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Bharat Electronics Ltd.

BSE: 500049 Sector: Engineering
NSE: BEL ISIN Code: INE263A01024
BSE LIVE 15:29 | 24 Nov 185.00 -1.60
(-0.86%)
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187.25

HIGH

189.45

LOW

184.25

NSE 15:18 | 24 Nov 184.70 -2.40
(-1.28%)
OPEN

188.25

HIGH

189.45

LOW

184.50

OPEN 187.25
PREVIOUS CLOSE 186.60
VOLUME 198969
52-Week high 192.50
52-Week low 116.72
P/E 26.70
Mkt Cap.(Rs cr) 45,455
Buy Price 185.00
Buy Qty 122.00
Sell Price 185.20
Sell Qty 6500.00
OPEN 187.25
CLOSE 186.60
VOLUME 198969
52-Week high 192.50
52-Week low 116.72
P/E 26.70
Mkt Cap.(Rs cr) 45,455
Buy Price 185.00
Buy Qty 122.00
Sell Price 185.20
Sell Qty 6500.00

Bharat Electronics Ltd. (BEL) - Auditors Report

Company auditors report

INDEPENDENT AUDITOR'S REPORT

TO THE MEMBERS OF BHARAT ELECTRONICS LIMITED

Report on the Standalone Ind AS financial

We have audited the accompanying standalone Ind AS financial statements of BHARATELECTRONICS LIMITED ("the Company") which comprise the Balance Sheet as at

31 March 2017 the Statement of Profit and Loss (including

Other Comprehensive Income) and the Cash Flow

Statement for the year then ended and the Statement of Changes in Equity for the yearthen ended and a summary of the significant information in which are incorporated theReturns for the year ended on that date audited by the branch auditors of the Company'sbranches at Ghaziabad Panchkula Kotdwara Pune Navi Mumbai and Machilipatnam.

Management's Responsibility for the Standalone Ind AS financial statements

The Company's Board of Directors are responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone Ind AS financial statements that give a true and fair view of the stateof affairs(financial position) profit or loss (financial performance including othercomprehensive income) cash flows and changes in equity of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards (Ind AS) prescribed under section 133 of the Companies Act 2013 read withrelevant rules issued thereunder.

This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe standalone Ind AS financial statements that give a true and fair view and are freefrom material misstatement whether due to fraud or error.

Auditor's Responsibility

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

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

We conducted our audit of the standalone Ind AS financial statements inaccountingaccordancepolicies with and the other Standardsexplanatory on Auditingspecified under require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether the standalone Ind AS financialstatements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the standalone Ind AS financial statements. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the standalone Ind AS financial to fraud or error. In making those riskassessments the auditor considers internal financial control relevant to the Company'spreparation of the standalone Ind AS financial statements that give a true and fair viewin order to design audit procedures that are appropriate in the circumstances. An auditalso includes evaluating the appropriateness of the accounting policies used and thereasonableness of the accounting estimates made by the Company's Directors as well asevaluating the overall presentation of the standalone Ind AS financial statements.

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

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone Ind AS financial statements give the informationrequired by the

Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India including the Ind AS

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

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

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

Other Matters

a) The comparative financial information of the Company for the year ended 31 March2016 and the transition date opening balance sheet as at 1 April 2015 included in thesestandalone Ind AS financial statements are based on the previously issued statutoryfinancial statements prepared in accordance with the Companies has been (AccountingStandards) Rules 2006 audited by us whose report for the year ended 31 March 2016 and 31March 2015 dated 15 July 2016 and 29 May 2015 respectively expressed an unmodified opinionon those standalone statements as adjusted for the differences in financial theaccounting principles adopted by the Company on transition to the Ind AS which have beenaudited by us.

b) We did not audit the Ind AS financialstatements of six branches included in thestandalone Ind AS financial statements of the Company whose financial reflect total assetsof Rs. 393636 lakhs as at 31 March 2017 and total income of Rs. 337985 lakhs for theyear ended on that date as considered in the standalone

Ind AS financial of these branches have been audited by the branch auditors appointedby Comptroller & Audit General of India whose reports have been furnished to us andour opinion in so far as it relates to the amounts and disclosures included in respect ofthese Units is based solely on the report of such branch auditors.

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

Our opinion is not modified in respect of these matters.

Report on Other Legal and Regulatory Requirements

1. As required by Companies (Auditor's Report) Order 2016 issued by the CentralGovernment of India in terms of sub-section 11 of section 143 of the Companies Act2013and based on the comments in the auditors' report of the respective branches we give inthe annexure a statement on the matters specified in paragraph 3 and 4 of the Order to theextent applicable (Annexure I).

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

a) We have sought and obtained all the information and explanations which to the bestof 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 theCompany so far as it appears from our examination of those books. The audit of theaccounts of Bengaluru Hyderabad and Chennai branches and Corporate Office carried out byus. In the case of New York and

Singapore Offices and other offices and in respect of which the accounts are maintainedat Corporate Office the returns / records received from the said offices have beenverified and found to be adequate for the purpose of our audit.

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

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

e) In our opinion the aforesaid standalone Ind AS financial statements comply with theIndian Accounting Standards specified under Section 133 of the Act read with relevant ruleissued thereunder; f) In accordance with Notification No. G.S.R 463(E) dated June 5th2015 the requirement of Section 164(2) of the Companies Act 2013 is not applicable toGovernment Companies.

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

h) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand 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

Ind AS financial Refer Note 30(10) to the standalone Ind AS financial statements.

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

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

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

4. The Company has provided requisite disclosures in its standalone Ind AS financialstatements as to holdings as well as dealings in Specified Bank Notes during the periodfrom 8 November 2016 to 30 December 2016. Based on audit procedures and relying on themanagement representation we report that the disclosures are in accordance with books ofaccount maintained by the

Company and as produced to us by the Management

Refer Note 30(19) to the standalone Ind AS financial statements. position in itsstandalone statements as at 31 March 2017

For BADARI MADHUSUDHAN & SRINIVASAN
Chartered Accountants
Firm Registration No. 005389S
(S. RAJENDIRAN)
Bengaluru Partner
29 May 2017 Membership No. 021883

ANNEXURE I TO THE INDEPENDENT AUDITOR'S REPORT

The Annexure referred to in paragraph 1 in Report on Other Legal and RegulatoryRequirements of the Independent Auditor's Report of even date to the members of thecompany on the standalone Ind AS financial statements for the year ended 31 March 2017 wereport that:

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

(b) As explained to us and based on our examination of records the Management hasgenerally carried out the physical verification of a portion of the Fixed Assets inaccordance with their phased programme of physical verification which is consideredreasonable having regard to the size of the Company and nature of its fixed assets.

In accordance with the programme certain fixed assets were verified during the yearand discrepancies if any were properly dealt with on such verification during the year.As informed to us no material discrepancies have been noticed on such verification duringthe year.

(c) As explained to us and based on our examination of records the title deeds ofimmovable properties are held in the name of the company. We draw your attention to NoteNo. 1 & 3 to the standalone Ind AS financial statements.

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

As informed to us no material discrepancies have been noticed on such verification.The discrepancies noticed on verification book records have been properly dealt in thebooks of account.

In respect of materials with sub-contractors confirmations have been receivedgenerally and reconciled with the book records. However in case of such items for whichno confirmations have been received which are not significant the company has dealt withthe same by making adequate provision in the books of account.

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

189 of the Act.

(a) According to the information and explanations given to us and based on the auditprocedures conducted by us we are of the opinion that the terms and conditions of loansgranted by the company to it's subsidiary covered in the register maintained under section189 of the Companies Act 2013 are not prima facie prejudicial to the company'sinterest.

(b) In case of the loans granted to the Company listed in the register maintained undersection 189 of the Act the borrower has been regular in the payment of interest andrepayment of principal as stipulated.

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

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

(v) According to the information and explanations given to us the Company has notaccepted any deposit from public in the current year as per the directives issued by theReserve Bank of India and the provisions of sections 73 to 76 or any other relevantprovisions of the Companies Act between and the rules the physical framedthere under.stocks and the All deposits have matured and settled except for Rs.36.95 lakhs out of which Rs. 36.50 lakhs is retained as per Garnishee Order of LokayuktaBengaluru and the balance of Rs. 0.45 lakhs though matured is unpaid due to legal issues.

In our opinion and according to the information and explanations given to us and basedon our examination of records the Company has complied with the provisions of Section 73and other relevant provisions of the Act and the Companies (Acceptance of Deposits) Rules2014.

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

(vii) (a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company the Company is regular in remittance ofundisputed statutory dues including Provident Fund Employees' State InsuranceIncome-tax Sales-tax Service-tax Custom Duty Excise Duty Cess and other applicablestatutory dues. According to the information and explanation given to us no undisputedstatutory dues are outstanding as at 31 March 2017 for a period of more than six monthsfrom the date they became payable.

(b) According to the information and explanations given to us there are no disputedamounts that remain unpaid as at 31 March 2017 for a period of more than six months fromthe date they became payable in respect of Provident Fund Employees' State InsuranceIncome-tax Sales-tax Service-tax Custom Duty Excise Duty Cess and other applicablestatutory dues with the exception of the following:

( Rs. in lakhs)

Name of statute Nature of dues Financial year to which amount relates Amount Forum where dispute is pending
Sales Tax Act Bihar Disputed Tax under Bihar 1995-96 to 1997-98 66.44 Commissioner of
Sales Tax Commercial Taxes(Appeals)
Chirkunda Bihar
CST Act 1956/Karnataka Sales Tax 2008-09 to 2015-16 *89812.85 Various levels of Appellate
VAT Act 2003 Authorities
Andhra Pradesh State Sales Tax 2005-06 to 2007-08 68.24 Various levels of Appellate
VAT Act 2009-10 Authorities
Finance Act Service Tax 2007-08 to 2009-10 147.97 Various levels of Appellate
1994-Service Tax Authorities
Central Excise Act MODVAT Credit Excise 1991-92 2016-17 290.8 Various levels of Appellate
Duty Excise Duty Interest Authorities
Customs Act Customs Duty 2012-13 2015-16 148.68 Various levels of Appellate
Authorities
Income Tax Act Income Tax 2007-08 to 2016-17 134.41 TDS Circle LTU Bengaluru
CST CST 2005-06 to 2007-08 1346.14 Sales Tax Appellate Tribunal
Sales Tax Act Sales Tax 1980-81 2007-08 to 424.07 Various levels of Appellate
2009-10 2013-14 Authorities
Vacant Land Tax Vacant Land Tax 1998-99 to 2003-04 10.35 Director Directorate of Town
Panchayat Chennai
Urban Land Tax Urban Land Tax 1984-85 to 2002-03 41.44 Principal Commissioner
and Commissioner of Land
Reforms Chennai
Commercial Tax Sales Tax 1989-90 1991-92 4.19 Various levels of Appellate
Authorities
ESI Act 1948 Interest & damages 1992-93 1998-2001 33.95 Punjab & Haryana High
towards late deposits Court (Chandigarh) and
contribution Andhra Pradesh High Court
Income Tax Act 1961 Disallowances as per 2008-09 2009-10 2011- 2398.66 Various levels of Appellate
Assessment Orders 12 to 2013-14 Authorities Bengaluru
Labour Act Dispute on Payment of 2010-11 2 Delhi High Court
Compensation
Trade Tax Rates of Taxes 2000-01 2001-02 361.15 Uttarakhand High Court
Nainital
Total disputed amount 95291.34
Total amount paid under protest pending final orders 11223.97

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

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

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

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

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

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

(xiii) On the basis of examination of records of the Company and information andexplanations given to us all transactions with the related parties are in compliance withsections 177 and 188 of Companies Act 2013 and the details have been disclosed in thestandalone Ind

AS Financial Statements vide Note No. 31 as required by the applicable Indianaccounting standards.

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

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

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

For BADARI MADHUSUDHAN & SRINIVASAN
Chartered Accountants
Firm Registration No. 005389S
(S. RAJENDIRAN)
Bengaluru Partner
29 May 2017 Membership No. 021883

ANNEXURE II TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of BharatElectronics Limited ("the Company") as of 31 March 2017 in conjunction with ouraudit of the standalone Ind AS financial statements of the Company for the year ended onthat date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India.

These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls over Financial Reporting(the"Guidance Note") and the Standards on Auditing issued by ICAI and deemed tobe prescribed under section 143(10) of the Companies Act 2013 to the extent applicableto an audit of internal financial controls both issued by the Institute of CharteredAccountants of India.

Those Standards and the Guidance Note require that we comply with ethical requirementsand plan and perform the audit to obtain reasonable assurance about whether adequateinternal financial controls over financial reporting was established and maintained and ifsuch controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness.

Our audit of internal financial controls over financial reporting included obtaining anunderstanding of internal financial controls over financial reporting assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the standalone Ind AS financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that

(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and 93Independent Auditor's Report

(3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could have amaterial effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

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

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31 March 2017 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls over Financial Reporting issued by the Institute of CharteredAccountants of India.

For BADARI MADHUSUDHAN & SRINIVASAN
Chartered Accountants
Firm Registration No. 005389S
(S. RAJENDIRAN)
Bengaluru Partner
29 May 2017 Membership No. 021883