HPL Electric & Power Ltd Directors Report.

To the Members of

HPL Electric & Power Ltd.

Report on the Audit of the Standalone Financial Statements Opinion

We have audited the financial statements of HPL ELECTRIC & POWER LIMITED ("the Company"), which comprise the balance sheet as at 31st March 2020, and the statement of Profit and Loss(including other comprehensive income), Statement of Changes in Equity and Statement of Cash Flows for the year then ended, and notes to the standalone financial statements, including a summary of significant accounting policies and other explanatory information (hereinafter referred to as "the standalone financial statements").

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2020, its profit/loss and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013. Our responsibilities under those Standards are further described in the Auditors Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Companies Act, 2013 and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

The key audit matters How the matter was addressed in our audit
Evaluation of uncertain tax positions Principal Audit Procedures
The Company operates in multiple jurisdictions and is subject to periodic challenges by local tax authorities on a range of tax matters during the normal course of business including indirect tax matters. These involve significant management judgment to determine the possible outcome of the uncertain tax positions, consequently having an impact on related accounting and disclosures in the consolidated financial statements. Our audit procedures include the following substantive procedures:
• Obtained understanding of key uncertain tax positions; and
• We along with our internal tax experts –
Read and analyzed select key correspondences, external legal opinions / consultations by management for key uncertain tax positions;
Discussed with appropriate senior management and evaluated managements underlying key assumptions in estimating the tax provisions; and
Assessed managements estimate of the possible outcome of the disputed cases.
Expected credit loss (ECL) on trade receivables Principal Audit Procedures
Trade receivables balances represent significant portion of the Companys assets. Loss allowances on trade receivables for delays and defaults in recovery involves significant judgements and estimates. Our audit procedures over ECL on trade receivables included the following:
Timing of collection of dues from the customers may differ from the actual credit period. Testing the design, implementation and operating e_ectiveness of key internal financial controls, on a sample basis, over accounting of measurement of ECL on trade receivables, credit control process over aged receivables;
The balance of loss allowances on trade receivables represent the Companys best estimates at the reporting date of ECL under Ind AS 109. The Company assesses the ECL allowance resulting from all possible defaults over the expected life of the receivables and credit impaired receivables. These are expected to be recognized before a trade receivables becomes past due. The measurement of ECL involves significant Companys judgement and assumption, primarily relating to: Evaluating governance structure over provisioning matrix;
Assessing Companys policy for ECL on trade receivables and credit impaired receivables with applicable accounting standards:
Challenging the ECL estimates by examining the information used to form such estimates such as application of future economic conditions, credit risk of customers, etc:
- Historical credit loss experience adjusted for future economic conditions, Checking completeness and accuracy of the data used by the Company for computation of assumptions used for computing ECL on trade receivables;
- Credit risk of customers Conducting audit procedure on existence of trade receivables. We performed independent checks for outstanding balances, tested subsequent receipts and sales transactions for audit samples.

Other Information

The Companys management and Board of Directors are responsible for the other information. The other information comprises the information included in the Companys annual report, but does not include the standalone financial statements and our auditors report thereon.

Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Standalone Financial Statements

The Companys Board of Directors is responsible for the matters stated in section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the accounting Standards specified under section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Companys ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Boards of Directors are also responsible for overseeing the Companys financial reporting process.

Auditors Responsibilities for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3) (i) of the Companies Act, 2013, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls system in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of managements use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Companys ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant de_ciencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors Report) Order, 2016 ("the Order"), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Companies Act, 2013, we give in the ‘Annexure A, a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

(A) As required by Section 143 (3) of the Act, we report that:

a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.

c) The Balance Sheet, the Statement of Profit and Loss including the Statement of Other Comprehensive Income, the Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account.

d) In our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended;

e) On the basis of the written representations received from the directors as on 31st March, 2020 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2020 from being appointed as a director in terms of Section 164 (2) of the Act.

f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in ‘Annexure B.

(B) With respect to the other matters to be included in the Auditors Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed pending litigations and the impact on its financial position - refer note 44 to the Standalone Financial Statements.

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

(C) With respect to the matter to be included in the Auditors Report under section 197(16):

In our opinion and according to the information and explanations given to us, the remuneration paid by the Company to its directors during the current year is in accordance with the provisions of Section 197 of the Act. The remuneration paid to any director is not in excess of the limit laid down under Section 197 of the Act. The Ministry of Corporate Affairs has not prescribed other details under Section 197(16) which are required to be commented upon by us.

For Kharabanda Associates
Chartered Accountants
FRN: 003456N
Sunil Kharabanda
Place : New Delhi Proprietor
Date : 9th July 2020 M. No. 082402

ANNEXURE ‘A TO THE INDEPENDENT AUDITORS REPORT

(Referred to in paragraph, under ‘Report on Other Legal and Regulatory Requirements section of our Report of even date)

(1) In respect of the Companys fixed assets: a) The company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. b) The fixed assets were physically verified during the year by the Management in accordance with a regular program of verification which, on our opinion, provides physical verification of all the fixed assets at reasonable intervals. According to the information and explanations given to us, no material discrepancies were noticed on such verification.

C) According to the information and explanations given to us and the records examined by us and based on the examination of the conveyance deed provided to us, we report that, the title deeds, comprising all the immovable properties of land and buildings which are freehold, are held in the name of the Company as at the balance sheet date.

(2) As explained to us, the inventories were physical verified during the year by the management at reasonable intervals and no material discrepancies were noticed on such verification. (3) The Company has not granted any loans, secured or unsecured to companies, firm, limited liability partnerships or other parties covered in the register maintained under Section 189 of the Companies Act, 2013. (4) In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Section 185 and 186 of the Act in respect of grant of loans, making investments and providing guarantees and securities, as applicable.

(5) The company has not accepted any deposits during the year and does not have any unclaimed deposits as at March 31, 2020 and therefore, the provision of the clause 3(v) of the Order are not applicable to the Company. (6) We have broadly reviewed the books of accounts maintained by the company in respect of the products where, pursuant to the rules made by the Central Government of India, the maintenance of cost records have been prescribed under sub-section (1) of Section 148 of the Companies Act, 2013 and are of the opinion that, prima-facie, the prescribed accounts and records have been made and maintained. (7) According to the information and explanations given to us, in respect of statutory dues: (a) The Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Employees State Insurance, Income Tax, Sales Tax, Service Tax, Value Added Tax, Goods and service Tax, duty of Custom, duty of Excise, Cess and other material statutory dues applicable to it with the appropriate authorities.

(b) There were no undisputed amounts payable in respect of Provident Fund, Employees State Insurance, Income Tax, Sales tax, Service Tax, Value Added Tax, Goods and Service tax, duty of Customs, duty of Excise, Cess and other material statutory dues in arrear as at 31st March, 2020 for a period of more than six months from the date they became payable. (c) According to the information and explanations given to us by the management and records of the Company examined by us, the particulars of dues of Income Tax, Sales Tax, Service Tax and Excise Duty as at 31st March, 2020 which have not been deposited on account of dispute, are given below:

Nature of the statue Nature of dues Financial year to which the matter pertains Forum where the Dispute is pending Amount (Rs. in lakhs)
Central Excise Act, 1944 Excise Duty 2008-2009 Addl. Comm, LTU, New Delhi. 16.40
Finance Act 1994 Service Tax 2012--2017 Comm. (A), LTU, Delhi 1.01
Haryana VAT Act 2003 Sales Tax 2008-2009 Haryana Tax Tribunal, Chandigarh. 25.51
Haryana VAT Act 2003 Sales Tax 2011-2012 Jt.Comm.(A), Ambala 4.38
Haryana VAT Act 2003 Sales Tax 2010-2011 Jt.Comm.(A),Rohtak. 17.83
Haryana VAT Act, 2003 Sales Tax 2009-2010 Haryana Tax Tribunal, Chandigarh. 4.78
Finance Act 1994 Service Tax 2011-2012 CESTAT, New Delhi. 1.13
Haryana VAT Act, 2003 Sales Tax 2011-2012 Haryana Tax Tribunal, Rohtak. 18.45
Haryana VAT Act, 2003 Sales Tax 2011-2012 Haryana Tax Tribunal, Sonepat. 23.19
Central Excise Act, 1944 Excise Duty 2009-10 to 2015-16 Comm..(A),New Delhi 82.49
Haryana VAT Act, 2003 Sales Tax 2012-13 Haryana Tax Tribunal, Rohtak 10.06
Haryana VAT Act, 2003 Sales Tax 2010-11 Haryana Tax Tribunal, Rohtak 49.22
Finance Act 1994 Service Tax 2010-11 to 2014-15 CESTAT, New Delhi. 163.04
Employee ‘s Provident Fund Act 1952 EPF Demand For EPF EPF Appelllate, Truibunal New Delhi 8.87
Haryana VAT Act, 2003 Sales Tax 2011-12 Haryana Tax Tribunal, Rohtak 23.39
Haryana VAT Act, 2003 Sales Tax 2012-13 Haryana Tax Tribunal, Rohtak 23.67
Haryana VAT Act, 2003 Sales Tax 2013-14 Haryana Tax Tribunal, Rohtak 80.59
Haryana VAT Act, 2003 Sales Tax 2013-14 Jt. Commissioner (A), Rohtak 72.95
Haryana VAT Act, 2003 Sales Tax 2014-15 Jt. Commissioner (A), Rohtak 25.35
Haryana VAT Act, 2003 Sales Tax 2013-14 Jt. Commissioner (A), Rohtak 18.38
Haryana VAT Act, 2003 Sales Tax 2013-14 Jt. Commissioner (A), Rohtak 97.68
Haryana VAT Act, 2003 Sales Tax 2011-12 Haryana Tax Tribunal, Chandigarh 3.61
Haryana VAT Act, 2003 Sales Tax 2012-13 Haryana Tax Tribunal, Chandigarh 1.97
Haryana VAT Act, 2003 Sales Tax 2013-14 Haryana Tax Tribunal, Chandigarh 3.73
Haryana VAT Act, 2003 Sales Tax 2014-15 Haryana Tax Tribunal, Chandigarh 0.52
Haryana VAT Act, 2003 Sales Tax 2010-11 Haryana Tax Tribunal, Jt. ETC (A) Rohtak 33.95
Haryana VAT Act, 2003 Sales Tax 2014-15 Dy. Excise & Taxation Commissioner (ST), 10.14
Sonipat
Haryana VAT Act, 2003 Sales Tax 2014-15 Jt Excise & Taxation Commissioner, Ambala 55.74
Income Tax Act, 1961 Income Tax AY 2017-18 Income Tax Demand before Asstt. Commissioner of IT, Delhi for AY 2017-18 28.72
Haryana VAT Act, 2003 Sales Tax 2015-16 Demand for Sales Tax before Haryana Tax Tribunal, Rohtak for 2015-16s 41.89
Haryana VAT Act, 2003 Sales Tax 2014-15 Demand for Sales Tax before Haryana Tax Tribunal, Rohtak for 2014-15 97.13
Haryana VAT Act, 2003 Sales Tax 2015-16 Demand for Sales Tax before Haryana Tax Tribunal, Rohtak for 2015-16 75.76

(8) In our opinion and according to the information and explanations given to us, the company has not defaulted in repayment of loan or borrowing to banks. The Company does not have any loans or borrowing from government and has not issued any debentures. The Company has taken a term loan amounting to Rs. 25 crore from TATA Capital Financial Services Limited. Outstanding as on March 31,2020 is Rs. 22.92 crore.

(9) In our opinion and according to the information and explanations given to us, the monies taken by way of term loan have been applied for the purposes for which they were obtained.

(10) To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no fraud on the Company by its officers or employees has been noticed or reported during the year. (11) In our opinion and according to the information and explanations given to us the Company has paid / provided managerial remuneration in accordance with the requisite approvals mandated by the provision of Section 197 read with Schedule V to the Act.

(12) The Company is not a Nidhi Company and hence reporting under clause 3(xii) of the Order is not applicable.

(13) In our opinion and according to the information and explanations given to us the Company is in compliance with Section 177 and 188 of the Act, where applicable, for all transactions with the related parties and the details of related party transactions have been disclosed in the financial statements as required by the applicable accounting standards.

(14) During the year, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debenture and hence reporting under clause 3(XIV) of the Order is not applicable to the Company.

(15) In our opinion and according to the information and explanations given to us, during the year the Company has not entered into any non-cash transactions with its Directors or persons connected to its Directors as referred to in Section 192 of the Act. (16) The Company is not required to be registered under Section 45-lA of the Reserve Bank of India Act, 1934.

For Kharabanda Associates
Chartered Accountants
FRN: 003456N
Sunil Kharabanda
Place : New Delhi Proprietor
Date : 9th July 2020 M. No. 082402

ANNEXURE ‘B TO THE INDEPENDENT AUDITORS REPORT

(Referred to in paragraph 1(f) under ‘Report on Other Legal and Regulatory Requirements section of our report to the members of HPL Electric & Power Limited of even date)

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (‘the Act)

We have audited the internal financial controls over financial reporting of HPL ELECTRIC & POWER LTD. (‘the Company) as of March 31, 2020 in conjunction with our audit of the standalone Ind AS financial statement of the company for the year then ended and as on that date.

Managements Responsibility for the Internal Financial Controls

The Board of Directors of the company is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over financial Reporting issued by the Institute of Chartered Accountants of India (the ‘Guidance Note). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, 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, as required under the Companies Act 2013.

Auditors Responsibility

Our responsibility is to express an opinion on the Companys internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal financial Controls Over Financial Reporting ( The Guidance Note) issued by the Institute of Chartered Accountants of India and the Standards on Auditing prescribed under Section 143(10) of the Companies Act 2013, to the extant applicable to an audit of internal financial controls. Those Standards and the Guidance Note required that we comply with the ethical requirements and plan and perform the audit to obtain reasonable assurance about internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend of the auditors judgment, including the assessment of the risks of material misstatement of the financial statement, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Companys internal financial controls system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A companys internal financial controls over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purpose in accordance with generally accepted accounting principles. A companys internal financial controls over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statement in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorisation of the management and directors of the company, and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitation of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial controls over financial reporting may become inadequate because of change in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, to the best of our information and according to the explanations given to us, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2020, based on the internal financial controls over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Control Over Financial Reporting issued by the Institute of Chartered Accountant of India.

For Kharabanda Associates
Chartered Accountants
FRN: 003456N
Place : New Delhi Sunil Kharabanda
Date : 9th July 2020 Proprietor
M. No. 082402