Auditor Report of Bharat Dynamics Ltd.

Mar 31, 2025

We have audited the accompanying Standalone Financial Statements of Bharat
Dynamics Limited (âthe companyâ), which comprise the Balance Sheet as at 31 March
2025, the Statement of Profit and Loss (including Other Comprehensive Income), the Cash
Flow Statement, the Statement of Changes in Equity for the year then ended, and notes to
the standalone financial statements, including a summary of Material Accounting Policies
and other explanatory information (hereinafter referred to as Standalone Financial
Statements").

In our opinion and to the best of our information and according to the explanations given to
us, the aforesaid standalone financial statements give the information required by the
Companies Act, 2013, as amended (''the Actâ) in the manner so required and give a true
and fair view in conformity with the Indian Accounting Standards (''Ind AS ) specified under
section 133 of the Act read with the Companies (Indian Accounting Standards) Rules,
2015 and other accounting principles generally accepted in India, of the state of affairs of
the Company as at 31 March, 2025 and its profit (including other comprehensive income),
its cash flows and the changes in equity for the year ended on that date.

Basis for Opinion

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

Emphasis of matter

We draw attention to the following matters in the notes to the Standalone Financial
Statements:

a) note 38(7) which describes inventory not moved for more than five years amounting
to ? 8331.44 lakhs (? 8338.85 lakhs as of 31 March 2024) for which no provision for

redundancy were made as is required by the company''s accounting policy for the
reasons stated there at;

b) note 28 which describes the recognition of a provision for onerous contracts
amounting to ?13,461.18 Lakh during the quarter ended 31 December 2024, and an
additional provision of ? 678.96 Lakh during the quarter ended 31 March 2025, in
accordance with Ind AS 37 - Provisions, Contingent Liabilities, and Contingent
Assets

Our conclusion is not modified in respect of these matters

Key Audit Matters

1. Key audit matters are those matters that, in our professional judgment, were of most
significance in our audit of the standalone financial statements of the year ended 31
March 2025. These matters were addressed in the context of our audit of the
standalone financial statements as a whole, and in forming our opinion thereon, and
we do not provide a separate opinion on these matters.

2. For each matter below, our description of how our audit addressed the matter is
provided in that context. We have determined the matters described below to be the
key audit matters to be communicated in our report.

Sl.no,	Key audit matters	How our audit addressed the Key Audit Matters
(a)
	Provision and contingent liabilities relating to ongoing litigations
	The Company is subject to a number of legal, regulatory and tax cases for which final outcome cannot be easily predicted and which could potentially result in significant liabilities. Managementâs disclosures with regards to provisions and contingent liabilities relating to ongoing litigation are presented in Note No. 38(6) of the Standalone Financial Statements. The assessment of whether a liability is recognized as a provision or disclosed as a contingent liability in the Standalone Financial Statements is	Our audit procedures included, but were not limited to the following; â¢ Obtained understanding of the process of identification and measurement of provisions and contingent liabilities relating to ongoing litigations implemented by the Management, through various discussions held with Company''s legal and finance personnel. â¢ Tested the design and operating effectiveness of the controls put in place by the management in relation to assessment of the outcome of the pending

	inherently subjective and requires significant management judgement in determination of the cash outflows from the business, interpretation of applicable laws and regulations, and careful examination of pending assessments at various levels of authorities. Since the amounts involved are significant and due to the range of possible outcomes leading to high estimation uncertainty that requires significant management and auditor judgement, this matter is considered to be a key audit matter for the current year audit.	litigations. â¢ Inspected the summary of litigation matters and discussed key developments during the year with the Companyâs Legal and Finance personnel. â¢ Inspected and evaluated, where applicable, external legal advice sought by the Company. Obtained direct confirmations from the dealing lawyers for certain material ongoing litigations. â¢ Discussed and challenged the managementâs assessment of the likelihood, magnitude and accounting of any liability that may arise in certain material cases based on PPR analysis. Accordingly, we reviewed the amount of contingent liabilities disclosed in the Standalone Financial Statements and exercised our professional judgment to assess appropriateness of such conclusions, involving experts as required. â¢ Evaluated the adequacy of disclosures made in the Standalone Financial Statements in accordance with the applicable accounting standards.
(b)	Provision For Warranty ___1
	As a part of contractual term, the company''s management makes warranty estimation which are established using historical information on the nature, frequency and average cost of warranty claims and also management estimates regarding possible future outflow on servicing the customers for any corrective action in respect of product failure which is generally expected to be settled within a period of 1 to 2 years from the date of	Our audit procedures included the following; â¢ Evaluated management''s assumption and judgement relating to estimation of warranty provision considering business environment in which the Company operates. â¢ Obtained an understanding of the Contract terms to evaluate the adequacy of the provision estimated by the management.

	supply.	â¢ Reviewed the past history of
	The company''s obligation to replace or	warranty claims to evaluate the reasonableness of the warranty
	repair faulty goods under the standard	provision considered.
	warranty terms is recognized as a provision and is not adjusted against transaction price as the customer does not have option to purchase warranty separately. Owing to past trend of reversal of excess provision resulting from high estimation uncertainty that requires significant management and auditor judgement, this matter is considered to be a key audit matter for the current vear audit.

Information other than the Standalone Financial Statements and auditorsâ report
thereon

The Companyâs Board of Directors is responsible for the other information. The other
information comprises the information included in the Annual Report, but does not include
the standalone financial statements and our auditorsâ report thereon. The Annual Report is
expected to be made available to us after the date of this auditors'' report.

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

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

When we read the Annual Report, if we conclude that there is a material misstatement
therein, we are required to communicate the matter to those charged with governance.

Responsibilities of management and those charged with governance for the
Standalone Financial Statements

comprehensive income, changes in equity and cash flows of the Company in accordance
with accounting principles generally accepted in India, including the Indian Accounting
Standards (Ind AS) prescribed under Section 133 of the Act read with the Companies
(Indian Accounting Standards) Rules, 2015 as amended. This responsibility also includes
maintenance of adequate accounting records in accordance with the provisions of the Act
for safeguarding the assets of the Company and for preventing and detecting frauds and
other irregularities; selection and application of appropriate accounting policies; making
judgments and estimates that are reasonable and prudent, and design, implementation
and maintenance of adequate internal financial controls, that were operating effectively for
ensuring the accuracy and completeness of the accounting records, relevant to the
preparation and presentation of the standalone financial statements, that give a true and
fair view and are free from material misstatement, whether due to fraud or error.

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

Those Board of Directors is also responsible for overseeing the Company''s financial
reporting process.

Auditorsâ Responsibilities for the audit of the Standalone Financial Statements

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

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

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

â¢ Obtain an understanding of internal control relevant to the audit in order to design
audit procedures that are appropriate in the circumstances. Under section 143(3)(i)
of the Act, we are also responsible for expressing our opinion on whether the
company has adequate Internal Financial Controls with reference to Standalone
Financial Statements in place and the operating effectiveness of such controls.

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

â¢ Conclude on the appropriateness of Board of Director''s use of the going concern
basis of accounting and, based on the audit evidence obtained whether a material
uncertainty exists related to events or conditions that may cast significant doubt on
the Companyâs ability to continue as a going concern. If we conclude that a
material uncertainty exists, we are required to draw attention in our auditors'' report
to the related disclosures in the Standalone Financial Statements or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on
the audit evidence obtained up to the date of our auditorsâ report. However, future
events or conditions may cause the Company to cease to continue as a going
concern.

â¢ Evaluate the overall presentation, structure and content of the Standalone Financial
Statements, including the disclosures, and whether the Standalone Financial
Statements represent the underlying transactions and events in a manner that
achieves fair presentation.

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

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

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

Report on Other legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2020 ("the Order") issued by

the Central Government of India in terms of Section 143(11) of the Act, we give in the

Annexure-1, a statement on the matters specified in paragraphs 3 and 4 of the said

Order, to the extent applicable.

2. Further to our comments in Annexure -1â, as required by section 143(3) of the Act,

based on our audit, we report, to the extent applicable, that:

(a) We have sought and obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purpose of our audit of the
accompanying Standalone Financial Statements.

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

(d) In our opinion, the aforesaid Standalone Financial Statements comply with Indian
Accounting Standards prescribed under Section 133 of the Act read with the
Companies (Indian Accounting Standards) Rules, 2015 as amended.

(e) The company being a Government Company as defined under section 2(45) of the
Act, pursuant to the Notification No. GSR 463(E) dated 5 June 2015 issued by the
Ministry of Corporate Affairs, Government of India, the provisions of sub-section (2)
of Section 164 of the Act, are not applicable to the company.

(f) With respect to the adequacy of the internal financial controls with reference to
Standalone Financial Statements of the company as on 31 March 2025 and the
operating effectiveness of such controls, refer to our separate report in Annexure-
2.

(g) The company being a Government Company as defined under section 2(45) of the
Act, pursuant to the Notification No. GSR 463(E) dated 5 June 2015 issued by the
Ministry of Corporate Affairs, Government of India, the provisions of section 197 of
the Act, are not applicable to the company.

(h) With respect to the other matters to be included in the Auditors'' Report in
accordance with rule 11 of the Companies (Audit and Auditors) Rules, 2014 (as

amended), in our opinion and to the best of our information and according to the
explanations given to us:

i. The company does not have any pending litigations which would impact its
financial position;

ii. The Company does not have any long-term contracts requiring a provision
for material foreseeable losses;

iii. The company does not have any amount required to be transferred, to the
Investor Education and Protection Fund;

iv. (a) The management has represented that, to the best of its knowledge and
belief no funds have been advanced or loaned or invested (either from
borrowed funds or securities premium or any other sources or kind of funds)
by the Company to or in any person(s) or entity(ies), including foreign
entities (''the intermediariesâ), with the understanding, whether recorded in
writing or otherwise, that the intermediary shall, whether, directly or indirectly
lend or invest in other persons or entities identified in any manner
whatsoever by or on behalf of the Company (âthe Ultimate Beneficiariesâ) or
provide any guarantee, security or the like on behalf of the Ultimate
Beneficiaries;

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

(c) Based on such audit procedures performed as considered reasonable
and appropriate in the circumstances, nothing has come to our notice that
has caused us to believe that the management representations under subÂ¬
clauses (a) and (b) above contain any material misstatement.

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

(b) As stated in note no. 38(9) (b) to the accompanying standalone financial
statements, the Board of Directors of the Company have proposed final
dividend for the year ended 31 March 2025 which is subject to the approval
of the members at the ensuing Annual General Meeting. The dividend
declared is in accordance with section 123 of the Act to the extent it applies
to declaration of dividend.

vi. Based on our examination which included test checks, the company has
used accounting software for maintaining its books of account which has a
feature of recording audit trail (edit log) facility and the same has operated
throughout the year for all relevant transactions recorded in the software.
Further, during the course of our audit we did not come across any instance
of audit trail feature being tampered with. Additionally, the audit trail has
been preserved by the company as per the statutory requirements for record
retention.

3. As required by section 143(5) of the Act, we give in Annexure-3'', a statement on the
matters specified in the directions issued by the Comptroller and Auditor General of
India in respect of the Company

For Tej Raj & Pal

Chartered Accountants
FRN 304124E

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(CA Paluri Kali Sri Harsha)>^Â£^-^^ /

Partner

M. No. 252420

UDIN: 25252420BMIZID1772

Place: Hyderabad

Date: 27 May 2025

Mar 31, 2024

To the Members of Bharat Dynamics Limited

Report on the Audit of Standalone Financial Statements

Opinion

We have audited the accompanying Standalone Financial Statements of Bharat Dynamics Limited (âthe companyâ), which comprise the Balance Sheet as at 31 March 2024, the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement, the Statement of Changes in Equity for the year then ended, and notes to the standalone financial statements, including a summary of Material Accounting Policies and other explanatory information (hereinafter referred to as âStandalone Financial Statements").

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Companies Act, 2013, as amended (''the Act'') in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards (âInd AS'') specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015 and other accounting principles generally accepted in India, of the state of affairs of the Company as at 31 March, 2024 and its profit (including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.

Basis for Opinion

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

Emphasis of matter

We draw attention to the following matters in the notes to the Standalone Financial Statements:

a. note 38(25) which describes the impact on the companyâs performance for the year ending 31 March 2024 with the supply chain of the company being affected in view of the on-going Russia-Ukraine war and conflicts in Middle-East region.

b. note 32 which describes adjustment having been made to the cost of materials consumed for Rs. 16491.29 lakhs on account of refund received during the year 2023-24 from the customers on account of reimbursement of expenditure for materials and stores procured in the past with consequent reversal of liability there against.

c. note 38(7) which describes inventory not moved for more than five years amounting to Rs. 8338.85 lakhs (Rs.8350.75 lakhs as of 31 March 2023) for which no provision for redundancy were made as is required by the companyâs accounting policy for the reasons stated there at.

Our conclusion is not modified in respect of these matters

Key Audit Matters

1. Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements of the year ended 31 March 2024. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context

2. We have determined the matters described below to be the key audit matters to be communicated in our report. We have fulfilled the responsibilities described in the Auditorâs responsibilities for the audit of the financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial statements. The results of audit procedures performed by us, including those procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying financial statements.

Sl.no.

Key audit matters

How our audit addressed the Key Audit Matters

(a)

Expected credit loss on trade receivables

The Company has outstanding trade receivables and Contract Asset of Rs.31,044.72 lakhs and Rs.87,456.12 lakhs respectively as at March 31, 2024, including overdue / aged receivables.

The Company supplies missiles to its sole customer Ministry of Defence (MoD). The Company has past

Our audit procedures included the following:

â¢ Obtained an understanding of the Companyâs process and tested internal controls associated with the managementâs assessment for not considering ECL allowance against trade receivables (i.e._t

experience available with it to expected credit loss allowances, if required.

The Company has not provided for Expected Credit Loss (ECL) allowance on trade receivables considering the past business experience with MoD.

Based on the above experience and using its best estimate, the Company has not accounted any ECL provision on the balance sheet date.

Due to the significance of trade receivables and the related management''s judgement this is considered to be a key audit matter.

MoD).

â¢ Obtained an understanding of the managementâs plan and steps being taken to collect all receivables including overdue / aged receivables.

â¢ Evaluated managementâs assessment of recoverability of the outstanding receivables from MoD including recoverability of overdue/ aged receivables through inquiry with management, and analysis of recent collection trends in respect of receivables particularly aged receivables.

â¢ Evaluated managementâs assumption and judgement relating to collection considering business environment in which the Company operates and rights available with the Company to recover amount due from customer (i.e., MoD).

â¢ Evaluated managementâs continuous assessment considering the collection against the overdue/ aged receivables. These considerations include whether there are regular receipts from the customer and the Company''s past collection history.

â¢ Obtained necessary management representation in this regard.

..(b)

Provision and contingent liabilities relating to ongoing litigations

The Company is subject to a number of legal, regulatory and tax cases for which final outcome cannot be easily predicted and which could potentially result in significant liabilities.

Managementâs disclosures with regards to provisions and contingent liabilities relating to ongoing litigation are

Our audit procedures included, but were not limited to the following;

â¢ Obtained understanding of the process of identification and measurement of provisions and contingent liabilities relating to ongoing litigations implemented by the Management, through various discussions held with

presented in Note No. 38(6) of the Standalone Financial Statements.

The assessment of whether a liability is recognised as a provision or disclosed as a contingent liability in the Standalone Financial Statements is inherently subjective and requires significant management judgement in determination of the cash outflows from the business, interpretation of applicable laws and regulations, and careful examination of pending assessments at various levels of authorities.

Since the amounts involved are significant and due to the range of possible outcomes leading to high estimation uncertainty that requires significant management and auditor judgement, this matter is considered to be a key audit matter for the current year audit.

| Companyâs legal and finance personnel.

â¢ Tested the design and operating effectiveness of the controls pu in place by the management in relation to assessment of the outcome of the pending litigations.

â¢ Inspected the summary ol litigation matters and discussed key developments during the year with the Companyâs Legal and Finance personnel.

â¢ Inspected and evaluated, where applicable, external legal advice sought by the Company. Obtained direct confirmations from the dealing lawyers for certain material ongoing litigations.

â¢ Discussed and challenged the managementâs assessment of the likelihood, magnitude and accounting of any liability that may arise in certain material cases based on PPR analysis. Accordingly, we reviewed the amount of contingent liabilities disclosed in the Standalone Financial Statements and exercised our professional judgment to assess appropriateness of such conclusions, involving experts as required.

â¢ Evaluated the adequacy of disclosures made in the Standalone Financial Statements in accordance with the applicable accounting standards.

_ M

Provision For Warranty

As a part of contractual term, the company''s management makes warranty estimation which are established using historical information on the nature, frequency and average

Our audit procedures included the following;

â¢ Evaluated managementâs assumption and judgement relating to estimation of warranty

	cost of warranty claims and also	provision considering business
	management estimates regarding	environment in which the
	possible future outflow on servicing the	Company operates.
	customers for any corrective action in	â¢ Obtained an understanding of
	respect of product failure which is	the Contract terms to evaluate
	generally expected to be settled within a	the adequacy of the provision
	period of 1 to 2 years from the date of	estimated by the management.
	supply.	â¢ Reviewed the past history of warranty claims to evaluate the
	The company''s obligation to replace or	reasonableness of the warranty
	repair faulty goods under the standard warranty terms is recognized as a provision and is not adjusted against transaction price as the customer does not have option to purchase warranty separately. Owing to past trend of reversal of excess provision resulting from high estimation uncertainty that requires significant management and auditor judgement, this matter is considered to be a key audit matter for the current	provision considered.
	year audit.

Information other than the Standalone Financial Statements and auditorsâ report thereon

The Company''s Board of Directors is responsible for the other information. The other information comprises the information included in the Annual Report, but does not include the standalone financial statements and our auditorsâ report thereon. The Annual Report is expected to be made available to us after the date of this auditors'' report.

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

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

When we read the Annual Report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.

Responsibilities of management and those charged with governance for the Standalone Financial Statements

The Companyâs Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, changes in equity and cash flows of the Company in accordance with accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015 as amended. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent, and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statements, that give a true and fair view and are free from material misstatement, whether due to fraud or error.

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

Those Board of Directors is also responsible for overseeing the Company''s financial reporting process.

Auditorsâ Responsibilities for the audit of the Standalone Financial Statements

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

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

misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

â¢ Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the company has adequate Internal Financial Controls with reference to Standalone Financial Statements in place and the operating effectiveness of such controls.

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

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

â¢ Evaluate the overall presentation, structure and content of the Standalone Financial Statements, including the disclosures, and whether the Standalone Financial Statements represent the underlying transactions and events in a manner that achieves fair presentation.

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

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

when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2020 (âthe Order") issued by

the Central Government of India in terms of Section 143(11) of the Act, we give in the

Annexure-1, a statement on the matters specified in paragraphs 3 and 4 of the said

Order, to the extent applicable.

2. Further to our comments in Annexure -1â, as required by section 143(3) of the Act,

based on our audit, we report, to the extent applicable, that:

(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit of the accompanying Standalone Financial Statements.

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

(d) In our opinion, the aforesaid Standalone Financial Statements comply with Indian Accounting Standards prescribed under Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015 as amended.

(e) The company being a Government Company as defined under section 2(45) of the Act, pursuant to the Notification No. GSR 463(E) dated 5 June 2015 issued by the Ministry of Corporate Affairs, Government of India, the provisions of sub-section (2) of Section 164 of the Act, are not applicable to the company.

(f) With respect to the adequacy of the internal financial controls with reference to Standalone Financial Statements of the company as on 31 March 2024 and the operating effectiveness of such controls, refer to our separate report in Annexure-2.

(g) The company being a Government Company as defined under section 2(45) of the Act, pursuant to the Notification No. GSR 463(E) dated 5 June 2015 issued by the Ministry of Corporate Affairs, Government of India, the provisions of section 197 of the Act, are not applicable to the company.

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

i. The company does not have any pending litigations which would impact its financial position;

ii. The Company does not have any long-term contracts requiring a provision for material foreseeable losses;

iii. The company does not have any amount required to be transferred, to the Investor Education and Protection Fund;

iv. (a) The management has represented that, to the best of its knowledge and belief no funds have been advanced or loaned or invested (either from borrowed funds or securities premium or any other sources or kind of funds) by the Company to or in any person(s) or entity(ies), including foreign entities (âthe intermediariesâ), with the understanding, whether recorded in writing or otherwise, that the intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (''the Ultimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

(b) The management has represented that, to the best of its knowledge and belief no funds have been received by the Company from any person(s) or entity(ies), including foreign entities (âthe Funding Partiesâ), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (âUltimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; and

(c) Based on such audit procedures performed as considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the management representations under subclauses (a) and (b) above contain any material misstatement.

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

(b) As stated in note no. 38(9) (b) to the accompanying standalone financial statements, the Board of Directors of the Company have proposed final dividend for the year ended 31 March 2024 which is subject to the approval of the members at the ensuing Annual General Meeting. The dividend declared is in accordance with section 123 of the Act to the extent it applies to declaration of dividend.

vi. Based on our examination which included test checks, the company has used accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software. Further, during the course of our audit we did not come across any instance of audit trail feature being tampered with. Additionally, the audit trail has been preserved by the company as per the statutory requirements for record retention.

3. As required by section 143(5) of the Act, we give in âAnnexure-3â, a statement on the matters specified in the directions issued by the Comptroller and Auditor General of India in respect of the Company.

Mar 31, 2023

Report on the Audit of the Standalone Financial Statements

We are issuing this revised audit report which supersedes our earlier report dated 25.05.2023 with an addition to Emphasis of Matter paragraph concurring to the opinion of the Comptroller and Auditor General of India under Section 143(6)(b) of the Companies Act, 2013.

Opinion

We have audited the accompanying standalone Ind AS financial statements of BHARAT DYNAMICS LIMITED ("the Company"), which comprise the Balance Sheet as at March 31, 2023, and the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Cash Flow Statement for the year then ended, and other explanatory information and a summary of the significant accounting policies and Notes to the standalone Ind AS financial statements (hereinafter referred to as "Standalone Ind AS financial statements").

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Standalone Ind AS financial statements give the information required by the Companies Act, 2013("the Act") in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31^st March 2023, and Profit and Other Comprehensive Income, changes in Equity and its Cash Flows for the year ended on that date.

Basis for Opinion

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

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

Key Audit Matters	How our audit addressed the Key Audit Matter
Revenue Recognition: Sale and Service	Principal Audit procedures performed include:
Contracts:	1. We assessed the appropriateness of the revenue recognition policies of the company and whether
The principal products of the Company comprise	its adoption is as per the covenants of the
defense equipment where the sale is concluded	applicable accounting standards.
after inspection by or on behalf of the customer	2. We evaluated the design of key controls and
and after acceptance at its facility.	operating effectiveness of the relevant key controls with respect to revenue recognition on selected
Revenue is thus recognised after such inspection	transactions.
and when customer obtains control of the goods.	3. We performed substantive testing by selecting
We identified revenue recognition as a key audit	samples of revenue transactions, recorded during
matter because	the year by testing the underlying documents.
a. The Company and its external	4. We tested the revenue transactions recorded
stakeholders focus on revenue as a key	nearer to the financial year end date by verifying
performance indicator.	the underlying documents to determine whether
b. Such focus creates an incentive for	the revenue had been recognized in the
revenue to be overstated or recognised	appropriate financial period.
before control has been transferred.	5. We tested the assumptions made by the
c. In a few cases revenue has been	management in determining full or proportionate
recognized but goods are in the	revenue recognition in respect of service contracts
possession of the company based on the	(job works and repairs & overhauls) by verifying
instructions of the customer. Application	appropriate evidence.
of the principle of "bill and hold" required	6. Recognition of unbilled revenue were validated
examination.	with milestone achievements with reference to
d. There are performance obligations which	contract terms.
do not relate to core activity of the	7. The levy of Liquidated damages were validated
company but form part of the	with reference to the contracts and effective
deliverables under Sale Contracts. In such	delivery dates. /"''"c''c	A M
cases time of recognition of performance	8. The "bill and hold" principles adopted^^t^
obligation is a complicated subject.	company were validated with the F^P?/TOj!%(	2424
	available with the company. f [jll&d,	h/s

Thus revenue recognition is a Key Audit Matter Refer: Note Nos. 30, 38(11), 38(20) and Item No.3 of Accounting Policy.	9. Satisfaction of performance obligations and recognition of revenue in respect of goods that are not the core product of the company, were examined in context to the overall sale contract. Our audit approach did not reveal any noncompliance with the company''s declared accounting policies, GAAP and Ind AS.
Inventories:	Principal Audit procedures performed include:
Audit of Inventories comprise	1. System and internal controls are evaluated
a. Physical verification	to ensure that there are no recording
b. Confirmation of third party holdings	delinquencies with respect to time of
c. Valuation	recording, quantity recorded, and item
d. Redundancies - Recognition and reversal	recorded. 2. Applied audit procedures to validate the
Inventories held by the company are custom	physical availability of the inventories as
made, sensitive and of high value. The holding	supported by physical verification reports
period is also high in tune with the long time	of the management teams.
windows taken for order execution.	3. Applied principles of roll back and roll over for few inventories to validate the year end
The nature of activity of the company and the	holding.
order execution timelines are spread over	4. Perused third party confirmations and
several years. This results in dated inventories	matched with the company''s records.
but not redundant considering ongoing the	Variances if any, are reduced from
production activity.	inventory values. 5. Sample checking of valuation methodology
The application of declared policy on redundancy	by the system was done through manual
and its appropriateness therefore needs to be	validation for the material portion of the
checked.	inventory. 6. Methodology of loading actual overheads
The focus on inventories is thus significant in the	to the inventory values were validated and
audit process and a Key Audit Matter.	confirmed to be in tune with costing principles.
Please refer Note No.10 and Accounting Policy	7. The policy of recognizing redundancy of
No.7	materials (Accounting policy no 7.4.) and Management''s override of such policy was_
	tested with appropriate evidence^Ijs; conform that such policies as wefl^Kthe	5/
	override are reasonable and inftwff6Lw?tfe-⁽industry conditions. 1 ^ Ucfrias	02f

	Our audit approach did not reveal any noncompliance with the company''s declared accounting policies, GAAP and Ind AS.
Recognition-Property, Plant and Equipment and	Principal Audit procedures performed include:
Capital Work in progress a) The process of capitalization of an asset	Understanding the process of initiating, approving
encompasses several stages such as	and issue of purchase/work orders
placing of work orders, receipt, inspection, getting site ready,	Method followed in capturing the relevant direct
installation, trial runs and decision on	and indirect costs for capitalization through the
date of commercial operations. In some	accounting software and fixed asset module
instances procurement in components leading to a whole asset, would lead to	Procedure for determining date of capitalization
different time periods in the process.	and useful life of the project/asset/component
b) In cases of buildings the process would	with communications/certificates from user
involve inspection for each stage of	departments.
completion and approval of running bills from contractors. In some cases the cost	Performed detailed testing of project/ asset/
of an asset may not be captured correctly	component capitalized during the year
in the first instance since inspection and approval of bills may be done after COD.	Ensured adequate disclosures as per Ind AS
c) The processes in a) & b) above need to be properly translated in books of accounts	The company has capitalized Rs 6,806.35 lakhs of
ensuring correct costs (both direct and	Tangible Assets and Rs 1,223.40 lakhs of Intangible
indirect costs) are capitalized at the	assets during the reporting period.
correct date under correct asset classification.	Our audit procedures as detailed above has not
d) In cases where the asset purchases/	revealed any incorrect capitalization or inadequate
projects are spread over more than one	disclosures
financial year the recognition of Capital WIP with proper costs is essential. The validation of various parameters of capitalization such as timing, cost, useful life, classification and depreciation rate is an area of higher risk of mis-statements. The compliance
with Indian accounting standards also poses a
significant audit risk.
Hence it is considered as a Key Audit Matter,	/ ./FRN: 002424 1 OrTn Kr,âuA
Refer Note Nos. 1 & 5 and Accounting Policy	\	n J
No.ll.	\ CS. \Chennal - 1f - ^r zy

We draw attention to Note 38(25) to the standalone financial statements regarding ifnpact on the company''s operation due to the ongoing Russia-Ukraine war.

We draw attention to Note: 38 (27) regarding the impact on the financials due to change in Accounting Policy on Customer Financed assets.

We draw attention to Note No 38(7) to the standalone financial statements:

The Company holds inventory valued at Rs 8,350.75 lakhs as at 31.03.2023 that was procured for certain orders. These orders were short closed by the customer. The company holds advance from customer of Rs 36,234.42 lakhs relating to such orders. The inventories are nonmoving for more than five years. As per company''s accounting policy redundancy provision is to be recognised for inventory which are non-moving for more than five years. No redundancy provision is recognised for these inventories.

The company contends that the customer has impliedly agreed to take over the inventory against the advance which is sufficient to cover the value of inventory. Hence no loss would be incurred by the company on this account and no redundancy provision is therefore considered necessary. There is no explicit term in the sale contracts to set-off the advance to the value of inventory.

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

Information other than the Standalone Financial Statements and Auditor''s Report thereon

The Company''s Management and Board of Directors are responsible for the other information. The other information comprises the information included in the Company''s Annual Report but does not include the standalone Ind AS financial statements and our auditorâs report thereon.

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

In connection with our audit of the standalone Ind AS financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements, or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatemenj>-of this other information, we are required to report that fact. We have nothing to repopf^fo^ this regard. / Â»/ff

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

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

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and the estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the standalone financial statements, management and Board of Directors are responsible for assessing the Company''s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Board of Directors are responsible for overseeing the Company''s financial reporting process.

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

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

As part of an audit in accordance with SAs, we exercise professional judgment and mairtM&i^

i ⁰ f Â¦ â

professional skepticism throughout the audit. We also: (J râ

I *>4â

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

â¢ Obtain an understanding of internal financial controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial control with reference to standalone financial statements in place and the operating effectiveness of such controls.

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

â¢ Conclude on the appropriateness of management''s use of the going concern basis of accounting in preparation of Standalone Financial Statements and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor''s report to the related disclosures in the standalone Ind AS financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor''s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

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

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

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

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

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

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order,2020 ("the Order"), issued by the Central Government in terms of sub-section (11) of Section 143 of the Act, we give in Annexure A, a statement on the matters specified in Paragraphs 3 and 4 of the Order, to the extent applicable.

2. As required under Section 143(3) of the Act, we report that:

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

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

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

d) In our opinion, the aforesaid Standalone Ind AS financial statements comply

with the Indian Accounting Standards prescribed under Section 133 of the Act^ââ^ and the Rules made thereunder.

e) In terms of Notification no. G.S.R.463(E)dt. 05.06.2015 issued by Ministry of Corporate Affairs, the provision of Section 164(2) of the Companies Act, 2013 in respect of disqualification of Directorate not applicable to the Company.

f) With respect to adequacy of the internal financial controls with reference to financial statements of the Company and the operating effectiveness of such controls, refer to our separate report in Annexure B;

g) With respect to Directions issued by the Comptroller and Auditor General of India under Section 143 (5) we give our report in Annexure C:

h) The provisions of Section 197 are not applicable to this government company (in terms of MCA Notification NO.GSR 463 (E) dated 05th June 2015) as the managerial remuneration is paid as per the appointment letter from the Government of India, and

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

i) The company does not have any pending litigations which would impact its financial position, except litigations with respect to taxation matters. The financial impact of such litigations are disclosed in Para 7(c) of Annexure A to this report.

ii) The company does not have any long-term contracts requiring a provision for material foreseeable losses.

iii) The company does not have any amounts required to be transferred to the Investor Education and Protection Fund

iv) The management has represented that, to the best of its knowledge and belief that no funds have been advanced to or in any other persons or entities, including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

v) The management has represented that, to the best of its knowledge and belief that the company has not received any funds from any persons or entities, including foreign entities ("Funding Parties") with the understanding, whether recorded in writing or otherwise, that the/-" company shall, whether, directly or indirectly, lend or invest in otbw^ persons or entities identified in any manner whatsoever by or on beh^fgf^ the Funding Party ("Ultimate Beneficiaries") or provide any guarartte&i-x

security orthe like on behalf of the Ultimate Beneficiaries other than those disclosed in the notes to accounts

vi) Based on the audit procedures that we considered reasonable and appropriate in the circumstances, nothing has come to our notice that that has caused us to believe that the representations under sub clause(iv) and (v) contain any material mis-statement.

vii) a. The final dividend paid by the Company during the year in respect of the same declared for the previous year is in accordance with Section 123 of the Companies Act 2013

b. The interim dividend declared and paid by the Company during the year and until the date of this audit report is in accordance with section 123 of the Companies Act 2013.

c. As stated in Note No. 38(9) to the financial statements, the Board of Directors of the Company have proposed final dividend for the year which is subject to the approval of the members at the ensuing Annual General Meeting. The dividend declared is in accordance with section 123 of the Act to the extent it applies to declaration of dividend.

viii) The reporting requirement on whether the company has used such accounting software that has a feature of recording audit trail is made applicable from the financial years commencing on or after 1^st April 2023 and hence not applicable to the year under report.

Mar 31, 2022

INDEPENDENT AUDITOR''S REPORT

To the members of BHARAT DYNAMICS LIMITED

Report on the Audit of the Standalone Financial Statements

We are issuing this revised audit report which supersedes our earlier report dated 26.05.2022, for the following reasons:

a. stating the unit of measurement of values in the tobies under Clauses 1(c), 7(a) and 7 (b) in the Annexure A to the Audit Report containing our report on various matters specified in Paras 3 and 4 of the Companies (Auditor''s Report) Order, 2020.

b. Clarifying on the reporting requirement under Clause (g) of Rule 11 to Companies ( Audit and Auditor''s Rules) 2014. This amendment is made in compliance to the provisional comments issued by the Principal Director of Commercial Accounts under Section 143(6)(b) of the Companies Act, 2013.

Opinion

We have audited the accompanying standalone Ind AS financial statements of BHARAT DYNAMICS LIMITED ("the Company"), which comprise the Balance Sheet as at March 31, 2022, and the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Cash Flow Statement for the year then ended, and other explanatory information and a summary of the significant accounting policies (hereinafter referred to as "Standalone Ind AS financial statements").

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Standalone Ind AS financial statements give the information required by the Companies Act, 2013("the Act") in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31*â March 2022, and Profit and Other Comprehensive Income, changes in Equity and its Cash Flows for the year ended on that date.

Basis for Opinion

Key Audit Matters

Key Audit Matters	How our audit addressed the Key Audit Matter
Recognition-Property , Plant and Equipment	Principal Audit procedures performed
and Capital Work in progress	include:
a) The process of capitalisation of an asset encompasses several stages such	? Understanding the process of
as placing of work orders, receipt,	initiating, approving and issue of
inspection, getting site ready,	purchase/work orders
installation, trial runs and decision on date of commercial operations. In	? Method followed in capturing the
some instances procurement in	relevant direct and indirect costs for
components leading to a whole asset.	capitalisation through the accounting
would lead to different time periods in	software and fixed asset module
the process. b) In cases of buildings the process would	? Procedure for determining date of
involve inspection for each stage of	capitalisation and useful life of the
completion and approval of running	project/asset/com ponent___with
bills from contractors. In some cases

the cost of an asset may not be captured correctly in the first instance since inspection and approval of bills may be done after COD. c) The processes in a) & b) above need to be properly translated in books of accounts ensuring correct costs( both direct and indirect costs) are capitalised at the correct date under correct asset classification. d) In cases where the asset purchases/ projects are spread over more than one financial year the recognition of Capital WIP with proper costs is essential. The validation of various parameters of capitalization such as timing, cost, useful life, classification and depreciation rate is an area of higher risk of mis-statements. The compliance with Indian accounting standards also poses a significant audit risk. Hence it is considered as a Key Audit Matter, Refer Note Nos. 1,2,4 & 5 and Accounting Policy No. 11.		communications/certificates from user departments. ? Performed detailed testing of project/ asset/ component capitalised during the year ? Ensured adequate disclosures as per Indian Accounting Standard The company has capitalized Rs 3,131.55 lakhs of PPE, Rs 99.85 lakhs of Intangible assets and Rs 5,122,.58 lakhs of right to use assets in the form of leasehold land. Our audit procedures as detailed above has not revealed any incorrect capitalisation or inadequate disclosures
Exceptional Item: Impairment recognised		We reviewed the terms of lease, more
during the vear:		specifically to the covenants that specify
		a. the purpose for which the lease was
The company has assessed impairment loss in		taken
respect of a lease property and	the	b. the timelines within which the
infrastructure created therein. The total value		company should submit building plans
of impairment assessed during the year is Rs		c. the timelines by which the company
3,358.57 lakhs.		should commence and complete
		construction
The impairment loss is presented in the Profit		d. terms of payment of charges and other
& Loss accounts as an exceptional item.		levies due to the lessor

The consideration of triggers, identification of significant changes with adverse effect, the consequent impairment assessment are areas that involve significant management judgement. â¢

The impairment is also one of the significant events that occurred during the current period under audit. Therefore, this subject as a Key Audit Matter.

Please refer Note No. 38(1) and Accounting Policy 15.

e. the right of the lessor to retrieve the leased property in certain circumstances.

We reviewed the correspondence between the company and the lessor on the relevant subjects such as levy of service charges, request for extension of lease and lessor''s intention to retrieve the leased property.

We assessed the legal rights and obligations of either party flowing from the lease deed.

We reviewed the status of the project for which the right to use asset was acquired and the circumstances around it as at the date of balance sheet.

We evaluated the management''s assessment of the attendant circumstances leading to the decision to recognise impairment.

The audit procedures adopted by us did not lead to any reservations regarding the impairment assessment.

Contingent Liabilities disclosed with regard

Our audit procedures relating to Contingent Liabilities disclosed regarding certain legal and tax matters included the following:

â¢ We understood, assessed and tested the design and operating effectiveness of key controls surrounding assessment of litigations relating to the relevant laws and regulations;

â¢ We discussed with the management the recent developments and the status of the material litigations;

â¢ We performed our assessment on a test basis on the underlying calculations supporting the contingent liabilities/other

to taxation related disputes

The company is in litigation with the tax

departments on various issues, received demands, deposited a portion of the demands under protest and has contested against the orders in appropriate forums. In one instance the first appellate authority has decided against the company.

The issues involved are varied. The company has not made any provision for these demands which total to Rs 30,951.31 lakhs crores. All the demands are treated as contingent liabilities.

This is a key audit matter, as evaluation of these matters requires management judgement and estimation, interpretation of laws & regulations and application of relevant judicial precedents to determine whether a provision is required or the same may be disclosed as a contingent liability, and making related disclosures in the financial statements. Refer Note Nos 38 (6) and Accounting Policy No. 16	significant litigations disclosed in the Standalone Financial Statements; â¢ We used our expertise to gain an understanding and to evaluate the disputed tax matters; â¢We evaluated the orders raising the demands and other communication from regulatory authorities and management responses thereto; â¢ We evaluated management''s assessments by understanding precedents set in similar cases and assessed the reliability of the management''s past estimates/judgements; â¢ We evaluated management''s assessment around those matters that are not disclosed or not considered as contingent liability, as the probability of material outflow is considered remote by the management; and â¢ We assessed the adequacy of the Company''s disclosures. Based on the above work performed, the assessment in respect of litigations and related disclosures relating to contingent liabilities/other significant litigations in the Standalone Financial Statements is considered reasonable.
Provisions & Accounting Estimates:	Â¦ The audit procedures adopted to test
The company creates several charges as	the judgements of the management,
Provisions. These charges relate to obligations	the appropriateness of historical data
to employees, vendors and customers.	for quantification and application of
	Ind AS covenants are:

The charges arise out of legal obligations or	Â¦ Review of the subject with reference
based on trade practices or governmental	to the triggers based on which the
directives or its own past practices that raise	obligations are purported to arise
expectations of other parties to act similarly.
The need for the charge and consequent	Â¦ Review of past practices supported by factual evidences that the company''s
provisioning involve management judgement	previous actions have given raise to
and susceptible to high risks.	expectations in the market leading to
Quantification of the charge involves high	a constructive/legal obligation as at the date of balance sheet
degree of estimation and generally based on
historical data or trade practices. This again	Â¦ Review of relevant documents that
involves management judgement on selection	support the management judgement
of the basis for quantification.	that an obligation exists and that will
Such judgements and estimates need to be	entail outflow of company''s economic resources
tested appropriately and should also conform
to Ind AS covenants. It is therefore key audit	" Assessment of past practices, triggers
matter.	and historical data as being eligible to
	form the basis for the
Refer Note Nos 27 & 38 and Accounting Policy	provision/accounting estimates
No. 16
	Â¦ Review of precedents with supporting evidences that benchmark the process of estimation of provision Â¦ Validation of the quantum of provision with reference to present facts. Â¦ Assessment of adequacy of disclosures made and compliance with Ind AS covenants. Our review of the provisions created by the
	company does not reveal any material discrepancy in the provisioning as well as their quantification.

Emphasis of Matter

We draw attention to Note Nos. to the standalone financial statements specified below:

Note No. 38(1): The exceptional item of Rs 3,358.57 lakhs reported in the profit & loss account represents recognition of impairment of a right to use asset and infrastructure created thereon. The right to use was acquired in 2014 for a specific project of Government of India. The project is yet to be finalized. The company''s right is tempered with timelines which the company has not complied. The lessor has exercised its option to repossess the asset due to non-compliance. The company is pursuing with the lessor for extension of timelines. The company has recognised impairment pending such extension.

Note No. 38(7): The company holds unusable inventory of Rs 9,446 lakhs which relates to an order that is since cancelled by the customer. The company holds a customer advance of Rs 36,234.42 lakhs. No provision has been made towards such inventory which is held as a current asset. The company contends that the customer''s advance held is sufficient to cover the value of inventory, so no loss would be incurred by the company on this account and hence no provision is considered necessary.

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

Information other than the Standalone Financial Statements and Auditor''s Report thereon

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

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Management''s responsibility for the Standalone Financial Statements

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

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

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

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

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

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

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2020 ("the Order"), issued by the Central Government in terms of sub-section (11) of Section 143 of the Act, we give in Annexure A, a statement on the matters specified in Paragraphs 3 and 4 of the Order, to the extent applicable.

2. As required under Section 143(3) of the Act, we report that:

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

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

d) In our opinion, the aforesaid Standalone Ind AS financial statements comply with the Indian Accounting Standards prescribed under Section 133 of the Act and the Rules made thereunder.

g) With respect to Directions issued by the Comptroller and Auditor General of India under Section 143 (5) we give our report in Annexure C: and

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

ii) The company does not have any long-term contracts requiring a provision for material foreseeable losses.

iii) The company does not have any amounts required to be transferred to the Investor Education and Protection Fund

. or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

v) The management has represented that, to the best of its knowledge and belief that the company has not received any funds from any persons or entities, including foreign entities ("Funding Parties") with the understanding, whether recorded in writing or otherwise, that the company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries other than those disclosed in the notes to accounts

vi) Based on the audit procedures that we considered reasonable and appropriate â¢ in the circumstances, nothing has come to our notice that that has caused us to

believe that the representations under sub clause ( iv) and (v) contain any material mis-statement.

vii) The dividend declared/paid by the company is in accordance with Section 123 of the Companies Act, 2013.

viii) The reporting requirement on whether the company has used such accounting software that has a feature of recording audit trail is made applicable from the financial years commencing on or after 1^st April 2022 and hence not applicable to the year under report.

Mar 31, 2018

To the Members of Bharat Dynamics Limited

We are issuing this revised report to comply with the observations made by the Comptroller and Auditor General of India with regard to Paragraph 7 (b) of Annexure A to the Independent Auditorsâ Report i.e., Report under CARO, 2016. This Independent Auditorsâ Report supersedes our report issued on 30/05/2018.

1. Report on the Standalone Financial Statements

We have audited the accompanying standalone Ind AS financial statements of Bharat Dynamics Limited (âthe Companyâ), which comprise the Balance Sheet as at March 31, 2018, and the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Cash Flow Statement for the year then ended, and other explanatory information and a summary of the significant accounting policies (herein after referred to as âStandalone Ind AS financial statementsâ).

2. Managementâs responsibility for the Standalone Financial Statements

The Companyâs Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (âthe Actâ) with respect to the preparation of these Standalone Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Act read with relevant rules issued thereunder.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; the selection and application of appropriate accounting policies; making judgments and the estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Standalone Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

3. Auditorsâ Responsibility

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

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

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

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the Standalone Ind AS financial statements. The procedures selected depend on the auditorâs judgment, including the assessment of the risks of material misstatement of the Standalone Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Companyâs preparation of the Standalone Ind AS financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances.

An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Companyâs Directors, as well as evaluating the overall presentation of the Standalone Ind AS financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Standalone Ind AS financial statements.

4. Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Standalone Ind AS financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India including the Ind AS, of the financial position of the Company as at 31 March 2018, and its financial performance including other comprehensive income, changes in equity and its cash flows for the year ended on that date.

5. Emphasis of Matters:

We draw the attention to:

Note number 28 of the standalone Ind AS financial statements which accounting of certain sales, based on acceptance of quality by the Customer and prices by the representative of the customer, awaiting the amendments to the contract.

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

6. Report on Other Legal and Regulatory Requirements

(1) As required by the Companies (Auditorâs Report) Order, 2016 (âthe Orderâ) issued by the Central Government of India in terms of sub-section (11) of Section 143 of the Act, we give in the Annexure A, a statement on the matters specified in the Paragraph 3 and 4 of the Order.

(2) As required under Section 143 (3) of the Act, we report that:

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

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

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

(d) In our opinion, the aforesaid Standalone Ind AS financial statements comply with the Indian Accounting Standards prescribed under Section 133 of the Act.

(e) On the basis of written representations received from the directors as on March 31, 2018 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2018 from being appointed as a director in terms of Section 164 (2) of the Act

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

(g) With respect to Directions issued by the Comptroller and Auditor General of India under Section 143 (5) we give our report in Annexure C: and

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

(i) The Company has disclosed the impact of pending litigations on its financial position in its Ind AS financial statements vide Note No. 36(6) of Notes to the Ind AS Financial Statements

(ii) The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts.

(iii) No amounts are required to be transferred, to the Investor Education and Protection Fund by the Company.

The Annexure referred to in Paragraph 6 (1) of Independent Auditorsâ Report to the Members of Bharat Dynamics Limited On the standalone Ind AS financial statements for the year ended on March 31, 2018

1. (a) Subject to sub-clause (c) herein below the Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) The Company has a regular program of physical verification of its fixed assets by which fixed assets are verified in phased manner over a period of five years. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and nature of its business. Pursuant to the program, certain fixed assets were physically verified by the Management during the year. In our opinion, and according to the information and explanations given to us, no material discrepancies were noticed on such verification.

(c) According to the information and explanations given to us and on the basis of our examination of records of the Company, the title deeds of immovable properties are held in the name of the Company, except the following properties for which the title is yet to be received by the Company.

Nature of Asset	Amount (Rs. In Lakhs)	Reasons
Freehold Land at Kanchanbagh ( including Investment Property valued at 0.97 Lakh)	29.39	Land allotted free of cost by the State Government. No Title Deed is issued. Value is fair value as per Ind AS 16
		Land is acquired through TSIIC. As per their rules Land will be registered only after setting up of the Factory.
Freehold Land at Ibrahim Patnam	5831.28
Freehold Land at Visakhapatnam	376.13	State Government yet to execute to the title deeds.
Lease hold land at Visakhapatnam	-	Lease Deed is not executed by the Lessor.

2. The Inventory of finished goods, raw materials, stores, spare parts, except those in transit and with third parties have been physically verified by the management during the year. We consider that the frequency of the verification is reasonable, having regard to the nature of business and size of the Company, discrepancies noticed on physical verification are appropriately dealt with in the accounts.

3. According to the information and explanations given to us, the Company has not given unsecured loans to companies/firms/parties covered in the register maintained under section 189 of the Companies Act, 2013, hence other matters relating to the loans and advances to parties listed under Section 189 are not applicable.

4. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Sections 185 and 186 of the Companies Act, 2013 in respect of grant of loans, making investments and providing guarantees, as applicable.

5. According to the information and explanations given to us, the Company has not accepted any deposits during the year and hence compliance with the provisions of Sections 73 to 76 of the Act and the Companies (Acceptance of Deposit) Rules, 2014, as amended with regard to acceptance of deposits are not applicable to the Company

6. According to the information and explanations given to us, the Company is required to maintain cost records under Section 148 (1) of the Companies Act, 2013. We have broadly reviewed these records and are of the opinion that prima facie, the prescribed accounts and records are made and maintained. We have not, however, made a detailed examination of these records with a view to determine whether they are accurate and complete.

7. According to the information and explanations given to us, in respect of statutory dues:

(a) The Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Employees State Insurance, Income-tax, and Sales Tax, Service Tax, Value Added Tax, Customs Duty, Excise Duty, Cess and other material statutory dues applicable to it to the appropriate authorities. According to the records of the Company and information and explanations given to us none of these undisputed taxes are in arrears as at March 31, 2018 for a period exceeding six month from the date they become payable.

(b) According to the records of the Company and information and explanations given to us the following are the particulars of disputed amounts payable in respect Central Sales Tax and Service Tax:

(Rs. In Lakh)

Name of the Statute	Nature of Dues	Disputed Amount	Paid under Protest/ Adjust-ed as	Balance	Period to which the amount	Forum where dispute is pending
		(Rs. in Lakhs)	required under law		relates	Forum where dispute is pending
Central Sales Tax Act	Central Sales Tax	284.36	71.09	213.27	2007-08	TS VAT AT
Central Sales Tax Act	Central Sales Tax	332.14	166.07	166.07	2010-11	TS VAT AT
Central Sales Tax Act	Central Sales Tax	5550.83	693.85	4856.98	2011-12	Writ pending with High Court at Hyderabad
Central Sales Tax Act	Central Sales Tax	5024.27	0	5024.27	2012-13	Writ pending with High Court at Hyderabad
Central Sales Tax Act	Central Sales Tax	4266.81	0	4266.81	2013-14	Writ pending with High Court at Hyderabad
Central Sales Tax Act	Central Sales Tax	6468.12	0	6468.12	2014-15	Writ pending with High Court at Hyderabad
Finance Act, 1994	Service Tax	2355.51	0	2355.51	2012-13 to 2014-15	Principal Commissioner, Service Tax, Hyderabad
TOTAL		24282.04	931.01	23351.03

8. According to the information and explanations given to us, we are of the opinion that the Company has not defaulted in the repayment of dues to financial institutions, banks, government and the Company has not issued any debentures.

9. The Company has not raised any money by way of initial public offer or further public offer or by way of term loans during the year, hence other matter contained in Companies (Auditorâs Report) Order, 2016 (CARO) is not applicable.

10. To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no fraud on the Company by its officers has been noticed or reported during the year.

11. Provision of Section 197 of the Companies Act, 2013 is not applicable to the Company.

12. The Company is not NIDHI company hence matter relating to NIDHI company in CARO is not applicable to the Company

13. According to the information and explanations furnished to us, and based on our examination of books and records, we are of the opinion that all transactions with related parties are in compliance with sections 177 and 188 of the Companies Act, 2013 and all the details have been disclosed in the financial statements as per applicable Accounting Standards.

14. The Company has not made any preferential offer of equity shares during the year and accordingly other matters relating to preferential offer are not applicable.

15. In our opinion and according to the information and explanations given to us, the Company has not entered into any non-cash transactions with its directors or persons connected with them during the year and hence provisions of Section 192 of the Companies Act, 2013 are not applicable

16. The Company is not required to be registered under Section 45-1A of the Reserve Bank of India Act.

The Annexure referred to in Paragraph 6 (2) (f) of Independent Auditorsâ Report to the Members of Bharat Dynamics Limited On the standalone Ind AS financial statements for the year ended on March 31, 2018

Report on the Internal Financial Controls over Financial Reporting under clause (i) of sub section 3 of Section 143 of the Companies Act, 2013

1. We have audited the internal financial controls over financial reporting of Bharat Dynamics Limited (the Company) as at March 31, 2018 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.

2. Managementâs Responsibility:

The Companyâs management is responsible for establishing and maintaining internal financial controls based on the internal financial control over financial reporting criteria established by the Company considering the essential components of control stated in the âGuidance Note on Audit of Internal Financial Controls Over Financial Reportingâ issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to Companyâs policies, the safeguarding of its assets, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

3. Auditorâs Responsibility:

Our responsibility is to express an opinion on the Companyâs internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the âGuidance Note on Audit of Internal Financial Controls Over Financial Reportingâ (Guidance Note) issued by the Institute of Chartered Accountants of India and the Standards on Auditing prescribed under Section 143 (10) of the Companies Act, 2013, to the extent applicable to an audit of Internal Financial Controls. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that material weakness exists, and testing and evaluating the design and operating effectiveness of internal financial control based on assessed risk. The procedures selected depend on the auditorâs judgement, including the assessment of the risks of material misstatements, whether due to fraud or error.

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

4. Meaning of Internal Financial Controls Over Financial Reporting: A companyâs internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companyâs internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditure of the company are being made only in accordance with authorisations of management and directions of the company.; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the companyâs assets that could have material effect on the financial statements.

5. Inherent Limitations of Internal Financial Controls Over Financial Reporting:

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

6. Opinion:

In our opinion, to the best of our information and according to the explanations given to us, the Company has, in all material respects, an adequate internal financial controls over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2018, based on âthe internal control over financial reporting criteria established by the Company considering the essential components of internal controls stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of Indiaâ.

Place : Hyderabad

Date : 04-07-2018

Mar 31, 2017

We are issuing this revised report to comply with the observations made by the Comptroller and Auditor General of India with regard to Paragraph 1 (c) and Paragraph 7 (b) of Annexure A to the Independent Auditorsâ Report i.e., Report under CARO, 2016. This Independent Auditorsâ Report supersedes our report issued on 03/08/2017.

1. Report on the Standalone Financial Statements

We have audited the accompanying standalone Ind AS financial statements of Bharat Dynamics Limited (âthe Companyâ), which comprise the Balance Sheet as at March 31, 2017, and the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Cash Flow Statement for the year then ended, and other explanatory information and a summary of the significant accounting policies (herein after referred to as âStandalone Ind AS financial statementsâ).

2. Managementâs responsibility for the Standalone Financial Statements

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; the selection and application of appropriate accounting policies; making judgments and the estimates that arc reasonable and prudent; and the design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Standalone Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

3. Auditorsâ Responsibility

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

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

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Standalone Ind AS financial statements.

4. Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Standalone Ind AS financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India including the Ind AS, of the financial position of the Company as at 31 March 2017, and its financial performance including other comprehensive income, changes in equity and its cash flows for the year ended on that date.

5. Emphasis of Matters:

We draw the attention to:

(i) Note number 27 of the standalone Ind AS financial statements which accounting of certain sales, based on acceptance of quality by the Customer and prices by the representative of the customer, awaiting the amendments to the contract.

(ii) Note number 35(19) of the standalone Ind AS financial statements regarding disclosure of segment information as required under Ind AS 108.

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

6. Other Matter

The comparative financial information of the Company for the transition date opening Balance Sheet as at April 1, 2015 included in these Standalone Ind AS financial statements, are based on the previously issued statutory Standalone financial statements prepared in accordance with the Companies (Accounting Standards) Rules, 2006 audited by Garre & Co., Chartered Accountants for the year ended March 31, 2015, whose reports dated July 25, 2015, expressed an unmodified opinion on those Standalone financial statements, as adjusted for the differences in the accounting principles adopted by the Company on transition to the Ind AS, which have been audited by us. Our opinion is not modified in respect of this matter.

7. Report on Other Legal and Regulatory Requirements

(2) As required under Section 143 (3) of the Act, we report that:

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

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

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

(d) In our opinion, the aforesaid Standalone Ind AS financial statements comply with the Indian Accounting Standards prescribed under Section 133 of the Act.

(e) On the basis of written representations received from the directors as on March 31, 2017 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2017 from being appointed as a director in terms of Section 164 (2) of the Act

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

(g) With respect to Directions issued by the Comptroller and Auditor General of India under Section 143 (5) we give our report in Annexure C ; and

(i) The Company has disclosed the impact of pending litigations on its financial position in its Ind AS financial statements vide Note No. 35(6) of Notes to the Ind AS Financial Statements

(ii) The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts.

(iii) No amounts are required to be transferred, to the Investor Education and Protection Fund by the Company.

(iv) The Company has provided requisite disclosures in the Standalone Ind AS Financial statements as to holdings as well as dealings in Specified Bank Notes during the period from November 8, 2016 to December 30, 2016. Based on audit procedures and relying on the management representation, we report that the disclosures are in accordance with books of account maintained by the Company and as produced to us by the Management- Refer Note 35(9) to the Standalone Ind AS Financial statements.

ANNEXIJRE-A TO THE INDEPENDENT AUDITORSâ REPORT

The Annexure referred to in Paragraph 7 (I) of Independent Auditors â Report to the Members of Bharat Dynamics Limited On the standalone Ind AS financial statements for the year ended on March 31, 2017

1. (a) Subject to sub-clause (c) herein below the Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) The Company has a regular program of physical verification ol its fixed assets by which fixed assets are verified in phased manner over a period of five years. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and nature of its business. Pursuant to the program, certain fixed assets were physically verified by the Management during the year. In our opinion, and according to the information and explanations given to us, no material discrepancies were noticed on such verification.

(c) According to the information and explanations given to us and on the basis ot our examination of records of the Company, the title deeds of immovable properties are held in the name of the Company in respect of Lease hold land at Amaravati. Only Photo copies of the title deeds like Pahani, entry in the revenue records arc shown to us in resocct of the following properties:

Nature of the Asset	Amount Rs. in lakhs	Nature of document shown to us
Freehold Iand At Karmanghat and Chintalakunta	46.55	Photo Copy of Pahani
Freehold Land at Bhanur	194.66	Photo Copy of Mutation in revenue records
Freehold Land at Shamirpet	0.87	Photo copy of Mutation in revenue records

Title Deeds in respect of the following immoveable properties are not made available.

Nature of Asset	Amount (Rs.ln Laklis)	Reasons
Freehold Land at Ibrahim Patnam	5831.28	Land is acquired through TSIIC. As per their rules Land will be registered only after settinu up of the Factory.
Freehold Land at Kanchanbagh including Investment Property	29.39	Land allotted free of cost by the State Government. No Title Deed is issued. Value is fair value as per Ind AS 16 . _

Freehold Land at Karmanghat	21.66	Private land acquired by the State Govt, and allotted to the Company. Proper Title deeds are yet to be conveyed.
Freehold Land at Visaldiapatnam	376.13	State Government yet to execute to the title deeds.
Lease hold land at Visakhapatnam	-	Lease Deed is not executed by the Lessor.

7. According to the information and explanations given to us, in respect of statutory dues:

(a) The Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Employees State Insurance, Income-tax, and Sales Tax, Service Tax, Value Added Tax, Customs Duty, Excise Duly, Cess and other material statutory dues applicable to it to the appropriate authorities. According to the records of the Company and information and explanations given to us none of these undisputed taxes are in arrears as at March 31, 2017 for a period exceeding six month from the date they become payable.

(b) According to the records of the Company and information and explanations given to us the following are the particulars of disputed amounts payable in respect Central Sales Tax Act and Value Added Tax:

Name of the Statute	Nature of Dues	Disputed Amount (Rs.in . Lakhs)	Paid under Protest/ Adjusted as required under law	Balance	Period to which the amount relates	Forum where dispute is pending
Central Sales Tax Act	Central Sales Tax	284.36	71.09	213.27	2007-08	TS VAT AT
Central Sales Tax Act	Central Sales Tax	332.14	166.07	166.07	2010-11	TS VAT AT
Central Sales Tax Act	Central Sales Tax	5550.83	693.85	4856.98	2011-12	Writ pending with High Court at Hyderabad
Central Sales Tax Act	Central Sales Tax	5024.27	0	5024.27	2012-13	Writ pending with - High Court at Hyderabad
Central Sales Tax Act	Central Sales Tax	4266.81	0	4266.81	2013-14	Writ pending with High Court at Hyderabad
AP Vat Act	VAT	10.30	1.16	9.14	2010-11	AC VAT
TOTAL		15468.71	932.17	14536.54

11. Provision of Section 197 of the Companies Act, 2013 is not applicable to the Company.

12. The Company is not NIDHI company hence matter relating to N1DH1 company in CARO is not applicable to the Company

14. The Company has not made any preferential offer of equity shares during the year and accordingly other matters relating to preferential offer are not applicable.

16. The Company is not required to be registered under Section 45-1A of the Reserve Bank of India Act.

ANNEXURE-C TO THE INDEPENDENT AUDITORSâ REPORT

The Annexure referred to in Paragraph 7 (2) (g) of Independent Auditorsâ Report to the Members of Bharat Dynamics Limited On the standalone financial statements for the year ended on March 31, 2017

Report on the directions under sub-section 1 of Section 143 of the Companies Act, 2013

According to the information and explanations furnished to us and based on audit of the accounts of the Company, Bharat Dynamics Limited, we report hereunder on the directions given by the Comptroller and Auditor General of India.

Direction	Report			Impact
I. Whether the Company has clear title/lease deeds for freehold and leasehold respectively? If not please state the area of freehold and lease hold land for which title/lease deeds are not available.	The availability of clear title / lease deeds could not be ascertained as title deeds are not made available for our perusal in respect of following properties			Nil
	Nature of Land		Extent of Land
	1. Freehold land at Kanchanbagh		151 Acres 33 Guntas
	2. Freehold land at Karmanghat		82 Acres 31 Guntas
	3. Free hold Land at Visakhapatnam		10 Acres 13 Guntas
	4. Freehold land at Ibrahimpatnam (Sale agreement is available)		597 Acres 22.50 Guntas
	5. Lease Hold Land at Visakhapatnam		3 Acres 25 Guntas
	In respect of the following free hold properties only photo copies of title deeds like Pahani, Mutation in Revenue records of Government - are made available for our verification.
	Freehold I-and al	Extent of Land
	Karmanghat Chintalakunta Banur Shamirpet	73Ac 26 Guntas 37Ac 22 Guntas 995Ac 2 Guntas 3 Ac 78 Yards

2. Whether there are any cases of waiver / write off of debts / loans / interest etc. If yes, the reasons for and amount involved.	According to the information and explanations furnished to us and based on our examinations books, we are of the opinion that debt / advances were written of for amount of Rs.1.12 lakh.	Profit is adversely effected by Rs. 1.12 Lakh
3. Whether proper records are maintained for inventories lying with third parties & assets received as gift/grant(s) from the Govt, or other authorities.	Based on the examination of the books and records of the Company, we are of the opinion that proper records were maintained for the inventories lying with third parties. The company did not receive any gift or grant from the Govt, or other authorities during the year.	Nil

For S.R. MOHAN & Co.

Chartered Accountants

FR No: 002111S

Place: Hyderabad (G. JAGADESWARA RAO)

Date: 24/08/2017 M.No. 021361

PARTNER

Mar 31, 2016

INDEPENDENT AUDITORSâ REPORT To the Members of Bharat Dynamics Limited

1. Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of Bharat Dynamics Limited (âthe Companyâ), which comprise the Balance Sheet as at March 31, 2016, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended and a summary of significant accounting policies and other explanatory information.

2. Managementâs responsibility for the Standalone Financial Statements

The Companyâs Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013(âthe Actâ) with respect to the preparation and presentation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flow of the Company in accordance with accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act read with Rule 7 of the Companies (Accounting) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies, making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

3. Auditorsâ Responsibility

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

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

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

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

4. Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in accordance with the accounting principles generally accepted in India:

(i) In the case of Balance Sheet, of the state of affairs as at March 31, 2016;

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

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

5. Report on Other Legal and Regulatory Requirements

(1) As required by the Companies (Auditorâs Report) Order, 2016 (\the Orderâ) issued by the Central Government of India in terms of sub-section (11) of Section 143 of the Act, we give in the Annexure A, a statement on the matters specified in the Paragraph 3 and 4 of the Order.

(2) As required under Section 143 (3) of the Act, we report that:

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

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

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

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

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

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

(g) With respect to Directions issued by the Comptroller and Auditor General of India under Section 143 (5) we give our report in Annexure C: and

(i) The Company has disclosed the impact of pending litigations on its financial position in its financial statements vide Note No. 29.02 of Notes to the Financial Statements

(ii) The Company has made provision, as required under the applicable law or accounting standards for material losses, if any, on long term contracts. (AS 7 provision (refer Note No. 29.05 of Notes to the Financial Statements). There are no derivative Contracts.

(iii) There were no amounts to transfer amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

The Annexure referred to in Paragraph 5 (1) of Independent Auditors â Report to the Members of Bharat Dynamics Limited On the standalone financial statements for the year ended on March 31, 2016

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

(b) The Company has a regular program of physical verification of its fixed assets by which fixed assets are verified in phased manner over a period of five years. In accordance with this program certain fixed assets were verified during the year and no material discrepancies were noticed on such verification. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and nature of its business

(c) According to the information and explanations given to us and on the basis of our examination of records of the Company, the title deeds of immovable properties are held in the name of the Company, in respect of Lease hold land at Amaravati. Only Photo copies of the title deeds like Pahani, entry in the revenue records are available in respect of the following properties:

Nature of the Asset		Amount Rs. In lakhs	Nature of document shown to us
Freehold Land Karmanghat Chintalakunta	At and	46.55	Photo Copy of Pahani
Freehold Land at Bhanur		194.65	Photo Copy of Mutation in revenue records
Freehold Land Shamirpet	at	0.87	Photo copy of Mutation in revenue records

Title Deeds in respect of the following immoveable properties are not available.

Nature of Asset		Amount (Rs. Lakhs)	Reasons
Freehold Land at Ibrahim Patnam		5444.33	Land is acquired through TSIIC. As per their rules Land will be registered only after setting up of the Factory.
Freehold Land Kanchanbagh	at	-	Land allotted free of cost by the State Government. No Title Deed is issued.
Freehold Land Karmanghat	at	21.66	Private land acquired by the State Govt and allotted to the Company. Proper Title deeds are yet to be conveyed.
Freehold Land i/KiSakhapatnam	at	376.13	State Government yet to execute to the title deeds.

Lease hold land at Visakhapatnam

Lease Deed is not executed by the Lessor.

2. The Inventory of finished goods,, raw materials, stores, spare parts, except those in transit and with third parties have been physically verified by the management during the year. We consider that the frequency of the verification is reasonable, having regard to the nature of business and size of the Company discrepancies noticed on physical verification are appropriately dealt with in the accounts.

j. According to the information and explanations given to us, the Company has not given unsecured loans to companies/firms/parties covered in the register maintained under section 189 of the Companies Act, 2013, Hence other matters relating to the loans and advances to parties listed under Section 189 are not applicable.

4. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Sections 185 and 186 of the Companies Act. 2013 in respect of grant of loans, making investments and providing guarantees, as applicable.

5. According to the information and explanations given to us, the Company has not acccpted any deposits during the year and hence compliance with the provisions of Sections 73 to 76 of the Act and the Companies (Acceptance of Deposit) Rules, 2014, as amended with regard to acceptance of deposits are not applicable to the Company.

6. According to the information and explanations given to us, the Company is required to maintain cost records under Section 148 (1) of the Companies Act, 2013. We have broadly reviewed these records and are of the opinion that prima facie, the prescribed accounts and records have made and maintained. We have not, however, made a detailed examination of these records with a view to determine whether they are accurate and complete.

7. According to the information and explanations given to us, in respect of statutory dues:

(a) The Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Employees State Insurance Income-tax, and Sales Tax, Service Tax, Value Added Tax, Customs Duty, Excise Duty, Cess and other material statutory dues applicable to it to the appropriate authorities. According to the records of the Company and information and explanations given to us none of these undisputed taxes are in arrears as at March 31, 2016 for a period exceeding six month from the date they become payable.

(b) According to the records of the Company and information and explanations given to us the following are the particulars of disputed amounts payable in respect of Income Tax and Value Added Tax:

Name Statute	Nature of Dues	Amount (Rs. In lakhs)	Period to which the amount relates	Forum where dispute is pending
Central Sales Tax Act	Central Sales Tax	2135.94	1994-95	AP Sales Tax Tribunal (APSTT)
Central Sales Tax Act	Central Sales Tax	2469.22	1995-96	APSTT
Central Sales Tax Act	Central Sales Tax	2450.74	1996-97	APSTT
Central Sales Tax Act	Central Sales Tax	19.49	2004-05	APSTT
Central Sales Tax Act	Central Sales Tax	3.51	2007-08	APSTT .
Central Sales Tax Act	Central Sales Tax	284.35	2007-08	APSTT
Central Sales Tax Act	Central Sales Tax	332.13	2010-11	APSTT
Central Sales Tax Act	Central Sales Tax	5550.82	2011-12	Appelete DY Commissioner
Central Sales Tax Act	Central Sales Tax	5024.27	2012-13	High Court, Hyd
Finance Act	Service Tax	90.35	2007-08 to 2009-10	Commissioner, Service Tax,Hyd
AP Vat Act	VAT	10.29	2010-11	Appelete DY Commissioner

9. The Company has not raised any money by way of initial public offer or further public offer or by way of term loans during the year, hence clause (ix) of Companies (Auditorâs Report) Order, 2016 (CARO) is not applicable.

11. Provision of Section 197 of the Companies Act, 2013 is not applicable to the Company and hence clause (xi) of CARO is not applicable.

12. The Company is not NIDHI company hence clause (xii) of CARO is not applicable to the Company

14. The Company has not made any preferential offer of equity shares during the year and accordingly other matters relating to preferential offer are not applicable..

16. The Company is not required to be registered under Section 45-1A of the Reserve Bank of India.

The Annexure referred to in Paragraph 5 (2) (j) of Independent Auditorsâ Report to the Members of Bharat Dynamics Limited On the standalone financial statements for the year ended on March 31, 2016

Report on the Internal Financial Controls over Financial Reporting under clause (i) of sub section 3 of Section 143 of the Companies Act.

1. We have audited the internal financial controls over financial reporting of Bharat Dynamics Limited (the Company) as at March 31, 2016 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.

2. Managementâs Responsibility:

3. Auditorâs Responsibility:

Our responsibility is to express an opinion on the Companyâs internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the âGuidance Note on Audit of Internal Financial Controls Over Financial Reportingâ (Guidance Note) issued by the Institute of Chartered Accountants of India and the Standards on Auditing prescribed under Section 143 (10) of the Companies Act, 2013, to the extent applicable to an audit of Internal Financial Controls. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and performing the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that material weakness exists, and testing and evaluating the design and operating effectiveness of internal financial control based on assessed risk. The procedures selected depend on the auditorâs judgment, including the assessment of the risks of material misstatements, whether due to fraud or error.

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

4. Meaning of Internal Financial Controls Over Financial Reporting:

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

5. Inherent Limitations of Internal Financial Controls Over Financial Reporting:

6. Opinion

In our opinion, to the best of our information and according to the explanations given to us, the Company has, in all material respects, an adequate internal financial controls over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2016, based on âthe internal control over financial reporting criteria established by the Company considering the essential components of internal controls stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of Indiaâ. ,

For S.R. MOHAN & Co.

Chartered Accountants

Place: Hyderabad FRNo:002111S

Date: 11-06-2016

(G. JAG AD E S WARA RAO)

M. No. 021361

PARTNER

Mar 31, 2015

TO,

THE MEMBERS OF BHARAT DYNAMICS LIMITED

The Report is revised to comply with the observations made by the Comptroller & Auditor General of India with regard to Annexure-I to the Auditor''s Report i.e., Report under CARO 2015. This Report supersedes our earlier Report issued on 29 Jul 2015.

Report on the Financial Statements

We have audited the accompanying financial statements of BHARAT DYNAMICS LIMITED, which comprise the Balance Sheet as at 31 March 2015, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Managementâs Responsibility for the Financial Statements

The Company''s Board of Directors is responsible for the matters in section 134(5) of the Companies Act, 2013 (âthe Act") with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes the maintenance of adequate accounting records in accordance with the provision of the Act for safeguarding of the assets of the Company and for preventing and detecting the frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial control, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give true and fair view and are free from material misstatement, whether due to

Auditorâs Responsibility

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

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

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

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

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements, give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India;

a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2015;

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

c) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Report on other Legal and Regulatory Requirements

As required by the Companies (Auditorâs Report) Order, 2015, issued by the Central Government of India in term of sub-section (11) of section 143 of the Companies Act, 2013, we give in the Annexure-I a statement on the matters specified in the paragraphs 3 and 4 of the Order, to the extent applicable.

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

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

b) In our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books (and proper returns adequate for the purposes of our audit have been received from the branches not visited by us)

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

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

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

f) With respect to the other matters included in the Auditorâs Report and to our best of our information and according to the explanations given to us :

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note No. 28.02 of the financial statements.

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

Report on directions issued under section 143 (5) of the Companies Act, 2013 is given at Annexure-ll.

The Annexure referred to in our report to the members of Bharat Dynamics Limited (the Companyâ) for the year Ended on 31^st March, 2015. We report that:

1 a) The Company is maintaining proper records showing full particulars, including quantitative details and situation, of fixed assets.

b) The fixed assets are physically verified by the Management according to a phased programme designed to cover all the items over a period which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the programme, a portion of the fixed assets has been physically verified by the Management during the year and no material discrepancies have been noticed on such verification

2. a) The inventory including stocks with third parties has been physically verified by the Management during the year. In respect of inventory lying with third parties, these have substantially been confirmed by them. In our opinion, the frequency of verification is reasonable.

b) In our opinion, the procedures of physical verification of inventory followed by the Management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c) On the basis of our examination of the inventory records, in our opinion, the Company is maintaining proper records of inventory.

3 The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under section 189 of the Act. Therefore, the provisions of clause 3(iii), (iii)(a) and

(iii)(b) of the said Order are not applicable to the Company.

4 In our opinion, and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. Further, on the basis of our examination of the books and records of the Company, and according to the information and explanations given to us, we have neither come across, nor have been informed of, any continuing failure to correct major weaknesses in the aforesaid internal control system.

5. The Company has not accepted any deposits from the public within the meaning of sections 73, 74, 75 and 76 of the Act and the Rules framed there under to the extent notified. _

6. a) The company has maintained cost records under sub-section (1) of section 148 of the Act.

b) We have broadly reviewed the books of accounts and records maintained by the Company in respect of manufacture of products covered under the Rules made by the Central Government for maintenance of cost records, under section 148 (i) of the Companies Act, and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

7. a) According to the information and explanations given to us and the records

of the Company examined by us, in our opinion, the Company is regular in depositing the undisputed statutory dues, including provident fund, employeesâ state insurance, income tax, sales tax, wealth tax, service tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues, as applicable, with the appropriate authorities.

b) The company has got disputes with regard to payment of Central Sales Tax, Service Tax, Value Added Tax as at 31-03-15 and the cases are pending at various stages of appeals and payment has not been made up to 31-03-15 and the details of which are given in Appendix âA''.

c) No amount is required to be transferred to Investor Education and Protection Fund in accordance with the provisions of the Companies Act, 1956 and the Rules made there under.

8. The Company has been registered for a period more than five years hence the clause 3(viii) is not applicable.

9. As the Company does not have any borrowings from any financial institution or bank nor has it issued any debentures as at the Balance Sheet date, the provisions of clause 3(ix) of the order are not applicable to the Company.

10 In our opinion, and according to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions during the year. Accordingly, the provisions of clause 3 (X) of the order are not applicable to the Company.

11. The Company has not raised any term loans. Accordingly, the provisions of clause 3 (xi) of the order are not applicable to the Company.

12 During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given

to us, we have neither come across any instance of material fraud on or by the Company, noticed or reported during the year, nor have we been informed of any such case by the Management.

Statutory dues aggregating to Rs. 14626.01 Lakh that have not been deposited on account of dispute and pending before the appropriate authorities are as follows:

SI No.	Name of the Statute	Nature of dues	Forum where the dispute is pending	(Rs in Lakhs)
1	CST Act	CST	AP High Court	1462.67
2	CST Act	CST	AP Sales Tax Appellate Tribunal	7269.19
3	CST Act	CST	Appellate Deputy Commissioner (CIT) Panjagutta Division	5841.45
4	Finance Act	Service Tax	Commissioner Hyderabad- II Service Tax	43.56
5	APVAT Act	VAT	Appellate Deputy Commissioner (CT) Panjagutta Division	9.14
			Total	14626.01

Directions issued to statutory auditors under Section 143(5) of the Companies Act. 2013.

The Annexure referred to in our report to the members of Bharat Dynamics Limited (the Company) for the year ended on 31 Mar 2015. We report that:

Sr.No	Query	Reply
1	If the Company has been selected for disinvestment, a complete status report in terms of valuation of Assets (including intangible assets and land) and Liabilities (including Committed & General Reserves) may be examined including the mode and present stage of disinvestment process.ââ	The Company has not been selected for disinvestment.
2	Please report whether there are any cases of waiver/ write off of debts/loans/interest etc., if yes, the reasons there for and the amount involved.	There are no cases of waiver/write-off of debts/loans/interest etc.
3	Whether proper records are maintained for inventories lying with third parties & assets received as gift from Govt, or other authorities.	Yes, Proper records are maintained for inventories lying with third parties. There are no assets received as gift from government or other authorities during the year under Audit.
4	A report on age-wise analysis of pending legal/ arbitration cases including the reasons of pendency and existence/ effectiveness of a monitoring mechanism for expenditure on all legal cases(foreign and local) may be given.	List of pending cases as provided by the Legal department of the Company as on 31 Mar 2015 is reviewed and age-wise analysis of the same is enclosed. There is an effective mechanism in the organization to monitor the expenditure on legal cases.

For GARRE & CO

Chartered Accountants

Firmâs registration (timber: 002460S

(G Subba Rao)

Partner

M No: 019579

Place: Hyderabad

^Date: 24-08-2015

Mar 31, 2014

1. We have audited the accompanying financial statements of Bharat Dynamics Limited (âthe Companyâ) which comprise the Balance Sheet as at 31^st March, 2014, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information, which we have signed under reference to this report.

Managementâs Responsibility for the Financial Statements

2. The Companyâs management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditorâs Responsibility

3. Our responsibility is to express an

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

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

Opinion

6. In our opinion, and to the best of our information and according to the explanations given to us, the accompanying financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2014;

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

Report on Other Legal and Regulatory Requirements

7. As required by âthe Companies (Auditorâs Report) Order, 2003â, as amended by âthe Companies (Auditorâs Report) (Amendment) Order, 2004â, issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956 (herein after referred as âOrderâ), and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

8. As required by section 227(3) of the Companies Act,1956 we report that;

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

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

(c) The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this report are in agreement with the books of account;

(d) In our opinion, the Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this report comply with the accounting standards referred to in subsection (3c) of section 211 of the Companies Act, 1956;

(e) On the basis of written representations received from the Directors as on 31^st March, 2014, and taken on record by the Board of Directors, none of the Directors is disqualified as on 31^st March 2014, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the companies act, 1956.

ANNEXURETO THE INDEPENDENT AUDITORSâ REPORT:

Bharat Dynamics Limited

[Referred to in paragraph 7 under the heading of âReport on Other Legal and Regulatory Requirementsâ of our report on even date to the Members of Bharat Dynamics Limited on the Financial Statements as of and for the year ended 31^st March, 2014]

(i). a. The Company is maintaining proper records showing full particulars, including quantitative details and situation, of fixed assets.

b. According to the information and explanation given to us, all the assets have been physically verified by the Management during the year, which in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies have been noticed on such verification.

c. No major part of fixed assets was disposed off during the year hence do not affect the going concern assumption.

(ii). a. As explained to us, inventory has been physically verified by the management during the year except material lying with the third parties (which have substantially been confirmed). In our opinion, the frequency of verification is reasonable.

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

c. According to the information and explanation given to us, the company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book/records were not material.

(iii). a. According to the information and explanations given to us, the Company has not taken/ granted any loan from/ to companies. Firms or other parties listed in the register maintained under section 301 of the companies act, 1956. b. As explained to us no advances in the nature of loans were given by the company hence this clause is not applicable.

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

(v). In our opinion and according to the information and explanations given to us, there are no transactions made in pursuance of contracts or arrangements that are needed to be entered in the register maintained under section 301 of the companies Act, 1956.

(vi). In our opinion and according to the information and explanations given to us, the company has not accepted any deposits from the public within the meaning of Sections 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under.

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

(viii). We have broadly reviewed the books of account relating to materials, labour and other items of cost maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under Section 209 (1) (d) of the Companies Act, 1956 and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

(ix). a. According to the information and explanations given to us and the records of the company examined by us, the company is generally regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employeesâ State Insurance, Income tax. Sales tax, Wealth tax. Service tax, Customs duty, Excise duty, Cess and other material statutory dues applicable to it.

b. Statutory dues aggregating to Rs 9076.23 lakh that have not been deposited on account of dispute and pending before the appropriate authorities are as follows.

Sl.No.	Name of the Statute	Nature of dues	Forum where the dispute is pending	Rs. (In Lakhs)
1	CST Act	CST	AP High Court	146267
2	CST Act	CST	AP Sales Tax Appellate Tribunal	7269.19
3	CST Act	CST	Appellate Deputy Commissioner (CT) Panjagutta Division	290.62
4	Finance Act	Service Tax	Commissioner Hyderabad-II Service tax	43.11
5	AP VAT Act	VAT	Appellate Deputy Commissioner (CT) Panjagutta Division	8.13
6	AP VAT Act	VAT	Assistant commissioner (CT) LTU	2.53

c. According to the information and explanations given to us, there are no dues of Sales tax, Income Tax, Service tax. Municipal tax, Customs duty. Excise duty and Wealth tax which have not been deposited with the appropriate authorities on account of any dispute.

(x). In our opinion, the company has no accumulated losses as at 31.03.2014 and it has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year.

(xi). According to the information and explanation given to us, the Company has not borrowed any amount from financial institutions, bank and debenture holders during the financial year.

(xii). In our opinion and according to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly the provisions of clause 4(xii) of the Companies (Auditorsâ Report) Order, 2003 are not applicable to the Company.

(xiii). In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/ society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditorsâ Report) Order, 2003 are not applicable to the Company.

(xiv). In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditorsâ Report) Order, 2003 are not applicable to the Company.

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

(xvi). The company has not availed any term loan facility.

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

(xviii). According to the information and explanation given to us, the Company not made preferential allotment to parties covered in the register maintained under Section 301 of the Companies Act, 1956.

(xix). According to the information and explanation given to us, during the year the Company has not issued any debentures. Therefore, the provisions of clause 4(xix) of the Companies (Auditorsâ Report) Order, 2003 are not applicable to the Company.

(xx). According to the information and explanation given to us, the Company has not raised any money by public issues during the year. Accordingly., the provisions of clause 4(xx) of the Companies (Auditorsâ Report) Order, 2003 are not applicable to the Company.

(xxi). Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given to us by the management, no fraud on or by the Company has been noticed or reported during the year.

For LAXMINIWAS NEETH & CO

Chartered Accountants

Firm Registration No: 002460S

Place: Hyderabad Dayaniwas Sharma

Date: 24/7/14 Partner

Membership No. 216244

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