Bharat Dynamics Ltd Auditor Reports

To the Members of Bharat Dynamics Limited

Report on the Audit of Standalone Financial Statements

Opinion

We have audited the accompanying Standalone Financial Statements of Bharat Dynamics Limited (‘the company), which comprise the Balance Sheet as at 31 March 2025, the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement, the Statement of Changes in Equity for the year then ended, and notes to the standalone financial statements, including a summary of Material Accounting Policies and other explanatory information (hereinafter referred to as "Standalone Financial Statements").

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Companies Act, 2013, as amended ( the Act) in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards (Ind AS) specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015 and other accounting principles generally accepted in India, of the state of affairs of the Company as at 31 March, 2025 and its profit (including other comprehensive income), its cash flows and the changes in equity 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 Standards are further described in the Auditors Responsibilities for the Audit of the Standalone Financial Statements" section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India ("ICAO 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 on the Standalone Financial Statements.

Emphasis of matter

We draw attention to the following matters in the notes to the Standalone Financial Statements:

a) note 38(7) which describes inventory not moved for more than five years amounting to ? 8331.44 lakhs (? 8338.85 lakhs as of 31 March 2024) for which no provision for

redundancy were made as is required by the companys accounting policy for the reasons stated there at;

b) note 28 which describes the recognition of a provision for onerous contracts amounting to ?13,461.18 Lakh during the quarter ended 31 December 2024, and an additional provision of ? 678.96 Lakh during the quarter ended 31 March 2025, in accordance with Ind AS 37 - Provisions, Contingent Liabilities, and Contingent Assets

Our conclusion is not modified in respect of these matters

Key Audit Matters

1. Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements of the year ended 31 March 2025. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

2. For each matter below, our description of how our audit addressed the matter is provided in that context. We have determined the matters described below to be the key audit matters to be communicated in our report.

Sl.no. Key audit matters	How our audit addressed the Key Audit Matters
(a) Provision and contingent liabilities relating to ongoing litigations
The Company is subject to a number of legal, regulatory and tax cases for which final outcome cannot be easily predicted and which could potentially result in significant liabilities. Managements disclosures with regards to provisions and contingent liabilities relating to ongoing litigation are presented in Note No. 38(6) of the Standalone Financial Statements. The assessment of whether a liability is recognized as a provision or disclosed as a contingent liability in the Standalone Financial Statements is	Our audit procedures included, but were not limited to the following; • Obtained understanding of the process of identification and measurement of provisions and contingent liabilities relating to ongoing litigations implemented by the Management, through various discussions held with Companys legal and finance personnel. • Tested the design and operating effectiveness of the controls put in place by the management in relation to assessment of the outcome of the pending
inherently subjective and requires significant management judgement in determination of the cash outflows from the business, interpretation of applicable laws and regulations, and careful examination of pending assessments at various levels of authorities. Since the amounts involved are significant and due to the range of possible outcomes leading to high estimation uncertainty that requires significant management and auditor judgement, this matter is considered to be a key audit matter for the current year audit.	litigations. • Inspected the summary of litigation matters and discussed key developments during the year with the Companys Legal and Finance personnel. • Inspected and evaluated, where applicable, external legal advice sought by the Company. Obtained direct confirmations from the dealing lawyers for certain material ongoing litigations. • Discussed and challenged the managements assessment of the likelihood, magnitude and accounting of any liability that may arise in certain material cases based on PPR analysis. Accordingly, we reviewed the amount of contingent liabilities disclosed in the Standalone Financial Statements and exercised our professional judgment to assess appropriateness of such conclusions, involving experts as required. • Evaluated the adequacy of disclosures made in the Standalone Financial Statements in accordance with the applicable accounting standards.
(b) Provision For Warranty
As a part of contractual term, the companys management makes warranty estimation which are established using historical information on the nature, frequency and average cost of warranty claims and also management estimates regarding possible future outflow on servicing the customers for any corrective action in respect of product failure which is generally expected to be settled within a period of 1 to 2 years from the date of supply.	Our audit procedures included the following, • Evaluated managements assumption and judgement relating to estimation of warranty provision considering business environment in which the Company operates. • Obtained an understanding of the Contract terms to evaluate the adequacy of the provision estimated by the management.
The companys obligation to replace or repair faulty goods under the standard warranty terms is recognized as a provision and is not adjusted against transaction price as the customer does not have option to purchase warranty separately.	• Reviewed the past history of warranty claims to evaluate the reasonableness of the warranty provision considered.
Owing to past trend of reversal of excess provision resulting from high estimation uncertainty that requires significant management and auditor judgement, this matter is considered to be a key audit matter for the current year audit.

Information other than the Standalone Financial Statements and auditors report thereon

The Companys Board of Directors is responsible for the other information. The other information comprises the information included in the Annual Report, but does not include the standalone financial statements and our auditors report thereon. The Annual Report is expected to be made available to us after the date of this auditors report.

Our opinion on the standalone 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 financial statements, our responsibility is to read the other information identified above when it becomes available 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.

When we read the Annual Report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.

Responsibilities of management and those charged with governance for the Standalone Financial Statements

The Companys Board of Directors is responsible for the matters stated in section 134(5) of 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 including other comprehensive income, changes in equity and cash flows of the Company in accordance with accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015 as amended. 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 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.

In preparing the standalone financial statements, the 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 the Board of Directors either intend to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those Board of Directors is also 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 control.

• Obtain an understanding of internal control 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 Controls 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 the management.

• Conclude on the appropriateness of Board of Directors use of the going concern basis of accounting 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 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 Financial Statements, including the disclosures, and whether the Standalone Financial Statements represent the underlying transactions and events in a manner that achieves fair presentation.

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 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, 2020 ("the Order") issued by the Central Government of India in terms of Section 143(11) of the Act, we give in the

Annexure-1, a statement on the matters specified in paragraphs 3 and 4 of the said Order, to the extent applicable.

2. Further to our comments in Annexure -1, as required by section 143(3) of the Act, based on our audit, we report, to the extent applicable, 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 purpose of our audit of the accompanying Standalone Financial Statements.

(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 Standalone Financial Statements dealt with by this report are in agreement with the books of account.

(d) In our opinion, the aforesaid Standalone Financial Statements comply with Indian Accounting Standards prescribed under Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015 as amended.

(e) The company being a Government Company as defined under section 2(45) of the Act, pursuant to the Notification No. GSR 463(E) dated 5 June 2015 issued by the Ministry of Corporate Affairs, Government of India, the provisions of sub-section (2) of Section 164 of the Act, are not applicable to the company.

(f) With respect to the adequacy of the internal financial controls with reference to Standalone Financial Statements of the company as on 31 March 2025 and the operating effectiveness of such controls, refer to our separate report in Annexure- 2.

(g) The company being a Government Company as defined under section 2(45) of the Act, pursuant to the Notification No. GSR 463(E) dated 5 June 2015 issued by the Ministry of Corporate Affairs, Government of India, the provisions of section 197 of the Act, are not applicable to the company.

(h) With respect to the other matters to be included in the Auditors Report in accordance with rule 11 of the Companies (Audit and Auditors) Rules, 2014 (as amended), in our opinion and to the best of our information and according to the explanations given to us:

i. The company does not have any pending litigations which would impact its financial position;

ii. The Company does not have any long-term contracts requiring a provision for material foreseeable losses;

iii. The company does not have any amount required to be transferred, to the Investor Education and Protection Fund;

iv. (a) The management has represented that, to the best of its knowledge and belief no funds have been advanced or loaned or invested (either from borrowed funds or securities premium or any other sources or kind of funds) by the Company to or in any person(s) or entity(ies), including foreign entities (the intermediaries), with the understanding, whether recorded in writing or otherwise, that the intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (the Ultimate Beneficiaries) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

(b) The management has represented that, to the best of its knowledge and belief no funds have been received by the Company from any person(s) or entity(ies), including foreign entities (the Funding Parties), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; and

(c) Based on such audit procedures performed as considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the management representations under subclauses (a) and (b) above contain any material misstatement.

v. (a) The final dividend proposed for the previous year, declared and paid by the company during the year is in accordance with Section 123 of the Act, as applicable.

(b) As stated in note no. 38(9) (b) to the accompanying standalone financial statements, the Board of Directors of the Company have proposed final dividend for the year ended 31 March 2025 which is subject to the approval of the members at the ensuing Annual General Meeting. The dividend declared is in accordance with section 123 of the Act to the extent it applies to declaration of dividend.

(c) The interim dividend declared and paid by the company is in accordance with section 123 of the Act.

vi. Based on our examination which included test checks, the company has used accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software. Further, during the course of our audit we did not come across any instance of audit trail feature being tampered with. Additionally, the audit trail has been preserved by the company as per the statutory requirements for record retention.

3. As required by section 143(5) of the Act, we give in Annexure-3, a statement on the matters specified in the directions issued by the Comptroller and Auditor General of India in respect of the Company

Annexure-1 referred to in paragraph 1 under "Report on Other legal and Regulatory Requirements" section of our report of even date to the members of Bharat Dynamics Limited on the Standalone Financial Statements for the year ended 31 March 2025

In terms of the information and explanations sought by us and given by the Company and the books of account and records examined by us in the normal course of audit and, to the best of our knowledge and belief, we report that:

(i) (a) (A) The Company has maintained proper records showing full particulars, including quantitative details and situation of property, plant and equipment, right of use assets and investment property

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

(b) The Company has a regular program of physical verification of its property, plant and equipment, right of use assets and investment property under which these assets are physically verified in a phased manner over a period of five years, which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. In accordance with this program, certain property, plant and equipment were physically verified during the year and no material discrepancies were noticed on such verification.

(c) The title deeds of all the immovable properties (other than properties where the Company is the lessee and the lease agreements are duly executed in favour of the lessee) are held in the name of the Company, except for the properties as stated below for which the Companys management is in the process of getting registered in the name of the Company and for incorporation in revenue records:

r*1 1 Description of the Property	Gross carrying value (? in lac)	Meld In Name of	Whether promoter, director or their relative or employee	Period since held	Reason for not being held in name of the Company
1 and al Ibhrahirnpalnam (632 Acres 16.50 Guntas)	7,965.16	isiic:	No	16-02-2017	In the process of registration
l and at Kancharibagh (146 Acres 32 Gunlas)	28.42	DMRI	No	19-10-1972	Pursuing with authorities for incorporation in revenue records
land at Kanchanbagh (5 Acres 1 Gunta)	0.97	IlMRl	No	19-10-1972

 

Description of the Property	Right of Use Asset Value	Location	i Detail of Lessor	Period since held	Reason for not being held in name of the Company
Land at Visakhapalnam (3 Acres 26 Guntas)		Visakhapafnam	President ol India	2-5-2011	lease deed is executed but yet to be registered

(d) The Company has not revalued its Property, Plant and Equipment (including right of use assets) or intangible assets or both during the year,

(e) No proceedings have been initiated or are pending against the Company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (as amended) and rules made thereunder during the year.

(ii) (a) The management has conducted physical verification of inventory at reasonable intervals during the year, including inventory lying with third parties etc. In our opinion, the coverage and procedure of such verification by the management is appropriate and discrepancies of 10% or more in the aggregate for each class of inventory as compared to book records were not noticed on such physical verification.

(b) The Company has been sanctioned a Fund Based working capital overdraft limit of ? 15.00 Cr by Union Bank of India against Fixed Deposits and Non- Fund based working capital limit of ? 400 Cr by Union Bank of India and ? 200 Cr by State Bank of India against floating charge registered as stated under note 38(12) to the standalone financial statements. No quarterly statements, in respect of these facilities are required to be filed by the Company with these banks and accordingly (b) of clause (ii) of para 3 of the order are not applicable

(jjj) The Company has not made any investment in, provided any guarantee or security or granted any loans or advances in the nature of loans, secured or unsecured to companies, firms, Limited Liability Partnerships (LLPs) or any other parties during the year thereby sub clause (a), (b), (c), (d), (e) and (f) of clause (iii) of para 3 of the order are not applicable.

(iv) The company being a Government Company as defined under section 2(45) of the Act, pursuant to the Notification No. GSR 463(E) dated 5 June 2015 issued by the Ministry of Corporate Affairs, Government of India, the provisions of section 185 and 186 of the Act, are not applicable to the company.

(v) The Company has not accepted any deposits or there are no amounts which have been deemed to be deposits within the meaning of sections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules, 2014 (as amended). Thereby the requirement for reporting under clause 3(v) of the Order is not applicable to the Company.

(vi) The Central Government has specified maintenance of cost records under sub-section (1) of section 148 of the Act in respect of the products of the Company. We have broadly reviewed the books of account maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. However, we have not 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 depositing undisputed statutory dues including goods and services tax, provident fund, employees state insurance, income- tax, sales-tax, service tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues, as applicable, with the appropriate authorities. Further, no undisputed amounts payable in respect thereof were outstanding at the year-end for a period of more than six months from the date they became payable.

(b) There are no statutory dues referred in sub-clause (a) which have not been deposited with the appropriate authorities on account of any dispute except for the following:

U In Lakhs)

S.No Nature of Statue	Nature of Due	Gross Amount	Amount Paid	Period to which the amounts relates	Forum where dispute Is pending
1 Central Sales Tax Act	Central Sales Tax	5,550.83	6 93.85	2011-12	Writ pending with High Court at Hyderabad
2 Central Sales Tax Act	Central Sates 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 Sates Tax Act	Central Sales Tax	6.468.12		2014-15	Writ pending with High Court at Hyderabad
5 Excise Duty Act	Interest	5,306.33		2015-16 TO 2017-18	Appeal pending with CESTAT, Hyderabad
6 Finance Act. 1994	Service Tax	1.840.89	128.43	2015-16 TO 2017-18	Appeal pending with CESTAT, Hyderabad
7 Income Tax Act. 1961	Income Tax	732.80	732.80	AY 2021-22	Filed Rectification Request with National Faceless Assessment Centre & Jurisdictional Assessmq Officer
8 Goods and Service T ax Act	Goods and Service Tax	8.76	0.79	AY 2020-21	Appeal Tiled with GST Appellate Authority, Hyderabad
TOTAL		29198.81	1555.87

(viii) The Company has not surrendered or disclosed any transaction, previously unrecorded in the books of account, in the tax assessments under the Income Tax Act. 1961 (43 of 1961) an income during the year. Thereby the requirement for reporting under clause 3(viii) of the Order is not applicable to the Company

(lx) (a) The Company has not defaulted in repayment of its loans or borrowings or

in the payment of interest thereon to any lender.

(b) The Company has not been declared a willful defaulter by any bank or financial institution or other lender.

(c) The company has not availed any term loan facilities.

(d) No funds raised by the Company on short term basis have been utilised for long term purposes.

(e) The Company does not have any subsidiaries, associate or joint ventures included in the consolidated financial Statements. Thereby the requirement for reporting under clause 3(ix)(e) of the Order is not applicable to the Company.

(f) The Company does not have any subsidiaries, associate or joint ventures included in the consolidated financial Statements. Thereby the requirement for reporting under clause 3(ix)(f) of the Order is not applicable to the Company.

(x) (a) The Company has not raised any money by way of initial public offer or further public offer (including debt instruments), during the year. Thereby the requirement for reporting under clause 3(x)(a) of the Order is not applicable to the Company.

(b) The Company has not made any preferential allotment or private placement of shares or (fully, partially, or optionally) convertible debentures during the year. Thereby the requirement for reporting under clause 3(x)(b) of the Order is not applicable to the Company.

(xi) (a) No fraud by the Company or no material fraud on the Company has been noticed or reported during the period covered by our audit.

(b) No report under sub-section 12 of section 143 of the Act has been filed by the auditors in Form ADT-4 as prescribed under Rule 13 of Companies (Audit and Auditors) Rules. 2014. with the Central Government for the period covered by our audit.

(c) No whistle blower complaints were received by the Company during the year.

(xii) The Company is not a Nidhi Company and the Nidhi Rules, 2014 are not applicable to it. Thereby the requirement for reporting under clause 3(xii) of the Order is not applicable to the Company.

(xiii) All transactions entered into by the Company with the related parties are in compliance with sections 177 and 188 of the Act, where applicable. Further, the details of such related party transactions have been disclosed in the standalone financial statements, as required under Indian Accounting Standard <lnd AS} 24, Related Party Disclosures specified in Companies (Indian Accounting Standards) Rules 2015 as prescribed under section 133 of the Act.

(xiv) (a) The Company has an internal audit system as per the provisions of section

138 of the Act which is commensurate with the size and nature of its business.

(b) We have considered the reports issued by the Internal Auditors of the Company till date for the period under audit.

(xv) The Company has not entered into any non-cash transactions with its directors or persons connected with its directors. Thereby the requirement for reporting under clause 3(xv) of the Order with respect to compliance with the provisions of section 192 of the Act are not applicable to the Company.

(xvi) The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934 (2 of 1934). Thereby the requirement for reporting under clauses 3(xvi)(a), (b), (c) and (d) of the Order is not applicable to the Company.

(xvii) The Company has not incurred any cash losses in the current financial year as well as the immediately preceding financial year

(xviii) There has been no resignation of the statutory auditors during the year. Thereby the requirement for reporting under clause 3(xviii) of the Order is not applicable to the Company.

(xix) On the basis of the financial ratios disclosed in note 38(21 )(G) to the Standalone Financial Statements, ageing and expected dates of realisation of financial assets and payment of financial liabilities, other information accompanying the standalone financial statements, our knowledge of the Board of Directors and management plans, nothing has come to our attention, which causes us to believe that any material uncertainty exists as on the date of the audit report indicating that Company is not capable of meeting its liabilities existing at the date of balance sheet as and when they fall due within a period of one year from the balance sheet date. We, however, state that this is not an assurance as to the future viability of the company, We further state that our reporting is based on the facts up to the date of the audit report and we neither give any guarantee nor any assurance that all liabilities falling due within a period of one year from the balance sheet date, will get discharged by the company as and when they fall due.

(xx) (a) The Company does not have any unspent Corporate Social Responsibility (CSR) amounts in respect of other than ongoing projects at the end of the year. Hence the question of reporting in respect of transfer of unspent amounts towards Corporate Social Responsibility (CSR) in respect of other than ongoing projects to Fund specified in Schedule VII to the Act within a period of six months of the expiry of the financial year in compliance with second proviso to sub-section (5) of section 135 of the Act does not arise.

(b) The Company does not have any unspent Corporate Social Responsibility (CSR) amounts as specified under sub-section (5) of section 135 of the Act, in respect of ongoing projects at the end of the year Hence the question of reporting in respect of transfer of unspent Corporate Social Responsibility (CSR) amounts in respect of ongoing projects as specified under sub-section (5) of section 135 of the Act, within a period of 30 days from the end of financial year to a special account in compliance with the provision of subsection (6) of section 135 of the Act does not arise.

(xxi) The Company does not have any subsidiaries, associate or joint ventures included in the consolidated financial Statements. Thereby the requirement for reporting under clause 3(xxi) of the Order is not applicable to the Company.

Annexure-2 referred to in paragraph 2 (f) under "Report on Other legal and Regulatory Requirements" section of our report of even date to the members of Bharat Dynamics Limited on the Standalone Financial Statements

Independent Auditors Report on the Internal Financial Controls with reference to the Standalone Financial Statement under Clause (i) of Sub-section 3 of Section 143 of the Act.

We have audited the internal financial controls with reference to the Standalone Financial Statements of the company as of 31 March 2025 in conjunction with our audit of the Standalone Financial Statements of the Company for the year ended on that date.

Responsibilities of management and those charged with governance for internal financial controls

The Companys Board of Directors are responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting ("the Guidance Note") issued by ICAI. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of the companys business, including adherence to the companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.

Auditors responsibility for the audit of the internal financial controls with reference to financial statements

Our responsibility is to express an opinion on the Companys internal financial controls with reference to financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the ICAI prescribed under Section 143(10) of the Act, to the extent applicable to an audit of internal financial controls with reference to financial statements, and the Guidance Note issued by the ICAI. 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 were 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 Standalone Financial Statements and their operating effectiveness Our audit of internal financial controls with reference to Standalone Financial Statements included obtaining an understanding of internal financial controls with reference to Standalone Financial Statements, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the Standalone Financial Statements, 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 Standalone Financial Statements.

Meaning of Internal Financial Controls with reference to the Standalone Financial Statements

A companys internal financial controls with reference to Standalone Financial Statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of Standalone Financial Statements for external purposes in accordance with generally accepted accounting principles. A companys internal financial controls with reference to Standalone Financial Statements include 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 Standalone Financial Statements in accordance with generally accepted accounting pnnciples, and that receipts and expenditures 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 a material effect on the Standalone Financial Statements.

Inherent limitations of Internal Financial Controls with reference to Standalone Financial Statements

Because of the inherent limitations of internal financial controls with reference to Standalone 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 Standalone Financial Statements to future periods are subject to the risk that the internal financial controls with reference to Standalone Financial Statements may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the Company has, in all material respects, adequate internal financial controls with reference to standalone financial statements and such internal financial controls with reference to standalone financial statements were operating effectively as at 31 March 2025, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note issued by the ICAI.

Annexure-3 referred to in paragraph 3 under "Report on Other legal and Regulatory Requirements" section of our Independent Auditors Report of even date to the members of the company on the Standalone Financial Statements

On the directions issued by the Comptroller and Auditor General of India under section 143(5) of the Act based on the verification of records of the Company and information and explanations given to us, we report that:

SI. Direction under section 143(5) of the No. Companies Act 2013	Auditors reply on action taken on the directions
I Whether the Company has a system in	As per the information and
place to process all the accounting transactions through IT system? 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.	explanations given to us, the company has a system in place to process all the accounting transactions through IT system. SAP- ERP has been implemented for all the processes like Financial Accounting (FI), Controlling (CO),
	Sales and Distribution (SD), Payroll / Fluman Capital Management (FICM), Material Management (MM), Commercial billing / Industry Solution Utilities (ISU), etc. Based on the audit procedures carried out and as per the information and explanations given to us, no accounting transactions have been processed /carried outside the IT system. Accordingly, there are no implications on the integrity of the accounts.
2 Whether there is any 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? If yes, the financial impact may be stated	Based on the audit procedures carried out and as per the information and explanations given to us, there are no cases of restructuring of existing loans or cases of waiver/write off of debts/ loans/ interest etc. made by the lender to the company due to the companys inability to repay the loan.
3 Whether funds received / receivable for specific schemes from Central / State agencies were properly accounted for / utilised as per its terms and conditions? List the cases of deviation.	To the best of our information and checks applied by us during the course of our audit, during the year 2024-25 no funds have been received / receivable for specific schemes from Central / State agencies. Flowever i.r.o those received in the earlier years