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Bharat Dynamics Ltd.

BSE: 541143 Sector: Engineering
NSE: BDL ISIN Code: INE171Z01018
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OPEN 847.75
PREVIOUS CLOSE 844.25
VOLUME 24196
52-Week high 904.95
52-Week low 368.00
P/E 26.19
Mkt Cap.(Rs cr) 15,302
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 847.75
CLOSE 844.25
VOLUME 24196
52-Week high 904.95
52-Week low 368.00
P/E 26.19
Mkt Cap.(Rs cr) 15,302
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Bharat Dynamics Ltd. (BDL) - Auditors Report

Company auditors report

To the members of BHARAT DYNAMICS LIMITED

Report on the Audit of the Standalone Financial Statements

We are issuing this revised Audit Report and Annexure A & B to IndependentAuditor's Report by including details of amounts paid/pre-deposited against disputed taxdemands in Annexure A and by replacing the phrase "Internal Financial Control"with the phrase "internal financial controls with reference to financialstatements" in Annexure B at appropriate places. This revision is in compliance tothe guidance of Comptroller & Auditor General of India. This report supersedes ourearlier report dated 21.6.2021.

Opinion

We have audited the accompanying standalone Ind AS financial statements of BHARATDYNAMICS LIMITED ("the Company") which comprise the Balance Sheet as at March31 2021 and the Statement of Profit and Loss (including Other Comprehensive Income) theStatement of Changes in Equity and the Cash Flow Statement for the year then ended andother 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 explanationsgiven to us the aforesaid Standalone Ind AS financial statements give the informationrequired by the Companies Act 2013 ("the Act") in the manner so required andgive a true and fair view in conformity with the accounting principles generally acceptedin India of the state of affairs of the Company as at 31st March 2021 andProfit and Other Comprehensive Income changes in Equity and its Cash Flows for the yearended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder Section 143 (10) of the Act. Our responsibilities under those SAs are furtherdescribed in the Auditor's Responsibilities for the Audit of the Standalone Ind ASFinancial Statements section of this report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thestandalone financial statements under the provisions of the Act and the Rules thereunderand we have fulfilled our other Ethical Responsibilities in accordance with theserequirements and the Code of Ethics. We believe that the audit evidence we have obtainedis sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key Audit Matters ("KAM") are those matters that in our professionaljudgment were of the most significance in our audit of the standalone Ind AS financialstatements of the current period. These matters were addressed in the context of our auditof the standalone Ind AS financial statements as a whole and in forming our opinionthereon 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 Contracts: Principal Audit procedures performed
The principal products of the Company comprise defense equipment where the sale are concluded after inspection by or on behalf of the customer. Revenue is thus recognised after such inspection and when customer obtains control of the goods. We identified revenue recognition as a key audit matter because 1. We assessed the appropriateness of the revenue recognition accounting policies by comparing with applicable accounting standards.
2. We evaluated the design of key controls and operating effectiveness of the relevant key controls with respect to revenue recognition on selected transactions.
a. the Company and its external stakeholders focus on revenue as a key performance indicator. 3. We performed substantive testing by selecting samples of revenue transactions recorded during the year by testing the underlying documents.
b. This could create an incentive for revenue to be overstated or recognised before control has been transferred. 4. We tested the revenue transactions recorded nearer to the financial year end date by verifying the underlying documents to determine whether the revenue had been recognised in the appropriate financial period.
c. In a few cases revenue has been recognized but goods are in the possession of the company without amendment of sale contract 5. We tested the assumptions made by the management in determining full or proportionate revenue recognition in respect of service contracts job works and repairs & overhauls) by verifying appropriate evidences.
Thus revenue recognition is a Key Audit Matter Refer:
Note Nos. 30 38(20) and Item No.3 of Accounting Policy. 6. Recognition of unbilled revenue were validated with milestone achievements with reference to contract terms.
7. The levy of Liquidated damages were validated with reference to the contracts and effective delivery dates.
Inventories: Principal Audit procedures performed include:
Audit of Inventories comprise
a. Physical verification 1. System and internal controls are evaluated to ensure that there are no recording delinquencies with respect to time of recording quantity recorded and item recorded.
b. Confirmation of third party holdings
c. Valuation
d. Redundancies-Recognition and reversal
Inventories held by the company are custom made sensitive and of high value. The holding period is also high in tune with the long time windows taken for order execution. The focus on inventories is thus significant in the audit process and a Key Audit Matter. Please refer Note No.10 and Accounting Policy No.7 2. Applied audit procedures to validate the physical availability of the inventories as supported by physical verification reports of the management teams.
3. Applied principles of roll back and roll over for few inventories to validate the year end holding.
4. Perused third party confirmations and matched with the company's records. Variances are reduced from inventory values.
5. Sample checking of valuation methodology by the system was done through manual validation for the material portion of the inventory.
6. Methodology of loading actual overheads to the inventory values were validated and confirmed to be in tune with costing principles.
7. The policy of recognizing redundancy of materials (Accounting policy no 7.4.) and Management's override of such policy was tested with appropriate evidences to conform that such policies as well as the override are reasonable and in tune with industry conditions.
Customer Balances: Principal Audit procedures performed include:
Trade Receivables Claims Receivable and Advances Received
The company's major customer is Government. Receivables and Advances form a major portion of both sides of Balance Sheet. The sale contracts have long gestation periods. a. We validated the sale service contracts and other claims recognized during the year with appropriate underlying documents.
This time lapse could create varied interpretations of contract terms on either side affect appropriate recognition of revenue and presentation of receivable/payables. The company cannot obtain third party confirmation to validate its balance. b. The adjustment of advances to the revenues recognized and claims made were validated with records.
The process of validating the balances identifying different categories of claims and appropriate adjustment and retention of advances therefore is considered a key audit matter. c. The company does not recognize impairment of any receivable based on its past experience. The long pending receivables and claims were confirmed with reference to related communications and management's reasonable assessment of no impairment.
d. The classification of receivables and advances received into Short Term and Long Term were validated with reference to reasonable management assumptions and past performance.

Emphasis of Matter

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

Note No. 38(7) on the impact and management's status assessment of short closedprojects.

Note No 38(22) on the impact of Covid-19 pandemic.

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

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

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

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

In connection with our audit of the standalone Ind AS financial statements ourresponsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the standalone financial statements orour 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 materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.

Management's responsibility for the Standalone Financial Statements

The Company's Board of Directors is 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 thefinancial position financial performance including other comprehensive income changesin equity and cash flows of the Company in accordance with the accounting principlesgenerally accepted in India including the Indian Accounting Standards (Ind AS) prescribedunder Section 133 of the Act read with relevant rules issued thereunder.

This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and the estimates that are reasonableand prudent; 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 standalone IndAS financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

In preparing the standalone financial statements management and Board of Directors areresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so. Board of Directors areresponsible 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 standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if Individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.

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

• Identify and assess the risks of material misstatement of the standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrols.

• Obtain an understanding of internal financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial control with reference to standalone financialstatements in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management’s use of the going concernbasis of accounting in preparation of Standalone Financial Statements and based on theaudit evidence obtained whether a material uncertainty exists related to events orconditions that may cast significant doubt on the Company's ability to continue as a goingconcern. If we conclude that a material uncertainty exists we are required to drawattention in our auditor's report to the related disclosures in the standalone Ind ASfinancial statements or if such disclosures are inadequate to modify our opinion. Ourconclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.

• Evaluate the overall presentation structure and content of the standalone IndAS financial statements including the disclosures and whether the standalone Ind ASfinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.

Materiality is the magnitude of misstatements in the standalone Ind AS financialstatements that individually or in aggregate makes it probable that the economicdecisions of a reasonably knowledgeable user of the financial statements may beinfluenced. We consider quantitative materiality and qualitative factors (i) in planningthe scope of our audit work and in evaluating the results of our work; and (ii) toevaluate the effect of any identified misstatements in the financial statements.

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

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

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone Ind AS financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditor's report unless law or regulation precludes public disclosureabout the matter or when in extremely rare circumstances we determine that a mattershould not be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of suchcommunication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of sub-section (11) of Section 143 of the Actwe give in Annexure A a statement on the matters specified in Paragraphs 3 and 4 of theOrder 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 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.

c) The Balance Sheet the Statement of Profit and Loss including Other ComprehensiveIncome the Statement of Changes in Equity and Cash Flow Statement dealt with this Reportare in agreement with the books of account.

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

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

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

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

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

i. The Company has disclosed the impact of pending litigations on its financialposition in its Ind AS financial statements vide Note No.38(6) of Notes to the Ind ASFinancial Statements.

ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts.

iii. No amounts are required to be transferred to the Investor Education andProtection Fund by the company.

Place: Hyderabad For G.Natesan and Co
Date: 11.08.2021 Chartered Accountants
FRN 002424S
U l tohiramapura"
CA K Murali \a\Chennai -18
Partner
M.No: 024842 ~
UDIN : 21024842AAAADG7192

ANNEXURE-A TO THE INDEPENDENT AUDITOR'S REPORT

Referred to in Paragraph 1 under "Report on Other Legal and RegulatoryRequirements" section of our report to the Members of Bharat Dynamics Limited

We are issuing this revised Annexure A to Independent Auditor's Report by includingdetails of amounts paid/pre-deposited against disputed tax demands. This revision is incompliance to the guidance of Comptroller & Auditor General of India. This reportsupersedes our earlier report dated 21.6.2021.

1) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets

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

(c) According to the information and explanations given to us and on the basis of ourexamination of records of the Company the title deeds of immovable properties and leasedeeds of right of use assets are held in the name of the Company except the followingproperties for which the title/lease deed is yet to be received by the Company.

Nature of Asset Amount (Rs. In Lakh) 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.
Freehold Land at Ibrahimpatnam 6136.90 Land is acquired through TSIIC and evidenced by Agreement of Sale. The company has requested TSIIC to execute the sale deed.
Freehold Land at Visakhapatnam 376.13 APIIC is yet to execute the Title Deeds.
Leasehold Land at Visakhapatnam-Right of Use Asset Lease deed yet to be

2) The inventory has been physically verified by the management during the year exceptinventories that are in the possession of sub-contractors and other third parties. In ouropinion the frequency of such verification is reasonable. The company has maintainedproper records of inventory. The discrepancies noticed on such physical verificationbetween physical stock and book records are not material.

3) According to the information and explanations given to us the Company has not givenloans secured or unsecured to companies firms limited liability partnerships or otherparties covered in the register maintained under section 189 of the Companies Act 2013.Accordingly the paragraphs 3(iii) (a) (b) and (c) of the order are not applicable to thecompany.

4) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Sections 185 and 186 of the Companies Act2013 in respect of grant of loans making investments and providing guarantees andsecurities. Accordingly paragraph 3(iv) of the order is not applicable to the company.

5) According to the information and explanations given to us the Company has notaccepted any deposits during the year and hence compliance with the provisions of Section73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules 2014 as amendedwith regard to acceptance of deposits are not applicable to the Company.

6) According to the information and explanations given to us the Central Governmenthas specified maintenance of Cost Records by the Company under Section 148 (1) of theCompanies Act 2013. We have broadly reviewed these records and are of the opinion thatprima facie the prescribed accounts and records made and maintained.

7) According to the information and explanations given to us in respect of Statutorydues:

a) The Company is regular in depositing undisputed Statutory dues including ProvidentFund Employees State Insurance Income-tax Good and Services tax Sales Tax Servicetax Value Added Tax Customs Duty Excise Duty Cess and other material statutory duesapplicable to it to the appropriate authorities.

b) According to the records of the Company and information and explanations given to usno undisputed Provident Fund Employees State Insurance Income-tax Good and Servicestax Sales Tax Service tax Value Added Tax Customs Duty Excise Duty Cess and othermaterial statutory dues were in arrears as at March 31 2021 for a period exceeding sixmonths from the date they become payable except for the following:

(Rs. In Lakhs)
Name of the Statute Nature of Dues Amount Period to which the amount relate Due date Date of Payment
Finance Act1994 Service Tax 2.81 2008- 09 and 2009- 10 Several Dates Not paid
Income Tax Act 1961 TDS defaults- Tax Interest on delayed remittances. 1.26 Financial Years 2009-10 to 2020 -21 Several Dates Not paid

c) According to the records of the Company and information and explanations given to usthe following are the particulars of disputed taxes payable:

(Rs. In Lakhs)
S.No Name of the Statute Nature of Dues Disputed amounts Period to which the amounts relate Forum where dispute is pending
1 Central Sales Tax Act Central Sales Tax 5550.83 2011-12 Writ Pending with High Court at Hyderabad
2 Central Sales Tax Act Central Sales Tax 5024.27 2012-13 Writ Pending with High Court at Hyderabad
3 Central Sales Tax Act Central Sales Tax 4266.81 2013-14 Writ Pending with High Court at Hyderabad
4 Central Sales Tax Act Central Sales Tax 6468.12 2014-15 Writ Pending with High Court at Hyderabad
5 Finance Act 1994 Service Tax 2355.50 2012-13 to 2014-15 Appeal pending with CETSTAT Hyderabad
6 Finance Act 1994 Service Tax 1883.80 2015-16 to 2017-18 Appeal pending with CETSTAT Hyderabad
7 Income Tax Act1961 Income Tax 94.36 2018-2019 Appeal filed on 29.04.2021 with National Faceless Assessment Centre
TOTAL 25643.69

Note: Against the Disputed amounts in item 1 5 & 6 the company has pre-depositedtax amounting to Rs 693.85 lakhs Rs 88.33 lakhs and Rs 128.43 lakhs respectively. AgainstItem 5 the company has paid under protest an amount of Rs 1089.42 lakhs.

8) According to the information and explanations given to us we are of the opinionthat the Company has not defaulted in the repayment of loans to banks. The company did nothave any outstanding loans or borrowings from government and financial institutions. TheCompany has not issued any debentures.

9) In our opinion and according to the information and explanations given to us theCompany did not raise any money by way of initial public offer or further public offer(including debt instruments) and term loans during the year. Accordingly paragraph 3(ix)of the Order is not applicable to the Company.

10) To the best of our knowledge and according to the information and explanationsgiven to us no fraud by the Company and no fraud on the Company by its officers has beennoticed or reported during the year.

11) Provisions of Section 197 of the Companies Act 2013 is not applicable to theCompany.

12) According to the information and explanations given to us in our opinion theCompany is not a Nidhi Company as prescribed under Section 406 of the Act. Accordinglyparagraph 3(xii) of the Order is not applicable to the Company.

13) According to the information and explanations furnished to us and based on ourexamination of books and records we are of the opinion that all transactions with relatedparties are in compliance with Sections 177 and 188 of the Companies Act 2013 whereapplicable and details have been disclosed in the standalone financial statements as perapplicable Accounting Standards.

14) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year. Accordingly paragraph 3(xiv) of the Order is not applicable to the Company.

15) In our opinion and accordingto the information an explanations given to us theCompany has not entered into any non-cash transactions with its directors or personsconnected with them during the year and hence provisions of Section 192 of the CompaniesAct 2013 are not applicable.z

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

Place: Hyderabad For G. Natesan and Co
Date: 11.082021 Chartered Accountants
FRN. 002424S
CA K Murali
Partner
M.No : 024842
UDIN : 21024842AAAADG7192

ANNEXURE-B TO THE INDEPENDENT AUDITOR'S REPORT

Referred to in Paragraph 2 (f) under "Report on Other Legal and RegulatoryRequirements" section of our report to the Members of Bharat Dynamics Limited

Report on the Internal Financial Controls with reference to Financial Statements underClause (i) of Sub-section 3 of Section 143 of the Companies Act 2013

We are Issuing this revised Annexure B to Independent Auditor's Report by replacing thephrase " Internal Financial Control" with the phrase "internal financialcontrols with reference to financial statements" This revision is in compliance tothe guidance of Comptroller & Auditor General of India. This report supersedes ourearlier report dated 21 6 2021.

We have audited the Internal Financial Controls with reference to Financial Statementsof Bharat Dynamics Limited (the Company) as at March 31 2021 in conjunction with ouraudit of the standalone financial statements of the Company for the year ended on thatdate

Management's Responsibility:

The Company's Management is responsible for establishing and maintaining InternalFinancial Controls with reference to Financial Statements based on the internal financialcontrol over financial reporting criteria established by the Company considering theessential components ot control stated in the "Guidance Note on Audit of InternalFinancial Controls over Financial Reporting" issued by the Institute of CharteredAccountants of India. These responsibilities include the design implementation andmaintenance of adequate Internal Financial Controls with reference to Financial Statementsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness. Including adherence to Company's policies the safeguarding of its assets andthe timely preparation of reliable financial information as required under the CompaniesAct 2013

Auditor's Responsibility:

Our responsibility is to express an opinion on the Company's Internal FinancialControls with reference to Financial Statements based on out audit We conducted our auditin accordance with the "Guidance Note on Audit of Internal Financial Controls overFinancial Reporting" (Guidance Note) issued by the Institute of Chartered Accountantsof India and the Standards on Auditing prescribed under Section 143(10) of the CompaniesAct 2013 to the extent applicable to an audit of Internal Financial Controls withreference to Financial Statements Those Standards and the Guidance Note require that wecomply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether adequate Internal Financial Controls with reference to FinancialStatements was established and maintained and if such controls operated effectively In allmaterial respects

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe Internal Financial Controls with reference to Financial Statements and their operatingeffectiveness. Our audit of Internal Financial Controls with reference to FinancialStatements included obtaining an understanding of Internal Financial Controls withreference to Financial Statements assessing the risk that material weakness exists andtesting and evaluating the design and operating effectiveness of internal financialcontrol based on the assessed risk. The procedures selected depend on the auditor'sjudgment including the assessment of the risks of material misstatement whether due tofraud 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 withreference to Financial Statements.

Meaning of Internal Financial Controls with reference to Financial Statements:

A company's internal financial control with reference to financial statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial control withreference to financial statements 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 expenditure of the company are being made only inaccordance with authorizations of management and directors of the company; and

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

Inherent Limitations of Internal Financial Controls with reference to FinancialStatements

Because of the inherent limitations of Internal Financial Controls with reference toFinancial Statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected Also projections of any evaluation of the Internal Financial Controls withreference to Financial Statements to future periods are subject to the risk that theInternal Financial Controls with reference to Financial Statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.

Emphasis of Matter:

a. The company's entire transactions are processed through the IT system. The companyhas not conducted an Information System Audit of its systems and processes.

b. The company does not have an Audit Committee of the Board since September 2020.

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

Opinion

In our opinion and to the best of our information and explanations given to us theCompany has in all material respects an adequate Internal Financial Controls withreference to Financial Statements and such Internal Financial Controls with reference toFinancial Statements were operating effectively as at March 31 2021 based on"Internal Financial Controls with reference to Financial Statements criteriaestablished by the Company considering the essential components of internal control statedin Guidance Note on Audit of Internal Financial Controls with reference to FinancialStatements issued by the Institute of Chartered Accountants of India".

Place: Hyderabad For G. Natesan and Co
Date: 11.082021 Chartered Accountants
FRN. 002424S
CA K Murali
Partner
M.No : 024842
UDIN : 21024842AAAADG7192

ANNEXURE-C TO THE INDEPENDENT AUDITOR'S REPORT

Referred to in Paragraph 2 (g) under "Report on Other Legal and RegulatoryRequirements" section of our report to the Members of Bharat Dynamics Limited

Report on the directions under sub-section 5 of Section 143 of the Companies Act 2013

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

Direction Report Impact
Whether the company has system in place to process all the accounting transactions through IT System Rs. If yes the implications of processing of accounting transactions outside IT system on the integrity of the accounts along with the financial implications if any may be stated According to the information and explanations furnished to us and based on our examination of books of accounts we are of the opinion that the company has necessary system in place to process all the accounting transactions through IT System. There are no accounting transactions that are processed outside the IT System during the year Nil
Whether there is any restructuring of an existing loan or cases of waiver/wnte off of debts/loans/interest etc. made by a lender to the company due to the company's inability to repay the loan Rs. If yes the financial impact may be stated. Based on our examination of books of accounts we are of the opinion that there are no such cases of restructuring of an existing loan or cases of waiver/write off of debts/loans/interest etc. made by a lender to the company due to the company's inability to repay the loan during the year. Nil
Whether funds received/receivable for specific schemes from Central/State agencies were properly accounted for/utilized as per its term and conditions Rs. List the cases of deviation. Based on the examination of the books of accounts and records of the Company we are of the opinion that the fund received from Government Agencies for specific schemes have been utilized as per its terms and conditions. Nil

 

Place: Hyderabad For G. Natesan and Co
Date: 11.082021 Chartered Accountants
FRN. 002424S
CA K Murali
Partner
M.No : 024842
UDIN : 21024842AAAADG7192

COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA UNDER SECTION 143(6) (h) OFTHE COMPANIES ACT 2013 ON THE FINANCIAL STATEMENTS OF BHARAT DYNAMICS LIMITED HYDERABADFOR THE YEAR ENDED 31 MARCH 2021.

The preparation of Financial Statements of Bharat Dynamics Limited Hyderabad forthe year ended 31 March 2021 in accordance with the financial reporting frameworkprescribed under the Companies Act. 2013 (Act) is the responsibility of the management ofthe company. The statutory auditor appointed by the Comptroller and Auditor General ofIndia under section 139(5) of the Act is responsible for expressing opinion on thefinancial statements under section 143 of the Act based on independent audit in accordancew ith the standards on auditing prescribed under section I43( 10) of the Act. This isstated to have been done by them vide their Revised Audit Report dated 11 August 2021which supersedes their earlier Audit Report dated 21 June 2021.

I. on behalf of the Comptroller and Auditor General of India have conducted asupplementary audit of the financial statements of Bharat Dy namics Limited Hyderabad forthe year ended 31 March 2021 under section 143(6) (a) of the Act. This supplementary audithas been carried out independently without access to the working papers of the statutoryauditor and is limited primarily to inquiries of the statutory auditors and companypersonnel and a selective examination of some of the accounting records.

In view of the revision made in the Statutory auditor's report to give effect to someof my audit observations raised during supplementary audit. I have no further comments tooffer upon or supplement to statutory auditors' report under section 143(6)(b) of the Act

For and on behalf of the
Comptroller & Auditor General of India
(Santosh Kumar)
Principal Director of Commercial Audit
Place: Bengaluru
Date: If August 2021

Ind AS

Financial Statements - 31 March 2021

Corporate information

Bharat Dynamics Limited (BDL) a Government of India Enterprise under the Ministry ofDefence was established at Hyderabad in the year 1970. It is engaged in the manufacturingof Missiles and allied Defence Equipments. The Company provides majority of its goods andservices to the Indian Armed forces and Government of India.

Contents:

Ind AS Financial Statements comprises:

(a) BalanceSheet

(b) Statement of Profit and Loss

(c) Statement of Changes in Equity

(d) Statement of Cash flows

(e) Notes comprising a summary of significant Accounting policies and otherexplanatory information; and

(f) Comparative information in respect of the preceding period;

Reporting Entity:

Bharat Dynamics Limited (Government of India Enterprise) is a Listed Company limited byshares incorporated and domiciled in India.

Registered Office:

Kanchanbagh Hyderabad - 500058

Corporate Office:

Plot No. 38-39 TSFC Building

Financial District Nanakramguda

Hyderabad - -500032.

.