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Bharat Forge Ltd.

BSE: 500493 Sector: Engineering
NSE: BHARATFORG ISIN Code: INE465A01025
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OPEN 747.50
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VOLUME 453346
52-Week high 848.00
52-Week low 595.85
P/E 38.21
Mkt Cap.(Rs cr) 36,792
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Sell Qty 0.00
OPEN 747.50
CLOSE 736.40
VOLUME 453346
52-Week high 848.00
52-Week low 595.85
P/E 38.21
Mkt Cap.(Rs cr) 36,792
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Bharat Forge Ltd. (BHARATFORG) - Auditors Report

Company auditors report

To the Members of Bharat Forge Limited

Report on the audit of the standalone Ind AS financial statements

Opinion

We have audited the accompanying standalone Ind AS financial statementsof Bharat Forge Limited ("the Company") which comprise the Balance sheet as atMarch 31 2022 the Statement of Profit and Loss including the statement of OtherComprehensive Income the Cash Flow Statement and the Statement of Changes in Equity forthe year then ended and notes to the standalone Ind AS financial statements including asummary of significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone Ind AS financial statements give theinformation required by the Companies Act 2013 as amended ("the Act") in themanner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at March31 2022 its profit including other comprehensive income its cash flows and the changesin equity for the year ended on that date.

Basis for opinion

We conducted our audit of the standalone Ind AS financial statements inaccordance with the Standards on Auditing (SAs) as specified under section 143(10) of theAct. Our responsibilities under those Standards are further described in the 'Auditor'sresponsibilities for the audit of the standalone Ind AS financial statements' section ofour 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 ethicalrequirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our audit opinion on the standalone Ind AS financial statements.

Key audit matters

Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone Ind AS financial statements forthe financial year ended March 31 2022. These matters were addressed in the context ofour audit of the standalone Ind AS financial statements as a whole and in forming ouropinion thereon and we do not provide a separate opinion on these matters. For eachmatter below our description of how our audit addressed the matter is provided in thatcontext.

We have determined the matters described below to be the key auditmatters to be communicated in our report. We have fulfilled the responsibilities describedin the Auditor's responsibilities for the audit of the standalone Ind AS financialstatements section of our report including in relation to these matters. Accordingly ouraudit included the performance of procedures designed to respond to our assessment of therisks of material misstatement of the standalone Ind AS financial statements. The resultsof our audit procedures including the procedures performed to address the matters belowprovide the basis for our audit opinion on the accompanying standalone Ind AS financialstatements.

Key audit matters How our audit addressed the key audit matter
Completeness of revenue (as described in Note 2.2(e) (Summary of significant accounting policies) and note 24 of notes forming part of the standalone I nd AS financial statements) Our audit procedures included the following:
The Company has revenue from sale of products which includes finished goods and tooling income and sale of services in the form of job work charges. The Company manufactures highly specialized forged and machined finished goods as per specification provided by the customers and based on the schedules from the customers. • We focused on our understanding of the Company's sales process including design and implementation of controls and tested the operating effectiveness of these controls.
• We read the Company's accounting policies pertaining to revenue recognition and assessed compliance with Ind AS 115 - Revenue from Contracts with Customers.
The Company recognizes revenue from sale of finished goods at a point in time based on the terms of the contract with customers which varies for each customer. Determination of point in time includes assessment of timing of transfer of significant risk and rewards of ownership establishing the present right to receive payment for the products delivery specifications including inco terms timing of transfer of legal title of the asset and determination of the point of acceptance of goods by customer. Further the pricing of the products is dependent on metal indices and foreign exchange fluctuation making the price volatile including variable considerations.
• We obtained and read the terms of customer contracts on sample basis to assess various performance obligations in the contract the point in time of transfer of control and pricing terms.
• We tested on a sample basis sales invoices for identification of point in time for transfer of control and terms of contract with customers. Further we performed procedures to test on a sample basis whether revenue was recognized in the appropriate period by testing shipping records good inwards receipt of customer sales invoice etc. and testing the management assessment involved in the process wherever applicable.
Due to judgments relating to determination of point in time in satisfaction of performance obligations with respect to sale of products this matter has been considered as key audit matter.
• We assessed the disclosure is in accordance with applicable accounting standards.
• We also performed various analytical procedures to identify any unusual sales trends for further testing.
Hedge accounting including valuations thereof (as described in Note 2.2(r) (Summary of significant accounting policies) and note 9 and 50 of notes forming part of the standalone Ind AS financial statements)
The Company enters into derivative financial instruments which are mainly plain vanilla forward contracts and range forward contracts to manage its exposure of foreign currency risk of highly probable forecasted transactions which arise during the normal course of its business. These contracts are measured at fair values leading to derivative financial assets of INR 3850.53 million as at March 31 2022 and the net movement of cashflow hedge reserve for the year is INR 762.24 million net of taxes which is recorded in other comprehensive income. The gain / loss on maturity of such derivative instruments is recorded in the statement of profit and loss along with the relevant hedged item. Our audit procedures included the following:
• We obtained understanding of the Company's overall hedge accounting strategy forward contract valuation and hedge accounting process from initiation to settlement of derivative financial instruments including assessment of the design and implementation of controls and tested the operating effectiveness of these controls.
• We read Company's accounting policy for hedge accounting in accordance with relevant accounting standards.
• We tested the existence of hedging contracts by tracing to the independent balance confirmations obtained from respective banks.
Due to the changes in risks and estimates during the lifecycle of the customer contracts in order to apply hedge accounting management is required to demonstrate that the underlying contract is considered to be a highly probable transaction that the hedges are highly effective and maintain hedge documentation. A degree of subjectivity is also required to determine when hedge accounting is to be considered as ineffective. Fair value movements of the forward contracts are driven by movements in financial markets.
• We tested management's hedge documentation and contracts on a sample basis.
• We tested on a sample basis the fair values of derivative financial instruments recorded by the Company with the independent balance confirmations obtained from banks.
• We involved our valuation specialists in re-performing the year-end fair valuations including evaluation of hedge effectiveness of derivative financial instruments on a sample basis and compared these valuations with those recorded by the Company including assessing the valuation methodology and key assumptions used therein.
Due to the outbreak of COVID 19 there are uncertainties involved in estimating the highly probable forecasted sales estimating future foreign exchange rates and accordingly have an impact on hedge effectiveness and impact to statement of profit and loss account.
These transactions may have a significant financial effect and have extensive accounting and reporting obligations and accordingly this is considered as a key audit matter.
• We have evaluated the revised estimates obtained from management with respect to highly probable forecasted sales due to COVID 19.
• We assessed the disclosure of hedge transactions in the standalone Ind AS financial statements of the Company.
Impairment assessment of investments in subsidiaries associates and joint ventures (as described in Note 2.2(q) (Summary of significant accounting policies) and note 6 of notes forming part of the standalone Ind AS financial statements)
The Company has major investments in subsidiaries associates and joint ventures as at March 31 2022. The management assesses at least annually the existence of impairment indicators of each shareholdings in such subsidiaries associates andjoint ventures. Our audit procedures included the following:
• We obtained understanding of the Company's policy on assessment of impairment of investment in subsidiaries associates and joint ventures and assumptions used by the management including design and implementation of controls. We have tested the operating effectiveness of these controls.
The processes and methodologies for assessing and determining the recoverable amount of each investments are based on complex assumptions that by their nature imply the use of the management's judgment in particular with reference to identification of impairment indicators forecast of future cash flows relating to the period covered by the Company's strategic business plan normalized cash flows assumed as a basis for terminal value as well as the long-term growth rates and discount rates applied to such forecasted cash flows
• We assessed the methodology used by management to estimate the recoverable value of each investment and consistency with accounting standards.
• We compared the carrying values of the Company's investment in these subsidiaries associates and joint ventures with their respective net worth as per audited financial statements.
• We have seen valuation models prepared by the management on investments where investment amount is material and there are indicators of impairment.
Further considering the outbreak of COVID 19 and uncertainties involved regarding forecast of future cash flows the management performed detailed analysis to evaluate impairment for specific cases where there are impairment indicators and material investments. Considering the judgment required for estimating the cash flows and the complexity of the assumptions used this is considered as a key audit matter.
• We involved our valuation specialists to evaluate methodology assumptions and estimates used in the calculations We discussed potential changes in key drivers as compared to previous year / actual performance with management to evaluate whether the inputs and assumptions used in the cash flow forecasts were suitable. We also evaluated the assumptions around the key drivers of the cash flow forecasts including discount rates expected growth rates and terminal growth rates used.
• We also assessed the recoverable value by performing sensitivity testing of key assumptions used.
• Analysed and examined the business plans approved along with assumptions and estimates used by management.
• We evaluated the accounting and disclosure of impairment of investment in the standalone Ind AS financial statements of the Company.
• We tested the arithmetical accuracy of these models.

We have determined that there are no other key audit matters tocommunicate in our report.

Other information

The Company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in the Annualreport but does not include the standalone Ind AS financial statements and our auditor'sreport thereon.

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

In connection with our audit of the standalone Ind AS financialstatements our responsibility is to read the other information and in doing so considerwhether such other information is materially inconsistent with the financial statements orour knowledge obtained in the audit or otherwise appears to be materially misstated. Ifbased on the work we have performed we conclude that there is a material misstatement ofthis other information we are required to report that fact. We have nothing to report inthis regard.

Responsibilities of management and those charged with governance forthe standalone Ind AS financial statements

The Company's Board of Directors is responsible for the matters statedin section 134(5) of the Act with respect to the preparation of these standalone Ind ASfinancial statements that give a true and fair view of the financial position financialperformance including other comprehensive income cash flows and changes in equity of theCompany in accordance with the accounting principles generally accepted in Indiaincluding the Indian Accounting Standards (Ind AS) specified under section 133 of the Actread with the Companies (Indian Accounting Standards) Rules 2015 as amended. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; andthe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone Ind AS financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the standalone Ind AS financial statements management isresponsible 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.

Those charged with governance are also responsible for overseeing theCompany's financial reporting process.

Auditor's responsibilities for the audit of the standalone Ind ASfinancial statements

Our objectives are to obtain reasonable assurance about whether thestandalone Ind AS financial statements as a whole are free from material misstatementwhether 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 auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone Ind AS financialstatements.

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

• Identify and assess the risks of material misstatement of thestandalone Ind AS financial statements whether due to fraud or error design and performaudit procedures responsive to those risks and obtain audit evidence that is sufficientand appropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.

• Obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. Undersection 143(3)(i) of the Act we are also responsible for expressing our opinion onwhether the Company has adequate internal financial controls with reference to financialstatements in place and the operating effectiveness of such controls.

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

• Conclude on the appropriateness of management's use of the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor's report. However future events or conditions may cause the Companyto cease to continue as a going concern.

• Evaluate the overall presentation structure and content of thestandalone Ind AS financial statements including the disclosures and whether thestandalone Ind AS financial statements represent the underlying transactions and events ina manner that achieves fair presentation.

We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.

We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.

From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalone IndAS financial statements for the financial year ended March 31 2022 and are therefore thekey audit matters. We describe these matters in our auditor's report unless law orregulation precludes public disclosure about the matter or when in extremely rarecircumstances we determine that a matter should not be communicated in our report becausethe adverse consequences of doing so would reasonably be expected to outweigh the publicinterest 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 sub-section(11) of section 143 of the Act we give in the "Annexure 1" a statement on thematters specified in paragraphs 3 and 4 of the Order.

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

(a) We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit;

(b) In our opinion proper books of account as required by law havebeen 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 theStatement of Other Comprehensive Income the Cash Flow Statement and Statement of Changesin Equity dealt with by this Report are in agreement with the books of account;

(d) In our opinion the aforesaid standalone Ind AS financialstatements comply with the Accounting Standards specified under Section 133 of the Actread with Companies (Indian Accounting Standards) Rules 2015 as amended;

(e) On the basis of the written representations received from thedirectors as on March 31 2022 taken on record by the Board of Directors none of thedirectors is disqualified as on March 31 2022 from being appointed as a director in termsof Section 164 (2) of the Act;

(f) With respect to the adequacy of the internal financial controls ofthe Company with reference to these standalone Ind AS financial statements and theoperating effectiveness of such controls refer to our separate Report in "Annexure2" to this report;

(g) In our opinion the managerial remuneration for the year endedMarch 31 2022 has been paid / provided by the

Company to its directors in accordance with the provisions of section197 read with Schedule V to the Act;

(h) With respect to the other matters to be included in the Auditor'sReport in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 asamended in our opinion and to the best of our information and according to theexplanations given to us:

i. The Company has disclosed the impact of pending litigations on itsfinancial position in its standalone Ind AS financial statements - Refer Note 38 to thestandalone Ind AS financial statements;

ii. The Company has made provision as required under the applicablelaw or accounting standards for material foreseeable losses if any on long-termcontracts including derivative contracts - Refer Note 9 and 19(a) to the standalone Ind ASfinancial statements;

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

iv. a) The management has represented that to the best of itsknowledge and belief other than as disclosed in the

Note 47 to the standalone Ind AS financial statements no funds havebeen advanced or loaned or invested (either from borrowed funds or share premium or anyother sources or kind of funds) by the Company to or in any other persons or entitiesincluding foreign entities ("Intermediaries") with the understanding whetherrecorded in writing or otherwise that the Intermediary shall whether directly orindirectly lend or invest in other persons or entities identified in any manner whatsoeverby or on behalf of the Company ("Ultimate Beneficiaries") or provide anyguarantee security or the like on behalf of the Ultimate Beneficiaries;

b) The management has represented that to the best of its knowledgeand belief other than as disclosed in the Note 47 to the standalone Ind AS financialstatements no funds have been received by the Company from any persons or entitiesincluding foreign entities ("Funding Parties") with the understanding whetherrecorded in writing or otherwise that the Company shall whether directly or indirectlylend or invest in other persons or entities identified in any manner whatsoever by or onbehalf of the Funding Party ("Ultimate Beneficiaries") or provide any guaranteesecurity or the like on behalf of the Ultimate Beneficiaries; and

c) Based on such audit procedures performed that have been consideredreasonable and appropriate in the circumstances nothing has come to our notice that hascaused us to believe that the representations under sub-clause (a) and (b) contain anymaterial misstatement.

v. The final dividend paid by the Company during the year in respect ofthe same declared for the previous year is in accordance with section 123 of the Act tothe extent it applies to payment of dividend.

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

As stated in Note 17 to the standalone Ind AS financial statements theBoard of Directors of the Company have proposed final dividend for the year which issubject to the approval of the members at the ensuing Annual General Meeting. The dividenddeclared is in accordance with section 123 of the Act to the extent it applies todeclaration of dividend.

For S R B C & CO LLP
Chartered Accountants
ICAI Firm Registration Number: 324982E/E300003
per Huzefa Ginwala
Partner
Membership Number: 111757
UDIN: 22111757AJAULT3008
Place of Signature: Pune
Date: May 16 2022

Annexure 1 referred to in paragraph 1 under the heading "Report onother legal and regulatory requirements" of our report of even date.

Re: Bharat Forge Limited ('the Company')

In terms of the information and explanations sought by us and given bythe company and the books of account and records examined by us in the normal course ofaudit and to the best of our knowledge and belief we state that:

(i) (a) (A) The Company has maintained proper records showing fullparticulars including quantitative details and situation of property plant andequipment.

(B) The Company has maintained proper records showing full particularsof intangible assets.

(b) All property plant and equipment have not been physically verifiedby the management during the year but there is a regular programme of verifying them oncein three years which in our opinion is reasonable having regard to the size of theCompany and the nature of its assets. No material discrepancies were identified on suchverification.

(c) The title deeds of immovable properties (other than propertieswhere the Company is the lessee and the lease agreements are duly executed in favour ofthe lessee) disclosed in note 3 to the standalone Ind AS financial statements are held inthe name of the Company except one immovable property aggregating gross block of INR 0.07million and net block of INR 0.05 million as at March 31 2022 for which title deeds werenot available with the Company and hence we are unable to comment on the same.

(d) The Company has not revalued its property plant and equipment(including right of use assets) or intangible assets during the year ended March 31 2022.

(e) There are no proceedings initiated or are pending against theCompany for holding any benami property under the Prohibition of Benami PropertyTransactions Act 1988 and rules made thereunder.

(ii) (a) The inventory has been physically verified by the managementduring the year except for inventories lying with third parties. In our opinion thefrequency of verification by the management is reasonable and the coverage and procedurefor such verification is appropriate. Inventories lying with third parties have beenconfirmed by them as at March 31 2022. Discrepancies of 10% or more in aggregate for eachclass of inventory were not noticed on such physical verification and confirmations forinventories lying with third parties.

(b) As disclosed in note 18 to the standalone Ind AS financialstatements the Company has been sanctioned working capital limits in excess of INR Fivecrores in aggregate from banks during the year on the basis of security of current assetsof the Company. Based on the records examined by us in the normal course of audit of thestandalone Ind AS financial statements the quarterly returns/statements filed by theCompany with such banks are in agreement with the books of accounts of the Company.

(iii) (a) During the year the Company has provided loans advances inthe nature of loans and stood guarantee to companies or any other parties as follows:

In Rs. Million
Guarantees Security Loans Advance in Nature of Loans
Aggregate amount granted/ provided during the year
- Subsidiaries 3766.97 - 993.22 -
- Joint Ventures - - - -
- Associates - - 8.00 -
- Others - - 121.74 -
In Rs. Million
Guarantees Security Loans Advance in Nature of Loans
Balance outstanding as at balance sheet date in respect of above cases
- Subsidiaries 6635.64 - 544.57 -
- Joint Ventures - - - -
- Associates - 8.00 -
- Others - 92.64 1350.00

(b) During the year the investments made guarantees provided and theterms and conditions of the grant of all loans and advances in the nature of loansinvestments and guarantees to companies or any other parties are not prejudicial to theCompany's interest.

(c) In respect of loans granted to companies the schedule of repaymentof principal and payment of interest has been stipulated and the repayment or receipts areregular except in the following cases:

Name of the Entity Amount (INR in millions) Due date Extent of delay (in days) Remarks if any
BF Elbit Advanced Systems Private Limited 13.42 March 31 2022 Not applicable Amount of such interest has been converted into loan as on March 31 2022 net of withholding taxes.
Tork Motors Private Limited 2.00 May 122021 79 Delay in receipt of principal.
2.00 July 12 2021 18 Delay in receipt of principal.
1.00 August 12 2021 7 Delay in receipt of principal.
1.00 November 12 2021 7 Delay in receipt of principal.
0.49 April 12 2021 91 Delay in receipt of interest.
0.51 May 122021 61 Delay in receipt of interest.
0.47 July 12 2021 38 - 63 Delay in receipt of interest.
0.50 August 12 2021 32 - 69 Delay in receipt of interest.
0.51 October 12 2021 8 - 69 Delay in receipt of interest.
0.47 November 12 2021 38 - 108 Delay in receipt of interest.
0.44 January 12 2022 47 - 67 Delay in receipt of interest.
0.44 February 12 2022 36 - 92 Delay in receipt of interest (partly collected in current year and partly subsequent to year end.)
BF Infrastructure Limited 0.90 June 02 2021 12 - 99 Delay in receipt of interest.
0.91 September 02 2021 7 Delay in receipt of interest.

(d) There are no amounts of loans and advances in the nature of loansgranted to companies firms Limited Liability Partnerships or any other parties which areoverdue for more than ninety days.

(e) During the year the Company had extended loans to a company tosettle the loan granted to this party which had fallen due during the year.

The aggregate amount of such dues extended and the percentage of theaggregate to the total loans or advances in the nature of loans granted during the yearare as follows:

Name of Party Aggregate amount of overdues of existing loans extended (INR in millions) Percentage of the aggregate to the total loans or advances in the nature of loans granted during the
Aeron Systems Private Limited 8.00 0.71%

(f) As disclosed in note 42 to the standalone Ind AS financialstatements in earlier years the Company has granted loans repayable on demand tocompanies. Of these following are the details of the aggregate amount of loans or advancesin the nature of loans granted to promoters or related parties as defined in clause (76)of section 2 of the Companies Act 2013:

All parties Promotors Related Parties
Aggregate amount of loans/ advances in nature of loans 225.01 - 225.01
- Repayable on demand (INR in million)
Percentage of loans/ advances in nature of loans to the total loans 11.28% - 11.28%

(iv) Loans investments guarantees and security in respect of whichprovisions of sections 185 and 186 of the Companies Act 2013 are applicable have beencomplied with by the Company.

(v) The Company has neither accepted any deposits from the public noraccepted any amounts which are deemed to be deposits within the meaning of sections 73 to76 of the Companies Act 2013 and the rules made thereunder to the extent applicable.Accordingly the requirement to report on clause 3(v) of the Order is not applicable tothe Company. However according to the information and explanations given to us inrespect of deposits accepted earlier under relevant provisions of the erstwhile CompaniesAct 1956 and the rules framed thereunder there are certain unclaimed deposits amountingto INR 0.04 million including interest thereon which are subject to litigation.

(vi) We have broadly reviewed the books of account maintained by theCompany pursuant to the rules made by the Central Government for the maintenance of costrecords under Section 148(1) of the Companies Act 2013 related to the manufacture offorged products and other products and are of the opinion that prima facie the specifiedaccounts and records have been made and maintained. We have not however made a detailedexamination of the same.

(vii) (a) Undisputed statutory dues including provident fundemployees' state insurance income-tax duty of custom goods and service tax cess andother material statutory dues have generally been regularly deposited with the appropriateauthorities though there has been a slight delay in a few cases. According to theinformation and explanations given to us and based on audit procedures performed by usundisputed dues in respect of provident fund employees' state insurance income tax dutyof custom goods and service tax cess and other statutory dues which were outstanding atthe year end for a period of more than six months from the date they became payable areas follows:

Statement of Arrears of Statuary dues outstanding for more than sixmonths.

Name of the statute Nature of the dues Amount (INR in million) Period to which the amount relates Due date Date of payment Remarks if any
Maharashtra Municipal Corporation Act 1949 and Bombay Provincial Municipal Corporation (Local Body Tax) Rules 2010 (LBT rules) Local Body Tax (LBT) 39.80 FY 201516 201617 & 201718 Various dates Not paid

(b) The dues of goods and services tax provident fund employees'state insurance income-tax sales-tax service tax duty of custom duty of excise valueadded tax cess and other statutory dues have not been deposited on account of anydispute are as follows:

Name of the statute Nature of the dues Amount (INR in million)# Period to which the amount relates Forum where the dispute is pending
Property tax Demand received for various cases (net of INR 221.49 million paid under protest) 173.29 AY 2005-06 to 2021-2022 High Court
Central Excise Act 1944 Demand received for various cases (net of INR 5.50 million paid under protest) 16.40 FY 2002-03 to 2012-13 CESTAT Mumbai
Customs Act 1962 Demand received for wrong availment of duty drawback (net of INR 122.80 million paid under protest) FY 2012-13 and 2013-14 Principal Commissioner (RA) and Ex-Officio Additional Secretary to the Government of India
Income Tax Act 1961 Non deduction of withholding taxes u/s 195 (net of INR 54.92 million paid under protest) AY 2014-15 I TAT Pune

# Excludes interest and penalty

(viii) The Company has not surrendered or disclosed any transactionpreviously unrecorded in the books of account in the tax assessments under the Income TaxAct 1961 as income during the year. Accordingly the requirement to report on clause3(viii) of the Order is not applicable to the Company.

(ix) (a) The Company has not defaulted in repayment of loans or otherborrowings or in the payment of interest thereon to any lender.

(b) The Company has not been declared wilful defaulter by any bank orfinancial institution or government or any government authority.

(c) In our opinion and according to the information and explanationsgiven by the management and audit procedures performed by us the Company has utilized themonies raised by way of term loans for the purposes for which they were raised thoughidle / surplus funds which were not required for immediate utilization have been gainfullyinvested in deposits with banks. The maximum amount of idle/surplus funds invested duringthe year was INR 1048.33 million of which INR Nil was outstanding at the end of theyear.

(d) On an overall examination of the standalone Ind AS financialstatements of the Company no funds raised on short-term basis have been used forlong-term purposes by the Company.

(e) On an overall examination of the standalone Ind AS financialstatements of the Company the Company has not taken any funds from any entity or personon account of or to meet the obligations of its subsidiaries associates orjoint ventures.

(f) The Company has not raised loans during the year on the pledge ofsecurities held in its subsidiaries joint ventures or associate companies. Hence therequirement to report on clause (ix)(f) of the Order is not applicable to the Company.

(x) (a) The Company has not raised any money during the year by way ofinitial public offer / further public offer (including debt instruments) hence therequirement to report on clause 3(x)(a) of the Order is not applicable to the Company.

(b) The Company has not made any preferential allotment or privateplacement of shares /fully or partially or optionally convertible debentures during theyear under audit and hence the requirement to report on clause 3 (x)(b) of the Order isnot applicable to the Company.

(xi) (a) No material fraud by the Company or no material fraud on theCompany has been noticed or reported during the year.

(b) During the year no report under sub-section (12) of section 143 ofthe Companies Act 2013 has been filed by cost auditor/ secretarial auditor or by us inForm ADT - 4 as prescribed under Rule 13 of Companies (Audit and Auditors) Rules 2014with the Central Government.

(c) As represented to us by the management there are no whistle blowercomplaints received by the Company during the year.

(xii) The Company is not a nidhi Company as per the provisions of theCompanies Act 2013. Therefore the requirement to report on clause 3(xii)(a) (b) and (c)of the Order is not applicable to the Company.

(xiii) Transactions with the related parties are in compliance withsections 177 and 188 of the Companies Act 2013 where applicable and the details have beendisclosed in the notes to the standalone Ind AS financial statements as required by theapplicable accounting standards.

(xiv) (a) The Company has an internal audit system commensurate withthe size and nature of its business.

(b) The internal audit reports of the Company issued till the date ofthe audit report for the period under audit have been considered by us.

(xv) The Company has not entered into any non-cash transactions withits directors or persons connected with its directors and hence requirement to report onclause 3(xv) of the Order is not applicable to the Company.

(xvi) (a) The provisions of section 45-IA of the Reserve Bank of IndiaAct 1934 (2 of 1934) are not applicable to the Company. Accordingly the requirement toreport on clause 3(xvi)(a) of the Order is not applicable to the Company.

(b) The Company is not engaged in any Non-Banking Financial or HousingFinance activities. Accordingly the requirement to report on clause 3(xvi)(b) of theOrder is not applicable to the Company.

(c) The Company is not a Core Investment Company as defined in theregulations made by Reserve Bank of India. Accordingly the requirement to report onclause 3(xvi)(c) of the Order is not applicable to the Company.

(d) There is no Core Investment Company as a part of the Group hencethe requirement to report on clause 3(xvi)(d) of the Order is not applicable to theCompany.

(xvii) The Company has not incurred cash losses in the currentfinancial year and in the immediately preceding financial year.

(xviii) There has been no resignation of the statutory auditors duringthe year and accordingly requirement to report on Clause 3 (xviii) of the Order is notapplicable to the Company.

(xix) On the basis of the financial ratios disclosed in note 51 to thestandalone Ind AS financial statements ageing and expected dates of realization offinancial assets and payment of financial liabilities other information accompanying thefinancial statements our knowledge of the Board of Directors and management plans andbased on our examination of the evidence supporting the assumptions nothing has come toour attention which causes us to believe that any material uncertainty exists as on thedate of the audit report that Company is not capable of meeting its liabilities existingat the date of balance sheet as and when they fall due within a period of one year fromthe balance sheet date. We however state that this is not an assurance as to the futureviability of the Company. We further state that our reporting is based on the facts up tothe date of the audit report and we neither give any guarantee nor any assurance that allliabilities falling due within a period of one year from the balance sheet date will getdischarged by the Company as and when they fall due.

(xx) (a) In respect of other than ongoing projects there are nounspent amounts that are required to be transferred to a fund specified in Schedule VII ofthe Companies Act 2013 in compliance with second proviso to sub section 5 of section 135of the Companies Act 2013. This matter has been disclosed in note 45 to the standaloneInd AS financial statements.

(b) All amounts that are unspent under section (5) of section 135 ofCompanies Act 2013 pursuant to any ongoing project has been transferred to specialaccount in compliance of with provisions of sub section (6) of section 135 of the saidAct. This matter has been disclosed in note 45 to the standalone Ind AS financialstatements.

For S R B C & CO LLP
Chartered Accountants
ICAI Firm Registration Number: 324982E/E300003
per Huzefa Ginwala
Partner
Membership Number: 111757
UDIN: 22111757AJAULT3008
Place of Signature: Pune
Date: May 16 2022

Annexure 2 referred to in paragraph 2(f) under the heading "Reporton other legal and regulatory requirements" of our report of even date.

Report on the Internal Financial Controls under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the ct")

We have audited the internal financial controls with reference tostandalone Ind AS financial statements of Bharat Forge Limited ("the Company")as of March 31 2022 in conjunction with our audit of the standalone Ind AS financialstatements of the Company for the year ended on that date.

Management's responsibility for internal financial controls

The Company's Management is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting issued by the Institute of Chartered Accountants of India("ICAI"). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence to theCompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.

Auditor's responsibility

Our responsibility is to express an opinion on the Company's internalfinancial controls with reference to these standalone Ind AS financial statements based onour audit. We conducted our audit in accordance with the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting (the "Guidance Note") andthe Standards on Auditing as specified under section 143(10) of the Act to the extentapplicable to an audit of internal financial controls both issued by ICAI. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls with reference to these standalone Ind AS financial statements wasestablished and maintained and if such controls operated effectively in all materialrespects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls with reference to these standalone Ind ASfinancial statements and their operating effectiveness. Our audit of internal financialcontrols with reference to standalone Ind AS financial statements included obtaining anunderstanding of internal financial controls with reference to these standalone Ind ASfinancial statements assessing the risk that a material weakness exists and testing andevaluating the design and operating effectiveness of internal control based on theassessed risk. The procedures selected depend on the auditor's judgement including theassessment of the risks of material misstatement of the financial statements whether dueto fraud or error.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internal financialcontrols with reference to these standalone Ind AS financial statements.

Meaning of internal financial controls with reference to thesestandalone Ind AS financial statements

A company's internal financial controls with reference to standaloneInd AS financial statements is a process designed to provide reasonable assuranceregarding the reliability of financial reporting and the preparation of financialstatements for external purposes in accordance with generally accepted accountingprinciples. A company's internal financial controls with reference to standalone Ind ASfinancial statements includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.

Inherent limitations of internal financial controls with reference tostandalone Ind AS financial statements

Because of the inherent limitations of internal financial controls withreference to standalone Ind AS financial statements including the possibility ofcollusion or improper management override of controls material misstatements due to erroror fraud may occur and not be detected. Also projections of any evaluation of theinternal financial controls with reference to standalone Ind AS financial statements tofuture periods are subject to the risk that the internal financial controls with referenceto standalone Ind AS financial statements may become inadequate because of changes inconditions or that the degree of compliance with the policies or procedures maydeteriorate.

Opinion

In our opinion the Company has in all material respects adequateinternal financial controls with reference to standalone Ind AS financial statements andsuch internal financial controls with reference to standalone Ind AS financial statementswere operating effectively as at March 31 2022 based on the internal control overfinancial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note issued by the ICAI.

For S R B C & CO LLP
Chartered Accountants
ICAI Firm Registration Number: 324982E/E300003
per Huzefa Ginwala
Partner
Membership Number: 111757
UDIN: 22111757AJAULT3008
Place of Signature: Pune
Date: May 16 2022

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