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Auditor Report of Bharat Electronics Ltd.

Mar 31, 2023

Bharat Electronics LimitedReport on the Audit of the Standalone Financial

Statements

Opinion

We have audited the accompanying standalone financial statements of BHARAT ELECTRONICS LIMITED (the "Company") which comprise the Balance Sheet as at 31 March 2023, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information (hereinafter referred to as the "standalone financial statements"), in which are included the Returns for the year ended on that date audited by the branch auditors of the Company''s branches located at Ghaziabad, Panchkula, Kotdwara, Pune, Navi Mumbai and Machilipatnam.

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements, give the information required by the Companies Act, 2013 (the "Act") in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended ("Ind AS") and other accounting principles generally accepted in India:

a. I n case of Balance Sheet, of the state of affairs of the Company as at 31 March 2023;

b. In case of Statement of Profit and Loss, of the Profit and total comprehensive income for the year ended on that date ;

c. I n case of Statement of changes in equity, changes in equity for the year ended on that date and

d. In case of Statement of cash flows, of the cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing ("SA"s) specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditor''s Responsibilities for the Audit of the Standalone 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 ("ICAI") together with the ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the Rules made thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI''s Code of Ethics. We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements of the current period. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.

Sl.

No.

Key Audit Matter

Auditor''s response

1

Accuracy of recognition, measurement, presentation and disclosure of revenue and related balances towards Ind AS 115- Revenue from Contracts with Customer.

The application of this standards involves the assessment towards identification of the distinct performance obligations, determination of the transaction price for each of the identified performance obligation, the judgements used for determining the satisfaction of those performance obligations over time or at a point in time.

Additionally, the application of the standard also involves judgement used in identifying the amount of cost incurred to obtain or fulfil a contract and the disclosure of the periods over which performance obligations are satisfied over time subsequently to the reporting date.

The Company''s Revenue from Contracts mainly includes supply of defence electronics equipment''s and systems.

(Refer Note No. 23 to the standalone financial statements and S.No. 5 to the Accounting policies)

Principal Audit procedure

Our Audit procedure involve identification of internal controls and their

operating effectiveness towards application of this standard. We have also

carried out the substantive testing of the transactions.

a. We have assessed the appropriateness of the revenue recognition policies by comparing with the applicable Indian accounting standards.

b. Selected the samples of continuing contracts as well as new contracts and identified the performance obligations and compared the same with performance obligation identified by the Company.

c. Verified the basis of allocation of the transaction price to the identified performance obligation if not specifically mentioned in the contract.

d. Identified the basis to be considered to determine the satisfaction of the performance obligation and compared the same with the judgments used by the company in determining the satisfaction of performance obligation over the time or at a point in time.

e. Verified the appropriate evidence considered for determining the satisfaction of performance obligation towards transfer of promised goods or services.

f. In respect of the contracts where the satisfaction of performance obligation over time, we have verified the method identified by the company for recognising the revenue and ensured that those methods are appropriate considering the nature of the performance obligation.

g. Verified the judgements used by the company to identify those costs that are incurred to obtain or fulfil the contract and period over which those costs will be amortised.

h. Review of the plan available with the company towards satisfaction of remaining performance obligation identified based on the delivery terms defined in the Customer order to prepare the disclosure relating to periods over which remaining unsatisfied or partially satisfied performance obligation will be satisfied subsequent to the reporting date.

i. Verified the judgements used by the company to identify the performance obligation under unconditional appropriation in case of Bill and Hold arrangements.

2

Critical estimates in respect of Onerous Contracts -

Estimation of unavoidable costs for meeting or satisfaction of performance obligation in respect of contract that have become onerous is critical. The unavoidable costs to complete the performance obligations, being an accounting estimate, is subjected to estimation certainty.

(Refer Note No. 21 to the standalone financial statements and S.No. 23 to the Accounting policies)

Principal Audit procedure -

We have enquired with the Management regarding the internal controls

available towards identification of onerous contracts and cost to fulfil those

contracts.

a. Selected the sample of the continuing as well as new contracts and tested the effectiveness of the controls towards recognition of costs incurred for a particular contract and estimation of costs necessary to fulfil the unsatisfied/ partially satisfied performance obligations in it.

b. Carried out test of controls and substantive procedures in determining the estimates for unavoidable costs towards onerous contracts.

c. Verified the purchase/Service Orders issued towards satisfying the performance obligation and costs incurred thereunder.

d. Verified the internal controls towards identification of costs incurred towards the concerned contracts and ensured that only the costs related to the contract is recorded.

e. Verified the possible reductions in the contract price towards the balance performance obligations in respect of penalties, contract modifications.

Sl.

No.

Key Audit Matter

Auditor''s response

3

Critical estimates made in respect of expected cost to complete the contract i.e., satisfaction of performance obligation over time. The estimate has inherent limitation of certainty towards estimating the cost to satisfy the performance obligation.

(Refer Note No. 23 to the standalone financial statements and S.No. 5 to the Accounting policies)

Principal Audit procedure -

We have enquired with the Management regarding the internal controls

available towards the identification of contract where the performance

obligation are satisfied over the period of time -

a. Selected the sample of the continuing as well as new contracts and tested the effectiveness of the controls towards recognition of costs incurred for a particular contract and estimation of costs necessary to fulfil the unsatisfied/ partially satisfied performance obligations in it.

b. Carried out test of controls and substantive procedures in determining the estimates for cost necessary to fulfil the contract.

c. Verified the purchase/Service Orders issued towards satisfying the performance obligation and costs incurred thereunder.

d. Verified the internal controls towards identification of costs incurred towards the concerned contracts and ensured that only the costs related to the contract is recorded.

e. Verified the possible reductions in the contract price towards the balance performance obligations in respect of penalties, contract modifications.

f. Discussed with the Management and analysed that the cost estimated is towards the work that are pending to be carried out for completion and satisfaction of the performance obligation.


Information Other than the Standalone Financial Statements and Auditor''s Report Thereon

The Company''s Board of Directors is responsible for the preparation of the other information. The other information comprises the information included in the Board''s Report including its annexures, Corporate Governance and Shareholders information but does not include the standalone financial statements and our auditor''s 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 during the course of our 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 the Governance for the Standalone Financial Statements

The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act,

2013 with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance, total comprehensive income, changes in equity and cash flows of the company in accordance with the Ind AS and other accounting principles generally accepted in India. The Management of the Company are responsible for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding 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 standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

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

The Board of Directors is also responsible for overseeing the financial reporting process of the Company.

Auditor''s Responsibilities for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor''s 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 standalone 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 standalone 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 financial 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 with reference to standalone financial statements 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 the management.

• Conclude on the appropriateness of management''s 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 ability of the company to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor''s report to the related disclosures in the standalone 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 auditor''s 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 standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the standalone financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the standalone financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the standalone financial statements.

We communicate with those charged with governance among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies 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 standalone financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor''s 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.

We have considered the audit report of six branches audited by Branch Auditor of the Company in forming our opinion on the standalone financial statements.

Other Matters

1. We did not audit the financial statements of six branches included in the standalone financial statements of the Company whose financial statements reflect total assets of '' 7,54,532 Lakhs as at 31 March 2023 and total revenues of '' 6,01,569 Lakhs for the year ended on that date (as per the respective unit''s Audited Financial Statement), as considered in the standalone financial statements. The financial statements of these branches

have been audited by the Branch Auditors appointed by Comptroller & Auditor General of India, whose reports have been furnished to us, and our opinion in so far as it relates to the amounts and disclosures included in respect of these branches, is based solely on the report of such Branch Auditors.

Our opinion is not modified in respect of the above matter.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s report) Order, 2020 ("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 of matters specified in paragraph 3 and 4 of the Order, to the extent applicable.

2. As required by Section 143(3) of the Act, based on our audit 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 purpose of our audit of the aforesaid standalone financial statements.

b) In our opinion, proper books of accounts as required by law have been kept by the Company so far as it appears from our examination of those books. The audit of the accounts of units (Bangalore complex, Hyderabad and Chennai) and Corporate Office was carried out by us, whilst the audit of Ghaziabad, Panchkula, Kotdwara, Pune, Navi Mumbai and Machilipatnam units were audited by the respective Branch Auditors. The report of the Branch Auditors has been considered by us while preparing our report. In case of New York, Singapore and other offices, not visited by us, the returns/records received from the said offices have been verified and found to be adequate for the purpose of our audit.

c) The reports on the accounts of the Branch Offices of the Company audited under Section 143(8) of the Act by branch auditors (in respect of Ghaziabad, Panchkula, Kotdwara, Pune, Navi Mumbai and Machilipatnam units) have been sent to us and have been properly dealt with by us in preparing this report.

d) The Balance Sheet, the Statement of Profit and Loss including Other Comprehensive Income, Statement of Changes in Equity and the Statement of Cash Flows dealt with by this Report are in agreement with the books of accounts maintained by Company and with the returns received from the offices not audited by us.

e) In our opinion, the aforesaid standalone financial statements comply with the Indian Accounting Standards specified under Section 133 of the Act.

f) The Company being a Government Company, the provisions of Section 164(2) of the Companies Act, 2013 in respect of disqualification of Directors are not applicable.

g) With respect to the adequacy of the internal financial controls with reference to standalone financial statements of the company and the operating effectiveness of such controls, refer to our separate Report in "Annexure B" which is based on the auditor''s report of the Company.

h) With respect to the other matters to be included in the Auditor''s Report in accordance with the requirements of Section 197(16) of the Companies Act, 2013 as amended:

In our opinion and to the best of information since the company being Government Company, the provisions in relation to the payment of managerial remuneration in accordance with the provisions of Section 197 read with Schedule V to the Companies Act, 2013 is not applicable.

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

i. The Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements as at 31 March 2023. Refer Note 30(8) to the standalone financial statements.

ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long term contracts - Refer Note No.21 to the standalone financial statements. The Company do not have any derivative contracts - Refer Note No 30(15) to the standalone financial statements.

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

iv. a) The Management has represented that,

to the best of its knowledge and belief, no funds (which are material either individually or in the aggregate) have been advanced or loaned or invested (either from borrowed

funds or share premium or any other sources or kind of funds) by the Company to or in any other person or entity, including foreign entity ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

b) The Management has represented, that, to the best of its knowledge and belief, no funds (which are material either individually or in the aggregate) have been received by the Company from any person or entity, including foreign entity ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

c) Based on the audit procedures that we have considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) of Rule 11(e), as provided under (a) and (b) above, contain any material misstatement.

v. As stated in Note 30(18) to the standalone

financial statements

a) The final dividend proposed in the previous year, declared and paid by the Company

during the year is in accordance with Section 123 of the Act, as applicable.

b) The interim dividend declared and paid by the Company during the year and until the date of this report is in compliance with Section 123 of the Act.

c) The Board of Directors of the Company have proposed final dividend for the year which is subject to the approval of the members at the ensuing Annual General Meeting. The amount of dividend proposed is in accordance with Section 123 of the Act, as applicable.

vi. Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 for maintaining books of account using accounting software which has a feature of recording audit trail (edit log) facility is applicable to the Company with effect from April 1, 2023, and accordingly, reporting under Rule 11(g) of Companies (Audit and Auditors) Rules, 2014 is not applicable for the financial year ended 31 March 2023.

3. As required by Section 143(5) of the Act, we have considered the directions issued by the Comptroller and Auditor General of India, the action taken thereon and its impact on the standalone financial statements of the company in "Annexure C".

For Guru and Jana

Chartered Accountants Firm Registration No.: 006826S

M Surendra Reddy

Partner

Membership No.: 215205 UDIN: 23215205BGUXCT1418

Guwahati 20 May 2023


Mar 31, 2022

To the Members of Bharat Electronics Limited

Report on the Audit of the Standalone Financial StatementsOpinion

We have audited the accompanying standalone financial statements of BHARAT ELECTRONICS LIMITED (the "Company") which comprise the Balance Sheet as at 31 March 2022, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information (hereinafter referred to as the "standalone financial statements"), in which are included the Returns for the year ended on that date audited by the branch auditors of the Company''s branches located at Ghaziabad, Panchkula, Kotdwara, Pune, Navi Mumbai and Machilipatnam.

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements, give the information required by the Companies Act, 2013 (the "Act") in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended ("Ind AS") and other accounting principles generally accepted in India:

a. I n case of Balance Sheet, of the state of affairs of the Company as at 31 March 2022;

b. I n case of Statement of Profit and Loss, of the profit and total comprehensive income for the year ended on that date;

c. I n case of Statement of changes in equity, changes in equity for the year ended on that date and

d. In case of Statement of cash flows, of the cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing ("SA"s) specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditor''s Responsibilities for the Audit of the Standalone 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 ("ICAI") together with the ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the Rules made thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI''s Code of Ethics. We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements of the current period. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.

Sl.

No.

Key Audit Matter

Auditor''s response

1

Accuracy of recognition, measurement, presentation and disclosure of revenue and related balances towards Ind AS 115-Revenue from Contracts with Customer.

The application of this standards involves the assessment towards identification of the distinct performance obligations, determination of the transaction price for each of the identified performance obligation, the judgements used for determining the satisfaction of those performance obligations over time or at a point in time.

Additionally, the application of the standard also involves judgement used in identifying the amount of cost incurred to obtain or fulfil a contract and the disclosure of the periods over which performance obligations are satisfied over time subsequently to the reporting date.

The Company''s Revenue from Contracts mainly includes supply of defence electronics equipment''s and systems.

(Refer Note No. 23 to the standalone financial statements and S.No. 5 to the Accounting policies)

Principal Audit procedure -

Our Audit procedure involve identification of internal controls and their operating effectiveness towards application of this standard. We have also carried out the substantive testing of the transactions.

a. We have assessed the appropriateness of the revenue recognition policies by comparing with the applicable Indian accounting standards.

b. Selected the samples of continuing contracts as well as new contracts and identified the performance obligations and compared the same with performance obligation identified by the Company.

c. Verified the basis of allocation of the transaction price to the identified performance obligation if not specifically mentioned in the contract.

d. Identified the basis to be considered to determine the satisfaction of the performance obligation and compared the same with the judgments used by the company in determining the satisfaction of performance obligation over the time or at a point in time.

e.

Verified the appropriate evidence considered for determining the satisfaction of performance obligation towards transfer of promised goods or services.

f.

In respect of the contracts where the satisfaction of performance obligation over time, we have verified the method identified by the company for recognising the revenue and ensured that those methods are appropriate considering the nature of the performance obligation.

g.

Verified the judgements used by the company to identify those costs that are incurred to obtain or fulfil the contract and period over which those costs will be amortised.

h.

Review of the plan available with the company towards satisfaction of remaining performance obligation identified based on the delivery terms defined in the Customer order to prepare the disclosure relating to periods over which remaining unsatisfied or partially satisfied performance obligation will be satisfied subsequent to the reporting date.

i.

Verified the judgements used by the company to identify the performance obligation under unconditional appropriation in case of Bill and Hold arrangements.

Sl.

No.

Key Audit Matter

Auditor''s response

2

Critical estimates in respect of Onerous Contracts -Estimation of unavoidable costs for meeting or satisfaction of performance obligation in respect of contract that have become onerous is critical. The unavoidable costs to complete the performance obligations, being an accounting estimate, is subjected to estimation uncertainty.

(Refer Note No. 21 to the standalone financial statements and S.No. 23 to the Accounting policies)

Principal Audit procedure -

We have enquired with the Management regarding the internal

controls available towards identification of onerous contracts and

cost to fulfil those contracts.

a. Selected the sample of the continuing as well as new contracts and tested the effectiveness of the controls towards recognition of costs incurred for a particular contract and estimation of costs necessary to fulfil the unsatisfied/ partially satisfied performance obligations in it.

b. Carried out test of controls and substantive procedures in determining the estimates for unavoidable costs towards onerous contracts.

c. Verified the purchase/Service Orders issued towards satisfying the performance obligation and costs incurred thereunder.

d. Verified the internal controls towards identification of costs incurred towards the concerned contracts and ensured that only the costs related to the contract is recorded.

e. Verified the possible reductions in the contract price towards the balance performance obligations in respect of penalties, contract modifications.

3

Critical estimates made in respect of expected cost to complete the contract i.e., satisfaction of performance obligation over time. The estimate has inherent limitation of certainty towards estimating the cost to satisfy the performance obligation.

(Refer Note No. 23 to the standalone financial statements and S.No. 5 to the Accounting policies)

Principal Audit procedure -

We have enquired with the Management regarding the internal

controls available towards the identification of contract where the

performance obligation are satisfied over the period of time -

a. Selected the sample of the continuing as well as new contracts and tested the effectiveness of the controls towards recognition of costs incurred for a particular contract and estimation of costs necessary to fulfil the unsatisfied/ partially satisfied performance obligations in it.

b. Carried out test of controls and substantive procedures in determining the estimates for cost necessary to fulfil the contract.

c. Verified the purchase/Service Orders issued towards satisfying the performance obligation and costs incurred thereunder.

d. Verified the internal controls towards identification of costs incurred towards the concerned contracts and ensured that only the costs related to the contract is recorded.

e. Verified the possible reductions in the contract price towards the balance performance obligations in respect of penalties, contract modifications.

f. Discussed with the Management and analysed that the cost estimated is towards the work that are pending to be carried out for completion and satisfaction of the performance obligation.

Information Other than the Standalone Financial Statements and Auditor''s Report Thereon

The Company''s Board of Directors is responsible for the preparation of the other information. The other information comprises the information included in the Board''s Report including its annexures, Corporate Governance and Shareholders information but does not include the standalone financial statements and our auditor''s 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 during the course of our 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 the Governance for the Standalone Financial Statements

The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance, total comprehensive income, changes in equity and cash flows of the company in accordance with the Ind AS and other accounting principles generally accepted in India. The Management of the company are responsible for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding 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 standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the standalone financial statements, the Management of the company are responsible for assessing the ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the

going concern basis of accounting unless the management intends to liquidate the company or to cease operations, or has no realistic alternative but to do so.

The Board of Directors is also responsible for overseeing the financial reporting process of the Company.

Auditor''s Responsibilities for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor''s 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 standalone 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 standalone 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 financial 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 with reference to standalone financial statements 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 the management.

• Conclude on the appropriateness of management''s 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 ability of the company to continue as a going concern. If we conclude that a

material uncertainty exists, we are required to draw attention in our auditor''s report to the related disclosures in the standalone 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 auditor''s 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 standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the standalone financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the standalone financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the standalone financial statements.

We communicate with those charged with governance among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies 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 standalone financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor''s 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.

We have considered the audit report of six branches audited by branch auditor of the company in forming our opinion on the standalone financial statements.

Other Matters

1. We did not audit the financial statements of six branches included in the standalone financial statements of the

Company whose financial statements reflect total assets of '' 5,98,940 lakhs as at 31 March 2022 and total revenues of '' 5,16,364 lakhs for the year ended on that date, as considered in the standalone financial statements. The financial statements of these branches have been audited by the branch auditors appointed by Comptroller & Auditor General of India, whose reports have been furnished to us, and our opinion in so far as it relates to the amounts and disclosures included in respect of these branches, is based solely on the report of such branch auditors.

2. The comparative financial information of the Company for the year ended 31 March 2021 is prepared in accordance with Ind AS included in this standalone financial statements has been audited by the predecessor auditor, except for the comparative information pertaining to presentation and disclosure in respect of amendments in Division II of Schedule III vide notification dated 24 March 2021. The report of the predecessor auditor on the comparative financial information dated 17 August 2021 expressed an unmodified opinion.

Our opinion is not modified in respect of these matters.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s report) Order, 2020 ("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 of matters specified in paragraph 3 and 4 of the Order, to the extent applicable.

2. As required by Section 143(3) of the Act, based on our audit 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 purpose of our audit of the aforesaid standalone financial statements.

b) In our opinion, proper books of accounts as required by law have been kept by the company so far as it appears from our examination of those books. The audit of the accounts of units (Bangalore complex, Hyderabad and Chennai) and Corporate Office was carried out by us, whilst the audit of Ghaziabad, Panchkula, Kotdwara, Pune, Navi Mumbai and Machilipatnam units were audited by the respective branch auditors. The report of the branch auditors has been considered by us while preparing our report. In case of New York, Singapore and other offices, not visited by us, the returns/records received from the said offices have

been verified and found to be adequate for the purpose of our audit.

c) The reports on the accounts of the branch offices of the Company audited under Section 143(8) of the Act by branch auditors (in respect of Ghaziabad, Panchkula, Kotdwara, Pune, Navi Mumbai and Machilipatnam units) have been sent to us and have been properly dealt with by us in preparing this report.

d) The Balance Sheet, the Statement of Profit and Loss including Other Comprehensive Income, Statement of Changes in Equity and the Statement of Cash Flows dealt with by this Report are in agreement with the books of accounts maintained by company and with the returns received from the offices not audited by us.

e) I n our opinion, the aforesaid standalone financial statements comply with the Indian Accounting Standards specified under section 133 of the Act, read with the Rule 7 of the Companies (Accounts) Rules, 2014.

f) The company being a Government Company, the provisions of Section 164(2) of the Companies Act, 2013 in respect of disqualification of Directors are not applicable.

g) With respect to the adequacy of the internal financial controls with reference to standalone financial statements of the company and the operating effectiveness of such controls, refer to our separate Report in "Annexure B" which is based on the auditor''s report of the company.

h) With respect to the other matters to be included in the Auditor''s Report in accordance with the requirements of Section 197(16) of the Companies Act, 2013 as amended:

In our opinion and to the best of information since the company being Government Company, the provisions in relation to the payment of managerial remuneration in accordance with the provisions of Section 197 read with Schedule V to the Companies Act, 2013 is not applicable.

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

i. The Company has disclosed the impact of pending litigations on its financial position

in its standalone financial statements as at 31 March 2022. Refer Note 30(8) to the standalone financial statements.

ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long term contracts - Refer Note No.21 to the standalone financial statements. The Company do not have any derivative contracts - Refer Note No 30(15) to the standalone financial statements.

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

iv. a) The Management has represented

that, to the best of its knowledge and belief, no funds (which are material either individually or in the aggregate) have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person or entity, including foreign entity ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

b) The Management has represented, that, to the best of its knowledge and belief, no funds (which are material either individually or in the aggregate) have been received by the Company from any person or entity, including foreign entity ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

c) Based on the audit procedures that we have considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) of Rule 11(e), as provided under (a) and (b) above, contain any material misstatement.

v. As stated in Note 30(18) to the standalone financial statements

a) The final dividend proposed in the previous year, declared and paid by the Company during the year is in accordance with Section 123 of the Act, as applicable.

b) The interim dividend declared and paid by the Company during the year and until the date of this report is in compliance with Section 123 of the Act.

c) The Board of Directors of the Company have proposed final dividend for the year which is

subject to the approval of the members at the ensuing Annual General Meeting. The amount of dividend proposed is in accordance with Section 123 of the Act, as applicable.

vi. The reporting responsibility on the accounting software for maintaining the books of accounts has been deferred to the next financial year.

3. As required by Sec. 143(5) of the Act, we have considered

the directions issued by the Comptroller and Auditor General of India, the action taken thereon and its impact on the standalone financial statements of the company in "Annexure C"

For Guru and Jana

Chartered Accountants Firm Registration No.: 006826S

Ananth Prasad B R

Partner

Varanasi Membership No.: 218145

23 May 2022 UDIN: 22218145AJLRUO1188


Mar 31, 2021

We are issuing this revised report to comply with the observations made by the Comptroller and Auditor General of India with respect to the branch auditors report of Kotdwara unit and our report on internal financial controls. This Independent auditor''s report supersedes our report issued on 22 June 2021.

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the accompanying standalone financial statements of Bharat Electronics Limited ("the Company"), which comprise the Balance Sheet as at 31 March, 2021, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows for the year then ended, and notes to financial statements, including a summary of significant accounting policies and other explanatory information, in which are included the Returns for the year ended on that date audited by the branch auditors of the Company''s branches located at Ghaziabad, Panchkula, Kotdwara, Pune, Navi Mumbai and Machilipatnam.

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements 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 31 March, 2021 and its profit (including Other

Comprehensive Income), the changes in equity 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 Auditor''s Responsibilities for the Audit of the Standalone 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 (ICAI) together with the ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Companies Act, 2013 and the Rules thereunder, we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI''s 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 standalone financial statements of the current period. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.

Sr.

No.

Key Audit Matter

Auditor''s Response

1

Accuracy of recognition, measurement, presentation and disclosure of revenue and related balances towards Ind AS 115- Revenue from Contracts with Customer. The application of this standard involves the assessment towards identification of the distinct performance obligations, determination of the transaction price for each of the identified performance obligation, the judgements used for determining the satisfaction of those performance obligations over time or at a point in time. Additionally, the application of the standard also involves judgements used in identifying the amount of cost incurred to obtain or fulfil a contract and the

Principal Audit Procedures

Our audit procedures involve identification of internal controls and their operating effectiveness towards application of this standard. We have also carried out the substantive testing of the transactions.

(i) Selected the sample of continuing contracts and the new contracts and identified the performance obligations and compared the same with the performance obligation identified by the company.

(ii) Verified the basis of allocation of transaction price to the identified performance obligation if not specifically mentioned in the contract.

Sr.

No.

Key Audit Matter

Auditor''s Response

disclosure of the periods over which performance obligations are satisfied over time subsequent to the reporting date.

(Refer Note no. 23 to the standalone financial statement and S.No. 5 to the Accounting policies)

(iii) Identified the basis to be considered to determine the satisfaction of performance obligation and compared the same with the judgements used by the Company in determining the satisfaction of performance obligation over time or at a point in time.

(iv) Verified the appropriate evidences considered for determining the satisfaction of performance obligations towards transfer of promised goods or services.

(v) In respect of contracts where the satisfaction of performance obligation is over time, we have verified the method identified by the Company for recognising the revenue and ensured that those methods are appropriate considering the nature of the performance obligation.

(vi) Verified judgements used by the Company to identify those costs that are incurred to obtain or fulfil the contract and period over which those costs will be amortised.

(vii) Reviewed the Plan available with the Company towards satisfaction of remaining performance obligations identified based on the delivery terms defined in the customer order to prepare the disclosure relating to periods over which remaining unsatisfied or partially satisfied performance obligations will be satisfied subsequent to the reporting date.

2

Critical Estimates in respect of Onerous Contracts. Estimation of unavoidable costs for meeting or satisfaction of performance obligations in respect of contracts that have become onerous is critical. The estimate has inherent limitation of certainty towards estimating the unavoidable costs to complete the performance obligations.

(Refer Note no. 21 to the standalone financial statement and S.No. 23 to the Accounting policies)

Principal Audit Procedures

We have enquired with the management regarding

the internal controls available towards identification of

onerous contracts and cost to fulfil those contracts.

(i) Selected the sample of continuing and existing contract and tested the effectiveness of the controls towards cost incurred and estimated costs of fulfilling the contract.

(ii) Carried out test of internal controls and also the substantive procedures in determining the estimates for unavoidable costs towards onerous contracts.

(iii) Verified and understood the internal controls available in estimating the basis for arriving the unavoidable costs for meeting the performance obligations in respect of onerous contracts.

(iv) Verified the purchase order issued for satisfying the performance obligation and identified those remaining costs which are to be incurred to satisfy the remaining performance obligations.

Sr.

No.

Key Audit Matter

Auditor''s Response

3

(v) Verified the internal controls towards identification of costs incurred towards the concerned contracts and ensured that only the related cost of the contract is recorded.

(vi) Verified the possible reductions in the contract price towards the balance performance obligations in respect of penalties.

(vii) Performed analytical procedures and test of details for reasonableness of cost incurred and estimated cost to be incurred.

3

Critical estimates made in respect of expected cost to complete the contract for performance obligation over time. The estimate has inherent limitation of certainty towards estimating the cost to satisfy the performance obligation.

(Refer Note no. 23 to the standalone financial statement and S.No. 5 to the Accounting policies)

Principal Audit Procedures

We have enquired with the management regarding the

internal controls available towards identification of contract

where the performance obligations are satisfied over the

period of time.

(i) Selected the sample of continuing and existing contracts and tested the effectiveness of the controls towards cost incurred and estimated costs.

(ii) Carried out test of internal controls and also the substantive procedures in determining the estimates made to complete contract.

(iii) Verified the purchase order issued for satisfying the performance obligation and identified those remaining costs which are to be incurred to satisfy the balance performance obligations.

(iv) Verified the internal controls towards identification of costs incurred towards the concerned contracts and ensured that only the related cost of the contract is considered.

(v) Discussed with the management and analysed that the cost estimated is towards the work that are pending to be carried out for completion and satisfaction of the performance obligations.

(vi) Performed analytical procedures and test of details for reasonableness of cost incurred and estimated cost to be incurred.

Information Other than the Standalone Financial Statements and Auditor''s Report Thereon

The company''s Board of Directors is responsible for the preparation of the other information. The other information comprises the Board''s Report including its annexures, Corporate Governance and shareholders information but does not include the standalone Financial Statements and our auditor''s 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 during the course of our 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 Company''s Board of Directors is responsible for the matters stated in section 134(5) of the Companies Act, 2013 with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance, total comprehensive income, changes in equity 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 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 standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the standalone financial statements, management is responsible for assessing the Company''s 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.

The Board of Directors are also responsible for overseeing the Company''s financial reporting process.

Auditor''s Responsibility for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor''s 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 standalone 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 standalone 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 with reference to standalone financial statements 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 the management.

• Conclude on the appropriateness of management''s 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 Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor''s report to the related disclosures in the standalone 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 auditor''s 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 standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the standalone financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the financial statements.

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 deficiencies 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 standalone financial statements of the current period and are therefore the key

audit matters. We describe these matters in our auditor''s 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.

We have considered the audit report of 6 branches audited by branch auditor in forming our opinion on the standalone financial statements.

Other matter

We did not audit the financial statements of six branches included in the standalone financial statements of the Company whose financial statements reflect total assets of Rs. 5,90,774 lakhs as at 31 March, 2021 and total revenues of Rs. 4,30,633 lakhs for the year ended on that date, as considered in the standalone financial statements. The financial statements of these branches have been audited by the branch auditors appointed by Comptroller & Auditor General of India, whose reports have been furnished to us, and our opinion in so far as it relates to the amounts and disclosures included in respect of these branches, is based solely on the report of such branch auditors.

Our opinion is not modified in respect of the above matter. Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s 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.

2. 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. The audit of the accounts of Bangalore complex, Hyderabad and Chennai units and Corporate Office was carried out by us, whilst the audit of Ghaziabad, Panchkula, Kotdwara, Pune, Navi

Mumbai and Machilipatnam units were audited by the respective branch auditors. The report of the branch auditors has been considered by us while preparing our report. In case of New York, Singapore and other offices, not visited by us, the returns/records received from the said offices have been verified and found to be adequate for the purpose of our audit.

c) The reports on the accounts of the branch offices of the Company audited under Section 143(8) of the Act by branch auditors (in respect of Ghaziabad, Panchkula, Kotdwara, Pune, Navi Mumbai and Machilipatnam units) have been sent to us and have been properly dealt with by us in preparing this report.

d) The Balance Sheet, the Statement of Profit and Loss including Other Comprehensive Income, Statement of Changes in Equity and Statement of Cash Flow dealt with by this Report are in agreement with the books of accounts of the Company and with the Returns received from the offices not visited by us.

e) In our opinion, the aforesaid standalone financial statements comply with the Indian Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

f) The company being a Government Company, the provisions of Section 164(2) of the Companies Act, 2013 in respect of disqualification of Directors are not applicable.

g) With respect to the adequacy of the internal financial controls with reference to standalone financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure B".

h) With respect to the other matters to be included in the Auditor''s Report in accordance with the requirement of Section 197(16) of the Companies Act, 2013 as amended:

The company being a Government Company, the provisions in relation to payment of managerial remuneration as mandated by Section 197 read with Schedule V to the Companies Act, 2013 is not applicable.

i) With respect to the other matters to be included in the Auditor''s 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 the impact of pending litigations on its financial position in its standalone financial statements as at 31 March, 2021 -Refer Note 30(8) to the standalone financial statements.

ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long term contracts- Refer Note No.21 to the standalone financial statements. The Company do not have any derivative contracts - Refer Note No 30(15) to the standalone financial statements.

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

3. As required by Section 143(5) of the Act, we have considered the directions issued by the Comptroller and Auditor General of India, the action taken thereon and its impact on the standalone financial statements of the Company in "Annexure C".

For Suri & Co.

Chartered Accountants Firm Registration No. 004283S

Natarajan V

Partner

Bengaluru Membership No.223118

17.08.2021 UDIN: 21223118AAAAEK5575


Mar 31, 2019

INDEPENDENT AUDITOR''S REPORT

TO THE MEMBERS OF BHARAT ELECTRONICS LIMITED

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the accompanying standalone financial statements of Bharat Electronics Limited

("the Company"), which comprise the Balance Sheet as at 31 March, 2019, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows for the year then ended, and notes to financial statements, including a summary of significant accounting policies and other explanatory information, in which are included the Returns for the year ended on that date audited by the branch auditors of the company''s branches at Ghaziabad, Panchkula, Kotdwara, Pune, Navi Mumbai and Machilipatnam.

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 ("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 31 March, 2019 and its profit (including other comprehensive income), the changes in equity 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 Auditor''s Responsibilities for the Audit of the Standalone 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 (ICAI) together with the ethical requirements that are relevant to our audit of the standalone 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 on the standalone financial statements.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements of the current period. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.

Sr. No.

Key Audit Matter

Auditor''s Response

1

Accuracy of recognition, measurement, presentation and disclosure of revenues and related balances towards adoption of Ind AS 115- Revenue from Contracts with Customers.

The application of this new standard involves the assessment towards identification of the distinct performance obligations, determination of the transaction price for each of the identified performance obligation, the judgements used for determining the satisfaction of those performance obligations over time or at a point in time.

Principal Audit Procedures

We discussed with the management to understand the impact on the adoption of this new accounting standard. Our audit procedures involve identification of internal controls and their operating effectiveness towards application of this standard. We have also carried out the substantive testing of the transactions.

(i) Selected the sample of continuing contracts and the new contracts and identified the performance obligations and compared the same with the performance obligation identified by the company.

Sr. No.

Key Audit Matter

Auditor''s Response

Additionally, the application of the standard also involves judgements used in identifying the amount of cost incurred to obtain or fulfil a contract and the disclosure of the periods over which performance obligations are satisfied over time subsequent to the reporting date.

(Refer Note no. 23 to the standalone financial statement and S.No. 5 to the Accounting policies)

(ii) Verified the basis of allocation of transaction price to the identified performance obligation if not specifically mentioned in the contract.

(iii) Identified the basis to be considered to determine the satisfaction of performance obligation and compared the same with the judgements used by the Company in determining the satisfaction of performance obligation over time or at a point in time.

(iv) Verified the appropriate evidences considered for determining the satisfaction of performance obligations towards transfer of promised goods or services.

(v) In respect of contracts where the satisfaction of performance obligation over time, we have verified the method identified by the company for recognising the revenue and ensured that those methods are appropriate consideringthe nature of the performance obligation.

(vi) Verified judgements used by the company to identify those costs that are incurred to obtain or fulfil the contract and period over this those cost will be amortised.

(vii) Reviewed the Plan available with the company towards satisfaction of remaining performance obligations identified based on the delivery terms defined in the customer order to prepare the disclosure relating to periods over which remaining unsatisfied or partially satisfied performance obligations will be satisfied subsequent to the reporting date.

2

Critical Estimates in respect of Onerous Contracts.

Estimation of unavoidable costs for meeting or satisfaction of performance obligations in respect of contracts that have become onerous is critical. The estimate has inherent limitation of certainty towards estimating the unavoidable costs to complete the performance obligations.

(Refer Note no. 21 to the standalone financial statement and S.No. 23 to the Accounting policies)

Principal Audit Procedures

We have enquired with the management regarding the internal controls available towards identification of onerous contracts and cost to fulfil those contracts.

(i) Selected the sample of continuing and existing contract and tested the effectiveness of the controls towards cost incurred and estimated costs of fulfilling the contract.

(ii) Carried out test of internal controls and also the substantive procedures in determining the estimates for unavoidable costs towards onerous contracts.

Sr. No.

Key Audit Matter

Auditor''s Response

(iii) Verified and understood the internal controls available in estimating the basis for arriving the unavoidable costs for meeting the performance obligations in respect of onerous contracts.

(iv) Verified the purchase order issued for satisfying the performance and identified those remaining cost which are to be incurred to satisfy the remaining performance obligations.

(v) Verified the internal controls towards identification of cost incurred towards the concerned contracts and

ensured that only the related cost of the contract is recorded.

(vi) Verified the possible reductions in the contract price towards the balance performance obligations in respect of penalties.

(vii) Performed analytical procedures and test of details for reasonableness of cost incurred and estimated cost to be incurred.

3

Critical estimates made in respect of expected cost to complete the contract for performance obligation over time. The estimate has inherent limitation of certainty towards estimating the cost to satisfy the performance obligation.

Principal Audit Procedures

We have enquired with the management regarding the internal controls available towards identification of contract where the performance obligation are satisfied over the period of time.

(Refer Note no. 23 to the standalone financial statement and S.No. 5 to the Accounting policies)

(i) Selected the sample contracts of continuing and existing contract and tested the effectiveness of the controls towards cost incurred and estimated costs.

(ii) Carried out test of internal controls and also the substantive procedures in determining the estimates made to complete contract.

(iii) Verified the purchase order issued for satisfying the performance and identified those remaining cost which are to be incurred to satisfy the balance performance obligations.

(iv) Verified the internal controls towards identification of cost incurred towards the concerned contracts and ensured that only the related cost of the contract is considered.

(v) Discussed with the management and analysed that the cost estimated is towards the work that are pending to be carried out for completion and satisfaction of the performance obligations.

(vi) Performed analytical procedures and test of details for reasonableness of cost incurred and estimated cost to be incurred.

Information Other than the Standalone Financial Statements and Auditor''s Report Thereon

The Company''s Board of Directors is responsible for the preparation of the other information. The other information comprises the Board''s Report including its annexures. Corporate Governance and shareholders information but does not include the standalone Financial Statements and our auditor''s 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 during the course of our 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 Company''s Board of Directors is responsible for the matters stated in section 134(5) of the Companies Act, 2013 with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance, total comprehensive income, changes in equity 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 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 standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the standalone financial statements, management is responsible for assessing the Company''s 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.

The Board of Directors are also responsible for overseeing the Company''s financial reporting process.

Auditor''s Responsibility for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor''s 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 standalone 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 standalone 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 the management.

• Conclude on the appropriateness of management''s 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 Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor''s report to the related disclosures in the standalone 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 auditor''s 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 standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the standalone financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the financial statements.

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 deficiencies 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 standalone financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor''s 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.

We have considered the audit report of 6 branches audited by branch auditors in forming our opinion on the standalone financial statements.

Other Matter

We did not audit the financial statements of six branches included in the standalone financial statements of the Company whose financial statements reflect total assets of Rs. 6,55,945 lakhs as at 31 March 2019 and total revenues of Rs. 4,58,862 lakhs for the year ended on that date, as considered in the standalone financial statements. The financial statements of these branches have been audited by the branch auditors appointed by Comptroller & Auditor General of India, whose reports have been furnished to us, and our opinion in so far as it relates to the amounts and disclosures included in respect of these branches, is based solely on the report of such branch auditors.

Our opinion is not modified in respect of the above matter.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s 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.

2. 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. The audit of the accounts of Bangalore complex, Hyderabad and Chennai units and Corporate office were carried out by us, whilst the audit of Ghaziabad, Panchkula, Kotdwara, Pune, Navi Mumbai and Machilipatnam units were audited by the respective branch auditors. The report of

the branch auditors have been considered by us while preparing our report. In case of New York, Singapore and other offices, not visited by us, the returns/records received from the said offices have been verified and found to be adequate for the purpose of our audit.

c) The reports on the accounts of the branch offices of the Company audited under Section 143(8) of the Act by branch auditors (in respect of Ghaziabad, Panchkula, Kotdwara, Pune, Navi Mumbai and Machilipatnam units) have been sent to us and have been properly dealt with by us in preparing this report.

d) The Balance Sheet, the Statement of Profit and Loss including Other Comprehensive Income, Statement of Changes in Equity and Statement of Cash Flow dealt with by this Report are in agreement with the books of accounts of the Company and with the Returns received from the offices not visited by us.

e) In our opinion, the aforesaid standalone financial statements comply with the Indian Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

f) The Company being a Government Company, the provisions of Section 164(2) of the Companies Act, 2013 in respect of disqualification of Directors are not applicable.

g) 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".

h) With respect to the other matters to be included in the Auditor''s Report in accordance with the requirement of Section 197(16) of the Companies Act, 2013 as amended :

In our opinion, the Company being a Government Company, the provisions in relation to payment of

managerial remuneration as mandated by Section 197 read with Schedule V to the Companies Act, 2013 is not applicable.

i) With respect to the other matters to be included in the Auditor''s 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 the impact of pending litigations on its financial position in its standalone financial statements as at 31 March 2019 -Refer Note 30(8) to the standalone financial statements.

ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long term contracts- Refer Note No.21 to the standalone financial statements. The Company do not have any derivative contracts - Refer Note No 30(16) to the standalone financial statements.

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

3. As required by Section 143(5) of the Act, we have considered the directions issued by the Comptroller and Auditor General of India, the action taken there on and its impact on the standalone financial statements of the Company in "Annexure C".

For Suri & Co.

Chartered Accountants

Firm Registration No. 004283S

Natarajan V

Bengaluru

Partner

29 May 2019

Membership No. 223118

ANNEXURE A TO THE INDEPENDENT AUDITOR''S REPORT

(Referred to in our report of even date)

The Annexure referred to in Independent Auditors'' Report to the members of the company on the standalone financial statements for the year ended 31st March, 2019, we report that:

i) a) The Company has generally maintained proper records showing full particulars including quantitative details and situations of its fixed assets.

b) As explained to us and based on our examination of records, the Management has generally carried out the physical verification of a portion of the Fixed Assets in accordance with their phased programme of physical verification, which is considered reasonable, having regard to the size of the Company and nature of its fixed assets. In accordance with the programme, certain fixed assets were verified during the year and discrepancies, if any, were properly dealt with on such verification during the year. As informed to us, no material discrepancies have been noticed on such verification during the year.

c) As explained to us and based on our examination of records, the title deeds of immovable properties are held in the name of the company, except for those which are mentioned in Note No.1(xvi) (d),(f),(h) & Note No.3(xiii) to the standalone financial statements.

ii) The Physical verification of inventory (excluding stock with third parties and material in transit) have been conducted at reasonable intervals by the company. We were informed that, no material discrepancies have been noticed on such verification. The discrepancies noticed on such verification have been properly dealt in the books of accounts.

In respect of materials with sub-contractors, confirmation have been generally received and reconciled with the book records. However, in case of such items for which no confirmations have been received, which are not significant, the Company has dealt with the same by making adequate provision in the books of accounts.

iii) According to the information and explanations given to us, the Company has granted unsecured loans to subsidiary company covered in the register maintained under section 189 of the Companies Act, 2013 ("Act"). The company has not granted loans to firms or other parties covered in the register maintained under section 189 of the Act.

(a) According to the information and explanation given to us and based on the audit procedures conducted by us, we are of the opinion that the terms and conditions of loans granted by the Company to it''s subsidiary covered in the register maintained under section 189 of the Companies Act, 2013 are not, prima facie, prejudicial to the Company''s Interest.

(b) According to the information and explanation given to us, the schedule of repayment of principal and payment of interest has been stipulated and repayments are regular.

(c) There are no overdue amounts in respect of the loan granted to the subsidiary Company listed in the register maintained under section 189 of the Act.

iv) The Company being a Government Company, the provisions of section 185 and 186 of the Companies Act, 2013 in respect of loans, investments, guarantees, and security, are not applicable.

v) According to the information and explanations given to us, the Company has not accepted any deposit from public in the current year as per the directives issued by the Reserve Bank of India and the provisions of sections 73 to 76 or any other relevant provisions of the Companies Act and the rules framed there under. We were informed that no order has been passed by Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

All deposits have matured and settled except for ? 36.95 lakhs, out of which Rs. 36.50 lakhs is retained as per Garnishee Order of Lokayukta, Bengaluru and the balance of Rs. 0.45 lakhs though matured is unpaid due to legal issues.

vi) We have broadly reviewed the books of account relating to materials, labour and other items of cost maintained by the Company pursuant to the Companies (Cost Records and Audit) Rules, 2014 prescribed by the Central Government for the maintenance of cost records under section 148 (1) (d) of the Companies Act, 2013 and we are of the opinion that prima facie, the prescribed cost accounts and records have been made and maintained. However, we have not carried out any detailed examination of the cost records with a view to determine whether they are accurate or complete.

vii) a) Based on our examination of books of account and according to the information and explanations given to us, in our opinion, the Company is regular in depositing undisputed statutory dues including Provident Fund, Income tax. Goods and Services Tax, Service Tax, duty of customs and other statutory dues applicable to the appropriate authority. No undisputed statutory dues were outstanding as at 31 March 2019 for a period of more than six months from the date they became payable.

b) According to the information and explanation given and records provided to us, income tax, sales tax, service tax and other taxes which have not been deposited as at 31 March, 2019, on account of dispute are as under:

Name of the Statute

Nature of dues

Financial year to which amount relates

Amount (Rs. in Lakhs)

Forum where dispute is pending

Income Tax Act

Disallowances as per Assessment orders

2008-09,2009-10, 2011-12 to 2013-14, 2015-16

2528.23

Commissioner of Income Tax (Appeals)

Chapter V of Finance Act, 1994

Service Tax

1997-98 to 2000-01, 2005-06 to 2011-12, 2014-15 and 2015-16

1379.06

Customs, Excise and Service Tax Appellate Tribunal (CESTAT)

Chapter V of Finance Act, 1994

Service Tax

2010-11 to 2017-18

558.94

Commissioner of GST and Central Excise

Central Excise Act

MODVAT credit

1991-92

29.69

Commissioner Appeals

Central Excise Act

Interest on Excise Duty

2011 -12 & 2012-13

243.87

Customs, Excise and Service Tax Appellate Tribunal (CESTAT)

Customs Act

Customs Duty

2012-13

25.45

Commissioner of Customs

Customs Act

Customs Duty

2009-10 to 2012-13

40.00

Assistant commissioner of customs

Sales Tax Act, Bihar

Disputed Tax under Bihar Sales Tax

1995-96 to 1997-98

66.44

Commissioner of Commercial Taxes (Appeals), Chirkunda, Bihar

CST Act,1956/ Karnataka VAT Act,2003

Sales Tax

2010-11,2012-13 to 2015-16

114.58

DCCT (6.1), DCCT(6.2)and DCCT (6.3)

Andhra Pradesh State VAT Act

Sales Tax

2009-10

21.66

Commercial Tax officer, Nampally, Hyderabad

Tamil Nadu General Sales Tax Act

Sales Tax

2007-08 to 2009-10

48.00

Deputy Commercial Tax Officer

Vacant Land Tax

Vacant Land Tax

1998-99 to 2003-04

10.35

Director, Directorate of Town Panchayat, Chennai

Urban Land Tax

Urban Land Tax

1984-85 to 2002-03

41.44

Principal commissioner and commissioner of land Reforms

Central Sales Tax Act

Sales tax

1980-81

0.94

Deputy Commissioner (Appeals)

Central Sales Tax Act

Sales tax

1989-90

0.35

Assistant Commissioner (Appeals)

Uttar Pradesh Sales Tax Act, 1948

Acceptance of duplicate of 3D (1)

1991-92

0.20

Deputy Commissioner (Appeals)

ESI Act, 1948

ESI Contribution, Interest & Cost of Recovery

1992-1993, 1998-2001

30.43

Hon''ble High Court of Andhra Pradesh

ESI Act,1948

Interest & Damages towards late deposit

2000-01

3.52

Hon''ble High Court of Punjab & Haryana, Chandigarh

Uttarakhand value Added Tax Act, 2005

Trade Tax and Interest

2001-02

220.08

Hon''ble High Court of Uttarakhand, Nainital

Local body Tax

Local body tax

2016-17

41.43

Assistant commissioner of Panvel Muncipal corporation

Sales Tax

Sales tax

2008-09

58.85

Rajasthan Tax Board

Total disputed amount

5463.51

Total amount paid under protest pending final orders

739.57

viii) Based on our examination of books of account and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to financial institution or Bank or Government or debenture holders.

ix) To the best of our knowledge and according to the information and explanation given to us, term loans availed by the Company were prima facie applied by the Company during the year for the purpose for which the loans were obtained and the Company did not raise any money by way of Initial Public Offer or further public offer (including debt instruments) during the year.

x) During the course of our examination of the books and records and according to the information and explanation given to us, we have neither come across any instance of material fraud on or by the Company by its officers or employees noticed or reported during the year nor we have been informed of any such case by the management.

xi) The Company being a Government Company, the provisions in relation to disbursement of managerial remuneration as mandated by section 197 read with schedule V to the Companies Act, 2013 is not applicable to the Company.

xii) The Company is not a Nidhi Company. Accordingly, paragraph 3(xii) of the order is not applicable.

xiii) On the basis of examination of records of the Company and information and explanations given

to us, all transactions with the related parties are in compliance with sections 177 and 188 of Companies Act, 2013 where applicable and the details of such transactions have been disclosed in the standalone financial statements as required by the applicable Indian Accounting Standards.

xiv) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the period under review and hence reporting under clause 3 (xiv) of the Order is not applicable to the Company.

xv) According to the information and explanations given to us and based on our examination of the records, the Company has not entered into any non-cash transactions with directors or persons connected with him and therefore, the provisions of section 192 of the Companies Act, 2013 are not applicable.

xvi) The Company is not required to be registered under section 45-IA of Reserve Bank of India Act, 1934.

For Suri & Co.

Chartered Accountants

Firm Registration No. 004283S

Natarajan V

Bengaluru

Partner

29 May 2019

Membership No. 223118

ANNEXURE B TO THE INDEPENDENT AUDITOR''S REPORT

(Referred to in our report 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 BHARAT ELECTRONICS LIMITED, ("the Company") as of 31 March, 2019 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.

Management''s Responsibility for Internal Financial Controls

The Company''s management 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 controls stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (ICAI). 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, including adherence to Company''s policies, 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 Company''s 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") and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate 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 on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, 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 Company''s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A Company''s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of Ind AS financial statements for external purposes in accordance with generally accepted accounting principles. A Company''s internal financial control 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 statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

(3) Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company''s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations 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 control over financial reporting may become inadequate because of changes 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 31 March, 2019, 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.

For Suri & Co.

Chartered Accountants

Firm Registration No. 004283S

Natarajan V

Bengaluru

Partner

29 May 2019

Membership No. 223118

ANNEXURE C TO THE INDEPENDENT AUDITOR''S REPORT

(Referred to in our report of even date)

Directions indicating the areas to be examined by the Statutory Auditors during the course of audit of annual accounts of Bharat Electronics Limited, for the year 2018-19 issued by the Comptroller & Auditor General of India under Section 143(5) of the Companies Act, 2013.

SI. No

Direction/Sub-direction

Action Taken

Impact on Financial Statement

1

Whether the company has system in place to process all the accounting transactions through IT system? If yes, the implications of processing of accounting transactions outside IT system on the integrity of the accounts along with the financial implications, if any, may be stated.

Yes. The company process all the accounting transactions on a day to day basis through IT system.

Nil

2

Whether there is any restructuring of an existing loan or cases of waiver/write off of debts/loans/ interest etc. made by a lender to the company due to company''s inability to repay the loan? If yes, the financial impact may be stated.

Based on the verification of records and according to the information and explanations provided to us, there are no restructuring of an existing loan (or) waiver/ write off of debts/loans/interest etc, made by the lender due to company''s inability to pay.

Nil

3

Whether funds received/receivable for specific schemes from central/state agencies were properly accounted for/utilized as per terms and conditions? List the cases of deviation.

Yes. According to the information and explanations provided to us and based on the verification of records, the funds received towards the specific schemes from central/state agencies have been appropriately accounted and utilized for the purpose for which it is received.

Nil

COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA UNDER SECTION 143(6)(b) OF THE COMPANIES ACT, 2013 ON THE FINANCIAL STATEMENTS OF M/S. BHARAT ELECTRONICS LIMITED, BENGALURU FOR THE YEAR ENDED 31 MARCH 2019

The preparation of financial statements of M/s. Bharat Electronics Limited, Bengaluru for the year ended 31 March 2019 in accordance with the financial reporting framework prescribed under the Companies Act, 2013 (Act) is the responsibility of the management of the company. The statutory auditor appointed by the Comptroller and Auditor General of India under section 139(5) of the Act is responsible for expressing opinion on the financial statements under section 143 of the Act based on independent audit in accordance with the standards on auditing prescribed under section 143(10) of the Act. This is stated to have been done by them vide their Audit Report dated 29 May 2019.

I, on behalf of the Comptroller and Auditor General of India, have conducted a supplementary audit of the financial statements of M/s. Bharat Electronics Limited, Bengaluru for the year ended 31 March 2019 under section 143(6)(a) of the Act. This supplementary audit has been carried out independently without access to the working papers of the statutory auditor and is limited primarily to inquiries of the statutory auditor, company personnel and a selective examination of some of the accounting records. On the basis of my supplementary audit nothing significant has come to my knowledge which would give rise to any comment upon or supplement to statutory auditors'' report under section 143 (6) (b) of the Act.

For and on behalf of the

Comptroller & Auditor General of India

(Santosh Kumar)

Principal Director of Commercial Audit

Place: Bengaluru

Date: 09 July 2019


Mar 31, 2018

Report on the Standalone Ind AS financial statements

We have audited the accompanying standalone Ind AS financial statements of BHARAT ELECTRONICS LIMITED (’the Company’’), which comprise the Balance Sheet as at 31 March 2018, and the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows for the year then ended and a summary of the significant accounting policies and other explanatory information, in which are incorporated the Returns for the year ended on that date audited by the branch auditors of the company’s branches at Ghaziabad, Panchkula, Kotdwara, Pune, Navi Mumbai and Machilipatnam.

Management’s Responsibility for the Standalone Ind AS Financial Statements

The Company’s 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 standalone Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Act, read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015, as amended.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding 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 standalone Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these standalone Ind AS financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.

We conducted our audit of the standalone Ind AS financial statements in accordance with the Standards on Auditing specified under Section 143 (10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the standalone Ind AS financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone Ind AS financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the standalone Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company’s preparation of the standalone Ind AS financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company’s Directors, as well as evaluating the overall presentation of the standalone Ind AS financial statements.

We believe that the audit evidence we have obtained and the audit evidence obtained by the other auditors in terms of their reports referred to in sub-paragraph (1) of the other matters paragraph below, is sufficient and appropriate to provide a basis for our audit opinion on the standalone Ind AS financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone Ind AS 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 including the Ind AS, of the state of affairs of the Company as at 31 March 2018, and its profit (including other comprehensive income), the changes in equity and its cash flows for the year ended on that date.

Other Matters

(1) We did not audit the Ind AS financial statements of six branches included in the standalone Ind AS financial statements of the company whose financial statements reflect total assets of Rs.562,962 Lakhs as at 31 March 2018 and total revenues of Rs.431,746 Lakhs for the year ended on that date, as considered in the standalone Ind AS financial statements. The financial statements of these branches have been audited by the branch auditors appointed by Comptroller & Auditor General of India, whose reports have been furnished to us, and our opinion in so far as it relates to the amounts and disclosures included in respect of these branches, is based solely on the report of such branch auditors.

Our opinion is not modified in respect of the above matter.

Report on Other Legal and Regulatory Requirements

(1) As required by the Companies (Auditor’s Report) Order 2016 Cthe Order’), issued by the Central Government of India in terms of sub-section 11 of section 143 of the Act, we give in the Annexure A, a statement on the matters specified in paragraphs 3 and 4 of the said Order.

(2) 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 accounts as required by law have been kept by the company so far as it appears from our examination of those books. The audit of the accounts of Bengaluru, Hyderabad and Chennai units and Corporate office were carried out by us, whilst the audit of Ghaziabad, Panchkula, Kotdwara, Pune, Navi Mumbai and Machilipatnam were audited by the respective branch auditors. The report of the branch auditors have been considered by us while preparing our report. In case of New York, Singapore and other offices, not visited by us, the returns / records received from the said offices have been verified and found to be adequate for the purpose of our audit.

(c) The reports on the accounts of the branch offices of the Company audited under Section 143 (8) of the Act by Branch auditors (in respect of Ghaziabad, Panchkula, Kotdwara, Pune, Navi Mumbai and Machilipatnam Units) have been sent to us and have been properly dealt with by us in preparing this report.

(d) The Balance Sheet, the Statement of Profit and Loss (including Other Comprehensive Income), Statement of Changes in Equity and the Statement of Cash Flow dealt with by this Report are in agreement with the books of account of the Company and with the Returns received from the offices not visited by us.

(e) In our opinion, the aforesaid standalone Ind AS financial statements comply with the Indian Accounting Standards specified under Section 133 of the Act.

(f) The company being a government company, the Provisions of Section 164(2) of Companies Act 2013, in respect of director’s disqualification, are not applicable.

(g) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer our separate report in Annexure B;

(h) With respect to the other matters to be included in the Auditor’s 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 the impact of pending litigations on its financial position in its standalone Ind AS financial statements as at 31 March 2018 - Refer Note No.30(9) to the standalone Ind AS financial statements.

(ii) The company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long term contracts - Refer Note No. 21 to the standalone Ind AS financial statements. The company do not have any derivative contracts -Refer Note No.30(17) to the standalone Ind AS financial statements.

(iii) There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection fund by the company.

(3) As required by Section 143(5) of the Act, we have considered the directions issued by the Comptroller and Auditor General of India, the action taken thereon and its impact on the Standalone Ind AS financial statements of the company (Annexure C).

The Annexure referred to in Independent Auditors’ Report to the members of the company on the standalone Ind AS financial statements for the year ended 31 March 2018, we report that :

(i) (a) The Company has generally maintained proper records showing full particulars including quantitative details and situations of its fixed assets.

(b) As explained to us and based on our examination of records, the Management has generally carried out the physical verification of a portion of the Fixed Assets in accordance with their phased programme of physical verification, which is considered reasonable, having regard to the size of the Company and nature of its fixed assets. In accordance with the programme, certain fixed assets were verified during the year and discrepancies, if any, were properly dealt with on such verification during the year. As informed to us, no material discrepancies have been noticed on such verification during the year.

(c) As explained to us and based on our examination of records, the title deeds of immovable properties are held in the name of the company, except for those which are mentioned in Note No.1(xvi) (a&d) & Note No.3(xiii) to the standalone Ind AS financial statements.

(ii) The Physical verification of inventory (excluding stock with third parties and material in transit) have been conducted at reasonable intervals by the company. We were informed that, no material discrepancies have been noticed on such verification. The discrepancies noticed on such verification have been properly dealt in the books of accounts.

In respect of materials with sub-contractors, confirmation have been generally received and reconciled with the book records. However, in case of such items for which no confirmations have been received, which are not significant, the company has dealt with the same by making adequate provision in the books of accounts.

(iii) According to the information and explanations given to us, the Company has granted unsecured loans to subsidiary company covered in the register maintained under section 189 of the Companies Act, 2013(“Act”). The company has not granted loans to firms or other parties covered in the register maintained under section 189 of the Act.

(a) According to the information and explanation given to us and based on the audit procedures conducted by us, we are of the opinion that the terms and conditions of loans granted by the company to it’s subsidiary covered in the register maintained under section 189 of the Companies Act, 2013 are not, prima facie, prejudicial to the company’s interest.

(b) According to the information and explanation given to us, the schedule of repayment of principal and payment of interest has been stipulated and repayments are regular.

(c) There are no overdue amounts in respect of the loan granted to the subsidiary company listed in the register maintained under section 189 of the Act.

(iv) The company being a Government company, the provisions of section 185 and 186 of the Companies Act, 2013 in respect of loans, investments, guarantees, and security, are not applicable.

(v) According to the information and explanations given to us, the company has not accepted any deposit from public in the current year as per the directives issued by the Reserve Bank of India and the provisions of sections 73 to 76 or any other relevant provisions of the Companies Act and the rules framed there under. We were informed that no order has been passed by Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

All deposits have matured and settled except for Rs.36.95 Lakhs, out of which Rs.36.50 Lakhs is retained as per Garnishee Order of Lokayukta, Bengaluru and the balance of Rs.0.45 Lakhs though matured is unpaid due to legal issues.

(vi) We have broadly reviewed the books of account relating to materials, labour and other items of cost maintained by the Company pursuant to the Companies (Cost Records and Audit) Rules, 2014 prescribed by the Central Government for the maintenance of cost records under section 148 (1) (d) of the Companies Act, 2013 and we are of the opinion that prima facie, the prescribed cost accounts and records have been made and maintained. However, we have not carried out any detailed examination of the cost records with a view to determine whether they are accurate or complete.

(vii) (a) Based on our examination of books of account and according to the information and explanations given to us, in our opinion, the company is regular in depositing undisputed statutory dues including Provident Fund, Income tax, Goods and Services Tax, Sales tax, Service Tax, duty of customs, duty of excise, Value Added Tax, Cess and other statutory dues applicable to the appropriate authority. No undisputed statutory dues were outstanding as at 31 March 2018 for a period of more than six months from the date they became payable.

(b) According to the information and explanation given and records provided to us, income tax, sales tax, service tax and other taxes which have not been deposited as at 31 March 2018, on account of dispute are as under :

(Rs. in Lakhs)

Name of the Statute

Nature of dues

Financial year to which amount relates

Amount

Forum where dispute is pending

Income Tax Act

Income Tax

2007-08 to 2017-18

137.99

TDS Circle, LTU

Income Tax Act

Disallowances as per Assessment orders

2008-09, 2009-10, 2011-12 to 2013-14

2461.67

Various levels of appellate authorities, Bengaluru

Chapter V of Finance Act,1994

Service Tax

2007-08, 2009-10 to 2011-12

397.08

Customs, Excise and Service Tax Appellate Tribunal(CESTAT)

Chapter V of Finance Act, 1994

Service Tax

2010-11 to 2015-16

688.96

Commissioner of GST and Central Excise

CST

Sales Tax dues & benefit of concessional Form C, Benefit of concessional Form D not allowed

1980-81, 1989-90

12.34

Case remanded to Deputy Commissioner(Appeals)

CST

CST

2005-06 to 2007-08

1346.14

Sales Tax Appellate Tribunal

CST

Acceptance of duplicate copy of 3D(1)

1991-92

1.51

Appeal filed with DC (Appeals) for acceptance of duplicate copy of 3D(1)

CST Act 1956/ Karnataka VAT Act, 2003

Sales Tax

2008-09, 2010-11 to 2014-15

443.64

DCCT (6.1), DCCT (6.2) and DCCT (6.3)

CST Act 1956/ Karnataka VAT Act, 2003

Sales Tax

2008-09 to 2013-14 and 2015-16

85,079.37

Joint Commissioner of Commercial Taxes (Appeal 6)

Andhra Pradesh State VAT Act

Sales Tax

2009-10

21.66

Commercial Tax officer, Nampally, Hyderabad

Customs Act

Customs Duty

2009-10 to 2012-13

123.22

Assistant Commissioner of customs

Customs Act

Customs Duty

2012-13

25.45

Commissioner of Customs

ESI Act,1948

ESI contribution, Interest & Cost of Recovery

1992-93, 1998-2001

30.43

Hontile High Court of Andhra Pradesh

ESI Act,1948

Interest & Damages towards late deposit

1996-97

3.52

Hontile High Court of Punjab & Haryana (Chandigarh)

Central Excise Act

MODVAT credit, Excise Duty

1991-92

29.69

Commissioner Appeals

Central Excise Act

Interest on Excise Duty

2011-12 & 2012-13

243.87

Customs, Excise and Service Tax Appellate Tribunal(CESTAT)

Vacant Land Tax

Vacant Land Tax

1998-99 to 2003-04

10.35

Director, Directorate of Town Panchayat, Chennai

Tamil Nadu General Sales Tax Act

Sales Tax

2007-08 to 2009-10

36.52

Deputy Commercial Tax Officer

Sales Tax

Sales Tax

2008-09

58.85

Rajasthan Tax Board

Sales Tax Act, Bihar

Disputed Tax under Bihar Sales Tax

1995-96 to 1997-98

66.44

Commissioner of Commercial Taxes(Appeals), Chirkunda, Bihar for 1995-96, 1996-97

Urban Land Tax

Urban Land Tax

1984-85 to 2002-03

41.44

Principal commissioner and commissioner of land Reforms

Trade Tax Dues

Rate of Taxes

2000-01 to 2001-02

361.16

Hon’ble High Court of Uttarakhand, Nainital

Total disputed amount

91,621.30

Total amount paid under protest pending final orders

10,084.12

(viii) Based on our examination of books of account and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to financial institution or Bank or Government or debenture holders.

(ix) To the best of our knowledge and according to the information and explanation given to us, term loans availed by the Company were prima facie applied by the Company during the year for the purpose for which the loans were obtained and the Company did not raise any money by way of Initial Public Offer or further public offer (including debt instruments) during the year.

(x) During the course of our examination of the books and records and according to the information and explanation given to us, we have neither come across any instance of material fraud on or by the company, noticed or reported during the year nor we have been informed of any such case by the management.

(xi) The company being a Government company, the provisions in relation to disbursement of managerial remuneration as mandated by section 197 read with Schedule V to the Companies Act, 2013 is not applicable to the company.

(xii) The Company is not a Nidhi Company. Accordingly, paragraph 3(xii) of the order is not applicable.

(xiii) On the basis of examination of records of the Company and information and explanations given to us, all transactions with the related parties are in compliance with sections 177 and 188 of Companies Act, 2013 where applicable and the details of such transactions have been disclosed in the Financial Statements as required by the applicable Indian accounting standards.

(xiv) According to the information and explanations given to us and based on our examination of the records of the company, the company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the period under review and hence reporting under clause 3(xiv) of the Order is not applicable to the company.

(xv) According to the information and explanations given to us and based on our examination of the records, the Company has not entered into any non-cash transactions with directors or persons connected with him and therefore, the provisions of section 192 of the Companies Act, 2013 are not applicable.

(xvi) The company is not required to be registered under section 45-IA of Reserve Bank of India.

For Suri & Co.

Chartered Accountants

Firm Registration No. 004283S

Natarajan V

Bengaluru Partner

29 May 2018 Membership No.223118


Mar 31, 2017

Report on the Standalone Ind AS financial statements

We have audited the accompanying standalone Ind AS financial statements of BHARAT ELECTRONICS LIMITED (“the Company”), which comprise the Balance Sheet as at 31 March 2017, the Statement of Profit and Loss (including Other Comprehensive Income) and, the Cash Flow Statement for the year then ended and the Statement of Changes in Equity for the year then ended, and a summary of the significant accounting policies and other explanatory information, in which are incorporated the Returns for the year ended on that date audited by the branch auditors of the Company’s branches at Ghaziabad, Panchkula, Kotdwara, Pune, Navi Mumbai and Machilipatnam.

Management’s Responsibility for the Standalone Ind AS financial statements

The Company’s Board of Directors are responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (“the Act”) with respect to the preparation of these standalone Ind AS financial statements that give a true and fair view of the state of affairs(financial position), profit or loss (financial performance including other comprehensive income), cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) prescribed under section 133 of the Companies Act, 2013 read with relevant rules issued thereunder.

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 standalone Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these standalone Ind AS financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.

We conducted our audit of the standalone Ind AS financial statements in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the standalone Ind AS financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone Ind AS financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the standalone Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company’s preparation of the standalone Ind AS financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company’s Directors, as well as evaluating the overall presentation of the standalone Ind AS financial statements.

We believe that the audit evidence obtained by us and the audit evidence obtained by the other auditors in terms of their reports referred to in sub-paragraph (b) of the Other Matters paragraph below, is sufficient and appropriate to provide a basis for our audit opinion on the standalone Ind AS financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone Ind AS 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, including the Ind AS,

a) in the case of the balance sheet, of the state of affairs (financial position) of the Company as at 31 March 2017,

b) in the case of the statement of profit and loss, of the profit (financial performance including other comprehensive income), for the year ended on that date; and

c) in the case of the cash flow statement and statement of changes in equity, of the cash flows and the changes in equity, for the year ended on that date.

Other Matters

a) The comparative financial information of the Company for the year ended 31 March 2016 and the transition date opening balance sheet as at 1 April 2015 included in these standalone Ind AS financial statements, are based on the previously issued statutory financial statements prepared in accordance with the Companies (Accounting Standards) Rules, 2006 audited by us whose report for the year ended 31 March 2016 and 31 March 2015 dated 15 July 2016 and 29 May 2015 respectively expressed an unmodified opinion on those standalone financial statements, as adjusted for the differences in the accounting principles adopted by the Company on transition to the Ind AS, which have been audited by us.

b) We did not audit the Ind AS financial statements of six branches included in the standalone Ind AS financial statements of the Company whose financial statements reflect total assets of Rs.393,636 lakhs as at 31 March 2017 and total income of Rs.337,985 lakhs for the year ended on that date, as considered in the standalone Ind AS financial statements. The financial statements of these branches have been audited by the branch auditors, appointed by Comptroller & Audit General of India, whose reports have been furnished to us, and our opinion in so far as it relates to the amounts and disclosures included in respect of these Units, is based solely on the report of such branch auditors.

c) We draw attention to Note No. 30(15) regarding disclosure of segment information as required under Ind AS 108.

Our opinion is not modified in respect of these matters.

Report on Other Legal and Regulatory Requirements

1. As required by Companies (Auditor’s Report) Order, 2016, issued by the Central Government of India in terms of sub-section 11 of section 143 of the Companies Act,2013 and based on the comments in the auditors’ report of the respective branches, we give in the annexure a statement on the matters specified in paragraph 3 and 4 of the Order to the extent applicable (Annexure I).

2. 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. The audit of the accounts of Bengaluru, Hyderabad and Chennai branches and Corporate Office has been carried out by us. In the case of New York and Singapore Offices and other offices not visited by us, and in respect of which the accounts are maintained at Corporate Office, the returns / records received from the said offices have been verified and found to be adequate for the purpose of our audit.

c) The reports on the accounts of the Unit’s offices of the Company audited under Section 143 (8) of the Act by Branch auditors (in respect of Ghaziabad, Panchkula, Kotdwara, Pune, Navi Mumbai and Machilipatnam Units) have been sent to us and have been properly dealt with, by us, in preparing this report.

d) The Balance Sheet, the Statement of Profit and Loss, the Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account of the Company.

e) In our opinion, the aforesaid standalone Ind AS financial statements comply with the Indian Accounting Standards specified under Section 133 of the Act read with relevant rule issued thereunder;

f) In accordance with Notification No. G.S.R 463(E), dated June 5th, 2015, the requirement of Section 164(2) of the Companies Act, 2013 is not applicable to Government Companies.

g) With respect to the adequacy of the internal financial controls over financial reporting of the Company’s financial statements and the operating effectiveness of such controls, a separate report is annexed (Annexure II).

h) With respect to the other matters to be included in the Auditor’s 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 the impact of pending litigations on its financial position in its standalone Ind AS financial statements as at 31 March 2017-Refer Note 30(10) to the standalone Ind AS financial statements.

ii. The Company has made requisite provisions for material foreseeable losses, for long-term contracts, including derivative contracts, if any, in the standalone Ind AS financial statements as required under the applicable laws or accounting standards - Refer Note 21 to the standalone Ind AS financial statements.

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

3. As required under Section 143 (5) of the Act, which is applicable to the Company, findings on the directions issued by Comptroller and Auditor General of India is annexed (Annexure III).

4. The Company has provided requisite disclosures in its standalone Ind AS financial statements as to holdings as well as dealings in Specified Bank Notes during the period from 8 November 2016 to 30 December 2016. Based on audit procedures and relying on the management representation, we report that the disclosures are in accordance with books of account maintained by the Company and as produced to us by the Management - Refer Note 30(19) to the standalone Ind AS financial statements.

ANNEXURE I TO THE INDEPENDENT AUDITOR’S REPORT


The Annexure referred to in paragraph 1 in Report on Other Legal and Regulatory Requirements of the Independent Auditor’s Report of even date to the members of the company on the standalone Ind AS financial statements for the year ended 31 March 2017, we report that:

(i) (a) The Company has generally maintained proper records showing full particulars including quantitative details and situation of its fixed assets.

(b) As explained to us and based on our examination of records, the Management has generally carried out the physical verification of a portion of the Fixed Assets in accordance with their phased programme of physical verification, which is considered reasonable, having regard to the size of the Company and nature of its fixed assets. In accordance with the programme, certain fixed assets were verified during the year and discrepancies, if any, were properly dealt with on such verification during the year. As informed to us, no material discrepancies have been noticed on such verification during the year.

(c) As explained to us and based on our examination of records, the title deeds of immovable properties are held in the name of the company. We draw your attention to Note No. 1 & 3 to the standalone Ind AS financial statements.

(ii) The raw materials, stores and spare parts, tools, work-in-progress, semi-finished goods and finished goods inventory (excluding stock with third parties and material in transit) have been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable and adequate in relation to the size of the Company and the nature of its business.

As informed to us, no material discrepancies have been noticed on such verification. The discrepancies noticed on verification between the physical stocks and the book records have been properly dealt in the books of account.

In respect of materials with sub-contractors, confirmations have been received generally and reconciled with the book records. However, in case of such items for which no confirmations have been received, which are not significant, the company has dealt with the same by making adequate provision in the books of account.

(iii) According to the information and explanations given to us, the Company has granted unsecured loans to one subsidiary company covered in the register maintained under section 189 of the Companies Act 2013 (“Act”). The Company has not granted loans to firms or other parties covered in the register maintained under Section 189 of the Act.

(a) According to the information and explanations given to us and based on the audit procedures conducted by us, we are of the opinion that the terms and conditions of loans granted by the company to it’s subsidiary covered in the register maintained under section 189 of the Companies Act, 2013 are not, prima facie, prejudicial to the company’s interest.

(b) In case of the loans granted to the Company listed in the register maintained under section 189 of the Act, the borrower has been regular in the payment of interest and repayment of principal as stipulated.

(c) There are no overdue amounts in respect of the loan granted to the subsidiary company listed in the register maintained under section 189 of the Act.

(iv) The provisions of section 185 and 186 of the Companies Act, 2013 in respect of loans, investments, guarantees, and security, are not applicable.

(v) According to the information and explanations given to us, the Company has not accepted any deposit from public in the current year as per the directives issued by the Reserve Bank of India and the provisions of sections 73 to 76 or any other relevant provisions of the Companies Act and the rules framed there under.

All deposits have matured and settled except for Rs.36.95 lakhs, out of which Rs.36.50 lakhs is retained as per Garnishee Order of Lokayukta, Bengaluru and the balance of Rs.0.45 lakhs though matured is unpaid due to legal issues.

In our opinion and according to the information and explanations given to us and based on our examination of records, the Company has complied with the provisions of Section 73 and other relevant provisions of the Act and the Companies (Acceptance of Deposits) Rules, 2014.

(vi) The Company pursuant to sub-section (1) of section 148 of the Companies Act, 2013 for the maintenance and audit of cost records prescribed by the Central Government has maintained cost records. We are of the opinion that, prima facie, the prescribed cost accounts and cost records have been made and maintained. However, we have not carried out any detailed examination of the cost records with a view to determine whether they are accurate or complete.

(vii) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company is regular in remittance of undisputed statutory dues including Provident Fund, Employees’ State Insurance, Income-tax, Sales-tax, Service-tax, Custom Duty, Excise Duty, Cess and other applicable statutory dues. According to the information and explanation given to us, no undisputed statutory dues are outstanding as at 31 March 2017, for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are no disputed amounts that remain unpaid as at 31 March 2017 for a period of more than six months from the date they became payable in respect of Provident Fund, Employees’ State Insurance, Income-tax, Sales-tax, Service-tax, Custom Duty, Excise Duty, Cess and other applicable statutory dues with the exception of the following:

(Rs. in lakhs)

Name of statute

Nature of dues

Financial year to which amount relates

Amount

Forum where dispute is pending

Sales Tax Act, Bihar

Disputed Tax under Bihar Sales Tax

1995-96 to 1997-98

66.44

Commissioner of Commercial Taxes(Appeals), Chirkunda, Bihar

CST Act 1956/Karnataka VAT Act, 2003

Sales Tax

2008-09 to 2015-16

*89,812.85

Various levels of Appellate Authorities

Andhra Pradesh State VAT Act

Sales Tax

2005-06 to 2007-08, 2009-10

68.24

Various levels of Appellate Authorities

Finance Act, 1994-Service Tax

Service Tax

2007-08 to 2009-10

147.97

Various levels of Appellate Authorities

Central Excise Act

MODVAT Credit, Excise Duty, Excise Duty Interest

1991-92, 2016-17

290.8

Various levels of Appellate Authorities

Customs Act

Customs Duty

2012-13, 2015-16

148.68

Various levels of Appellate Authorities

Income Tax Act

Income Tax

2007-08 to 2016-17

134.41

TDS Circle, LTU, Bengaluru

CST

CST

2005-06 to 2007-08

1,346.14

Sales Tax Appellate Tribunal

Sales Tax Act

Sales Tax

1980-81, 2007-08 to 2009-10, 2013-14

424.07

Various levels of Appellate Authorities

Vacant Land Tax

Vacant Land Tax

1998-99 to 2003-04

10.35

Director, Directorate of Town Panchayat, Chennai

Urban Land Tax

Urban Land Tax

1984-85 to 2002-03

41.44

Principal Commissioner and Commissioner of Land Reforms, Chennai

Commercial Tax

Sales Tax

1989-90, 1991-92

4.19

Various levels of Appellate Authorities

ESI Act, 1948

Interest & damages towards late deposits, contribution

1992-93, 1998-2001

33.95

Punjab & Haryana High Court (Chandigarh) and Andhra Pradesh High Court


Income Tax Act, 1961

Disallowances as per Assessment Orders

2008-09, 2009-10, 201112 to 2013-14

2,398.66

Various levels of Appellate Authorities, Bengaluru

Labour Act

Dispute on Payment of Compensation

2010-11

2

Delhi High Court

Trade Tax

Rates of Taxes

2000-01, 2001-02

361.15

Uttarakhand High Court, Nainital

Total disputed amount

95,291.34

Total amount paid under protest pending final orders

11,223.97

* The rectified demand value is considered for the year 2008-09 and 2010-11 as per Karnataka High Court Order, however, rectified order is yet to be received from the Karnataka Commercial Tax Department.

(viii) On the basis of examination of records of the Company and information and explanations given to us, the Company has not defaulted in repayment of dues to a bank, financial institution or others.

(ix) The requirement relating to application of moneys raised by way of initial public offer or further public offer (including debt instruments) and term loans for the purposes for which they were raised are not applicable to the Company.

(x) During the course of our examination of the books of account and records of the Company carried out in accordance with the generally accepted auditing practices in India and according to the information and explanations given to us, we have neither come across any instance of fraud by the Company or any fraud on the Company or by its officers or employees has been noticed or reported during the year nor have we been informed of any such case by the Management, that causes the standalone Ind AS financial statements to be materially misstated.

(xi) The provisions in relation to disbursement of managerial remuneration as mandated by section 197 read with Schedule V to the Companies Act, 2013 is not applicable.

(xii) The provisions in relation to compliance of Nidhi Company with the Net Owned Funds to Deposits in the ratio of 1: 20 to meet out the liability maintenance of ten per cent unencumbered term deposits as specified in the Nidhi Rules, 2014 to meet out the liability is not applicable to the Company.

(xiii) On the basis of examination of records of the Company and information and explanations given to us, all transactions with the related parties are in compliance with sections 177 and 188 of Companies Act, 2013 and the details have been disclosed in the standalone Ind AS Financial Statements vide Note No. 31 as required by the applicable Indian accounting standards.

(xiv) The provisions in relation to preferential allotment or private placement of shares or fully or partly convertible debentures during the year under pursuant to the requirement of section 42 of the Companies Act, 2013 are not applicable, since no such issues have been made by the Company.

(xv) According to the information and explanations given to us and on the basis of examination of records, the Company has not entered into any non-cash transactions with directors or persons connected with him and therefore, the provisions of section 192 of Companies Act, 2013 are not applicable.

(xvi) The requirement of registration under section 45-IA of the Reserve Bank of India Act, 1934 is not applicable to the Company.

For BADARI, MADHUSUDHAN & SRINIVASAN

Chartered Accountants

Firm Registration No. 005389S

(S. RAJENDIRAN)

Bengaluru Partner

29 May 2017 Membership No. 021883


Mar 31, 2016

We have audited the accompanying standalone financial statements of BHARAT ELECTRONICS LIMITED ("the Company"), which comprise the Balance Sheet as at 31 March 2016, the Statement of Profit and Loss and, the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information, in which are incorporated the Returns for the year ended on that date audited by the branch auditors of the Company''s branches at Ghaziabad, Panchkula, Kotdwara, Pune, Navi Mumbai and Machilipatnam.

In the light of observations arising in our Auditor''s Report from the audit of Comptroller & Audit General of India, our Independent Auditor''s Report dated 27 May 2016 has been revised to incorporate Annexure III, the directions of Comptroller & Audit General of India and our findings thereon.

This report supersedes our Independent Auditor''s Report dated 27 May 2016.

Management''s Responsibility for the Standalone financial statements

The Company''s Board of Directors are responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone 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, read with Rule 7 of the Companies (Accounts) Rules, 2014. 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 standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

Our responsibility is to express an opinion on these standalone financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the standalone financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the standalone financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company''s preparation of the standalone financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company''s Directors, as well as evaluating the overall presentation of the standalone financial statements.

We believe that the audit evidence obtained by us and the audit evidence obtained by the other auditors in terms of their reports referred to in sub-paragraph (a) of the Other Matters paragraph below, is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone 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 :

a) in the case of the balance sheet, of the state of affairs of the Company as at 31 March 2016.

b) in the case of the statement of profit and loss, of the profit for the year ended on that date; and

c) in the case of the cash flow statement, of the cash flows for the year ended on that date.

Other Matters

a) We did not audit the financial statements of six branches included in the standalone financial statements of the Company whose financial statements reflect total assets of Rs. 3,81,908.39 lakhs as at 31 March 2016 and total revenues of Rs. 1,81,023.18 lakhs for the year ended on that date, as considered in the standalone financial statements. The financial statements of these branches have been audited by the branch auditors, appointed by Comptroller & Audit General of India, whose reports have been furnished to us, and our opinion in so far as it relates to the amounts and disclosures included in respect of these Units, is based solely on the report of such branch auditors.

b) We draw attention to Note No. 31(6) regarding disclosures required under Para 5 of Part II to Schedule III of the Companies Act, 2013 (under General Instructions for preparation of Statement of Profit and Loss) [erstwhile Para 5 of Part II to Schedule VI of the Companies Act, 1956 (under General Instructions for preparation of Statement of Profit and Loss)].

c) We draw attention to Note No. 31(12) regarding disclosure of segment information as required under AS-17.

Our opinion is not modified in respect of these matters.

Report on other Legal and Regulatory Requirements

1. As required by Companies (Auditor''s Report) Order, 2016, issued by the Central Government in terms of sub-section 11 of section 143 of the Companies Act, 2013 and based on the comments in the auditors'' report of the respective branches, we give in the annexure a statement on the matters specified in paragraph 3 and 4 of the Order to the extent applicable. (Annexure 1).

2. 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. The audit of the accounts of Bangalore, Hyderabad and Chennai branches and Corporate Office has been carried out by us. In the case of New York and Singapore Offices and other offices not visited by us, and in respect of which the accounts are maintained at Corporate Office, the returns / records received from the said offices have been verified and found to be adequate for the purpose of our audit.

(c) The reports on the accounts of the Unit''s offices of the Company audited under Section 143 (8) of the Act by Branch auditors ( in respect of Ghaziabad, Panchkula, Kotdwara, Pune, Navi Mumbai and Machilipatnam Units) have been sent to us and have been properly dealt with, by us, in preparing this report.

d) The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account of the Company.

e) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

f) On the basis of the written representations received from the Directors as at 31 March 2016 taken on record by the Board of Directors, none of the Directors is disqualified as on 31 March 2016 from being appointed as a Director in terms of Section 164 (2) of the Act.

g) With respect to the adequacy of the internal financial controls over financial reporting of the Company''s financial statements and the operating effectiveness of such controls, a separate report is annexed (Annexure II).

h) With respect to the other matters to be included in the Auditor''s 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 the impact of pending litigations on its financial position in its standalone financial statements as at 31 March 2016 - Refer Note 31 (8) to the financial statements.

ii. The Company did not have any long-term contracts including derivatives 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.

3. As required under Section 143 (5) of the Act, which is applicable to the Company, findings on the directions issued by Comptroller and Auditor General of India is annexed (Annexure III).

Annexure I to the Independent Auditor''s report

The Annexure referred to in paragraph 1 in Report on Other Legal and Regulatory Requirements of the Independent Auditor''s Report of even date to the members of the company on the Standalone financial statements for the year ended March 31, 2016, We report that :

(i) (a) The Company has generally maintained proper records showing full particulars including quantitative details and situation of its fixed assets

(b) As explained to us and based on our examination of records, the Management has generally carried out the physical verification of a portion of the Fixed Assets in accordance with their phased programme of physical verification, which is considered reasonable, having regard to the size of the Company and nature of its fixed assets. In accordance with the programme, certain fixed assets were verified during the year and discrepancies, if any, were properly dealt with on such verification during the year. As informed to us, no material discrepancies have been noticed on such verification during the year.

(c) As explained to us and based on our examination of records, the title deeds of immovable properties are held in the name of the company. We draw your attention to Note No. 9 to the financial statements.

(ii) The raw materials, stores and spare parts, tools, work- in-progress, semi-finished goods and finished goods inventory (excluding stock with third parties and material in transit) have been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable and adequate in relation to the size of the Company and the nature of its business.

As informed to us, no material discrepancies have been noticed on such verification. The discrepancies noticed on verification between the physical stocks and the book records have been properly dealt in the books of account.

In respect of materials with sub-contractors, confirmations have been received generally and reconciled with the book records. However, in case of such items for which no confirmations have been received, which are not significant, the company has dealt with the same by making adequate provision in the books of account

(iii) According to the information and explanations given to us, the Company has granted unsecured loan to one subsidiary company covered in the register maintained under section 189 of the Companies Act 2013 ("Act"). The Company has not granted loans to firms or other parties covered in the register maintained under Section 189 of the Act.

(a) According to the information and explanations given to us and based on the audit procedures conducted by us, we are of the opinion that the terms and conditions of loans granted by the company to it''s subsidiary covered in the register maintained under section 189 of the Companies Act, 2013 are not prejudicial to the company''s interest.

(b) In case of the loans granted to the Company listed in the register maintained under section 189 of the Act, the borrower has been regular in the payment of interest and repayment of principal as stipulated.

(c) There is no amount overdue for more than 90 days.

(iv) According to the information and explanations given to us, in respect of loans, investments, guarantees, and security, the provisions of section 185 and 186 of the Companies Act, 2013 are not applicable

(v) According to the information and explanations given to us, the Company has not accepted any deposit from public in the current year as per the directives issued by the Reserve Bank of India and the provisions of sections 73 to 76 or any other relevant provisions of the Companies Act and the rules framed there under.

All deposits have matured and settled except for Rs. 36.95 lakhs, out of which Rs. 36.50 lakhs is retained as per Garnishee Order of Lokayukta, Bangalore and the balance of Rs. 0.45 lakhs though matured is unpaid due to legal issues.

In our opinion and according to the information and explanations given to us and based on our examination of records, the Company has complied with the provisions of Section 73 and other relevant provisions of the Act and the Companies (Acceptance of Deposits) Rules, 2014.

(vi) The Company pursuant to sub-section (1) of section 148 of the Companies Act for the maintenance and audit of cost records prescribed by the Central Government has maintained cost records. We are of the opinion that, prima facie, the prescribed cost accounts and cost records have been made and maintained. However, we have not carried out any detailed examination of the cost records with a view to determine whether they are accurate or complete.

(vii) (a) The Company is regular in remittance of undisputed statutory dues including Provident Fund, Employees'' State Insurance, Income- tax, Sales-tax, Service-tax, Custom Duty, Excise Duty, Cess and other applicable statutory dues. According to the information and explanation given to us, no undisputed statutory dues are outstanding as at 31 March 2016, for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are no disputed amounts that remain unpaid as at 31 March 2016 for a period of more than six months from the date they became payable in respect of Provident Fund, Employees'' State Insurance, Income-tax, Sales-tax, Service-tax, Custom Duty, Excise Duty, Cess and other applicable statutory dues with the exception of the following :

Financial year to Name of Statute Nature of Dues which amount relates

Sales Tax Act Sales Tax dues 1995-96 to 1997-98, 2005-2015

Sales Tax Act Sales Tax dues 2000-01

Central Sales tax Central Sales Tax (CST) 1980-81, 1991-92, Act 2005-06 to 2007-08, 2011-12

Central Excise Tax Excise Duty, Modvat 1991-92 Credit

Customs Act Customs Duty 2012-13

Customs Act Customs Duty -

Finance Act Service Tax 2007-08, 2009-10 1994- Service Tax

Finance Act Revisionary Showcause 2008-09 1994- Service Tax Notice

Vacant Land Tax Vacant Land Tax 1998-99 to 2003-04

Urban Land Tax Urban Land Tax 1984-85 to 2002-03

ESI Act, 1948 Interest and damages - towards late deposits

Total disputed amount

Total amount paid under protest pending final order

Name of Statute Amount Forum where dispute is (Rs. in Lakhs) pending

Sales Tax Act 4971.49 Various levels of Appellate authority

Sales Tax Act 361.16 Uttrakhand high court Nainital

Central Sales tax Act 2194.00 Various levels of Appellate authority

Central Excise Tax 38.56 Commissioner (Appeals)

Customs Act 103.52 CESTAT

Customs Act 123.23 Assistant Commissioner of Customs

Finance Act 1994 113.96 CESTAT

Finance Act 1994 34.01 Commissioner

Vacant Land Tax 10.35 Director, Directorate of Town Panchayat, Chennai

Urban Land Tax 41.44 Principal Commissioner and Commissioner of Land Reforms, Chennai.

ESI Act, 1948 3.52 Punjab and Haryana High Court, Chandigarh

Total disputed amount 7995.24

Total amount paid under protest pending final order 3426.90

(viii) On the basis of examination of records of the Company and information and explanations given to us, the Company has not defaulted in repayment of dues to a bank, financial institution or others.

(ix) The requirement relating to application of moneys raised by way of initial public offer or further public offer (including debt instruments) and term loans for the purposes for which they were raised are not applicable to the Company.

(x) During the course of our examination of the books of account and records of the Company carried out in accordance with the generally accepted auditing practices in India and according to the information and explanations given to us, we have neither come across any instance of fraud by the Company or any fraud on the Company or by its officers or employees has been noticed or reported during the year nor have we been informed of any such case by the Management, that causes the financial statements to be materially misstated.

(xi) According to the information and explanations given to us and based on the examination of records, the provisions in relation to disbursement of managerial remuneration is in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act.

(xii) The provisions in relation to compliance of Nidhi Company with the Net Owned Funds to Deposits in the ratio of 1:20 to meet out the liability maintenance of ten per cent unencumbered term deposits as specified in the Nidhi Rules, 2014 to meet out the liability is not applicable to the Company.

(xiii) On the basis of examination of records of the Company and information and explanations given to us, all transactions with the related parties are in compliance with sections 177 and 188 of Companies Act,2013 and the details have been disclosed in the Financial Statements vide Note No. 31(14), as required by the applicable accounting standards.

(xiv) The provisions in relation to preferential allotment or private placement of shares or fully or partly convertible debentures during the year under pursuant to the requirement of section 42 of the Companies Act, 2013 are not applicable, since no such issues have been made by the Company.

(xv) According to the information and explanations given to us and on the basis of examination of records, the Company has not entered into any non-cash transactions with directors or persons connected with him and therefore, the provisions of section 192 of Companies Act, 2013 are not applicable.

(xvi) The requirement of registration under section 45-IA of the Reserve Bank of India Act, 1934 is not applicable to the Company.

For Badari, Madhusudhan & Srinivasan

Chartered Accountants

Firm Registration Number : 005389S

(S. RAJENDIRAN)

Bengaluru Partner

15 July 2016 Membership No. 021883


Mar 31, 2015

We have audited the accompanying standalone financial statements of BHARAT ELECTRONICS LIMITED ("the Company"), which comprise the Balance Sheet as at 31 March 2015, the Statement of Profit and Loss for the year then ended, the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information, in which are incorporated the Returns for the year ended on that date audited by the branch auditors of the Company's branches at Ghaziabad, Panchkula, Kotdwara, Pune, Navi Mumbai and Machilipatnam.

Management's Responsibility for the Standalone financial statements

The Company's Board of Directors are responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone 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, read with Rule 7 of the Companies (Accounts) Rules, 2014. 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 standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these standalone financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the standalone financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone financial statements. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the standalone financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation of the standalone financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company's Directors, as well as evaluating the overall presentation of the standalone financial statements.

We believe that the audit evidence obtained by us and the audit evidence obtained by the other auditors in terms of their reports referred to in sub-paragraph (a) of the Other Matters paragraph below, is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the standalone financial statements of the company for the year ended 31 March 2015 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 :

a) in the case of the balance sheet, of the state of affairs of the Company as at 31 March 2015.

b) in the case of the statement of profit and loss, of the profit for the year ended on that date; and

c) in the case of the cash flow statement, of the cash flows for the year ended on that date.

Other Matters

a) We did not audit the financial statements of six branches included in the standalone financial statements of the Company whose financial statements reflect total assets of Rs. 280,137.10 lakhs as at 31 March 2015 and total revenues of Rs. 209,021.17 lakhs for the year ended on that date, as considered in the standalone financial statements. The financial statements of these branches have been audited by the branch auditors whose reports have been furnished to us, and our opinion in so far as it relates to the amounts and disclosures included in respect of these branches, is based solely on the report of such branch auditors.

b) We draw attention to Note No. 30(6) regarding disclosures required under Para 5 of Part II to Schedule III of the Companies Act, 2013(under General Instructions for preparation of Statement of Profit and Loss) [erstwhile Para 5 of Part II to Schedule VI of the Companies Act, 1956(under General Instructions for preparation of Statement of Profit and Loss)].

c) We draw attention to Note No. 30(13) regarding disclosure of segment information as required under AS-17.

Our opinion is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

1. As required by Companies (Auditor's Report) Order, 2015, issued by the Central Government in terms of sub-section 11 of section 143 of the Act and based on the comments in the auditors' report of the respective branches, we give in the annexure a statement on the matters specified in paragraph 3 and 4 of the Order.

2. 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. The audit of the accounts of Bengaluru, Hyderabad and Chennai branches and Corporate Office has been carried out by us. In the case of New York and Singapore Offices and other offices not visited by us, and in respect of which the accounts are maintained at Corporate Office, the returns / records received from the said offices have been verified and found to be adequate for the purpose of our audit.

(c) The reports on the accounts of the branch offices of the Company audited under Section 143 (8) of the Act by branch auditors in respect of Ghaziabad, Panchkula, Kotdwara, Pune, Navi Mumbai and Machilipatnam branches have been sent to us and have been properly dealt with, by us in preparing this report.

d) The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account and with the returns received from the branches not visited by us.

e) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

f) On the basis of the written representations received from the directors as at 31 March 2015, taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2015 from being appointed as a director in terms of Section 164 (2) of the Act.

g) With respect to the other matters to be included in the Auditor's 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 the impact of pending litigations on its financial position in its standalone financial statements- Refer Note 30(8).

ii. We are given to understand that the Company does not have any long-term contracts including derivatives contracts for which there are 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.

ANNEXURE REFERRED TO THE INDEPENDENT AUDITORS' REPORT

(Referred to in Report on Other Legal & Regulatory Requirement)

(i) (a) The Company has generally maintained proper records showing full particulars including quantitative details and situation of its fixed assets.

(b) As explained to us and based on our examination of records, the Management has generally carried out the physical verification of a portion of the Fixed Assets in accordance with their phased programme of physical verification, which is considered reasonable having regard to the size of the Company and nature of its business and discrepancies, if any, were properly dealt with on such verification during the year.

(ii) (a) The raw materials, stores and spare parts, tools, work-in-progress, semi-finished goods and finished goods inventory (excluding stock with third parties and material in transit) have been physically verified by the management. In our opinion, the frequency of verification is reasonable.

(b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) In our opinion and on the basis of our examination of the records, the Company is maintaining proper records of its inventories. The discrepancies noticed on verification between the physical stocks and the book records were not material, and has been dealt with properly in the books of account.

In respect of materials with sub-contractors, confirmations have been received generally and reconciled with the book records. However, in case of such items for which no confirmations have been received, which are not significant, the company has dealt with the same by making adequate provision in the books of account.

(iii) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 189 of the Companies Act. Hence, clause (iii)(a) & (b) are not applicable.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control procedure commensurate within the Company and the nature of its business, for the purchase of inventories & fixed assets and payment for expenses & for sale of goods and services. During the course of our audit, no major weaknesses in the internal controls have been noticed.

(v) According to the information and explanations given to us, the Company has not accepted any deposit from public in the current year as per the directives issued by the Reserve Bank of India and the provisions of sections 73 to 76 or any other relevant provisions of the Companies Act and the rules framed there under. All deposits have matured and settled except for Rs. 36.95 lakhs, out of which Rs. 36.50 lakhs is retained as per Garnishee Order of Lokayukta, Bengaluru and the balance of Rs. 0.45 lakhs though matured is unpaid due to legal issues.

In our opinion and according to the information and explanations given to us and based on our examination of records, the Company has complied with the provisions of Section 73 and other relevant provisions of the Act and the Companies (Acceptance of Deposits) Rules, 2014.

(vi) The Company pursuant to sub-section (1) of section 148 of the Companies Act for the maintenance and audit of cost records prescribed by the Central Government has maintained cost records. We are of the opinion that prima facie the prescribed cost accounts and cost records have been made and maintained. We have not however made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(vii) (a) The Company is regular in remittance of undisputed statutory dues including Provident Fund, Employees' State Insurance, Income-tax, Sales-tax, Service-tax, Custom Duty, Excise Duty, Cess and other applicable statutory dues. According to the information and explanation given to us, no undisputed statutory dues are outstanding as at 31 March 2015, for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are no disputed amounts that remain unpaid as at 31 March 2015 for a period of more than six months from the date they became payable in respect of Provident Fund, Employees' State Insurance, Income-tax, Sales-tax, Service-tax, Custom Duty, Excise Duty, Cess and other applicable statutory dues with the exception of the following :

Financial year to which amount Name of Statute Nature of Dues relates (Rs. in Lakhs)

Sales Tax Act, Bihar Sales Tax 1995-97



Central Sales Sales Tax 2005-06 to 2012-13 Act,1956

Karnataka VAT Act, Sales Tax 2006-07 to 2011-12 2003

Finance Act 1994 Service Tax 2009-10 Service Tax

Finance Act 1994 Revisionary Show 2008-09 Service Tax cause Notice

Central Excise Act Modvat credit 1991-92

Central Excise Act Excise Duty 1991-92

Central Excise Tax Excise duty 1991-92

Central Excise Tax Excise duty 1991-92

Customs Act Custom Duty 2012-13

VAT Act APVAT 2005-06 to 2007-08

VAT Act APVAT 2013-14

CST CST 2005-06 to 2007-08

CST CST 2011-12

Finance Act Service Tax 2007-08 1994- Service Tax

Sales Tax Act Sales Tax 2007-08 to 2009-10

Vacant Land Tax Vacant Land Tax 1998-99 to 2003-04

Urban Land Tax Urban Land Tax 1984-85 to 2002-03



Sales Tax Sales Tax dues & benefit of 1980-81 Concessional Form C

Name of Statute Amount Forum where dispute is pending

Sales Tax Act, 66.44 Commissioner of Bihar Commercial Tax (Appeals), Chirkunda,Bihar

Central Sales Act,1956 1,683.63 JC(Appeals)

Karnataka VAT Act, 554.11 JC(Appeals) 2003

Finance Act 1994 Service Tax 103.38 CESTAT

Finance Act 1994 34.01 Commissioner Service Tax

Central Excise Act 23.65 Dy. Commissioner

Central Excise Act 6.04 Commissioner (Appeals)

Central Excise Tax 8.67 Commissioner

Central Excise Tax 0.20 Commissioner

Customs Act 103.52 CESTAT

VAT Act 46.58 Sales Tax Appellate Tribunal

VAT Act 134.10 ADC (Appeals)

CST 1,346.14 Sales Tax Appellate Tribunal

CST 834.73 ADC (Appeals)

Finance Act 10.58 CESTAT 1994- Service Tax

Sales Tax Act 48.00 Appellate Authority

Director, Directorate Vacant Land Tax 10.35 of Town Panchayat, Chennai

Principal Commissioner 41.44 and Commissioner of Urban Land Tax Land Reforms, Chennai.

Case remanded to Sales Tax 8.63 Deputy Commissioner (Appeal)

Financial year to which amount Name of Statute Nature of Dues relates (Rs. in Lakhs)



Sales Tax Benefit of concessional 1989-90 Form D not allowed

Sales Tax Acceptance of Duplicate 1991-92 Copy of 3D(1)

ESI ACT,1984 Interest and damage to 1996-97 late deposit

Sales Tax Act Sales Tax Act 2008-09

2009-10

2008-09

Sales Tax Trade Tax dues 2001-02

Sales Tax Trade Tax dues 2000-01

Uttrakhand high court Nainital

Total disputed amount

Total amount paid under protest pending final order

Name of Statute Amount Forum where dispute is pending



Sales Tax 2.47 Case remanded to AC(Appeal)

Sales Tax 1.32 Appeal Filed with DC (Appeal) for acceptances of duplicate copy of 3D(1)

ESI ACT,1984 3.52 Punjab & Haryana High Court Chandigarh

Sales Tax Act 260.48 Joint commissioner (Appeals)

242.89 Joint commissioner (Appeals)

112.93 Dy. Commissioner (Appeals)

Sales Tax 220.08 Uttrakhand high court Nainital

Sales Tax 141.08

Total disputed amount 6048.99 Total amount paid under protest pending final order 1068.25

(c) The requirement of transfer to investor education and protection fund is in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made thereunder.

(viii) The Company does not have any accumulated losses as at the end of the financial year and has not incurred cash losses during the financial year and in the immediately preceding financial year.

(ix) On the basis of examination of records of the Company and information and explanations given to us, the Company has not defaulted in repayment of dues to a bank, financial institution or others

(x) According to the information and explanations given to us, the Company has not given any guarantees for loan taken by others from a bank or financial institution.

(xi) The Company has not availed any term loan and hence, this clause is not applicable.

(xii) During the course of our examination of the books of account and records of the Company, carried out in accordance with the generally accepted auditing practices in India and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported, during the year nor have we been informed of any such case by the Management, that causes the standalone financial statements to be materially misstated.

For Badari, Madhusudhan & Srinivasan Chartered Accountants Firm Registration Number : 005389S

N. SRINIVASAN Bengaluru Partner 29 May 2015 Membership No. 027887


Mar 31, 2014

We have audited the accompanying financial statements of Bharat Electronics Limited ("Company") which comprise the balance sheet as at 31 March 2014, the statement of profit and loss for the year then ended and cash flow statement for the year then ended and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

Management is responsible for 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 Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act") read with General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal control 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.

Auditor''s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the financial statements of the Company for the year ended 31 March 2014 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 :

a) in the case of the balance sheet, of the state of affairs of the Company as at 31 March 2014.

b) in the case of the statement of profit and loss, of the profit for the year ended on that date; and

c) in the case of the cash flow statement, of the cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order"), as amended, issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said Order.

2. Further to our comments in the Annexure referred to in paragraph above and as required by Section 227 (3) of the Act, we report that :

(a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose 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. The audit of the accounts of Bangalore, Hyderabad and Chennai units and Corporate Office were carried out by us. In the case of New York and Singapore Offices, not visited by us, and in respect of which the accounts are maintained at Corporate Office, the returns / records received from the said offices have been verified and found to be adequate for the purpose of our audit.

(bb) the report on the audit of branch offices audited under section 228 of the Act, in respect of Ghaziabad, Panchkula, Kotdwara, Pune, Navi Mumbai and Machilipatnam units, by respective branch auditors has been forwarded to us under section 228 (3) (c) of the Act and have been dealt with in preparing our Report in the manner considered necessary by us.

(c) the balance sheet, statement of profit and loss and cash flow statement dealt with by this report are in agreement with the books of account.

(d) in our opinion, the balance sheet, statement of profit and loss and cash flow statement dealt with by this Report comply with the accounting standards referred to in Section 211 (3C) of the Act, read with General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013, and clause 13 of Note 30 regarding Segment Reporting.

(e) as the Company is a Government Company, it is exempted from the provisions of Section 274(1)(g) of the Act regarding disqualification of Directors vide Notification GSR 829(E) dated 21 October 2003 issued by the Ministry of Finance, Department of Company Affairs.

ANNEXURE TO THE INDEPENDENT AUDITOR''S REPORT [Referred to in Report on Other Legal and Regulatory Requirements]

(i) (a) The Company has generally maintained proper records showing full particulars including quantitative details and situation of Fixed Assets.

(b) As explained to us and based on our examination of records, the Management has generally carried out the physical verification of the Fixed Assets in accordance with their phased programme of physical verification, which is considered reasonable having regard to the size of the Company and nature of its business and discrepancies, if any, were properly dealt with on such verification during the year.

c) Fixed assets sold/disposed off during the year were not substantial and therefore do not affect the going concern assumption.

(ii) (a) The raw materials, stores and spare parts, tools, work-in-progress, semi-finished goods and finished goods inventory, excluding stocks with third parties and materials in transit, have been physically verified by the Management. In our opinion, the frequency of verification is reasonable.

(b) The procedures for physical verification of inventory followed by the management are generally reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material and has been dealt with properly in the books of account.

In respect of materials with sub-contractors, confirmations have been received generally and reconciled with the book records. However, in case of such items for which no confirmations have been received, which are not significant, the company has dealt with the same by making adequate provision in the books of account.

(iii) The Company has not granted / taken any loans secured or unsecured to / from parties covered in the register maintained under Section 301 of the Act and hence, Clause No. 4 (iii) of the Order, as amended, is not applicable.

(iv) In our opinion and according to the information and explanations given to us and based on our examination of records, there are adequate internal control systems commensurate with the size of the Company and nature of its business with regard to purchase of Inventory and Fixed Assets and with regard to the Sale of Goods and Services. During the course of audit, we have not observed any continuing failure to correct major weakness in the internal control systems.

(v) In our opinion and according to the information and explanations given to us, there are no contracts or arrangements referred to in section 301 of the Act, that need to be entered in the register required to be maintained under that section.

(vi) The Company has not accepted any deposit from public in the current year and all deposits had matured and settled except for Rs. 36.95 lakhs, out of which Rs. 36.50 lakhs are being retained as per Garnishee Order of Lok Ayukta, Bangalore and the balance ofRs. 0.45 lakhs though matured is unpaid due to other legal issues. In our opinion and according to the information and explanations given to us and based on our examination of records, the Company has complied with the provisions of Section 58A and Section 58AA and other relevant provisions of the Act and the Companies (Acceptance of Deposits) Rules, 1975.

(vii) In our opinion, the Company has an internal audit system commensurate with its size and nature of its business.

(viii) The Company pursuant to the Companies (Cost Accounting) Rules, 2011 made by the Central Government for the maintenance and audit of cost records under section 209 (1) (d) of the Act, has maintained cost records. We are of the opinion that prima facie the prescribed cost accounts and cost records have been made and maintained. We have not however made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(ix) (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income Tax, Sales Tax (VAT), Service Tax, Customs Duty, Excise Duty and other applicable material statutory dues.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Sales Tax (VAT), Service Tax, Customs Duty, Excise Duty were in arrears, as at 31 March 2014 for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us and based on our examination of records, there were no dues in respect of Income Tax, Sales Tax (VAT), Wealth Tax, Service Tax, Customs Duty and Excise Duty which have not been deposited with the appropriate authorities on account of any dispute except as follows :

Amount Nature of Nature of Forum where (Rs. in Statute Dues dispute is pending Lakhs )

Sales Tax Sales Tax Commissioner 66.44 Act, Bihar of Commercial Tax (Appeals), Chirkunda, Bihar

Central Sales Sales Tax Joint Commissioner 1,970.85 Act (Appeals)

Karnataka Sales Tax Joint Commissioner 501.02 VAT Act (Appeals)

Karnataka Sales Tax Dy. Commissioner 156.01 VAT Act of Commercial Tax

Finance Act Service Tax CESTAT 103.38

Finance Act Service Tax- Commissioner 34.01 Revisionary Show Cause Notice

Central Modvat Credit Dy. Commissioner 23.65 Excise Act

Central Excise Duty Commissioner 6.04 Excise Act (Appeals)

Central Excise Duty Commissioner 8.67 Excise Act

Customs Act Custom Duty CESTAT 103.52 Trade Tax Benefit of Uttarakhand High 220.07 Concessional Court, Nainital Form not allowed

Trade Tax Benefit of Uttarakhand High 141.09 Concessional Court, Nainital form not allowed

Income Tax TDS u/s 194 High court of 73.32 Act I against Allahabad deduction made u/s 194C

Income Tax Penalty u/s High court of 63.21 Act 201 A passed Allahabad by DCIT

Central Sales Sales Tax Deputy 8.63 Tax Act dues & Commissioner benefit of (Appeals) Concessional Form C

Central Sales Benefit of Assistant 2.47 Tax Act Concessional Commissioner Form D not (Appeals) allowed (1989-90)

U.P. Trade Acceptance DC (Appeals) 1.32 Tax Act of duplicate copy of 3D(1)

ESI Act Interest & Punjab & Haryana 3.52 Damages High Court, towards late Chandigarh deposit

Central Sales Central Sales Sales Tax Appellate 1,346.14 Tax Act Tax Tribunal

The Andhra AP VAT Sales Tax Appellate 46.58 Pradesh Tribunal Value Added Tax Act

Finance act Service Tax CESTAT-Bangalore 10.58

Urban land Land Tax Principal 41.44 Tax Commissioner and commissioner Land Reform Chennai

Vacant Land Land Tax Director, 10.35 Tax Directorate of Town Panchayath, Chennai

Tamil Nadu Sales Tax Sales Tax Appellate 48.00 Sales Tax Authorities

Income Tax Income Tax Income Tax 264.50 Act Appellate Tribunal

Income Tax Income Tax Commissioner 6,956.44 Act of Income Tax (Appeals)

(x) The Company does not have any accumulated losses as at the end of the financial year and has not incurred cash losses during the financial year and in the immediately preceding financial year.

(xi) In our opinion and based on our examination of records, the Company has not defaulted in repayment of dues to banks.

(xii) In our opinion and based on our examination of records, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and others securities.

(xiii) The Company is not a chit fund / nidhi /mutual benefit fund/ society. Therefore, the provisions of clause (xiii) of paragraph 4 of the Order, as amended, are not applicable to the Company.

(xiv) The Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause (xiv) of the Order, as amended, are not applicable to the Company.

(xv) According to the information and explanations given to us and the representations made by the Management, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

(xvi) The Company has not availed any term loan and hence, clause 4 (xvi) of the Order, as amended, is not applicable.

(xvii) According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that no funds raised on short term basis have been used for long term investment.

(xviii) The Company has not made preferential allotment of shares to parties covered in the register maintained under section 301 of the Act.

(xix) The Company has not issued any debentures during the year.

(xx) The Company has not raised any money by Public Issues and hence clause (xx) of the Order, as amended, is not applicable to the Company.

(xxi) During the course of our examination of the books of account and records of the Company carried out in accordance with the generally accepted auditing practices in India and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company noticed or reported during the year nor have we been informed of any such case by the Management, that causes the financial statements to be materially misstated.

For Badari, Madhusudhan & Srinivasan

Chartered Accountants Firm Registration Number: 005389S

N.K. Madhusudhan

Bangalore Partner

30 May 2014 Membership No. 020378


Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of Bharat Electronics Limited ("Company"), which comprise the Balance Sheet as at March 31, 2013, the Statement of Profit and Loss for the year then ended and Cash Flow Statement for the year then ended and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

Management is responsible for 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 Standards referred to in sub- section (3C) of Section 211 of the Companies Act, 1956 ("the Act"). This responsibility includes the design, implementation and maintenance of internal control 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.

Auditor''s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the financial statements of the Company for the year ended March 31, 2013 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:

a) In the case of the Balance sheet, of the state of affairs of the Company as at March 31, 2013.

b) In the case of the Statement of Profit and Loss, of the Profit for the year ended on that date; and

c) In the case of the Cash Flow Statement, of the Cash Flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors'' Report) Order, 2003, as amended by the Companies (Auditors'' Report) Order, 2004 (hereinafter referred to as "the Order") issued by the Central Government of India in terms of section 227(4A) of the Companies Act,l956, we give in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said Order.

2. Further to our comments in the Annexure referred to in paragraph above and as required by Section 227(3) of the Act, we report that:

(a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

(b) In our opinion, proper books of account as required by law, have been kept by the Company in so far as it appears from our examination of those books. The audit of the accounts of Bangalore, Hyderabad and Chennai Unit and Corporate Office were carried out by us, whilst the audit of Ghaziabad, Panchkula, Kotdwara, Pune, Navi Mumbai and Machilipatnam units were audited by respective branch auditors. The reports of branch auditors have been considered by us while preparing our report. In the case of New York and Singapore Offices, not visited by us, in respect of which the accounts are maintained at Corporate Office, the returns / records received from the said offices have been verified and found to be adequate for the purpose of our audit. We further state that the disclosure in Clause 15 of Note 31 of Company''s share of Assets, Liabilities, Income and Expenses in the joint ventures is based on audited financial statements of GE BE Private Limited and audited financial statements of BEL Multitone Private Limited as provided by the respective operators of Joint Ventures.

(c) the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this Report are in agreement with the books of account of this Company.

(d) In our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this Report comply with the accounting standards referred to in Section 211 (3C) of the Companies Act, 1956 read with Section 211 (3B) of the Companies Act, 1956 and Clause 12 of Note 31 regarding Segment Reporting.

(e) As the Company is a Government Company, it is exempted from the provisions of Section 274(l)(g) of the Companies Act, 1956 regarding disqualification of Directors vide Notification GSR 829(E) dated 21st October 2003 issued by the Ministry of Finance, Department of Company Affairs.

(i) (a) The Company has generally maintained proper records showing full particulars including quantitative details and situation of Fixed Assets.

(b) As explained to us and based on our examination of records, the Management has generally carried out the physical verification of a portion of the Fixed Assets in accordance with their phased programme of physical verification, which is considered reasonable having regard to the size of the Company and nature of its business and discrepancies, if any, were properly dealt with on such verification during the year.

(c) During the year, the Company has not disposed off substantial portion of the Fixed Assets.

(ii) (a) The Raw Materials, Stores and Spare Parts, Tools, Work in Progress and Semi - Finished Goods inventory (excluding stocks with third parties and materials in transit) have been physically verified by the Management. In our opinion, the frequency of verification is reasonable. In case of finished goods, stock verification was done at year end. We draw attention towards non - adjustment of the discrepancies noticed on physical verification of inventory as compared to the book records as given in Note No. 18(ii).

(b) The procedures for physical verification of inventory followed by the management are generally reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material, and the differences are under reconciliation. In the case of materials with sub - contractors confirmation from certain sub - contractors were not obtained and in this regard we draw attention to Note No. 18(i).

(iii) The Company has not granted / taken any loans secured or unsecured to / from parties covered in the register maintained under Section 301 of the Companies Act, 1956 and hence, Clause No. 4 (iii) of Companies Audit Report Order, 2003 as amended in 2004, is not applicable.

(iv) In our opinion and according to the information and explanations given to us and based on our examination of records, there are adequate internal control systems commensurate with the size of the Company and nature of its business with regard to purchase of Inventory and Fixed Assets and with regard to the Sale of Goods and Services. During the course of audit, we have not observed any continuing failure to correct major weakness in these internal control systems.

(v) In our opinion and according to the information and explanations given to us, there are no contracts or arrangements referred to in section 301 of the Companies Act, 1956 that need to be entered in the register required to be maintained under that section.

(vi) The Company has not accepted any deposit from public in the current year and all deposits had matured and settled except for Rs. 36.95 lakhs, out of which Rs. 36.50 lakhs are being retained as per Garnishee Order of Lokayukta, Bangalore and the balance of Rs. 0.45 lakhs though matured have not been claimed by depositors. In our opinion and according to the information and explanations given to us and based on our examination of records, the Company has complied with the provisions of Section 58A and Section 58AA and other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975.

(vii) In our opinion, the Company has an internal audit system commensurate with its size and nature of its business.

(viii) The Company pursuant to the Companies (Cost Accounting) Rules, 201 1 made by the Central Government for the maintenance and audit of cost records under section 209(1)(d) of the Act, has maintained cost records. We are given to understand that the Cost Audit has been ordered with effect from financial year 2012 - 13 and the audit is scheduled in June 201 3. We are of the opinion that prima facie the prescribed cost accounts and cost records have been made and maintained. We have not, however, made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(ix) (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income Tax, Sales Tax (VAT), Service Tax, Customs Duty, Excise Duty and other material statutory dues applicable to it.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Sales Tax (VAT), Service Tax, Customs Duty, Excise Duty were in arrears, as at March 3 1, 201 3 for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us and based on our examination of records, there were no dues in respect of Income Tax, Sales Tax (VAT), Wealth Tax, Service Tax, Customs Duty and Excise Duty which have not been deposited with the appropriate authorities on account of any dispute except as follows:

(x) The Company does not have accumulated losses as at the end of the financial year and has not incurred Cash losses during the financial year and in the immediately preceding financial year.

(xi) In our opinion and based on our examination of records, the Company has not defaulted in repayment of dues to banks.

(xii) In our opinion and based on our examination of records, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and others securities.

(xiii) The Company is not a chit fund or a nidhi /mutual benefit fund/ society. Therefore, the provisions of clause (xiii) of paragraph 4 of the Companies (Auditor''s Report) Order, 2003 is not applicable to the Company.

(xiv) The Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause (xiv) of Companies (Auditor''s Report) Order, 2003 are not applicable to the Company.

(xv) According to the information and explanations given to us and the representations made by the Management, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

(xvi) The Company has not availed any term loan and hence, clause 4 (xvi) of Companies (Auditor''s Report) Order, 2003 is not applicable.

(xvii) According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that no funds raised on short term basis have been used for long term investment.

(xviii) The Company has not made preferential allotment of shares to parties covered in the register maintained under section 301 of the Companies Act, 1956.

(xix) The Company has not issued any debentures.

(xx) The Company has not raised any money by Public Issues and hence clause (xx)of Companies (Auditor''s Report) Order, 2003, is not applicable to the Company.

(xxi) During the course of our examination of the books of account and records of the Company carried out in accordance with the generally accepted auditing practices in India and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company noticed or reported during the year nor have we been informed of any such case by the Management, that causes the financial statements to be materially misstated. For R G N Price & Co

Chartered Accountants

Firm Regn. No. 002785S

R M Kamath

Bangalore Partner

30 May 2013 Membership No. 022907


Mar 31, 2012

1. We have audited the attached Balance Sheet of Bharat Electronics Limited as at 31 March 2012, the Statement of Profit and Loss and also the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's Management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003 (as amended) issued by the Central Government in terms of sub-section (4A) of section 227 of the Companies Act, I956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to in Paragraph 3 above, we report that:

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

b. In our opinion, proper books of account, as required by law, have been kept by the Company in so far as it appears, from our examination of those books. The audit of the accounts of Bangalore, Hyderabad and Chennai Units and Corporate Office were carried out by us, whilst the audit of Ghaziabad, Panchkula, Kotdwara, Pune, Navi Mumbai and Machilipatnam units were audited by respective branch auditors. The reports of branch auditors have been considered by us while preparing our report. In the case of New York and Singapore Offices, not visited by us, in respect of which the accounts are maintained at Corporate Office, the returns / records received from the said offices have been verified and found to be adequate for the purpose of our audit. We further state that the disclosure in Clause I5 of Note 3I of Company's share of Assets, Liabilities, Income and Expenses in the joint ventures is based on audited financial statements of GE BE Private Limited and audited financial statements of BEL Multitone Private Limited as provided by the respective operators of Joint Ventures.

c. The Balance Sheet and the Statement of Profit and Loss and Cash Flow Statement dealt with by this report, are in agreement with the books of accounts of this Company;

d. In our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in Section 2II(3C) of the Companies Act, I956, read with Section 2II(3B) of the Companies Act, I956 and Clause I2 of Note 3I regarding Segment Reporting.

e. As the Company is a Government Company, it is exempted from the provisions of Section 274(I)(g) of the Companies Act, I956 regarding disqualification of Directors vide Notification GSR 829(E) dated 21 October 2003 issued by Ministry of Finance, Department of Company Affairs.

f. In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the Significant Accounting Policies and the Notes forming part of accounts give the information required by the Companies Act, I956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

i) In the case of the Balance Sheet, of the State of Affairs of the Company as at 3I March 20I2.

ii) In the case of the Statement of Profit and Loss, of the Profit of the Company, for the year ended on that date.

iii) In the case of Cash Flow Statement, of the Cash Flow for the year ended on that date.

Annexure referred to in Para 3 of our report of even date on the Accounts of Bharat Electronics Limited for the year ended 31 March 2012

(i) (a) The Company has generally maintained proper records showing full particulars including quantitative details and situation of Fixed Assets.

(b) As explained to us, the Management has generally carried out the physical verification of a portion of the Fixed Assets in accordance with their phased programme of physical verification, which is considered reasonable having regard to the size of the Company and nature of its business and discrepancies, if any, were properly dealt with on such verification during the year.

(c) During the year, the Company has not disposed off substantial portion of the Fixed Assets.

(ii) (a) The Raw Materials, Stores and Spare Parts, Tools, Work in Progress and Semi-Finished Goods inventory with the Company have been physically verified during the year by the Management. In our opinion, the frequency of verification is reasonable. In case of finished goods, stock verification was done at year end.

(b) The procedures of physical verification of Raw Material inventories followed by the Management are generally reasonable and adequate in relation to the size of the Company and nature of its business.

(c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material and have been appropriately dealt in the books. In the case of materials with sub -contractors confirmation from certain sub - contractors were not obtained and in this regard please refer Note No. 18 ( i ) and 18 ( ii ).

(iii) The Company has not granted / taken any loans to / from parties covered in the register maintained under Section 301 of the Companies Act, 1956 and hence, Clause No. 4

(iii) of Companies Audit Report Order, 2003 as amended in 2004, is not applicable.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business with regard to purchases of Inventory, Fixed Assets and with regard to the Sale of Goods and Services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

(v) According to the information and explanations given to us, we are of the opinion that there are no transactions that need to be entered in register maintained under Section 301 of the Companies Act, 1956.

(vi) Company has not accepted any deposit from public in the current year and all deposits had matured and settled except for Rs. 38.55 lakhs, out of which Rs. 36.50 lakhs are being retained as per Garnishee Order of Lok Ayukta, Bangalore and the balance of Rs. 2.05 lakhs though matured have not been claimed by depositors. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Section 58 A and 58 AA and other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975.

(vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

(viii) The Company pursuant to the Companies (Cost Accounting) Rules 201 I made by the Central Government for the maintenance of cost records under Section 209(I)(d) of the Companies Act, 1956 has maintained cost records and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

(ix) (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income Tax, Sales Tax (VAT), Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues applicable to it.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Service Tax, Sales Tax (VAT), Customs Duty, Excise Duty and Cess were in arrears, as at 3 I March 201 2 for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us, there are no dues of Income Tax, Service Tax, Sales Tax (VAT), Customs Duty, Excise Duty and Cess which have not been deposited on account of any dispute except as follows :

Amount Nature of Nature of Forum where disputed Statute Dues dispute is pending (Rs.in Lakhs)

The Central Excise Duty 64.90 Customs, Excise Excise Act, and Service Tax I944 Appellate Tribunal, New Delhi

57.26 CESTAT, Bangalore

49.17 Commissioner (Appeals), Bangalore

UP Trade Tax Benefit of 2.03 Ist Appellate Act, I948 Concessional Authority Form 3D not allowed

Acceptance 1.22 DC (Appeals) of Duplicate Copy of Form 3D(I)

Central Sales Sales Tax 8.18 Deputy Tax, Act I956 Commissioner (Appeal)

Benefit of 2.30 AC (Appeal) Concessional Form C

Central Sales 530.06 Sales Tax Appeallate Tax Tribunal

Trade Tax Benefit of 220.08 Uttarakhand High concessional Court, Nainital form not allowed

ESI Act, I948 Interest and 3.52 Punjab and Haryana Damages High Court, towards late Chandigarh deposit.

Sales Tax Act, Sales Tax 66.44 Commissioner of Bihar Commercial Taxes (Appeals), Chirkunda, Bihar

AP Sales Tax Sales Tax 10.83 DC (Appeals) Secundarabad Division, Hyderabad

The Andhra AP VAT 26.04 Sales Tax Appellate Pradesh Value Tribunal Added Tax Act

Karnataka Sales Tax 3,287.41 JC (Appeals) Sales Tax Act Bangalore

Service Tax Service Tax 103.38 Commissioner (Appeals), Bangalore

Service Tax 10.58 CESTAT Bangalore

Interest and 2.58 Commissioner Penalty on (Appeals),

Service Tax Bangalore

Urban Land Land Tax 41.44 Principal Tax Commissioner and Commissioner Land Reforms, Chennai

Vacant Land Land Tax 10.35 Director, Tax Directorate of Town Panchayat, Chennai

Employees Provident 17.58 Regional Provident Provident Fund Fund Commissioner Fund and and Recovery Officer Miscellaneous Provision Act, 1952

(x) The Company does not have accumulated losses as at the end of the financial year and has not incurred Cash losses during the financial year and in the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to banks.

(xii) According to the information furnished to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) The Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4 (xiii) of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

(xiv) The Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4 (xiv) of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

(xv) The Company has not given any guarantee for loans taken by others from banks or financial institutions.

(xvi) The Company has not availed any term loan and hence, clause 4 (xvi) of Companies (Auditor's Report) Order, 2003 is not applicable.

(xvii) According to the information and explanation given to us and on an overall examination of the Balance Sheet of the Company, we report that no funds raised on short term basis have been used for long term investment.

(xviii) The Company has not made preferential allotment of shares to parties covered in the register maintained under Section 30I of the Companies Act, I956.

(xix) The Company has not issued any debentures.

(xx) The Company has not raised money by Public Issues and hence clause 4(xx) of Companies (Auditor's Report) Order, 2003 is not applicable to the Company.

(xxi) During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company noticed or reported during the year nor have we been informed of any such case by the Management, that causes the financial statements to be materially misstated.

For R G N Price & Co

Chartered Accountants

Firm Regn. No. 002785S

R M Kamath

Bangalore Partner

21 June 2012 Membership No. 022907


Mar 31, 2011

1. We have audited the attached Balance Sheet of Bharat Electronics Limited as at 31st March 2011, the Profit and Loss Account and also the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003 (as modified on 25 Nov 2004) issued by the Central Government in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to in Paragraph 3 above, we report that:

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

b. In our opinion, proper books of account, as required by law, have been kept by the Company in so far as it appears, from our examination of those books. The audit of the accounts of Bangalore, Hyderabad and Chennai Units and Corporate Office were carried out by us, whilst the audit of Ghaziabad, Panchkula, Kotdwara, Pune, Navi Mumbai and Machilipatnam units were audited by respective branch auditors. The reports of branch auditors have been considered by us while preparing our report. In the case of New York and Singapore offices, not visited by us, in respect of which the accounts are maintained at Corporate Office, the returns / records received from the said offices have been verified and found to be adequate for the purpose of our audit. We further state that the disclosure in Note No. 23 of Schedule 21 of Company's share of Assets, Liabilities, Income and Expenses in the Joint ventures is based on audited financial statements of GE BE Pvt. Ltd. and audited financial statements of BEL Multitone Pvt. Ltd., as provided by the respective operators of Joint Ventures.

c. The Balance Sheet and the Profit and Loss Account and Cash Flow Statement dealt with by this report, are in agreement with the books of accounts of this Company ;

d. In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in Section 211(3C) of the Companies Act, 1956, read with Section 211(3B) of the Companies Act, 1956 and Item No. 18 on Notes on Accounts regarding Segment Reporting.

e. As the Company is a Government Company, it is exempt from the provisions of Section 274 (1) (g) of the Companies Act, 1956 regarding disqualification of directors.

f. In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the Significant Accounting Policies and the Notes forming part of accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India :

i) In the case of the Balance Sheet, of the State of Affairs of the Company as at 31st March, 2011,

ii) In the case of the Profit and Loss Account, of the Profit of the Company, for the year ended on that date.

iii) In the case of Cash Flow Statement, of the Cash Flow for the year ended on that date.

Annexure referred to in Para 3 of our report of even date on the Accounts of Bharat Electronics Limited, for the year ended 31st March 2011

(i) (a) The Company has generally maintained proper records showing full particulars including quantitative details and situation of fixed assets.

(b) As explained to us, the Management has generally carried out the physical verification of a portion of the Fixed Assets in accordance with their phased programme of physical verification, which is considered reasonable having regard to the size of the Company and nature of its business and discrepancies, if any, were properly dealt with on such verification during the year.

(c) During the year, the Company has not disposed off substantial portion of the Fixed Assets.

(ii) (a) The Raw material, Stores and Spare Parts, Tools, Work in Progress and Semi - Finished goods inventory with the Company have been physically verified during the year by the Management. In our opinion, the frequency of verification is reasonable. In case of finished goods, stock verification was done at year end.

(b) The procedures of physical verification of Raw Material inventories followed by the Management are generally reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material and have been appropriately dealt in the books. In the case of materials with sub-contractors confirmations from certain sub-contractors were not obtained and in this regard please refer Item No. 9(a) of Notes to Accounts.

(iii) The Company has not granted / taken any loans to / from parties covered in the register maintained under Section 301 of the Companies Act, 1956 and hence, Clause No. iii of Companies Audit Report Order, 2003, as amended in 2004, is not applicable.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

(v) According to the information and explanations given to us, we are of the opinion that there are no transactions that need to be entered in register maintained under Section 301 of the Companies Act, 1956.

(vi) Company has not accepted any deposit from public in the current year and all deposits had matured and settled except for Rs. 38.55 Lakhs, out of which Rs. 36.50 lakhs are being retained as per Garnishee Order of Lok Ayukta, Bangalore and the balance Rs. 2.05 lakhs though matured have not been claimed by the depositors. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Section 58A and 58AA and other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975.

(vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

(viii) The Company pursuant to the Rules made by the Central Government for the maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 has to maintain cost records for Electronic Products and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained. However, we have not made a detailed scrutiny of the same.

(ix) (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income Tax, Sales Tax (VAT), Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues applicable to it.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Service Tax, Sales Tax(VAT), Customs Duty, Excise Duty and Cess were in arrears, as at 31st March 2011 for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us, there are no dues of Income Tax, Service Tax, Sales

Tax(VAT), Customs Duty, Excise Duty and Cess which have not been deposited on account of any dispute except as follows :

Amount

Nature of Nature of Forum where dispute disputed Statute Dues is pending (Rs. in Lakhs)

The Central Excise Duty 64.90 Customs, Excise and Excise Act, 1944 Demand Service Tax Appellate Tribunal, New Delhi

57.26 CESTAT

49.85 Commissioner (Appeals)

U.P. Trade Tax Benefit of 1.97 Case remanded to Act, 1948 Concessional 1st Appellate Authority Form 3D not allowed (Year 1979-80)

U.P. Trade Tax Benefit of 1.17 Appeal filed with DC Act, 1948 Concessional (Appeals) for acceptance Form 3B and of Duplicate Copy of 3D not allowed 3D(1) (Year 1991-92)

Central Sales Tax Sales Tax dues 7.95 Case remanded to Act, 1956 and benefit of Deputy Commissioner Concessional (Appeal) Form C (Year 1980-81)

Central Sales Tax Benefit of 2.21 Case remanded to AC Act, 1956 Concessional (Appeal) Form D not allowed (Year 1989-90)

Central Sales Tax Central Sales Tax 482.09 Sales Tax Appellate Act, 1956 Tribunal

Income Tax (TDS) Applicability of 73.37 Income Tax Appellate 194 Cor 194 I Tribunal, Delhi (Financial Year 2007-08 and 2008-09)

ESI Act, 1948 Interest and 3.52 Punjab and Haryana damage towards High Court, Chandigarh late deposit.

Sales Tax Act, Sales Tax 66.44 Commissioner of Bihar Commercial Taxes (Appeals), Chirkunda, Bihar

AP. Sales Tax Sales Tax 21.66 DC (Appeals), Secundarabad Division, Hyderabad

Karnataka Sales Tax Sales Tax 1,584.99 JC (Appeals), Bangalore

Service Tax Service Tax 8.42 Commissioner (Appeals)

Service Tax Service Tax 34.01 High Court of Karnataka

Service Tax Service Tax 103.38 Commissioner

Andhra Pradesh VAT Sales Tax 26.04 Sales Tax Appellate Tribunal

Trade Tax Benefit of 220.08 Uttrakhand High Court, Concessional Nainital Form not allowed (Year 2001-02)

Urban Land Tax Land Tax 41.44 Land Tax Authorities

Vacant Land Tax Land Tax 10.35 Land Tax Authorities

(x) The Company does not have accumulated losses as at the end of the financial year and has not incurred Cash losses during the financial year and in the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to bank.

(xii) According to information furnished, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) The Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

(xiv) The Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

(xv) The Company has not given any guarantee for loans taken by others from banks or financial institutions.

(xvi) The Company has not availed any term loan and hence, clause (xvi) of CARO 2003 is not applicable.

(xvii) According to the information and explanation given to us and on an overall examination of the Balance Sheet of the Company, we report that no funds raised on short term basis have been used for long term investment.

(xviii) The Company has not made preferential allotment of shares to parties covered in the register maintained under Section 301 of the Companies Act, 1956.

(xix) The Company has not issued any debentures.

(xx) The Company has not raised money by Public Issues and hence Clause 4 (xx) of CARO 2003 is not applicable to the Company.

(xxi) During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company noticed or reported during the year nor have we been informed of any such case by the management, that causes the financial statements to be materially misstated.

For R G N Price & Co.

Chartered Accountants

H S Venkatesh

Partner

Bangalore Firm Regn. No. 002785S

29th June 2011 Membership No. 026666


Mar 31, 2010

1. We have audited the atached Balance Sheet of Bharat Electronics Limited as at 31st March 2010, the Profit and Loss Account and also the cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditng standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supportng the amounts and disclosures in the financial statements. An audit also includes assessing the Accounting principles used and signifcant estmates made by the management, as well as evaluatng the overall financial statement presentaton. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003 (as modifed on 25 Nov 2004) issued by the Central Government in terms of sub-Section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the maters specifed in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to in Paragraph 3 above, we report that:

a. We have obtained all the informaton and explanatons which to the best of our knowledge and belief were necessary for the purpose of our audit.

b. In our opinion, proper books of account, as required by law, have been kept by the Company in so far as it appears, from our examinaton of those books. The audit of the accounts of Bangalore, Hyderabad and Chennai Units and Corporate Ofce were carried out by us, whilst the audit of Ghaziabad, Panchkula, Kotdwara, Pune, Navi Mumbai and Machilipatnam units were audited by respectve branch auditors. The reports of branch auditors have been considered by us while preparing our report. In the case of New York and Singapore ofces, not visited by us, in respect of which the accounts are maintained at Corporate Ofce, the returns / records received from the said ofces have been verifed and found to be adequate for the purpose of our audit. We further state that the disclosure in Note No. 24 of Schedule 21 of Companys share of Assets, Liabilites, Income and Expenses in the joint ventures is based on audited financial statements of GE BE Pvt. Ltd., and audited financial statements of BEL Multtone Pvt. Ltd., as provided by the respectve operatiors of joint ventures.

c. The Balance Sheet and the Profit and Loss Account cash flow dealt with by this report, are in agreement with the books of account of this Company;

d. In our opinion, the Balance Sheet, Profit and Loss Account and Cash flow Statement dealt with by this report comply with the Accounting standards referred to in Section 211(3C) of the Companies Act, 1956, read with Section 211(3B) of the Companies Act, 1956 and Item No. 19 on Notes on Accounts regarding segment reportng.

e. As the Company is a Government Company, it is exempt from the provisions of Section 274 (1) (g) of the Companies Act, 1956 regarding disqualifcaton of directors.

f. In our opinion and to the best of our informaton and according to the explanatons given to us, the said accounts read together with the Signifcant Accounting Policies and the Notes forming part of accounts give the informaton required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the Accounting principles generally accepted in India:

i) In the case of the Balance Sheet, of the State of afairs of the Company as at 31st March, 2010,

ii) In the case of the Profit and Loss Account, of the profit of the Company, for the year ended on that date.

iii) In the case of Cash Flow Statement, of the cash flow for the year ended on that date.

Annexure referred to in Para 3 of our report of even date on the accounts of Bharat Electronics Limited, for the year ended 31st March 2010.

(i) (a) The Company has generally maintained proper records showing full partculars including quanttatve details and situaton of Fixed Assets.

(b) As explained to us, the Management has generally carried out the physical verifcaton of a porton of the Fixed Assets in accordance with their phased programme of physical verifcaton, which is considered reasonable having regard to the size of the Company and nature of its business and discrepancies, if any, were properly dealt with on such verifcaton during the year.

(c) During the year, the Company has not disposed of substantal porton of the Fixed Assets.

(ii) (a) The raw material, stores and spare parts, tools, work in progress and semi fnished goods inventory with the Company have been physically verifed during the year by the management. In our opinion, the frequency of verifcaton is reasonable. In case of fnished goods, stock verifcaton was done at year end.

(b) The procedures of physical verifcaton of raw material inventories followed by the management are generally reasonable and adequate in relaton to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory. The discrepancies notced on verifcaton between the physical stocks and the book records were not material and have been appropriately dealt in the books. In the case of materials with sub-contractors confrmatons from certain sub-contractors were not received and in this regard please refer Item No. 10 (a) of Notes to Accounts.

(iii) The Company has not granted / taken any loans to / from partes covered in the register maintained under Section 301 of the Companies Act, 1956 and hence, Clause No. iii of Companies Audit Report Order, 2003, as amended in 2004, is not applicable.

(iv) In our opinion and according to the informaton and explanatons given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business with regard to purchases of inventory, Fixed Assets and with regard to the sale of goods and services. During the course of our audit, we have not observed any contnuing failure to correct major weaknesses in internal control system.

(v) According to the informaton and explanatons given to us, we are of the opinion that there are no transactons that need to be entered in register maintained under Section 301 of the Companies Act, 1956.

(vi) Company has not accepted any deposit from public in the current year and all deposits had matured and setled except for Rs. 38.55 Lakhs, out of which Rs. 36.50 lakhs are being retained as per Garnishee Order of Lok Ayukta, Bangalore and the balance Rs. 2.05 lakhs though matured have not been claimed by the depositors. In our opinion and according to the informaton and explanatons given to us, the Company has complied with the provisions of Section 58AA and other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975.

(vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

(viii) The Company, pursuant to the rules made by the Central Government for the maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 has to maintain cost records for electronic products and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained. However, we have not made a detailed scrutny of the same.

(ix) (a) The Company is generally regular in depositng with appropriate authorites undisputed statutory dues including Provident Fund, Investor Educaton and Protecton Fund, Employees State Insurance, Income Tax, Sales Tax (VAT), Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues applicable to it.

(b) According to the informaton and explanatons given to us, no undisputed amounts payable in respect of Income Tax, Service Tax, Sales Tax (VAT), Customs Duty, Excise Duty and Cess were in arrears, as at March 31, 2010 for a period of more than six months from the date they became payable.

(c) According to the informaton and explanatons given to us, there are no dues of Income Tax, Service Tax, Sales Tax (VAT), Customs Duty, Excise Duty and Cess which have not been deposited on account of any dispute except as follows:

Amount Nature of disputed Forum where dispute is Nature of Dues Statute (Rs. in pending thousands)

The Central Excise Duty 6,490 Custom Excise and Excise Act, Demand Service Tax Appealate 1944 Tribunal, New Delhi 572.6 CES TAT

418.8 Commissioner (Appeals)

192.53 Commissioner

U.P. Trade Benefit of 192 Case remanded to 1st Tax Act, Concessional Form Appelate Authority 1948 3D not allowed. (Year 1979-80)

Central Sales Sales Tax dues 772 Case remanded to Deputy Tax Act, and benefit of Commissioner (Appeal). 1956 concessional Form C (Year 1989-90)

Central Sales Sales Tax dues 213 Case remanded to AC Tax Act, and benefit of (Appeal). 1956 concessional Form D(Year 1989-90)

UP Trade Tax Benefit of 112 Appeal fled with DC Act, 1948 concessional (Appeals) for acceptance Form 3B and 3D of duplicate copy of 3d(1) not allowed (Year 1991-1992)

UP Trade Tax Non-receipt of 305 Joint Commissioner Act, 1948 Concessional forms – Corporate Circle, for sale to Army Ghaziabad. and NTPC (Year 2008)

Income Tax Applicability of 7,337 CIT(Appeals),Ghaziabad. (TDS) Section 194(‘C) or 194(I) (Financial year 2007-08 and 2008-09).

ESI Act, Interest and 352 Punjab and Haryana High 1948 damage towards Court, Chandigarh late deposit

Sales Tax Sales Tax 664.4 Commissioner of Act, Bihar Commercial Taxes (Appeals, Chirkunda, Bihar)

AP Sales Tax Sales Tax 108.3 DC (Appeals) Secundarabad Division, Hyderabad

Rajasthan Sales Tax 160 DC (Appeals), Udaipur Sales Tax

Karnataka Sales Tax 12,757.5 JC (Appeals), Bangalore Sales Tax

Service Tax Service Tax 84.2 Commissioner (Appeals)

Service Tax Service Tax 379.7 High Court of Karnataka

Service Tax Service Tax 363.3 Commissioner (Appeals)

Service Tax Service Tax 1033.8 Commissioner

Trade Tax Trade Tax Dues and 16,512 Tribunal Commercial Tax Department, Interest on dues and Joint Commissioner Kotdwara (Appeals), Commercial Tax, Dehradun

Tamil Nadu Sales Tax 160,749 Andhra Pradesh High Sales Tax Court

Andhra Sales Tax 2,604 Sales Tax Appellate Pradesh VAT tribunal

CST Act CST 48,208 Sales Tax Appellate 1956 tribunal

Urban Land Land Tax 4,144 Land Tax Authorites Tax

Vacant Land Land Tax 1,035 Land Tax Authorites Tax

(x) The Company does not have accumulated losses as at the end of the Financial year and has not incurred Cash losses during the financial year and in the immediately preceding financial year.

(xi) In our opinion and according to the informaton and explanatons given to us, the Company has not defaulted in repayment of dues to bank.

(xii) According to informaton furnished, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securites.

(xiii) The Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company.

(xiv) The Company is not dealing in or trading in shares, securites, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company.

(xv) The Company has not given any guarantee for loans taken by others from banks or financial insttutons.

(xvi) The Company has not availed any term loan, and hence, clause (xvi) of CARO 2003 is not applicable.

(xvii) According to the informaton and explanaton given to us and on an overall examinaton of the Balance Sheet of the Company, we report that no funds raised on short term basis have been used for long term investment.

(xviii) The Company has not made preferental allotment of shares to partes covered in the register maintained under Section 301 of the Companies Act, 1956.

(xix) The Company has not issued any debentures.

(xx) The Company has not raised money by public issues and hence Clause 4 (xx) of CARO 2003is not applicable to the Company.

(xxi) During the course of our examinaton of the books and records of the Company, carried out in accordance with the generally accepted auditng practces in India, and according to the informaton and explanatons given to us, we have neither come across any instance of fraud on or by the Company notced or reported during the year nor have we been informed of any such case by the management, that causes the financial statements to be materially misstated.

For R.G.N Price & Co. Chartered Accountants

H. S. Venkatesh

Partner Bangalore

Membership No. 026666 Firm Regn. No.002785S 25th June 2010

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