Bharat Dynamics Ltd Directors 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 Independent Auditors Report by including details of amounts paid/pre-deposited against disputed tax demands in Annexure A and by replacing the phrase "Internal Financial Control" with the phrase "internal financial controls with reference to financial statements" in Annexure B at appropriate places. This revision is in compliance to the guidance of Comptroller & Auditor General of India. This report supersedes our earlier report dated 21.6.2021.

Opinion

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

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under Section 143 (10) of the Act. Our responsibilities under those SAs are further described in the Auditors Responsibilities for the Audit of the Standalone Ind AS Financial Statements section of this 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 ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other Ethical Responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key Audit Matters ("KAM") are those matters that, in our professional judgment, were of the most significance in our audit of the standalone Ind AS financial statements of the current period. These matters were addressed in the context of our audit of the standalone Ind AS financial statements as a whole, and in forming our opinion thereon, 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 companys 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 Managements 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 companys 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 managements 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 managements status assessment of short closed projects.

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 Auditors Report thereon

The Companys Management and Board of Directors are responsible for the other information. The other information comprises the information included in the Companys Annual Report but does not include the standalone Ind AS financial statements and our auditors report thereon.

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

In connection with our audit of the standalone Ind AS financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our 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 material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Managements responsibility for the Standalone Financial Statements

The Companys Board of Directors is responsible for the matters stated in section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone Ind AS financial statements that give a true and fair view of the financial position, financial performance, including other comprehensive income, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Act read with relevant rules issued thereunder.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and the estimates that are reasonable and prudent; and the 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 Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the standalone financial statements, management and Board of Directors are responsible for assessing the Companys ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Board of Directors are responsible for overseeing the Companys financial reporting process.

Auditors Responsibilities for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, Individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements.

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

• Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls.

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

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

• Conclude on the appropriateness of management’s use of the going concern basis of accounting in preparation of Standalone Financial Statements and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Companys ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors report to the related disclosures in the standalone Ind AS financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors report. However, future events or conditions may cause the Company to cease to continue as a going concern.

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

Materiality is the magnitude of misstatements in the standalone Ind AS financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the financial statements may be influenced. We consider quantitative materiality and qualitative factors (i) in planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the financial statements.

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone Ind AS financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

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

c) The Balance Sheet, the Statement of Profit and Loss, including Other Comprehensive Income, the Statement of Changes in Equity and Cash Flow Statement dealt with this Report are in agreement with the books of account.

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

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

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

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

h) With respect to other matters to be included in the Auditors 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 Ind AS financial statements vide Note No.38(6) of Notes to the Ind AS Financial Statements.

ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts.

iii. No amounts are required to be transferred, to the Investor Education and Protection 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 AUDITORS REPORT

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

We are issuing this revised Annexure A to Independent Auditors Report by including details of amounts paid/pre-deposited against disputed tax demands. This revision is in compliance to the guidance of Comptroller & Auditor General of India. This report supersedes our earlier report dated 21.6.2021.

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

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

(c) According to the information and explanations given to us and on the basis of our examination of records of the Company, the title deeds of immovable properties and lease deeds of right of use assets are held in the name of the Company, except the following properties 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 6,136.90 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 except inventories that are in the possession of sub-contractors and other third parties. In our opinion the frequency of such verification is reasonable. The company has maintained proper records of inventory. The discrepancies noticed on such physical verification between physical stock and book records are not material.

3) According to the information and explanations given to us, the Company has not given loans, secured or unsecured to companies, firms, limited liability partnerships or other parties 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 the company.

4) In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Sections 185 and 186 of the Companies Act, 2013 in respect of grant of loans, making investments and providing guarantees and securities. 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 not accepted any deposits during the year and hence compliance with the provisions of Section 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules, 2014, as amended with regard to acceptance of deposits are not applicable to the Company.

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

7) According to the information and explanations given to us, in respect of Statutory dues:

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

b) According to the records of the Company and information and explanations given to us no undisputed Provident Fund, Employees State Insurance, Income-tax, Good and Services tax, Sales Tax, Service tax, Value Added Tax, Customs Duty, Excise Duty, Cess and other material statutory dues were in arrears as at March 31, 2021 for a period exceeding six months 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 Act,1994 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 us the 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 5,550.83 2011-12 Writ Pending with High Court at Hyderabad
2 Central Sales Tax Act Central Sales Tax 5,024.27 2012-13 Writ Pending with High Court at Hyderabad
3 Central Sales Tax Act Central Sales Tax 4,266.81 2013-14 Writ Pending with High Court at Hyderabad
4 Central Sales Tax Act Central Sales Tax 6,468.12 2014-15 Writ Pending with High Court at Hyderabad
5 Finance Act, 1994 Service Tax 2,355.50 2012-13 to 2014-15 Appeal pending with CETSTAT, Hyderabad
6 Finance Act, 1994 Service Tax 1,883.80 2015-16 to 2017-18 Appeal pending with CETSTAT, Hyderabad
7 Income Tax Act,1961 Income Tax 94.36 2018-2019 Appeal filed on 29.04.2021 with National Faceless Assessment Centre
TOTAL 25,643.69

Note: Against the Disputed amounts in item 1, 5 & 6 the company has pre-deposited tax amounting to Rs 693.85 lakhs, Rs 88.33 lakhs and Rs 128.43 lakhs respectively. Against Item 5 the company has paid under protest an amount of Rs 1,089.42 lakhs.

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

9) In our opinion and according to the information and explanations given to us, the Company 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 explanations given to us, no fraud by the Company and no fraud on the Company by its officers has been noticed or reported during the year.

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

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

13) According to the information and explanations furnished to us, and based on our examination of books and records, we are of the opinion that all transactions with related parties are in compliance with Sections 177 and 188 of the Companies Act, 2013 where applicable and details have been disclosed in the standalone financial statements as per applicable Accounting Standards.

14) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the 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, the Company has not entered into any non-cash transactions with its directors or persons connected with them during the year and hence provisions of Section 192 of the Companies Act, 2013 are not applicable.z

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

Place: Hyderabad For G. Natesan and Co
Date: 11.08,2021 Chartered Accountants
FRN. 002424S
CA K Murali
Partner
M.No : 024842
UDIN : 21024842AAAADG7192

ANNEXURE-B TO THE INDEPENDENT AUDITORS REPORT

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

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

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

We have audited the Internal Financial Controls with reference to Financial Statements of Bharat Dynamics Limited (the Company) as at March 31, 2021 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date

Managements Responsibility:

The Companys Management is responsible for establishing and maintaining Internal Financial Controls with reference to Financial Statements based on the internal financial control over financial reporting criteria established by the Company considering the essential components ot control stated in the "Guidance Note on Audit of Internal Financial Controls over Financial Reporting" issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate Internal Financial Controls with reference to Financial Statements that were operating effectively for ensuring the orderly and efficient conduct of its business. Including adherence to Companys policies, the safeguarding of its assets, and the timely preparation of reliable financial information, as required under the Companies Act, 2013

Auditors Responsibility:

Our responsibility is to express an opinion on the Companys Internal Financial Controls with reference to Financial Statements based on out audit We conducted our audit in accordance with the "Guidance Note on Audit of Internal Financial Controls over Financial Reporting" (Guidance Note) issued by the Institute of Chartered Accountants of India and the Standards on Auditing prescribed under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of Internal Financial Controls with reference to Financial Statements, Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate Internal Financial Controls with reference to Financial Statements was established and maintained and if such controls operated effectively In all material respects

Our audit involves performing procedures to obtain audit evidence about the adequacy of the Internal Financial Controls with reference to Financial Statements and their operating effectiveness. Our audit of Internal Financial Controls with reference to Financial Statements included obtaining an understanding of Internal Financial Controls with reference to Financial Statements, assessing the risk that material weakness exists, and testing and evaluating the design and operating effectiveness of internal financial control based on the assessed risk. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Companys Internal Financial Controls with reference to Financial Statements.

Meaning of Internal Financial Controls with reference to Financial Statements:

A companys internal financial control with reference to financial statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal financial control with reference to financial statements includes those policies and procedures that:

(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditure of the company are being made only in accordance with authorizations of management and directors of the company; and

(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the companys assets that could have material effect on the financial statements.

Inherent Limitations of Internal Financial Controls with reference to Financial Statements

Because of the inherent limitations of Internal Financial Controls with reference to Financial Statements, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected Also, projections of any evaluation of the Internal Financial Controls with reference to Financial Statements to future periods are subject to the risk that the Internal Financial Controls with reference to Financial Statements may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Emphasis of Matter:

a. The companys entire transactions are processed through the IT system. The company has 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, the Company has, in all material respects, an adequate Internal Financial Controls with reference to Financial Statements and such Internal Financial Controls with reference to Financial Statements were operating effectively as at March 31, 2021, based on "Internal Financial Controls with reference to Financial Statements criteria established by the Company considering the essential components of internal control stated in Guidance Note on Audit of Internal Financial Controls with reference to Financial Statements issued by the Institute of Chartered Accountants of India".

Place: Hyderabad For G. Natesan and Co
Date: 11.08,2021 Chartered Accountants
FRN. 002424S
CA K Murali
Partner
M.No : 024842
UDIN : 21024842AAAADG7192

ANNEXURE-C TO THE INDEPENDENT AUDITORS REPORT

Referred to in Paragraph 2 (g) under "Report on Other Legal and Regulatory Requirements" 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 the accounts of the Company, Bharat Dynamics Limited, we report hereunder on the directions given 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 companys 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 companys 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: 11.08,2021 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) OF THE COMPANIES ACT, 2013 ON THE FINANCIAL STATEMENTS OF BHARAT DYNAMICS LIMITED, HYDERABAD FOR THE YEAR ENDED 31 MARCH 2021.

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

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

In view of the revision made in the Statutory auditors report, to give effect to some of my audit observations raised during supplementary audit. I have no further comments to offer 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 of Defence was established at Hyderabad in the year 1970. It is engaged in the manufacturing of Missiles and allied Defence Equipments. The Company provides majority of its goods and services 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 other explanatory 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 by shares, incorporated and domiciled in India.

Registered Office:

Kanchanbagh, Hyderabad - 500058

Corporate Office:

Plot No. 38-39, TSFC Building,

Financial District, Nanakramguda

Hyderabad - -500032.