To the Members of BEML LIMITED
Report on the Consolidated Ind AS FinancialStatements
We have audited the accompanying consolidated Ind AS financialstatements of BEML LIMITED (hereinafter referred to as the Holding Company)and its subsidiaries (the Holding Company and its subsidiaries together referred to asthe Group) and its Jointly Controlled Entity comprising of the ConsolidatedBalance Sheet as at 31st March 2018 the Consolidated Statement of Profit and Loss(including other comprehensive income) Consolidated Statement of Cash Flow andConsolidated Statement of Changes in Equity and the for the year then ended and a summaryof the significant accounting policies and other explanatory information (hereinafterreferred to as the consolidated Ind AS financial statements).
Management's Responsibility for theConsolidated Ind AS Financial Statements
The Holding Company's Board of Directors is responsible for thematters stated in Section 134(5) of the Companies Act 2013 (the Act) withrespect to the preparation of these Consolidated Ind AS financial statements that give atrue and fair view of the consolidated financial position consolidated financialperformance including other comprehensive income consolidated Cash flows and consolidatedchanges in equity of the Group including its jointly controlled entity in accordance withthe accounting principles generally accepted in India including the Accounting Standards(Ind AS)specified under Section 133 of the Act read with the Companies (Indian AccountingStandards) Rules 2015 as amended. The respective board of directors of the companiesincluded in the Group are responsible for maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Group and forpreventing and detecting frauds and other irregularities; the selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and the design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the Ind ASfinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error which have been used for the purpose ofpreparation of the consolidated Ind AS financial statements by the Directors of HoldingCompany as aforesaid.
Our responsibility is to express an opinion on these consolidated IndAS financial statements based on our audit. While conducting the audit we have taken intoaccount the provisions of the Act the accounting and auditing standards and matters whichare required to be included in the audit report under the provisions of the Act and theRules made there under. We conducted our audit in accordance with the Standards onAuditing specified under Section 143(10) of the Act. Those Standards require that wecomply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether the consolidated Ind AS financial statements are free frommaterial misstatement.
An audit involves performing procedures to obtain audit evidence aboutthe amounts and the disclosures in the consolidated Ind AS financial statements. Theprocedures selected depend on the auditor's judgment including the assessment of therisks of material misstatement of the consolidated Ind AS financial statements whetherdue to fraud or error. In making those risk assessments the auditor considers internalfinancial control relevant to the Holding Company's preparation of the consolidatedInd AS financial statements that give a true and fair view in order to design auditprocedures that are appropriate
in the circumstances. An audit also includes evaluating theappropriateness of the accounting policies used and the reasonableness of the accountingestimates made by the Holding Company's Board of Directors as well as evaluating theoverall presentation of the consolidated Ind AS financial statements.
We believe that the audit evidence obtained by us is sufficient andappropriate to provide a basis for our qualified audit opinion on the consolidated Ind ASfinancial statements.
Basis for Qualified Opinion
As explained in Note.7 the financial statements of BEML MidwestLimited a joint venture Company has not been consolidated in the absence of itsfinancial statements. As per the accounting principles the financial statements of thisjoint venture should have been consolidated using proportionate consolidation method. Theeffects on the consolidated Ind AS financial statements of the failure to consolidatethis Joint Venture Company net of provision for diminution already made in the value ofthe investment has not been determined.
In our opinion and to the best of our information and according to theexplanations given to us except for the effects of the matter described in the Basis forQualified Opinion paragraph above the aforesaid consolidated Ind AS financial statementsgive the information required by the Act in the manner so required and give a true andfair view in conformity with the accounting principles generally accepted in Indiaincluding Ind AS of the consolidated financial position of the Group as at March 312018 and its consolidated financial performance including other comprehensive income itsconsolidated Statement of Cash Flow and changes in equity for the year then ended.
Emphasis of Matter:
We draw our attention to:
a) Note No. 14(ii) in respect of Trade receivable from MOD Rs.4899.99lakhs towards exchange rate difference and escalation for import of components in respectof a long term contract for Design Development and Supply entered into with MOD in 2001.The realisation of these receivables depends on the final determination of the amountpayable by the MOD.
b) Note No.11 (a) in respect of the amount advanced to MAMC consortiumfor Rs.5800.61 lakhs realization/settlement of which depends on approval from Ministry ofDefence and viable business plan.
c) Note No.39 (G) regarding pending confirmation reconciliationreview/adjustment of balances in respect of advances balances with governmentdepartments trade payable trade receivable other loans and advances and deposits.
d) In the books of MAMC Industries Limited company is holding leasehold land taken from Urban Development Dept Govt of West Bengal on 7th March 2011 and thesaid land is laying without starting of factory and as per the terms of lease the Govt.of West Bengal has right to re-enter and take back the possession of the said land if nofactory is started within two years from the date of lease and also have to right tocancel the lease deed. Further the lease rentals remains unpaid since the date of lease(see Note No. 3 Property Plant and Equipment) which is non observance of point no 23 ofthe said lease deed.
Our opinion is not qualified in respect of the above matters.
a) We did not audit the financial statements of the subsidiary VignyanIndustries Limited whose financial statements reflect total assets of Rs.1614.69 lakhs asat 31.03.2018 and profit of Rs.23.95 lakhs and net cash outflow amounting to Rs.0.47 lakhsfor the then year ended. The financial statements have been audited by other auditor whosereport has been furnished to us and our opinion so far as it relates to the amountsincluded in respect of the subsidiary is solely based on the report of the other auditor.
b) We did not audit the financial statements of the subsidiary MAMCIndustries Limited whose financial statements reflect total assets of Rs.476.09 lakhs asat 31.03.2018 and loss of Rs.9.54 lakhs and net cash outflow amounting to Rs.0.01 lakhsfor the then year ended. The financial statements have been audited by other auditor whosereport has been furnished to us and our opinion so far as it relates to the amountsincluded in respect of the subsidiary is solely based on the report of the other auditor.
c) We did not audit the financial statements of the subsidiary BEMLBrazil Industrial Ltda whose financial statements reflect total assets of Rs.43.67 lakhsas at 31.03.2018 and loss of Rs.6.83 lakhs and net cash out flow amounting to Rs.8.15lakhs for the then year ended. The financial statements have been audited by other auditorunder local laws of Brazil whose report has been furnished to us and our opinion so faras it relates to the amounts included in respect of the subsidiary is solely based on thereport of the other auditor converted into Indian Rupees by the Group on the basis ofaverage exchange rate for the year in respect of Statement of Profit and Loss and closingexchange rate as on the last day of the financial year in respect of Balance Sheet itemsexcept Share Capital which is considered on actual investments made in Indian Rupees bythe Holding Company.
Our opinion on the consolidated Ind AS financial statements and ourreport on Other Legal and Regulatory Requirements below is not modified in respect of theabove matters with respect to our reliance on the work done and the reports of the otherauditors and the financial statements/financial information certified by the Management.
Report on Other Legal and Regulatory
1. As required by section 143 (3) of the Act based on our audit wereport that:
a. we have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purpose of our auditof the aforesaid consolidated Ind AS financial statements.
b. in our opinion except for the effect of the matters described inthe Basis for Qualified Opinion paragraph above proper books of account as required bylaw relating to the preparation of the aforesaid consolidated Ind AS financial statementshave been kept so far as it appears from our examination of those books and reports of theother auditors.
c. the Consolidated Balance Sheet the Consolidated Statement of Profitand Loss ( including other comprehensive income) Consolidated Cash Flow and Changes inEquity dealt with by this Report are in agreement with the relevant statements maintainedfor the purpose of preparation of the consolidated Ind AS financial statements.
d. in our opinion except for the effect of the matters described inthe Basis for Qualified Opinion paragraph above the aforesaid consolidated Ind ASfinancial statements comply with the Accounting Standards specified under section 133 ofthe Act read with relevant Rules issued there under.
e. being a Government Company provisions of Sec 164(2) of the Actrelating to disqualification of directors are not applicable.
f. the qualification relating to the maintenance of accounts and othermatters connected there with are as stated in the Basis for Qualified Opinion paragraphabove.
g. with respect to the adequacy of the internal financial controls overfinancial reporting of the Group Company's financial statements and the operatingeffectiveness of such controls refer to our separate Report in Annexure Awhich is based on the auditors reports of the Company and its subsidiary companies and
h. With respect to the other matters to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014 in our opinion and to the best of our information and according to theexplanations given to us:
1) Except for the possible effect of the matter described in paragraphof the Basis for Qualified Opinion above
i. the consolidated Ind AS financial statements disclose the impact ofpending litigations on the consolidated financial position of the Group and JointlyControlled Entities - Refer Note 39(D)(1)(a)(ii) to the consolidated financial statements;
ii. the Group did not have any long-term contracts including derivativecontracts for which there were any material foreseeable losses.
iii. there were no amounts which were required to be transferred to theInvestor Education and Protection Fund by the Holding Company and its SubsidiaryCompanies and Jointly Controlled Entity incorporated in India.
|For S R R K Sharma Associates |
|Chartered Accountants |
|Firm's Registration No. 003790S |
|CA S ANANDA KRISHNA |
|Membership No. 027986 |
|Place: Bangalore |
|Date : 25.05.2018 |