Bharat Heavy Electricals Ltd Auditor Reports

To the Members of

Bharat Heavy Electricals Limited

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the accompanying standalone financial statements of Bharat Heavy Electricals Limited (the Company), which comprise the Balance Sheet as at March 31, 2026, 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 standalone financial statements, including a summary of the material accounting policies and other explanatory information (hereinafter referred to as the Standalone financial statements) in which are incorporated the returns for the year ended on that date for 11 branches audited by us and 14 branches audited by the branch auditors of the company.

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid 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 Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015, as amended, (Ind AS) and other accounting principles generally accepted in India, of the state of affair s of the Company as at March 31, 2026, its profit including other comprehensive income, its changes in equity and cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing (SAs) specified under section 143 (10) of the Companies Act, 2013. Our responsibilities under those Standards are further described in the Auditors Responsibilities for the Audit of the 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 Companies Act, 2013 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 s ufficien t and appropriate to provide a basis for our opinion on the standalone financial statements.

Key Audit Matters

Key audit matters are those matters that in our professional judgement 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. We have determined the matters described below to be the key audit matters to be communicated in our report.

Key Audit Matter	Auditor\u2019s Response
Accuracy of recognition, measurement, presentation and disclosures of revenues and other related balances in respect of \u201cRevenue from contracts with Customers\u201d under Ind AS 115.	Principal Audit Procedures
The application of this revenue accounting standard involves certain key judgments relating to identification of distinct performance obligations, determination of transaction price of identified performance obligations, the appropriateness of the basis used to measure revenue recognized over a period, and disclosures including presentations of balances in the financial statements.	Our audit approach consisted testing of the design and operating effect iveness of internal controls and procedures as follows:
	\u2022 Evaluated the effect iveness of controls over the preparation of information that are designed to ensure the completeness and accuracy.
	\u2022 Selected a sample of existing continuing contracts and new contracts, and tested the operating effect iveness of the internal control, relating to identification of the distinct performance obligations and determination of transaction price.
	\u2022 Tested the relevant information, accounting systems and change relating to contracts and related information used in recording and disclosing revenue in accordance with Ind AS 115.
Estimated effort s is a critical estimate to determine revenue, as it requires consideration of progress of the contract, efforts incurred till date, effort s required to complete the remaining performance obligation.
	\u2022 Reviewed a sample of contracts to identify possible delays in achieving milestones, which require change in estimated effort s to complete the remaining performance obligations.
	\u2022 Performed analytical procedures and test of details for reasonableness and other related material items.
Refer Note 22 & 39 to the standalone financial statements.

Assessment and recoverability of Trade Receivables and Contract Assets	Principal Audit Procedures
The Company has trade receivables outstanding (net) of D 9223.30 Crore and contract assets (net) of D 29389.61 Crore at the end of March 31, 2026.	We have assessed the Company\u2019s internal process to recognize the revenue and review mechanism of trade receivables and contract assets. Our audit approach consisted testing of the design and operating effect iveness of internal controls and procedures as follows:
These balances are related to revenue recognized in line with Ind AS 115 \u201cRevenue from contracts with customers\u201d for ongoing contracts and completed contracts. The assessment of its recoverability is a key audit matter in the audit due to its size, pending balance confirmation of letters sent and high level of management judgment.	\u2022 Evaluated the process of invoicing with Customers.
	\u2022 Obtained the list of project wise outstanding details and its review mechanism by the management.
	\u2022 Reviewed the guidelines and policies of the Company on impairment of trade receivables and contract assets.
	\u2022 Tested the accuracy of aging of trade receivables and contract assets at the year end on sample basis.
Refer Notes 6, 9, 39 to the standalone financial statements.	\u2022 Performed analytical procedures and test of details for reasonableness, recoverability and other related material items.

Assessment of Contingent Liability	Principal Audit Procedures
There are a number of litigations pending before various forums against the Company and the management\u2019s judgement is required for estimating the amount to be disclosed as contingent liability.	The audit procedures included but were not limited to:
	\u2022 Obtaining a detailed understanding processes and controls of the Management with respect to claims or disputes
	\u2022 Performing following procedures on samples selected:
	Understanding the matters by reading the correspondences, communications, minutes of the management meeting
We determined the above area as a Key Audit Matter in view of associated uncertainty relating to the outcome of these matters which requires application of judgment in interpretation of law. Accordingly, our audit was focused on analyzing the facts of subject matter under consideration and judgments/ interpretation of law involved.
	Making corroborative inquiries with appropriate level of the management personnel including status update, expectation of outcomes with the basis, and the future course of action contemplated by the Company, and perusing legal opinions, if any, obtained by the Management.
	Evaluating the evidence supporting the judgement of the management about possible outcomes and the reasonableness of the estimates.
	Evaluating appropriateness of adequate disclosures in accordance with the applicable accounting standards.
Refer Note 32 to the standalone financial statements

Other Matters

We did not audit the financial statements/information of 14 (Fourteen) branches included in the standalone financial statements of the Company whose financial statements/ financial information reflect total assets of 49806 Crore as at 31 st March, 2026 and total revenue from operations of 25523 Crore for the year ended on that date, as considered in the standalone financial statements. The financial statements/ information of these branches have been audited by the Branch auditors whose reports have been furnished to us, and our opinion in so far as it relates to the amounts and disclosures included in respect of these branches, is based solely on the report of such branch auditors.

Our opinion is not modified in respect of these matters.

Information Other than the Standalone Financial Statements and Auditors Report Thereon

The Companys Board of Directors is responsible for the preparation of the other information. The other information comprises the information included in Management Discussion and Analysis, Boards Report including Annexures to Boards Report, Business Responsibility & Sustainability Report, Corporate Governance and Shareholders information, but does not include the standalone financial statements and our auditors report thereon. These reports are expected to be made available to us after the date of this Auditors Report.

Our opinion on the 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 financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

When we read such other information when made available to us and if we conclude that there is a material misstatement there-in 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 Companies Act, 2013 (the Act) with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance, total comprehensive income, changes in equity and cash flows of the Company in accordance with the Ind AS and other accounting principles generally accepted in India. 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 effect ively 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, Management of Company 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 the Management of Company either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. The Board of Directors are responsible for overseeing the Companys financial reporting process.

Auditors Responsibilities for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the 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 s ufficien t 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 financial controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Companies Act, 2013, 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 effect iveness 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 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.

Materiality is the magnitude of misstatements in the standalone financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the financial statements. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone 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 sub-section (11) of section 143 of the Act, we give in the 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 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 and proper returns adequate for the purpose of our audit have been received from the branches not visited by us;

c. The reports on the accounts of the branch office s of the Company audited under Section 143(8) of the Act by branch auditors 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), Statement of Changes in Equity and the Statement of Cash Flow dealt with by this Report are in agreement with the books of account;

e. In our opinion, the aforesaid financial statements comply with the Indian Accounting Standards prescribed under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules 2015 as amended;

f. In terms of Notification no. G.S.R. 463 (E) dt. 05.06.2015 issued by Ministry of Corporate Affair s, the Provision of Section 164(2) of the Companies Act, 2013 in respect of disqualification of directors are not applicable to the Company, being a Government Company.

g. With respect to the adequacy of the internal financial controls with reference to standalone financial statements of the Company and the operating effect iveness of such controls, refer to our separate Report in Annexure B ; h. As per notification number G.S.R. 463 (E) dated 5 th June, 2015 issued by Ministry of Corporate Affair s, section 197 of the Act, regarding remuneration to director is not applicable to the Company, since it is a Government Company; and

i. 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:

i. The company has disclosed the impact of pending litigations on its financial position in its standalone financial statements. Refer Note 32 to the financial statements; ii. The company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts. Refer Note 38 to the financial statements; iii. There has been no delay in transferring the amount, required to be transferred in accordance with the relevant provisions of the Companies Act, 2013 and the rules made thereunder, to the Investor Education and Protection Fund by the Company. iv) a) The management has represented that, to the best of its knowledge and belief, of the Standalone Financial Statements, 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(s) or entity(ies), 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. b) The management has represented, that, to the best of its knowledge and belief, as disclosed, no funds have been received by the Company from any person(s) or entity(ies), 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. c) Based on such audit procedures that have been considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) of Rule 11 (e), as provided under (a) and (b) contain any material mis-statement. v) As stated in Note 31 to the financial statements, a) the Board of Directors of the company has proposed final dividend for the year which is subject to the approval of the members at the ensuing Annual General Meeting. The dividend proposed is in accordance with section 123 of the Act to the extent it applies to the declaration of dividend.

b) During the year Company has not declared or paid any Interim Dividend. c) 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 vi. Based on our examination carried out in accordance with the Implementation Guidance on Reporting on Audit Trail under Rule 11(g) of the Companies (Audit and Auditors) Rules,2014 (Revised 2024 Edition) issued by the Institute of Chartered Accountants of India, which included test checks, and the reports of Branch Auditors we report that the company has used multiple 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. (3) On the basis of verification of the books and records of the Company, as we considered appropriate and according to the information and explanations given to us, we are enclosing our report in terms of Section 143(5) of the Act, on the directions and sub directions issued by the Comptroller and Auditor General of India in Annexure C .

Annexure A TO INDEPENDENT AUDITORS REPORT

(Referred to in Paragraph 1 under Report on Other Legal and Regulatory Requirements of our report to the Members of Bharat Heavy Electricals Limited of even date) i. In respect of the Companys Property, Plant & Equipment and Intangible Assets: a) A] The Company has maintained proper records showing full particulars, including quantitative details and situation of the Property, Plant & Equipment, and relevant details of right of use assets.

B] The Company has maintained proper records showing full particulars of intangible assets. b) Physical Verification of Property, Plant & Equipment have been stated to be physically verified by the Management during the year is being conducted in a phased manner by the management under a programme designed to cover all the property, plant and equipment including intangible assets over a period of three years, which, in our opinion, is reasonable having regard to the size of the Company and nature of its business and no material discrepancies were noticed on such verification to the extent verification was made during the year. c) According to the information and explanation given to us, the records examined by us, the title deeds of immovable properties as disclosed in Note 3a on Property, Plant and Equipment to the Standalone Financial Statements are held in the name of the Company except for the following:

Title deeds of Immovable Property not held in the name of BHEL (As on 31/03/2026)

Description of item of property (under the line item of B/S)	Gross Carrying value ( in Crore)	Lease/ Title deeds held in the name of	Whether title deed holder is a promoter, director or relative of promoter/director or employee of promoter/ director	Property held since which date	Reason for not being held in the name of the company
PPE:-
Land- Freehold	0.52	State Govt of Telangana	No	1974 onwards	Transfer of title deed in progress, matter taken up with state govt. through TSIIC
Land- Freehold	0.11	State Govt of Telangana	No	30-01-1961	Gazette Notification issued for acquisition of Land for setting up of Heavy Electrical Plant (Ref No:171,192,92-A,61,202 in the year 1961 &63
Land- Freehold	0.18	State Govt. of Madhya Pradesh	No	Since 1957	Land provided through gazette of Government of India, title deed not available in the name of BHEL.
Land- Freehold	1.24	State Govt. of Tamil Nadu	No	Various dates between 13.01.1981 to 17.02.1986	Land transfer documents (Handing over by state govt and taken over by BHEL) are available indicating area and Survey Numbers. Assignment deed is yet to be issued by State Government in favour of BHEL .

Description of item of property (under the line item of B/S)	Gross Carrying value ( in Crore)	Lease/ Title deeds held in the name of	Whether title deed holder is a promoter, director or relative of promoter/director or employee of promoter/ director	Property held since which date	Reason for not being held in the name of the company
Land- Freehold	0.0022	B Saroja Devi	No	01-04-1965	There is a dispute between Mrs. B Saroja Devi and M/s BHEL in supreme court. The Supreme Court has referred the case back to High Court for disposal and the same is pending.
Land- Freehold	0.2799	Mysore Porcelain Ltd	No	21-05-1980	Land devolved to BHEL EPD through gazette of GOI. updation in land records in progress
Land- Freehold	1.64	State Govt. of TamilNadu	No	24-11-2010	Patta (Title Deed) is yet to be obtained
Land- Leasehold (Right-of-use of assets)	68.38	464.8287 Acres in the name of Maharashtra Industrial Development Corporation 9.0688 Acres in the name of State Govt. of Maharashtra 2.7676 Acres in the name of Private owners of Land	No	20-03-2013	Full acquisition of proposed land not yet completed.
Building \u2013 Freehold	0.11	JB Construction (Builder)	No	1989	Title in respect of 4 Flats are in dispute between builder & Land Owner
Building - Freehold	0.05	Maharashtra Cooperative Society	No	1989	6 Flats in name of Cooperative Society. There is no dispute.
Land- Freehold	0.0002	Mutation is done in BHEL Name. However, in Khatauni BHEL Jhansi is not shown. It is shown as Dohri Railway Land.	No	1974-75	This is due to mistake at the end of State Revenue Department that they have made a typographical error while making the khatauni entry. Matter was taken up by Estate Department, TP Jhansi with District Revenue Authority for change of the name on the name of BHEL.
Building - Leasehold (Right-of-use of assets)	1.2777	State Govt. of Maharashtra	No	01-02-1991	Maharashtra Govt. has not executed the lease of land with MVIRDC, thus MVIRDC cannot execute the lease deed for 1 Floors with BHEL.

Description of item of property (under the line item of B/S)	Gross Carrying value ( in Crore)	Lease/ Title deeds held in the name of	Whether title deed holder is a promoter, director or relative of promoter/director or employee of promoter/ director	Property held since which date	Reason for not being held in the name of the company
Investment Property:-
Building - Leasehold	1.2777	State Govt. of Maharashtra	No	01-02-1991	Maharashtra Govt. has not executed the lease of land with MVIRDC, thus MVIRDC cannot execute the lease deed for 1 Floors with BHEL.

(d) The Company has not revalued its Property, Plant

& Equipment (including Right of Use assets) or intangible assets during the year. Accordingly, the other requirements of clause 3(i)(d) of the Order is not applicable. e) No proceedings have been initiated during the year or pending against the Company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) (as amended in 2016) and rules made thereunder. ii. (a) The physical verification of inventory (excluding stocks lying with third parties) has been conducted at reasonable intervals by the Management during the year. In respect of inventory lying with third parties, these have substantially been confirmed by them. In respect of inventories of stores and spares, the Management has a verification programme with appropriate procedures designed to cover the items over a period of three years, which in our opinion, is appropriate. According to the information and explanations given to us, no material discrepancies of 10% or more in the aggregate for each class of inventory between physical inventory and book records were noticed on physical verification (b) In our opinion and according to the information and explanations given to us, and relevant records produced, the company has been sanctioned working capital limit of I80,000 Crore (Fund Based

Limit of I9,500 Crore, Non-Fund Based Limits Letter of Credit (LC) I4,500 Crore and Bank Guarantees (BG) I66,000 crore), under consortium finance from Banks/Financial institution against security of current assets. As per records verified by us, in our opinion, the monthly/quarterly returns or statement filed by the company with such Banks/Financial Institution are in agreement with books of accounts of the Company iii. No.

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/ unsecured, to companies, firms LLPs or any other parties during the year. Hence reporting under clause 3(iii)(a)(A) & (B) of the Order is not applicable.

In view of above, the requirements of clause 3(iii)(b), 3(iii) (c), 3(iii)(d) & 3(iii)(e) of the Order are not applicable. The Company has not made any loans and advances in the nature of loans during the year including any amounts of loans granted to promoters, related parties as defined in clause (76) of section 2 of the Act and hence reporting under clause 3(iii)(f) of the Order is not applicable. iv. According to the information and explanations given to us, Section 185 of the Act regarding loans to directors is not applicable to the Company by virtue of Notification No. G.S.R 463(E) dated 05.06.2015 issued by the Ministry of Corporate of Affair s, Government of India. In our opinion and according to the information given to us, the company has complied with the provisions of Section 185 & 186 of Companies Act 2013 in respect of loans and investment made. v. The Company has not accepted any deposit or amounts which are deemed to be deposits within the meaning of section 73 to 76 of the Act and rules made thereunder. Hence, reporting under clause 3(v) of the Order is not applicable. 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 cost records have been made and maintained by the Company. We have, however, not made a detailed examination of the records with a view to determining whether they are accurate or complete. vii. In respect of statutory dues: a) In our opinion, the Company has generally been 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 any other statutory dues to the appropriate authorities. No such statutory dues were outstanding as at March 31, 2026 for a period of more than six months from the date they became payable. b) The details of dues towards Income Tax, Sales Tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax and Goods and Services Tax which have not been deposited as at March 31, 2026, on account of disputes are given below:

(I in Crore)

Sl. No. Name of the Statute	Forum where dispute is pending	Nature of the dues	Amount involved	Amount deposited	Amount not deposited	Period to which the amount relates
1 Central Sales Tax Act, Value Added Tax and Sales Tax Act of various	Assessing Officer	Sales Tax	10.84	4.26	6.58	1991-92, 1995-96, 1997-98, 1999-00, 2004-05, 2007-08, 2009-13, 2016-17
States	Dy.Commissioner/ Jt.Commissioner/ Commissioner (Appeals)		154.30	52.64	101.65	1993-94, 1994-95, 1998-99, 2002-03 to 2017-18
	Appellate Tribunal		135.28	38.35	96.93	1984-85, 1989-90, 1991-92, 1995-96 to 2017-18
	High Court		50.55	47.84	2.71	1985-86, 1994-95, 2000-01, 2006-07 to 2016-17
2 Central Excise Act, 1944	Dy.Commissioner/ Jt.Commissioner/ Commissioner (Appeals)	Excise Duty	10.60	0.02	10.58	1980 - 2008, 2011-12 to 2017-18
	Appellate Tribunal Supreme Court		44.44 27.49	4.31 -	40.13 27.49	1980 - 2008, 2005-06, 2016-17 2008-09, 2009-10
3 Service Tax under the Finance Act, 1994	Dy.Commissioner/ Jt.Commissioner/ Commissioner (Appeals)	Service Tax	1.31	0.44	0.87	2017-18
	Appellate Tribunal		400.68	5.74	394.95	2005-06 to 2017-18
4 Customs Act,1962	Dy.Commissioner/ Jt.Commissioner/ Commissioner (Appeals)	Custom Duty	2.14	0.79	1.35	2013-14 to 2015-16, 2021-22 to 2025-26
	Appellate Tribunal High Court		21.60 5.80	0.43 5.80	21.18 -	2007-08, 2012-14, 2020-21 to 2024-25 2017-18

Sl. No. Name of the Statute	Forum where dispute is pending	Nature of the dues	Amount involved	Amount deposited	Amount not deposited	Period to which the amount relates
5 GST Act 2017	Assessing Officer	GST	0.17	0.01	0.16	2021-22, 2024-25
	Dy.Commissioner/ Jt.Commissioner/ Commissioner (Appeals)		56.20	4.79	51.41	2017-18 to 2025-26
	Appellate Tribunal		7.75	0.54	7.22	2017-18 to 2019-20
6 Income Tax Act 1961	Jt.Commissioner/ Commissioner (Appeals)	Income Tax	0.41	0.41	-	2016-18
7 Income Tax (Foreign)	Settlement agreement to be filed before Rawandan Revenue Authority	Income Tax	20.01	6.55	13.47	2013-15
	Bangladesh tax appellate authority		22.87	-	22.87	2020-21
8 Employees Provident Fund and Miscellaneous Provisions Act, 1952	RPFC Kanpur	Provident Fund	1.24	0.62	0.62	2002-03
	Total		973.70	173.53	800.16

viii. There were no transactions relating to previously unrecorded income that have been surrendered or disclosed as income during the year in tax assessments under the Income Tax Act, 1961 (43 of 1961). ix. a) The Company has not defaulted in repayment of loans or other borrowings or in the payment of interest thereon to any lender. b) The Company has not been declared willful defaulter by any bank or financial institutions or government or any government authority. c) The Company has not taken any Term Loan during the year and there is no outstanding term loan at the beginning of the year and hence, reporting under clause 3(ix) (c) of Order is not applicable. d) On an overall examination of the Standalone Financial Statements of the Company, funds raised on short-term basis have, prima facie, not been used during the year for long-term purposes by the Company. e) The Company has not taken any funds from any entity or person on account of or to meet the obligations of its joint ventures. f) The Company has not raised any loans during the year on the pledge of securities held in its joint ventures. x. a) The Company has not raised money by way of initial public offer or further public offer (including debt instruments) during the year and hence reporting under clause 3(x)(a) of the Order is not applicable. b) During the year, the Company has not made any preferential allotment or private placement of shares or convertible debentures (fully or partly or optionally) and hence reporting under clause 3(x)(b) of the Order is not applicable.

xi. a) Based upon the audit procedures performed and according to the information and explanations given to us, we report that no fraud by the Company or on the Company has been noticed or reported during the year. b) No report under section 143(12) of the Act has been filed in Form ADT-4 as prescribed under rule 13 of Companies (Audit and Auditors) Rules, 2014 with Central Government during the year and till the audit report date. c) We have taken into consideration the whistle blower complaints received by the Company during the year while determining the nature, timing and extent of audit procedures xii. The Company is not a Nidhi Company and hence reporting under of clause 3(xii)(a), (b), (c) of the Order is not applicable to the Company and hence not commented upon. xiii. In our opinion, the Company is in compliance with Section 177 and 188 of the Companies Act, 2013 with respect to applicable transactions with related parties and the details of the related party transactions have been disclosed in the Standalone Financial Statements as required by the applicable accounting standards. xiv. a) In our opinion, the Company has an internal audit system to commensurate with the size and the nature of its business. b) We have considered the furnished internal audit reports of the audits conducted for the year under audit, issued to the Company during the year and till date, in determining the nature, timing, and extent of our audit procedures.

xv. In our opinion, during the year the Company has not entered into any non-cash transactions with the directors or persons connected with them covered under Section 192 of the Act. Accordingly, clause 3(xv) of the Order is not applicable. xvi. a) In our opinion, the Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934. Accordingly, requirements of clause (xvi)(a) of the Order are not applicable to the Company.

b) In our opinion, the Company has not conducted any Non-Banking Financial or Housing Finance activities therefore the Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934. Accordingly, requirements of clause 3(xvi)(b) of the Order are not applicable. c) In our opinion, the Company is not a core investment company as defined in the Core Investment Companies (Reserve Bank) Directions, 2016 and accordingly reporting under clause 3(xvi)(c) of the Order is not applicable. d) In our opinion, there is no core investment company within the Group as defined in the Core Investment Companies (Reserve Bank) Directions, 2016 and accordingly reporting under clause 3(xvi)(d) of the Order is not applicable. xvii. Based on our examination of the books and records of the Company, the company has not incurred cash losses in the current and in the immediately preceding financial year. Accordingly, provisions of clause 3(xvii) of the order are not applicable. xviii. There has been no resignation of the statutory auditors during the year. Accordingly, requirements of clause 3 (xviii) of the order are not applicable. xix. On the basis of the financial ratios, ageing and expected dates of realization of financial assets and payment of financial liabilities, other information accompanyingtheStandaloneFinancialStatements, 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 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 amount 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) The Company has has transferred unspent Corporate Social Responsibility amount as at March 31, 20216 to a Special account within a period of 30 days from the end of the financial year in compliance with the provision of section 135(6) of the Act. xxi. Provision of clause (xxi) is not applicable to Company level Standalone Financial Statements.

ANNEXURE B TO INDEPENDENT AUDITORS REPORT OF EVEN DATE ON THE STANDALONE FINANCIAL STATEMENTS OF BHARAT HEAVY ELECTRICALS LIMITED

Report on the Internal Financial Controls 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 financial statements of Bharat Heavy Electricals Limited (the Company) as of March 31, 2026 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 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 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 effect ively for ensuring the orderly and efficien t 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 Companies Act, 2013.

Auditors Responsibility

Our responsibility is to express an opinion on the Companys internal financial controls with reference to 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, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, 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 financial statements was established and maintained and if such controls operated effect ively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system with reference to financial statements and their operating effect iveness. Our audit of internal financial controls with reference to financial statements included obtaining an understanding of internal financial controls with reference to standalone financial statement, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effect iveness of internal control based on the assessed risk. The procedures selected depend on the Auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is s ufficien t and appropriate to provide a basis for our audit opinion on the Companys internal financial controls system over financial reporting with reference to standalone financial statement.

Meaning of Internal Financial Controls with reference to Standalone financial statements

A Companys internal financial control with reference to financial statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A Companys internal financial control with reference to 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 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 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 statement, 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 control 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, an adequate internal financial controls system with reference to Standalone financial statements and such internal financial controls with reference to Standalone financial statements were operating effect ively as at March 31, 2026, based on the internal control with reference to financial statements 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 issued by the Institute of Chartered Accountants of India.

ANNEXURE C TO INDEPENDENT AUDITORS REPORT

Directions issued by the Comptroller & Auditor General of India under Section 143(5) of the Companies Act, 2013 indicating the areas to be examined by the Statutory Auditors during the course of audit of annual accounts of Bharat Heavy Electricals Limited (Standalone) for the year 2025-26:

Sl. No. Areas Examined	Response
1 Assess the fair valuation of all the investments, both quoted and unquoted, made directly by the Company or through Trusts, for Post-retirement benefits of the employees. This includes verifying valuation methodologies, ensuring consistency with Ind AS and reviewing supporting documentation. The auditor shall provide a brief note on the valuation approach, its reasonability, and compliance with applicable regulations, reporting any material deviations or misstatements.	The investments, made by Company for Post- retirement benefits of the employees have been valued appropriately in accordance with the applicable financial reporting framework and applicable regulations. The valuation approach and valuation methodologies applied by Company for these investments are reasonable and consistent with Ind AS-19 as disclosed at Note 36 of Financial statements. No material deviations or misstatements have been observed.
2 Whether the Company has a system in place to process all the accounting transactions through IT system? If yes, whether review of this system and controls that are significant to the Company, financial reporting process as well as cyber security has been done by Information Security	The Company have a system in place to process all accounting transactions through IT system(s), thereby ensuring appropriate controls and accuracy of transactions. The Company conducts an annual review of its IT systems and cyber security through STQC, which is empaneled by CERT-In for IT security testing. Further, the review of systems and controls significant to the Company and the financial reporting process is carried out at reasonable intervals by in-house professionals, ensuring adequate coverage of all Units. In view of the above, there are no adverse implications on the integrity of the accounts nor any financial implications.
Auditing Organisations empanelled by Cert-In at a minimum frequency of once in a year and material discrepancies found, if any, have been suitably reported? The implications of processing of accounting transactions outside IT system on the integrity of the accounts along with the financial implications may also be reported.
3 Whether funds (grants/ subsidy etc.) received/ receivable for specific schemes from Central/ State Government or its agencies were properly accounted for as per the applicable accounting standards or norms and whether the received funds were utilised as per its terms and conditions? Whether accounting of interest earned on	The Fund(s) received / receivable for specific schemes from Central / State agencies during the year 2025-26 including interest earned have been properly accounted for as per the applicable accounting standards or norms, and were utilized as per the terms and conditions of the Grant. No material deviations or misstatements have been observed.
grants received has been done as per terms and
conditions of the Grant. List the cases of deviation.
4(a) Whether the Company has identified the key Risk areas? If yes, whether the Company has formulated any Risk Management Policy to mitigate these risks? If yes, (a) whether the Risk Management Policy has been formulated considering global best practices?	Yes, BHEL has identified the key risk faced by it. The mitigation measures against the identified key risks are in place.
	The company has in place a Risk Management Charter and Policy to implement a structured and comprehensive Enterprise Risk Management system. This Charter is built on the established principles of sound risk management as per recognized sources of Risk Management Standard.

Sl. No. Areas Examined	Response
4(b) Whether the Company has identified its data assets and whether it has been valued appropriately?	The Company has not identified data assets, such as customer/vendor master data, engineering designs, and other similar information, and consequently, no such data assets have been valued by the company, apart from the intangible assets already recognized in the books of accounts.
5 Whether the Company is complying with the Securities and Exchange Board of India (SEBI) (Listing Obligations and Disclosure Requirements) Regulations, 2015, and other applicable rules and regulations of SEBI, Department of Investment and Public Asset Management, Ministry of Corporate Affair s, Department of Public Enterprises, Reserve Bank of India, Telecom Regulatory Authority of India, CERT-IN, Ministry of Electronics and Information Technology and National Payments Corporation of India wherever applicable? If not, the cases of deviation may be highlighted.	During the period under review, the number of independent directors on the Board of the Company was less than half of the total strength of the Board as required under Regulation 17(1) of the SEBI Listing Regulations, Para 3.1.4 of the DPE Guidelines on Corporate Governance and Section 149 (4) of the Companies Act, 2013. Further, the Company did not have an independent woman director during the period as required under Regulation 17 (1) of the SEBI Listing Regulations.
	Apart from this, the Company is generally compliant with all applicable regulatory requirements. Periodical compliance reviews are being conducted. No material non-compliance impacting financial statements has been observed.

Further, Sub-directions to Statutory Auditors of Power Sector entities:

Sl. No. Areas Examined	Auditor\u2019s Response
(i) Verify whether the existing regulatory assets of the Company are supported by the tariff orders of the Electricity Regulatory Commission	The Company is not engaged in power distribution activity and hence there are no regulatory assets to report.
(ii) Verify whether the revenue in respect of such assets has been recognised by the Company on the basis of tariff orders issued by the Electricity Regulatory Commission	Not applicable.
(iii) State the impact of recognition/ existence of regulatory assets in the absence of tariff orders, if any	Not applicable.
(iv) State the impact of delayed/ non-recovery of regulatory assets on the financial statements of the Company	Not applicable.
(v) Examine and report upon the accuracy/ adequacy of accounting treatment/ related disclosures in this regard	Not applicable.

For K Venkatachalam Aiyer & Co.			For K S Dua & Co.
Chartered Accountants			Chartered Accountants
FRN - 004610S	FRN - 017478N
CA. V. Ramachandran		CA. Swarn Singh Dhillon

Partner	Partner
M. No. 020504	M No. 527610
UDIN: 26020504IUTLNW3890	UDIN: 26527610PAIMQZ1233

Place: New Delhi
Dated: 04 th May, 2026