Bharat Electronics Ltd Auditor Reports

To the Members of Bharat Electronics Limited

Report on the Audit of the Standalone Financial

Statements

Opinion

We have audited the Standalone Financial Statements of BHARAT ELECTRONICS LIMITED ("the Company"), which comprise the Balance Sheet as at 31 March 2024, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows for the year then ended, and notes to the Financial Statements, including a summary of material accounting policies and other explanatory information (hereinafter referred to as "the Standalone Financial Statements") in which are included the Returns (Branch financial statements/ financial information) of the Companys branches located at Ghaziabad, Panchkula, Kotdwara, Pune, Navi Mumbai and Machilipatnam, audited by the branch auditors, for the year ended on 31 March 2024.

In our opinion and to the best of our information and according to the explanations given to us and based on the audit reports provided by the branch auditors, the aforesaid Standalone 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 31 March 2024, its profit and other comprehensive income, its 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 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 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 obtained by us and by the branch auditors referred to in the "Other Matter"paragraph, is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

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 current period. 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.

Key Audit Matters	Our Principal Audit Procedures
1 Revenue recognition (including recognition of contract assets, contract cost, and trade receivables) as per Ind AS 115 - Revenue from Contracts with Customers ("Ind AS 115").	Our audit procedures included the following:
(Refer note 23, 12, 7 to the Standalone Financial Statements respectively).	a. obtained an understanding and evaluated the design and operating effectiveness of internal controls implemented by the Management with respect to recognition of revenue, contract assets, receivable and contract cost as per Ind AS 115.
The Company is engaged in the manufacturing of electronic equipment and systems for the defence sector. Due to long term nature of contracts with the customers, various terms of the contracts pertaining to identification of performance obligation, allocation of transaction price and recognition of contract assets, trade receivables and contract costs, involve judgments. Therefore, revenue recognition is considered as Key Audit Matter.	b. obtained customer contracts on sample basis to evaluate terms of the contract to verify whether the accounting policy adopted by the Company complies Ind AS 115.
	c. tested the Managements evaluation of Ind AS 115 and tested on a sample basis Managements working for recognition and measurement of multiple performance obligations and related variable considerations if any.
	d. i n respect of revenue transactions selected on sample basis, we have inspected the underlying documents to verify that the control has been transferred to the customer and the Company has right to consideration.
	e. in case of contract assets as at year end, we verified on sample basis whether right to consideration is impaired and if so, whether appropriate adjustment in the financial statements is made.
	f. tested on sample basis whether revenue transactions near to the reporting data have been recognised in the appropriate period by comparing the transactions selected with relevant underlying documentation as per the terms of delivery specified in the contract.
	g. on sample basis verified whether the Company has unconditional right to consideration in respect of trade receivable balances recognised during the year.
	h. verified on sample basis whether contract cost recognised during the year is incurred either to obtain the contract or to fulfil contract based on criteria specified under Ind AS 115.
	i. Verified whether appropriate presentation and disclosure is made in the financial statements.

 

2 Recognition and measurement of Intangible assets under development (Refer note 5 to the Standalone Financial Statements).	Our audit procedures included the following:
Total value of Intangible Assets under Development is 43,730 Lakhs as at 31 March 2024.	a. understood and evaluated the internal controls implemented by the Management to ensure compliance with recognition and measurement criteria specified under Ind AS 38.
The Company undertakes various internal projects to develop advanced electronic warfare systems which can potentially be sold to its customers to generate future economic benefit to the Company. The Company recognises cost incurred in respect of such development phase of projects as intangible assets under development based on the recognition criteria specified as per Ind AS 38.	b. obtained project-specific list of intangible assets under development to understand nature and align with our audit understanding of the Companys activities and business scope.
Because identifying projects as being in the development stage requires a high degree of judgment and the level of complexity involved in assessing saleability and marketability of such projects, recognition and measurement of intangible assets under development is considered as Key Audit Matter.	c. performed audit procedures to verify accuracy and existence of cost capitalised under Intangible Assets under Development.
	d. assessed whether cost capitalised by the Company is in nature of development phase by obtaining technical assessment performed by the Management to evaluate:
	• technical feasibility of completing the intangible asset
	• intentions and ability of the Company to complete and use the intangible asset
	• whether intangible asset can generate probable future economic benefit
	• whether availability of adequate technical, financial and other resources to complete the development
	• whether expenditure incurred with respect to development projects can be reliably measured
	e. obtained project wise aging of intangible assets under development to identify projects exceeding the originally estimated costs or time for completion.
	f. reviewed year-end impairment assessment by Management and conducted audit procedures to evaluate the existence of similar conditions in other projects and assess any financial impact.
	g. verified on sample basis that capitalization of Intangible assets under development as Development Cost under Intangible Assets are based on customer orders/ Letter of Intent, and useful lives are determined based on their availability for Company use.
	h. verified whether appropriate presentation and disclosure is made in the financial statements.

Other Information

The Companys Board of Directors is responsible for the other information. The other information comprises the Corporate Governance Report included in the Annual Report but does not include the Standalone Financial Statements and our auditors report thereon, which we obtained prior to the date of this auditors report, and the Management Discussion and Analysis and Board of Directors Report along with its Annexures, which is expected to be made available to us after that date. 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 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 on the other information that we obtained prior to the date of this auditors report, 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 Management Discussion and Analysis and Board of Directors Report along with its Annexures, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance and describe actions applicable under the applicable laws and regulations.

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 the accounting principles generally accepted in India, including the Indian Accounting Standards ("Ind AS") specified 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 of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of

adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Standalone Financial Statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the Standalone Financial Statements, the Management is 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.

Those Board of Directors are 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:

• I dentify 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 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 controls with reference to the 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 Managements 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.

• Obtain sufficient appropriate audit evidence regarding the financial information of the branches or business activities within the Company to express an opinion on the Standalone Financial Statements. We are responsible for the direction, supervision and performance of the audit of the financial statements/financial information of such branches included in the Standalone Financial Statements of which we are the independent auditors. For the other branches included in the Standalone Financial Statements, which have been audited by other auditors, such other auditors remain responsible for the direction, supervision and performance of the audits carried out by them. We remain solely responsible for our audit opinion. Our responsibilities in this regard are further described in the section titled Other Matter in this audit report.

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 controls 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.

Other Matters

We did not audit the financial statements/financial information of six branches included in the Standalone Financial Statements of the Company whose financial statements/ financial information reflect total assets of 7,18,189 Lakhs as at 31 March 2024, revenue from operations of 6,17,658 Lakhs and total profit before tax of 1,51,845 Lakhs for the year ended on 31 March 2024. The financial statements/ financial information of these branches has been audited by the branch auditors appointed by the Comptroller & Auditor General of India, whose reports have been furnished to us, and our opinion in so far as it relates to the amounts and disclosures included in respect of these branches, is based solely on the report of such branch auditors.

Our opinion on the Standalone Financial Statements is not modified in respect of the above matters.

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 sub-section (11) of section 143 of the Act, based on our audit and on the consideration of reports of the branch auditors on the financial statements/financial information of the branches, 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 by Section 143(3) of the Act, based on our audit and on the consideration of reports of the branch auditors on the financial statements/financial information of the branches 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 except for the matters stated in the paragraph 2 (j)(vi) below on reporting under Rule 11(g). In case of New York, Singapore and other offices, not visited by us, the Returns/records received from the said offices have been verified and found to be adequate for the purpose of our audit.

c) The reports on the accounts of the branch offices of the Company audited under Section 143(8) of the Act by the branch auditors (Ghaziabad, Panchkula, Kotdwar, Pune, Navi Mumbai and Machilipatnam) have been sent to us and have been properly dealt with by us in preparing this report.

d) The Balance Sheet, the Statement of Profit and Loss (including other comprehensive income), the Statement of Changes in Equity and the Statement of Cash Flows dealt with by this Report are in agreement with the books of account.

e) I n our opinion, the aforesaid Standalone Financial Statements comply with the Indian Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended.

f) According to the information and explanation provided to us and as per notification no. GSR 463(E) dated 5 June 2015, Section 164 (2) of the Act - Disqualifications for appointment of director is not applicable to the Government Companies.

g) With reference to the maintenance of accounts and other matters connected therewith, refer to our comment in Paragraph 2 (b) above and refer to our comment in paragraph 2(j)(vi) below, on reporting under rule 11 (g).

h) With respect to the adequacy of the internal financial controls with reference to the Standalone Financial Statements of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure B".

i) According to the information and explanation provided to us and as per notification no. GSR 463(E) dated 5 June 2015, Section 197 of the Act - Overall maximum managerial remuneration and managerial remuneration in case of absence or inadequacy of profits is not applicable to a Government Company. Accordingly, reporting under section 197 (16) of the Act is not applicable.

j) 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, in our opinion and to the best of our information and according to the explanations given to us and on the consideration of reports of the branch auditors:

i. The Company has disclosed the impact of pending litigations on its financial position in its Standalone Financial Statements - Refer Note 30 (8) (i) to the Standalone Financial Statements.

ii. The Company has made provision as required under the applicable law or accounting standards, for material foreseeable losses on long-term contracts. The Company did not have any derivative contracts. Refer Note 21 and 30 (14) to the Standalone Financial Statements.

iii. There is no delay in amount required to be transferred, to the Investor Education and Protection Fund by the Company during the year ended 31 March 2024.

iv. a) The Management has represented to us that, to the best of its knowledge and belief, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person or entity, including foreign entities ("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 ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries. Refer note 30 (21) (e) to the Standalone Financial Statements.

b) The Management has represented to us, that, to the best of its knowledge and belief no funds have been received by the Company from any person or entity, including foreign entities ("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. Refer note 30 (21) (f) to the Standalone Financial Statements.

c) Based on the information and explanation given to us and 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 representations made by the Management under sub-clause i) (iv)(a) and (iv)(b) above contain any material misstatement.

v. As stated in Note 30(17) to the Standalone

Financial Statements

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

b) The interim dividend declared and paid by the Company during the year and until the date of this report is in compliance with Section 123 of the Act.

c) The Board of Directors of the Company have proposed final dividend for the year which is subject to the approval of the members at the ensuing Annual General Meeting. The amount of dividend proposed is in accordance with section 123 of the Act, as applicable.

vi. Based on our examination which included test checks, the Company, has used an 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 except that no audit trail (edit log) facility/feature was enabled at the database level to log any direct changes. During the course of our audit, so far it relates to audit trail in respect of transactions, we did not come across any instance of audit trail feature being tampered with.

As proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 is applicable from 1 April 2023, reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 on preservation of audit trail as per the statutory requirements for record retention is not applicable for the financial year ended 31 March 2024.

3. As required by Section 143(5) of the Act, we have considered the directions issued by the Comptroller and Auditor General of India, the action taken thereon and its impact on the accounts and Standalone Financial Statements of the Company in "Annexure C".

"Annexure A" to the Independent Auditors Report

Referred to in paragraph 1 under the heading, "Report on Other legal and Regulatory Requirements" of our report on even date:

i. a. A. The Company is maintaining proper records showing full particulars, including quantitative details and situation of property, plant and equipment.

B. The Company is maintaining proper records showing full particulars of intangible assets.

b. The Company has a regular program of physical verification of its property, plant and equipment by which its property, plant and equipment are verified in a phased manner over a period of three years and in some branches/locations annually. In our opinion, the periodicity of physical verification of property, plant and equipment is reasonable having regard to the size of the Company and the nature of its assets. In accordance with this program a portion of property, plant and equipment were verified during the year and according to the information and explanation provided to us by the Management 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 the records of the Company, title deeds of immovable properties as disclosed in the Standalone Financial Statements are held in the name of the Company except as specified in Note 1 (xiii).

d. The Company has chosen cost model for its property, plant and equipment (including Right to Use Assets) and intangible assets. Consequently, the question of our commenting on whether the revaluation is based on the valuation by a Registered Valuer, or specifying the amount of change, if the change is 10% or more in the aggregate of the net carrying value of each class of property, plant and equipment (including Right to Use Assets) or intangible assets does not arise.

e. According to the information and explanations provided to us, there are no proceedings that have been initiated or are pending against the Company for holding any benami property under the Prohibition of Benami Property Transactions

Act, 1988 (as amended in 2016) and rules made thereunder.

ii. a. The inventory, except goods in transit and inventory lying with sub-contractors, has been physically verified by the Management during the year. In our opinion, the frequency, coverage and procedure of such verification is reasonable and appropriate. In respect of good-in-transit, subsequent goods delivery documents have been verified by the Management. Inventory lying with sub-contractors having substantial values have been confirmed by the Management from such sub-contractors. The discrepancies noticed on verification between the physical stocks and the book records were not 10% or more in the aggregate for each class of inventory and have been properly dealt with in the books of account.

b. According to the information and explanations provided to us, the Company has been sanctioned working capital limits in excess of five Crore rupees, in aggregate, from banks or financial institutions on the basis of security of current assets.

The Management of the Company has provided us with the quarterly returns or statements (except for quarter ended 31 March 2024, which is yet to be submitted), which they have represented to us have been filed by the Company with their banks or financial institutions based on the sanction terms. Based on our procedures and in our opinion the quarterly returns or statements filed by the Company with such banks or financial institutions are in agreement with the unaudited books of account of the Company.

iii. According to the information and explanations provided to us, during the year, the Company has made investments in its subsidiary Company BEL Optronics Devices Limited. Refer Note 6 to the Standalone Financial Statements. The Company has not 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 or any other parties except loans to its employees as per the standard Company policy.

(A) & (B)

Aggregate amount given during the year ( Lakhs)	Balance outstanding at the balance sheet date ( Lakhs)	Subsidiaries, joint ventures, associates and others	Nature of transaction
511	845	Employees	Loans /Advances in the nature of loans

b. According to the information and explanations provided to us and based on our review of the terms of policy, conditions and circumstances, the investments made and the terms and conditions of the grant of loans/advances in the nature of loans are not prejudicial to the Companys interest.

c. According to the information and explanations provided to us, in respect of loans, the schedule of repayment of principal and payment of interest have been stipulated. The repayments or receipts are as per the schedule stipulated.

d. According to the information and explanations provided to us and based on the terms and conditions of the loans, no amount is overdue except as specified below for which reasonable steps have been taken by the Company for recovery of the principal and interest:

(Rs in Lakhs)

No. of cases	Principle overdue over 90 days	Interest Overdue	Total Overdue
3	0.95	0.47	1.42

e. According to the information and explanations provided to us, no loan granted which has fallen due during the year, has been renewed or extended or fresh loans granted to settle the over dues of existing loans given to the same parties.

f. According to the information and explanations provided to us, the Company has not granted loans repayable on demand in current year or without specifying any terms or period of repayment.

iv. According to the information and explanation provided to us and as per notification no. GSR 463(E) dated 5 June 2015, sections 185 and 186 of the Act with respect to granting of loans, investments, guarantees and security, is not applicable to a Government Company engaged in defence sector/production.

v. According to the information and explanations given to us, the Company has not accepted any deposits from the public within the meaning of Sections 73 to 76 of the Act and the Rules made thereunder or amounts which

are deemed to be deposits. We were informed that no order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

All earlier year deposits (collected prior to February 2006) have matured and settled except for 36.95 Lakhs, out of which 36.50 Lakhs is retained as per Garnishee Order of Lokayukta, Bengaluru and balance of 0.45 Lakhs though matured is unpaid due to legal issues.

vi. We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Records and Audit) Rules, 2014 prescribed by the Central Government under Section 148(1) of the Act, and are of the opinion that, prima facie, the prescribed records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

vii. a. According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/ accrued in the books of account in respect of 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 any other material statutory dues have generally been regularly deposited during the year by the Company with the appropriate authorities. As explained to us, during the year, the Company did not have any dues on account of Cess.

According to the information and explanations given to us, no undisputed amounts payable in respect of statutory dues referred in sub clause (a) above were in arrears as at 31 March 2024, for a period of more than six months from the date they became payable.

b. According to the information and explanations given to us, there are no statutory dues referred in sub clause (a) above as at 31 March 2024, which have not been deposited by the Company on account of disputes, except for the following:

Name of the statute	Nature of dues	Amount (in Lakhs)	Amount paid under protest (in Lakhs)	Period to which the amount relates	Forum where the dispute is pending
Finance Act 1994	Service Tax including interest and penalty	310	8	2005 - 06 to 2008-09	Customs Excise and Service Tax Appellate Tribunal (CESTAT)
Central Excise Act, 1944	Central Excise Duty including penalty	24	10	1990-91	Commissioner Appeals
Central Excise Act, 1944	Interest on Central Excise Duty	244	-	2011- 12 and 2012- 13	Customs Excise and Service Tax Appellate Tribunal (CESTAT)
Customs Act, 1962	Customs duty including interest and penalty	25	-	2002-03	Commissioner (Appeals) of Customs
Central Excise Act, 1944	Central Excise Duty including penalty	6	0.5	1991-92	Commissioner Appeals
Finance Act 1994	Service Tax including penalty	1,427	54	2014- 15 & 2015- 16	Customs Excise and Service Tax Appellate Tribunal (CESTAT)
Customs Act, 1962	Customs duty including interest and penalty	608	501	2015-16	Customs Excise and Service Tax Appellate Tribunal (CESTAT)
Customs Act, 1962	Customs duty including interest and penalty	3,081	-	2016-17 and 2019-20	Customs Excise and Service Tax Appellate Tribunal (CESTAT)
Customs Act, 1962	Customs duty including interest and penalty	0.2	0.2	2017-18	Assistant Commissioner of Customs
Goods and Service Tax Act, 2017	Union Territory Goods and Service Tax	0.21		2017- 18 & 2018- 19	The Assistant Commissioner of Central Tax (Andaman & Nicobar Division)
Madhya Pradesh VAT Act, 2002	Madhya Pradesh VAT including penalty	73	27	2011-12	Madhya Pradesh commercial Tax appellate Board, Bhopal
The Income Tax Act 1961	Tax deducted at source	40		2007-08, 2009-10, 2010-11 to 2013-14 and 2017-18	TDS Circle LTU
The Finance Act 1993	Service tax	11	-	2007-08	Customs, Excise and service tax appellate Tribunal
Finance Act 1994	Service Tax	31	3	2016- 17 to 2017- 18	CESTAT Chennai
Tamilnadu Value Added Tax 2006	Sales Tax	107	-	2015-16	Sales tax Tribunal Chennai
Tamilnadu Value Added Tax 2006	Sales Tax	31	-	2016-17	Sales tax Tribunal Chennai
Goods and Service Tax Act, 2017	Penalty under GST	4	-	Prior to 2017	Joint commissioner(Appeals) Goods and Service Tax,Chennai
Employee State Insurance Act 1948	ESI contribution	10	-	1992-1993	AP High court
Employee State Insurance Act 1948	Interest and cost of recovery	20	11	1998-2001	AP High court
Finance Act 1994	Service tax	6	-	2005-06 to 2008-09	Customs Excise and Service Tax Appelate Tribunal Benagaluru
Employee State Insurance Act 1948	Interest on damages towards late deposit	4	-	2000-01	Punjab and Harayana high court Chandigarh
Finance Act 1994	Service Tax	212	-	2005-06 to 2008-09	Custom,Excise and Service Tax Appellate Tribunal Bengaluru
Goods and Service Tax Act, 2017	Central Goods and Service Tax	66	5	2017-18	Commissioner(Appeal)
The Income Tax Act 1961	Disallowance as per assessment orders	4,575		2008- 09, 2009- 10, 2011- 12 to 2013-2014, 2015-16 to 2017-18, 2019- 20, 2020- 21	Commissioner of income tax appeals
Customs Act, 1962	Customs duty including interest and penalty	564	-	2021-22	Appellate level

 

Name of the statute	Nature of dues	Amount (in Lakhs)	Amount paid under protest (in Lakhs)	Period to which Forum where the dispute is the amount relates pending
Customs Act, 1962	Customs duty including interest and penalty	0.18	-	2021-22	Appellate level
Goods and Service Tax Act, 2017	Cenvat Credit And Itc	8	-	2017-18	GST Department Panchkula
Goods and Service Tax Act, 2017	Input Tax Credit	32	-	2018-19	GST Department Panchkula
West Bengal Sales Tax Act, 1994	Sales Tax	0.71	-	2016-17	West Bengal Taxation Tribunal

viii. According to the information and explanations given to us and records examined by us, there are no transactions which were not recorded in the books of account and have been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (43 of 1961).

ix. a. Based on our audit procedures; in our opinion and according to the information and explanations given to us, the Company does not have any loans or borrowings from any lender. Accordingly reporting on clause 3 (ix) (a) is not applicable.

b. According to the information and explanations given to us, our audit procedures and as represented to us by the Management, we report that the Company has not been declared wilful defaulter by any bank or financial institution or government or any government authority.

c. According to the information and explanations given to us and in our opinion, no term loans are availed by the Company in the current year. Accordingly reporting on clause 3 (ix) (c) is not applicable.

d. According to the information and explanations given to us, the procedures performed by us, and on an overall examination of the financial statements of the Company, we report that no funds raised on short- term basis have been used for long-term purposes by the Company.

e. According to the information and explanations given to us and on an overall examination of the financial statements of the Company, we report that the Company has not taken any funds (borrowings) from any entity or person on account of or to meet the obligations of its subsidiaries or associate.

f. According to the information and explanations given to us and procedures performed by us, we report that the Company has not raised loans during the year on the pledge of securities held in its subsidiaries or associate company.

x. a. The Company has not raised moneys by way of initial public offer or further public offer (including debt instruments) during the year.

b. According to the information and explanations given to us, the Company has not made any preferential allotment or private placement of shares or convertible debentures (fully, partially or optionally convertible) during the year. Accordingly, reporting on clause x(b) is not applicable.

xi. a. Based upon the audit procedures performed by us and according to the information and explanation provided to us by the Management, no fraud by the Company or no fraud on the Company has been noticed or reported to us during the year.

b. According to information and explanation provided to us and based on our examination of records, no report under sub-section (12) of section 143 of the Companies Act has been filed in Form ADT-4 as prescribed under rule 13 of Companies (Audit and Auditors) Rules, 2014 with the Central Government during the year and up to the date of this report.

c. According to information and explanation provided to us and based on our audit procedures and enquiry with the vigil mechanism committee, there were complaints received during the year which we have taken into consideration while determining the nature, timing and extent of audit procedures. The Management has represented to that the amounts involved in these cases are immaterial.

xii. I n our opinion and according to the information and explanations given to us, the Company is not a Nidhi Company and the Nidhi Rules, 2014 are not applicable to it. Accordingly, reporting on clause 3 (xii) (a), (b) & (c) of the Order is not applicable.

xiii. According to the information and explanations given to us and based on our examination of the records of the Company, transactions with related parties are in compliance with Sections 177 and 188 of the Act, where applicable, and the details of transactions have been disclosed in the Standalone Financial Statements as required by Ind AS 24 Related Party Disclosures to the extend applicable to Government companies. Refer note 31 to the Standalone Financial Statements.

xiv. a. According to the information and explanations given to us and in our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

b. We have taken into consideration the reports made available to us by the Management of the Internal Auditors for the period under audit.

xv. According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not entered into any noncash transactions with the directors or persons connected with them during the year. Accordingly, reporting on clause 3(xv) of the Order is not applicable.

xvi. (a) In our opinion and according to the information and explanations given to us, the Company is not required to be registered under Section 45-IA of the Reserve Bank of India, 1934. Accordingly, reporting on clause 3 (xvi) (b) & (c) of the Order is not applicable.

(d) According to the information and explanations given to us, there is no Core Investment Company within the Group.

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

xviii. There has been no resignation of the statutory auditors during the year. Accordingly, reporting on clause 3 (xviii) of the Order is not applicable.

xix. According to the information and explanations given to us and on the basis of the financial ratios, ageing

and expected dates of realization of financial assets and payment of financial liabilities, other information accompanying the financial statements, our knowledge of the Board of Directors and Management plans and based on our examination of the evidence supporting the assumptions, nothing has come to our attention, which causes us to believe that any material uncertainty exists as on the date of the audit report that the 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. There are no unspent amounts towards Corporate Social Responsibility (CSR) on other than ongoing projects requiring a transfer to a Fund specified in Schedule VII to the Companies Act in compliance with second proviso to sub-section (5) of Section 135 of the said Act. Accordingly, reporting under clause 3(xx)(a) of the Order is not applicable for the year.

b. According to the information and explanations provided to us, an amount of 3,842 Lakhs remaining unspent under sub-section (5) of section 135 of the Companies Act, pursuant to an ongoing project, has been transferred to special account in compliance with the provision of sub-section (6) of section 135 of the said Act. Refer Note 30 (15) to the Standalone Financial Statements.

"Annexure B" to the Independent Auditors Report

Referred to in paragraph 2 (h) under the heading, "Report on Other legal and Regulatory Requirements" of our report on even date:

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

We have audited the internal financial controls with reference to the Standalone Financial Statements of Bharat Electronics Limited ("the Company") as of 31 March 2024 in conjunction with our audit of the Standalone Financial Statements of the Company for the year ended on that date.

Managements Responsibility for Internal Financial Controls

The Companys Management is responsible for establishing and maintaining internal financial controls based on the internal controls over financial reporting criteria established by the Company considering the essential components of internal controls 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 that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to 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

Our responsibility is to express an opinion on the Companys internal financial controls with reference to the Standalone Financial Statements based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the "Guidance Note") and the Standards on Auditing, to the extent applicable to an audit of internal financial controls, both issued by the Institute of Chartered Accountants of India. 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 the Standalone 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 the Standalone Financial Statements and their operating effectiveness. Our audit of internal financial controls with reference to the Standalone Financial Statements included obtaining an understanding of internal financial controls with reference to the Standalone Financial Statements, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal controls 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 and by the branch auditors, in terms of their reports, is sufficient and appropriate to provide a basis for our audit opinion on the Companys internal financial controls with reference to the Standalone Financial Statements.

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

A Companys internal financial controls with reference to the 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 the Standalone 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 Standalone Financial Statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorisations of Management and directors of the Company; and

(3) provide reasonable assurance regarding prevention or timely detection of unauthorised 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 the Standalone Financial Statements

Because of the inherent limitations of internal financial controls with reference to the 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 the Standalone Financial Statements to future periods are subject to the risk that the internal financial controls with reference to the 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 and based on audit reports of branch auditors, the Company has, in all material respects, adequate internal financial controls with reference to the Standalone Financial Statements and such internal financial controls with reference to the Standalone Financial Statements were operating effectively as at 31 March 2024, based on the internal controls over financial reporting criteria established by the Company considering the essential components of internal controls stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

Other Matters

Our aforesaid reports under Section 143(3)(i) of the Act on the adequacy and operating effectiveness of the internal financial controls with reference to Standalone Financial Statements insofar as it relates to six branches, is based on the corresponding reports of the auditors of such branches.

Our opinion is not modified in respect of the above matter.

"Annexure C" to the Independent Auditors Report

Referred to in paragraph 3 under the heading, "Report on Other legal and Regulatory Requirements" of our report on even date:

Report on the areas to be examined by the Statutory Auditors as per directions of the Comptroller & Auditor General of India under Section 143(5) of the Companies Act, 2013 for the year ended 31 March 2024.

In our opinion and to the best of our information and according to the explanations given to us and based on the audit reports provided by the branch auditors, we report the following:

Directions/sub directions	Action taken	Impact
1 Whether the Company has system in 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.	Yes, the Company has system in place to process all the accounting transactions through IT system.	Nil
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. Whether such cases are properly accounted for? (In case, lender is a Government Company, then this direction is also applicable for statutory auditor of lender company).	According to the information and explanations provided to us, the Company has not received any loan from the bank or financial institutions. Accordingly, reporting on this clause is not applicable.	Nil
3 Whether funds, (grants/subsidy etc.) received/ receivable for specific schemes from Central/State Government or its agencies were properly accounted for/utilised as per its term and conditions? List the cases of deviation.	According to the information and explanations provided to us and based on records during the year no funds have been received towards specific schemes from Central/ State Government, or its agencies. The funds received in earlier years have been appropriately accounted and utilised for the purpose for which it is received.	Nil

 

For P G BHAGWAT LLP

Chartered Accountants

Firm Registration Number: 101118W/W100682

Abhijeet Bhagwat

Partner

Membership Number: 136835

UDIN: 24136835BKBGVG4474

Darjeeling

20 May 2024