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DIRECTOR'S REPORT

High Energy Batteries (India) Ltd.

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Market Cap. (₹) 31.55 Cr. P/BV 1.69 Book Value (₹) 103.86
52 Week High/Low (₹) 395/142 FV/ML 10/1 P/E(X) 72.34
Bookclosure 28/07/2018 EPS (₹) 2.43 Div Yield (%) 0.00
Year End :2018-03 

BOARD S REPORT

The Board hereby present their 57thAnnual Report and the Audited Accounts for the year ended 31stMarch, 2018.

OPERATING RESULTS

The Company’s financial performance under review is summarised below:

(Rs, Lakhs)

For the year Ended

(As per IND AS)

{As per IGAAP)

Particulars

2017

- 2018

2016

- 2017

2016

- 2017

Sales

5937.11

4718.99

4683.17

(Net of Excise Duly and

VAT/Sales Tax)

Other Income

13,80

15.09

51.70

Total Income

5950,93

4734,38

4734.87

Profit / (Loss) before

Finance Cost. Depreciation and Tax

1062.57

663.69

709.30

Less;

1. Finance Cost

490.90

417.40

530.59

2. Depreciation

120.64

619.54

132.01

549.41

132.01

062.00

Profit / (Loss) Before Tax

463.03

114.23

46.70

Less:

Provision for Taxation:

MAT

10.13

-

-

Deleted Tax net of MAT Credit

101,12

200.32

12.77

Income Tax relating to Previous year

17.32

-

-

Hat Profit &( ass)

328.46

(86.05)

33.93

Other Comprehensive Income

12,69

52.90

-

Total Comprehensive income

341.16

(33.15)

-

During the year, the company's turnover was Rs, 5937.11 Lakhs as compared to the Turnover of Rs, 4718.99 Lakhs during the previous year. Regular receipt of orders from our customers helped us to achieve higher turnover.

DIVIDEND

in the absence of distributable profits, no dividend is recommended.

PERFORMANCE HIGHLIGHTS SILVER ZINC BATTERIES

The company achieved a turnover of Rs, 4B24.16 Lakhs during the year as against Rs, 4100.24 Lakhs during the previous year, This year major orders were received from Navy for torpedoes propulsion batteries. Many of the development cum supply orders pertaining to Missile batteries from DRDL, RCI and contributed to achieve higher turnover.

NICKEL CADMIUM BATTERIES

The company achieved a turnover of Rs.226.45 Lakhs against f 412.58 Lakhs during the previous year. Orders f or batteries are regularly received from Aircraft for SU30 Aircraft and Battery for other fighter Aircraft.

Due to low margin, orders for Pocket Plate type Industrial Battery were not entertained resulting in reduction of turnover.

LEAD ACID BATTERIES (LAB)

During the year, the turnover of LAB division was Rs, 886.50 Lakhs as against Rs, 206.17 Lakhs. Production and sales were achieved during the year through supplies to Private labellers(PL), consisting mainly of VRLA Battery for UPS back-up. The company is looking for diversification of market (n the current year to achieve breakeven.

EXPORTS

The company could achieve a turnover of Rs,30.02 Lakhs towards export to our regular customers. Our effort, to secure sizeable export orders,, is continuing persistently and processing of orders by a couple of customers abroad, is in the final stage and is expected to materialize during the current year.

Your Company participated in DEFEXPO at Chennai during 11 April 2018 to 14thApril 2013 and exhibited Company’s products. The stall was visited by Defence Minister, Scientific Advisor and other respected dignitaries. Also got good response from foreign customers.

CURRENT YEAR - 2018 - 19

With sizeable orders on hand and also orders in the pipeline, the company hopes (o achieve better turnover in the Silver Zinc division with a higher level of margin. Our efforts to have orders in Nicad for both Aircraft battery & Industrial battery and Export are also expected to yield good results, in terms of order book and performance.

For the Lead Acid Battery division, the Company is focusing on PL Business especially of VRLA battery and Battery for e-rickshaw (EV) through established firms and all efforts are on to achieve higher turnover with breakeven performance.

FINANCE

Delay in realisation of payments from Government Departments affected the liquidity position of the company tor the year under review. However, due to the increase in Turnover. Bank operations have slightly eased up. Company envisages a better liquidity cum financial position in the current year, with support of our Banks and clearance ot our proposal for Working capital limits.

ISO SYSTEMS

The Company Quality Management Systems (QMS) ISO 9001:2015 and Environmental Management Systems (EMS) ISO 14001:2 015. continue to be accredited for Aerospace &. Naval Battery division. For the Lead Acid Battery division, the company continues to have QMS accreditation end will progress with EMS certification during the current year.

RESEARCH AND DEVELOPMENT

The Company is engaged in the development ol new batteries for Missiles such as BrahMos, ASL. ANSP and is presently in the advanced stages of Qualification for Airversion of BrahMos Missiles.

Silver Oxide Zinc Pile type battery development is in progress, initiated through DRDQ Laboratory for a strategic high power, high energy underwater propulsion requirement. The Company expects to get regular production orders for the batteries successfully developed and delivered.

Development of Lead Acid Batteries of medium range VRLA types and Battery for e-rickshaw {EV} is in progress. Also, testing at external Laboratories for third party certification is in progress.

CORPORATE GOVE FINANCE

Compliance with the provisions of Corporate Governance is not mandatory to the Company, as your company's paid-up capital and net worth is less than the limit prescribed under Regulation 15(2) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. However, utmost importance has been given to good Corporate Governance in all its activities. A report on Corporate Governance is annexed herewith, marked as Annexure - 1 to this Report.

Section 134(3) of the Companies Act, 2013 requires the Board's Report to include several additional contents and disclosures. The applicable contents and disclosures have accordingly been made in the Corporate Governance Report at the appropriate places which form an integral part of this Report,

EXTRACT OF ANNUAL RETURN

Details farming part of the extract oi the Annual Return in Form MGT-9 are given in Annexure - 2.

DIRECTORS’ RESPONSIBILITY

STATEMENT

Pursuant to Section 134(3)[c) of the Companies Act, 2013 with respect to the Directors' Responsibility Statement, your Board confirms that:

(a) in the preparation of the annual accounts, the applicable Accounting standards have been followed:

{b) the directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company a I the end of the financial year and of the profit of the company for I hat period;

(c) the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) the directors have prepared the annual accounts on a going concern basis;

(e) the directors have laid down internal financial controls to be followed by the company and that said internal financial controls are adequate and were operating effectively; and

(f) the directors have devised proper systems to ensure compliance with the provisions of all applicable laws and such systems were adequate and operating effectively.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

The company did not give any Loan or Guarantee or provided any security or make investment covered under Section 106 of the Companies Act. 2013 during the year.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTY

Since the Company remains outside the purview of Section 138(1) of the Companies Act, 2013 read with Rule 15 of Companies (Meeting of Board and its Powers) Rules, 2014, the reporting requirements thereunder are not applicable.

MATERIAL CHANGES AND COMMITMENTS

There is no change in the nature of business of the company during the year.

There are no material changes and commitments in the business operations of the company since the dose of the financial year as on 3151 March 201B to the date of this report.

CONSERVATION OF ENERGY ETC.

Information relating to conservation of energy, technology absorption and foreign exchange earnings and outgo as required under Section 134(3)(m} of the Companies Act, 2013 read with Rule Sot the Companies (Accounts) Rules, 2014 is given in Annexure

CORPOHATE SOCIAL RESPONSIBILITY (CSR)

Section 135 of the Companies Act, 2013 mandates every company having minimum threshold limit of net worth, turnover or net profit, as prescribed to constitute a Corporate Social Responsibility Committee, and also to for late corporate social responsibility policy that shall indicate the activities to be undertaken by the company. Since the company does not meet the criteria for constituting Corporate Social Responsibility Committee, it remains outside the purview of Section 135 of the Companies Act, 2013 and consequently the reporting requirements thereunder are not applicable.

PARTICULARS OF EMPLOYEES

The information required pursuant to Section 197 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules. 2014, is furnished in Annexure - 4.

ADEQUACY OF INTERNAL FINANCIAL CONTROL WITH REFERENCE TO FINANCIAL STATEMENTS

1) The company has laid down adequate systems and well-drawn procedures for ensuring internal financial controls, it has appointed an external audit firm as internal auditors for periodically checking and monitoring the internal control measures.

2) Internal auditors are present at the Audit Committee meetings where internal audit reports are discussed alongside of management comments and the final observation of the internal auditor.

3) The Board of Directors have put in place budgetary control and monitoring measures for ensuring the orderly and efficient conduct of the business of the company, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information.

ADOPTION OF THE INDIAN ACCOUNTING STANDARDS (Ind AS)

The Company hitherto was following IGAAP notified under the Companies (Accounting Standards) Rules, 2006. It has now adopted the Indian Accounting Standards (Ind AS) from FY 2017 -18 as mandated and restated the financial statements for FY 2016-17 for presenting comparative information. Accordingly, the financial statements for current year including comparative figures of previous year are based on ind AS and in accordance with the recognition and measurement principles stated therein. The impact of the application of Ind AS is disclosed in the notes to Financial Statements.

DIRECTORS

The Board regrets to inform the demise of our director RAdm S Mohapatra on 10.02.2018. He held eminent positions in Indian Navy, DR DO laboratory and BrahMos Ltd and took part effectively in all our Board proceedings. The Board wishes to place on record his valuable contributions to the company as Director.

All the Independent Directors have given the declaration that they comply with the criteria on independence, as laid down under Section 149(6) of the Companies Act, 2013. The performance evaluation of independent directors has been done by the entire Board of Directors, excluding the director being evaluated at its meeting held on 22"* March 2013. The Board on the basis of such performance evaluation determined to continue the term of appointment of all the Independent

Directors who have been appointed by the Company at its 53"1 AGM for a fixed term up to 31st March 2019.

AUDITORS

M/s.Maharaj N R Suresh and Co, Chartered Accountants., Chennai (Firm Registration No.001931S} were appointed as Statutory Auditors by the shareholders in the 56th Annual General Meeting for a period of five years till the conclusion of the 61stAnnual General Meeting of the Company on such remuneration I’d be fixed by the Board of Directors on the recommendation of Audit Committee from time to time. This was subject to ratification by members at every AGM, in accordance with the first Proviso to Section 139( 1) of the Companies Act, 2013 as may be amended from time to time. This requirement for annual ratification at AGM has been dispensed with by the Companies (Amendment) Act, 2017 effective 7thMay 2018- Accordingly no ratification is required henceforth and the Statutory Auditors would continue in the normal course till the conclusion of 61st AGM,

Particulars of Statutory Auditors, internal auditor and the Secretarial Auditor are given in the Corporate Governance Report that forms an integral part of this Report. Secretarial Audit Report, as required by Section 204(1) of the Companies Act, 2013, attached as Annexure - 5.

ACKNOWLEDGEMENT

Your Directors wish to express their sincere thanks to :

(i) all the valued customers viz Defence Services. VSSC, ISRO, DRDO Laboratories and Ministry of Defence for the whose-hearted support and encouragement provided by them for indigenisation efforts on sophisticated high energy batteries for strategic applications;

(ii) the Overseas customers, who have reposed utmost faith and confidence in our products;

(iii) the Lead Acid Battery Customers, Dealers, Distributors and Institutional Indenters, like Postal and Railways;

(iv) the Bankers, for extending timely financial support for the continued successful performance of the Company;

(v) the Employees at all levels of the company for their commendable performance and

(vi) to all suppliers and S h are holders for their continued support.

(For the Board of Directors)

N. GOPALARATNAM

Chairman

Chennai

May 26, 2018

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