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Independent Auditor's Report
TO THE MEMBERS OF BHARAT ELECTRONICS LIMITED,
Report on the Standalone financial statements
We have audited the accompanying standalone financial statements of BHARAT ELECTRONICS LIMITED ("the Company"), which comprise the Balance Sheet as at 31 March 2015, the Statement of Profit and Loss for the year then ended, the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information, in which are incorporated the Returns for the year ended on that date audited by the branch auditors of the Company's branches at Ghaziabad, Panchkula, Kotdwara, Pune, Navi Mumbai and Machilipatnam.
Management's Responsibility for the Standalone financial statements
The Company's Board of Directors are responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Our responsibility is to express an opinion on these standalone financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.
We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the standalone financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone financial statements. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the standalone financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation of the standalone financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company's Directors, as well as evaluating the overall presentation of the standalone financial statements.
We believe that the audit evidence obtained by us and the audit evidence obtained by the other auditors in terms of their reports referred to in sub–paragraph (a) of the Other Matters paragraph below, is sufficient and appropriate to provide
a basis for our audit opinion on the standalone financial statements.
In our opinion and to the best of our information and according to the explanations given to us, the standalone financial statements of the company for the year ended 31 March 2015 give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India :
a) in the case of the balance sheet, of the state of affairs of the Company as at 31 March 2015.
b) in the case of the statement of profit and loss, of the profit for the year ended on that date; and
c) in the case of the cash flow statement, of the cash flows for the year ended on that date.
a) We did not audit the financial statements of six branches included in the standalone financial statements of the Company whose financial statements reflect total assets of X 280,137.10 lakhs as at 31 March 2015 and total revenues of X 209,021.17 lakhs for the year ended on that date, as considered in the standalone financial statements. The financial statements of these branches have been audited by the branch auditors whose reports have been furnished to us, and our opinion in so far as it relates to the amounts and disclosures included in respect of these branches, is based solely on the report of such branch auditors.
b) We draw attention to Note No. 30(6) regarding disclosures required under Para 5 of Part II to Schedule III of the Companies Act, 2013(under General Instructions for preparation of Statement of Profit and Loss) [erstwhile Para 5 of Part II to Schedule VI of the Companies Act, 1956(under General Instructions for preparation of Statement of Profit and Loss)].
c) We draw attention to Note No. 30(13) regarding disclosure of segment information as required under AS–17.
Our opinion is not modified in respect of this matter.
Report on Other Legal and Regulatory Requirements
1. As required by Companies (Auditor's Report) Order, 2015, issued by the Central Government in terms of sub–section 11 of section 143 of the Act and based on the comments in the auditors' report of the respective branches, we give in the annexure a statement on the matters specified in paragraph 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 explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.
(b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books. The audit of the accounts of Bengaluru, Hyderabad and Chennai branches and Corporate Office has been carried out by us. In the case of New York and Singapore Offices and other offices not visited by us, and in respect of which the accounts are maintained at Corporate Office, the returns / records received from the said offices have been verified and found to be adequate for the purpose of our audit.
(c) The reports on the accounts of the branch offices of the Company audited under Section 143 (8) of the Act by branch auditors in respect of Ghaziabad, Panchkula, Kotdwara, Pune, Navi Mumbai and Machilipatnam branches have been sent to us and have been properly dealt with, by us in preparing this report.
d) The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account and with the returns received from the branches not visited by us.
e) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.
f) On the basis of the written representations received from the directors as at 31 March 2015, taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2015 from being appointed as a director in terms of Section 164 (2) of the Act.
g) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us :
i. The Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements– Refer Note 30(8).
ii. We are given to understand that the Company does not have any long–term contracts including derivatives contracts for which there are any material foreseeable losses.
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.
ANNEXURE REFERRED TO THE INDEPENDENT AUDITORS' REPORT (Referred to in Report on Other Legal & Regulatory Requirement)
(i) (a) The Company has generally maintained proper records showing full particulars including quantitative details and situation of its fixed assets.
(b) As explained to us and based on our examination of records, the Management has generally carried out the physical verification of a portion of the Fixed Assets in accordance with their phased programme of physical verification, which is considered reasonable having regard to the size of the Company and nature of its business and discrepancies, if any, were properly dealt with on such verification during the year.
(ii) (a) The raw materials, stores and spare parts, tools, work–in–progress, semi–finished goods and finished goods inventory(excluding stock with third parties and material in transit) have been physically verified by the management. In our opinion, the frequency of verification is reasonable.
(b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.
(c) In our opinion and on the basis of our examination of the records, the Company is maintaining proper records of its inventories. The discrepancies noticed on verification between the physical stocks and the book records were not material, and has been dealt with properly in the books of account.
In respect of materials with sub–contractors, confirmations have been received generally and reconciled with the book records. However, in case of such items for which no confirmations have been received, which are not significant, the company has dealt with the same by making adequate provision in the books of account.
(iii) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 189 of the Companies Act. Hence, clause (iii)(a) & (b) are not applicable.
(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control procedure commensurate within the Company and the nature of its business, for the purchase of inventories & fixed assets and payment for expenses & for sale of goods and services. During the course of our audit, no major weaknesses in the internal controls have been noticed.
(v) According to the information and explanations given to us, the Company has not accepted any deposit from public in the current year as per the directives issued by the Reserve Bank of India and the provisions of sections 73 to 76 or any other relevant provisions of the Companies Act and the rules framed there under. All deposits have matured and settled except for X 36.95 lakhs, out of which X 36.50 lakhs is retained as per Garnishee Order of Lokayukta, Bengaluru and the balance of X 0.45 lakhs though matured is unpaid due to legal issues.
In our opinion and according to the information and explanations given to us and based on our examination of records, the Company has complied with the provisions of Section 73 and other relevant provisions of the Act and the Companies (Acceptance of Deposits) Rules, 2014.
(vi) The Company pursuant to sub–section (1) of section 148 of the Companies Act for the maintenance and audit of cost records prescribed by the Central Government has maintained cost records. We are of the opinion that prima facie the prescribed cost accounts and cost records have been made and maintained. We have not however made a detailed examination of the cost records with a view to determine whether they are accurate or complete.
(vii) (a) The Company is regular in remittance of undisputed statutory dues including Provident Fund, Employees' State Insurance, Income–tax, Sales–tax, Service–tax, Custom Duty, Excise Duty, Cess and other applicable statutory dues. According to the information and explanation given to us, no undisputed statutory dues are outstanding as at 31 March 2015, for a period of more than six months from the date they became payable.
(b) According to the information and explanations given to us, there are no disputed amounts that remain unpaid as at 31 March 2015 for a period of more than six months from the date they became payable in respect of Provident Fund, Employees' State Insurance, Income–tax, Sales–tax, Service–tax, Custom Duty, Excise Duty, Cess and other applicable statutory dues with the exception of the following :
(c) The requirement of transfer to investor education and protection fund is in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made thereunder.
(viii) The Company does not have any accumulated losses as at the end of the financial year and has not incurred cash losses during the financial year and in the immediately preceding financial year.
(ix) On the basis of examination of records of the Company and information and explanations given to us, the Company has not defaulted in repayment of dues to a bank, financial institution or others
(x) According to the information and explanations given to us, the Company has not given any guarantees for loan taken by others from a bank or financial institution.
(xi) The Company has not availed any term loan and hence, this clause is not applicable.
(xii) During the course of our examination of the books of account and records of the Company, carried out in accordance with the generally accepted auditing practices in India and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported, during the year nor have we been informed of any such case by the Management, that causes the standalone financial statements to be materially misstated.
For Badari, Madhusudhan & Srinivasan
Firm Registration Number : 005389S
Membership No. 027887
29 May 2015