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Notes to Accounts of Bharat Electronics Ltd.

Mar 31, 2023

i. Freehold land consists of 2,081.80 acres (2,081.80 acres) and Leasehold land consists of 989.28 acres (989.28 acres).

ii. Freehold land includes 5.32 acres (5.32 acres) leased to commercial / religious organisations and in their possession.

iii. Additions related to R&D assets during the year includes

A. '' 2,440 ('' 995) in respect of the assets of Central Research Laboratories / Product Development and Innovation Centre accounted under natural code heads.

B. '' 205 (Nil) in respect of the assets of Navi Mumbai Unit accounted under natural code heads.

iv. Electronic Equipment value includes POS machines valuing Nil ('' 886) which are under the control of Haryana Government (operating lease).

v. Site Restoration Obligation

Refer Note 21 for Site Restoration Obligation in respect of Wind Mill & Solar Power Plants.

Gross Block Value of Plant & Machinery includes Site Restoration Obligation of '' 2,355 ('' 2,318) in respect of Wind Mill & Solar Power Plants.

vi. Contractual Commitments

Refer Note 30 (6) for outstanding Contractual Commitments.

vii. Deemed Cost

On transition to Ind AS (01.04.2015), the company has elected to continue with the carrying value of all its property, plant and equipment as at 1 April 2015 measured as per previous GAAP and use that carrying value as the deemed cost of the property, plant & equipment.

viii. Estimation of Useful Life of Assets

The management has estimated the useful life of the various categories of tangible assets (which are different from the useful life indicated in Schedule II to the Companies Act, 2013) after taking into consideration, factors like expected usage of assets, risk of technical and commercial obsolescence, etc.

The estimated useful lives of various categories of Tangible Assets is as follows:

Asset Class

Years

Buildings

20 - 40

Roads and Culverts

20 - 40

Installations

10

Plant and Machinery

2 - 25

Electronic Equipments

5 - 7

Vehicles

4 - 5

Office Equipments

5 - 7

Furniture, Fixtures and equipments

6 - 10

Equipments for R&D Labs

5

ix. Depreciation / Amortisation

Depreciation is calculated on a straight-line basis over the estimated useful lives of the Assets.

Leased Assets are amortised on a straight-line basis over their estimated useful lives or their respective lease term

whichever is shorter.

x. Method of Accounting Depreciation

Depreciation / Amortisation has been calculated as per the Accounting Policy No. 8 of the Company and recognised as

expenses in the Statement of Profit and Loss. Amount of Depreciation recognised as part of Cost of Other Asset is Nil

(Nil).

xi. Impairment of Assets

Refer Note 30 (4).

xii. Refer Note 12 in respect of Unadjusted Capital Advance paid towards Property, Plant & Equipment.

xiii. Land acquired free of cost from the Government in some units has been accounted in line with provisions of Ind AS 101.

xiv. Details of Registration, Pending Litigation etc.,

a. Pending execution of title/sale deed and handing over physical possession of land allotted by Andhra Pradesh Industrial Infrastructure Corporation (APIIC) in respect of land admeasuring 5.60 acres (5.60 acres) in Mallapur allotted to BEL, Hyderabad and the matter being under litigation, no provision towards registration and other costs has been made in the books of account. Cost of land paid to APIIC amounting to '' 65 ('' 65) has been shown in Note 12-Other Non current Assets to the Financial Statements under the heading Capital Advances.

b. Based on the Memorandum of Understanding reached with the Defence authorities, assets constructed on the land allotted to BEL and in possession of BEL are capitalised under respective heads for setting up of the Hyderabad Unit. Pending finalisation of the terms and conditions by the appropriate authorities, the cost of land admeasuring 25.11 acres (25.11 acres) has not been accounted in the books of accounts.

c. Land Admeasuring to 122.82 Acres (122.82 Acres) at Ibrahipatnam alloted by APIIC/TSIIC possession is given, for which sale deed is pending.

d. A demand of '' 256 ('' 256) being 50% of the compensation amount decreed by City Civil Court, Hyderabad has been received towards additional compensation from TSIIC dated 31.01.2015 for land of 22.375 acres (22.375 acres) which is part of the Freehold Land mentioned above. The demand is under dispute and hence, no provision in respect of the same has been made in the books of accounts.

e. Free hold Land to the extent of 1.22 acres (1.22 acres) which was allotted by Government Authorities in Bengaluru in return for handing over of Land measuring 1.24 acres (1.24 acres) is under litigation.

f. The Company has installed Windmill Generator at three locations. Out of which: Windmill Generator-I capitalised in the year 2006-07 on Lease Land. Upfront Lease rent is Nil and Lease Agreement for the land is pending finalisation. Windmill Generator - II is capitalised in the year 2007-08 on the leased land by paying upfront lease rent of '' 36. Lease Agreement for the land is pending finalisation.

g. The title deed in respect of land in Panchkula measuring 0.566 acres (0.30 acres) is under litigation. Three cases are pending in the Civil Court Ambala, SDM Cum. Assistant Collector, UT, Chandigarh and District Court Panchkula.

h. Sale deed is pending for finalisation of the land admeasuring to 913.99 acres (913.99 acres) at Palasamudram (Defence System Integration Complex - DSIC), Ananthapur Dist. AP.

i. Leasehold land admeasuring 8.93 acres (8.93 acres) has been converted into freehold land in Pathankot and registered in May 2022.

j. A land measuring 12.52 acres (12.52 acres) at Sohna (Haryana), mututaion is pending with concerned Tehsildar (Ghaziabad).

xv. Company has installed solar power plants on lease land in Ordance Factory Board at Medak, Itarsi, Bolangir, HVF Avadi, GCF Jabalpur, VFJ Jabalpur, Hazratpur, Muradnagar, Nalanda, MSF Ishapore by paying a nominal value of INR 1 (represents absolute figure) as annual lease rent for every plant.

xvi. Prepaid rent paid for 3 MW Hassan & 8.4 MW Davangere windmill plants capitalised as Right of Use on transition to Ind AS 116.

xvii. Land admeasuring to 31.15 acres (31.15 acres) located at Devanahalli, Bengaluru is received from Karnataka Industrial Area Development Board (KIADB) and the cost of land along with the cost of registration of '' 7,974 ('' 7,974) capitalised under Lease hold land. As per the terms of the lease agreement, on sucessful commencement of the project the same will be converted as freehold land.

xviii. Short term lease amount expended during the year is Nil (Nil).

xix. Leasehold land includes 9.62 acres (9.62 acres) leased to Government Organisation for use during construction and is in their possession of NCRTC as at the year end.(Ghaziabad)

xx. Lease agreement has been entered with Tamil Nadu Industrial Explosives Ltd (TEL). Chennai, towards lease of 50 acres for 29 years and capitalised during FY 2021-22 as an ROU asset for total value of '' 5,166. Interest expense on lease liability is '' 339. Discounting Rate considered is 6.95% (i.e. applicable incremental borrowing rate) as per Ind AS 116. Total cash outflow for TEL lease is '' 13,685.

xxi. Equipments belong to "Electronics Computer system" whose Gross block is '' 3 ('' 3) and accumulated depreciation of '' 3 ('' 3), and Equipments belongs to "Miscellaneous Maintainance Equipment" whose Gross block is '' 2 ('' 2) and accumulated depreciation of '' 1 ('' 1) are lying at Naval Dockyard, Vizag.

xxii. DAV Public School was provided a portion of leasehold land by the Unit. Unit has filed a case against DAV Public School for eviction (Ghaziabad Unit).

xxiii. Repayment of Lease during the year amounting to '' 433 ('' 167).

xxiv. Borrowing cost of Nil ('' 974) (Net off interest income) towards Employee quarters is capitalised. The capitalisation rate is Nil (6.47%) p.a.

xxv. Lease agreement has been entered with QUBEXPRO, Visakhapatnam towards lease of space for 2 years (non-cancellable period) with an extendable period of another 4 years (Total lease period is 6 years) and capitalised during the year as ROU asset for total value of '' 780. Interest expenses on lease liability is '' 205. Rate used for discounting for arriving expenses is 7.66% p.a. as per Ind AS 116. Total cashflow for SDC-Vizag lease is '' 986.

i. Civil construction mainly comprises of Production related building, R&D building and Employee Quarters.

ii. Refer Note 30(6) in respect of contractual commitments.

iii. Refer Note 12 in respect of Unadjusted Capital Advance paid towards Property, plant & equipment.

iv. Impairment of Assets

Building under construction with carrying value of '' 124 is halted for more than three years as the contractor to whom the said work was awarded is in the process of winding up, and there has been no progress in the work. During the year 2021-22 a claim of '' 1,398 submitted to official liquidator based on independent valuation report. As per the advice of Official Liquidator (High Court, Madras) condonation of delay from High Court has been obtained during the year. An amount of '' 124 was impaired in the financial year 2018- 19. Refer Note 30(4).

iv. Land comprises of Freehold Land of 1.48 acres (1.48 acres) in Bengaluru.

v. Deemed Cost

On transition to Ind AS (01.04.2015), the company has elected to continue with the carrying value of all its investment property as at 1 April 2015 measured as per previous GAAP and used that carrying value as the deemed cost of the investment property.

vi. Estimation of Useful Life of Assets

The management has estimated the useful life of the various categories of tangible assets (which are different from the useful life indicated in Schedule II to the Companies Act, 2013) after taking into consideration, factors like expected usage of assets, risk of technical and commercial obsolescence, etc.

vii. Depreciation

Depreciation is calculated on a straight-line basis over the estimated useful lives of the Assets. The amount of Depreciation has been recognised as expense in the Statement of Profit and Loss.

viii. Method of Accounting Depreciation

Depreciation has been calculated as per the Accounting Policy No. 8 of the Company and recognised as expenses in the Statement of Profit and Loss.

ix. Impairment of Assets

As the fair value of the Investment Property is higher than its carrying value, there is no indication of impairment.

x. Restrictions on the realisability of Investment Property

The land is allotted by Government of India.

xi. Related Party Transactions

Investment Property includes Building and land measuring 0.31 acres (0.31 acres) given under cancellable operating lease to Subsidiary Company BEL Thales Systems Ltd. Also Refer Note 31.

xii. Details of Registration, Pending Litigation etc.

A. Nil (Nil).

xiii. Estimation of Fair Value: - The company has estimated the fair value of Investment Property based on the Government Guidance Value (municipal value) of the similar properties in the investment property''s location and not based on the valuation by registered valuer. All resulting fair value estimates for the investment properties are included in level 2.

i. Deemed Cost

On transition to Ind AS (01.04.2015), the company has elected to continue with the carrying value of all its other intangible assets as at 1 April 2015 measured as per previous GAAP and used that carrying value as the deemed cost of other intangible assets.

iii. Amortisation

Amortisation is calculated on a straight-line basis over the estimated useful lives of the Assets.

The amount of Amortisation has been recognised as expense in the Statement of Profit and Loss.

iv. Method of Accounting Amortisation

Amortisation has been calculated as per the Accounting Policy No. 8 of the Company and recognised as expenses in the Statement of Profit and Loss.

v. Refer Note 30(6) for Contractual Commitments.

vi. Impairment of Assets

Refer Note 30(4).

vii. The restriction on the title of the assets is governed by the terms of agreement.

viii. Refer Note 30(7) for the aggregate amount of research and development expenditure recognised as an expense during the period.

i. Refer Note 30 (6) for Contractual Commitments.

ii. Impairment of Assets:-

An amount '' 545 (Nil) was provided as impairment loss since development activity is not being continued at present and also as per company''s assessment the probability of generating economic benefit was not certain (Refer Note 30(4)).

iii. An amount of '' 1,950 (Nil) is charged off to Statement of Profit & Loss during the year.

ii. a. The company has invested its leave Encashment liabilities in LIC''sNew Group Leave Encashment Plan.

b. During the year LIC investment related to BERECHS liabilities which was in new group superannuation cash accumulation plan has been transfered to Bharat Electronics Limited Retired Employees Medical Trust (BREMT). Refer Note 21.

iv. An amount of INR 50,000 [represents absolute figure] has been contributed towards equity capital in M/s Defence Innovation Organisation (DIO). DIO was incorporated on 10 April 2017 as a ''Not for profit'' Company as per the provisions of Section 8 of the Companies Act, 2013 with an authorised share capital of '' 100 (BEL: 50 %; HAL:50%) with an objective of funding innovation in defence sector. The registered office of the company situated in BEL''s premises Bengaluru.

An amount of '' 5,000 has been provided in the books of account towards contribution to initial corpus fund. Out of this an amount of '' 4,000 is pending for disbursement.

i. Payment Terms

A. I n majority of contracts, payment (net of advance received, if any) is due on delivery of items. However, in some contracts a portion of dues (Typically 5% to 10%) is linked to satisfaction of further performance obligation like completion of installation and commission activity etc. In respect of turnkey contracts, payment (net of advance, if any) is linked to achievement of specified milestone.

B. Advance including progressive payments received from customer are classified as contract liability and adjusted on completion of related performance obligation.

C. Amount retained by customer in respect of completed performance obligation, due to linking of payment with completion of other performance obligations in the contract, is classified as contract asset. Balance amount receivable is classified as Trade receivable.

ii. Financial instruments

Refer Note 33 for classification of financial instruments.

iii. Impairment of financial assets

Provisions for impairment has been made in line with Accounting Policy No. 30 of the company.

iv. Related party disclosure

For Related Party Disclosures refer Note 31.

v. Security, Hypothecation etc.

Refer Note 35.

i. Financial Instruments

Refer Note 33 for classification of financial instruments.

ii. Impairment of Financial Assets

Provisions for impairment has been made in line with Accounting Policy No. 30 of the company.

iii. Related Party Disclosure

For Related Party Disclosures refer Note 31.

iv. Security, Hypothecation etc

Refer Note 35.


i. Financial Instruments

Refer Note 33 for classification of financial instruments.

ii. Impairment of Financial Assets

Provisions for impairment has been made in line with Accounting Policy No. 30 of the company.

iii. Related Party Disclosure

For related party disclosures refer Note 31.

iv. Net carrying amount of Nil (Nil) has been added in other assets with respect to Property, Plant and Equipment not in active use and pending for disposal.

v. Security, Hypothecation etc

Refer Note 35.

x. Terms, Rights, preferences and restrictions attaching to each class of shares

A. The Company has only one class of shares viz, Equity Shares.

B. Each holder of Equity Shares is entitled to one vote on show of hands and in poll in proportion to the Number of shares held.

C. Each Shareholder has a right to receive the dividend declared by the Company.

D. On winding up of the Company, the equity shareholders will be entitled to get the realised value of the remaining assets of the Company, if any, after distribution of all preferential amounts as per law. The distribution will be in proportion to the number of equity shares held by the shareholders.

b. Nature and purpose of Reserves

i. Capital Reserve

Capital Reserve is created by transfer from Retained earnings an amount equal to capital profit earned by the company. The reserve is utilised in accordance with the provisions of the Companies Act, 2013.

ii. Capital Redemption Reserve

Capital Redemption Reserve is created by transfer from General Reserve an amount equal to face value of the Shares bought back. The reserve is utilised in accordance with the provisions of the Companies Act, 2013.

iii. Equity Investment through Other Comprehensive Income (OCI)

The company has elected to recognise changes in fair value of certain equity investments in other comprehensive income. The change in fair value is accumulated in this reserve. If and when the investment is de-recognised the accumulated amount will be transferred to Retained earnings.

iv. Other Comprehensive Income (OCI)

Other comprehensive income are those gains or losses which are not yet realised and excluded from the statement of profit and loss. It mainly consists of remeasurement of the net defined benefit liability / asset (net of tax).

xii. Government of India being the Promoter holding 51.14% (51.14%) of Shares as on 31.03.2023. No. of Equity Shares held as on Balance Sheet date is 3,73,79,21,934 (1,24,59,73,978), increase is due to bonus issue.

xiii. 4,87,31,85,886 Bonus shares were issued during the year for consideration other than cash.

ii. The information has been given in respect of such suppliers to the extent they could be identified as Micro & Small enterprises on the basis of information available with the Company and have been relied upon by the Auditors.

iii. Financial Instruments

Refer Note 33 for classification of financial instruments.

iv. Related Party Disclosure

For Related Party Disclosures refer Note 31.

v. The exposure of company to currency and liquidity risk related to Trade Payables is disclosed at Note 34.

ii. Provision for Warranties - as per Accounting Policy No. 20 of the Company.

Provision for warranties is made in respect of products whose normal warranty period is outstanding. As the warranty provision period varies from product to product, provision is made at Strategic Business Unit (SBU) level based on average period of warranty period. Provision is made based on trend based estimate of the likely expenses to be incurred. The provision is measured at the present value of the estimated cost of Warranty.

iii. Provision for Site restoration - as per Accounting Policy No. 23 of the Company.

In accordance with the terms and conditions of the Lease agreement entered into with Lessor, the company is required to return the land in its original condition. Accordingly provision in respect of Site restoration obligation has been made. The provision required is reviewed and required adjustment made at each year end.

The provision is measured at the present value of the best estimate of the cost of restoration.

iv. Provision for Onerous contracts - as per Accounting Policy No. 23 of the Company.

In respect of certain contracts entered into by the company, it is expected that the likely cost to complete the contract would exceed the Revenue received / receivable against the contract. In such cases, provision in respect of the expected losses has been made. The provision required is reviewed and required adjustment made at each year end. The provision is measured at the present value of the best estimate of loss likely to be incurred.

v. Amount debited to opening provision.

vi. An amount of '' 6,937 ('' 7,555) has been debited against Natural Code Heads wrt Warranty Cost.

An amount of Nil (Nil) has been debited against Natural Code Heads wrt Site Restoration Obligation.

vii. Performance warranty obligation in respect of sale where back to back warranty of vendor is available, potential liability, if any, in the event of default of vendor is not ascertainable and not expected to be significant.

(A) POST EMPLOYMENT BENEFIT OBLIGATION (i) Gratuity:

The Company provides gratuity to employees in India as per payment of Gratuity Act, 1972. The Company has a Gratuity Scheme for its employees, which is a funded plan. Every year, the Company remits fund to the Gratuity Trust to the extent of shortfall of the assets over the fund obligations, which is determined through actuarial valuation. As per the Gratuity Scheme, gratuity is payable to an employee on the cessation of his employment after he has rendered continuous service for not less than five years in the Company. For every completed year of service or part thereof in excess of six months, the Company shall pay gratuity to an employee at the rate of fifteen days salary based on the last drawn basic & dearness allowance.

Additional Disclosures:

i. Sensitivity analysis involves changing one key actuarial assumption at a time keeping the other assumptions constant. Sensitivity analysis has been carried out using the Direct Method by re-running the entire valuation model for the changed assumptions by using magnitude of variation of plus or minus 50 basis points.

ii. No change in the methods and assumptions used for preparing sensitivity analysis as compared to previous year

ii) BEL RETIRED EMPLOYEES CONTRIBUTORY HEALTH SCHEME (BREMT):

During the year BEL has formed a ''Bharat Electronics Limited Retired Employees Medical Trust (BREMT)'' [''Trust''] for running a medical fund for its retired employees. The Company has a contributory health scheme for its retired employees "BEL Retired Employees'' Contributory Health Scheme" (BERECHS), which is a funded scheme. Company remits fund to the BREM Trust to the extent of shortfall of the assets over the fund obligations, which is determined through actuarial valuation. The primary objective of the scheme is to provide medical facilities to employees retiring on attaining the age of superannuation, or on VRS. Benefits under the Scheme shall be available to the employees who become members and their spouses only.

B. Long Term Compensated Absence:

The Company has a Long Term Compensated Absence Scheme for its employees, which is a Non-Funded Scheme. The employees of the Company are entitled to two types of Long Term Compensated Absences: Annual Leave (AL) & Half Pay Leave (HL) in case of Executives and Annual Leave (AL) & Sick Leave (SL) in case of Non-Executives. The scheme provides for compensation to employees against the unavailed Leave (AL & HL in case of Executives and AL & SL in case of Non-Executives) on attaining the age of superannuation, VRS or death. AL can also be encashed during service or at the time resignation.

C. Pension Scheme:

The Company has got a defined contribution pension benefit plan for the benefit of its employees in respect of which contribution is made on an annual basis to a Trust setup for this purpose.

The benefit under the scheme are available for the employees as per the rules laid down in this regard.

i) A narrative description of the specific or unusual risks arising from a defined benefit plan (i.e. Gratuity and BErEcHS)

The specific risk relating to defined benefit plans are as follows:-

Movement in long term government bond rate between two reporting periods which will impact discount rate and consequently the present value of obligations.

Risk of higher / lower salary escalation / benefit as considered for valuation vis-a-vis the actual experience through the Financial Year.

However, both the risks are mitigated on a regular basis i.e. yearly as valuations are done after every year based on updated assumptions.

ii) A narrative description of any asset-liability matching strategies.

The gratuity Plan and BERECHS Medical Plan of the company is a funded plan. The assets backing this plan are predominantly insurer-managed funds. Hence the company has limited flexibility in terms of implementing asset-liability matching strategies for this plan.

iii) A description of the funding arrangements and funding policy.

a) The Gratuity plan of the company is a funded plan. 99.49% (98.67%) of the plan assets backing this plan are insurer managed assets and 0.50% (1.32%) of the plan assets are invested in Central and State Government Securities. The annual contribution to the fund is normally set equal to the deficit as disclosed by the preceding actuarial valuation of the benefit obligations.

b) The BERECHS Medical plan of the company is a funded plan. 99.99% (NA) of the plan assets backing this plan are insurer managed assets The annual contribution to the fund is normally set equal to the deficit as disclosed by the preceding actuarial valuation of the benefit obligations.

Satisfaction of performance obligation

A. In majority of the contract, performance obligation is satisfied "at a point in time" which is primarily determined on customer obtaining control of the asset. One of the prime indicator considered for this is transfer of significant risk and rewards to the customer based on Inco terms. Where a contract involves multiple performance obligation, the criteria specified in Ind AS 115 is applied to determine the point in time when the performance obligation is satisfied.

B. Under "Bill and hold" arrangement performance obligation is satisfied on unconditional appropriation of the goods to the contract. Normally no obligation towards custodial service exists.

C. Contract with the customer normally do not contain significant financing component and any advance payment received and /or amount retained by customer is with intention of protecting either parties to the contract.

D. Variable consideration primarily consists of amount receivable/reimbursable against foreign exchange variation clause. The amount of revenue recognised in respect of the same is determined based on the methodology specified in the contract. The amount is recognised as revenue on accrual/admittance of claim by customer.

E. The company''s turnover mainly includes supply of defence electronics equipments and systems.

F. Contract entered into with customer, typically do not have a return/refund clause.

G. Warranties provided are primarily in the nature of performance warranty.

H. The company normally uses the input method to recognise revenue in respect of contracts in which performance obligation are satisfied over a period of time. For revenue recognition, the percentage of completion method is adopted where in the percentage of actual cost incurred to total estimated cost is applied to the contract price for arriving at the quantum of revenue to be recognised.

I. Contract with customer (other than AMC) in respect of which revenue is recognised over a period of time typically involves multiple activities of different nature like construction of building, supply and installation of equipments,

networking of equipment and system etc. Due to this it is not possible to quantify in physical terms the quantum of work done (i.e. output) reliably. Whereas, under input method, the cost incurred in respect of these varied activities can be captured and compared to the total estimated cost to be incurred (which can be estimated reliably), for arriving at the percentage of completion. In case of AMC contracts, output method is used to recognise revenue where passage of time is the criteria for satisfaction of performance obligation.

J. For revenue recognition in respect of performance obligation satisfied at a "point in time" the following criteria is used for determining whether customer has obtained "Control on asset "

• Transfer of significant risk and rewards

• Customer has legal title to the asset

• The entity has transferred physical possession of the asset

• Customer has accepted the asset

• Entity has the present right to payment for the asset

K. Transaction price is typically determined based on contract entered into with customer. Allocation of transaction price in respect to multiple obligation is based on relative standalone selling price.

L. No non-cash considerations are received/given during the current/previous year.

An amount of Nil ('' 247) (net) has been recognised as revenue during the year out of performance obligation satisfied in previous periods.

2 Statement of Compliances

The standalone financial statements are prepared in accordance with Indian Accounting Standards (Ind AS) [as notified under section 133 of the Companies Act, 2013 (the "Act") read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015, as amended.] and other relevant provision of the Act.

The Company''s standalone financial statements up to and for the year ended 31 March 2016 were prepared in accordance with the Companies (Accounting Standards) Rules, 2006, notified under Section 133 of the Act and other relevant provisions of the Act.

3 Operating Cycle

As per the requirement of Schedule III to the Companies Act, 2013, the Operating Cycle has been determined at Strategic Business Unit (SBU) / Unit level, as applicable.

4 Impairment of Assets

The Company has analysed Indications of impairment of assets of each geographical composite manufacturing unit considered as Cash Generating Units (CGU). On the basis of assessment of internal and external factors, an accumulated amount of '' 7,882 ('' 7,337) is provided as provision for impairment as on Balance Sheet date. During the year an amount of '' 545 (Nil) has been provided as impairment of asset.

5 Short Term Borrowings

a The Company has been sanctioned working capital limit of '' 5,00,000 ('' 4,00,000) by Consortium Bankers (SBI Lead Bank). The sanctioned limit includes fund based limit of '' 50,000 ('' 50,000) and non fund based limit of '' 4,50,000 ('' 3,50,000).

b The interest rate payable on fund based limit is linked to SBI 3 Months (1 Year) MCLR Rate. [Interest rate payable as on 31.03.2023 is 8.10 % p.a. (6.65%)].

c The amount utilised is repayable on demand. Utilisation as on 31.03.2023 is Nil (Nil).

d The above sanction limit is secured by hypothecation of Current Assets of the Company (Refer Note 35).

8 Contingent Liabilities:

Particulars

As at 31 March 2023

As at 31 March 2022

Claims not acknowledged as debts

1,02,532

1,00,509

Outstanding Letters of Credit

62,865

72,997

Others

26,336

3,486

Provisional Liquidated Damages up to 31 March on unexecuted customer orders where the delivery date has expired

46,236

35,986

In respect of certain cases, liability is not asertainable as on date, as the matter is yet to be adjudicated. However such liability is not expected to be material.

9 Contingent Assets:

Particulars

As at 31 March 2023

As at 31 March 2022

Nil

-

-

10 Confirmation of Balances

Letters requesting confirmation of balances have been sent in respect of Trade Receivables, Trade Payables, Advances and Deposits. Wherever replies have been received, reconciliation is under process and impact on Financial Statements is not expected to be material.

11 Labour Disputes

In respect of Labour matters, as the matters are yet to be adjudicated, the liability, if any, is not ascertainable. However, such liability is not expected to be material.

12 Leases

Adoption of Ind AS 116

Effective 1 April 2019, the company has adopted Ind AS 116 "Leases" using modified retrospective approach. The adoption of the standard did not have any material impact on the financial statements of the company.

b) As a Lessee:

The Company has leases that were classified as finance lease applying Ind AS 17, for such leases the carrying amount of the right of use asset at the date of initial application of Ind AS 116 is the carrying amount of the lease on the transition date as measured applying Ind AS 17. Accordingly an amount of '' 1,275 has been reclassified from property, plant and equipment to right of use assets.

On transition, the company recognises right of use asset representing its right to use the underlying asset for the unexpired lease period.

The right of use asset is recognised at:

a) The carrying amount of prepaid rent when no future lease payments are payable; or

b) At the carrying amount and discounted at incremental borrowing rate. Accordingly right of use asset is '' 365 and Corresponding lease liability '' 365 has been recognised. On application of Ind AS 116 in respect of these assets, nature of expenses has been reclassified from lease rent to depreciation cost for right of use asset and finance cost for interest accrued on lease liability.

The above lease contracts, entered by company pertains to land taken on lease for generation of power through solar project and buildings for business purposes. The company has restriction with respect to disposal of these assets.

The company has not recognised any expenses as contingent rent.

The maturity analysis of Contractual Cash flows of Lease Liabilities is disclosed in Note 34.

13 Segment Reporting

Ministry of Corporate Affairs vide Notification no. 463 (E) dated 5 June 2015 as amended has exempted the Companies engaged in Defence Productions from the requirement of Segment Reporting.

14 Retention Sales

The Value of Retention Sales (i.e., Goods retained with the Company at the Customers'' request and at their risk) included in Turnover during the year is '' 76,411 ('' 80,880).

Out of the above the Value of Ex-works Sales is '' 10,008 (Nil).

17 COVID - 19 Impact

The Company has considered the possible effects that may result from the pandemic relating to COVID-19 in the preparation of the financial statements including the recoverability of carrying amount of financial and non-financial assets. In developing the assumptions relating to the possible future uncertainties in the global economic conditions because of pandemic, the company has used its available internal and external sources of information and economic forecasts and expects that the carrying amount of these assets will be recovered. The impact of COVID-19 on the financial statements may differ from the estimate as at the date of approval of the financial statements.

18 Dividend not recognised at the end of the reporting period

The directors have recommended a final dividend of INR 0.60 (INR 1.50) per share. [Represents absolute figure].

The proposed dividend is subject to approval of shareholders in the ensuing Annual General Meeting and if approved would results in cash outflow of approximately of '' 43,859 ('' 36,549).

19 An amount of '' 26 (Nil) has been contributed to Defence production IT Division which has been created as one of the division of HAL to implement IT related initiatives in Dept. of Defence production including Ordnance Factory Board (OFB) and Defence Public Sector Units.

20 Value of remaining Performance Obligations (pending orders to be executed)

Unrecognised revenue from contracts with customer which are partially satisfied or unsatisfied (Pending orders to be executed)

c The Company does not have any charges or satisfaction which is yet to be registered with Registrar of Companies (RoC) beyond the statutory period.

d The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.

e The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign

entities (Intermediaries) with the understanding that the Intermediary shall:

a. 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

b. provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

f The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:

a. 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

b. provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

g The Company has not any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).

23 During the year 2019-20, a fraud on the company by the employees amounting to '' 1,000 has been detected during the routine internal audit. Out of the said amount, '' 64 has been recovered and the balance amount of '' 936 is recognised as receivable, pending recovery, the same has been provided for as doubtful in the Statement of Profit and Loss. The company has filed civil suits on respective employees and vendor. During the Financial Year 2022-23, '' 54 has been incurred towards court fees for filing civil suits.

24 The date on which the code of social security, 2020 will come to effect has not been notified and the company will assess the impact of the code when it comes into effect and will record the impact in the period the code becomes effective.

25 Figure in brackets relate to previous years.

26 All figures in financial statements are rounded off to nearest lakhs unless otherwise mentioned.

27 The standalone Ind AS financial statements were approved for issue on 20 May 2023 by the Board of Directors.

Directors sitting fees:

The sitting fees paid to non executive Directors is '' 32 during the Financial Year 2022-23 and '' 18 during the Financial Year 2021-22.

All transactions dealt with related parties are on arm''s length basis. In respect of loan to subsidiary (BELOP) refer note "g" below.

e. All Outstanding balances are Unsecured. All Outstanding balances (Other than loan) is repayable in cash within next 6 months. For Outstanding balance of loans refer note "g" below.

f. The Company has entered into an Agreement with BELOP in April, 2013 to temporarily fund the amount of '' 10,416 ['' 26,040 less '' 15,624] for enabling BELOP to make payment towards ToT for XD-4 II Tubes, pending receipt of balance amount from MoD. As on 31.03.2023, an amount of '' 9,851 ('' 9,851) has been paid to BELOP, out of which an amount of '' 9,851 ('' 9,851) has been received from MoD.

As per the Agreement, an amount of Nil (Nil) has been recovered during the financial year from BELOP towards the cost of funds.

g. Loans to Related Parties

1. The Company has entered into an agreement with BELOP in August 2016 to fund a Term Loan of '' 4,600 out of which '' 2,935 has been disbursed as on 31.03.2023 and an amount of Nil (Nil) is outstanding as on 31.03.2023.

h. Management Contracts including deputation of Employees

Two Officials of BEL have been deputed to BELOP (Subsidiary) and Seven Officials of BEL have been deputed to BEL-THALES Systems Limited (Subsidiary) and their Salary and Other Costs is paid by BELOP and BEL-THALES System Limited respectively during the year as per terms and conditions of employment.

i. Transaction with Government and Government Related Entities

As BEL is a government entity under the control of Ministry of Defence (MoD), the company has availed exemption from detailed disclosures required under Ind AS 24 wrt related party transactions with government and government related entities.

However as required under Ind AS 24, following are the individually significant transactions: -2,49,19,47,956 (Nil) number of Bonus Shares were Issued in FY 2022-23.

An amount of '' 63,546 ('' 52,331) was paid as Dividend during the FY 2022-23.

I n addition to the above, around 96% (97%) of the Company''s Turnover, around 97% (99%) of Trade Receivables and around 99% (99%) of Customer''s Advance is with respect to government and government related entities.

j. Investment with respect to BELOP includes fair valuation of loan.

k. Defence Innovation Organisation (DIO) was incorporated on 10 April 2017 as a ''Not for Profit'' Company as per the provisions of Section 8 of the Companies Act, 2013 with an authorised share capital of '' 100 (BEL: 50%; HAL: 50%) with an objective of funding innovation in defence sector. The registered office of the company situated in BEL''s premises in Bengaluru.

Level 1: Level 1 hierarchy includes Financial instruments measured using quoted prices.

Level 2: The fair value of Financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity specific estimates.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3. This is the case of unlisted equity shares.

3 Valuation technique used to determine Fair Value

a. LIC Investment - (Level 2)

Based on valuation report of the Scheme provided by LIC.

b. Mana Effluent Treatment Plant Ltd - (Level 3)

BEL has invested in equity securities of Mana Effluent Treatment Plant Ltd. which is an unlisted company. The Company''s cost of investment in Mana Effluent Treatment Plant Ltd is only '' 5 (out of issued Share Capital of '' 163). The company has opted for Net Asset Value method for fair valuation.

c. Defence Innovation Organisation (DIO) - (Level 3)

BEL has contributed to equity capital of M/s Defence Innovation Organisation (DIO), a ''Not for Profit'' Company as per the provisions of Section 8 of the Companies Act, 2013 with an objective of funding innovation in defence sector. The company has opted for Net Asset Value method for fair valuation.

Note 34 - Financial risk management i) Risk Management framework and policies

The Company is broadly exposed to credit risk, liquidity risk and market risk (fluctuations in exchange rates, interest rates and price risk) as a result of financial instruments.

Board of Directors have the overall responsibility for the establishment, monitoring and supervision of the Company''s Risk Management framework. The Board has set up a Risk Management Committee, for this purpose, which is responsible for developing and monitoring the risk management policies. The Company has an established Risk Management Policy that outlines risk management structure and provides a comprehensive frame work for identification, evaluation, prioritisation, treatment of various risks associated with different areas of finance and operations.

The company has a centralised Treasury function which is responsible to undertake appropriate measures to mitigate financial risk in accordance with the policies and procedures formulated by the Board. Hedging transactions are undertaken by a team with appropriate skills and experience in consultation with an external expert. The Company does not trade in derivatives for speculation.

ii) Market Risk

Market risk is the risk that changes in market prices such as foreign exchange rates, interest rates will affect the Company''s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

The Company''s activities expose it primarily to the financial risks of changes in foreign exchange rates and interest rate movements (refer to notes below on currency risk and interest risk).

iii) Currency Risk

BEL is exposed to foreign exchange risk arising from foreign currency transactions primarily relating to purchases and sales made in foreign currencies such as US Dollar, Euro, Great Britain Pound, Swiss Franc and Japanese Yen. Foreign exchange risk arises from existing and future commercial transactions and recognised assets and liabilities denominated in a currency that is not the Company''s functional currency (INR).

The Company has a Board approved currency risk management policy implemented by a Risk Management Committee that reviews the Company''s exposure to this risk on a regular basis. The Risk Management Policy recommends hedging upto 50% of the open foreign currency exposure. However the decision to enter into a hedging arrangement is made by the Risk Management Committee based on the relevant data inputs and the advice of the external specialist consultant retained for this purpose.

The Company''s export proceeds are realised mostly by remittance into an Export Earners Foreign Currency account (EEFC) which is then utilised for payments to be made in foreign currency, thereby mitigating the currency risk on exports. Imports to the extent of around 12% (8%) of annual foreign exchange outgo are not covered by the Exchange Rate Variation (ERV) clause in the related customer contract and hence are open to currency risk. These imports are benchmarked as per the policy and appropriate decision on covering the risk is taken on a case to case basis. The Company''s currency risk policy advocates forward contract hedging for mitigating risk wherever required.

iv) Foreign Currency Sensitivity

The sensitivity of profit or loss to changes in the exchange rate arises mainly from foreign currency denominated financial instruments. The sensitivity to variations in respect of net exposure of major currencies is given below. This analysis assumes that all other variables remain constant.

v) Interest rate risk

Interest rate risk can be either fair value interest rate risk or cash flow interest rate risk. Fair value interest rate risk is the risk of changes in fair values of fixed interest bearing investments because of fluctuations in the interest rates. Cash flow interest rate risk is the risk that the future cash flows of floating interest bearing instruments will fluctuate because of fluctuations in market interest rates.

vi) Variable Rate Borrowing

The company has been sanctioned a working capital limit of '' 5,00,000 ('' 4,00,000). The sanctioned limit includes fund based limit of '' 50,000 ('' 50,000) and non fund based limit of '' 4,50,000 ('' 3,50,000). The fund based limit of '' 50,000 has not been utilised during the year [Outstanding as on 31 March 2023 is Nil (31 March 2022 is Nil)]. The outstanding balance as on 31.03.2023 with respect to non fund based limit is '' 2,37,600 ('' 2,69,500). The interest is payable based on SBI''s 3 months (1 Year) MCLR rate. As the borrowing is nil there is no impact on likely change in interest rates.

vii) Equity Price Risk

The company''s exposure to equity price risk is negligible as its equity investment (other than in Subsidiaries and Associate) is negligible.

viii) Liquidity Risk

Liquidity Risk is the risk that a Company could encounter if it faces difficulty in meeting the obligations associated with financial liabilities by delivering cash and other financial asset or the risk that the Company will face difficulty in raising financial resources required to fulfill its commitments. The Company''s exposure to liquidity risk is very minimal as it has a prudent liquidity risk management process in place which ensures maintaining adequate cash and marketable securities to pay its liabilities when they are due. To ensure continuity of funding, the Company has access to short-term bank facilities in th


Mar 31, 2022

i. Freehold land consists of 2,081.80 acres (2,072.87 acres) and Leasehold land consists of 989.28 acres (948.20 acres).

ii. Freehold land includes 5.32 acres (7.21 acres) leased to commercial / religious organisations and in their possession.

iii. Additions related to R&D assets during the year includes

A. '' 995 ('' 2,074) in respect of the assets of Central Research Laboratories / Product Development and Innovation Centre accounted under natural code heads.

B. Nil ('' 17) in respect of the assets of Pune Unit accounted under natural code heads.

iv. Electronic Equipment value includes POS machines valuing '' 886 ('' 1,026) which are under the control of Haryana Government (operating lease).

v. Site Restoration Obligation

Refer Note 21 for Site Restoration Obligation in respect of Wind Mill & Solar Power Plants.

Gross Block Value of Plant & Machinery includes Site Restoration Obligation of '' 2,318 ('' 2,105) in respect of Wind Mill & Solar Power Plants.

vi. Contractual Commitments

Refer Note 30(6) for outstanding Contractual Commitments.

vii. Deemed Cost

On transition to Ind AS (01.04.2015), the company has elected to continue with the carrying value of all its property, plant and equipment as at 1 April 2015 measured as per previous GAAP and use that carrying value as the deemed cost of the property, plant & equipment.

viii. Estimation of Useful Life of Assets

The management has estimated the useful life of the various categories of tangible assets (which are different from the useful life indicated in Schedule II to the Companies Act, 2013) after taking into consideration, factors like expected usage of assets, risk of technical and commercial obsolescence, etc.

ix. Depreciation / Amortisation

Depreciation is calculated on a straight-line basis over the estimated useful lives of the Assets.

Leased Assets are amortised on a straight-line basis over their estimated useful lives or their respective lease term

whichever is shorter.

x. Method of Accounting Depreciation

Depreciation / Amortisation has been calculated as per the Accounting Policy No. 8 of the Company and recognised as

expenses in the Statement of Profit and Loss. Amount of Depreciation recognised as part of Cost of Other Asset is Nil (Nil).

xi. Impairment of Assets

Refer Note 30(4).

xii. Refer Note 12 in respect of Unadjusted Capital Advance paid towards Property, Plant & Equipment.

xiii. Land acquired free of cost from the Government in some units has been accounted in line with provisions of Ind AS 101.

xiv. Details of Registration, Pending Litigation etc.

a. Pending execution of title/sale deed and handing over physical possession of land allotted by Andhra Pradesh Industrial Infrastructure Corporation (APIIC) in respect of land admeasuring 5.60 acres (5.60 acres) in Mallapur allotted to BEL, Hyderabad and the matter being under litigation, no provision towards registration and other costs has been made in the books of accounts. Cost of land paid to APIIC amounting to '' 65 ('' 65) is included in Capital Advances.

b. Based on the Memorandum of Understanding reached with the Defence authorities, assets constructed on the land allotted to BEL and in possession of BEL are capitalised under respective heads for setting up of the Hyderabad Unit. Pending finalisation of the terms and conditions by the appropriate authorities, the cost of land admeasuring 25.11 acres (25.11 acres) has not been accounted in the books of accounts.

c. Land admeasuring to 122.82 acres (122.82 acres) at Ibrahipatnam allotted by APIIC / TSIIC possession is given for which sale deed is pending.

d. A demand of '' 256 ('' 256) being 50% of the compensation amount decreed by City Civil court, Hyderabad has been received towards additional compensation from TSIIC dated 31.01.2015 for land of 22.375 acres (22.375 acres) which is part of the Freehold Land mentioned above. The demand is under dispute and hence, no provision in respect of the same has been made in the books of accounts.

e. Free hold Land to the extent of 1.22 acres (1.22 acres) which was allotted by Government Authorities in Bengaluru in return for handing over of Land measuring 1.24 acres (1.24 acres) is under litigation.

f. The Company has installed Windmill Generator at three locations. Out of which : Windmill Generator-I capitalised in the year 2006-07 on Lease Land. Upfront Lease rent is Nil and Lease Agreement for the land is pending finalisation. Windmill Generator - II is capitalised in the year 2007-08 on the leased land by paying upfront lease rent of '' 36. Lease Agreement for the land is pending finalisation.

g. The title deed in respect of land in Panchakula measuring 0.30 acres (0.30 acres) is under litigation. Two cases are pending in court in this regard.

h. Leasehold land admeasuring 8.93 acres (8.93 acres) has been converted into freehold land in Pathankot is pending for registration. No provision towards registration and other cost has been made in the books of accounts for pending registration.

i. Sale deed is pending for finalisation of the land admeasuring to 913.99 acres (913.99 acres) at Palasamudram, Ananthapur Dist. AP.

xv. Company has installed solar power plants on lease land in Ordance Factory Board at Medak, Itarsi, Bolangir, HVF Avadi, GCF Jabalpur, VFJ Jabalpur, Hazratpur, Muradnagar, Nalanda, MSF Ishapore by paying a nominal value of INR 1 (represents absolute figure) as annual lease rent for every plant.

xvi. Prepaid rent paid for 3 MW Hassan & 8.4 MW Davangere windmill plants capitalised as Right of Use on transition to Ind AS 116.

xvii. Land admeasuring to 31.15 acres (31.15 acres) located at Devanahalli, Bengaluru is received from Karnataka Industrial Area Development Board (KIADB) and the cost of land along with the cost of registration of '' 7,974 ('' 7,974) capitalised under Lease hold land. As per the terms of the lease agreement, on sucessful commencement of the project the same will be converted as freehold land.

xviii. Borrowing cost of '' 974 ('' 729) (net of interest income) towards Employee quarters is capitalised. Capitalisation rate is 6.47% p.a (6.47% p.a.)

xix. Short term lease amount expended during the year is Nil (Nil).

xx. Leasehold land includes 9.62 acres (9.62 acres) leased to Government Organisation for use during construction and is in their possession of NCRTC as at the year end. (Ghaziabad Unit)

xxi. Lease agreement has been entered with Tamil Nadu Industrial Explosives Ltd (TEL) Chennai, towards lease of 50 acres for 29 years and capitalised during FY 2021-22 as an ROU asset for total value of '' 5,166. Interest expense on lease liability is '' 289. Discounting Rate considered is 6.95% (i.e. applicable incremental borrowing rate) as per Ind AS 116. Total cash outflow for TEL lease is '' 13,685.

xxii. Equipments belong to "Electronics Computer system" whose Gross block is '' 3 ('' 3) and accumulated depreciation of '' 3 ('' 2), and Equipments belongs to "Miscellaneous Maintainance Equipment" whose Gross block is '' 2 ('' 1) and accumulated depreciation of '' 1 ('' 1) are lying at Naval Dockyard, Vizag.

xxiii. DAV Public School was provided a portion of leasehold land by the Unit. Unit has filed a case against DAV Public School for eviction (Ghaziabad Unit).

xxiv. Repayment of Lease during the year amounting to '' 167 ('' 159).

i. Civil construction mainly comprises of Production related building, R&D building and Employee Quarters.

ii. Refer Note 30 (6) in respect of contractual commitments.

iii. Refer Note 12 in respect of Unadjusted Capital Advance paid towards Property, plant & equipment.

iv. Impairment of Assets

Building under construction with carrying value of '' 124 is halted for more than three years as the contractor to whom the said work was awarded is in the process of winding up, and there has been no progress in the work. During the year a claim of '' 1,398 submitted to Official Liquidator based on independent valuation report. Official Liquidator (High court, Madras) advised BEL to submit the claim along with condonation of delay. The company is in the process of submitting the same. An amount of '' 124 was impaired in the financial year 2018- 19. Refer Note 30(4).

v. Borrowing costs of Nil ('' 245) [net of interest income] has been included in Capital WIP in respect of employee quarters under construction. The capitalisation rate is 6.47% p.a (6.47% p.a).

iv. Land comprises of Freehold Land of 1.48 acres (1.48 acres) in Bengaluru.

v. Deemed Cost

On transition to Ind AS (01.04.2015), the company has elected to continue with the carrying value of all its investment property as at 1 April 2015 measured as per previous GAAP and used that carrying value as the deemed cost of the investment property.

vi. Estimation of Useful Life of Assets

The management has estimated the useful life of the various categories of tangible assets (which are different from the useful life indicated in Schedule II to the Companies Act, 2013) after taking into consideration, factors like expected usage of assets, risk of technical and commercial obsolescence, etc.

The estimated useful life of Tangible Asset is as follows:

Asset Class Years

Buildings 40

vii. Depreciation

Depreciation is calculated on a straight-line basis over the estimated useful lives of the Assets.

The amount of Depreciation has been recognised as expense in the Statement of Profit and Loss.

viii. Method of Accounting Depreciation

Depreciation has been calculated as per the Accounting Policy No. 8 of the Company and recognised as expenses in the Statement of Profit and Loss.

ix. Impairment of Assets

As the fair value of the Investment Property is higher than its carrying value, there is no indication of impairment.

x. Restrictions on the realisability of Investment Property

The land is allotted by Government of India.

xi. Related Party Transactions

Investment Property includes Building and land measuring 0.31 acres (0.31 acres) given under cancellable operating lease to Subsidiary Company BEL Thales Systems Ltd. Also Refer Note 31.

xii. Details of Registration, Pending Litigation etc.

A. Nil (Nil).

xiii. Estimation of Fair Value

The company has estimated the fair value of Investment Property based on the Government Guidance Value (municipal value) of the similar properties in the investment property''s location and not based on the valuation by registered valuer. All resulting fair value estimates for the investment properties are included in level 2.

On transition to Ind AS (01.04.2015), the company has elected to continue with the carrying value of all its other intangible assets as at 1 April 2015 measured as per previous GAAP and used that carrying value as the deemed cost of other intangible assets.

ii. Estimated useful life

The estimated useful lives of the Other Intangible Assets is as follows :

Asset Class Years

Software licenses / implementation Enterprise resource planning (ERP) 3

Others (Development Cost) 3 - 15

iii. Amortisation

Amortisation is calculated on a straight-line basis over the estimated useful lives of the Assets.

The amount of amortisation has been recognised as expense in the Statement of Profit and Loss.

iv. Method of Accounting Amortisation

Amortisation has been calculated as per the Accounting Policy No. 8 of the Company and recognised as expenses in the Statement of Profit and Loss.

v. Refer Note 30(6) for Contractual Commitments.

vi. Impairment of Assets

Refer Note 30 (4).

vii. The restriction on the title of the assets is governed by the terms of agreement.

viii. Refer Note 30(7) for the aggregate amount of research and development expenditure recognised as an expense during the period.

ii. The company has invested its Leave Encashment & "BEL Retired Employees'' Contributory Health Schemes"(BERECHS) liabilites in LICs New Group Leave Encashment Plan & New Group Superannuation Cash Accumulation Plan respectively [Refer note 21].

iii. Refer Note 33 for classification of financial instruments.

iv. An amount of INR 50,000 [represents absolute figure] has been contributed towards equity capital in M/s Defence Innovation Organisation (DIO). DIO was incorporated on 10 April 2017 as a ''Not for profit'' Company as per the provisions of Section 8 of the Companies Act,2013 with an authorised share capital of '' 100 (BEL :50 %; HAL:50%) with an objective of funding innovation in defence sector. The registered office of the company situated in BEL''s premises Bengaluru.

An amount of '' 5,000 has been provided in the books of account towards contribution to initial corpus fund.Out of this an amount of '' 4,000 is pending for disbursement.

i. Payment Terms

A. I n majority of contracts, payment (net of advance received, if any) is due on delivery of items. However, in some contracts a portion of dues (Typically 5% to 10%) is linked to satisfaction of further performance obligation like completion of installation and commission activity etc. In respect of turnkey contracts, payment (net of advance, if any) is linked to achievement of specified milestone.

B. Advance including progressive payments received from customer are classified as contract liability and adjusted on completion of related performance obligation.

C. Amount retained by customer in respect of completed performance obligation, due to linking of payment with completion of other performance obligations in the contract, is classified as contract asset. Balance amount receivable is classified as Trade receivable.

ii. Financial instruments

Refer Note 33 for classification of financial instruments.

iii. Impairment of financial assets

Provisions for impairment has been made in line with Accounting Policy No. 30 of the company.

iv. Related party disclosure

For Related Party Disclosures refer Note 31.

v. Security, Hypothecation etc

Refer Note 35.

i. Raw Materials and Components include '' 14,707 ('' 8,440) being materials with sub-contractors, out of which '' 386 ('' 694) of materials is subject to confirmation and reconciliation. Against '' 386 ('' 694) an amount of '' 386 ('' 694) has been provided for.

ii. Stock verification discrepancies for the year are as follows:

Shortages of '' 705 ('' 473) and surplus of '' 389 ('' 405). Pending reconciliation, an amount of '' 316 ('' 68) has been provided for.

iii. Valuation of Inventories has been made as per Company''s Accounting Policy No. 18.

iv. A. The United Nations Climate Change Secretariat has granted 15,856 (15,856) TON CO2EQ carbon credit for the

2.5 MW BEL Grid Connected Wind Power Project Davangere District, Karnataka for the verification period from 05.11.2007 to 31.03.2012. The carbon credits are included under Finished Goods at a value of '' 2 ('' 2). The CER is valued at cost as required by Guidance Note on CER issued by ICAI.

v. Security, Hypothecation etc

Refer Note 35.

vi. Amount recognised in Statement of Profit & Loss

Write-down of inventories to net realisable value amounted to '' 1,575 ('' 1,599) has been recognised in the statement of profit and loss.

vii. Reversal of write down of inventories of '' 539 ('' 1,985) has been made during the year, which were recognised as an expenses in the previous year.

viii. Impairment of Assets

Provisions for inventory has been made in line with Accounting Policy No. 18 of the Company.

ix. Materials amounting to '' 4,350 ('' 4,370) are located physically at Customer Premises.

x. The company has received / retained the assets of the customer as per the contractual terms and those do not form part of the inventory.

Cash and cash equivalents includes Term Deposits with original maturity period up to three months. Term Deposits with original maturity period beyond Three months upto Twelve months have been included in Bank balances (Refer Note 14) and Term Deposits with original maturity period beyond Twelve months have been included in Other financial assets (Refer Note 9).

i. Refer Note 33 for classification of financial instruments.

ii. There are no repatriation restrictions with regard to cash and cash equivalents.

iii. Balance with banks include :- Pursuant to the stay order received from Honorable High Court of Karnataka, bank authorities have held '' 46 ('' 46) based on the Garnishee order issued by the recovery Officer - ESI Corporation.

Terms, Rights, preferences and restrictions attaching to each class of shares

A. The Company has only one class of shares viz, Equity Shares.

B. Each holder of Equity Shares is entitled to one vote on show of hands and in poll in proportion to the Number of shares held.

C. Each Shareholder has a right to receive the dividend declared by the Company.

D. On winding up of the Company, the equity shareholders will be entitled to get the realised value of the remaining assets

of the Company, if any, after distribution of all preferential amounts as per law. The distribution will be in proportion to the number of equity shares held by the shareholders.

B) Nature and purpose of Reserves

a. Capital Reserve

Capital Reserve is created by transfer from Retained earnings an amount equal to capital profit earned by the company. The reserve is utilised in accordance with the provisions of the Companies Act, 2013.

b. Capital Redemption Reserve

Capital Redemption Reserve is created by transfer from General Reserve an amount equal to face value of the Shares bought back. The reserve is utilised in accordance with the provisions of the Companies Act, 2013.

c. Equity Investment through Other Comprehensive Income (OCI)

The company has elected to recognise changes in fair value of certain equity investments in other comprehensive income. The change in fair value is accumulated in this reserve. If and when the investment is de-recognised the accumulated amount will be transferred to Retained earnings.

d. Other Comprehensive Income (OCI)

Other comprehensive income are those gains or losses which are not yet realised and excluded from the statement of profit and loss. It mainly consists of remeasurement of the net defined benefit liability/ asset (net of tax).

xiii. Government of India being the Promoter holding 51.14% (51.14%) of Shares as on 31.03.2022.

ii. The information has been given in respect of such suppliers to the extent they could be identified as Micro & Small enterprises on the basis of information available with the Company and have been relied upon by the Auditors.

iii. Financial Instruments

Refer Note 33 for classification of financial instruments.

iv. Related Party Disclosure

For Related Party Disclosures refer Note 31.

v. The exposure of company to currency and liquidity risk related to Trade Payables is disclosed at Note 34.

ii. Provision for Warranties - as per Accounting Policy No. 20 of the Company.

Provision for warranties is made in respect of products whose normal warranty period is outstanding. As the warranty provision period varies from product to product, provision is made at Strategic Business Unit (SBU) level based on average period of warranty period. Provision is made based on trend based estimate of the likely expenses to be incurred. The provision is measured at the present value of the estimated cost of Warranty.

iii. Provision for Site restoration - as per Accounting Policy No. 23 of the Company.

In accordance with the terms and conditions of the Lease agreement entered into with Lessor, the company is required to return the land in its original condition. Accordingly provision in respect of Site restoration obligation has been made. The provision required is reviewed and required adjustment made at each year end.

The provision is measured at the present value of the best estimate of the cost of restoration.

iv. Provision for Onerous contracts - as per Accounting Policy No. 23 of the Company.

In respect of certain contracts entered into by the company, it is expected that the likely cost to complete the contract would exceed the Revenue received / receivable against the contract. In such cases, provision in respect of the expected losses has been made. The provision required is reviewed and required adjustment made at each year end. The provision is measured at the present value of the best estimate of loss likely to be incurred.

v. Amount debited to opening provision.

vi. An amount of '' 7,555 ('' 7,873) has been debited against Natural Code Heads wrt Warranty Cost.

An amount of Nil (Nil) has been debited against Natural Code Heads wrt Site Restoration Obligation.

vii. Performance warranty obligation in respect of sales where back to back warranty of vendor is available, potential liability, if any, in the event of default of vendor is not ascertainable and not expected to be significant.

viii. Performance warranty with respect to ventilator project is based on the best estimate of the management as the trend cannot be established in normal course.

(A) POST EMPLOYMENT BENEFIT OBLIGATION (i) GRATUITY :

The Company provides gratuity to employees in India as per payment of Gratuity Act, 1972. The Company has a Gratuity Scheme for its employees, which is a funded plan. Every year, the Company remits fund to the Gratuity Trust to the extent of shortfall of the assets over the fund obligations, which is determined through actuarial valuation. As per the Gratuity Scheme, gratuity is payable to an employee on the cessation of his employment after he has rendered continuous service for not less than five years in the Company. For every completed year of service or part thereof in excess of six months, the Company shall pay gratuity to an employee at the rate of fifteen days salary based on the last drawn basic & dearness allowance.

B. LONG TERM COMPENSATED ABSENCE :

The Company has a Long Term Compensated Absence Scheme for its employees, which is a Non-Funded Scheme. The employees of the Company are entitled to two types of Long Term Compensated Absences: Annual Leave (AL) & Half Pay Leave (HL) in case of Executives and Annual Leave (AL) & Sick Leave (SL) in case of Non-Executives. The scheme provides for compensation to employees against the unavailed Leave (AL & HL in case of Executives and AL & SL in case of Non-Executives) on attaining the age of superannuation, VRS or death. AL can also be encashed during service or at the time of resignation.

C. PENSION SCHEME :

The Company has got a defined contribution pension benefit plan for the benefit of its employees in respect of which contribution is made on an annual basis to a Trust setup for this purpose.

The benefit under the scheme are available for the employees as per the rules laid down in this regard.

i) A narrative description of the specific or unusual risks arising from a defined benefit plan (i.e. Gratuity and BERECHS)

The specific risk relating to defined benefit plans are as follows :-

Movement in long term government bond rate between two reporting periods which will impact discount rate and consequently the present value of obligations.

Risk of higher / lower salary escalation / benefit as considered for valuation vis-a-vis the actual experience through the Financial Year.

However, both the risks are mitigated on a regular basis i.e. yearly as valuations are done after every year based on updated assumptions.

ii) A narrative description of any asset-liability matching strategies.

The gratuity plan of the company is a funded plan. The assets backing this plan are predominantly insurer-managed funds. Hence the company has limited flexibility in terms of implementing asset-liability matching strategies for this plan.

The post retirement medical plan of the company is an unfunded plan. Hence asset-liability matching strategies are not relevant for this plan.

iii) A description of the funding arrangements and funding policy.

The Gratuity plan of the company is a funded plan. 98.67% (98.70%) of the plan assets backing this plan are insurer managed assets and 1.32% (1.29%) of the plan assets are invested in Central and State Government Securities. The annual contribution to the fund is normally set equal to the deficit as disclosed by the preceding actuarial valuation of the benefit obligations.

The post-retirement medical plan [BERECHS] is an unfunded plan.

Satisfaction of performance obligation

A. In majority of the contract, performance obligation is satisfied "at a point in time" which is primarily determined on customer obtaining control of the asset. One of the prime indicator considered for this is transfer of significant risk and rewards to the customer based on Inco terms. Where a contract involves multiple performance obligation, the criteria specified in Ind AS 115 is applied to determine the point in time when the performance obligation is satisfied.

B. Under "Bill and hold" arrangement performance obligation is satisfied on unconditional appropriation of the goods to the contract. Normally no obligation towards custodial service exists.

C. Contract with the customer normally do not contain significant financing component and any advance payment received and /or amount retained by customer is with intention of protecting either parties to the contract.

D. Variable consideration primarily consists of amount receivable/reimbursable against foreign exchange variation clause. The amount of revenue recognised in respect of the same is determined based on the methodology specified in the contract. The amount is recognised as revenue on accrual/admittance of claim by customer.

E. The company''s turnover mainly includes supply of defence electronics equipments and systems.

F. Contract entered into with customer, typically do not have a return/refund clause.

G. Warranties provided are primarily in the nature of performance warranty.

H. The company normally uses the input method to recognise revenue in respect of contracts in which performance obligation are satisfied over a period of time. For revenue recognition, the percentage of completion method is adopted where in the percentage of actual cost incurred to total estimated cost is applied to the contract price for arriving at the quantum of revenue to be recognised.

I. Contract with customer (other than AMC) in respect of which revenue is recognised over a period of time typically involves multiple activities of different nature like construction of building, supply and installation of equipments, networking of equipment and system etc. Due to this it is not possible to quantify in physical terms the quantum of work done (i.e. output) reliably. Whereas, under input method, the cost incurred in respect of these varied activities can be captured and compared to the total estimated cost to be incurred (which can be estimated reliably), for arriving at the percentage of completion. In case of AMC contracts, output method is used to recognise revenue where passage of time is the criteria for satisfaction of performance obligation.

J. For revenue recognition in respect of performance obligation satisfied at a "point in time" the following criteria is used for determining whether customer has obtained "Control on asset "

• Transfer of significant risk and rewards

• Customer has legal title to the asset

• The entity has transferred physical possession of the asset

• Customer has accepted the asset

• Entity has the present right to payment for the asset

K. Transaction price is typically determined based on contract entered into with customer. Allocation of transaction price in respect to multiple obligation is based on relative standalone selling price.

L. No non-cash considerations are received/given during the current/previous year.

An amount of '' 247 ('' 7,043) (net) has been recognised as revenue during the year out of performance obligation satisfied in previous periods.

iii. I n a project, 1 site out of 10 is still to be handed over by the customer since 2015. Other 9 sites have progressed significantly and the Company had got time extension for these 9 sites; therefore, based on an opinion obtained by the management, 9 sites and 1 site respectively considered as a separate performance obligation. This has resulted in an increase in Revenue by Nil ('' 8,786) and increase in profit by Nil ('' 8,540).

2 Statement of Compliances

The standalone financial statements are prepared in accordance with Indian Accounting Standards (Ind AS) [as notified under section 133 of the Companies Act, 2013 (the "Act") read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015, as amended.] and other relevant provision of the Act.

The Company''s standalone financial statements up to and for the year ended 31 March 2016 were prepared in accordance with the Companies (Accounting Standards) Rules, 2006, notified under Section 133 of the Act and other relevant provisions of the Act.

3 Operating Cycle

As per the requirement of Schedule III to the Companies Act, 2013, the Operating Cycle has been determined at Strategic Business Unit (SBU) / Unit level, as applicable.

4 Impairment of Assets

The Company has analysed Indications of impairment of assets of each geographical composite manufacturing unit considered as Cash Generating Units (CGU). On the basis of assessment of internal and external factors, an amount of '' 7,337 ('' 7,337) is provided as provision for impairment.

5 Short Term Borrowings

a The Company has been sanctioned working capital limit of '' 4,00,000 by Consortium Bankers (SBI Lead Bank). The sanctioned limit includes fund based limit of '' 50,000 and non fund based limit of '' 3,50,000.

b The interest rate payable on fund based limit is linked to SBI 3 Months (1 Year) MCLR Rate. [Interest rate payable as on 31.03.2022 is 6.65 % p.a. (7.00%)].

c The amount utilised is repayable on demand. Utilisation as on 31.03.2022 is Nil (Nil).

d The above sanction limit is secured by hypothecation of Current Assets of the Company (Refer Note 35).

10 Confirmation of Balances

Letters requesting confirmation of balances have been sent in respect of Trade Receivables, Trade Payables, Advances and Deposits. Wherever replies have been received, reconciliation is under process and impact on Financial Statement is not expected to be material.

11 Labour Disputes

In respect of Labour matters, as the matters are yet to be adjudicated, the liability, if any, is not ascertainable. However, such liability is not expected to be material.

12 Leases

Adoption of Ind AS 116

Effective 1 April, 2019, the company has adopted Ind AS 116 "Leases" using modified retrospective approach. The adoption of the standard did not have any material impact on the financial statements of the company.

ii) The company has Leased out Point of Sales machines to Government of Haryana for period of five years from 2016-17 to 2021-22.

iii) The company has Leased out few portions of Land to different organisations under non-cancellable Operating Lease. Lease period is spread over from the year 1967 to 2077. The leases have various terms, escalation clause, lease renewal rights etc. On renewal, the terms of the lease are renegotiated.

The company has not recognised any income as contingent rent.

b) As a Lessee:

The Company has leases that were classified as finance lease applying Ind AS 17, for such leases the carrying amount of the right of use amount at the date of initial application of Ind AS 116 is the carrying amount of the lease on the transition date as measured applying Ind AS 17. Accordingly an amount of '' 1,275 has been reclassified from property plant and equipment to right of use assets.

On transition, the company recognises right of use asset representing its right to use the underlying asset for the unexpired lease period.

The right of use asset is recognised at :

a) The carrying amount of prepaid rent when no future lease payments are payable; or

b) At the carrying amount and discounted at incremental borrowing rate. Accordingly right of use asset is '' 365 and Corresponding lease liability '' 365 has been recognised. On application of Ind AS 116 in respect of these assets, nature of expenses has been reclassified from lease rent to depreciation cost for right of use asset and finance cost for interest accrued on lease liability.

The above lease contracts, entered by company pertains to land taken on lease for generation of power through solar project and buildings for business purposes. The company has restriction with respect to disposal of these assets.

The company has not recognised any expenses as contingent rent.

The maturity analysis of Contractual Cash flows of Lease Liabilities is disclosed in Note 34.

13 Segment Reporting

Ministry of Corporate Affairs vide Notification no. 463 (E) dated 5 June, 2015 as amended has exempted the Companies engaged in Defence Productions from the requirement of Segment Reporting.

14 Retention Sales

The Value of Retention Sales (i.e., Goods retained with the Company at the Customers'' request and at their risk) included in Turnover during the year is '' 80,880 ('' 49,302).

17 COVID - 19 Impact

The Company has considered the possible effects that may result from the pandemic relating to COVID 19 in the preparation of the financial statements including the recoverability of carrying amount of financial and non-financial assets. In developing the assumptions relating to the possible future uncertainties in the global economic conditions because of pandemic, the company has used its available internal and external sources of information and economic forecasts and expects that the carrying amount of these assets will be recovered. The impact of COVID-19 on the financial statements may differ from the estimate as at the date of approval of the financial statements.

18 Dividend not recognised at the end of the reporting period

The directors have recommended a final dividend of INR 1.20 (INR 1.20) per share. [Represents absolute figure].

The proposed dividend is subject to approval of shareholders in the ensuing Annual General Meeting and if approved would results in cash outflow of approximately of '' 29,239 ('' 29,239).

19 An amount of Nil ('' 25) has been contributed to Defence production IT Division which has been created as one of the division of HAL to implement IT related initiatives in Dept. of Defence production including Ordnance Factory Board (OFB) and Defence Public Sector Units.

20 Value of remaining Performance Obligations (pending orders to be executed)

Unrecognised revenue from contracts with customer which are partially satisfied or unsatisfied (Pending orders to be executed)

e The Company have not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:

a. 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

b. provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries

f The Company have not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:

a. 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

b. provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries,

g The Company have not any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).

23 During the year 2019-20, a fraud on the company by the employees amounting to '' 1,000 has been detected during the routine internal audit. Out of the said amount, '' 64 has been recovered and the balance amount of '' 936 is recognised as receivable, pending recovery, the same has been provided for as doubtful in the Statement of Profit and Loss. The company has initiated appropriate actions and the investigation is in process.

24 The date on which the code of social security, 2020 will come to effect has not been notified and the company will assess the impact of the code when it comes into effect and will record the impact in the period the code becomes effective.

25 Figure in brackets relate to previous years.

26 All figures in financial statements are rounded off to nearest lakhs unless otherwise mentioned.

27 The standalone Ind AS financial statements were approved for issue on 23 May 2022 by the Board of Directors.

Directors sitting fees :

The sitting fees paid to non executive Directors is '' 18 as at 31 March 2022 and '' 16 as on 31 March 2021 respectively.

d. All transactions dealt with related parties are on arm''s length basis. In respect of loan to subsidiary (BELOP) refer note "g" below.

e. All Outstanding balances are Unsecured. All Outstanding balances (Other than loan) is repayable in cash within next 6 months. For Outstanding balance of loans refer note "g" below.

f. The Company has entered into an Agreement with BELOP in April, 2013 to temporarily fund the amount of '' 10,416 ['' 26,040 less '' 15,624] for enabling BELOP to make payment towards ToT for XD-4 II Tubes, pending receipt of balance amount from MoD. As on 31.03.2022, an amount of '' 9,851 ('' 9,851) has been paid to BELOP, out of which an amount of '' 9,851 ('' 9,851) has been received from MoD.

As per the Agreement, an amount of Nil ('' 21) has been recovered during the financial year from BELOP towards the cost of funds.

g. Loans to Related Parties

1. The Company has entered into an agreement with BELOP in August 2016 to fund a Term Loan of '' 4,600 out of which '' 2,935 has been disbursed as on 31.03.2022 and an amount of Nil is outstanding as on 31.03.2022

i) The principal amount will be repaid in 36 equal installments with effect from August 2019.

ii) Interest will be charged on the outstanding loan amount, on monthly basis, at BEL''s rate of yield on its deposits or the interest rate yield on a five year Government of India Bond, whichever is higher.

2. *Loan outstanding does not include Nil ('' 1) adjusted on account of Fair Valuation of loan given to subsidiary (BELOP) at below market rate.

h. Management Contracts including deputation of Employees

Two Officials of BEL has been deputed to BELOP (Subsidiary) and Seven Officials of BEL have been deputed to BEL-THALES Systems Limited (Subsidiary) and their Salary and Other Costs is paid by BELOP and BEL-THALES System Limited respectively during the year as per terms and conditions of employment.

i. Transaction with Government and Government Related Entities

As BEL is a government entity under the control of Ministry of Defence (MoD), the company has availed exemption from detailed disclosures required under Ind AS 24 wrt related party transactions with government and government related entities.

However as required under Ind AS 24, following are the individually significant transactions : -An amount of '' 52,331 ('' 52,331) was paid as Dividend during the FY 2021-22.

I n addition to the above, around 97% (92%) of the Company''s Turnover, around 99% (95%) of Trade Receivables and around 99% (99%) of Customer''s Advance is with respect to government and government related entities.

j. Investment with respect to BELOP includes fair valuation of loan.

k. Defence Innovation Organisation (DIO) was incorporated on 10 April 2017 as a ''Not for Profit'' Company as per the provisions of Section 8 of the Companies Act, 2013 with an authorised share capital of '' 100 (BEL: 50%; HAL: 50%) with an objective of funding innovation in defence sector. The registered office of the company situated in BEL''s premises in Bengaluru.

Level 1: Level 1 hierarchy includes Financial instruments measured using quoted prices.

Level 2: The fair value of Financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity specific estimates. Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3. This is the case of unlisted equity shares.

3 Valuation technique used to determine Fair Value:-

a. LIC Investment - (Level 2)

Based on valuation report of the Scheme provided by LIC.

b. Mana Effluent Treatment Plant Ltd - (Level 3)

BEL has invested in equity securities of Mana Effluent Treatment Plant Ltd. which is an unlisted company. The Company''s cost of investment in Mana Effluent Treatment Plant Ltd is only '' 5 (out of issued Share Capital of '' 163). The company has opted for Net Asset Value method for fair valuation.

c. Defence Innovation Organisation (DIO) - (Level 3)

BEL has contributed towards equity capital of M/s Defence Innovation Organisation (DIO), a ''Not for Profit'' Company as per the provisions of Section 8 of the Companies Act, 2013 with an objective of funding innovation in defence sector. The company has opted for Net Asset Value method for fair valuation.

Note 34 - Financial risk managementi. Risk Management framework and policies

The Company is broadly exposed to credit risk, liquidity risk and market risk (fluctuations in exchange rates, interest rates and price risk) as a result of financial instruments.

Board of Directors have the overall responsibility for the establishment, monitoring and supervision of the Company''s Risk Management framework. The Board has set up a Risk Management Committee, for this purpose, which is responsible for developing and monitoring the risk management policies. The Company has an established Risk Management Policy that outlines risk management structure and provides a comprehensive frame work for identification, evaluation, prioritisation, treatment of various risks associated with different areas of finance and operations.

The company has a centralised Treasury function which is responsible to undertake appropriate measures to mitigate financial risk in accordance with the policies and procedures formulated by the Board. Hedging transactions are undertaken by a team with appropriate skills and experience in consultation with an external expert. The Company does not trade in derivatives for speculation.

ii. Market Risk

Market risk is the risk that changes in market prices such as foreign exchange rates, interest rates will affect the Company''s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

The Company''s activities expose it primarily to the financial risks of changes in foreign exchange rates and interest rate movements (refer to notes below on currency risk and interest risk).

iii. Currency Risk

BEL is exposed to foreign exchange risk arising from foreign currency transactions primarily relating to purchases and sales made in foreign currencies such as US Dollar, Euro, Great Britain Pound, Swiss franc and Japanese Yen. Foreign exchange risk arises from existing and future commercial transactions and recognised assets and liabilities denominated in a currency that is not the Company''s functional currency (INR).

The Company has a Board approved currency risk management policy implemented by a Risk Management Committee that reviews the Company''s exposure to this risk on a regular basis. The Risk Management Policy recommends hedging upto 50% of the open foreign currency exposure. However the decision to enter into a hedging arrangement is made by the Risk Management Committee based on the relevant data inputs and the advice of the external specialist consultant retained for this purpose.

The Company''s export proceeds are realised mostly by remittance into an Export Earners Foreign Currency account (EEFC) which is then utilised for payments to be made in foreign currency, thereby mitigating the currency risk on exports. Imports to the extent of around 8% (8%) of annual foreign exchange outgo are not covered by the Exchange Rate Variation (ERV) clause in the related customer contract and hence are open to currency risk. These imports are benchmarked as per the policy and appropriate decision on covering the risk is taken on a case to case basis. The Company''s currency risk policy advocates forward contract hedging for mitigating risk wherever required.

As on 31 March 2022, there are no outstanding forward contracts.

v. Interest rate risk

Interest rate risk can be either fair value interest rate risk or cash flow interest rate risk. Fair value interest rate risk is the risk of changes in fair values of fixed interest bearing investments because of fluctuations in the interest rates. Cash flow interest rate risk is the risk that the future cash flows of floating interest bearing instruments will fluctuate because of fluctuations in market interest rates.

vi. Variable Rate Borrowing:

The company has been sanctioned a working capital limit of '' 4,00,000. The sanctioned limit includes fund based limit of '' 50,000 and non fund based limit of '' 3,50,000. The fund based limit of '' 50,000 has not been utilised during the year [Outstanding as on 31 March 2022 is Nil (31 March 2021 is Nil)]. The outstanding balance as on 31.03.2022 with respect to non fund based limit is '' 2,69,500 ('' 2,80,322). The interest is payable based on SBI''s 3 months (1 Year) MCLR rate. As the borrowing is nil there is no impact on likely change in interest rates.

vii. Equity Price Risk

The company''s exposure to equity price risk is negligible as its equity investment (other than in Subsidiaries and Associate) is negligible.

viii. Liquidity Risk

Liquidity Risk is the risk that a Company could encounter if it faces difficulty in meeting the obligations associated with financial liabilities by delivering cash and other financial asset or the risk that the Company will face difficulty in raising financial resources required to fulfill its commitments. The Company''s exposure to liquidity risk is very minimal as it has a

prudent liquidity risk management process in place which ensures maintaining adequate cash and marketable securities to pay its liabilities when they are due. To ensure continuity of funding, the Company has access to short-term bank facilities in the nature of bank overdraft facility, cash credit facility and short-term borrowings to fund its ongoing working capital requirements and growth needs when necessary.

The Company meets its liquidity requirement mainly through internally generated cash flows which is monitored centrally by treasury. There is an established process of rolling cash forecasts from various operating units which form the basis for mapping expected cash inflows, to meet the liabilities.

The table below analyses the company''s financial liabilities based on their contractual maturities. The amounts disclosed are contractual undiscounted cash flows.

ix. Credit Risk

Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in financial loss to the Company. Credit risk arises from credit exposures from customers, cash and cash equivalent with banks, security deposits and loans.

The credit risk of the Company is managed at a corporate level by the risk management committee which has established the credit policy norms for its customers and other receivables. Significant amount of trade receivables are due from Government / Government Departments, Public Sector Companies (PSUs) consequent to which the Company does not have a credit risk associated with such receivables. In case of non Government trade receivables, sales are generally carried out based on Letter of Credit established by the customer thereby reducing the credit risk.

In a few cases credit is extended to customers based on market conditions after assessing the solvency of the customer and the necessary due diligence to determine credit worthiness. Advance payments are made against bank guarantee which safeguards the credit risk associated with such payments. Impairment losses on financial assets (representing mainly liquidated damages leviable for delayed deliveries and other disallowances) have been made after factoring contractual terms, etc and other indicators.

The cash and ca


Mar 31, 2021

i. Freehold land consists of 2,072.87 acres (2,072.87 acres) and Leasehold land consists of 948.20 acres (948.20 acres).

ii. Freehold land includes 7.21 acres (7.21 acres) leased to commercial / religious organisations and in their possession.

iii. Additions related to R&D assets during the year includes

A. H 2,074 (H 1,019) in respect of the assets of Central Research Laboratories / Product Development and Innovation Centre accounted under natural code heads.

B. H 17 (H 14) in respect of the assets of Pune Unit accounted under natural code heads.

iv. Electronic Equipment value includes POS machines valuing H 1,026 (H 1,026) which are under the control of Haryana Government (operating lease).

v. Site Restoration Obligation

Refer Note 21 for Site Restoration Obligation in respect of Wind Mill & Solar Power Plants.

Gross Block Value of Plant & Machinery includes Site Restoration Obligation of H 2,105 (H 2,062) in respect of Wind Mill & Solar Power Plants.

vi. Contractual Commitments

Refer Note 30(6) for outstanding Contractual Commitments.

vii. Deemed Cost

On transition to Ind AS (01.04.2015), the company has elected to continue with the carrying value of all its property, plant and equipment as at 1 April 2015 measured as per previous GAAP and use that carrying value as the deemed cost of the property, plant & equipment.

viii. Estimation of Useful Life of Assets

The management has estimated the useful life of the various categories of tangible assets (which are different from the useful life indicated in Schedule II to the Companies Act, 2013) after taking into consideration, factors like expected usage of assets, risk of technical and commercial obsolescence, etc.

The estimated useful lives of various categories of Tangible Assets is as follows:

Asset Class

Years

Buildings

20-40

Roads and Culverts

20-40

Installations

10

Plant and Machinery

2-25

Electronic Equipments

5-7

Vehicles

4-5

Office Equipments

5-7

Furniture, Fixtures and equipments

6-10

Equipment for R & D Lab

5

ix. Depreciation / Amortisation

Depreciation is calculated on a straight-line basis over the estimated useful lives of the Assets.

Leased Assets are amortised on a straight-line basis over their estimated useful lives or their respective lease term whichever is shorter.

x. Method of Accounting Depreciation

Depreciation / Amortisation has been calculated as per the Accounting Policy No. 8 of the Company and recognised as

expenses in the Statement of Profit and Loss. Amount of Depreciation recognised as part of Cost of Other Asset is Nil (Nil).

xi. Impairment of Assets

Refer Note 30(4) .

xii. Refer Note 12 in respect of Unadjusted Capital Advance paid towards Property, Plant & Equipment.

xiii. Land acquired free of cost from the Government in some units has been accounted in line with provisions of Ind AS 101.

xiv. Details of Registration, Pending Litigation etc.,

A. Pending execution of title / sale deeds and handing over of physical possession of land allotted to BEL Hyderabad Unit by Andhra Pradesh Industrial Infrastructure Corporation (APIIC) in respect of land measuring 5.60 acres (5.60 acres) in Mallapur, Hyderabad and the matter being under litigation, no provision towards registration and other cost has been made in the books of accounts. Cost of land paid to APIIC amounting to H 65 (H 65) is included in Capital Advances.

B. Based on the Memorandum of Understanding reached with the Defence Authorities, assets constructed on the land allotted to BEL and in possession of BEL are capitalised under the respective heads for setting up of the Hyderabad Unit. Pending finalisation of the terms and conditions by the appropriate authorities, the cost of land measuring 25.11 acres (25.11 acres) has not been accounted in the books of accounts.

C. Land admeasuring to 122.82 acres (122.82 acres) at Ibrahipatnam allotted by APIIC / TSIIC possession is given for which sale deed is pending.

D. A demand of H 256 (H 256) being 50% of the compensation amount decreed by City Civil Court, Hyderabad has been received towards additional compensation from TSIIC dated 31.01.2015 for Land of 22.375 acres (22.375 acres) which is part of free hold land mentioned above. The demand is under dispute and hence, no provision in respect of the same has been made in the books of accounts.

E. Free hold Land to the extent of 1.22 acres (1.22 acres) which was allotted by Government Authorities in return for handing over of Land measuring 1.24 acres (1.24 acres) is under litigation.

F. The Company has installed Windmill Generator at three locations. Out of which : Windmill Generator-I capitalized in the year 2006-07 on Lease Land. Upfront Lease rent is Nil and Lease Agreement for the land is pending finalization. Windmill Generator - II is capitalized in the year 2007-08 on the leased land by paying upfront lease rent of H 36. Lease Agreement for the land is pending finalization.

G. The title deed in respect of land measuring 0.30 acres (0.30 acres) is under litigation. Two cases are pending in court in this regard.

H. Leasehold land admeasuring 8.93 acres (8.93 acres) in Pathankot is pending for registration. No provision towards registration and other cost has been made in the books of accounts for pending registration.

I. Land admeasuring to 6.20 acres (6.20 acres) has been converted into freehold land at Bathinda. No provision towards registration and other cost has been made in the books of accounts for pending registration.

J. Sale deed is pending for finalisation of the land admeasuring to 913.99 acres (913.99 acres) at Palasamudram, Ananthapur Dist. AP

K. Leasehold land admeasuring 197.68 acres (197.68 acres) at Addl. Butibori, Nagpur is pending for registration. No provision towards registration and other cost has been made in the books of accounts for pending registration.

xv. Company has installed solar power plants on lease land in Ordnance Factory Board Medak, Itarsi, Bolangir, HVF Avadi, GCF Jabalpur, VFJ Jabalpur, Hazratpur, Muradnagar, Nalanda by paying a nominal value of INR 1 as Annual lease rent for every plant.

xvi. Prepaid rent paid for 3 MW Hassan & 8.4 MW Davangere windmill plants capitalised as Right of Use on transition to Ind AS 116.

xvii. Land admeasuring to 31.15 acres (31.15 acres) located at Devanahalli, Bengaluru is received from Karnataka Industrial Area Development Board (KIADB) and the cost of land along with the cost of registration of H 7,974 (H 7,856) capitalised under Lease hold land. As per the terms of the lease agreement, on sucessful commencement of the project the same will be converted as freehold land.

xviii. Freehold land includes 2.2 acres (2.2 acres), land purchased at Gudibande Taluk, Chikkaballapur District, Karnataka for Long range communication test facility for defence equipment.

xix. Leasehold Land includes 5.94 acres (5.94 acres) acquired for construction of Regional Product Support Centre at Jodhpur.

xx. Borrowing cost of H 729 (H 484) (net of interest income) towards Employee quarters is capitalised. Capitalisation rate is 6.47% p.a (6.47% p.a.)

xxi. Compensation from Third Parties :-

The Company has received an amount of Nil (H 109) through insurance claim for loss of assets in fire having Net book value of Nil (H 43).

xxii. Leasehold land includes 9.62 acres (Nil) leased to Government Organisation and is in their possession.

NOTE 2

Capital Work-in-progress

Particulars

As at 31 March 2021

As at 31 March 2020

Civil construction

12,193

9,532

Plant & machinery

16,687

4,170

Others

4,489

3,550

Capital items in transit

1,824

2,816

35,193

20,068

Less: Provision for impairment

(124)

(124)

35,069

19,944

i. Civil construction mainly comprises of Production related building, R&D building and Employee Quarters.

ii. Refer Note 30(6) in respect of contractual commitments.

iii. Refer Note 12 in respect of Unadjusted Capital Advance paid towards Property, plant & equipment.

iv. Borrowing costs of H 245 (H 490) [net of interest income] has been included in Capital WIP in respect of employee quarters under construction. The capitalisation rate is 6.47% p.a (6.47% p.a).

v. Impairment of Assets :-

Building under construction with carrying value of H 124 (H 124), is halted as the contractor to whom the work was awarded has wound up and no progress in the work thereafter. The company is in the process of filing a legal claim to recover the amount paid to the contractor. Hence an amount of H 124 (H 124) is provided as impairment. Refer Note 30 (4).

v. Estimation of Fair Value

The company has estimated the fair value of the Investment Property based on the Government Guidance Value (municipal value) of the similar properties in the investment property''s location. All resulting fair value estimates for the investment properties are included in Level 2.

vi. Deemed Cost

On transition to Ind AS (01.04.2015), the company has elected to continue with the carrying value of all its investment property as at 1 April 2015 measured as per previous GAAP and used that carrying value as the deemed cost of the investment property.

vii. Estimation of Useful Life of Assets

The management has estimated the useful life of the various categories of tangible assets (which are different from the useful life indicated in Schedule II to the Companies Act, 2013) after taking into consideration, factors like expected usage of assets, risk of technical and commercial obsolescence, etc.

Tno ac imo arf i icqti i ita of TanniK a Accot ic ac T/-\ /-\\a#c •

Asset Class

Years

Buildings

40

viii. Depreciation

Depreciation is calculated on a straight-line basis over the estimated useful lives of the Assets. The amount of Depreciation has been recognised as expense in the Statement of Profit and Loss.

ix. Method of Accounting Depreciation

Depreciation has been calculated as per the Accounting Policy No. 8 of the Company and recognised as expenses in the Statement of Profit and Loss.

x. Impairment of Assets

As the fair value of the Investment Property is higher than its carrying value, there is no indication of impairment.

xi. Restrictions on the realisability of Investment Property The land is allotted by Government of India.

xii. Related Party Transactions

Investment Property includes Building and land measuring 0.31 acres (0.31 acres) given under cancellable operating lease to Subsidiary Company BEL Thales Systems Ltd. Also Refer Note 31.

xiii. Details of Registration, Pending Litigation etc.

Nil (Nil).

xiv. Nil (INR 95) [represents absolute figure] is transferred from investment property to freehold land.

iii. Amortisation

Amortisation is calculated on a straight-line basis over the estimated useful lives of the Assets. The amount of amortisation has been recognised as expense in the Statement of Profit and Loss.

iv. Method of Accounting Amortisation

Amortisation has been calculated as per the Accounting Policy No. 8 of the Company and recognised as expenses in the Statement of Profit and Loss.

v. Refer Note 30(6) for Contractual Commitments.

vi. Impairment of Assets

Refer Note 30(4).

vii. The restriction on the title of the assets is governed by the terms of agreement.

viii. Refer Note 30(7) for the aggregate amount of research and development expenditure recognised as an expense during the period.

i. Payment Terms

A. In majority of contracts, payment (net of advance received, if any) is due on delivery of items. However, in some contracts a portion of dues (Typically 5% to 10%) is linked to satisfaction of further performance obligation like completion of installation and commission activity etc. In respect of turnkey contracts, payment (net of advance, if any) is linked to achievement of specified milestone.

B. Advance including progressive payments received from customer are classified as contract liability and adjusted on completion of related performance obligation.

C. Amount retained by customer in respect of completed performance obligation, due to linking of payment with completion of other performance obligations in the contract, is classified as contract asset. Balance amount receivable is classified as Trade receivable.

vii. Unrecognised Deferred Tax (Assets) / Liabilities :

There are no temporary differences on which deferred tax (Assets) /Liability have not been recognised for the year ended 31 March 2021 & 31 March 2020.

viii. Tax Losses carried forward :

There are no Tax Losses on which Deferred Tax Asset has been recognised for the year ended 31 March 2021 & 31 March 2020.

ix. The tax rate used for reconciliation is the corporate tax rate of 25.168% (34.944%) payable by corporate entities on taxable profits under Income Tax Act, 1961. During the year, the Company has opted for lower tax rate under section 115 BAA of Income Tax Act, 1961 inserted vide Taxation law (Amendment) Act, 2019.

i. Raw Materials and Components include H 8,440 (H 9,643) being materials with sub-contractors, out of which H 694 (H 367) of materials is subject to confirmation and reconciliation. Against H 694 (H 367) an amount of H 694 (H 366) has been provided for.

ii. Stock verification discrepancies for the year are as follows :

Shortages of H 473 (H 1,294) and surplus of H 405 (H 412) . Pending reconciliation, an amount of H 68 (H 887) has been provided for.

iii. Valuation of Inventories has been made as per Company''s Accounting Policy No. 18.

iv. A. The United Nations Climate Change Secretariat has granted 15,856 (15,856) TON CO2EQ carbon credit during

earlier years, for the 2.5 MW BEL Grid Connected Wind Power Project Davangere District, Karnataka for the verification period from 05.11.2007 to 31.03.2012. The carbon credits are included under Finished Goods at a value of H 2 (H 2). The CER is valued at cost as required by Guidance Note on CER issued by ICAI.

B. CER under Certification : Nil (Nil) CERs.

v. Security, Hypothecation etc.

Refer Note 35.

vi. Amount recognised in Statement of Profit & Loss

Write-down of inventories to net realisable value amounted to H 1,599 (H 5,067) has been recognised in the statement of profit and loss.

vii. Reversal of write down of inventories of H 1,985 (H 3,389) has been made during the year, which were recognised as an expenses in the previous year.

viii. Impairment of Assets

Provisions for inventory has been made in line with Accounting Policy No. 18 of the Company.

ix. Materials amounting to H 4,370 (H 3,319) are located physically at Customer Premises.

x. The company has received / retained the assets of the customer as per the contractual terms and those do not form part of the inventory.

xi. Terms, rights, preferences and restrictions attaching to each class of shares

A. The Company has only one class of shares viz, Equity Shares.

B. Each holder of Equity Shares is entitled to one vote on show of hands and in poll in proportion to the Number of shares held.

C. Each Shareholder has a right to receive the dividend declared by the Company.

D. On winding up of the Company, the equity shareholders will be entitled to get the realised value of the remaining assets of the Company, if any, after distribution of all preferential amounts as per law. The distribution will be in proportion to the number of equity shares held by the shareholders.

B. Nature and purpose of Reserves

a. Capital Reserve

Capital Reserve is created by transfer from Retained earnings an amount equal to capital profit earned by the company. The reserve is utilised in accordance with the provisions of the Companies Act, 2013.

b. Capital Redemption Reserve

Capital Redemption Reserve is created by transfer from General Reserve an amount equal to face value of the Shares bought back. The reserve is utilised in accordance with the provisions of the Companies Act, 2013.

c. Equity Investment through Other Comprehensive Income (OCI)

The company has elected to recognise changes in fair value of certain equity investments in other comprehensive income. The change in fair value is accumulated in this reserve. If and when the investment is de-recognised the accumulated amount will be transferred to Retained earnings.

d. Other Comprehensive Income (OCI)

Other comprehensive income are those gains or losses which are not yet realised and excluded from the statement of profit and loss. It mainly consists of remeasurement of the net defined benefit liability / asset (net of tax).

ii. Financial Instruments

Refer Note 33 for classification of financial instruments.

iii. Related Party Disclosure

For Related Party Disclosures refer Note 31.

iv. The information has been given in respect of such suppliers to the extent they could be identified as Micro & Small enterprises on the basis of information available with the Company and have been relied upon by the Auditors.

v. The exposure of company to currency and liquidity risk related to Trade Payables is disclosed at Note 34.

ii. Provision for Warranties - as per Accounting Policy No. 20 of the Company.

Provision for warranties is made in respect of products whose normal warranty period is outstanding. As the warranty provision period varies from product to product, provision is made at Strategic Business Unit (SBU) level based on average period of warranty period. Provision is made based on trend based estimate of the likely expenses to be incurred. The provision is measured at the present value of the estimated cost of Warranty.

iii. Provision for Site restoration - as per Accounting Policy No. 23 of the Company.

In accordance with the terms and conditions of the Lease agreement entered into with Lessor, the company is required to return the land in its original condition. Accordingly provision in respect of Site restoration obligation has been made. The provision required is reviewed and required adjustment made at each year end.

The provision is measured at the present value of the best estimate of the cost of restoration.

iv. Provision for Onerous contracts - as per Accounting Policy No. 23 of the Company.

In respect of certain contracts entered into by the company, it is expected that the likely cost to complete the contract would exceed the Revenue received / receivable against the contract. In such cases, provision in respect of the expected losses has been made. The provision required is reviewed and required adjustment made at each year end. The provision is measured at the present value of the best estimate of loss likely to be incurred.

v. Amount debited to opening provision.

vi. An amount of H 7,873 (H 14,156) has been debited against Natural Code Heads wrt Warranty Cost.

An amount of Nil (Nil) has been debited against Natural Code Heads wrt Site Restoration Obligation.

vii. Performance warranty obligation in respect of sales where back to back warranty of vendor is available, potential liability, if any, in the event of default of vendor is not asertainable and not expected to be significant.

viii. Performance warranty with respect to ventilator project is based on the best estimate of the management as the trend cannot be established in normal course.

(A) POST EMPLOYMENT BENEFIT OBLIGATION (i) GRATUITY :

The Company provides gratuity to employees in India as per payment of Gratuity Act, 1972. The Company has a Gratuity Scheme for its employees, which is a funded plan. Every year, the Company remits fund to the Gratuity Trust to the extent of shortfall of the assets over the fund obligations, which is determined through actuarial valuation. As per the Gratuity Scheme, gratuity is payable to an employee on the cessation of his employment after he has rendered continuous service for not less than five years in the Company. For every completed year of service or part thereof in excess of six months, the Company shall pay gratuity to an employee at the rate of fifteen days salary based on the last drawn basic & dearness allowance.

The following table summarises the components of net benefit expense recognised in the Statement of Profit & Loss and amounts recognised in the Balance Sheet and the movement in the net defined benefit obligation over the years as per Actuarial valuation are as follows :

(ii) BEL RETIRED EMPLOYEES CONTRIBUTORY HEALTH SCHEME (BERECHS) :

The Company has a contributory health scheme for its retired employees "BEL Retired Employees'' Contributory Health Scheme" (BERECHS), which is non-funded scheme. The primary objective of the scheme is to provide medical facilities to employees retiring on attaining the age of superannuation, or on VRS. Benefits under the Scheme shall be available to the employees who become members and their spouses only. With effect from 01.04.2021 the company has taken insurance cover for both inpatient and out patient for retirees.

The following table summarises the components of net benefit expense recognised in the Statement of Profit & Loss and amounts recognised in the Balance Sheet and the movement in the net defined benefit obligation over the years as per Actuarial valuation are as follows :

B. Long Term Compensated Absence :

The Company has a Long Term Compensated Absence Scheme for its employees, which is a Non-Funded Scheme. The employees of the Company are entitled to two types of Long Term Compensated Absences: Annual Leave (AL) & Half Pay Leave (HL) in case of Executives and Annual Leave (AL) & Sick Leave (SL) in case of Non-Executives. The scheme provides for compensation to employees against the unavailed Leave (AL & HL in case of Executives and AL & SL in case of Non-Executives) on attaining the age of superannuation, VRS or death. AL can also be encashed during service or at the time of resignation.

C. Pension Scheme :

The Company has got a defined contribution pension benefit plan for the benefit of its employees in respect of which contribution is made on an annual basis to a Trust setup for this purpose.

The benefit under the scheme are available for the employees as per the rules laid down in this regard.

i) A narrative description of the specific or unusual risks arising from a defined benefit plan (i.e. Gratuity and BERECHS)

The specific risk relating to defined benefit plans are as follows :-

Movement in long term government bond rate between two reporting periods which will impact discount rate and consequently the present value of obligations.

Risk of higher / lower salary escalation / benefit as considered for valuation vis-a-vis the actual experience through the Financial Year.

However, both the risks are mitigated on a regular basis i.e. yearly as valuations are done after every year based on updated assumptions.

ii) A narrative description of any asset-liability matching strategies.

The gratuity plan of the company is a funded plan. The assets backing this plan are predominantly insurer-managed funds. Hence the company has limited flexibility in terms of implementing asset-liability matching strategies for this plan.

The post retirement medical plan of the company is an unfunded plan. Hence asset-liability matching strategies are not relevant for this plan.

iii) A description of the funding arrangements and funding policy.

The Gratuity plan of the company is a funded plan. 98.70% (98.65%) of the plan assets backing this plan are insurer managed assets and 1.29% (1.34%) of the plan assets are invested in Central and State Government Securities. The annual contribution to the fund is normally set equal to the deficit as disclosed by the preceding actuarial valuation of the benefit obligations.

Satisfaction of performance obligation

A. In majority of the contract, performance obligation is satisfied "at a point in time" which is primarily determined on customer obtaining control of the asset. One of the prime indicator considered for this is transfer of significant risk and rewards to the customer based on Inco terms. Where a contract involves multiple performance obligation, the criteria specified in Ind AS 115 is applied to determine the point in time when the performance obligation is satisfied.

B. Under "Bill and hold" arrangement performance obligation is satisfied on unconditional appropriation of the goods to the contract. Normally no obligation towards custodial service exists.

C. Contract with the customer normally do not contain significant financial component and any advance payment received and / or amount retained by customer is with intention of protecting either parties to the contract.

D. Variable consideration primarily consists of amount receivable/reimbursable against foreign exchange variation clause. The amount of revenue recognised in respect of the same is determined based on the methodology specified in the contract. The amount is recognised as revenue on accrual/admittance of claim by customer.

E. The company''s turnover mainly includes supply of defence electronics equipments and systems.

F. Contract entered into with customer, typically do not have a return/refund clause.

G. Warranties provided are primarily in the nature of performance warranty.

H. The company normally uses the input method to recognise revenue in respect of contracts in which performance obligation are satisfied over a period of time. For revenue recognition, the percentage of completion method is adopted where in the percentage of actual cost incurred to total estimated cost is applied to the contract price for arriving at the quantum of revenue to be recognised.

I. Contract with customer (other than AMC) in respect of which revenue is recognised over a period of time typically involves multiple activities of different nature like construction of building, supply and installation of equipments, networking of equipment and system etc. Due to this it is not possible to quantify in physical terms the quantum of work done (i.e. output) reliably. Whereas, under input method, the cost incurred in respect of these varied activities can be captured and compared to the total estimated cost to be incurred (which can be estimated reliably), for arriving at the percentage of completion. In case of AMC contracts, output method is used to recognise revenue where passage of time is the criteria for satisfaction of performance obligation.

J. For revenue recognition in respect of performance obligation satisfied at a "point in time" the following criteria is used for determining whether customer has obtained "Control on asset":

• Transfer of significant risk and rewards

• Customer has legal title to the asset

• The entity has transferred physical possession of the asset

• Customer has accepted the asset

• Entity has the present right to payment for the asset

K. Transaction price is typically determined based on contract entered into with customer. Allocation of transaction price in respect to multiple obligation is based on relative standalone selling price.

L. No non-cash considerations are received/given during the current/previous year.

An amount of H 7,043 (H 7,725) (net) has been recognised as revenue during the year out of performance obligation satisfied in previous periods.

iii. In a project, one site out of ten is still to be handed over by the customer since 2015. Other 9 sites have progressed significantly; therefore, based on an opinion obtained by the management, the site, which has not been handed over till date, has been considered as a separate performance obligation, as there is uncertainty regarding its handing over in near future. This has resulted in increase in Revenue for the year by H 8,786 (Nil) and increase in profit by H 8,540 (Nil)

2 Statement of Compliances

The standalone financial statements are prepared in accordance with Indian Accounting Standards (Ind AS) [as notified under section 133 of the Companies Act, 2013 (the "Act") read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015, as amended] and other relevant provision of the Act.

The Company''s standalone financial statements up to and for the year ended 31 March 2016 were prepared in accordance with the Companies (Accounting Standards) Rules, 2006, notified under Section 133 of the Act and other relevant provisions of the Act.

3 Operating Cycle

As per the requirement of Schedule III to the Companies Act, 2013, the Operating Cycle has been determined at Strategic Business Unit (SBU) / Unit level, as applicable.

4 Impairment of Assets

The Company has analysed Indications of impairment of assets of each geographical composite manufacturing unit considered as Cash Generating Units (CGU). On the basis of assessment of internal and external factors, an amount of H 7,337 (H 124) is provided as provision for impairment.

5 Short Term Borrowings

a. The Company has been sanctioned working capital limit of H 4,00,000 by Consortium Bankers (SBI Lead Bank). The sanctioned limit includes fund based limit of H 50,000 and non fund based limit of H 3,50,000.

b. The interest rate payable on fund based limit is linked to SBI 1 year MCLR Rate. [Interest rate payable as on 31.03.2021 is 7.00 % p.a. (7.90% p.a)].

c. The amount utilised is repayable on demand. Utilisation as on 31.03.2021 is Nil (Nil).

d. The above sanction limit is secured by hypothecation of Current Assets of the Company (Refer Note 35).

ii) The company has Leased out Point of Sales machines to Government of Haryana for period of five years from 2016-17 to 2021-22.

The company has Leased out few portions of Land to different organizations under non-cancellable Operating Lease. Lease period is spread over from the year 1967 to 2077. The leases have various terms, escalation clause, lease renewal rights etc. On renewal, the terms of the lease are renegotiated.

The company has not recognized any income as contingent rent.

b) As a Lessee:

The Company has leases that were classified as finance lease applying Ind AS 17, for such leases the carrying amount of the right of use amount at the date of initial application of Ind AS 116 is the carrying amount of the lease on the transition date as measured applying Ind AS 17. Accordingly an amount of H 1,275 has been reclassified from property, plant and equipment to right of use assets.

On transition, the company recognises right of use asset representing its right to use the underlying asset for the unexpired lease period.

The right of use asset is recognised at :

a) The carrying amount of prepaid rent when no future lease payments are payable; or

b) At the carrying amount and discounted at incremental borrowing rate. Accordingly right of use asset is H 365 and Corresponding lease liability H 365 has been recognised. On application of Ind AS 116 in respect of these assets, nature of expenses has been reclassified from lease rent to depreciation cost for right of use asset and finance cost for interest accrued on lease liability.

The above lease contracts, entered by company pertains to land taken on lease for generation of power through solar project and buildings for business purposes. The company has restriction with respect to disposal of these assets.

The Company has entered into a lease agreement with M/s Tamil Nadu Industrial Explosive Ltd., towards lease of 67.25 acres of land along with buildings constructed thereon situated at Vellore district, Tamil Nadu for the tenure of 29 years commencing from 22 May 2021. The minimum lease rent payable as per the contractual terms is H 13,601. The registration charges amounting to H 137 paid towards execution of lease agreement is recorded under Capital work in progress - Note 2 .

The maturity analysis of Contractual Cash flows of Lease Liabilities is disclosed in Note 34.

13 Segment Reporting

Ministry of Corporate Affairs vide Notification no. 463 (E) dated 5 June, 2015 as amended has exempted the Companies engaged in Defence Productions from the requirement of Segment Reporting.

14 Retention Sales

The Value of Retention Sales (i.e., Goods retained with the Company at the Customers'' request and at their risk) included in Gross Turnover during the year is H 49,302 (H 1,78,315).

Out of the above, the Value of Ex-works Sales is H 6,884 (H 29,959).

17 COVID - 19 Impact

The Company has considered the possible effects that may result from the pandemic relating to COVID-19 in the preparation of the financial statements including the recoverability of carrying amount of financial and non-financial assets. In developing the assumptions relating to the possible future uncertainties in the global economic conditions because of pandemic, the company has used its available internal and external sources of information and economic forecasts and expects that the carrying amount of these assets will be recovered. The impact of COVID-19 on the financial statements may differ from the estimate as at the date of approval of the financial statements.

18 Dividend not recognised at the end of the reporting period

The directors have recommended a final dividend of INR 1.20 (INR 1.40) per share. [Represents absolute figure].

The proposed dividend is subject to approval of shareholders in the ensuing Annual General Meeting and if approved would result in cash outflow of approximately H 29,239.

19 An amount of H 25 (H 25) has been contributed to Defence Production IT Division which has been created as one of the division of HAL to implement IT related initiatives in Dept. of Defence Production including Ordnance Factory Board (OFB) and Defence Public Sector Units.

21 During the year 2019-20, a fraud on the company by the employees amounting to H 1,000 has been detected during the routine internal audit. Out of the said amount, Nil (H 64) has been recovered and the balance amount of H 936 (H 936) is recognised as receivable, pending recovery, the same has been provided for as doubtful in the statement of profit and loss. The company has initiated appropriate actions and the investigation is in process.

22 The date on which the code of social security, 2020 will come to effect has not been notified and the company will assess the impact of the code when it comes into effect and will record the impact in the period the code becomes effective.

23 Fig ure in brackets relate to previous years.

24 All figures in financial statements are rounded off to nearest lakhs unless otherwise mentioned.

25 The standalone Ind AS financial statements were approved for issue on 22 June 2021 by the Board of Directors.

The sitting fees paid to non executive Directors is H 16 as at 31 March 2021 and H 20 as on 31 March 2020 respectively.

d. All transactions dealt with related parties are on arm''s length basis. In respect of loan to subsidiary (BELOP) refer note "g" below.

e. All Outstanding balances are Unsecured. All Outstanding balances (Other than loan) is repayable in cash within next 6 months. For Outstanding balance of loans refer note "g" below.

f. The Company has entered into an Agreement with BELOP in April, 2013 to temporarily fund the amount of H 10,416 [H 26,040 less H15,624] for enabling BELOP to make payment towards ToT for XD-4 II Tubes, pending receipt of balance amount from MoD. As on 31.03.2021, an amount of H 9,851 (H 9,851) has been paid to BELOP, out of which an amount of H 9,851 (H 7,109) has been received from MoD. The balance amount of Nil (H 2,742) has been shown under Other Financial Assets - Non Current. (Refer Note 9).

As per the Agreement, an amount of H 21 (H 181) has been recovered during the financial year from BELOP towards the cost of funds.

g. Loans to Related Parties

1. The Company has entered into an agreement with BELOP in August 2016 to fund a Term Loan of H 4,600 out of which H 2,935 has been disbursed as on 31.03.2021 and an amount of H 381 (including interest) is outstanding as on 31.03.2021.

i) The principal amount will be repaid in 36 equal installments with effect from August 2019.

ii) Interest will be charged on the outstanding loan amount, on monthly basis, at BEL''s rate of yield on its deposits or the interest rate yield on a five year Government of India Bond, whichever is higher.

2.* Loan outstanding does not include H 1 (H 13) adjusted on account of Fair Valuation of loan given to subsidiary (BELOP) at below market rate.

h. Management Contracts including deputation of Employees

Two Officials of BEL has been deputed to BELOP (Subsidiary) and Seven Officials of BEL have been deputed to BEL-THALES Systems Limited (Subsidiary) and their Salary and Other Costs is paid by BELOP and BEL-THALES System ltd. respectively during the year as per terms and conditions of employment.

i. Transaction with Government and Government Related Entities

As BEL is a government entity under the control of Ministry of Defence (MoD), the company has availed exemption from detailed disclosures required under Ind AS 24 wrt related party transactions with government and government related entities.

However as required under Ind AS 24, following are the individually significant transactions : -An amount of H 52,331 (H 40,612) was paid as Dividend during the FY 2020-21.

In addition to the above, around 92% (91%) of the Company''s Turnover, around 95% (97%) of Trade Receivables and around 99% (99%) of Customer''s Advance is with respect to government and government related entities.

j. Investment with respect to BELOP includes fair valuation of loan.

k. Defence Innovation Organisation (DIO) was incorporated on 10 April 2017 as a ''Not for Profit'' Company as per the provisions of Section 8 of the Companies Act, 2013 with an authorised share capital of H 100 (BEL: 50%; HAL: 50%) with an objective of funding innovation in defence sector. The registered office of the company situated in BEL''s premises in Bengaluru.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3. This is the case of unlisted equity shares.

3 Valuation technique used to determine Fair Value

a. LIC Investment - (Level 2)

Based on valuation report of the Scheme provided by LIC.

b. Mana Effluent Treatment Plant Ltd - (Level 3)

BEL has invested in equity securities of Mana Effluent Treatment Plant Ltd. which is an unlisted company. The Company''s cost of investment in Mana Effluent Treatment Plant Ltd is only H 5 (out of issued Share Capital of H 163). The company has opted for Net Asset Value method for fair valuation.

c. Defence Innovation Organisation (DIO) - (Level 3)

BEL has contributed to equity capital of M/s Defence Innovation Organisation (DIO), a ''Not for Profit'' Company as per the provisions of Section 8 of the Companies Act, 2013 with an objective of funding innovation in defence sector. The company has opted for Net Asset Value method for fair valuation.

NOTE 34Financial risk management

i) Risk Management framework and policies

The Company is broadly exposed to credit risk, liquidity risk and market risk (fluctuations in exchange rates, interest rates and price risk) as a result of financial instruments.

Board of Directors have the overall responsibility for the establishment, monitoring and supervision of the Company''s Risk Management framework. The Board has set up a Risk Management Committee, for this purpose, which is responsible for developing and monitoring the risk management policies. The Company has an established Risk Management Policy that outlines risk management structure and provides a comprehensive frame work for identification, evaluation, prioritisation, treatment of various risks associated with different areas of finance and operations.

The company has a centralized Treasury function which is responsible to undertake appropriate measures to mitigate financial risk in accordance with the policies and procedures formulated by the Board. Hedging transactions are undertaken by a team with appropriate skills and experience in consultation with an external expert. The Company does not trade in derivatives for speculation.

ii) Market Risk

Market risk is the risk that changes in market prices such as foreign exchange rates, interest rates will affect the Company''s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

The Company''s activities expose it primarily to the financial risks of changes in foreign exchange rates and interest rate movements (refer to notes below on currency risk and interest risk).

iii) Currency Risk

BEL is exposed to foreign exchange risk arising from foreign currency transactions primarily relating to purchases and sales made in foreign currencies such as US Dollar, Euro, Great Britain Pound, Swiss franc and Japanese Yen. Foreign exchange risk arises from existing and future commercial transactions and recognised assets and liabilities denominated in a currency that is not the Company''s functional currency (INR).

The Company has a Board approved currency risk management policy implemented by a Risk Management Committee that reviews the Company''s exposure to this risk on a regular basis. The Risk Management Policy recommends hedging upto 50% of the open foreign currency exposure. However the decision to enter into a hedging arrangement is made by the Risk Management Committee based on the relevant data inputs and the advice of the external specialist consultant retained for this purpose.

The Company''s export proceeds are realised mostly by remittance into an Export Earners Foreign Currency account (EEFC) which is then utilised for payments to be made in foreign currency, thereby mitigating the currency risk on exports. Imports to the extent of around 8% (7%) of annual foreign exchange outgo are not covered by the Exchange Rate Variation (ERV) clause in the related customer contract and hence are open to currency risk. These imports are benchmarked as per the policy and appropriate decision on covering the risk is taken on a case to case basis. The Company''s currency risk policy advocates forward contract hedging for mitigating risk wherever required.

v) Interest rate risk

Interest rate risk can be either fair value interest rate risk or cash flow interest rate risk. Fair value interest rate risk is the risk of changes in fair values of fixed interest bearing investments because of fluctuations in the interest rates. Cash flow interest rate risk is the risk that the future cash flows of floating interest bearing instruments will fluctuate because of fluctuations in market interest rates.

vi) Variable Rate Borrowing

The company has been sanctioned a Term Loan of H 10,000 on 31.03.2017 [Outstanding as on 31 March 2021 is Nil (H 833)]. Interest payable on this loan is based on SBI''s Minimum Commercial Lending Rate - MCLR. [SBI is eligible to reset the interest charged on yearly basis].

In addition the company has been sanctioned a working capital limit of H 4,00,000. The sanctioned limit includes fund based limit of H 50,000 and non fund based limit of H 3,50,000. The fund based limit of H 50,000 has not been utilised during the year [Outstanding as on 31 March 2021 is Nil (31 March 2020 is Nil)]. The outstanding balance as on 31.03.2021 with respect to non fund based limit is H 2,80,322 (H 3,14,236). The interest is payable based on SBI''s 1 year MCLR rate. As the borrowing is nil there is no impact on likely change in interest rates.

vii) Equity Price Risk

The company''s exposure to equity price risk is negligible as its equity investment (other than in Subsidiaries and Associate) is negligible.

viii) Liquidity Risk

Liquidity Risk is the risk that a Company could encounter if it faces difficulty in meeting the obligations associated with financial liabilities by delivering cash and other financial asset or the risk that the Company will face difficulty in raising financial resources required to fulfill its commitments. The Company''s exposure to liquidity risk is very minimal as it has a prudent liquidity risk management process in place which ensures maintaining adequate cash and marketable securities to pay its liabilities when they are due. To ensure continuity of funding, the Company has access to short-term bank facilities in the nature of bank overdraft facility, cash credit facility and short-term borrowings to fund its ongoing working capital requirements and growth needs when necessary.

The Company meets its liquidity requirement mainly through internally generated cash flows which is monitored centrally by treasury. There is an established process of rolling cash forecasts from various operating units which form the basis for mapping expected cash inflows, to meet the liabilities.

The table below analyses the company''s financial liabilities based on their contractual maturities. The amounts disclosed are contractual undiscounted cash flows.

ix) Credit Risk

Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in financial loss to the Company. Credit risk arises from credit exposures from customers, cash and cash equivalent with banks, security deposits and loans.

The credit risk of the Com


Mar 31, 2019

Notes to Accounts

NOTE 34

Financial risk management

i) Risk Management framework and policies

The Company is broadly exposed to credit risk, liquidity risk and market risk (fluctuations in exchange rates, interest rates and price risk) as a result of financial instruments.

Board of Directors has the overall responsibility for the establishment, monitoring and supervision of the Company''s risk management framework. The Board has set up a Risk Management Committee, for this purpose, which is responsible for developing and monitoring the risk management policies. The Company has an established Risk Management Policy that outlines risk management structure and provides a comprehensive frame work for identification, evaluation, prioritization, treatment of various risks associated with different areas of finance and operations.

The company has a centralized Treasury function which is responsible to undertake appropriate measures to mitigate financial risk in accordance with the policies and procedures formulated by the Board. Hedging transactions are undertaken by a team with appropriate skills and experience in consultation with an external expert. The Company does not trade in derivatives for speculation.

ii) Market Risk

Market risk is the risk that changes in market prices such as foreign exchange rates, interest rates will affect the Company''s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

The Company''s activities expose it primarily to the financial risks of changes in foreign exchange rates and interest rate movements (refer to notes below on currency risk and interest risk).

iii) Currency Risk

BEL is exposed to foreign exchange risk arising from foreign currency transactions primarily relating to purchases and sales made in foreign currencies such as US Dollar, Euro, Great Britain Pound and Swiss Franc. Foreign exchange risk arises from existing and future commercial transactions and recognised assets and liabilities denominated in a currency that is not the Company''s functional currency (INR).

The Company has a Board approved currency risk management policy implemented by a Risk Management Committee that reviews the Company''s exposure to this risk on a regular basis. The Risk Management Policy recommends hedging upto 50% of the open foreign currency exposure. However the decision to enter into a hedging arrangement is made by the Risk Management Committee based on the relevant data inputs and the advice of the external specialist consultant retained for this purpose.

The Company''s export proceeds are realized mostly by remittance into an Export Earners Foreign Currency account (EEFC) which is then utilised for payments to be made in foreign currency, thereby mitigating the currency risk on exports. Imports to the extent of around 10% (25%) of annual foreign exchange outgo are not covered by the Exchange Rate Variation (ERV) clause in the related customer contract and hence are open to currency risk. These imports are benchmarked as per the policy and appropriate decision on covering the risk is taken on a case to case basis. The Company''s currency risk policy advocates forward contract hedging for mitigating risk wherever required.

As on 31 March 2019, there are no outstanding forwards contracts.

The company''s exposure to foreign currency risk in respect of major currencies is given below :

Particulars

As at 31 March 2019

As at 31 March 2018

USD

EURO

GBP

CHF

USD

EURO

GBP

CHF

Trade Payable

659

154

23

41

807

141

21

55

Trade Receivable / Contract Asset

52

3

-

-

33

12

-

-

Net Exposure

607

151

23

41

774

129

21

55

iv) Foreign Currency Sensitivity

The sensitivity of profit or loss to changes in the exchange rate arises mainly from foreign currency denominated financial instruments. The sensitivity to variations in respect of major currencies is given below. This analysis assumes that all other variables remain constant.

Particulars

Impact on Profit

As at 31 March 2019

As at 31 March 2018

USD - Increase by 5%

2,127

2,530

USD - Decrease by 5%

(2,127)

(2,530)

EURO -Increase by 5%

600

516

EURO - Decrease by 5%

(600)

(516)

GBP- Increase by 5%

105

95

GBP- Decrease by 5%

(105)

(95)

CHF- Increase by 5%

146

191

CHF- Decrease by 5%

(146)

(191)

v) Interest rate risk

Interest rate risk can be either fair value interest rate risk or cash flow interest rate risk. Fair value interest rate risk is the risk of changes in fairvalues of fixed interest bearing investments because of fluctuations in the interest rates. Cash flow interest rate risk is the risk that the future cash flows of floating interest bearing instruments will fluctuate because of fluctuations in market interest rates.

vi) Variable Rate Borrowing:

The company has been sanctioned a Term Loan of Rs. 10,000 on 31.03.2017 [Outstanding as on 31 March 2019 is Rs. 3,334 (Rs. 6,666)]. Interest payable on this loan is based on SBI''s Minimum Commercial Lending Rate - MCLR [SBI is eligible to reset the interest charged on yearly basis]. There would be an additional outflow of cash of Rs. 33 if the interest rate goes up by 1 % and saving of s. 33 in cash flow if interest rate goes down by 1 %. There would however be no impact on profit as the interest component is capitalized since the borrowing is towards capital expenditure.

In addition the company has been sanctioned a working capital limit of Rs. 4,00,000. The sanctioned limit includes fund based limit of Rs. 50,000 and non fund based limit of Rs. 3,50,000. The fund based limit of Rs. 50,000 has not been utilised during the year [Outstanding as on 31 March 2019 is nil (31 March 2018 is nil)]. The outstanding balance as on 31.03.2019 with respect to non fund based limit is Rs. 1,88,007 (Rs 1,75,565). The interest is payable based on SBI''s 1 year MCLR rate. As the borrowing is nil there is no impact on likely change in interest rates.

vii) Equity Price Risk

The company''s exposure to equity price risk is negligible as its equity investment (other than in subsidiaries and Associate) is negligible.

viii) Liquidity Risk

Liquidity Risk is the risk that a Company could encounter if it faces difficulty in meeting the obligations associated with financial liabilities by delivering cash and other financial asset or the risk that the Company will face difficulty in raising financial resources required to fulfill its commitments. The Company''s exposure to liquidity risk is very minimal as it has a prudent liquidity risk management process in place which ensures maintaining adequate cash and marketable securities to pay its liabilities when they are due. To ensure continuity of funding, the Company has access to short-term bank facilities in the nature of bank overdraft facility, cash credit facility and short-term borrowings to fund its ongoing working capital requirements and growth needs when necessary.

The Company meets its liquidity requirement mainly through internally generated cash flows which is monitored centrally by treasury. There is an established process of rolling cash forecasts from various operating units which form the basis for mapping expected cash inflows, to meet the liabilities.

The table below analyses the company''s financial liabilities based on their contractual maturities. The amounts disclosed are contractual un-discounted cash flows.

As at 31 March 2019

Particulars

Less than 3 months

3 months to 6 months

6 months to 1 year

Between 1 & 2 year

Between 2 & 5 year

Total

Borrowings

-

-

-

-

-

-

Trade Payables

1,36,081

5,113

2,307

26

-

1,43,527

Current Maturities of Long Term Debts

833

834

1,667

-

-

3,334

Interest accrued and due on Trade Payables

1

-

2

-

-

3

Other Financial Liabilities

88,565

1,651

10,078

3,029

-

1,03,323

As at 31 March 2018

Particulars

Less than 3 months

3 months to 6 months

6 months to 1 year

Between 1 & 2 year

Between 2 & 5 year

Total

Borrowings

-

-

-

3,333

-

3,333

Trade Payables

1,19,138

7,509

13,460

-

5

1,40,112

Current Maturities of Long Term Debts

833

834

1,666

-

-

3,333

Interest accrued and due on Trade Payables

8

-

2

-

-

10

Other Financial Liabilities

72,195

2,141

6,898

216

-

81,450

The company does not have any outstanding derivatives as on 31 March 2019.

ix) Credit Risk

Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in financial loss to the Company. Credit risk arises from credit exposures from customers, cash and cash equivalent with banks, security deposits and loans.

The credit risk of the Company is managed at a corporate level by the risk management committee which has established the credit policy norms for its customers and other receivables. Significant amount of trade receivables are due from Government/Government Departments, Public Sector Companies (PSUs) consequent to which the Company does not have a credit risk associated with such receivables. In case of non Government trade receivables, sales are generally carried out based on Letter of Credit established by the customer thereby reducing the credit risk.

In a few cases credit is extended to customers based on market conditions after assessing the solvency of the customer and the necessary due diligence to determine credit worthiness. Advance payments are made against bank guarantee which safeguards the credit risk associated with such payments. Impairment losses on financial assets (representing mainly liquidated damages leviable for delayed deliveries and other disallowances) have been made after factoring contractual terms, etc. and other indicators.

The cash and cash equivalent with banks are in the form of short term deposits with maturity period of upto 1 year. The Company has a well structured Risk Mitigation Policy whereby there are preset limits for each bank based on its net worth and earning capacity which is reviewed on a periodic basis. The Company has not incurred any losses on account of default from banks on deposits.

The credit risk in respect of other financial assets is negligible as they are mostly due from government department / parties.

Loan of Rs. 2,987 (Rs. 3,420) is outstanding [as on 31.03.2019] from BELOP [100% subsidiary company]. The subsidiary company has been regular in repayment of its dues (Interest and Principal) and no credit risk is expected in terms of repayment of the loan amount.

x) Capital Management

The Company''s Capital Management objective is to maintain a strong capital base to provide adequate returns to the shareholders and ensure the ability of the company to continue as a going concern. The Company has a conservative approach for raising capital through debt but reserves the right to leverage this alternative at an appropriate time to fuel growth and maintain optimal capital structure.

As part of this overall objective, the company has expanded capital base by issuing bonus shares in financial year 2015-16 & 2017-18 and bought back shares in financial year 2016-17 & 2017-18 [Refer Note 16]. The Company has a well defined Dividend Distribution Policy which lays the framework for payments of dividend and retention of surplus for future growth and enhancing shareholders wealth. The company has borrowed an amount Rs. 10,000 from Bank for construction of quarters. [Outstanding as on 31 March 2019 is Rs. 3,334 (Rs. 6,666)] [Refer Note 18 & 20]. The Company has been sanctioned borrowing limits with banks to the tune of Rs. 4,00,000.

Gearing Ratio:

Particulars

As at 31 March 2019

As at 31 March 2018

Net Debt

3,334

6,666

Total Equity

9,01,891

7,76,101

Net Debt to Equity Ratio

0.004:1

0.009:1

NOTE 35

Assets pledged as security

The carrying amounts of assets pledged as security for Term Loan and Working Capital borrowings are:

Particulars

As at 31 March 2019

As at 31 March 2018

(i) Inventories

4,41,365

4,55,132

(ii) Trade Receivables

5,36,921

5,04,950

(iii) Cash & Cash Equivalents

72,190

73,820

(iv) Bank Balances [Other than (iii) above]

9,100

-

(v) Loans

3,282

2,724

(vi) Other Financial Assets

3,567

5,577

(vii) Other Current Assets

4,67,945

3,42,329

Total assets pledged as security

15,34,370

13,84,532

Refer Note 18 & 20 for the details of borrowings.

NOTE 36

Critical estimates and judgments

While preparing the financial statements, management has made certain judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised prospectively.

Judgments made in applying accounting policies that have the most significant effects on the amounts recognised in the financial statements and Estimates that have a significant risk of resulting in a material adjustment are as under:

i) Research and Development Expenditure - Accounting Policy No. 10 - (Refer Note 5 and 12)

Developmental expenditure incurred with respect to No Cost No Commitment (NCNC) Projects and Joint developmental projects which are not fully compensated by the development partner are carried forward till the completion of project.

ii) Estimation of defined benefit obligation - Key actuarial assumptions - (Refer Note 21) iii) Estimation of provision for warranty claims - (Refer Note 21)

Warranty provision computation involves estimation of average warranty cost based on trend based analysis. If the estimations made varies, the same will impact the expense recognised. iv) Recognition of Revenue - (Refer Note 23)

Input methods towards performance obligations over time involves estimation of Stage of completion based on actual costs incurred to the estimated total costs expected to complete the contract. If the estimations made varies, the same will impact the Revenue recognised. v) Intangible assets - (Refer Note 4 and 5)

Amount carried forward as other intangible assets and intangible assets under development are tested for impairment annually with respect to certainty of future economic benefits.

NOTE 37

Recent accounting pronouncements

Ind AS 116-Leases:

On 30 March, 2019, the Ministry of Corporate Affairs has notified Ind AS 116 - Leases. Ind AS 116 will replace the existing leases standard, Ind AS 17 - Leases, and related interpretations. This standard is applicable for accounting period beginning on or after 1 April, 2019. Ind AS 116 introduces a single lessee accounting model and requires the lessee to recognize assets and liabilities for all leases with a term of more than twelve months, unless the underlying asset is of low value. Currently, operating lease expenses are charged to the Statement of Profit and Loss. Ind AS 116 substantially carries forward the lessor accounting requirements in Ind AS 17.

The standard permits two possible methods of transition :

• Full retrospective - Retrospectively to each prior period presented applying Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors.

• Modified retrospective - Retrospectively, with the cumulative effect of initially applying the standard recognized at the date of initial application.

The company proposes to adopt the Modified retrospective approach for transitioning to Ind AS 116 and take the cumulative adjustment to retained earnings, on the date of initial application (1 April, 2019). Accordingly, comparatives for the year ended 31 March, 2019 will not be retrospectively adjusted.

The company is in the process of evaluating the effect of this amendment on the financial statements. Ind AS 12, Appendix C, Uncertainty over Income Tax Treatments:

• On 30 March, 2019, the Ministry of Corporate Affairs has notified Ind AS 12, Appendix C, Uncertainty over Income Tax Treatments which is to be applied while performing the determination of taxable profit (or loss), tax bases, unused tax losses, unused tax credits and tax rates, when there is uncertainty over income tax treatments under Ind AS 12.

• The effective date for adoption of Ind AS 12 Appendix C is annual periods beginning on or after 1 April, 2019.

• According to the appendix, companies need to determine the probability of the relevant tax authority accepting each tax treatment, or group of tax treatments, that the companies have used or plan to use in their income tax filing which has to be considered to compute the most likely amount or the expected value of the tax treatment when determining taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates.

The standard permits two possible methods of transition:

• Full retrospective approach - Under this approach. Appendix C will be applied retrospectively to each prior reporting period presented in accordance with Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors, without using hindsight, and

• Retrospectively with cumulative effect of initially applying Appendix C recognized by adjusting equity on initial application, without adjusting comparatives.

The Company will adopt the standard on 1 April, 2019 and has decided to adjust the cumulative effect in equity on the date of initial application i.e. 1 April, 2019 without adjusting comparatives.

The effect on adoption of Ind AS 12 Appendix C, on the financial statements, is being evaluated. Amendment to Ind AS 12 - Income taxes:

On 30 March, 2019, the Ministry of Corporate Affairs issued amendments to the guidance in Ind AS 12 - Income Taxes, in connection with accounting for dividend distribution taxes.

Effective date for application of this amendment is annual period beginning on or after 1 April, 2019.

The amendment clarifies that an entity shall recognize the income tax consequences of dividends in profit or loss, other comprehensive income or equity according to where the entity originally recognized those past transactions or events.

The effect of application of this amendment on the financial statements is being evaluated. Amendment to Ind AS 19 - Employee Benefits:

On 30 March, 2019, the Ministry of Corporate Affairs issued amendments to Ind AS 19- Employee Benefits, in connection with accounting for plan amendments, curtailments and settlements.

The amendments require an entity:

• To use updated assumptions to determine current service cost and net interest for the remainder of the period after a plan amendment, curtailment or settlement; and

• To recognize in profit or loss as part of past service cost, or a gain or loss on settlement, any reduction in a surplus, even if that surplus was not previously recognized because of the impact of the asset ceiling.

Effective date for application of this amendment is annual period beginning on or after 1 April, 2019. The Company does not have any impact on account of this amendment.


Mar 31, 2018

Note 1

i. Freehold Land consists of 2064.29 acres (2064.29 acres) and Leasehold Land consists of 290.26 acres (290.26 acres).

ii. Freehold Land includes 7.11 acres (7.11 acres) leased to commercial/religious organisations and in their possession.

iii. Lease Hold land includes land taken on Lease at Kochi for 90 Years and capitalised in the year 2008-09.

iv. Additions during the year includes, Rs.1,982 (Rs.1,089), Rs.15 (Rs.5) and Rs.222 (‘ Nil) in respect of the assets of Central Research Laboratories, Pune and Hyderabad Unit respectively, R&D assets accounted under natural code heads.

v. Electronic Equipment value includes POS machines valuing

vi. Site Restoration Obligation

Refer Note 21 for Site Restoration Obligation in respect of Wind Mill & Solar Power Plants.

Gross Block Value of Plant & Machinery includes Site Restoration Obligation of

vii. Contractual Commitment

Refer Note 30(7) for outstanding Contractual Commitment.

viii. Deemed Cost

On transition to Ind AS (01.04.2015), the company has elected to continue with the carrying value of all its property, plant and equipment as at 1 April 2015 measured as per previous GAAP and use that carrying value as the deemed cost of the Property, Plant & Equipment.

ix. Estimation of Useful Life of Assets

The management has estimated the useful life of the various categories of tangible assets (which are different from the useful life indicated in Schedule II to the Companies Act, 2013) after taking into consideration, factors like expected usage of assets, risk of technical and commercial obsolescence, etc.

x. Depreciation / Amortisation

Depreciation is calculated on a straight-line basis over the estimated useful lives of the Assets.

Leased Assets are amortised on a straight-line basis over their estimated useful lives or their respective lease term whichever is shorter.

xi. Method of Accounting Depreciation

Depreciation / Amortisation has been calculated as per the Accounting Policy No. 8 of the Company and recognised as expenses in the Statement of Profit and Loss. Amount of Depreciation recognised as part of Cost of Other Asset is Nil (Nil).

xii. Impairment of Assets

Refer Note 30(5).

xiii. Compensation from third parties

Nil (Nil).

xiv. Refer Note 12 in respect of Unadjusted Capital Advance paid towards Property Plant & Equipment.

xv. Land acquired free of cost from the Government in some units has been accounted in line with provisions of

Ind AS 101.

xvi. Details of Registration, Pending Litigation etc.,

a. Deeds containing the terms of transfer / grant of land from State Governments / State Undertakings have been registered during the FY 2014-15 in respect of 86.60 acres (86.60 acres) valuing Rs.197 (Rs.197) pertaining to Panchkula Unit. However, rectification of land area held by BEL for Township from 30.00 acres (30.00 acres) to 28.60 acres (28.60 acres) in records of HUDA and Registration Authority is in process. The title deed in respect of land measuring 0.30 acres (0.30 acres) is under litigation.

b. Pending execution of title / sale deeds and handing over of physical possession of land allotted to BEL Hyderabad Unit by Andhra Pradesh Industrial Infrastructure Corporation (APIIC) in respect of land measuring 5.60 acres (5.60 acres) in Mallapur, Hyderabad and the matter being under litigation, no provision towards registration and other cost has been made in the books of accounts. Cost of land paid to APIIC amounting to Rs.65 (Rs.65) is included in Capital Advances.

c. Based on the Memorandum of Understanding reached with the Defence authorities, assets constructed on the land allotted to BEL and in possession of BEL are capitalised under the respective heads for setting up of the Hyderabad Unit. Pending finalisation of the terms and conditions by the appropriate authorities, the cost of land measuring 25.11 acres (25.11 acres) has not been accounted in the books of accounts.

d. Land admeasuring to 122.82 acres (122.82 acres) at Ibrahimpatnam alloted by APIIIC / TSIIC possession is given for which sale deed is pending [Hyderabad Unit]. Sale deed is pending for finalisation fo the land admeasuring to 913.99 acres (913.99 acres) at Palasamudram, Ananthapur Dist. AP [BG Complex]. Sale deed is pending for finalisation/ execution for the land admeasuring to 12.50 acres (12.50 acres) [Kotdwara Unit].

e. A demand of Rs.256 (Rs.256) being 50% of the compensation amount decreed by City Civil Court, Hyderabad has been received towards additional compensation from TSIIC dated 31.01.2015 for Land of 22.375 acres (22.375 acres) which is part of free hold land mentioned above. The demand is under dispute and hence, no provision in respect of the same has been made in the books of accounts.

f. Free hold Land to the extent of 1.22 acres (1.22 acres) which was allotted by Government Authorities in return for handing over of Land measuring 1.24 acres (1.24 acres) is under litigation (Bangalore Complex Unit).

g. The Company has installed Windmill Generator at three locations. Windmill Generator-I capitalized in the year 2006-07 on Lease Land. Upfront Lease rent is Nil and Lease Agreement for the land is pending finalization. Windmill Generator-II is capitalized in the year 2007-08 on the leased land by paying upfront lease rent of Rs.36 which being an operating lease classified as Other assets. Lease Agreement for the land is pending finalization. Windmill Generator-III is capitalized in the year 2015-16 on the leased land by paying upfront lease rent of Rs.161 which being an operating lease classified as Other assets.

Note 2

i. Civil Construction mainly comprises of Production related building, R&D building & Employee Quarters.

ii. Borrowing costs of Rs.378 (Rs.1) [net of interest income] has been included in Capital WIP in respect of employee quarters under construction. The capitalisation rate is 8.15% p.a.

iii. Refer Note 30(7) in respect of Contractual Commitment.

iv. Refer Note 12 in respect of Unadjusted Capital Advance paid towards Property, Plant & Equipment.

iv. Land comprises of Free Hold Land of 1.36 acres (1.36 acres) in Bengaluru.

v. Estimation of Fair Value

The company has estimated the fair value of the Investment Property based on the Government Guidance Value (municipal value) of the similar properties in the investment property’s location. All resulting fair value estimates for the investment properties are included in Level 2.

vi. Deemed Cost

On transition to Ind AS (01.04.2015), the company has elected to continue with the carrying value of all its investment property as at 1 April 2015 measured as per previous GAAP and used that carrying value as the deemed cost of the investment property.

vii. Estimation of Useful Life of Assets

The management has estimated the useful life of the various categories of tangible assets (which are different from the useful life indicated in Schedule II to the Companies Act, 2013) after taking into consideration, factors like expected usage of assets, risk of technical and commercial obsolescence, etc. The estimated useful life of Tangible Asset is as follows :

viii. Depreciation

Depreciation is calculated on a straight-line basis over the estimated useful lives of the Assets.

The amount of Depreciation has been recognised as expense in the Statement of Profit and Loss.

ix. Method of Accounting Depreciation

Depreciation has been calculated as per the Accounting Policy No. 8 of the Company and recognised as expenses in the Statement of Profit and Loss.

x. Impairment of Assets

As the fair value of the Investment Property is higher than its carrying value, there is no indication of impairment.

xi. Restrictions on the realisability of Investment Property

The land is alloted by Government of India.

xii. Related Party Transactions

Investment Property includes Building and land measuring 0.31 acres (0.31 acres) given under cancellable operating lease to Subsidiary Company BEL Thales System Ltd. Also Refer Note 31.

xiii. Details of Registration Pending Litigation etc.,

Nil (Nil).

Note 3

i. Deemed Cost

On transition to Ind AS (01.04.2015), the company has elected to continue with the carrying value of all its other intangible assets as at 1 April 2015 measured as per previous GAAP and used that carrying value as the deemed cost of other intangible assets.

ii. Estimated useful life

The estimated useful lives of the Other Intangible Assets is as follows :

iii. Amortisation

Amortisation is calculated on a straight-line basis over the estimated useful lives of the Assets.

The amount of amortisation has been recognised as expense in the Statement of Profit and Loss.

iv. Method of Accounting Amortisation

Amortisation has been calculated as per the Accounting Policy No. 8 of the Company and recognised as expenses in the Statement of Profit and Loss.

v. Refer Note 30(7) for Contractual Commitment.

vi. Impairment of Assets Refer Note 30(5).

vii. The restriction on the title of the assets is governed by the terms of agreement.

viii. Refer Note 30(8) for the aggregate amount of research and development expenditure recognised as an expense during the period.

Note 4

i. The company has invested its Leave Encashment & ”BEL Retired Employees’ Contributory Health Scheme” (BERECHS) liabilities in LICs New Group Leave Encashment Plan & New Group Superannuation Cash Accumulation Plan respectively [Refer Note 21].

ii. Refer Note 33 for classification of financial instruments.

iii. a. The Company has designated investment in equity shares of M/s Mana Effluent Treatment Plant Ltd., at FVOCI because these equity shares represent investments that are intended to be held for long-term for strategic purposes. Fair Value of the Investment based on Net Asset Value Method is given below :

b. Company has not received any dividend so far on these Investments.

c. No strategic investments were disposed off during 2017-18, and there were no transfers of any cumulative gain or loss within equity relating to these investments.

iv. Unrecognised Deferred Tax (Assets) / Liabilities

There are no temporary differences on which Deferred Tax (Assets)/Liability have not been recognised for the year ended 31 March 2018 & 31 March 2017.

v. Tax Losses carried forward

There are no Tax Losses on which Deferred Tax Asset has been recognised for the year ended 31 March 2018 & 31 March 2017.

Note 5

i. Raw Materials and Components include Rs.9,756 (Rs.13,023) being materials with sub-contractors, out of which Rs.409 (Rs.177) of materials is subject to confirmation and reconciliation. Against Rs.409 (Rs.177), an amount of Rs.408 (Rs.177) has been provided for.

ii. Stock verification discrepancies for the year are as follows : Shortages of Rs.473 (Rs.1,609) and surplus of Rs.367 (Rs.1,254). Pending reconciliation, an amount of Rs.107 (Rs.399) has been provided for.

iii. Valuation of Inventories has been made as per Company’s Accounting Policy No. 18.

iv. a. The United Nations Climate Change Secretariat has granted 15856 (15856) TON CO2EQ carbon credit during earlier years, for the 2.5MW BEL Grid Connected Wind Power Project Davangere District, Karnataka for the verification period from 05.11.2007 to 31.03.2012. The carbon Credits are included under Finished Goods at a value of Rs.2 (Rs.2). The CER is valued at cost as required by Guidance Note on CER issued by ICAI.

b. CER under Certification : Nil (Nil) CERs.

c. Depreciation & Operation Cost of Emission Reduction Equipments during the year :

v. Security, Hypothecation etc

Refer Note 35.

vi. Amount recognised in Statement of Profit & Loss

Write-down of inventories to net realisable value amounted to Rs.5,938 (Rs.2,662) has been recognised in the statement of profit and loss.

vii. No reversal of write down of inventories has been made during the year, which were recognised as an expenses in the previous year.

viii. Impairment of Assets

Provisions for inventory has been made in line with Accounting Policy No. 18 of the Company.

ix. Materials amounting to Rs.12,968 (Rs.5,066) are located physically at Customer Premises.

Note 6

i. Buyback :

a. The board of directors at their meeting held on 30 January 2018 has unanimously approved a proposal for the buyback of 20397780 equity shares of Rs.1 each from the eligible shareholders representing 0.83% of the total number of equity shares of the company (as on record date of 2 September 2018). The buyback was offered at the rate of Rs.182.50 per share on propotionate basis, through “Tender Offer”. The buyback was concluded on March 23 2018 with a buyback of 20397780 shares with a cash outflow of Rs.37,226.

In accordance with Section 69 to the Companies Act, 2013, the company has transferred a sum of Rs.204 to “Capital Redemption Reserve” being the nominal value of the shares bought back as an appropriation from the General Reserve.

b. 16637207 numbers of equity shares with face value of Rs.10 was bought back for Rs.1,305 per share at a premium of Rs.1,295 per share, resulting into a total cash outflow of Rs.217,116 during the FY 2016-17. In accordance with Section 69 to the Companies Act, 2013, the company has transferred a sum of Rs.1,664 to “Capital Redemption Reserve” being the nominal value of the shares bought back as an appropriation from the General Reserve.

ii. During the previous five years the company has not allotted any shares as fully paid up pursuant to contract without payment being received in cash.

iii. Terms, Rights, preferences and restrictions attaching to each class of shares

a. The Company has only one class of shares viz, Equity Shares.

b. Each holder of Equity Shares is entitled to one vote on show of hands and in poll in proportion to the Number of shares held.

c. Each Shareholder has a right to receive the dividend declared by the Company.

d. On winding up of the Company, the equity shareholders will be entitled to get the realised value of the remaining assets of the Company, if any, after distribution of all preferential amounts as per law. The distribution will be in proportion to the number of equity shares held by the shareholders.

b. Nature and purpose of Reserves

i. Capital Reserve

Capital Reserve is created by transfer from Retained earnings an amount equal to capital profit earned by the company. The reserve is utilised in accordance with the provisions of the Companies Act, 2013.

ii. Capital Redemption Reserve

Capital Redemption Reserve is created by transfer from General Reserve an amount equal to face value of the Shares bought back. The reserve is utilised in accordance with the provisions of the Companies Act, 2013.

iii. Equity Investment through Other Comprehensive Income (OCI)

The company has elected to recognise changes in fair value of certain equity investments in other comprehensive income. The change in fair value is accumulated in this reserve. If and when the investment is derecognised the accumulated amount will be transferred to Retained earnings.

iv. Other Comprehensive Income (OCI)

Other comprehensive income are those gains or losses which are not yet realised and excluded from the statement of profit and loss. It mainly consists of remeasurement of the net defined benefit liability/asset (net of tax).

ii. Nature of security

Refer Note 35.

iii. Terms of repayment

Repayable in 12 quarterly installments commencing from Quarter ending June 2017 and ends on the Quarter ending March 2020.

iv. Rate of Interest

8.15% p.a. subject to revision based on RBI / SBI guideline and risk rating of the company.

v. Period and amount of default as on Balance Sheet Date

Nil

* Includes amount shown under Note 20.

** Interest includes INR 3,278 [represents absolute figure] which is rounded off.

Note 7

i. During the period INR 43,339 [represents absolute figure] (Rs.8) of provisions made in Previous year has been reversed, since on subsequent verification, the amount was found to be not payable.

ii. The information has been given in respect of such suppliers to the extent they could be identified as Micro & Small Enterprises on the basis of information available with the Company and have been relied upon by the Auditors.

iii. Financial Instruments

Refer Note 33 for classification of financial instruments.

iv. Related Party Disclosure

For Related Party Disclosures refer Note 31.

v. The company’s exposure to currency and liquidity risk related to Trade Payables is disclosed at Note 34.

ii. Provision for Warranties - as per Accounting Policy No. 20 of the Company.

Provision for warranties is made in respect of products whose normal warranty period is outstanding. As the warranty provision period varies from product to product, provision is made at Strategic Business Unit (SBU) level based on average period of warranty period. Provision is made based on trend based estimate of the likely expenses to be incurred. The provision is measured at the present value of the estimated cost of Warranty.

iii. Provision for Site restoration obligation - as per Accounting Policy No. 23 of the Company.

In accordance with the terms and conditions of the Lease agreement entered into with Lessor, the company is required to return the land in its original condition. Accordingly provision in respect of Site restoration obligation has been made. The provision required is reviewed and required adjustment made at each year end. The provision is measured at the present value of the best estimate of the cost of restoration.

iv. Provision for Onerous contracts - as per Accounting Policy No. 5 & 23 of the Company.

In respect of certain contracts entered into by the company, it is expected that the likely cost to complete the contract would exceed the Revenue received / receivable against the contract. In such cases, provision in respect of the expected losses has been made. The provision required is reviewed and required adjustment made at each year end. The provision is measured at the present value of the best estimate of loss likely to be incurred.

v. Amount debited to opening provision.

vi. An amount of Rs.8,030 (Rs.8,016) has been debited against Natural Code Heads wrt Warranty Cost.

An amount of Nil (Nil) has been debited against Natural Code Heads wrt Site Restoration Obligation.

* Represents excess of plan asset over obligation as on 31 March 2018.

(A) POST EMPLOYMENT BENEFIT OBLIGATION

(i) Gratuity :

The Company provides gratuity to employees in India as per payment of Gratuity Act, 1972. The Company has a Gratuity Scheme for its employees, which is a funded plan. Every year, the Company remits fund to the Gratuity Trust to the extent of shortfall of the assets over the fund obligations, which is determined through actuarial valuation. As per the Gratuity Scheme, gratuity is payable to an employee on the cessation of his employment after he has rendered continuous service for not less than five years in the Company. For every completed year of service or part thereof in excess of six months, the Company shall pay gratuity to an employee at the rate of fifteen days salary based on the last drawn basic & dearness allowance.

The following table summarises the components of net benefit expense recognised in the Statement of Profit & Loss and amounts recognised in the Balance Sheet and the movement in the net defined benefit obligation over the years as per Actuarial valuation are as follows :

(ii) BEL RETIRED EMPLOYEES CONTRIBUTORY HEALTH SCHEME (BERECHS) :

The Company has a contributory health scheme for its retired employees “BEL Retired Employees’ Contributory Health Scheme” (BERECHS), which is non-funded scheme. The primary objective of the scheme is to provide medical facilities to employees retiring on attaining the age of superannuation, or on VRS. Benefits under the Scheme shall be available to the employees who become members and their spouses only. The company takes insurance cover for inpatient treatment. In addition to the annual insurance premium, the Company bears 60% of the medicine cost and 75% of the cost of diagnostic tests for outpatient treatment and for the treatment of specified diseases, the Company bears the full cost of treatment, over and above the insurance coverage.

The following table summarises the components of net benefit expense recognised in the Statement of Profit & Loss and amounts recognised in the Balance Sheet and the movement in the net defined benefit obligation over the years as per Actuarial valuation are as follows :

(iii) EMPLOYEES PROVIDENT FUND [INTEREST SHORTFALL]

Employees Provident Fund is managed by Provident Fund Trust of the company. The Company contributes Managements’ contributions payable towards Employee Provident Fund to the Trust.

Company has determined on the basis of Actuarial Valuation carried out as at 31 March 2018, that there is no liability towards the interest shortfall on valuation date (having regard to terms of plan that there is no compulsion on the part of the Trust to distribute any part of the surplus, if any, by way of additional interest on PF balances).

B. Long Term Compensated Absence

The Company has a Long Term Compensated Absence Scheme for its employees, which is a Non-Funded Scheme. The employees of the Company are entitled to two types of Long Term Compensated Absences : Annual Leave (AL) & Half Pay Leave (HL) in case of Executives and Annual Leave (AL) & Sick Leave (SL) in case of Non-Executives. The Scheme provides for compensation to employees against the unavailed Leave (AL & HL in case of Executives and AL & SL in case of Non-Executives) on attaining the age of superannuation, VRS, or death. AL can also be encashed during service or at the time of resignation.

The following table summarises the components of net benefit expense recognised in the Statement of Profit & Loss and amount recognised in the Balance Sheet for the plan as furnished in the disclosure report provided by the Actuary :

C. Pension Scheme

The Company has got a defined contribution pension benefit plan for the benefit of its employees in respect of which contribution is made on an annual basis to a Trust setup for this purpose.

The benefit under the scheme are available for the employees as per the rules laid down in this regard.

A narrative description of the specific or unusual risks arising from a defined benefit plan (i.e. Gratuity and BERECHS)

The specific risk relating to defined benefit plans are as follows :

Movement in long term government bond rate between two reporting periods which will impact discount rate and consequently the present value of obligations.

Risk of higher / lower salary escalation / benefit as considered for valuation vis-a-vis the actual experience through the Financial Year.

However, both the risks are mitigated on a regular basis i.e. yearly as valuations are done after every year based on updated assumptions.

A narrative description of any asset-liability matching strategies.

The gratuity plan of the company is a funded plan. The assets backing this plan are predominantly insurer-managed funds. Hence the company has limited flexibility in terms of implementing asset-liability matching strategies for this plan.

The post retirement medical plan of the company is an unfunded plan. Hence asset-liability matching strategies are not relevant for this plan.

A description of the funding arrangements and funding policy.

The Gratuity plan of the company is a funded plan. 93.89% (87.97%) of the plan assets backing this plan are insurer managed assets and 3.25% (7.03%) of the plan assets are invested Central and State Government Securities. The annual contribution to the fund is normally set equal to the deficit as disclosed by the preceding actuarial valuation of the benefit obligations.

The post-retirement medical plan [BERECHS] is an unfunded plan.

NOTE 8

General Notes to Accounts

1. Earning per Equity Share

a. From continuing operations

Basic earning per share [INR]

Diluted earning per share [INR]

b. Amounts used as the numerators in calculating basic and diluted earnings per share

c. Weighted average number of equity shares used in computing basic and diluted earnings per share

2. Statement of Compliances

The standalone financial statements are prepared in accordance with Indian Accounting Standards (Ind AS) [as notified under section 133 of the Companies Act, 2013 (the “Act”) read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015, as amended.] and other relevant provision of the Act.

The Company’s standalone financial statements up to and for the year ended 31 March 2016 were prepared in accordance with the Companies (Accounting Standards) Rules, 2006, notified under Section 133 of the Act and other relevant provisions of the Act.

3. Operating Cycle

As per the requirement of Schedule III to the Companies Act, 2013, the Operating Cycle has been determined at Strategic Business Unit (SBU) / Unit level, as applicable.

5. Impairment of Assets

The Company has analysed indications of impairment of assets of each geographical composite manufacturing unit considered as Cash Generating Units (CGU). On the basis of assessment of internal and external factors, none of the Unit has found indications of Impairment of its Assets and hence no provision is considered necessary.

6. Short Term Borrowings

a. The Company has been sanctioned working capital limit of Rs.400,000 by Consortium Bankers (SBI Lead Bank). The sanctioned limit includes fund based limit of Rs.50,000 and non fund based limit of Rs.350,000.

b. The interest rate payable on fund based limit is linked to SBI 1 year MCLR Rate. [ Interest rate payable as on 31.03.2018 is 8.15% p.a. (8.25%) ].

c. The amount utilised is repayable on demand. Utilisation as on 31.03.2018 is Nil (Nil).

d. The above sanction limit is secured by hypothecation of Current Assets of the Company.

11. Confirmation of Balances

Letters requesting confirmation of balances have been sent in respect of Trade Receivables, Trade Payables, Advances and Deposits. Wherever replies have been received, reconciliation is under process and provisions / adjustments are made wherever considered necessary.

12. Labour Disputes

In respect of Labour matters, as the matters are yet to be adjudicated, the liability, if any, is not ascertainable. However, such liability is not expected to be material.

13. Excise Duty

“Excise Duty - Others” represents incremental provision of Excise Duty on Finished Goods, Excise Duty on Sale of Scrap, etc.

14. Consequent to introduction of Goods and Service Tax (GST) with effect from 1 July 2017, Excise Duty is no longer leviable on manufacture of goods and hence is not part of Gross Turnover w.e.f 1 July 2017.

15. Segment Reporting

Ministry of Corporate Affairs vide Notification no. 463 (E) dated 5 June 2015 as amended has exempted the Companies engaged in Defence Productions from the requirement of Segment Reporting.

16. Retention Sales

The Value of Retention Sales (i.e., Goods retained with the Company at the Customers’ request and at their risk) included in Gross Turnover during the year is Rs.76,400 (Rs.104,791).

Out of the above the Value of Ex-work Sales is Rs.37,110 (Rs.93,526).

17. Foreign Exchange Exposure

Pursuant to the announcement of the ICAI requiring the disclosure of “Foreign Exchange Exposure”, the major currency-wise exposure as on 31 March 2018 is given below. [Foreign Currencies are shown in Lakhs] (Previous year figures are shown in brackets).

* includes exposures relating to outstanding Letters of Credit and Capital Commitments.

During the FY 2017-18, the Company has not entered Forward Contracts to cover Foreign Currency fluctuations in respect of Firm Commitments. There are no outstanding Forward Contracts as on 31.03.2018.

18. Disclosure relating to CSR Expenditure

a. Gross amount required to be spent by the Company during the FY 2017-18 is Rs.3,475 (Rs.2,972).

b. Amount spent during the FY 2017-18 :

Above expenses includes CSR Administration Overhead of Rs.65 (Rs.129) which is grouped under Employee Benefit Expenses.

19. Non Cancellable Operating Lease Disclosure :

a. As a Lessor :

The future minimum Lease Rent Receivable

The company has Leased out few portion of Land to different organizations under non-cancellable operating Lease. The leases have various terms, escalation clause, lease renewal rights etc. On renewal, the terms of the lease are renegotiated.

The company has not recognized any income as contingent rent.

b. As a Lessee :

The future minimum Lease Rent Payable

The company has taken land on lease under non-cancellable operating Leases. The leases have various terms, escalation clause, lease renewal rights etc. On renewal, the terms of the lease are renegotiated.

The company has not recognized any expenses as contingent rent.

20. Chennai Unit was affected by floods during December 2015. Insurance policy taken by the company with United India Insurance Company Limited covers flood related losses. An amount of Rs.1,581 (Rs.1,000) was received as final settlement & has been recognised in statement of profit and loss. In addition, an amount of Nil (Rs.32) was received towards claim settlement wrt scrap items.

21. Dividend not recognised at the end of the reporting period

The directors have recommended a final dividend of INR 0.40 (INR 1.05) per share [represents absolute figure].

The proposed dividend is subject to approval of shareholders in the ensuing Annual General Meeting and if approved would result in cash outflow of approximately of Rs.11,750 (including Dividend Distribution Tax).

22. Figures in brackets relate to Previous years.

23. All figures in financial statement are rounded off to nearest Lakhs unless otherwise mentioned.

24. The standalone Ind AS financial statements were approved for issue on 29 May 2018 by the Board of Directors.

* Represents amount of Nil (INR 7,763) [represents absolute figure] which is rounded off.

d. All transactions dealt with related parties are on arm’s length basis. In respect of loan to subsidiary (BELOP) refer note “g” below.

e. All Outstanding balances are Unsecured. All Outstanding balances (Other than loan) is repayable in cash within next 6 months. For Outstanding balance of loans refer note “g” below.

f. The Company has entered into an Agreement with BELOP in April 2013 to temporarily fund the amount of Rs.10,416 [Rs.26,040 less Rs.15,624] for enabling BELOP to make payment towards ToT for XD-4 II Tubes, pending receipt of balance amount from MoD. As on 31.03.2018, an amount of Rs.9,851 (Rs.9,503) has been paid to BELOP, out of which an amount of Rs.7,109 (Rs.6,401) has been received from MoD. The balance amount of Rs.2,742 (Rs.3,102) has been shown under Other Financial Assets -Non Current. (Refer Note 9).

As per the Agreement, an amount of Rs.221 (Rs.273) has been recovered during the financial year from BELOP towards the cost of funds.

g. Loans to Related Parties

1. The Company has entered into an agreement with BELOP in July 2015 to temporarily fund its Working Capital requirement to the maximum extent of Rs.5,000 which was fully disbursed by 31.03.2016 and an amount of Rs.1,872 is outstanding as on 31.03.2018. As per the terms and conditions :

i) The balance amount will be repaid in quarterly installments with effect from July 2016.

ii) Interest will be charged on the outstanding loan amount, on monthly basis, at BEL’s rate of yield on its deposits.

2. The Company has entered into an agreement with BELOP in August 2016 to fund a Term Loan of Rs.4,600 out of which Rs.1,531 has been disbursed as on 31.03.2018. As per the terms and conditions :

i) The principal amount will be repaid in 36 equal installments with effect from August 2019.

ii) Interest will be charged on the outstanding loan amount, on monthly basis, at BEL’s rate of yield on its deposits or the interest rate yield on a five year Government of India Bond, whichever is higher.

3. ** Loan outstanding does not include Rs.63 (Rs.70) adjusted on account of loan given to subsidiary (BELOP) at below market rate.

h. Management Contracts including deputation of Employees

Two Official of BEL has been deputed to BELOP (Subsidiary) and Eight Officials of BEL have been deputed to BEL-THALES Systems Limited (Subsidiary) and their Salary and Other Costs is paid by BELOP and BEL-THALES System ltd. respectively during the year as per terms and conditions of employment.

i. Transaction with Government and Government Related Entities

As BEL is a government entity under the control of Ministry of Defence (MoD), the company has availed exemption from detailed disclosures required under Ind AS 24 wrt related party transactions with government and government related entities. However as required under Ind AS 24, following are the individually significant transactions :

1. Buyback of 11945469 (13828771) number of Shares during FY 2017-18.

2. 151745884 (120028420) number of Bonus Shares were Issued in the FY 2017-18.

3. An amount of Rs.42,221 (Rs.44,735) was Paid as Dividend during the FY 2017-18.

In addition to the above, around 85% (90%) of the Company’s Turnover, around 99% (76%) of Trade Receivables and around 84% (70%) of Customer’s Advance is with respect to government and government related entities.

j. Investment in Equity with respect to BELOP includes fair valuation of loan.

Level 1 : Level 1 hierarchy includes Financial instruments measured using quoted prices.

Level 2 : The fair value of Financial instruments that are not traded in an active market is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity specific estimates.

Level 3 : If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3. This is the case of unlisted equity shares.

3 Valuation technique used to determine Fair Value :

a. LIC Investment - (Level 2)

Based on valuation report of the Scheme provided by LIC.

b. Mana Effluent Treatment Plant Ltd - (Level 3)

BEL has invested in equity securities of Mana Effluent Treatment Plant Ltd. which is an unlisted company. The Company’s cost of investment in Mana Effluent Treatment Plant Ltd is only Rs.5 (out of issued Share Capital of Rs.163). The company has opted for Net Asset Value method for fair valuation.

NOTE 9

Financial risk management

i) Risk Management framework and policies

The Company is broadly exposed to credit risk, liquidity risk and market risk (fluctuations in exchange rates, interest rates and price risk) as a result of financial instruments.

Board of Directors has the overall responsibility for the establishment, monitoring and supervision of the Company’s risk management framework. The Board has set up a Risk Management Committee, for this purpose, which is responsible for developing and monitoring the risk management policies. The Company has an established Risk Management Policy that outlines risk management structure and provides a comprehensive frame work for identification, evaluation, prioritization, treatment of various risks associated with different areas of finance and operations.

The company has a centralized Treasury function which is responsible to undertake appropriate measures to mitigate financial risk in accordance with the policies and procedures formulated by the Board. Hedging transactions are undertaken by a team with appropriate skills and experience in consultation with an external expert. The Company does not trade in derivatives for speculation.

ii) Market Risk

Market risk is the risk that changes in market prices such as foreign exchange rates, interest rates will affect the Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

The Company’s activities expose it primarily to the financial risks of changes in foreign exchange rates and interest rate movements (refer to notes below on currency risk and interest risk).

Currency Risk

BEL is exposed to foreign exchange risk arising from foreign currency transactions primarily relating to purchases and sales made in foreign currencies such as US Dollar, Euro, Great Britain Pound and Swiss Franc. Foreign exchange risk arises from existing and future commercial transactions and recognised assets and liabilities denominated in a currency that is not the Company’s functional currency (INR).

The Company has a Board approved currency risk management policy implemented by a Risk Management Committee that reviews the Company’s exposure to this risk on a regular basis. The Risk Management Policy recommends hedging upto 50% of the open foreign currency exposure. However the decision to enter into a hedging arrangement is made by the Risk Management Committee based on the relevant data inputs and the advice of the external specialist consultant retained for this purpose.

The Company’s export proceeds are realized mostly by remittance into an Export Earners Foreign Currency account (EEFC) which is then utilised for payments to be made in foreign currency, thereby mitigating the currency risk on exports. Imports to the extent of around 25% (30%) of annual foreign exchange outgo are not covered by the Exchange Rate Variation (ERV) clause in the related customer contract and hence are open to currency risk. These imports are benchmarked as per the policy and appropriate decision on covering the risk is taken on a case to case basis. The Company’s currency risk policy advocates forward contract hedging for mitigating risk wherever required.

As on 31 March 2018, there are no outstanding forwards contracts. The company has not entered into any forward contracts during the financial year 2017-18.

Foreign Currency Sensitivity

The sensitivity of profit or loss to changes in the exchange rate arises mainly from foreign currency denominated financial instruments. The sensitivity to variations in respect of major currencies is given below. This analysis assumes that all other variables remain constant.

Interest rate risk

Interest rate risk can be either fair value interest rate risk or cash flow interest rate risk. Fair value interest rate risk is the risk of changes in fair values of fixed interest bearing investments because of fluctuations in the interest rates. Cash flow interest rate risk is the risk that the future cash flows of floating interest bearing instruments will fluctuate because of fluctuations in market interest rates.

Variable Rate Borrowing :

The company has been sanctioned a Term Loan of Rs.10,000 on 31.03.2017 [Outstanding as on 31 March 2018 is Rs.6,666 (Rs.5,000) ]. Interest payable on this loan is based on SBI’s Minimum Commercial Lending Rate - MCLR. [SBI is eligible to reset the interest charged on yearly basis]. There would be an additional outflow of cash of Rs.67 if the interest rate goes up by 1% and saving of Rs.67 in cashflow if interest rate goes down by 1%. There would however be no impact on profit as the interest component is capitalized since the borrowing is towards capital expenditure.

In addition the company has been sanctioned a working capital limit of Rs.400,000. The sanctioned limit includes fund based limit of Rs.50,000 and non fund based limit of Rs.350,000. The fund based limit of Rs.50,000 has not been utilised during the year [ Outstanding as on 31 March 2018 is nil (31 March 2017 is Nil) ]. The outstanding balance as on 31.03.2018 with respect to non fund based limit is Rs.175,565 (Rs.165,376). The interest is payable based on SBI’s 1 year MCLR rate. As the borrowing is nil there is no impact on likely change in interest rates.

Equity Price Risk

The company’s exposure to equity price risk is negligible as its equity investment (other than in subsidiaries and Associate) is negligible.

iii) Liquidity Risk

Liquidity Risk is the risk that a Company could encounter if it faces difficulty in meeting the obligations associated with financial liabilities by delivering cash and other financial asset or the risk that the Company will face difficulty in raising financial resources required to fulfill its commitments. The Company’s exposure to liquidity risk is very minimal as it has a prudent liquidity risk management process in place which ensures maintaining adequate cash and marketable securities to pay its liabilities when they are due. To ensure continuity of funding, the Company has access to short-term bank facilities in the nature of bank overdraft facility, cash credit facility and short-term borrowings to fund its ongoing working capital requirements and growth needs when necessary.

The Company meets its liquidity requirement mainly through internally generated cash flows which is monitored centrally by treasury. There is an established process of rolling cash forecasts from various operating units which form the basis for mapping expected cash inflows, to meet the liabilities.

iv) Credit Risk

Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in financial loss to the Company. Credit risk arises from credit exposures from customers, cash and cash equivalent with banks, security deposits and loans.

The credit risk of the Company is managed at a corporate level by the risk management committee which has established the credit policy norms for its customers and other receivables. Significant amount of trade receivables are due from Government / Government Departments, Public Sector Companies (PSUs) consequent to which the Company does not have a credit risk associated with such receivables. In case of non Government trade receivables, sales are generally carried out based on Letter of Credit established by the customer thereby reducing the credit risk.

In a few cases credit is extended to customers based on market conditions after assessing the solvency of the customer and the necessary due diligence to determine credit worthiness. Advance payments are made against bank guarantee which safeguards the credit risk associated with such payments. Impairment losses on financial assets (representing mainly liquidated damages leviable for delayed deliveries and other disallowances) have been made after factoring contractual terms, etc and other indicators.

The cash and cash equivalent with banks are in the form of short term deposits with maturity period of upto 1 year. The Company has a well structured Risk Mitigation Policy whereby there are preset limits for each bank based on its net worth and earning capacity which is reviewed on a periodic basis. The Company has not incurred any losses on account of default from banks on deposits.

The credit risk in respect of other financial assets is negligible as they are mostly due from government department / parties.

Loan of Rs.3,420 (Rs.4,445) is outstanding [as on 31.03.2018] from BELOP [100% subsidiary company]. The subsidiary company has been regular in repayment of its dues (Interest and Principal) and no credit risk is expected in terms of repayment of the loan amount.

v) Capital Management

The Company’s Capital Management objective is to maintain a strong capital base to provide adequate returns to the shareholders and ensure the ability of the company to continue as a going concern. The Company has a conservative approach for raising capital through debt but reserves the right to leverage this alternative at an appropriate time to fuel growth and maintain optimal capital structure.

As part of this overall objective, the company has expanded capital base by issuing bonus shares in financial year 2015-16 & 2017-18 and bought back shares in financial year 2016-17 & 2017-18 [Refer Note 16]. The Company has a well defined Dividend Distribution Policy which lays the framework for payments of dividend and retention of surplus for future growth and enhancing shareholders wealth. The company has borrowed an amount Rs.10,000 from Bank for construction of quarters. [Outstanding as on 31 March 2018 is Rs.6,666 (Rs.5,000) ] [Refer Note 18 & 20]. The Company has been sanctioned borrowing limits with banks to the tune of Rs.400,000.

NOTE 10

Critical estimates and judgments

While preparing the financial statements, management has made certain judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised prospectively.

Judgments made in applying accounting policies that have the most significant effects on the amounts recognised in the financial statements and Estimates that have a significant risk of resulting in a material adjustment are as under :

i) Research and Development Expenditure - Accounting Policy No. 10 - (Refer Note No. 5)

Developmental expenditure incurred with respect to No Cost No Commitment (NCNC) Projects and Joint developmental projects which are not fully compensated by the development partner are carried forward till the completion of project.

ii) Estimation of defined benefit obligation - Key actuarial assumptions - (Refer Note No. 21)

iii. Estimation of provision for warranty claims - (Refer Note No. 21)

Warranty provision computation involves estimation of average warranty cost based on trend based analysis. If the estimations made varies, the same will impact the expense recognised.

iv. Pay Revision Provision - (Refer Note No. 21)

Pay Revision in respect of Non executive is due with effect from 01.01.2017. Provision in respect of revised pay has been made based on a reasonable estimate of expected liability for the period 01.04.2017 to 31.03.2018 during the financial year 2017-18.

v. Recognition of Revenue - (Refer Note No. 23)

Percentage-of-completion method involves estimation of Stage of completion based on actual costs incurred to the estimated total costs expected to complete the contract. If the estimations made varies, the same will impact the Revenue recognised.

NOTE 11

Recent accounting pronouncements

A. Ind AS 115- Revenue from Contracts with Customers :

On 28 March 2018, Ministry of Corporate Affairs (“MCA”) has notified the Ind AS 115, Revenue from Contracts with Customers. This standard shall apply for accounting periods beginning on or after 1 April 2018. The standard permits two methods of transition.

1. Retrospectively to each prior reporting period presented in accordance with Ind AS 8, accounting policies, changes in accounting estimates and errors.

2. Retrospectively with the cumulative effect of initially applying the Standard recognised at the date of initial application.

The Company will adopt this standard on 1 April 2018 retrospectively with the cumulative effect of initially applying the Standard as an adjustment to the opening balance of retained earnings (or other component of equity, as appropriate) of the accounting period. The company is evaluating the effect of this amendment on the financial statements.

B. Appendix B to Ind AS 21, Foreign currency transactions and advance consideration :

On 28 March 2018, Ministry of Corporate Affairs (“MCA”) has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 to Ind AS 21 (The Effects of Changes in Foreign Exchange Rates) with effect from 1 April 2018. This amendment clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income (or part of it) is the date when an entity has received or paid advance consideration in a foreign currency. The Company is evaluating the effect of this amendment on the financial statements.

Corporate Information

The accompanying financial statements comprise the financial statements of Bharat Electronics Limited (the Company). The Company is a public company domiciled in India and is incorporated under the provisions of the Companies Act applicable in India. Bharat Electronics Limited’s shares are listed on two recognised stock exchanges in India. The registered office and principal place of business of the Company is located at Bengaluru, Karnataka, India.

The Company is a public sector enterprise under the administrative control of the Department of Defence Production, Ministry of Defence. Bharat Electronics Limited manufactures and supplies electronic equipment and systems to defence sector. Other than defence sector, the Company has also got a limited presence in the civilian market.


Mar 31, 2017

Corporate Information

The accompanying financial statements comprise the financial statements of Bharat Electronics Limited (the Company). The Company is a public company domiciled in India and is incorporated under the provisions of the Companies Act applicable in India. Bharat Electronics Limited’s shares are listed on two recognised stock exchanges in India. The registered office and Principal place of business of the Company is located at Bengaluru, Karnataka, India.

The Company is a public sector enterprise under the administrative control of the Department of Defence Production, Ministry of Defence. Bharat Electronics Limited manufactures and supplies electronic equipment and systems to defence sector. Other than defence sector, the Company has also got a limited presence in the civilian market.

i. Freehold Land consists of 2063.89 acres (31.03.2016 : 2037.34 acres; 01.04.2015 : 1036.07 acres) and Leasehold Land consists of 290.26 acres (31.03.2016 : 290.26 acres; 01.04.2015 : 290.26 acres).

ii. Freehold Land includes 7.11 acres (31.03.2016 : 7.11 acres; 01.04.2015 : 7.07 acres) leased to commercial/religious organisations and in their possession.

iii. Leasehold land includes land taken on Lease at Kochi for 90 Years and capitalised in the year 2008-09.

iv. Additions during the year includes Rs.1,089 (31.03.2016 : Rs.1,147; 01.04.2015 Rs.1,266) and Rs.5 (31.03.2016 : Rs.4; 01.04.2015 : Nil) in respect of the assets of Central Research Laboratories and Pune Unit respectively.

v. Addition of Buildings during the year includes Nil (31.03.2016 : Nil; 01.04.2015 : Rs.1,199) in respect of Development & Engineering Buildings.

vi. Electronic Equipment value includes POS machines valuing Rs.1,026 (31.03.2016: Nil; 01.04.2015 : Nil) which are under the control of Haryana Government (operating lease).

vii. Deductions include net carrying cost of Nil (31.03.2016 : Rs.588; 01.04.2015 : Nil) in respect of assets affected due to flood at Chennai Unit.

viii. Site Restoration Obligation

Refer Note 21 for Site Restoration Obligation in respect of Wind Mill Generation Plant.

ix. Gross Block Value of Plant & Machinery includes Site Restoration Obligation of Rs.83 (31.03.2016 : Rs.83; 01.04.2015 : Rs.3) in respect of Wind Mill Plants.

x. Contractual Commitment

Refer Note 30(8) for outstanding Contractual Commitment.

xi. Deemed Cost

On transition to Ind AS, the company has elected to continue with the carrying value of all its property, plant and equipment as at 1 April 2015 measured as per previous GAAP and use that carrying value as the deemed cost of the Property, Plant & Equipment.

xii. Estimation of Useful Life of Assets

The management has estimated the useful life of the various categories of tangible assets (which are different from the useful life indicated in Schedule II to the Companies Act, 2013) after taking into consideration, factors like expected usage of assets, risk of technical and commercial obsolescence, etc.

xiii. Depreciation / Amortisation

Depreciation is calculated on a straight-line basis over the estimated useful lives of the Assets.

Leased Assets are amortised on a straight-line basis over their estimated useful lives or their respective lease term whichever is shorter.

xiv. Method of Accounting Depreciation

Depreciation/Amortisation has been calculated as per the Accounting Policy No. 8 of the Company and recognised as expenses in the Statement of Profit and Loss. Amount of Depreciation recognised as part of Cost of Other Asset is Nil (31.03.2016 : Nil; 01.04.2015 : Nil).

xv. Impairment of Assets

Refer Note 30(6).

xvi. Compensation from third parties

Nil (31.03.2016 : Nil; 01.04.2015 : Nil).

xvii. Refer Note 12 in respect of Unadjusted Capital Advance paid towards Property, Plant & Equipment.

xviii. Land acquired free of cost from the Government in some units has been accounted in line with provisions of Ind AS 101.

xix. Details of Registration Pending Litigation etc.,

a. Deeds containing the terms of transfer / grant of land from State Governments / State Undertakings have been registered during the FY 2014-15 in respect of 86.60 acres valuing Rs.197 pertaining to Panchkula Unit. However, rectification of land area held by BEL for Township from 30.00 acres to 28.60 acres in records of HUDA and Registration Authority is in process. The title deed in respect of land measuring 0.30 acres (31.03.2016 : 0.30 acres; 01.04.2015 : 0.30 acres) is under litigation.

b. Pending execution of title/sale deeds and handing over of physical possession of land allotted to BEL Hyderabad Unit by Andhra Pradesh Industrial Infrastructure Corporation (APIIC) in respect of land measuring 5.60 acres (31.03.2016 : 5.60 acres; 01.04.2015 : 5.60 acres) in Mallapur, Hyderabad and the matter being under litigation, no provision towards registration and other cost has been made in the books of accounts. Cost of land paid to APIIC amounting to Rs.65 (Rs.65) is included in Capital Advances.

c. Based on the Memorandum of Understanding reached with the Defence authorities, assets constructed on the land allotted to BEL and in possession of BEL are capitalised under the respective heads for setting up of the Hyderabad Unit. Pending finalisation of the terms and conditions by the appropriate authorities, the cost of land measuring 25.11 acres (31.03.2016 : 25.11 acres; 01.04.2015 : 25.11 acres) has not been accounted in the books of accounts.

d. Land admeasuring to 122.82 Acres at Ibrahipatnam alloted by APIIIC/TSIIC possession is given for which sale deed is pending wrt Hyderabad Unit.

e. A demand of Rs.256 (31.03.2016 : Rs.256; 01.04.2015 : Nil) (being 50% of the compensation amount decreed by City Civil Court, Hyderabad) has been received towards additional compensation from TSIIC Dated. 31.01.2015 for Land of 22.375 acres (31.03.2016 : 22.375 acres; 01.04.2015 : Nil) which is part of free hold land mentioned above. The demand is under dispute and hence, no provision in respect of the same has been made in the books of accounts.

f. Free hold Land to the extent of 1.22 acres (31.03.2016 : 1.22 acres; 01.04.2015 : 1.22 acres) which was allotted by Government Authorities in return for handing over of Land measuring 1.24 acres (31.03.2016 : 1.24 acres; 01.04.2015 : 1.24 acres) is under litigation (Bangalore Complex Unit) .

g. The Company has installed Windmill Generator at three locations. Windmill Generator-I capitalized in the year 2006-07 on Lease Land. Upfront Lease rent is Nil and Lease Agreement for the land is pending finalization.

Windmill Generator -II is capitalized in the year 2007-08 on the leased land by paying upfront lease rent of Rs.36 which being an operating lease classified as Other assets. Lease Agreement for the land is pending finalization.

Windmill Generator -III is capitalized in the year 2015-16 on the leased land by paying upfront lease rent of Rs.161 which being an operating lease classified as Other assets.

h. Title in respect of 12.50 acres (31.03.2016 : 12.50 acres; 01.04.2015 : 12.50 acres) of land acquired through land transfer certificate is under litigation (Kotdwara Unit).

i. Civil Construction mainly comprises of Production related building, R&D building, Employee Quarters and Training Centre under construction.

ii. Borrowing costs of Rs.1 (net of interest income) (31.03.2016 : Nil; 01.04.2015 : Nil) (capitalisation rate @ 8.15% p.a.) has been capitalised during the year 2016-17 in respect of employee quarter under construction.

iii. Refer Note 30(8) in respect of Contractual Commitment.

iv. Refer Note 12 in respect of Unadjusted Capital Advance paid towards Property, Plant & Equipment.

i. Amount recognised in Statement of Profit & Loss

ii. Refer Note No. 30(8) for Contractual Commitment.

iii. Fair Value of the investment properties

iv. Land comprises of Free Hold Land of 1.36 Acres (31.03.2016 : 1.36 Acres; 01.04.2015 : 1.36 Acres) in Bengaluru.

v. Estimation of Fair Value

The company has estimated the fair value of the Investment Property based on the Government Guidance Value (municipal value) of the similar properties in the investment property’s location. All resulting fair value estimates for the investment properties are included in Level 2.

vi. Deemed Cost

On transition to Ind AS, the company has elected to continue with the carrying value of all its Investment Property recognised as at 1 April 2015 (earlier treated as Property, Plant and Equipment) measured as per Previous GAAP and used that carrying value as the deemed cost of the Investment Property.

vii. Estimation of Useful Life of Assets

viii. Depreciation

Depreciation is calculated on a straight-line basis over the estimated useful lives of the Assets.

The amount of Depreciation has been recognised as expense in the Statement of Profit and Loss.

ix. Method of Accounting Depreciation

Depreciation has been calculated as per the Accounting Policy No. 8 of the Company and recognised as expenses in the Statement of Profit and Loss.

x. Impairment of Assets

As the fair value of the Investment Property is higher than its carrying value, there is no indication of impairment.

xi. Restrictions on the reliability of Investment Property

The lands are alloted by Government of India.

xii. Related Party Transactions

Investment Property includes Building and land measuring 0.31 Acres (31.03.2016 : 0.31 Acres; 01.04.2015 : 0.31 Acres) given under cancellable operating lease to Subsidiary Company BEL Thales System Ltd. Also Refer Note 31.

NOTE 1

Intangible assets

i. Deemed Cost

On transition to Ind AS, the company has elected to continue with the carrying value of all its Intangible assets recognised as at 1 April 2015 measured as per Previous GAAP and used that carrying value as the deemed cost of the Intangible assets.

ii. Amortisation

Amortisation is calculated on a straight-line basis over the estimated useful lives of the Assets.

The amount of Amortisation has been recognised as expense in the Statement of Profit and Loss.

iii. Method of Accounting Amortization

Amortisation has been calculated as per the Accounting Policy No. 8 of the Company and recognised as expenses in the Statement of Profit and Loss.

iv. Refer Note 30(8) for Contractual Commitment

i. Raw Materials and Components include Rs.13,023 (Rs.5,502) being materials with sub-contractors, out of which Rs.169 (Rs.68) of materials is subject to confirmation and reconciliation. Against Rs.169 (Rs.68), an amount of Rs.169 (Rs.68) has been provided for.

ii. Stock verification discrepancies for the year are as follows :

Shortages of Rs.1,583 (Rs.247) and surplus of Rs.1,256 (Rs.284). Pending reconciliation, an amount of Rs.370 (Rs.80) has been provided for.

iii. Valuation of inventories has been made as per Company’s Accounting Policy No. 18

iv. a. The United Nations Climate Change Secretariat has granted 15856 (15856) TON CO2EQ Carbon Credit during earlier years, for the 2.5MW BEL Grid Connected Wind Power Project at Davangere District , Karnataka for the verification period from 05 November 2007 to 31 March 2012 (05 November 2007 to 31 March 2009). The carbon Credits are included under Finished Goods at a value of Rs.2 (Rs.2). The CER is valued at cost as required by Guidance Note on CER issued by ICAI.

b. CER under Certification : Nil (Nil) CERs.

c. Depreciation & Operation Cost of Emission Reduction Equipments during the year :

v. Security, Hypothecation etc Refer Note 35.

vi. Amount recognised in Profit & Loss

Write-down of inventories to net realisable value amounted to Rs.2,662 (Rs.1,402) has been recognised in the statement of profit and loss.

vii. No Reversal of write down of inventories has been made during the year, which were recognised as an expenses in the previous year.

viii. Impairment of Assets

Provisions for inventory has been made in line with Accounting Policy No. 18 of the Company.

i. The information regarding dues to Micro and Small Enterprises as required under Micro, Small & Medium Enterprises Development (MSMED) Act, 2006 as on 31 March 2017 is furnished below:

* Includes amount shown under Note No. 20

** Interest includes INR 3278 wrt current year which is rounded off.

ii. During the period Rs.8 of provisions made in Previous year has been reversed, since on subsequent verification, the amount was found to be not payable.

iii. The information has been given in respect of such suppliers to the extent they could be identified as Micro & Small Enterprises on the basis of information available with the Company and have been relied upon by the Auditors.

iv. Financial Instruments

Refer Note 33 for classification of financial instruments.

v. Related Party Disclosure

For Related Party Disclosures refer Note 31.

vi. The company’s exposure to currency and liquidity risk related to Trade Payables is disclosed at Note 34.

NOTE 2 Provisions

ii. Provision for Warranties - as per Accounting Policy No. 20 of the Company.

Provision for warranties is made in respect of products whose normal warranty period is outstanding. As the warranty provision period varies from product to product, provision is made at Strategic Business Unit (SBU) level based on average period of warranty period. Provision is made based on trend based estimate of the likely expenses to be incurred. The provision is measured at the present value of the estimated cost of Warranty.

iii. Provision for Site restoration - as per Accounting Policy No. 23 of the Company.

In accordance with the terms and conditions of the Lease agreement entered into with Lessor, the company is required to return the land in its original condition. Accordingly provision in respect of Site restoration obligation has been made. The provision required is reviewed and required adjustment made at each year end.

The provision is measured at the present value of the best estimate of the cost of restoration.

iv. Provision for Onerous contracts - as per Accounting Policy No. 23 of the Company.

In respect of certain contracts entered into by the company, it is expected that the likely cost to complete the contract would exceed the Revenue received / receivable against the contract. In such cases, provision in respect of the expected losses has been made. The provision required is reviewed and required adjustment made at each year end. The provision is measured at the present value of the best estimate of loss likely to be incurred.

v. Amount debited to opening provision.

vi. An amount of Rs.8,065 (Rs.8,592) has been debited against Natural Code Heads wrt Warranty Cost.

An amount of Nil (Nil) has been debited against Natural Code Heads wrt Site Restoration Obligation.

An amount of Rs.1,974 (Rs.2,498) has been debited against Natural Code Heads wrt Onerous Contract.

vii. * Represents excess of plan asset over obligation as on 31 March 2016.

(A) POST EMPLOYMENT BENEFIT OBLIGATION (i) Gratuity :

The Company provides gratuity to employees in India as per payment of Gratuity Act, 1971. The Company has a Gratuity Scheme for its employees, which is a funded plan. Every year, the Company remits fund to the Gratuity Trust to the extent of shortfall of the assets over the fund obligations, which is determined through actuarial valuation. As per the Gratuity Scheme, gratuity is payable to an employee on the cessation of his employment after he has rendered continuous service for not less than five years in the Company. For every completed year of service or part thereof in excess of six months, the Company shall pay gratuity to an employee at the rate of fifteen days salary based on the last drawn basic & dearness allowance.

The following table summarises the components of net benefit expense recognised in the Statement of Profit & Loss and amounts recognised in the Balance Sheet and the movement in the net defined benefit obligation over the years as per Actuarial valuation are as follows :

(ii) BEL RETIRED EMPLOYEES CONTRIBUTORY HEALTH SCHEME (BERECHS):

The Company has a contributory health scheme for its retired employees “BEL Retired Employees’ Contributory Health Scheme” (BERECHS), which is non-funded scheme. The primary objective of the scheme is to provide medical facilities to employees retiring on attaining the age of superannuation, or on VRS. Benefits under the Scheme shall be available to the employees who become members and their spouses only. The company takes insurance cover for inpatient treatment. In addition to the annual insurance premium, the Company bears 60% of the medicine cost and 75% of the cost of diagnostic tests for outpatient treatment and for the treatment of specified diseases, the Company bears the full cost of treatment, over and above the insurance coverage.

The following table summarises the components of net benefit expense recognised in the Statement of Profit & Loss and amounts recognised in the Balance Sheet and the movement in the net defined benefit obligation over the years as per Actuarial valuation are as follows :

(iii) EMPLOYEES PROVIDENT FUND [INTEREST SHORTFALL]

Employees Provident Fund is managed by Provident Fund Trust of the company. The Company contributes Managements’ contributions payable towards Employee Provident Fund to the Trust. During the year the Company has recognised an amount of Rs.8,033 (Rs.7,498) towards contribution to Employees Provident Fund in the Statement of Profit and Loss.

Company has determined on the basis of Actuarial Valuation carried out as at 31 March 2017, that there is no liability towards the interest shortfall on valuation date (having regard to terms of plan that there is no compulsion on the part of the Trust to distribute any part of the surplus, if any, by way of additional interest on PF balances).

B. Long Term Compensated Absence

The Company has a Long Term Compensated Absence Scheme for its employees, which is a Non-Funded Scheme. The employees of the Company are entitled to two types of Long Term Compensated Absences : Annual Leave (AL) & Half Pay Leave (HL) in case of Executives and Annual Leave (AL) & Sick Leave (SL) in case of Non-Executives. The Scheme provides for compensation to employees against the unavailed Leave (AL & HL in case of Executives and AL & SL in case of Non-Executives) on attaining the age of superannuation, VRS, or death. AL can also be encashed during service or at the time resignation.

The following table summarises the components of net benefit expense recognised in the Statement of Profit & Loss and amount recognised in the Balance Sheet for the plan as furnished in the disclosure report provided by the Actuary :

C. Pension Scheme

Company has got a defined contribution pension benefit plan for the benefit of its employees in respect of which contribution is made on an annual basis to a Trust setup for this purpose.

The benefit under the scheme are available for the employees as per the rules laid down in this regard.

A narrative description of the specific or unusual risks arising from a defined benefit plan (i.e. Gratuity and BERECHS)

The specific risk relating to defined benefit plans are as follows : -

Movement in long term government bond rate between two reporting periods which will impact discount rate and consequently the present value of obligations.

Risk of higher/lower salary escalation/benefit as considered for valuation vis-a-vis the actual experience through the Financial Year.

However, both the risks are mitigated on a regular basis i.e. yearly as valuations are done after every year based on updated assumptions.

A narrative description of any asset-liability matching strategies.

The gratuity plan of the company is a funded plan. The assets backing this plan are predominantly insurer-managed funds. Hence the company has limited flexibility in terms of implementing asset-liability matching strategies for this plan.

The post retirement medical plan of the company is an unfunded plan. Hence asset-liability matching strategies are not relevant for this plan.

A description of the funding arrangements and funding policy.

The Gratuity plan of the company is a funded plan. 87.97% of the plan assets backing this plan are insurer managed assets and 7.03% of the plan assets are invested in Central and State Government Securities. The annual contribution to the fund is typically set equal to the deficit as disclosed by the preceding actuarial valuation of the benefit obligations.

The post-retirement medical plan [BERECHS] is an unfunded plan.

NOTE 3

General Notes to Accounts

1 Earnings per Equity Share

2 Impact of Changes in Accounting Policies

The Company has amended its R&D Policy (Accounting Policy No. 10) for enabling carrying forward of expenditure relating to Joint Developmental Projects. The impact due to above change in policy is increase in WIP by Rs.4,312 and increase in Profit by Rs.4,312.

3 Statement of Compliances

The standalone financial statements are prepared in accordance with Indian Accounting Standards (Ind AS) [as notified under section 133 of the Companies Act, 2013 (the “Act”) read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015.], and other relevant provision of the Act.

The Company’s standalone financial statements up to and for the year ended 31 March 2016 were prepared in accordance with the Companies (Accounting Standards) Rules, 2006, notified under Section 133 of the Act and other relevant provisions of the Act.

As these are the Company’s first standalone financial statements prepared in accordance with Indian Accounting Standards (Ind AS), Ind AS 101, First-time Adoption of Indian Accounting Standards has been applied. An explanation of how the transition to Ind AS has affected the previously reported financial position, financial performance and cash flows of the Company is provided in Note 37.

4 Operating Cycle

As per the requirement of Schedule III to the Companies Act, 2013, the Operating Cycle has been determined at Strategic Business Unit (SBU) / Unit level, as applicable.

5 Construction Contracts

6 Impairment of Assets

The Company has analysed indications of impairment of assets of each geographical composite manufacturing unit considered as Cash Generating Units (CGU). On the basis of assessment of internal and external factors, none of the Unit has found indications of Impairment of its Assets and hence no provision is considered necessary.

7 Short Term Borrowings

a. The Company has been sanctioned working capital limit of Rs.290,000 by Consortium Bankers (SBI Lead Bank). The sanctioned limit includes a sub limit of Rs.20,000 of fund based limit (interchangeable with non fund based LC limits).

b. The interest rate payable on fund based limit is linked to SBI Base Rate plus 0.25%. (Interest rate payable as on 31 March 2017 is 8.25% p.a.).

c. The amount utilised is repayable on demand. Utilisation as on 31 March 2017 is Nil (Nil).

d. The above sanction limit is secured by hypothecation of Current Assets of the Company.

8 Contractual Commitments

9 Expenditure incurred on Research and Development:

The Company incurred on Research and Development during the year, which are included in the respective natural classification is given below :

10 Contingent Liabilities :

MTNL has made a claim of Rs.80,670 on the company in respect of convergent billing project. Against this the company has made a counter claim of Rs.31,900.

11 Contingent Assets :

12 Confirmation of Balances

Letters requesting confirmation of balances have been sent in respect of Trade Receivables, Trade Payables, Advances and Deposits. Wherever replies have been received, reconciliation is under process and provisions / adjustments are made wherever considered necessary.

13 Labour Disputes

In respect of Labour matters, as the matters are yet to be adjudicated, the liability, if any, is not ascertainable. However, such liability is not expected to be material.

14 Excise Duty

a. ”Excise Duty - Others” which is included in Note No. 29 - “Other Expenses” represents incremental provision of Excise

Duty on Finished Goods, Excise Duty paid on Sale of Scrap and Others.

b. ”Excise Duty” was leviable on certain category of Defence Sales only from 1 June 2015 in respect of FY 2015-16 as against full year in respect of FY 2016-17.

15 Segment Reporting

Ministry of Corporate Affairs has vide Notification no. 463 (E) dated 5 June 2015 exempted the Companies engaged in Defence Productions from the requirement of Segment Reporting.

16 Retention Sales

The Value of Retention Sales (i.e., Goods retained with the Company at the Customers’ request and at their risk) included in Gross Turnover during the year is Rs.11,394 (Rs.52,147).

The Value of Ex-work Sales included in Gross Turnover during the year is Rs.1,60,145 (Rs.2,01,585).

17 Foreign Exchange Exposure

Pursuant to the announcement of the ICAI requiring the disclosure of “Foreign Exchange Exposure”, the major currency-wise exposure as on 31 March 2017 is given below. (Previous year figures are shown in brackets)

* includes exposures relating to outstanding Letters of Credit and Capital Commitments.

During the FY 2016-17, the Company has not entered Forward Contracts to cover Foreign Currency fluctuations in respect of Firm Commitments. There are no outstanding Forward Contracts as on 31 March 2017.

18 Disclosure relating to CSR Expenditure

a. Gross amount required to be spent by the Company during the FY 2016-17 is Rs.2,972 (Rs.2,523).

b. Amount spent during the FY 2016-17:

19 The details of specified Bank Notes (SBN) held and transacted during the period from 08.11.2016 to 30.12.2016 is as follows :

20 Non Cancellable Operating Lease Disclosure:

a. As a Lessor:

The future minimum Lease Rent Receivable:

* represent INR 3,012 and ** represents INR 12,048 which is rounded off.

The company has Leased out Point of Sales machines to Government of Haryana for a period of five years from 2016-17 to 2021-22.

The company has Leased out few portions of Land to different organizations under non-cancellable operating Lease. Lease period is spread over from the year 1967 to 2077. The leases have various terms, escalation clause, lease renewal rights etc. On renewal, the terms of the lease are renegotiated.

The company has not recognized any income as contingent rent.

b. As a Lessee:

During the year 2016-17, Bangalore Complex has taken 356.73 Acres of Land on Lease for a period of 25 years from Ordnance Factory Board at various locations for setting up Solar Power Plant by paying a nominal Value of INR 1 as Annual Lease Rent for each Locations.

21 Chennai Unit was affected by floods during December 2015. Insurance policy taken by the company with United India Insurance Company Limited covers flood related losses. An amount of Rs.1,000 (Rs.1,000) was received as part of Insurance claim settlement and has been recognised under “Other Income”. In addition, an amount of Rs.32 was received towards claim settlement wrt scrap items.

22 Dividend not recognised at the end of the reporting period

The directors have recommended a final dividend of INR 1.05 (INR 14.50) per share.

The proposed dividend is subject to approval of shareholders in the ensuing Annual General Meeting.

23 Figures in brackets relate to Previous years.

24 All figures in financial statement are rounded off to nearest lakhs unless otherwise mentioned.

25 The standalone financial statements were approved for issue on 29 May 2017 by the Board of Directors.

NOTE 4

Related Party Transactions a. Subsidiaries & Associates

b. Key Management Personnel’s Details

i. Name of Key Management Personnel’s

ii Compensation to Key Management Personnel’s

c. The transactions with Related Parties other than Key Management Personnel are as follows (Previous Year figures are shown in brackets) : -

* Represents amount of INR 7,763 (Nil) which is rounded off.

d. All transactions dealt with related parties are on arm’s length basis. In respect of loan to subsidiary (BELOP) refer note “h” below.

e. All Outstanding balances are Unsecured. All Outstanding balances (Other than loan) is repayable in cash within next 6 months. For Outstanding balance of loans refer note “h” below.

f. The Company has entered into an Agreement with BELOP in April, 2013 to temporarily fund the amount of Rs.10,416 (Rs.26,040 less Rs.15,624) for enabling BELOP to make payment towards ToT for XD-4 II Tubes, pending receipt of balance amount from MoD. As on 31 March 2017, an amount of Rs.9,503 (Rs.9,357) has been paid to BELOP, out of which an amount of Rs.6,401 (Rs.6,401) has been received from MoD. The balance amount of Rs.3,102 (Rs.2,956) has been shown under Other Non-Current Assets. (Refer Note 12).

As per the Agreement, an amount of Rs.273 (Rs.304) has been recovered during the financial year from BELOP towards the cost of funds.

g. Consequent to acquisition of 1,32,000 equity share held by Specified Undertaking of Unit Trust of India on 30 July 2015, BELOP has become 100 % Subsidiary of the BEL.

h. Loans to Related Parties

1. The Company has entered into an agreement with BELOP in July 2015 to temporarily fund its Working Capital requirement to the maximum extent of Rs.5,000 which was fully disbursed by 31 March 2016 and an amount of Rs.3,381 is outstanding as on 31 March 2017. As per the terms and conditions :

i) The balance amount will be repaid in quarterly installments with effects from July 2016.

ii) Interest will be charged on the outstanding loan amount, on monthly basis, at BEL’s rate of yield on its deposits.

2. The Company has entered into an agreement with BELOP in August 2016 to fund a Term Loan of Rs.4,600 out of which Rs.1,039 has been disbursed as on 31 March 2017. As per the terms and conditions :

i) The principal amount will be repaid in 36 equal installments with effects from June, 2018.

ii) Interest will be charged on the outstanding loan amount, on monthly basis, at BEL’s rate of yield on its deposits or the interest rate yield on a five year Government of India Bond, whichever is higher.

3. ** Loan outstanding does not include Rs.70 (Rs.83) adjusted on account of loan given to subsidiary (BELOP) at below market rate.

i. Management Contracts including deputation of Employees :

Two Official of BEL has been deputed to BELOP (Subsidiary) and Eight Officials of BEL have been deputed to BEL-THALES Systems Limited (Subsidiary) and their Salary and Other Costs is paid by BELOP and BEL-THALES System ltd. respectively during the year as per terms and conditions of employment.

j. Transaction with Government and Government Related Entities :

As BEL is a government entity under the control of Ministry of Defence (MoD), the company has availed exemption from detailed disclosures required under Ind AS 24 wrt related party transactions with government and government related entities.

However as required under Ind AS 24, following are the individually significant transactions :

1. Buyback of 13828771 number of Shares for Rs.1,80,465 during FY 2016-17.

2. 120028420 number of Bonus Shares were Issued in the FY 2015-16.

3. An amount of Rs.44,735 was Paid as Dividend during the year.

In addition to the above, around 90% of the Company’s Turnover, around 76% of Trade Receivables and around 70% of Customer’s Advance is with respect to government and government related entities.

k. Investment in Equity with respect to BELOP includes fair valuation of loan.

Level 1 : Level 1 hierarchy includes Financial instruments measured using quoted prices.

Level 2 : The fair value of Financial instruments that are not traded in an active market is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity specific estimates.

Level 3 : If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3. This is the case of unlisted equity shares.

3. Valuation technique used to determine Fair Value :

a. LIC Investment - (Level 2)

Based on valuation report of the Scheme provided by LIC.

b. M/s Mana Effluent Pvt Ltd - (Level 3)

BEL has invested in equity securities of M/s Mana Effluent Pvt Ltd. which is an unlisted company. The Company’s cost of investment in M/s Mana Effluent Pvt Ltd is only Rs.5 (out of Issued Share Capital of Rs.161). The company has opted for Net Asset Value method for fair valuation.

NOTE 5

Financial risk management

i. Risk Management framework and policies

The Company is broadly exposed to credit risk, liquidity risk and market risk (fluctuations in exchange rates, interest rates and price risk) as a result of financial instruments.

Board of Directors has the overall responsibility for the establishment, monitoring and supervision of the Company’s risk management framework. The Board has set up a Risk Management Committee, for this purpose, which is responsible for developing and monitoring the risk management policies. The Company has an established Risk Management Policy that outlines risk management structure and provides a comprehensive frame work for identification, evaluation, prioritization, treatment of various risks associated with different areas of finance and operations.

The company has a centralized Treasury function which is responsible to undertake appropriate measures to mitigate financial risk in accordance with the policies and procedures formulated by the Board. Hedging transactions are undertaken by a team with appropriate skills and experience in consultation with an external expert. The Company does not trade in derivatives for speculation.

ii. Market Risk

Market risk is the risk that changes in market prices such as foreign exchange rates, interest rates will affect the Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

The Company’s activities expose it primarily to the financial risks of changes in foreign exchange rates and interest rate movements (refer to notes below on currency risk and interest risk).

Currency Risk

BEL is exposed to foreign exchange risk arising from foreign currency transactions primarily relating to purchases and sales made in foreign currencies such as US Dollar, Euro, Great Britain Pound and Swiss Franc. Foreign exchange risk arises from existing and future commercial transactions and recognised assets and liabilities denominated in a currency that is not the Company’s functional currency (INR).

The Company has a Board approved currency risk management policy implemented by a Risk Management Committee that reviews the Company’s exposure to this risk on a regular basis. The Risk Management Policy recommends hedging upto 50% of the open foreign currency exposure. However the decision to enter into a hedging arrangement is made by the Risk Management Committee based on the relevant data inputs and the advice of the external specialist consultant retained for this purpose.

The Company’s export proceeds are realized mostly by remittance into an Export Earners Foreign Currency account (EEFC) which is then utilised for payments to be made in foreign currency, thereby mitigating the currency risk on exports. Imports to the extent of around 30% of annual foreign exchange outgo are not covered by the Exchange Rate Variation (ERV) clause in the related customer contract and hence are open to currency risk. These imports are benchmarked as per the policy and appropriate decision on covering the risk is taken on a case to case basis. The Company’s currency risk policy advocates forward contract hedging for mitigating risk wherever required.

As on 31 March 2017, there are no outstanding forwards contracts. The company has not entered into any forward contracts during the financial year 2016-17.

Foreign Currency sensitivity

The sensitivity of profit or loss to changes in the exchange rate arises mainly from foreign currency denominated financial instruments. The sensitivity to variations in respect of major currencies is given below . This analysis assumes that all other variables remain constant.

Interest rate risk

Interest rate risk can be either fair value interest rate risk or cash flow interest rate risk. Fair value interest rate risk is the risk of changes in fair values of fixed interest bearing investments because of fluctuations in the interest rates. Cash flow interest rate risk is the risk that the future cash flows of floating interest bearing instruments will fluctuate because of fluctuations in market interest rates.

Variable Rate Borrowing:

The company has been sanctioned a Term loan of Rs.10,000 on 31 March 2017 (Outstanding as on 31 March 2017 is Rs.5,000). Interest payable on this loan is based on SBI’s Minimum Commercial Lending Rate - MCLR. (SBI is eligible to reset the interest charged on yearly basis). There would be an additional outflow of cash of Rs.50 if the interest rate goes up by 1% and saving of Rs.50 in cashflow if interest rate goes down by 1%. There would however be no impact on profit as the interest component is capitalized since the borrowing is towards capital expenditure.

In addition the company has been sanctioned a working capital limit of Rs.2,90,000 which has not been utilised in the year end (Outstanding as on 31 March 2017 is Nil (31 March 2016 is Nil) (1 April 2015 is Nil)) in respect of which interest payable is based on SBI’s base rate. SBI is eligible to reset the interest charged on periodic basis. As the borrowing is Nil there is no impact on likely change in interest rates.

Equity Price Risk

The company’s exposure to equity price risk is negligible as its equity investment (other than in subsidiaries and Associate) is negligible.

iii. Liquidity Risk

Liquidity Risk is the risk that a Company could encounter if it faces difficulty in meeting the obligations associated with financial liabilities by delivering cash and other financial asset or the risk that the Company will face difficulty in raising financial resources required to fulfill its commitments. The Company’s exposure to liquidity risk is very minimal as it has a prudent liquidity risk management process in place which ensures maintaining adequate cash and marketable securities to pay its liabilities when they are due. To ensure continuity of funding, the Company has access to short-term bank facilities in the nature of bank overdraft facility, cash credit facility and short-term borrowings to fund its ongoing working capital requirements and growth needs when necessary.

The Company meets its liquidity requirement mainly through internally generated cash flows which is monitored centrally by treasury. There is an established process of rolling cash forecasts from various operating units which form the basis for mapping expected cash inflows, to meet the liabilities.

The table below analyses the company’s financial liabilities based on their contractual maturities. The amounts disclosed are contractual un discounted cash flows.

The company does not have any outstanding derivatives as on 31 March 2017.

iv. Credit Risk

Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in financial loss to the Company. Credit risk arises from credit exposures from customers, cash and cash equivalent with banks, security deposits and loans.

The credit risk of the Company is managed at a corporate level by the risk management committee which has established the credit policy norms for its customers and other receivables. Significant amount of trade receivables are due from Government/Government Departments, Public Sector Companies (PSUs) consequent to which the Company does not have a credit risk associated with such receivables. In case of non Government trade receivables, sales are generally carried out based on Letter of Credit established by the customer thereby reducing the credit risk.

In a few cases credit is extended to customers based on market conditions after assessing the solvency of the customer and the necessary due diligence to determine credit worthiness. Advance payments are made against bank guarantee which safeguards the credit risk associated with such payments. Impairment losses on financial assets (representing mainly liquidated damages leviable for delayed deliveries and other disallowances) have been made after factoring contractual terms, etc and other indicators.

The cash and cash equivalent with banks are in the form of short term deposits with maturity period of upto 1 year. The Company has a well structured Risk Mitigation Policy whereby there are preset limits for each bank based on its net worth and earning capacity which is reviewed on a periodic basis. The Company has not incurred any losses on account of default from banks on deposits.

The credit risk in respect of other financial assets is negligible as they are mostly due from government department / parties.

Loan of Rs.4,445 given is to 100% subsidiary company. The subsidiary company has been regular in repayment of its dues (Interest and Principal) and no credit risk is expected in terms of repayment of the loan amount.

v. Capital Management

The Company’s Capital Management objective is to maintain a strong capital base to provide adequate returns to the shareholders and ensure the ability of the company to continue as a going concern. The Company has a conservative approach for raising capital through debt but reserves the right to leverage this alternative at an appropriate time to fuel growth and maintain optimal capital structure.

As part of this overall objective, the company has expanded capital base by issuing bonus shares in financial year 2015 and bought back shares in financial year 2016. The Company has a well defined Dividend Distribution Policy which lays the framework for payments of dividend and retention of surplus for future growth and enhancing shareholders wealth. The company has a nominal borrowing of Rs.5,000 as on 31 March 2017. The Company has sanctioned borrowing limits with some banks to the tune of Rs.2,90,000.

NOTE 6

Critical estimates and judgments

While preparing the financial statements, management has made certain judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised prospectively.

Judgments made in applying accounting policies that have the most significant effects on the amounts recognised in the financial statements and Estimates that have a significant risk of resulting in a material adjustment are as under :

i. Research and Development Expenditure - Accounting Policy No. 10 - (Refer Note No. 5)

Developmental expenditure incurred with respect to No Cost No Commitment (NCNC) Projects and Joint developmental projects which are not fully compensated by the development partner are carried forward till the completion of project.

ii. Estimation of defined benefit obligation - Key actuarial assumptions - (Refer Note No. 21)

iii. Estimation of provision for warranty claims - (Refer Note No. 21)

Warranty provision computation involves estimation of average warranty cost based on trend based analysis. If the estimations made varies, the same will impact the expense recognised.

iv. Pay Revision Provision - (Refer Note No. 21)

Pay Revision in respect of Executive and Non executive is due with effect from 1 January 2017. Provision in respect of revised pay has been made based on a reasonable estimate of expected liability for the period 1 January 2017 to 31 March 2017.

v. Recognition of Revenue - (Refer Note No. 23)

Percentage-of-completion method involves estimation of Stage of completion based on actual costs incurred to the estimated total costs expected to complete the contract. If the estimations made varies, the same will impact the Revenue recognised.

NOTE 7 First Time Adoption of Ind AS Transition to Ind AS

These are the Company’s first standalone financial statements prepared in accordance with Indian Accounting Standard (Ind AS).

The transition to Ind AS has resulted in changes in the presentation of financial statements, disclosures in the notes thereto and accounting policies and principles. The accounting policies set out in the financial statements have been applied in preparing the financial statements for the year ended 31 March 2017 and the comparative information. For the purpose of transition to Ind AS, the Company has followed the guidance prescribed in Ind AS 101 (first time adoption of Indian Accounting Standards), with 1 April 2015 as the transition date from the previous GAAP. An explanation of how the transition from previous GAAP to Ind AS has affected the company’s financial position, financial performance and cash flows is set out in the following tables and notes.

I Exemptions and Exceptions Availed

Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from previous GAAP to Ind AS.

A. Ind AS optional exemptions

Property, plant and equipment, Intangible assets and Investment Property-Deemed cost

Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognised in the previous financial statements as at the date of transition to Ind AS, and use that as its deemed cost on the date of transition after making necessary adjustments for de-commissioning liabilities. This exemption can also be used for intangible assets and investment property.

Accordingly, the company has elected to measure all of its property, plant and equipment, intangible assets and investment property at their previous GAAP carrying value as at the date of transition. The carrying values of property, plant and equipment, as aforesaid are after making adjustments relating to decommissioning liabilities.

Designation of previously recognised financial instruments

Ind AS 101 allows an entity to designate investments in equity instruments (other than equity investments in Subsidiaries, Associates) at Fair Value through Other Comprehensive Income (FVOCI) on the basis of the facts and circumstances at the date of transition to Ind AS. The Company has elected to designate its investment in equity instruments (other than equity investments in Subsidiaries, Associates) at FVOCI on the date of transition to Ind AS.

Investments in Subsidiaries and Associates

Ind AS 101 permits an entity to measure its investments in Subsidiaries, Associates at cost in accordance with Ind AS 27 (Separate Financial Statements). Accordingly, the Company has measured investments in subsidiaries and Associate at cost.

Leases

Appendix C to Ind AS 17 requires an entity to assess whether a contract or arrangement contains a lease. In accordance with Ind AS 17, this assessment should be carried out at the inception of the contract or arrangement. Ind AS 101 provides an option to make this assessment on the basis of facts and circumstances existing at the date of transition to Ind AS, except where the effect is expected to be not material.

The company has elected to apply this exemption.

The company has availed the following exemption :

B. Ind AS mandatory exceptions

De-recognition of financial assets and financial liabilities

As per Ind AS 101 a first time adopter shall apply the de-recognition principles requirements in Ind AS 109 prospectively for transactions occurring on or after the date of transition to Ind AS. However, an entity may apply the de-recognition requirements retrospectively from a date chosen by it if the information needed to apply Ind AS 109 to financial assets and liabilities recognised as a result of past transactions was obtained at the time of initially accounting for those transactions.

The company has elected to apply the de-recognition provisions of Ind AS 109 prospectively from the date of transition to Ind AS.

Classification and measurement of financial assets

As per Ind AS 101 an entity has to assess classification of financial assets on the basis of facts and circumstances existing as on the date of transition.

Accordingly, BEL has determined the classification of Financial assets based on facts and circumstances existing at the date of transition to Ind AS.

II Reconciliation between Previous GAAP and Ind AS A. Reconciliation of Equity

Previous GAAP (IGAAP) figures have been reclassified to conform to Ind AS and Schedule III presentation requirements.

i. Reconciliation of Equity as at date of transition 1 April 2015 and 31 March 2016.

C. Notes to first time adoption

i. Property, Plant and equipment

a) Under previous GAAP assets acquired out of customer grants were carried at Net value (Cost less grant value). Under Ind AS these assets have to be recognised at cost with Grant amount being credited to Deferred revenue (Customer Grant). Consequently, the amount of Property, plant and equipment has increased by Rs.697 during FY 2015-16 (Rs.1,606 as on 1 April 2015) with corresponding credit to Deferred revenue (Customer Grant). There will be no impact on Total equity because of this adjustment.

b) Due to creation of provision towards Site restoration Obligation as required under Ind AS 37 an amount of Rs.80 has been recognised as a part of Property, Plant and equipment during 2015-16 (Rs.55 as on 1 April 2015). This amount will be charged off over the Lease period.

ii. Investment Property

As required under Ind AS 40 on Investment Property, Land and building that are rented out have been reclassified as Investment property. In the previous GAAP these were classified as Property, plant and equipment. Accordingly the carrying value of Rs.14 Lakhs of Building that has been rented out has been reclassified from property, plant and equipment to Investment property as on 1 April 2015. There is no impact on the total equity on account of this adjustment.

iii. Leasing Arrangement

As permitted under Ind AS 101 the company has assessed whether a contract or arrangement contains a lease on the basis of facts and circumstances existing at the date of transition to Ind AS. Based on the assessment some leasing agreements have been identified as Operating lease and consequently an amount of Rs.180 has been decapitalised during FY 2015-16 (Rs.75 as on 1 April 2015) and the corresponding amount recognised as Non-Financial Assets. There is no impact on total equity on account of this adjustment.

iv. Adjustment to Revenue recognition and consequential adjustment to Inventories, unbilled revenue, etc

Adjustment to revenue recognized under previous GAAP has been made on account of change in timing of revenue recognition, fair value criteria,etc as per requirements of Ind AS. Due to this additional revenue of Rs.1,962 has been recognised during FY 2015-16 with increase in corresponding expenses amounting to Rs.3,222 primarily due to onerous nature of the contracts in respect of which revenue is recognised. The net impact due to above adjustments resulted in decrease in profit by Rs.1,260 during FY 2015-16.

Retained earnings have gone down by Rs.948 as on 1 April 2015 due to adjustment relating to Revenue recognition. Consequential adjustments have been made to Inventory and corresponding Assets and Liabilities.

v. Provisions

As per requirements of Ind AS 37 provision has been created in respect of Site restoration obligation, onerous contracts and warranty expenses. This has lead to increase in provision amount by Rs.11,198 during FY 2015-16 ( Rs.13,976 as on 1 April 2015 ). Consequently the total equity as on 31 March 2016 has reduced by Rs.25,094 (Rs.13,976 as on 1 April 2015) and profit for the year ended 31 March 2016 by Rs.11,118.

vi. Excise Duty

Under previous GAAP revenue from sale of products was presented net of excise duty on sales. Under Ind AS, revenue from sale of goods is presented inclusive of excise duty. The excise duty paid is presented in Statement of Profit and Loss as an expense. This change has resulted in an increase in revenue from operations and expenses for FY 2015-16 by Rs.36,751. This change in presentation has no impact on profit.

vii. Remeasurement of Post employment benefit obligations

Under Ind AS, remeasurements of Employee benefit obligations i.e., actuarial gains and losses are recognised in Other comprehensive income (OCI). Under previous GAAP these were recognised in Statement of profit and loss. Consequently an amount of Rs.5,169 (before tax) has been reclassified from Employee benefit expenses to Other Comprehensive income during FY 2015-16. However, this has no impact on profit on 31 March 2016.

Additionally, an amount of Rs.1,072 representing excess of Plan assets over net defined liability has been recognised as an Asset under Ind AS during FY 2015-16 with credit of Rs.1,749 to Other Comprehensive Income and charge of Rs.677 to employee cost. This has resulted in increase in Total Comprehensive income by Rs.1,072 as on 31 March 2016.

viii. Fair value of Investments

In accordance with Ind AS, financial assets representing investment in equity shares of entities other than subsidiaries and associates have been designated as Fair Value through Other Comprehensive Income (FVOCI) as permitted by Ind AS 109. Under previous GAAP, this investment was carried at cost. The resulting fair value changes of this investment has been recognized in Equity investment through OCI reserve as at the date of transition and subsequently in Other Comprehensive Income for the year ended 31 March 2016. This has increased “Other Comprehensive Income (OCI)’’ and “Total equity” by Rs.1 as at 31 March 2016 ( Rs.Nil as on 1 April 2015).

ix. Fair valuation of Loan given to Subsidiary Company

Loan given to subsidiary company at below market rate of interest has been fair valued resulting in recognition of the differential amount of Rs.115 as Investment in the subsidiary as on 31 March 2016 with corresponding reduction in the carrying value of the Loan. Interest Income of Rs.32 has been recognised for the year 2015-16 with corresponding increase in the outstanding Loan amount on account of unwinding of discount value. This has resulted in increase in profit by Rs.32 for the year ended 31 March 2016.

x. Deferred Tax

Deferred tax adjustment has been made in respect of temporary differences arising on account of adjustments made consequent to transition to Ind AS. This has resulted in increase in value of deferred tax asset by Rs.3,855 as on 31 March 2016 and by Rs.4,989 as on 1 April 2015 with increase in Total equity by Rs.8,844 as on 31 March 2016 (Rs.4,989 on 1 April 2015) and Profit by Rs.3,855 as on 31 March 2016.

xi. Prior period error and omissions

As required under Ind AS, if errors and omissions relating to prior period are material they have to be adjusted by restating the Opening balances of Assets, Liabilities and equity for the earliest prior period presented. Accordingly prior period income of Rs.326 reported for the year 2015-16 under previous GAAP has been adjusted against Opening reserves as on 1 April 2015 with corresponding increase in Trade receivables. This has resulted in a decrease in Profit by Rs.326 for the FY 2015-16.

xii. Interest charged on temporary financial assistance to subsidiary company BELOP has been grossed up in 2015-16 by crediting interest income by Rs.304 and corresponding increase in material cost. This has no impact on retained earnings. In addition as on 1 April 2015 an amount of Rs.14 (Rs.9 for the year 2015-16) has been credited to opening reserve with corresponding increase in Inventory in respect of unused inventory. This has increased profit and opening reserve by corresponding amount respectively.

xiii. Government Grant

As per requirements of Ind AS, amount given by Government in the capacity of a Customer should be treated as Customer grant. Accordingly, an amount of Rs.398 has been reclassified from Government Grant to customer Grant as on 1 April 2015. This change in classification does not have any impact on profit or retained earnings.

xiv. Other Adjustments

Depreciation of Rs.333 has been charged to Property, Plant and equipment as on 31 March 2016 and an equivalent amount credited to Other Income (from Customer grant). An amount of Rs.148 for the FY 2015-16 (Rs.102 as on 1 April 2015) has been charged to Profit and Loss statement and Retained earnings respectively towards other consequential adjustments due to changes explained above.

An amount of Rs.33 has been treated as “Other Income” during FY 2015-16 with corresponding debit to employee cost due to Grossing up of amount adjusted against perks etc. This has no impact on profit for the year.

xv. Redesignation of Joint Venture as an Associate

Based on assessment of control criteria, on transition to Ind AS, Investment in Joint Venture has been identified as an associate. There is no impact on Financial Statements on account of this re-assessment.

xvi. Retained Earnings

Retained Earning as on 1 April 2015 and as on 31 March 2016 has been adjusted consequent to adjustments as explained.

xvii. Impact on Cash Flow

Cash flow has decreased by Rs.1,331 for the FY 2015-16 on transition to Ind AS.

xviii.Proposed Dividend

Under previous GAAP dividends proposed by the Board of Directors after the balance sheet date before the approval of the financial statements were considered as adjusting events. Accordingly, provision for proposed dividend was recognized as a liability. Under Ind AS such dividends are recognized when it is approved by the shareholders in the general meeting. Accordingly, the liability for proposed dividend and the dividend distribution tax thereon amounting to Rs.19,546 for the FY 2015-16 (Rs.22,338 as at 1 April 2015) has been reversed with corresponding adjustment to retained earnings. Consequently the total equity increased by an equivalent amount.


Mar 31, 2016

1) As per the requirement of Schedule III to the Companies Act, 2013, the Operating Cycle has been determined at Strategic Business Unit (SBU) / Unit level, as applicable.

2) The Company has changed the following accounting policies with effect from FY 2015-16

a) Fixed Assets, Capital Work in Progress and Intangible Assets Under Development (Policy No. 4)

b) Depreciation / Amortisation (Policy No 5).

c) Research & Development Expenditure (Policy No 7) .

d) Technical Know-How (Policy No 17).

The above accounting policies have been changed for specifying the policy for recognition of internally generated

Intangible Assets and related issues.

The financial impact of the change in above accounting policies is as follows :

a) Decrease in expenditure by Rs. 18653.00

b) Increase in "Intangible Assets under Development" by Rs. 9546.40

c) Increase in Inventory (WIP) by Rs. 9106.60

3) The Company has analysed indications of impairment of assets of each geographical composite manufacturing unit considered as Cash Generating Units (CGU). On the basis of assessment of internal and external factors, none of the Unit has found indications of Impairment of its Assets and hence no provision is considered necessary.

4) a) The Company has been sanctioned working capital limit of Rs. 290,000 by Consortium Bankers (SBI Lead Bank). The sanctioned limit includes a sub limit of Rs. 20,000 of fund based limit (interchangable with non fund based LC limits).

b) The interest rate payable on fund based limit is linked to SBI Base Rate plus 0.25%. (Interest rate payable as on 31.03.2016 is 9.55% p.a.).

c) The amount utilised is repayable on demand. Utilisation as on 31.03.2016 is NIL ( NIL).

d) The above sanction limit is secured by hypothecation of Inventories and Trade Receivables.

5) The Company being a Defence manufacturing company, has been granted exemption by Ministry of Corporate Affairs vide Notification No:2437 (E) dated 04 September 2015 from the following 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) under section 129(6) of the Companies Act, 2013 in view of the sensitive nature of the information. Accordingly, the following details under Para 5 of Part II to Schedule III of the Companies Act, 2013 are not disclosed :

6) Letters requesting confirmation of balances have been sent in respect of Trade Receivables, Trade Payables, Advances and Deposits. Wherever replies have been received, reconciliation is under process and provisions / adjustments will be made wherever considered necessary.

7) In respect of Labour matters, as the matters are yet to be adjudicated, the liability, if any, is not ascertainable. However, such liability is not expected to be material.

8) (a) "Excise Duty" which is paid during the year in respect of turnover is shown as a deduction from Turnover (Gross) in the Statement of Profit and Loss . "Excise Duty - Others" which is included in Note No. 27 - "Other Expenses" represents incremental provision of Excise Duty on Finished Goods, Excise Duty paid on Sale of Scrap and Others.

(b) Consequent to issue of Notification no. 23/2015 dated 30.04.2015, certain category of Defence Sales have been become excisable with effect from 01.06.2015, leading to increase in excise duty levied as compared to previous year.

9) Ministry of Corporate Affairs has vide Notification no. 463 (E) dated 5 June 2015 exempted the Companies engaged in Defence Productions from the requirement of Segment Reporting.

10) The Value of Retention Sales (i.e., Goods retained with the Company at the Customers'' request and at their risk) included in Gross Turnover during the year is Rs. 52,147.40 (Rs. 1,01,116.92).

11) Related Party Disclosure :

(a) The related parties and their relationship with the Company are as under :

- Subsidiary Companies:

BEL Optronic Devices Ltd.(BELOP) - Equity Holding 100% (w.e.f. 30.07.2015); and BEL-THALES Systems Ltd. - Equity Holding 74.00%;

- Joint Venture Companies :

GE BE Private Ltd. - Equity Holding 26.00%;

BEL Multitone Private Ltd has been dissolved with effect from 15.09.2015 [Refer note no 31 (17)].

(b) (i) The amount of Rs. 15,624.00 received by the Company from MoD, upto 31.03.2013, on behalf of BELOP (out of total receivable of Rs. 26,040.00) towards funding of ToT cost of XD-4 II Tubes, being acquired by BELOP (Subsidiary) from PHOTONIS France S.A.S., has been passed on to BELOP as on 31.03.2014.

(ii) The Company has entered into an Agreement with BELOP in April, 2013 to temporarily fund the amount of Rs. 10,416.00 (Rs. 26,040.00 less Rs. 15,624.00) for enabling BELOP to make payment towards ToT for XD-4 II Tubes, pending receipt of balance amount from MoD. As on 31.03.2016, an amount Rs. 9,357.13 (Rs. 9357.13) has been paid to BELOP, out of which an amount of Rs. 6400.63 (Rs. 6,176.69) has been received from MoD. The balance amount ofRs. 2956.49 (Rs. 3180.44) has been shown under Other Non-Current Assets (Refer Note 16).

As per the Agreement, an amount of Rs. 304.40 (Rs. 280.48) has been recovered during the financial year from BELOP towards the cost of funds in the form of Price Reduction.

(c) Consequent to acquisition of 1,32,000 equity share held by Specified Undertaking of Unit Trust of India on 30 July 2015, BELOP has become 100 % Subsidiary of the BEL.

(d) The Company has entered into a agreement with BELOP in July 2015 to temporarily fund its Working Capital requirement to the maximum extent of Rs. 5000 which has been fully disbursed as on 31.03.2016. As per the terms and conditions : (i) The principal amount will be repaid in 12 equal installments with effects from April, 2016.

(ii) Interest will be charged on the outstanding loan amount, on monthly basis, at BEL''s rate of yield on its deposits.

(e) Management Contracts including deputation of Employees :

One Official of BEL has been deputed to BELOP (Subsidiary) and Five Officials have been deputed to BEL-THALES Systems Limited (Subsidiary) and their Salary and Other Costs is paid by BELOP and BEL-THALES respectively during the year as per terms and conditions of employment.

(f) The key management personnel & their remuneration details are as follows :

The total salary including other benefits drawn by the key management personnel during the year 2015-16 is Rs. 348.61 (Rs. 305.52) as detailed below :

12) The Honorable Karnataka High Court vide its Order no OLR 19/2015 dated 6 November 2015 has passed its final order stating that the BEL Multitone Private Ltd be dissolved with effect from 15.09.2015.

13) Pursuant to the announcement of the ICAI requiring the disclosure of "Foreign Exchange Exposure", the major currency- wise exposure as on 31 March 2016 is given below. (Previous year figures are shown in brackets).

14) Chennai Unit was affected by floods during December 2015. Insurance policy taken by the company with United India Insurance Company Limited covers flood related losses. Settlement of claims by the Insurance Company is under process. The above incident has no material impact on the operation of Unit/Company. Also Refer Note no.28.

15) Disclosure relating to CSR Expenditure

a) Gross amount required to be spent by the Company during the FY 2015-16 is Rs. 2522.94 (Rs. 2303.93)

b) Amount spent during the FY 2015-16 :

16) Previous year''s figures have been regrouped/reclassified wherever necessary. Figures in brackets relate to Previous Year.


Mar 31, 2015

1. LONG TERM PROVISIONS

i. The amount of Liability on long term compensated absences has been bifurcated between current and non current based on the report of Actuary.

ii. As per the provisions of Accounting Standard 15 (R), the following information is disclosed in respect of Long Term Compensated Absences :

The Company has a Long Term Compensated Absence Scheme for its employees, which is a Non-Funded Scheme. The employees of the Company are entitled to two types of Long Term Compensated Absences : Annual Leave (AL) & Half Pay Leave (HL) in case of Executives and Annual Leave (AL) & Sick Leave (SL) in case of Non-Executives . The Scheme provides compensation to employees against the unavailed Leave (AL & HL in case of Executives and AL & SL in case of Non-Executives) on attaining the age of superannuation, VRS, or death. AL can also be encashed during service or at the time of resignation.

iii. As per the provisions of Accounting Standard 15 (R), the following information is disclosed in respect of BERECHS :

The Company has a contributory health scheme for its retired employees "BEL Retired Employees' Contributory Health Scheme" (BERECHS), which is a non-funded scheme. The primary objective of the scheme is to provide medical facilities to employees retiring on attaining the age of superannuation, or on VRS. Benefits under the Scheme shall be available to the employees who become members and their spouses only. The Company takes insurance cover for inpatient treatment. In addition to the annual insurance premium, the Company bears 60% of the medicine cost and 75% of the cost of diagnostic tests for outpatient treatment and for the treatment of specified diseases, the Company bears the full cost of treatment, over and above the insurance coverage.

iv. During the year the Company has recognised an amount of Rs. 7,108.13 (Rs. 6,743.35) towards contribution to Employees Provident Fund and Pension Schemes in the Statement of Profit and Loss. The Guidance on Implementing AS 15 (Revised) issued by the Institute of Chartered Accountants of India states that provident funds setup by employers that guarantee a specified rate of return and which require interest shortfalls to be met by the employer would be defined benefit plans in accordance with the requirements of paragraph 26(b) of AS 15(R) and actuarially valued.

Pursuant to the Guidance Note, the Company has determined on the basis of Actuarial Valuation carried out as at 31 March 2015, that there is no liability towards the interest shortfall on valuation date under para 55 and 59 of AS 15 (R) (having regard to terms of plan that there is no compulsion on the part of the Trust to distribute any part of the surplus, if any, by way of additional interest on PF balances).

2. Gratuity Scheme

As per the provisions of Accounting Standard 15 (R), the following information is disclosed in respect of Gratuity :

The Company has a Gratuity Scheme for its employees, which is a funded plan. Every year, the Company remits funds to the Gratuity Trust to the extent of shortfall of the assets over the fund obligations, which is determined through actuarial valuation. As per the Gratuity Scheme, gratuity is payable to an employee on the cessation of his employment after he has rendered continuous service for not less than five years in the Company. For every completed year of service or part thereof in excess of six months, the Company shall pay gratuity to an employee at the rate of fifteen days salary based on the last drawn basic & dearness allowance.

3. Best Estimate of Contribution to be paid

The best estimate of contribution to be paid towards Gratuity during the annual period beginning after the Balance Sheet is Rs. 1,947.52 (Rs. Nil). In case of Provident Fund, there is no actuarial liability assessed for shortfall in interest as at the year end.

4. For BERECHS & Long Term Compensated Absences, Refer Note 5 for disclosure details.

i) Raw Materials and Components include Rs. 5,334.61 (Rs. 4,176.12) being materials with sub-contractors, out of which Rs. 56.55 (Rs. 50.47) of materials is subject to confirmation and reconciliation. Against Rs. 56.55 (Rs. 50.47), an amount of Rs. 49.46 (Rs. 35.58) has been provided for. The impact, if any, on consequent adjustment for the balance amount is considered not material.

ii) Stock verification discrepancies for the year are as follows :

Shortages of Rs. 163.54 (Rs. 114.26) and surplus of Rs. 126.15 (Rs. 71.01). Pending reconciliation, an amount of Rs. 66.10 (Rs. 56.47) has been provided for.

iii) Valuation of Inventories has been made as per Company's Accounting Policy. (Refer Accounting Policy 10).

iv) a. The United Nations Climate Change Secretariat has granted 15,856 (15,856) TON CO2EQ Carbon Credit for the 2.5MW BEL Grid Connected Wind Power Project at Davangere District, Karnataka for the verification period from 05.11.2007 to 31.03.2012. The carbon Credits are included under Finished Goods at a value of Rs. 1.90 (Rs. 1.90). The CER is valued at cost as required by Guidance Note on CER issued by ICAI. b. CER under Certification : Nil (Nil) CERs.

5. GENERAL NOTES TO ACCOUNTS

1) As per the requirement of Schedule III to the Companies Act, 2013, the Operating Cycle has been determined at Strategic Business Unit (SBU) / Unit level, as applicable.

2) The Company has changed the following Accounting Policies with effect from FY 2014-15 :

A) Basis of Accounting (Policy No. 1) - to take cognizance of the Companies Act, 2013.

B) Revenue Recognition (Policy No. 3) - to bring clarity on Accounting Policy relating to recognition of Service Income.

C) Depreciation / Amortisation (Policy No. 5) - to take cognizance of Schedule II to the Companies Act, 2013.

The financial impact of the change in above Accounting Policies during the Financial Year is as follows :

NIL in respect of A & B above and reduction in expenditure by Rs. 145.29 in respect of C above.

3) The Company has analysed indications of impairment of assets of each geographical composite manufacturing unit considered as Cash Generating Units (CGU). On the basis of assessment of internal and external factors, none of the Unit has found indications of Impairment of its Assets and hence no provision is considered necessary.

4) A) The Company has been sanctioned working capital limit of Rs. 290,000 by Consortium Bankers (SBI Lead Bank). The sanctioned limit includes a sub limit of Rs. 20,000 of fund based limit (interchangable with non fund based LC limits).

B) The interest rate payable on fund based limit is linked to SBI Base Rate plus 0.40%. (Interest rate payable as on 31 March 2015 is 10.40% p.a.).

C) The amount utilised is repayable on demand. Utilisation as on 31 March 2015 is NIL ( NIL).

D) The above sanction limit is secured by hypothecation of Inventories and Trade Receivables.

6. Contingent Liabilities :

Particulars 2014 - 15 2013 - 14

Claims not acknowledged as debts 17,681.39 17,930.62

Outstanding Letters of Credit 31,648.37 29,146.53

Others 523.35 560.65

Provisional Liquidated Damages upto 31 March on unexecuted customer orders 10,954.67 15,736.49 where the delivery date has expired Company has offered MTNL to get the Convergent Billing Project completed on BEL's risk and cost basis. Liability of the Company in this regard is not ascertain- able at this stage.

7. Letters requesting confirmation of balances have been sent in respect of Trade Receivables, Trade Payables, Advances and Deposits. Wherever replies have been received, reconciliation is under process and provisions / adjustments will be made wherever considered necessary.

8. In respect of Labour matters, as the matters are yet to be adjudicated, the liability, if any, is not ascertainable. However, such liability is not expected to be material.

9. "Excise Duty" which is paid during the year in respect of turnover is shown as a deduction from Turnover (Gross) in the Statement of Profit and Loss. "Excise Duty - Others" which is included in Note No. 27 - "Other Expenses" represents in- cremental provision of Excise Duty on Finished Goods, Excise Duty paid on Sale of Scrap and Others.

10. Electronic products primarily to Defence Services and hence, it would not be in public interest for the Company to present segment information. For similar reasons, the Company is being granted exemption from publication in the Annual Accounts, certain disclosures (Refer Note 30(6)). The SEBI has also granted exemption, for these reasons, to the Company from publication of segment information required under Accounting Standard 17 (AS 17) in quarterly unaudited financial results. Hence, Segment information required under AS 17 is not disclosed. Such non disclosure has no financial effect.

11. The Value of Retention Sales (i.e., Goods retained with the Company at the Customers' request and at their risk) included in Gross Turnover during the year is Rs. 1,01,116.92 (Rs. 42,539.00).

12. Related Party Disclosure :

(a) The related parties and their relationship with the Company are as under :

* Subsidiary Company viz.,

BEL Optronic Devices Ltd. - Equity Holding 92.79%; and BEL-THALES Systems Ltd. - Equity Holding 74.00%;

* Joint Venture Companies :

GE BE Private Ltd. - Equity Holding 26.00%; and BEL Multitone Private Ltd. - Equity Holding 49.00% *

(b) (i) The amount of Rs. 15,624.00 received by the Company from MoD, upto 31.03.2013, on behalf of BELOP (out of total receivable of Rs. 26,040.00) towards funding of ToT cost of XD-4 II Tubes, being acquired by BELOP (Subsidiary) from PHOTONIS France S.A.S., has been passed on to BELOP as on 31.03.2014.

(ii) The Company has entered into an Agreement with BELOP in April, 2013 to temporarily fund the amount of Rs. 10,416.00 (Rs. 26,040.00 less Rs. 15,624.00) for enabling BELOP to make payment towards ToT for XD-4 II Tubes, pending receipt of balance amount from MoD. As on 31 March 2015, an amount Rs. 9,357.13 (Rs. 8,404.88) has been paid to BELOP, out of which an amount of Rs. 6,176.69 (Rs. 6,176.69) has been received from MoD. The balance amount of Rs. 3,180.44 (Rs. 2,228.19) has been shown under Other Non-Current Assets (Refer Note 16).

As per the Agreement, an amount of Rs. 280.48 (PY Rs. 198.62) has been recovered during the financial year from BELOP towards the cost of funds in the form of Price Reduction.

(c) Management Contracts including deputation of Employees :

One Official of BEL has been deputed to BEL Optronic Devices Ltd (Subsidiary) and Four Officials have been deputed to BEL-THALES Systems Limited (Subsidiary) and their Salary and Other Costs is paid by BELOP and BEL-THALES respectively during the year as per terms and conditions of employment.

13. BEL Multitone Pvt. Ltd. (Joint Venture Company) was under liquidation consequent to Special Resolution passed by its Members on 25.11.2013 for Members' Voluntary winding up. As on 31 March 2015, all the assets of the Company have been disposed off and all dues settled. Approval for closure of winding up procedure has been accorded by its Members at General Meeting held on 31 March 2015. The liquidator has sent the report to Registrar of Companies & Official Liquidator for issuance of winding up order.

14. Previous year's figures have been regrouped/reclassified wherever necessary. Figures in brackets relate to Previous Year.


Mar 31, 2014

NOTE - 1

LONG TERM PROVISIONS

ii. The amount of Liability on long term compensated absences has been bifurcated between current and non current based on the report of Actuary.

iii. As per the provisions of Accounting Standard 15 (R), the following information is disclosed in respect of Long Term Compensated Absence:

The Company has a Long Term Compensated Absence Scheme for its employees, which is a Non-Funded Scheme. The employees of the Company are entitled to two types of Long Term Compensated Absences: Annual Leave (AL) & Half Pay Leave (HL) in case of Executives and Annual Leave (AL) & Sick Leave (SL) in case of Non-Executives . The Scheme provides for compensation to employees against the unavailed Leave (AL & HL in case of Executives and AL & SL in case of Non-Executives) on attaining the age of superannuation, VRS, or death. AL can also be encashed during service or at the time of resignation.

The following table summarises the components of net benefit expense recognised in the Statement of Profit & Loss and amount recognised in the Balance Sheet for the plan as furnished in the disclosure Report provided by the Actuary:

v. As per the provisions of Accounting Standard 15 (R), the following information is disclosed in respect of BERECHS :

The Company has a contributory health scheme for its retired employees "BEL Retired Employees'' Contributory Health Scheme" (BERECHS), which is a non-funded scheme. The primary objective of the scheme is to provide medical facilities to employees retiring on attaining the age of superannuation, or on VRS. Benefits under the Scheme shall be available to the employees who become members and their spouses only. The Company takes insurance cover for inpatient treatment. In addition to the annual insurance premium, the Company bears 60% of the medicine cost and 75% of the cost of diagnostic tests for outpatient treatment and for the treatment of specified diseases, the Company bears the full cost of treatment, over and above the insurance coverage.

The following table summarise the components of net benefit expense recognised in the Statement of Profit and Loss and the funded status and amounts recognised in the Balance Sheet for the plan as furnished in the disclosure report provided by the Actuary:

iii. Pension Scheme

Pension Scheme has been introduced for Executives (including TC Personnel) with effect from 01.01.2007 subsequent to receipt of approval for the Scheme from MoD. The Company has set up a Trust under the name of "Bharat Electronics Limited Superannuation (Pension) Trust" to administer the Scheme. Against a provision of Rs. 11,807.01 as on 31.03.2013, an amount of Rs. 9,298.83 has been ascertained as payable to the Trust for the period from 01.01.2007 to 31.03.2013. The balance amount of Rs. 2,508.18 has been withdrawn/adjusted during the FY 2013-14. Amount of Rs. 10,617.92 (including contribution of Rs. 2,403.45 for FY 2013-14) has been remitted to the Trust during FY 2013-14. The outstanding liability of Rs. 1,134.75 represents Rs. 1,122.17 in respect of contribution to be made towards Retired Executives and Rs. 12.58 in respect of Existing Executives is shown under Other Current Liabilities.

iv. Gratuity Scheme

As per the provisions of Accounting Standard 15 (R), the following information is disclosed in respect of Gratuity:

"The Company has a Gratuity Scheme for its employees, which is a funded plan. Every year, the Company remits funds to the Gratuity Trust to the extent of shortfall of the assets over the fund obligations, which is determined through actuarial valuation. As per the Gratuity Scheme, gratuity is payable to an employee on the cessation of his employment after he has rendered continuous service for not less than 5 (five) years in the Company. For every completed year of service or part thereof in excess of six months, the Company shall pay gratuity to an employee at the rate of 15 (fifteen) days salary based on the last drawn basic & dearness allowance. The following table summarise the components of net benefit expense recognised in the Statement of Profit and Loss and the funded status and amounts recognised in the Balance Sheet for the plan as furnished in the Disclosure Report provided by the actuary:"

v. Experience adjustments for funded schemes

The disclosure with respect to paragraph 120 (n) of AS-15(R) towards experience adjustments are being made for funded schemes viz., Gratuity. [As long term compensated absence and BERECHS are not funded, such disclosure is not required].

vi. Best Estimate of Contribution to be paid

The best estimate of contribution to be paid towards Gratuity during the annual period beginning after the Balance Sheet is Rs. Nil (Rs. 2,196.45). In case of Provident Fund, there is no actuarial liability assessed for shortfall in interest as at year end.

vii. For BERECHS & Long Term Compensated Absence, Refer Note 5 for disclosure details.

FIXED ASSETS-TANGIBLE

i) a) In respect of Freehold Land pertaining to Machilipatnam Unit admeasuring 0.516 acres valuing Rs. 3.75 (0.516 acres valuing Rs. 3.75), execution of title/sale Deed by the appropriate authorities is pending. Pending finalisation of formal deeds, no provision towards registration and other costs have been made.

b) Deeds containing the terms of transfer / grant of land from State Governments / State Undertakings have not been finalised in respect of 86.78 acres valuing Rs. 181.63 (86.78 acres valuing Rs. 181.63) pertaining to Panchkula Unit. Out of this, title in respect of land measuring 0.300 acres (0.962 acres) is under litigation. Pending finalisation of formal deeds, no provision towards registration and other costs have been made.

c) Pending execution of title/sale deeds and handing over of physical possession of land allotted to BEL Hyderabad Unit by Andhra Pradesh Industrial Infrastructure Corporation (APIIC) in respect of land admeasuring 5.60 acres (5.60 acres) in Mallapur, Hyderabad and the matter being under litigation, no provision towards registration and other cost has been made in the books of accounts. Cost of land paid to APIIC amounting to Rs. 65.12 (Rs. 65.12) is included in Long Term Loans & Advances.

d) Based on the Memorandum of Understanding reached with the Defence authorities, expenditure on civil works was incurred on land allotted to BEL for setting up of the Hyderabad Unit. Pending finalisation of the terms and conditions by the appropriate authorities, the cost of land measuring 25.11 acres (25.11 acres) has not been accounted in the books of accounts.

e) Land acquired free of cost from the Government in some units has been accounted at a notional value by corresponding credit to Capital Reserve.

f) The Company has installed Windmill Generator at two locations. The leasehold land of the Windmill Generator-I is capitalised in the year 2007-08 at the nominal value of Rs. 5 (Five Rupees only) as the upfront lease cost is Nil. The leasehold land of Windmill Generator-II is capitalised in the year 2007-08 at the cost of Rs. 114. In both the cases, the Lease Agreement for the land is pending finalisation.

g) Freehold land of Pune Unit measuring 1.10 acres (Cost Rs. 0.56) is handed over to Pimpri-Chinchwad Municipal Corporation during the FY 2013-14 for the purpose of road widening. Compensation of Rs. 434.69 has been received in FY 2012-13 based on the rates fixed by Moolya Nirdharan Suchi of Government of Maharashtra.

h) Approval for extension of lease period from DRDO in respect of Land admeasuring 26.994 acres (Pune Unit) is under process.

ii) a) In pursuance of the Companies (Amendment) Act, 1988 and Schedule XIV thereof, increased rates of depreciation on straight line method in accordance with the Schedule XIV have been adopted wherever required, only on additions on or after 01.04.1987.

b) Wherever the rates of depreciation applied prior to 01.04.1987 are higher than the rates specified in Schedule XIV to the Companies Act, 1956, they have been continued. However, additions forming part of existing machines are depreciated on the same basis as the original machines.

c) Depreciation for multiple shifts is charged on block of assets for the full year.

NOTE - 30

GENERAL NOTES TO ACCOUNTS

1) As per the requirement of Schedule VI to the Companies Act, 1956, the Operating Cycle Period has been determined at individual contract level.

2) The Company has changed the following Accounting Policies with effect from FY 2013-14:

A) Basis of Accounting (Policy No. 1) - to take cognizance of the Companies Act, 2013 (to the extent applicable)

B) Foreign Currency Transactions (Policy No. 14) - to take cognizance of the Foreign Exchange Risk Management Policy which has been introduced with effect from FY 2013-14.

C) Employee Benefits (Policy No. 15) - to take cognizance of introduction of Half Pay Leave in respect of Executives. The financial impact of the change in above Accounting Policies during the Financial Year is as follows: NIL in respect of A & B above and an additional expenditure of Rs. 1,123.90 in respect of C above.

3) The Company has analysed indications of impairment of assets of each geographical composite manufacturing unit considered as Cash Generating Units (CGU). On the basis of assessment of internal and external factors, none of the Unit has found indications of Impairment of its Assets and hence no provision is considered necessary.

4) A) The Company has been sanctioned working capital limit of Rs. 290,000 by Consortium Bankers (SBI Lead Bank). The sanctioned limit includes a sub limit of Rs. 20,000 of fund based limit (interchangeable with non fund based LC limits).

B) The interest rate payable on fund based limit is linked to SBI Base Rate plus 0.40%. (Interest rate payable as on 31.03.2014 is 10.40% p.a.).

C) The amount utilised is repayable on demand. Utilisation as on 31.03.2014 is NIL (NIL).

D) The above sanction limit is secured by hypothecation of Inventories and Trade Receivables.

5) Contingent Liabilities:

Particulars 2013 - 14 2012 - 13

Claims not acknowledged as debts 17,930.62 19,111.76

Outstanding Letters of Credit 29,146.53 22,838.78

Others 560.65 1,093.66

Provisional Liquidated Damages upto 31 March on unexecuted customer orders where 15,736.49 11,152.96 the delivery date has expired

Company has offered MTNL to get the Convergent Billing Project completed on BEL''s risk and cost basis. Liability of the Company in this regard is not ascertainable at this stage.

6) Letters requesting confirmation of balances have been sent in respect of Trade Receivables, Trade Payables, Advances and Deposits. Wherever replies have been received, reconciliation is under process and provisions / adjustments will be made wherever considered necessary.

7) In respect of Labour matters, as the matters are yet to be adjudicated, the liability, if any, is not ascertainable. However, such liability is not expected to be material.

8) "Excise Duty" which is paid during the year in respect of turnover is shown as a deduction from Turnover (Gross) in the State- ment of Profit and Loss . "Excise Duty - Others" which is included in Note No. 27 - "Other Expenses" represents incremental provision of Excise Duty on Finished Goods, Excise Duty paid on Sale of Scrap and Others.

9) The Company is engaged in manufacture and supply of strategic electronic products primarily to Defence Services and hence, it would not be in public interest for the Company to present segment information. For similar reasons, the Company has been granted exemption from publication in the Annual Accounts, the quantitative particulars required under Schedule VI to the Companies Act, 1956. The SEBI has also granted exemption, for these reasons, to the Company from publication of segment information required under Accounting Standard 17 (AS 17) in quarterly unaudited financial results. Hence, Segment information required under AS 17 is not disclosed. Such non disclosure has no financial effect.

10) The Value of Retention Sales (i.e., Goods retained with the Company at the Customers'' request and at their risk) included in Gross Turnover during the year is Rs. 42,539.00 (Rs. 9,073.00).

11) Related Party Disclosure:

(a) The related parties and their relationship with the Company are as under:

- Subsidiary Company viz., BEL Optronic Devices Ltd. (Equity Holding 92.79%) ;

- Joint Venture Companies :

GE BE Private Ltd. (Equity Holding 26%); and BEL Multitone Private Ltd. (Equity Holding 49%)

(b) (i) The amount of Rs. 15,624.00 received by the Company from MoD, upto 31.03.2013, on behalf of BELOP (out of total receivable ofRs. 26,040.00) towards funding of ToT cost of XD-4 II Tubes, being acquired by BELOP (Subsidiary) from PHOTONIS France S.A.S., has been passed on to BELOP as on 31.03.2014.

(ii) The Company has entered into an Agreement with BELOP in April, 2013 to temporarily fund the amount of Rs. 10,416.00 (Rs. 26,040.00 less Rs. 15,624.00) for enabling BELOP to make payment towards ToT for XD-4 II Tubes, pending receipt of balance amount from MoD. As on 31.03.2014, an amount Rs. 8,404.88 has been paid to BELOP, out of which an amount of Rs. 6,176.69 has been received from MoD. The balance amount of Rs. 2,228.19 has been shown under Other Non-Current Assets (Refer Note 16). As per the Agreement, an amount of Rs. 198.62 has been recovered from BELOP towards the cost of funds in the form of Price Reduction during the FY 2013-14.

(c) Management Contracts including deputation of Employees :-

Two Officials of BEL have been deputed to BEL Optronic Devices Ltd. (Subsidiary) and their Salary and Other Costs is paid by BELOP during the year as per terms and conditions of employment.

12) BEL Multitone Pvt. Ltd. (Joint Venture Company) is under liquidation consequent to Special Resolution passed by its Members on 25.11.2013 for Members'' Voluntary winding up.

13) Previous year''s figures have been regrouped / reclassified wherever necessary. Figures in brackets relate to previous year.


Mar 31, 2013

1) The Operating Cycle Period, as per Revised Schedule VI requirement has been determined at individual contract level.

2) The Company has analysed indications of impairment of assets of each geographical composite manufacturing unit considered as Cash Generating Units (CGU). On the basis of assessment of internal and external factors, none of the Unit has found indications of Impairment of its Assets and hence no provision is considered necessary.

3) a) The Company has been sanctioned working capital limit of Rs. 1,80,000 by Consortium Bankers (SBI Lead Bank). The sanctioned limit includes a sub limit of Rs. 20,000 of fund based limit (interchangeable with non fund based LC limits).

b) The interest rate payable on fund based limit is linked to SBI Base Rate plus 1%. (Interest rate payable as on 31.03.2013 is 10.70% p.a.).

c) The amount utilised is re-payable on demand. Utilisation as on 31.03.2013 is NIL ( NIL).

d) The above sanction limit is secured by hypothecation of Inventories and Trade Receivables.

4) Letters requesting confirmation of balances have been sent in respect of Trade Receivables, Trade Payables, Advances and Deposits. Wherever replies have been received, reconciliation is under process and provisions / adjustments will be made wherever considered necessary.

5) Liability, if any, in respect of labour matters under dispute before various judicial authorities is not ascertainable, but is expected to be not material.

6) "Excise Duty" which is paid during the year in respect of turnover is shown as a deduction from turnover (Gross) in the Statement of Profit and Loss. "Excise Duty - Others" which is included in Note No. 28 - "Other Expenses" represents incremental provision of Excise Duty on Finished Goods, Excise Duty on Sale of Scrap, etc.

7) The Company is engaged in manufacture and supply of strategic electronic products primarily to Defence Services and hence, it would not be in public interest for the Company to present segment information. For similar reasons, the Company has been granted exemption from publication in the Annual Accounts, the quantitative particulars required under Schedule VI to the Companies Act, 1956. The SEBI has also granted exemption, for these reasons, to the Company from publication of segment information required under Accounting Standard 17 (AS 17) in quarterly unaudited financial results. Hence Segment information required under Accounting Standard 17 (AS 17) is not disclosed. Such non-disclosure has no financial effect.

8) Trade Receivables as on 31.03.2013 includes Rs. 14,595.66 (P.Y. Rs. 14,615.13) which has not been billed to MTNL pending completion of installation and commissioning activity in respect of Convergent Billing Project.

9) Related Party Disclosure:

(a) The related parties and their relationship with the Company are as under:

- Subsidiary Company viz., BEL Optronic Devices Ltd. (Equity Holding 92.79%);

- Joint Venture Companies:

GE BE Private Ltd. (Equity Holding 26%); and BEL Multitone Private Ltd. (Equity Holding 49%)

(b) During the Financial Year 2012-13, BEL has received an amount of Rs. 15624.00 from MoD, on behalf of BEL Optronic Devices Ltd (Subsidiary), towards funding of ToT cost of XD-4 II Tubes being acquired by BEL Optronic Devices Ltd (Subsidiary) from PHOTONIS France S.A.S. Out of the above, an amount of Rs. 15489.00 has been passed on to BELOP during the F.Y. 2012-13.

(c) Management Contracts including deputation of Employees:-

One Official (Manager) of BEL has been deputed to BEL Optronic Devices Ltd (Subsidiary) and his salary, etc. is paid by BELOP during the year as per terms and conditions of employment.

(d) The key management personnel & their remuneration details are as follows:

The total salary including other benefits drawn by the key management personnel as detailed below during the year 2012-13 is Rs. 238.62 (Rs. 267.55 ) as detailed below:

10) Previous year''s figures have been regrouped / reclassified wherever necessary. Figures in brackets relate to previous year.


Mar 31, 2012

1) The operating cycle period, as per Revised Schedule VI requirement has been determined at individual contract level.

2) The Company has made modifications to the following Accounting Policies with effect from 2011 - 12 and onwards mainly to incorporate the change in terminologies and regrouping requirements under Revised Schedule VI as compared to Pre - revised Schedule VI.

a) Fixed Assets, Capital Work in Progress and Intangible Assets under development [previously "Fixed Assets, Capital Work in Progress] (Policy No. 4)

b) Research & Development Expenditure (Policy No. 7)

c) Government Grants (Policy No. 8)

d) Investments (Policy No. 9)

e) Trade Receivables and Other Receivables [previously "Sundry Debtors"] (Policy No. 11)

f) Income Tax (Policy No. 12)

g) Foreign Currency Transactions (Policy No. 14)

h) Technical Know How (Policy No. 17)

All the above modifications have no impact on profit for the year nor are they expected to have a material effect in later years.

3) a) The Company has been sanctioned working capital limit of Rs. 1,80,000 by Consortium Bankers (SBI Lead Bank). The sanctioned limit includes a sub limit of Rs. 20,000 of fund based limit (interchangeable with non fund based LC limits).

b) The interest rate payable on fund based limit is linked to SBI Base Rate plus 1%. (Interest rate payable as on 31.03.2012 is 11% p.a.).

c) The amount utilised is re-payable on demand. Utilisation as on 31.03.2012 is NIL ( NIL)

d) The above sanction limit is secured by hypothecation of Inventories and Trade Receivables.

4) Letters requesting confirmation of balances have been sent in respect of Trade Receivables, Trade Payables, Advances and Deposits. Wherever replies have been received, reconciliation has been done and provisions / adjustments have been made wherever considered necessary.

5) Liability, if any, in respect of labour matters under dispute before various judicial authorities is not ascertainable, but is expected to be not material.

6) "Excise Duty" which is paid during the year in respect of turnover is shown as a deduction from turnover (Gross) in the Statement of Profit and Loss. "Excise Duty - Others" which is included in Note No. 28 - "Other Expenses" represents incremental provision of Excise Duty on Finished Goods, Excise Duty on Sale of Scrap, etc.

7) The Company is engaged in manufacture and supply of strategic electronic products primarily to Defence Services and hence, it would not be in public interest for the Company to present segment information. For similar reasons, the Company has been granted exemption from publication in the annual accounts, the quantitative particulars required under Schedule VI to the Companies Act, 1956. The SEBI has also granted exemption, for these reasons, to the Company from publication of segment information required under Accounting Standard 17 (AS 17) in quarterly unaudited financial results. Hence Segment information required under Accounting Standard 17 (AS 17) is not disclosed. Such non-disclosure has no financial effect.

8) Trade Receivables as on 31.03.2012 includes Rs. 14,615 which has not been billed to MTNL pending completion of installation and commissioning activity in respect of Convergent Billing Project.

9) Related Party Disclosure :

(a) The related parties and their relationship with the Company are as under :

- Subsidiary Company viz., BEL Optronic Devices Ltd., (Equity Holding 92.79% );

- Joint Venture Companies:

GE BE Private Ltd., (Equity Holding 26% ); and BEL Multitone Private Ltd., (Equity Holding 49% )

(b) Management Contracts including deputation of Employees : Two Officials (Managers) of BEL have been deputed to BELOP (Subsidiary) and their salary, etc., is paid by BELOP during the year as per terms and conditions of employment. As on 31 March 2012, One Official (Manager) is on deputation with BELOP.

10) The Company has prepared these financial statements as per the format prescribed by Revised Schedule VI to the Companies Act, 1956 issued by Ministry of Corporate Affairs. Previous year's figures have been regrouped / reclassified to conform to the classification required by the Revised Schedule VI. Previous year's figures have also been regrouped / reclassified wherever otherwise considered necessary. Figures in brackets relate to previous year.


Mar 31, 2011

1. Estimated amount of contracts remaining to be executed on Capital Account and not provided for amounts to Rs. 15,438.01 (Rs. 11,524.66).

2. "The MCA vide its Notification No. S.O. 301(E) dated 08.02.2011 has exempted companies producing "Defence Equipments" from compliance with the following provisions contained in Part II of Schedule VI to the Companies Act, 1956, as amended" :

Paragraph Particulars

3(i)a Details regarding sales in respect of each class of goods with quantities thereof.

3(ii)(a)(1) Value of raw materials consumed giving item- wise break-up & quantities thereof.

3(ii)(a)(2) Opening and closing stock of goods produced giving break up in respect of each class of goods with quantities thereof.

3(ii)(d) Value of Opening and Closing stock of goods, purchases, sales & consumption of raw materials with quantitative break up & Gross Income from services rendered.

4 - C Details regarding licensed capacity, installed capacity and actual production in respect of each class of goods manufactured.

4 - D (a) Value of imports calculated on CIF basis for the year in respect of raw materials, components, spares and Capital goods.

4 - D (b) Expenditure in foreign currency during the financial year on account of royalty, know - how, professional, consultant fees, interest and other matters.

4 - D (c) Value of imported & indigenous raw materials, components and spares consumed & percentage of each to the total consumption.

4 - D (e) Earnings in foreign exchange classified under the following heads, namely ;

(i) export of goods calculated on FOB basis

(ii) royalty, know - how, professional and consultant fees;

(iii) interest and dividends;

(iv) other income, indicating the nature thereof.

4. The Company has discontinued the LTC scheme for non executives during the year 2010 - 11 and hence, no actuarial valuation of this liability is required. To reflect this change, Accounting Policy No. 15 (Employee Benefits) has been amended.

5. Letters requesting confirmation of Balances have been sent in respect of Sundry Debtors, Sundry Creditors, Advances and Deposits. Wherever replies have been received, reconciliation has been done and provisions / adjustments have been made wherever considered necessary.

6. The Company has analysed indications of impairment of assets of each geographical composite manufacturing unit considered as Cash Generating Units (CGU). On the basis of assessment of internal and external factors, none of the Units has found indications of impairment of its assets and hence no provision is considered necessary.

Deeds containing the terms of transfer / grant of land from State Governments / State Undertakings have not been finalised in respect of 86.78 acres valuing Rs. 181.63 (86.78 acres valuing Rs. 181.63) pertaining to Panchkula Unit. Out of this, title in respect of land measuring 0.962 acres (0.962 acres) is under litigation.

Pending finalisation of formal deeds, no provision towards registration and other costs have been made.

b) Pending execution of title / sale deeds and handing over of physical possession of land allotted to BEL Hyderbad by Andhra Pradesh Industrial Infrastructure Corporation (APIIC) admeasuring 5.60 acres (5.60 acres) in Mallapur, Hyderabad, no provision towards registration and other cost has been made in the books of accounts. Cost of land paid to APIIC amounting to Rs. 65.12 (Rs. 65.12) is included in Capital WIP-Advances.

c) Based on the Memorandum of Understanding reached with the Defence authorities, expenditure on civil works was incurred on land allotted to BEL for setting up of the Hyderabad Unit. Pending finalisation of the terms and conditions by the appropriate authorities, the cost of land measuring 25.11 acres (25.11 acres) has not been provided in the books of accounts.

d) Land acquired free of cost from the Government in some units has been accounted at a notional value by corresponding credit to Capital Reserve.

e) The Company has installed Windmill Generator at two locations. The leasehold land of the Windmill Generator-I is capitalised at the nominal value of Rs. 5 (Five Rupees only) as the upfront lease cost is Nil. The leasehold land of Windmill Generator-II is capitalised in the year 2007-08 at the cost of Rs. 114. In both the cases, the lease agreement for the land is pending finalisation.

f) Freehold land of Pune Unit measuring 3,897.52 square meters (cost Rs. 0.48) is to be handed over to Pimpri -Chinchwad Municipal Corporation for the purpose of road widening at an estimated provisional compensation of Rs. 209.04 based on the rates fixed by Moolya Nirdharan Suchi of Government of Maharastra.

7. a) In pursuance of the Companies (Amendment) Act, 1988 and Schedule XIV thereof, increased rates of depreciation on straight line method in accordance with the Schedule XIV have been adopted wherever required, only on additions on or after 01.04.1987.

b) Wherever the rates of depreciation applied prior to 01.04.1987 are higher than the rates specified in Schedule

XIV to the Companies Act, 1956, they have been continued. However, additions forming part of existing machines are depreciated on the same basis as the original machines.

c) Depreciation for multiple shifts is charged on block of assets for the full year.

8. a) Raw Materials and Components include Rs. 2,670.24 (Rs. 2,765.88) being materials with subcontractors, out of which Rs. 90.19 (Rs. 163.38) of material is subject to confirmation and reconciliation. The impact, if any, on consequent adjustment is considered not material.

b) Pending reconciliation, stock verification discrepancies for the year [shortages of Rs. 42.24 (Rs. 141.36) and surplus of Rs. 16.13 (Rs. 82.30)] have not been adjusted in the accounts.

9. Liability, if any, in respect of labour matters under dispute before various judicial authorities is not ascertainable, but is expected to be not material.

10. The exchange rate variations arising on transactions in foreign currency between the date of recording of such transactions and the settlement / the Balance Sheet date resulting in a net exchange gain of Rs. 2,648.84 (gain Rs. 6,663.21) during the year have been included in the Profit and Loss Account in Schedule No. 14 - "Other Revenues".

11. "Excise Duty which is paid during the year in respect of turnover is shown as a deduction from turnover (Gross) in the Profit and Loss Account. "Excise Duty - Others" which is included in the Schedule 17 - "Other Expenses of Manufacturing, Administration, Selling & Distribution" represents incremental provision of Excise Duty on Finished Goods, Excise Duty on Sale of Scrap, etc.

iii) The amount of interest due and payable for the period of delay in making payment (which have been paid but beyond the appointed day during the year) but without adding the interest specified under the Act: Rs. 1.17 (Rs. 0.17).

iv) The amount of interest accrued and remaining unpaid at the end of the year ending 31st March 2011 : Rs. 2.45 (Rs. 2.84).

v) The amount of further interest remaining due and payable even in the succeeding years, until such date when the interest dues as above are actually paid to the small enterprise, for the purpose of disallowance as a deductible expenditure under section 23 of MSMED Act : Rs. 0.55 (Rs. 2.50)

The information has been given in respect of such suppliers to the extent they could be identified as Micro & Small Enterprises on the basis of information available with the Company.

12. Contingent Liabilities :

a. Claims not Rs. 10,834.02 (Rs. 8,654.70) acknowledged as debts

b. Outstanding Rs. 26,774.99 (Rs. 22,658.62) Letters of Credit c. Others Rs. 397.30 (Rs. 291.81)

d. Provisional Liquidated Damages upto 31.03.2011 on unexecuted customer orders where the delivery date has expired is Rs. 8,698.05 (Rs. 4,873.96)

13. The following disclosure is made as per AS-7 (Accounting for Construction Contracts) in respect of accounting policy 3 (i) (c) relating to revenue recognition on contracts :

a) Contract revenue recognised during the year Rs. Nil (Rs. Nil)

b) No Contract Revenue is recognised in the current year. Upto year 2008 - 09, contract revenue was recognised using the percentage of completion method. Ratio of the actual cost incurred on the contracts upto 31.03.2009 to the estimated total cost of the contracts, was used to determine the stage of completion.

c) Aggregate amount of cost incurred : Rs. 43,009.84 (Rs. 43,009.84).

d) Recognised profit upto 31.03.2011 (net of provision for contingency): Rs. 3,522.08 (Rs. 2,923.33).

e) Amount of advances received and Outstanding as at 31.03.2011 -Rs.48.85 (Rs.48.85)

f) The amount of retention -Rs. 1,466.65 (Rs. 1,404.70)

14. a) Wage revision in respect of non - executives has been implemented during the year 2010 - 11.

b) As per the guidelines issued by the Department of Public Enterprises (DPE), GOI on the pay revision for Officers of PSUs, the company has submitted a proposal to the Ministry of Defence, GOI for a Pension Scheme (Defined Contribution Scheme) for Executives which has been duly considered by the Board of Directors. Pending approval by the Administrative Ministry, a provision for Rs. 6,900.91 has been made in the accounts upto the year 2010 - 11.

15. As per the provisions of Accounting Standard 15 (R), the following information is disclosed in respect of Employee Benefits :

Gratuity Scheme :

The Company has a Gratuity Scheme for its employees, which is a funded plan. Every year, the Company remits funds to the gratuity trust to the extent of shortfall of the assets over the fund obligations, which is determined through actuarial valuation. As per the Gratuity Scheme, gratuity is payable to an employee on the cessation of his employment after he has rendered continuous service for not less than 5 (five) years in the Company. For every completed year of service or part thereof in excess of six months, the Company shall pay gratuity to an employee at the rate of 15 (fifteen) days salary based on the last drawn basic & dearness allowance.

BEL Retired Employees' Contributory Health Scheme (BERECHS) :

The Company has a contributory health scheme for its retired employees "BEL Retired Employees' Contributory Health Scheme" (BERECHS), which is a non-funded scheme. The primary objective of the scheme is to provide medical facilities to employees retiring on attaining the age of superannuation, or on VRS. Benefits under the Scheme shall be available to the employees who become members and their spouses only. The Company takes insurance cover for in-patient treatment. In addition to the annual insurance premium, the Company bears 50% of the medicine cost and 75% of the cost of diagnostic tests for outpatient treatment and for the treatment of specified diseases, the Company bears the full cost of treatment, over and above the insurance coverage.

The following tables summarise the components of net benefit expense recognised in the Profit and Loss Account and the funded status and amounts recognised in the Balance Sheet for the plan as furnished in the disclosure report provided by the actuary.

Long Term Compensated Absence Scheme :

The Company has a Long Term Compensated Absence Scheme for its employees, which is a Non - Funded Scheme. The employees of the Company are entitled to two types of Long Term Compensated Absences : Annual Leave (AL) and Sick Leave (SL). The Scheme provides for compensation to employees against the unavailed Leave (both AL & SL) on attaining the age of superannuation, VRS, resignation (only AL) and death. AL can also be encashed during service.

Provident Fund Contribution :

During the year the Company has recognised an amount of Rs. 6,083.69 (^ 5,633.16) towards contribution to Employees Provident Fund and Pension Schemes in the Profit and Loss Account. The guidance on implementing AS 15 (R) issued by the Institute of Chartered Accountants of India states that provident funds setup by employers that guarantee a specified rate of return and which require interest shortfalls to be met by the employer would be defined benefit plans in accordance with the requirements of paragraph 26(b) of AS 15(R) and actuarially valued.

Pursuant to the Guidance Note, the Company has determined on the basis of actuarial valuation carried out as at 31st March 2011, that there is no liability towards the interest shortfall on valuation date under para 55 and 59 of AS 15 (R) (having regard to terms of plan that there is no compulsion on the part of the Trust to distribute any part of the surplus, if any, by way of additional interest on PF balances).

Experience adjustments for funded schemes

The disclosure with respect to paragraph 120 (n) of AS - 15(R) towards experience adjustments are being made for funded schemes viz., Gratuity. As long term compensated absence and BERECHS are not funded, such disclosure is not required.

The best estimate of contribution to be paid towards Gratuity during the annual period beginning after the Balance Sheet is Rs.2,811.22 (Rs. 3,198.76). In case of Provident Fund, there is no actuarial liability assessed for shortfall in interest as at year end.

16. The Company is engaged in manufacture and supply of strategic electronic products primarily to Defence Services and hence, it would not be in public interest for the Company to present segment information. For similar reasons, the Company has been granted exemption from publication in the annual accounts, the quantitative particulars required under Schedule VI to the Companies Act, 1956. The SEBI has also granted exemption, for these reasons, to the Company from publication of segment information required under Accounting Standard 17 (AS 17) in quarterly unaudited financial results. Hence segment information required under Accounting Standard 17 (AS 17) is not disclosed. Such non - disclosure has no financial effect.

19. As per the provisions of Accounting Standard 19, the following information is disclosed in respect of Finance Lease :

a) The net carrying amount (WDV) at the Balance Sheet date in respect of vehicles taken on lease is Rs. 32.95 (Rs. 63.44).

b) Total minimum lease payments as at the Balance Sheet date is Rs. 45.74 (Rs. 85.49) and the present value is Rs. 41.05 (Rs. 72.61).

17. Related Party Disclosure :

(a) The related parties and their relationship with the Company are as under :

Subsidiary Company viz., BEL Optronic Devices Ltd. (Equity Holding 92.79 %) ;

Joint Venture Companies :

GE BE Private Ltd. (Equity Holding 26 %); and BEL Multitone Private Ltd. (Equity Holding 49 %)

(b) Management Contracts including deputation of Employees :

Two Officials (Managers) of BEL have been deputed to BELOP (Subsidiary) and their salary, etc., is paid by BELOP during the year as per terms and conditions of employment.

18. Previous year's figures have been regrouped wherever necessary. Figures in brackets relate to previous year.


Mar 31, 2010

1. Estimated amount of contracts remaining to be executed on Capital Account and not provided for amounts to Rs. 11,524.66 (Rs. 6,581.64).

2. a) Expenditure in foreign exchange on account of royalty, know how, interest and other maters (on payment basis) amounted to Rs. 335.86 (Rs. 555.44).

b) Earnings in foreign exchange on account of exports on FOB basis amounted to Rs. 9,936.71 (Rs. 7,227.96).

3. The Company has made certain modificatons / changes to Accounting policies during the year 2009-10 which are generally clarifcatory in nature except in respect of policy on Employee Benefits. The changes made in Employee Benefits and the impact thereof is as under:

- Leave Travel Concessions benefit given to employees were hitherto treated as short-term benefits and accounted on payment basis. As per the expert opinion given by Expert Advisory Commitee (EAC) of The Insttute of Chartered Accountants of India (ICAI), the liability towards this is a long-term benefit and accordingly should be actuarially valued. As per the actuarial valuaton, the liability as on 31st March 2010 is Rs. 202.75 and this has been accounted in 2009-10.

- As per AS-15®, the liability, if any, towards shortall in payment of minimum interest by the Company managed Provident Funds is to be actuarially valued and provided for. Accordingly the Company actuarially valued the positon as on 31st March 2010 and as per Actuarys report, no additonal liability exists on this account as on 31st March 2010 (31st March 2009 - Rs. Nil).

4. Leters requestng confrmaton of Balances have been sent in respect of Sundry Debtors, Sundry Creditors, Advances and Deposits. Wherever replies have been received, reconciliaton has been done and provisions / adjustments have been made wherever considered necessary.

5. The Company has analysed indicatons of impairment of assets of each geographical composite manufacturing unit considered as Cash Generatng Units (CGU). On the basis of assessment of internal and external factors, none of the Units has found indicatons of impairment of its assets and hence no provision is considered necessary.

6. a) In respect of certain Fixed Assets mentoned below, executon of ttle / sale Deed by the appropriate authorites is pending.

(i) Freehold land Rs. 3.75 (Rs. 3.75)

(Machilipatnam - 0.516 acres) (ii) Leasehold land Rs. 0.18 (Rs. 0.18) (Ghaziabad)

(iii) Buildings Rs. 0.16 (Rs. 0.16) (Ghaziabad)

Deeds containing the terms of transfer / grant of land from State Governments / State Undertakings have not been fnalised in respect of 86.78 acres (86.78 acres) pertaining to Panchkula Unit. Out of this, ttle in respect of land measuring 0.962 acres is under litgaton.

Pending finalisation of formal deeds, no provision towards registration and other costs have been made.

b) Pending executon of title / sale deeds and handing over of physical possession of land alloted to BEL Hyderbad by Andhra Pradesh Industrial Infrastruture Corporation (APIIC) admeasuring 5.60 acres (5.60 acres) in Mallapur, Hyderabad, no provision towards registration and other cost has been made in the books of accounts. Cost of land paid to APIIC amountng to Rs. 65.12 (Rs. 65.12) is included in Capital WIP-Advances.

c) Based on a Memorandum of Understanding reached with the Defence authorites, expenditure on civil works was incurred on land alloted to BEL for setng up of the Hyderabad Unit. Pending finalisation of the terms and conditons by the appropriate authorites, the cost of land measuring 25.110 (25.110) acres has not been provided in the books of accounts.

d) Land acquired free of cost from the Government in some units has been accounted at a notonal value by corresponding credit to Capital Reserve.

e) The Company has installed Windmill Generatior at two locatons. The leasehold land of the Windmill Generatior-I is capitalised at the nominal value of Rs. 5 (Five Rupees only) as the upfront lease cost is nil. The leasehold land of Windmill Generatior-II is capitalised at the cost of Rs. 114.00. In both the cases the lease agreement for the land is pending finalisation.

f) Freehold land of Pune Unit measuring 3897.52 square meters (cost Rs. 0.48) is to be handed over to Pimpri Chinchwad Municipal Corporation for the purpose of road widening at an estmated provisional compensaton of Rs. 245.00 based on the rates fxed by Moolya Nirdharan Suchi of Government of Maharastra. Approval from Ministry of Defence, Government of India is awaited.

7. a) In pursuance of the Companies (Amendment) Act, 1988 and Schedule XIV thereof increased rates of depreciaton on straight line method in accordance with the Schedule XIV have been adopted wherever required, only on additons afer 1.4.1987.

b) Wherever the rates of depreciaton applied prior to 1.4.1987 are higher than the rates specifed in Schedule XIV to the Companies Act, 1956 they have been contnued. However, additons forming part of existng machines are depreciated on the same basis as the original machines.

c) Depreciaton for multple shifs is charged on block of assets for the full year.

8. a) Raw Materials and Components include Rs. 2,765.88 (Rs. 1,869.89) being materials with subcontractors, out of which Rs. 163.38 (Rs. 160.75) of material is subject to confrmaton and reconciliaton. The impact, if any, on consequent adjustment is considered not material.

b) Pending reconciliaton, stock verifcaton discrepancies for the year [shortages of Rs. 141.36 (Rs.63.99) and surplus of Rs. 82.30 (Rs. 16.28)] have not been adjusted in the accounts.

9. Liability, if any, in respect of labour maters under dispute before various judicial authorites is not ascertainable, but is expected to be not material.

10. The exchange rate variatons arising on transactons in foreign currency between the date of recording of such transactons and the setlement / the Balance Sheet date resultng in a net exchange gain of Rs. 6663.21 (Loss Rs. 3,763.21) during the year have been included in the Profit and Loss Account in Schedule No. 14 - "Other Revenues" [Previous Year: in Schedule No. 17 - "Other Expenses of Manufacturing, Administration, Selling & Distributon"].

11. "Excise Duty, which is included in turnover (Gross) is shown as a deducton from turnover (Gross) in the Profit and Loss Account. "Excise Duty - Others" included in the Schedule 17 - "Other Expenses of Manufacturing, Administration, Selling & Distributon" represents incremental provision of Excise Duty on Finished Goods, Excise Duty on Sale of Scrap etc.

12. The informaton regarding amounts due to Micro and Small Enterprises as required under Micro, Small & Medium Enterprises Development (MSMED) Act, 2006 as on 31st March 2010 is furnished below:

i) The principal amount and the interest due thereon remaining unpaid to any supplier as at 31st March 2010:

Principal Amount Rs. 163.95 (Rs. 153.62)

Interest Rs. 1.74 (Rs. 0.47)

ii) The amount of interest paid by the Company along with the amount of the payment made to the supplier beyond the appointed day during the year ending 31st March 2010:

Principal Amount Rs. 7.85 (30.89)

Interest Rs. 0.80 (0.33)

iii) The amount of interest due and payable for the period of delay in making payment (which have been paid but beyond the appointed day during the year) but without adding the interest specifed under the Act: Rs. 0.17 (0.79).

iv) The amount of interest accrued and remaining unpaid at the end of the year ending 31st March 2010: Rs. 2.84 (Rs. 1.36)

v) The amount of further interest remaining due and payable even in the succeeding years, untl such date when the interest dues as above are actually paid to the small enterprise, for the purpose of disallowance as a deductble expenditure under Section 23 of MSMED Act: Rs. 2.50 (Rs. 1.20)

The informaton has been given in respect of such suppliers to the extent they could be identfed as Micro & Small Enterprises on the basis of informaton available with the Company.

(Rupees in Lakhs)

13. Contngent Liabilites:

a. Claims not Rs. 8,654.70 (Rs. 4,506.46) acknowledged as debts

b. Outstanding Rs. 22,658.62 (Rs. 33,714.78) Leters of Credit

c. Others Rs. 397.30 (Rs. 291.81)

d. Provisional Liquidated Damages up to 31.03.2010 on unexecuted customer orders where the delivery date has expired is Rs. 4,873.96 (Rs. 6,852.52).

14. The following disclosure is made as per AS-7 (Accounting for Constructon Contracts) in respect of Accounting policy 3i(c) relating to revenue recogniton on contracts:

a) Contract revenue recognised during the year Rs. Nil (Rs. 1,908.50).

b) No contract revenue is recognised in the current year. In the previous year, contract revenue was recognised using the percentage of completon method. ratio of the actual cost incurred on the contracts upto 31.03.2009 to the estmated total cost of the contracts, was used to determine the stage of completon.

c) Aggregate amount of cost incurred: Rs. 43,009.84 (Rs. 70,613.40).

d) Recognised profit upto 31.03.2010 (net of provision for contngency): Rs. 2,817.66 (Rs. 15,829.10).

e) Amount of advances received and outstanding as at 31.03.10 - Rs. 48.85 (Rs. 48.88)

f) The amount of retenton Rs. 1,404.70 (Rs. 8,111.26)

17. Provision for wage revision in respect of non-executves has been made in the accounts of 2009-10 based on the wage setlement reached with Negotatng Trade Unions (NTUs) during May 2010. This includes Rs. 7,987.35 pertaining to the period upto 31st March 2009.

As per the guidelines issued by the Department of Public Enterprises (DPE), GOI on the pay revision for Ofcers of PSUs, the Company has submited a proposal to the Ministry of Defence, GOI for a Pension Scheme (Defined Contributon Scheme) for Executves which has been duly considered by the Board of Directors. Pending approval by the Administratve Ministry, a provision for Rs. 4,817.56 has been made in the accounts of 2009- 10 which includes Rs. 3,134.91 being the past liability towards management contributon to Pension Scheme for the period up to 31.03.2009 and the same has been treated as an Exceptonal item in the Profit and Loss Account.

Further, as per the DPE guidelines the Company has formulated a new incentve scheme in lieu of the existng Executve Performance Incentve Scheme (EPI Scheme) for Executves viz. Performance Related Pay (PRP Scheme) efectve from the Financial Year 2007-08 which has been duly recommended by the Remuneration Commitee and approved by the Board of Directors. Necessary provision on this account has been made in the accounts of 2009-10.

15. As per the provisions of revised Accounting Standard 15, the following informaton is disclosed in respect of Employee Benefits:

Gratuity Scheme:

The Company has a gratuity scheme for its employees, which is a funded plan. Every year the Company remits funds to the gratuity trust to the extent of shortall of the assets over the fund obligatons, which is determined through actuarial valuaton. As per the gratuity scheme, gratuity is payable to an employee on the cessaton of his employment afer he has rendered contnuous service for not less than 5 (fve) years in the Company. For every completed year of service or part thereof in excess of six months, the Company shall pay gratuity to an employee at the rate of 15 (ffeen) days salary based on the last drawn basic & dearness allowance.

The following tables summarise the components of net benefit expense recognised in the Profit and Loss Account and the funded status and amounts recognised in the Balance Sheet for the plan as furnished in the Disclosure Report provided by the actuary:

16. The Company is engaged in manufacture and supply of strategic electronic products primarily to Defence Services and hence it would not be in public interest for the Company to present segment informaton. For similar reasons the Company has been granted exempton from publicaton in the annual accounts the quanttatve partculars required under Schedule VI to the Companies Act, 1956. The SEBI has also granted exempton, for these reasons, to the Company from publicaton of segment informaton required under Accounting Standard 17 (AS 17) in quarterly unaudited financial results. Hence Segment informaton required under Accounting Standard 17 (AS 17) is not disclosed. Such non-disclosure has no financial efect.

17. As per the provisions of Accounting Standard 19, the following informaton is disclosed in respect of Finance Lease:

a) The net carrying amount (WDV) at the Balance Sheet date in respect of vehicles taken on lease is Rs. 63.44 (Rs. 113.06).

b) Total minimum lease payments as at the Balance Sheet date is Rs. 85.49 (Rs. 149.46) and the present value is Rs. 72.61 (Rs. 121.08).

18. Related Party Disclosure:

(a) The related partes and their relatonship with the Company are as under:

- Subsidiary Company viz. BEL Optronic Devices Ltd.,

(Equity Holding 92.79%);

- Joint Venture Companies:

GE BE Private Ltd. (Equity Holding 26%); and BEL Multtone Private Ltd., (Equity Holding 49%)

19. Disclosure as required under AS 29 - Provisions, contngent liabilites and contngent assets:

20. Previous years fgures have been regrouped wherever necessary. Figures in brackets relate to previous year.

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