Bharat Electronics Limited
Nagavara, Outer Ring Road
Bangalore - 560045
1. We have audited the attached Balance Sheet of Bharat Electronics Limited asat 31st March 2010, the Profit and Loss Account and also the cash flow statement for theyear ended on that date annexed thereto. These financial statements are the responsibilityof the Company's management. Our responsibility is to express an opinion on thesefinancial statements based on our audit.
2. We conducted our audit in accordance with audiing standards generally accepted inIndia. Those Standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement. Anaudit includes examining, on a test basis, evidence supporing the amounts and disclosuresin the financial statements. An audit also includes assessing the accounting principlesused and significant estimates made by the management, as well as evaluating the overallfinancial statement presentation. We believe that our audit provides a reasonable basisfor our opinion.
3. As required by the Companies (Auditor's Report) Order, 2003 (as modified on 25 Nov2004) issued by the Central Government in terms of sub-section (4A) of section 227 of theCompanies Act, 1956, we enclose in the Annexure a statement on the matters specified inparagraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to in Paragraph 3 above, we reportthat:
a. We have obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purpose of our audit.
b. In our opinion, proper books of account, as required by law, have been kept by theCompany in so far as it appears, from our examination of those books. The audit of theaccounts of Bangalore, Hyderabad and Chennai Units and Corporate Office were carried outby us, whilst the audit of Ghaziabad, Panchkula, Kotdwara, Pune, Navi Mumbai andMachilipatnam units were audited by respective branch auditors. The reports of branchauditors have been considered by us while preparing our report. In the case of New Yorkand Singapore offices, not visited by us, in respect of which the accounts are maintainedat Corporate Office, the returns / records received from the said offices have beenverified and found to be adequate for the purpose of our audit. We further state that thedisclosure in Note No. 24 of Schedule 21 of Company's share of Assets, Liabilities, Incomeand Expenses in the joint ventures is based on audited financial statements of GE BE Pvt.Ltd., and audited financial statements of BEL Mulitone Pvt. Ltd., as provided by therespective operators of joint ventures.
c. The Balance Sheet and the Profit and Loss Account cash flow dealt with by thisreport, are in agreement with the books of account of this Company;
d. In our opinion, the Balance Sheet, Profit and Loss
Account and Cash flow Statement dealt with by this report comply with the accountingstandards referred to in Section 211(3C) of the Companies Act, 1956, read with Section211(3B) of the Companies Act, 1956 and Item No. 19 on Notes on Accounts regarding segmentreporting.
e. As the Company is a Government Company, it is exempt from the provisions of Section274 (1) (g) of the Companies Act, 1956 regarding disqualification of directors.
f. In our opinion and to the best of our information and according to the explanationsgiven to us, the said accounts read together with the Significant Accounting Policies andthe Notes forming part of accounts give the information required by the Companies Act,1956, in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India:
i) In the case of the Balance Sheet, of the State of affairs of the Company as at 31stMarch, 2010,
ii) In the case of the Profit and Loss Account, of the profit of the Company, for theyear ended on that date.
iii) In the case of Cash Flow Statement, of the cash flow for the year ended on thatdate.
| ||For R.G.N Price & Co. |
| ||Chartered Accountants |
| ||H. S. Venkatesh |
| ||Partner |
|Bangalore ||Firm Regn. No. 002785S |
|25th June 2010 ||Membership No. 026666 |
Annexure referred to in Para 3 of our report of even date on the accounts of BharatElectronics Limited, for the year ended 31st March 2010.
(i) (a) The Company has generally maintained proper records showing full particularsincluding quantitative details and situation of Fixed Assets.
(b) As explained to us, the Management has generally carried out the physicalverification of a portion of the Fixed Assets in accordance with their phased programme ofphysical verification, which is considered reasonable having regard to the size of theCompany and nature of its business and discrepancies, if any, were properly dealt with onsuch verification during the year.
(c) During the year, the Company has not disposed off substantial portion of the FixedAssets.
(ii) (a) The raw material, stores and spare parts, tools, work in progress and semifinished goods inventory with the Company have been physically verified during the year bythe management. In our opinion, the frequency of verification is reasonable. In case offinished goods, stock verification was done at year end.
(b) The procedures of physical verification of raw material inventories followed by themanagement are generally reasonable and adequate in relation to the size of the Companyand the nature of its business.
(c) The Company is maintaining proper records of inventory. The discrepancies noticedon verification between the physical stocks and the book records were not material andhave been appropriately dealt in the books. In the case of materials with sub-contractorsconfirmations from certain sub-contractors were not received and in this regard pleaserefer Item No. 10 (a) of Notes to Accounts.
(iii) The Company has not granted / taken any loans to / from parties covered in theregister maintained under Section 301 of the Companies Act, 1956 and hence, Clause No. iiiof Companies Audit Report Order, 2003, as amended in 2004, is not applicable.
(iv) In our opinion and according to the information and explanations given to us,there are adequate internal control systems commensurate with the size of the Company andthe nature of its business with regard to purchases of inventory, Fixed Assets and withregard to the sale of goods and services. During the course of our audit, we have notobserved any continuing failure to correct major weaknesses in internal control system.
(v) According to the information and explanations given to us, we are of the opinionthat there are no transactions that need to be entered in register maintained underSection 301 of the Companies Act, 1956.
(vi) Company has not accepted any deposit from public in the current year and alldeposits had matured and settled except for Rs. 38.55 Lakhs, out of which Rs. 36.50 lakhsare being retained as per Garnishee Order of Lok Ayukta, Bangalore and the balance Rs.2.05 lakhs though matured have not been claimed by the depositors. In our opinion andaccording to the information and explanations given to us, the Company has complied withthe provisions of Section 58AA and other relevant provisions of the Companies Act, 1956and the Companies (Acceptance of Deposits) Rules, 1975.
(vii) In our opinion, the Company has an internal audit system commensurate with thesize and nature of its business.
(viii) The Company, pursuant to the rules made by the Central Government for themaintenance of cost records under section 209(1)(d) of the Companies Act, 1956 has tomaintain cost records for electronic products and we are of the opinion that prima faciethe prescribed accounts and records have been made and maintained. However, we have notmade a detailed scrutiny of the same.
(ix) (a) The Company is generally regular in depositing with appropriate authoritiesundisputed statutory dues including Provident Fund, Investor Education and ProtectionFund, Employees' State Insurance, Income Tax, Sales Tax (VAT), Wealth Tax, Service Tax,Customs Duty, Excise Duty, Cess and other material statutory dues applicable to it.
(b) According to the information and explanations given to us, no undisputed amountspayable in respect of Income Tax, Service Tax, Sales Tax (VAT), Customs Duty, Excise Dutyand Cess were in arrears, as at March 31, 2010 for a period of more than six months fromthe date they became payable.
(c) According to the information and explanations given to us, there are no dues ofIncome Tax, Service Tax, Sales Tax (VAT), Customs Duty, Excise Duty and Cess which havenot been deposited on account of any dispute except as follows:
|Nature of Statute ||Nature of Dues ||Amount disputed (Rs. in thousands) ||Forum where dispute is pending |
|The Central Excise Act, 1944 ||Excise Duty Demand ||6,490 ||Custom Excise and Service Tax Appealate Tribunal, New Delhi |
| || ||572.6 ||CESTAT |
| || ||418.8 ||Commissioner (Appeals) |
| || ||192.53 ||Commissioner |
|U.P. Trade Tax Act, 1948 ||Benefit of Concessional Form 3D not allowed. (Year 1979-80) ||192 ||Case remanded to 1st Appelate Authority |
|Central Sales Tax Act, 1956 ||Sales Tax dues and benefit of concessional Form C (Year 1989-90) ||772 ||Case remanded to Deputy Commissioner (Appeal). |
|Central Sales Tax Act, 1956 ||Sales Tax dues and benefit of concessional Form D(Year 1989-90) ||213 ||Case remanded to AC (Appeal). |
|UP Trade Tax Act, 1948 ||Benefit of concessional Form 3B and 3D not allowed (Year 1991-1992) ||112 ||Appeal filed with DC (Appeals) for acceptance of duplicate copy of 3d(1) |
|UP Trade Tax Act, 1948 ||Non-receipt of Concessional forms for sale to Army and NTPC (Year 2008) ||305 ||Joint Commissioner - Corporate Circle, Ghaziabad. |
|Income Tax (TDS) ||Applicability of Section 194('C) or 194(I) (Financial year 2007-08 and 2008-09). ||7,337 ||CIT (Appeals), Ghaziabad. |
|ESI Act, 1948 ||Interest and damage towards late deposit ||352 ||Punjab and Haryana High Court, Chandigarh |
|Sales Tax Act, Bihar ||Sales Tax ||664.4 ||Commissioner of Commercial Taxes (Appeals, Chirkunda, Bihar) |
|AP Sales Tax ||Sales Tax ||108.3 ||DC (Appeals) Secundarabad Division, Hyderabad |
|Rajasthan Sales Tax ||Sales Tax ||160 ||DC (Appeals), Udaipur |
|Karnataka Sales Tax ||Sales Tax ||12,757.5 ||JC (Appeals), Bangalore |
|Service Tax ||Service Tax ||84.2 ||Commissioner (Appeals) |
|Service Tax ||Service Tax ||379.7 ||High Court of Karnataka |
|Service Tax ||Service Tax ||363.3 ||Commissioner (Appeals) |
|Service Tax ||Service Tax ||1033.8 ||Commissioner |
|Trade Tax Department, Kotdwara ||Trade Tax Dues and Interest on dues ||16,512 ||Tribunal Commercial Tax and Joint Commissioner (Appeals), Commercial Tax, Dehradun |
|Tamil Nadu Sales Tax ||Sales Tax ||160,749 ||Andhra Pradesh High Court |
|Andhra Pradesh VAT ||Sales Tax ||2,604 ||Sales Tax Appellate tribunal |
|CST Act 1956 ||CST ||48,208 ||Sales Tax Appellate tribunal |
|Urban Land Tax ||Land Tax ||4,144 ||Land Tax Authorities |
|Vacant Land Tax ||Land Tax ||1,035 ||Land Tax Authorities |
(x) The Company does not have accumulated losses as at the end of the Financial yearand has not incurred Cash losses during the financial year and in the immediatelypreceding financial year.
(xi) In our opinion and according to the information and explanations given to us, theCompany has not defaulted in repayment of dues to bank.
(xii) According to information furnished, the Company has not granted loans andadvances on the basis of security by way of pledge of shares, debentures and othersecurities.
(xiii) The Company is not a chit fund or a nidhi / mutual benefit fund / society.Therefore, the provisions of clause 4(xiii) of the Companies (Auditor's Report) Order,2003 are not applicable to the Company.
(xiv) The Company is not dealing in or trading in shares, securities, debentures andother investments. Accordingly, the provisions of clause 4(xiv) of the Companies(Auditor's Report) Order, 2003 are not applicable to the Company.
(xv) The Company has not given any guarantee for loans taken by others from banks orfinancial institutions.
(xvi) The Company has not availed any term loan, and hence, clause (xvi) of CARO 2003is not applicable.
(xvii) According to the information and explanation given to us and on an overallexamination of the Balance Sheet of the Company, we report that no funds raised on shortterm basis have been used for long term investment.
(xviii) The Company has not made preferential allotment of shares to parties covered inthe register maintained under Section 301 of the Companies Act, 1956.
(xix) The Company has not issued any debentures.
(xx) The Company has not raised money by public issues and hence Clause 4 (xx) of CARO2003is not applicable to the Company.
(xxi) During the course of our examination of the books and records of the Company,carried out in accordance with the generally accepted auditing practices in India, andaccording to the information and explanations given to us, we have neither come across anyinstance of fraud on or by the Company noticed or reported during the year nor have webeen informed of any such case by the management, that causes the financial statements tobe materially misstated.
| ||For R.G.N Price & Co. |
| ||Chartered Accountants |
| ||H. S. Venkatesh |
| ||Partner |
|Bangalore ||Membership No. 026666 |
|25th June 2010 ||Firm Regn. No.002785S |
OFFICE OF THE PRINCIPAL DIRECTOR OF COMMERCIAL AUDIT and Ex-Officio MEMBER, AUDITBOARD, BANGALORE - 560 001.
Shri. Ashwani Kumar Datt,
Chairman & Managing Director,
Bharat Electronics Limited,
Outer Ring Road, Nagavara,
Bangalore - 560 045.
Sub: Comments of the Comptroller and Auditor General of India under section 619 (4) ofthe Companies Act, 1956.
I am forwarding herewith Nil Comments Certificate of the Comptroller and AuditorGeneral of India under Section 619(4) of the Companies Act, 1956 on the accounts of BharatElectronics Limited, Bangalore for the year ended 31 March 2010.
It may please be ensured that the Comments are:
(i) printed in toto without any editing;
(ii) placed before the AGM as required under Section 619(5) of the Companies Act, 1956;and
(iii) placed next to the Statutory Auditors' Report in the Annual Report of the Companywith proper indication in the index.
The receipt of this letter may please be acknowledged.
| ||Yours faithfully, |
| ||(C.H. Kharshiing, IA&AS) |
|Encl: As above. ||Pr. Director of Commercial Audit |
COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA UNDER SECTION 619(4) OF THECOMPANIES ACT, 1956 ON THE ACCOUNTS OF BHARAT ELECTRONICS LIMITED, BANGALORE FOR THE YEARENDED 31 MARCH 2010.
The preparation of financial statements of Bharat Electronics Limited, Bangalorefor the year ended 31 March 2010 in accordance with the financial reporting frameworkprescribed under the Companies Act, 1956 is the responsibility of the management of theCompany. The Statutory Auditors appointed by the Comptroller and Auditor General of Indiaunder Section 619(2) of the Companies Act, 1956 are responsible for expressing opinion onthese financial statements under section 227 of the Companies Act, 1956 based onindependent audit in accordance with the auditing and assurance standards prescribed bytheir professional body, the Institute of Chartered Accountants of India. This is statedto have been done by them vide their Audit Report dated 25 June 2010.
I, on behalf of the Comptroller and Auditor General of India, have conducted asupplementary audit under section 619(3)(b) of the Companies Act, 1956 of the financialstatements of Bharat Electronics Limited, Bangalore for the year ended 31 March 2010. Thissupplementary audit has been carried out independently without access to the workingpapers of the statutory auditors and is limited primarily to inquiries of the StatutoryAuditors and Company personnel and a selective examination of some of the accountingrecords. On the basis of my audit nothing significant has come to my knowledge, whichwould give rise to any comment upon or supplement to Statutory Auditor's report undersection 619(4) of the Companies Act, 1956.
| ||For and on the behalf of the |
| ||Comptroller & Auditor General of India |
|Bangalore ||(C.H. Kharshiing) |
|Dated: 29.07.2010 ||Pr. Director of Commercial Audit & ex-officio Member, Audit Board, Bangalore |