Hindustan Aeronautics Ltd Auditor Reports

Independent Auditors Report

TO THE MEMBERS OF

HINDUSTAN AERONAUTICS LIMITED

Report on the Audit of Standalone Financial Statements

Opinion

We have audited the accompanying Standalone Financial Statements of Hindustan Aeronautics Limited ("the Company") which comprise the Balance Sheet as at 31^st March 2025, and the Statement of Profit and Loss (including Other Comprehensive Income), 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 included the returns of 29 divisions for the period ended on that date audited by the Division Auditors of the company.

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Standalone Financial Statements give the information required by the Companies Act, 2013 ("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 affairs of the Company as at 31^st March 2025, and its Profit, Total comprehensive income, Changes in Equity and its 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 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 we have obtained is sufficient and appropriate to provide a basis for our opinion.

Emphasis of Matter

(I) Attention is invited to Notes to the Standalone Financial Statements extracted below:

Note 49: Clause - 43G

Revision of pay scales of executives and workmen, with effect from 01.01.2017 was implemented in accordance with the guidelines issued by Department of Public Enterprises vide OM dated 03.08.2017 for executives and in accordance with the Wage Agreement entered into between Management and Employees Union representative in 2019-20 in respect of workmen.

On an interpretation on pay refixation and pursuant to the directives of the Administrative Ministry, the pay fixation to be revised and the excess amount paid is to be recovered from the employees. Based on the directives Company issued a Circular dated 24.07.2021 and the communication dated 26.07.2021 for recovery of the excess amount.

While so, the Employees Union and Officers Association have filed Writ Petition with Honble High Court of Karnataka to stay recovery of excess amount of salary paid by the Company. The Hble High court given verdict in favour of Officers Associations by setting aside the Circular dated 24.07.2021 and the communication dated 26.07.2021 issued by the Management. The order of the Hble High Court in favour of Officers was put up to the Board in its 490^th Meeting held on 12.02.2025. Board has noted the judgement of the Hble High Court and accorded approval to abide by the Court order. Accordingly, the differential amount withheld by the Management in respect of Ex-officers has to be released /refunded to the concerned Ex-officers/Nominees along with applicable interest.

As per the Board approval, one increment impact amount of Rs.2712 lakhs recovered from the retired/deceased/resigned employees has been paid during 2024-25. Further, in respect of officers an amount of Rs.18565 lakhs credited to salaries and wages in the earlier years and kept under claims receivable has been reversed during 2024-25. Accordingly, employees cost for the current year is not comparable with the corresponding previous year.

In respect of workmen, the order is awaited, hence, reduction of salaries and wages in respect of workmen continued for the year ended 31^st March 2025 and Rs.2444 lakhs effect given in the books towards this. Excess amount credited to salaries and wages in respect of workmen has been shown under claims receivable (Gross) of Rs.16390 lakhs as at 31^st March 2025 (previous year: Rs.14282 lakhs).

Based on the final verdict, decision in respect of workmen will be taken and suitable effect will be carried out in the accounts.

Note 49: Clause - 43D(ii)

Ministry vide OM dated 12.07.2023 has conveyed the approval for increasing the Companys contribution to the Pension Scheme of Executives from existing 7% to 10% of Basic Pay + DA w.e.f. 01.01.2017. Revision of Pension contribution from 7% to 10% of Basic Pay + DA w.e.f 01.01.2017 has been made in respect of executives who are on the rolls of the Company as on the date of implementation of the revised ceiling i.e. 01.01.2017. In respect of new incumbents who joined the Company post 01.01.2017, it will be effective from the date of appointment.

The additional liability accruing to the Company due to the increased ceiling, is Rs.21776 lakhs pertaining to the period from 1 January, 2017 to 31 March, 2024 ( Rs.3719 lakhs for the year ended 31 March, 2025). The total additional financial impact on revision of pension contribution upto 31^st March 2024 has been given effect in the books of accounts during the year ended 31 March, 2024. Accordingly, employees cost for the current year is not comparable with the corresponding previous year.

In respect of workmen, Company issued Circular dated 24.04.2025 has conveyed the approval for increasing the Companys contribution to the Pension Scheme from existing 7% to 10% of Basic Pay + DA w.e.f. 01.01.2025. Revision of Pension contribution from 7% to 10% of Basic Pay + DA w.e.f 01.01.2025 has been made in respect of workmen who were on the rolls of the Company as on the date of implementation of the revised ceiling.

The additional liability accruing to the Company due to the increased ceiling is Rs.1051 lakhs pertaining to the period from 1 January, 2025 to 31 March, 2025. The total additional financial impact on revision of pension contribution has been given effect in the books of accounts during the year ended 31 March, 2025. Accordingly, employees cost for the current year is not comparable with the corresponding previous year.

Note 49: Clause - 13B

Exceptional item represents Rs.589 Lakhs received on 12^th September 2024 for compensation received from the Office of Special Land Acquisition Officer, Bangalore under KIADB Act, on compulsory acquisition of 315 Sq. Mtrs (0.078 Acres) of HAL land at Beninganahalli Village, Bangalore by M/s Bangalore Metro Rail Corporation Ltd.

Note 49: Clause - 31B

Inventory were damaged due to floods caused by rains during September 2022. Based on the internal technical assessment, the loss of Inventory was estimated as Rs.7856 lakhs. Subsequently, based on the findings as part of the exercise to submit an insurance claim, the actual loss towards HAL owned items reassessed as Rs.1001 lakhs and towards Customer owned and sister division owned items as Rs.5590 lakhs. For the same, the provision was created in the books as redundancy charges of Rs.1001 lakhs and as replacement charges of Rs.5590 lakhs during 2023-24. Based on the insurance claims submitted by the division for HAL owned items, the Insurance Surveyor has assessed loss of Rs.688 lakhs, for which an advance amount of Rs.250 lakhs is received as interim settlement and for the balance receivable from insurer of Rs.438 Lakhs is shown under claims receivable as at 31^st March 2025. Further, during the year, based on the feedback received from OEMs on retraival of the items, the Company has re assessed the loss of inventory as Rs.3664 Lakhs against Rs.5590 lakhs assessed during 2023-24. Hence, Rs.3664 lakhs has been retained under Provision for Replacement and Future Charges and the balance provision of Rs.1926 lakhs towards inventory retrieved back has been reversed during 2024-25. Insurance claims of Rs.688 lakhs admitted by the Insurer, hence redundancy charges for the same amount has been reversed during 2024-25.

Note 49: Clause - 31E

One overhauled Su-30 Aircraft having tail no. SB-182 got crashed during a flight near Ozar, Nashik on 04^th June 2024. HAL has taken an insurance policy for efforts and material used in overhaul, and preferred the claim with the Insurance Company for 14435 lakhs. An amount of Rs.14071 lakhs have been advised for payment by Insurance Company after deducting policy Administration charges. The disbursement has been received by HAL Nasik on 17^th January 2025.

Further, Brought on Charge (BOC) action of SB-182 was not completed and Aircraft was under custody & control of HAL. Board of Investigation (BOI) has been setup for finding the exact reason for the accident of aircraft. Customer is also demanding for the replacement of equivalent Aircraft. As there is no replacement aircraft (Cat-B) available, out of prudence, provision of Rs.84336 lakhs for new aircraft have been created during 2024-25.

Note 49: Clause - 31C

Existing FPQ (arising out of 3^rd PPRC) is up to 2022-23. 4^th PPRC is under progress, due to which the prices for the year 202324 and onwards is yet to be firmed up. Hence pending finalisation of approval for the fixation of FPQ prices for the year 2023-24 and 2024-25, sales have been recognized provisionally based on the indices provided by Air HQ.

During the year ended 31.03.2024, Divisions have recognized FPQ sales by considering the FPQ price of 2022-23, applying indices of 2023-24. For the year ended 31.03.2025, Divisions have recognized FPQ sales by considering the provisional price of 2023-24, and applying indices of 2024-25.

Note 49: Clause - 43C(i)

The Company has provided Performance Related Pay for the year as per the Guidelines issued by Department of Public Enterprises.

Note 49: Clause - 43C(ii)

During the year 2011, C&AG observed that the profits earned from short term deposits is an incidental activity and not a core activity of the Company and inclusion of the interest income from these deposits for PRP computation had led to excess of payment of Rs.4318 lakhs to its executives. Based on HAL reply on difficulties in recovery, the C&AG vide letter dated 11^th November 2024, suggested that the issue of difficulties in retrospective recovery of excess amount of Rs.4318 lakhs paid on account of PRP for the year 2009-10 to 2011-12 be placed before the Board for obtaining waiver and disclose in the financial statements.

In compliance with the C&AG letter, the issue of difficulties in retrospective recovery of excess amount paid on account of PRP for the year 2009-10 to 2011-12 to its Executives was placed before HAL Board in its 488^th Meeting held on 16^th December 2024.

After deliberation, HAL Board approved the waiver from recovery of Rs.4318 lakhs of excess payment of PRP for the year 2009-10 to 2011-12 to its Executives. Necessary accounting treatment has been done in the accounts for the year ended 31.03.2025.

Note 49: Clause - 27

Balance shown under Trade Receivables, Trade Payable, Claims Receivable, Advance against Goods and Services, Capital Advances, deposits and stock/materials lying with sub-contractors/fabricators are under reconciliation. Since the Company is a Government entity under the control of Ministry of Defence (MoD), around 98% of the Companys turnover, around 98% of Trade receivables and Contract Assets, around 97% of Claims receivables and around 99% of the customer advances is with respect to Government and Government related entities. The bills are raised on the customers by the divisions located at various places and reconciliation is carried out on an ongoing basis. However, Management does not expect to have any material financial impact of such pending confirmation/reconciliation.

Note 49: Clause - 21B

An incidence of cyber fraud in the Division was noticed by the Management where the advance payment of Rs.55 lakhs (USD 63,405.44) was transferred to a different bank account due to compromised email received from different domain other than the original source (vendor) and the matter was referred to Cybercrime cell and was also taken up with NIC for further investigation of any breach of NIC server. An amount of Rs.55 lakhs has been transferred to Claim Receivable-Credit Impaired (Note-19) and provision for same has been made in the books of accounts during the financial year 2024-25. Further accounting treatment will be made based on the outcome of investigation in this regard.

Note 49: Clause - 45E(v)

A Section 8 Company has been formed (Under Companies Act 2013) in the name of "Systems Testing and Research for Advanced Materials Foundation (STREAM)". The total project cost Rs.49.68 Crs comprising of Govt. Grant-in-Aid of Rs.36.864 Crs and SPV partners contribution Rs.12.816 Crs. Wherein M/s Microlab will be the lead with equity contribution of 20%, BEML-20%, HAL-20%, Vaidheswaran Industries-10%, & TIDCO-30%. STREAM was incorporated with a vision of creating easy access and addressing the testing needs of domestic defence industry.

STREAM was incorporated on 18^th September 2024. HAL has made an investment of Rs.20 lakhs towards subscription of 20000 Equity shares of Rs.100 each on 18^th November 2024. Further HAL made an investment of Rs.41.25 lakhs towards subscription of 41250 Equity Shares of Rs.100 each, pending allotment, the amount of investment shown under share application money under current financial assets.

(II) We draw attention that the Company is not complying with Regulation 17(1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended, and Section 149(4) of the Companies Act, 2013 pertaining to the required composition of its Board of Directors.

(III) We draw attention to the fact that, due to the absence of the requisite number of Independent Directors, the Company has not been able to reconstitute the Audit Committee and the Nomination and Remuneration Committee. Consequently, the Company is not in compliance with the provisions of Section 177 and Section 178 of the Companies Act, 2013, as well as Regulation 18(1) and Regulation 19(1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. This constitutes a non-compliance with the applicable statutory requirements.

Our opinion is not modified in respect of these matters

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 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 Matters	Response to Key Audit Matters & Conclusion
a) Revenue recognition (Ind AS 115)	Our audit approach consisted testing of the design and operating effectiveness of the internal controls and substantive testing as follows:
The revenue standard establishes a comprehensive framework for determining whether, how much and when revenue is recognized. This involves certain key judgments relating to identification of distinct performance obligations, determination of transaction price of identified performance obligation, the appropriateness of the basis used to measure revenue recognized over a period. Additionally, the standard mandates robust disclosures in respect of revenue and periods over which the remaining performance obligations will be satisfied subsequent to the balance sheet date.	• Evaluated the appropriateness of the disclosures provided under the revenue standard and assessed the completeness and mathematical accuracy of the relevant disclosures.
	• Evaluated the design of internal controls relating to implementation of the revenue standard.
	• Selected a sample of continuing and new contracts, and tested the operating effectiveness of the internal control, relating to identification of the distinct performance obligations and determination of transaction price. We carried out a combination of procedures involving enquiry and observation, reperformance and inspection of evidence in respect of operation of these controls.
	• Selected a sample of continuing and new contracts and performed the following procedures.
	• Read, analysed and identified the distinct performance obligations in these contracts.
	• Compared these performance obligations with that of identified and recorded by the group.
	• Considered the terms of the contracts to determine the transaction price including any variable consideration to verify the transaction price used to compute revenue and to test the basis of estimation of the variable revenue.
	• Examination of the correspondence relating to price revision and ascertained the reasonableness of the estimates.
	• Sample of revenues disaggregated by type and service offerings was tested with the performance obligations specified in the underlying contracts.
	Due to detailed procedures, a portion of is recognised based on the most likely amount based on past experience and the consistent practices followed. We have verified the procedures revenue recognition including unbilled revenue.
b) Impairment of Trade Receivables
In respect of receivables from Government the Company does not make any impairment provision based on past experience.	We have verified the
The amount involved being significant balance and management judgment we consider this as a Key Audit Matter	i) Effectiveness of internal controls in place and procedures followed in identifying the recoverability of long outstanding dues.
	ii) The procedures and follow-up actions in ascertaining the impairment of receivables.
	Our audit procedures include evaluation of provisions made for impairment in earlier years. We also made test checks of invoice wise collection details provided made in respect of in the five preceding financial years and we concluded the Management assumption is reasonable
c) Contract Asset
Contract asset represents the revenue recognized but yet to be invoiced to the customer.	Contract Assets represents the Companys right to receive the consideration in exchange for the Goods or Services that the Company has transferred to the customer, when that right is conditioned on something other than passage of time.
d) Liquidated damages
The Companys contract with the customers has standard clause for liquidated damages for delayed delivery. The Companys product has extended period of manufacturing; design approvals and inspection by customer at various stages which result in delay in certain cases leading to liquidated damages. The liquidated damages recognized being significant in the statement of profit and loss, is considered a key audit matter in our opinion.	We have verified the controls, period of delay, the expected days of delay as on 31.03.2025 and also the calculation for the liquidated damages recognized and found the system followed and calculation to be in order.
e) Work - in - Progress (WIP) - Inventories	Our Audit Procedures generally include review of
Inventories include Work in Progress which have been physically verified by the Management based on physical verification instructions.	• Physical Verification instructions
	• Physical verification reports
	• Roll back procedures
	• Examining the basis of valuation on a test check basis
	Currently, the verification of WIP is done on annual basis. The division wise WIP inventory was submitted from Divisions and consolidated at H.O. level.
	Based on the above audit procedures we conclude that the valuation of WIP is proper
f) Pay Refixation
Revision of pay scales of executives and workmen, with effect from 01.01.2017 was implemented in accordance with the guidelines issued by Department of Public Enterprises vide OM dated 03.08.2017 for Executives and in accordance with the Wage Agreement entered into between Management and Employees Union representative in 2019-20 in respect of Workmen.	For Workmen revision of pay scales, we have verified the calculations, Interim Stay granted by Honble High Court of Karnataka.
	For Executives revision of pay scales, we have verified the calculations, Order passed by Honble High Court of Karnataka.
On an interpretation on pay refixation and pursuant to the directives of the Administrative Ministry, the pay fixation to be revised and the excess amount paid is to be recovered from the employees. Based on the directives Company issued a Circular dated 24.07.2021 and the communication dated 26.07.2021 for recovery of the excess amount.	There is no major observation.
While so, the Employees Union and Officers Association have filed Writ Petition with Honble High Court of Karnataka to stay recovery of excess amount of salary paid by the Company. The Hble High court given verdict in favour of Officers Associations by setting aside the Circular dated 24.07.2021 and the communication dated 26.07.2021 issued by the Management. The order of the Hble High Court in favour of officers was put up to the Board in its 490th Meeting held on 12.02.2025. Board has noted the judgement of the Hble High Court and accorded approval to abide by the Court order. Accordingly, the differential amount withheld by the Management in respect of ex-officers has to be released /refunded to the concerned ex-officers/Nominees along with applicable interest.
As per the Board approval, one increment impact amount of Rs.2712 lakhs recovered from the retired/deceased/ resigned employees has been paid during 2024-25. Further, in respect of officers an amount of Rs.18565 lakhs credited to salaries and wages in the earlier years and kept under claims receivable has been reversed during 2024-25. Accordingly, employees cost for the current year is not comparable with the corresponding previous year.
In respect of workmen, the order is awaited, hence, reduction of salaries and wages in respect of workmen continued for the year ended 31st March 2025 and Rs.2444 lakhs effect given in the books towards this excess amount credited to salaries and wages in respect of workmen has been shown under claims receivable (Gross) of Rs.16390 lakhs as at 31st March 2025 (previous year: Rs.14282 lakhs).
Based on the final verdict, decision in respect of workmen will be taken and suitable effect will be carried out in the accounts.
g) Revision of Contribution to Pension Scheme
Ministry vide OM dated 12.07.2023 has conveyed the approval for increasing the Companys contribution to the Pension Scheme of Executives from existing 7% to 10% of Basic Pay + DA w.e.f. 01.01.2017. Revision of Pension contribution from 7% to 10% of Basic Pay + DA w.e.f 01.01.2017 has been made in respect of executives who are on the rolls of the Company as on the date of implementation of the revised ceiling i.e. 01.01.2017. In respect of new incumbents who joined the Company post 01.01.2017, it will be effective from the date of appointment.	We have verified the calculations and there is no major observations.
The additional liability accruing to the Company due to the increased ceiling, is Rs.21776 lakhs pertaining to the period from 1 January, 2017 to 31 March, 2024 ( Rs.3719 lakhs for the year ended 31 March, 2025). The total additional financial impact on revision of Pension contribution upto 31st March 2024 has been given effect in the books of accounts during the year ended 31st March, 2024. Accordingly, employees cost for the current year is not comparable with the corresponding previous year.
In respect of workmen, Company issued Circular dated 24.04.2025 has conveyed the approval for increasing the Companys contribution to the Pension Scheme from existing 7% to 10% of Basic Pay + DA w.e.f. 01.01.2025. Revision of Pension contribution from 7% to 10% of Basic Pay + DA w.e.f 01.01.2025 has been made in respect of workmen who were on the rolls of the Company as on the date of implementation of the revised ceiling.
The additional liability accruing to the Company due to the increased ceiling is Rs.1051 lakhs pertaining to the period from 1st January, 2025 to 31st March, 2025. The total additional financial impact on revision of Pension contribution has been given effect in the books of accounts during the year ended 31st March, 2025. Accordingly, employees cost for the current year is not comparable with the corresponding previous year.
h) Impairment Assessment of Intangible Assets and Intangible Assets Under Development	Our audit procedures included, among others:
The Company has recognised significant intangible assets comprising software, documentation charges, development expenditure, and license fees. In addition, the Company also has intangible assets under development representing ongoing development charges.	• Understanding and evaluating the Companys policy and procedures for identifying and assessing impairment indicators for both recognised intangible assets and those under development.
These assets are recognised and measured in accordance with Ind AS 38 - Intangible Assets and are subject to impairment testing under Ind AS 36 - Impairment of Assets.	• Reviewing the functioning and documentation of the Impairment Review Committee, including its evaluation of project status, economic viability, and accounting recommendations.
The assessment of impairment for both completed intangible assets and those under development involves significant management judgment. This includes evaluating technical feasibility, future economic benefits, project viability, useful life estimations, and expected completion and commercialisation timelines for assets under development.	• Reviewing the basis for managements judgments and estimates, including technical reviews, projected benefits, and cost-to-completion assumptions for selected projects.
The Company has instituted an Impairment Review	• Verifying whether the impairment testing methodology was in accordance with Ind AS 36 and that capitalization criteria under Ind AS 38 were met for assets under development.
Committee, which conducts a structured evaluation of all HAL-funded R&D projects. The review includes analysis of approvals, project status, expenditure incurred, estimated completion costs, future economic benefits, and other relevant technical and financial parameters.	• Evaluating the adequacy and appropriateness of disclosures in the financial statements relating to intangible assets and their impairment assessment.
Based on this review, the Committee recommends appropriate accounting actions such as recognition of impairment, amortisation, or deferral of costs.	Based on the audit procedures performed, we found that the impairment assessment process was reasonable, and the judgments and estimates made by the Management were supported by appropriate documentation.

Information Other than the Financial Statements and Auditors Report Thereon

The Companys Board of Directors is responsible for the other information. The other information comprises the information included in the Annual Report, but does not include the Consolidated Financial Statements, Standalone Financial Statements and our Auditors Report thereon. The Companys Annual report is expected to be made available to us after the date of this Auditors Report.

Our opinion on the Standalone Financial Statements does not cover the other information and, we do not express any form of assurance conclusion thereon.

In connection with our audit of the Standalone Financial Statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the Standalone Financial Statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibility 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 specified under Section 133 of the Companies Act,2013. 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 Board of Directors 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 Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The Board of Directors is also responsible for overseeing the Companys financial reporting process.

Auditors Responsibilities for the Audit of the Standalone Financial Statements

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

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional scepticism throughout the audit.

We also:

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

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control. ^•

• 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.

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 Standalone 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 Standalone 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.

Other Matters

The Standalone Financial Statements also include the audited Standalone Financial Statements of 29 Divisions of the Company, whose financial statements/financial information reflect the total assets of 108,87,946 lakh as at 31^st March, 2025, total income of Rs.33,54,645 lakhs and Net profit before Tax of Rs.10,82,001 lakhs for the year ended 31^st March 2025, as considered in the Standalone Financial Statements which have been audited by the respective independent auditors.

The Independent Auditors Reports on the Standalone Financial Statements of these Divisions have been furnished to us, and our opinion in so far as it relates to the amounts and disclosures included in respect of these Divisions, are based solely on the report of such auditors and the procedures performed by us are as stated in paragraph above.

The standalone financial statements of the Company for the year ended March 31, 2024, quarter ended June 30, 2024, included in these standalone financial statements, have been audited by the predecessor auditors, M/s A. John Moris & Co., Chartered Accountants, who has expressed an unmodified opinion vide their audit reports dated 16^th May, 2024, 14^th August, 2024 respectively.

Our opinion is not modified in respect of these matters.

Report on Other Legal and Regulatory Requirements

1. 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 return adequate for the purpose of an audit have been received from the branches not visited by us.

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 have been sent to us and have been properly dealt with 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 and with the returns received from the branches not visited by us.

e) In our opinion, the aforesaid Standalone 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 circular NO. GSR 463(E) dated 05^th June 2015 issued by the Ministry of Corporate Affairs, Government of India, the Company being Government Company, is exempt from the provisions of section 164(2) of the Act regarding disqualification of Directors.

g) Ministry of Corporate Affairs vide notification no 1/2/2014-CL-V dated 23^rd February 2018 has exempted the companies engaged in defence production to the extent of application of relevant Accounting Standard on Segment Reporting. In view of the above, no disclosure is made by the Company as required by Ind AS 108. Subject to the above, we state that, in our opinion, the aforesaid Standalone Financial Statements comply with the Accounting Standards specified under Section 133 of the Act.

h) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure A". Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Companys internal financial controls over financial reporting.

i) As per Notification number G.S.R. 463 (E) dated 5^th June, 2015 issued by Ministry of Corporate Affairs, section 197 of the Act regarding remuneration to director is not applicable to the Company, since it is a Government Company.

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

i. The Company has disclosed the impact of pending litigations on its financial position in its Standalone Financial Statements as on 31.03.2025 -Refer Note 49 (2a), 49 (2b), 49 (20), 49 (21A), 49 (21B), 49 (43G), to the 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 does not have any derivative contracts.

iii. There has been no delay in transferring amounts required to be transferred 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, 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 persons or entities, 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, no funds have been received by the Company from any persons or entities, 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; and

(c) Based on such audit procedures we have considered reasonable and appropriate in the circumstances; nothing has come to the notice that has caused us to believe that the representations under sub-clause (i) and (ii) contain any material misstatement.

v. (a) The final dividend paid by the Company during the year, in respect of the same declared for the previous year

is in accordance with Section 123 of the Act to the extent it applies to payment of dividend.

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

(c) The Company has not proposed any final dividend up to the date of our report.

vi. Based on our examination which included test checks, performed by us on the Company, the Company has used accounting software for maintaining their respective books of account for the period ended 31^st March 2025, which has a feature of recording audit trail (edit log) facility. The audit trail facility has been operating throughout the period 1^st April 2024 to 31^st March 2025 for all relevant transactions recorded in the software. Further, during the course of our audit we did not come across any instance of audit trail feature being tampered with.

Based on our examination which included test checks, performed by us on the Company, and information provided to us, the Company is preserving the audit trail as per the statutory requirements for record retention as per proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014, as amended.

2. 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 Companies Act, 2013 we give in the "Annexure-B" statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

3. As required by section 143(5) of the Act, we give in "Annexure C" a statement on the matters specified by the Comptroller and Audit General of India for the Company.

	FOR GUPTA NAYAR & CO.
	Chartered Accountants
	Firm Reg. No. 008376N
	Nandlal Agarwal
	Partner
Place: Bengaluru	M No. 091272
Date: 14.05.2025	UDIN: 25091272BMSCAJ4838

ANNEXURE "A" TO THE INDEPENDENT AUDITORS REPORT

(Referred to in paragraph 1(h) under Report on Other Legal and Regulatory Requirements section of our report to the Members of HINDUSTAN AERONAUTICS LIMITED of 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 Standalone Financial Statements of HINDUSTAN AERONAUTICS LIMITED ("the Company") as of 31 March, 2025 in conjunction with our audit of the Standalone Financial Statements of the Company for the year ended on that date.

Managements and Board of Directors Responsibility for Internal Financial Controls

The Companys Management and the Board of Directors are responsible for establishing and maintaining internal financial controls with reference to Standalone 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 with reference to financial statements, issued by the Institute of Chartered Accountants of India (ICAI). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of 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 Standalone Financial Statements based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of internal financial controls with reference to financial statements (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, with reference to financial statements. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls with reference to Standalone Financial Statements was established and maintained and if such controls operated effectively in all material respects.

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

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

Meaning of Internal Financial controls with reference to Standalone Financial Statements

A companys internal financial controls 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 controls with reference to financial statements include those policies and procedures that

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

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of 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 Financial Statements, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls with reference to Financial Statements to future periods are subject to the risk that the internal financial control over financial reporting 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 over financial reporting and such internal financial controls with reference to Financial Statements were operating effectively as at March 31, 2025, based on the internal control over financial reporting criteria established by the Company, considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial controls with reference to financial statements issued by ICAI.

Further, an incident of cyber fraud in Kanpur division was noticed by the Management where the advance payment of Rs.55 lakhs (63405.44 USD) was transferred to a different bank account due to compromised email received from different domain other than the original source (vendor). The FIR was registered with cyber crime cell and matter is still under investigation.

The Kanpur Division does not have mapping of incoming emails and creating a white list of all authentic vendors so that all incoming emails are validated.

Our opinion is not modified in respect of this matter

	FOR GUPTA NAYAR & CO.
	Chartered Accountants
	Firm Reg. No. 008376N /
	Nandlal Agarwal
	Partner
Place: Bengaluru	M No. 091272
Date: 14.05.2025	UDIN: 25091272BMSCAJ4838

ANNEXURE "B" TO THE INDEPENDENT AUDITORS REPORT (Referred to in paragraph 2 under Report on Other Legal and Regulatory Requirements Rs.section of our report to the Members of HINDUSTAN AERONAUTICS LIMITED of even date)

In terms of the information and explanations sought by us and provided to us by the Company and the books of account and records examined by us in the normal course of audit and to the best our knowledge and belief we state that;

(i) In respect of the Companys property, plant and equipment, right-of-use assets and intangible assets

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

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

(b) The Company has a programme of physical verification of these property, plant and equipment so as to cover all the assets once in every five years, which in our opinion is reasonable having record to the size of the company division and nature of its assets. Pursuant to the programme, certain property, plant and equipments and right of use assets were due for verification during the year and were physically verified by the Management during the year. According to the information and explanations given to us no material discrepancies were noticed on such verification.

(c) The title deeds of all the immovable properties (other than properties where the Company is the lessee and the lease agreements are duly executed in favour of the lessee) disclosed in the financial statements are held in the name of the Company, except the following:

Description of item of property	Gross Carrying value	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 76.475 acres	5	Various Persons, Bangalore	N/A	1950s Approx.	Compendium Error. Estate department in possession of Hand book with land acquired in various survey numbers called as Compendium. Few title documents are not available as per the compendium.
Land - 39.32 Acres	286	Lucknow Development Authority	N/A	19.05.1986	The land is in the possession of the Division. However, same is to be registered in the name of the Division by Lucknow Development Authority.
Land at Kasbe Sukena Railway Station: Approx. 196.22 Acres of rail siding		Government of Maharashtra	No	Since Inception of Nasik Division (1964)	196.22 Acre Land being Railway siding land is not in use by HAL & to be returned to Appropriate authority of State Government. Division is continuously following up the matter.
Land at Ojhar : Approx. 69.477 Acres of land given by State Government.		Government of Maharashtra	No	Since Inception of Nasik Division (1964)	Matter of 69.477 Acre of Land is being followed with Sub Divisional Magistrates Niphad for making Indenture.
Land at Ghaukhera- Kanpur 16.81 acres	0	Exhibited as Audhyogik krishik, land in Govt. record	N/A	13-12-1965	Land acquired and handed over to HAL by District Land Acquisition Officer, case filed with SDM for transfer of name in title deed.
Land at Chak kuriyan-Kanpur 7.92 acres	0	Not appearing in govt. record	N/A	22-12-1965	Award & Possession certificate in the name of HAL
Land at Dahli Sujanpur-Kanpur 3.11 acres	0	Appearing as Vayuyaan Colony	N/A	15-12-1965
Land-Kanpur 401.19 acres	4	No title deed	N/A	Since inception 1964-65	Possession of the immovable property was handed over to Hindustan Aeronautics
Buildings	35				Limited (HAL) by district Land Acquisition Officer and Indian Air Force, therefore no title deed is required to be executed under Government Grants Act, 1895.(Section 2 Government Grants are exempted from the operation of the Transfer of Property Act). Property held since beginning but date not available, award & possession certificate in the name of HAL 346.89 acres of land. The remaining 54.3 acres of land is transferred to HAL by IAF by way of transfer of land
Land - 7.115 Acres		Govt. of India	NA	31-03-1969	7.115 acres of Land received from Army by Barrackpore division in exchange of 5 acres of Land at Bangalore, which was received free of cost from State Government before 31st March 1969. Therefore, no title deed is required to be executed under Government Grant Act, 1895 (Section 2 Government Grants are exempted from operation of the Transfer of Property Act)
Land - 282.4 acers		Various persons, Korwa Village	NA	26-1 1-1982	As informed vide UP Govt ltr No. 606/B/DT 08.05.1990 in the instant case sale deed or gift deed is not necessary. However the land is in the possession of the division.

(d) The Company has not revalued any of its Property, Plant and Equipment and intangible assets during the year.

(e) No proceedings have been initiated during the year or are pending against the Company as of 31^st March 2025 for holding any benami property under Benami Transaction (Prohibition) Act, 1988 (has amended in 2016) and rules made thereunder.

(ii) (a) The Management has conducted physical verification of inventory at reasonable intervals and no discrepancies of 10% or more in the aggregate for each class of the inventory were noticed.

(b) The Company has been sanctioned working capital limits in excess of Rs.5 crore, in aggregate, during the year from banks on the basis of security of current assets. The quarterly stock statement filed by the Company and the books of accounts are in agreement. Refer note 35C of note 49 to financial statements.

(iii) (a) The Company has not provided any loans or advances in the nature of loan or stood guarantee or provided securities to any other entities during the year. Hence reporting under clause (iii)(a) of the Order is not applicable.

(b) In our opinion, the investment made during the year and the terms and conditions of the grant of loans during the year are, prima facie, not prejudicial to the Companies Interest.

(c) The repayment of principal and payment of interest for employees Rs.loan has been stipulated and the repayments are regular.

(d) There are no overdue amount for more than ninety days.

(e) The Company has not granted any loan or renewed or extended or fresh loans granted to settle the over dues of existing loans given to the same parties. Hence, reporting under clause 3(iii)(e) of the Order is not applicable.

(f) The Company has not granted any loans or advances in the nature of loans either repayable on demand or without specifying and terms or period of repayment during the year. Hence, reporting under clause 3(iii)(f) is not applicable.

(iv) In terms of Circular No. GSR 463 (E) dated 5^th June 2015 issued by Ministry of Corporate Affairs, Government of India, the Company being a Government Company engaged in Defence production is exempt from Section 185 and 186 of Companies Act 2013 and hence reporting under clause 3(iv) is not applicable.

(v) The Company has not accepted any deposits or amount which are deemed to be deposits. Hence, reporting under Clause 3 (v) of the order is not applicable.

(vi) We have broadly reviewed the books of accounts relating to materials, labour and other items of cost maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under Section 148 (1) of the Act and we are of the opinion that prima facie the prescribed accounts and 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) The Company is regular in depositing undisputed statutory dues, including Goods and Service Tax, Provident Fund,

Employees Rs.State Insurance, Income Tax, Sales Tax, Service Tax, Duty of Customs, Duty of Excise, Value Added Tax, Cess, Goods and Service Tax and any other Statutory Dues to the appropriate authorities and there were no undisputed amounts payable which were in arrears as at 31^st March 2025 for a period of more than six months from the date they became payable.

(b) Details of dues of Goods and service Tax, Income Tax or Sales Tax or Service Tax or Duty of Customs or Duty of Excise or Value Added Tax, and Cess that have not been deposited as on 31^st March 2025 on account of disputes are given below:

Sales Tax:

Assessment Year	Amount (in lakhs)	Appeal by	Forum Where Dispute is pending
2015-16	9	by Company	Asst Commissioner Central Tax
2016-17	3	by Company	Asst Commissioner Central Tax
2010-11	372	HAL Lucknow	Appellate Tribunal Lucknow.
2011-12	1432	HAL Lucknow	High Court
2012-13	4156	HAL Lucknow	High Court
2013-14	4859	HAL Lucknow	High Court
2014-15	8310	HAL Lucknow	High Court
2015-16	15268	HAL Lucknow	Appellate Tribunal Lucknow.
2016-17	14326	HAL Lucknow	Appellate Tribunal Lucknow.
2017-18	4602	HAL Lucknow	Appellate Tribunal Lucknow.
2004-05 to 2017-18	30273	Sales Tax/ Entry Tax	Commissioner(Appeals)/Tribunal
2005-06	102	HAL Barrackpore Division	WB Commercial Taxes Appellate and Revisional Board, Kolkata
2006-07	448	HAL Barrackpore Division	Do
2007-08	348	HAL Barrackpore Division	Do
2008-09	849	HAL Barrackpore Division	Do
2016-17	83	HAL Barrackpore Division	West Bengal Taxation Tribunal, Kolkata

Service Tax

Assessment Year		Amount (in lakhs)		Appeal by	Forum Where Dispute is pending
2008-09		387		Service Tax Department	Before Tribunal Bangalore
2013-14 to 2016-17		136		Aircraft Division	Before Tribunal Bangalore
April 2017 to June2017		6		Aircraft Division	Appellate Tribunal, Bangalore
August 2002 to March 2003		6		Central Excise Act 1944	CESTAT, Bangalore
April 2003 to March 2004		26		Central Excise Act 1944	CESTAT, Bangalore
April 2004 to March 2005		63		Central Excise Act 1944	CESTAT, Bangalore
April 2005 to March 2006		78		Central Excise Act 1944	CESTAT, Bangalore
April 2006 to March 2007		123		Central Excise Act 1944	CESTAT, Bangalore
April 2007 to March 2008		128		Central Excise Act 1944	CESTAT, Bangalore
April 2008 to March 2009		18		Central Excise Act 1944	CESTAT, Bangalore
April 2009 to March 2010		1		Central Excise Act 1944	CESTAT, Bangalore
April 2010 to March 2011		1		Central Excise Act 1944	CESTAT, Bangalore
August 2013 to March 2017		13		Central Excise Act 1944	CESTAT, Bangalore
April 2011 to March 2012		74		Finance Act,1994	CESTAT
2009-10 and 2010-11		84		Finance Act,1994	CESTAT
Oct 2007 to March 2009		120		Finance Act,1994	CESTAT
2012-13 Till 2017-18		55		HAL FMD	Commissioner of Central Tax (Appeals) East Commissionerate Domlur
Assessment Year	Amount (in lakhs)		Appeal by			Forum Where Dispute is pending
2007-08	310		Service Tax			ST/134/10-MUM Dated 23.03.2010 17/ST/2009.Matter Decided by CESTAT Mumbai In HAL favour
2008-09	248		Service Tax			ST/134/10-MUM Dated 23.03.2010 17/ST/2009. Matter Decided by CESTAT Mumbai In HAL favour
2012-13, 2013-14 and 2014-15	1123		Service Tax			ST/85782/2022-DB Dated 25.03.2022-Appeal Disposed on 20.03.2024 and Reminded Back to Lower Authority
2015-16	7		Service Tax			Appeal filed before Honble CESTAT. Order Awaited
2016-17	5		Service Tax			Appeal filed before Honble CESTAT. Order Awaited
2017-18	0		Service Tax			Appeal filed before Honble CESTAT. Order Awaited
2012-13	9		Service Tax			Appeal filed before Honble CESTAT. Order Awaited
2013-14	7		Service Tax			Appeal filed before Honble CESTAT. Order Awaited
2014-15	8		Service Tax			Appeal filed before Honble CESTAT. Order Awaited
2015-16	1207		Finance Act,1994			Pending Before the Commissioner of CGST and Central Exercise, Audit Commissionerate, Bhubaneswar
2016-17 and 2017-18	394		Levy of Service Tax			CESTAT EZY At Kolkata
2005-06 to 2009-10	385		HAL			CESTAT - Hearing Awaited
2010-11	38		HAL			CESTAT - Hearing Awaited
2011-12	340		HAL			CESTAT - Hearing Awaited
2010-11	38		HAL			CESTAT - Hearing Awaited
2015-16	280		HAL			CESTAT - Hearing Awaited
2016-17 and 2017-18	242		HAL			CESTAT - Hearing Awaited
2014-15 to 2017-18 (upto June 2017)	12		HAL			CESTAT - Hearing Awaited
2004-05 to 2008-09	426		HAL Lucknow			Central Excise and Service Tax Appellate Tribunal, New Delhi.
Various Years	166		HAL
2005-06	62		Service Tax Act			CESTAT/Tribunal
2009-10	282		Service Tax Act
2016-17	13974		Service Tax Act, 1994			CESTAT/Tribunal
2017-18	1904		Service Tax Act, 1994			CESTAT/Tribunal
2019-20	326		Service Tax Act, 1994			CESTAT/Tribunal
2012-13	42		HAL Barrackpore Division			CESTAT
October 2012-Feb 2017	23		Chapter V of Finance Act, 1994			Commissionerate of GST Bangalore
June 2013 to June 2017	1		Service Tax			Commissioner

GST

Assessment Year	Amount (in lakhs)	Appeal by	Forum Where Dispute is pending
2017-18	2046	by Company	HAL has filed Appeal with Appellate Authority (Joint Commissioner of CGST).
2018-19	165	by Company	GST Department, Begumpet.
2020-21	179	by Company	GST Department, Begumpet.

Customs Duty

Assessment Year	Amount (in lakhs)	Appeal by	Forum Where Dispute is pending
2018-19	945	Aircraft Division	Before Tribunal Bangalore
2015-16 TO 2019-20	4098	The Company	Differential Duty on Import of Goods -CESTAT
2012-13	64	Customs Act, 1962	CESTAT
2012-13	10289	Customs Act, 1962	CESTAT
2012-13	95	Customs Act, 1962	CESTAT
2012-13	13121	Customs Act, 1962	CESTAT
2016-20	264	Customs Act, 1962	CESTAT
2017-18	22	Customs Act, 1962	CESTAT
2017-18	3674		CESTAT Mumbai
2017-18 to 2022-23	25477	Custom Duty	CESTAT
2022-23	93	Customs Act	CESTAT Delhi
December, 2018 to November, 2019	160	Section 28 of the Customs Act, 1962	CESTAT, Bangalore
2018-19 and 2019-20	1751	Section 28 of the Customs Act, 1962	CESTAT, Bangalore
2018-19 and 2019-20	699		Appeal is yet to be filled
2024-25	3665	by Company	Amount Pertains to short levy of IGST due to misclassification of HSN Code. Demand and Show Cause Notice Received. Appeal is yet to be filled

Income Tax

Assessment Year	Amount (in lakhs)	Appeal by	Forum Where Dispute is pending
2017-18	4248	by Company	Commissioner of appeals
2022-23	21923	by Company	Commissioner of appeals
2023-24	21015	by Company	Commissioner of appeals
2019-20	28442	by Company	Income Tax Appellate Tribunal
2008-09 to 2018-19	206	by Company	Rectification/correction is pending

Others

Assessment Year	Amount (in lakhs)	Appeal by	Forum Where Dispute is pending
April 2019 to Sept 2020	16.26	The Company	Arrears of ESI Contribution - ESIC Regional Director
2001-02 to 2024-25	2855.63		Bombay High Court
2001-02 to 2024-25	510.33		Bombay High Court
2003 Onwards (Employees and Contractors)	378	by HAL

(viii) There were no transactions relating to previously unrecorded income that 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) 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 wilful defaulter by any bank or financial institution or Government or any Government authority.

(c) The Company has not taken any term loan during the year and there are no outstanding term loans at the beginning of the year and hence, reporting under clause 3(ix)(c) of the Order is not applicable.

(d) On an overall examination of the 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) on an overall examination of the financial statement of the Company, the Company has not taken any funds from any entity or person on account of or to meet the obligation of its subsidiaries.

(f) The Company has not raised any loans during the year and hence reporting under clause 3(ix)(f) of the order is not applicable.

(x) (a) The Company has not raised moneys 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) During the year, an incidence of cyber fraud in the Kanpur division was noticed by the Management where the advance payment of Rs.55 lakhs (USD 63,405.44) was transferred to a different bank account due to compromised email received from different domain other than the original source (vendor) and the matter was referred to Cybercrime cell and was also taken up with NIC for further investigation of any breach of NIC server. As disclosed in Clause 21B of Note 49, an amount of Rs.55 lakhs has been transferred to Claim Receivable-Credit Impaired and provision for same has been made in the books of accounts during the financial year 2024-25.

(b) Report under sub-section (12) of section 143 of the Companies Act is not required to file in Form ADT-4 as prescribed under rule 13 of the Companies (Audit and Auditors) Rules, 2014 with the Central Government, during the year and up to the date of this report.

(c) As per the information and explanations provided to us, no whistle blower complaints are received during the year by the Company.

(xii) The Company is not a Nidhi Company and hence complying with the provisions of the Nidhi Rules, 2014 does not arise.

(xiii) All transactions with the related parties are in compliance with Sections 177 and 188 of the Companies Act, 2013 where applicable and the details have been disclosed in the Financial Statements etc, as required by the applicable Accounting Standards.

(xiv) (a) In our opinion, the Company has an adequate internal audit system commensurate with the size and nature of its business.

(b) We have considered, the internal audit reports for the year under audit, issued till date to the divisions during the year and till date.

(xv) The Company has not entered into any non-cash transactions with Directors or persons connected with him.

(xvi) a) The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934. Hence reporting under clause 3(xvi)(a), (b) and (c) of the Order is not applicable.

b) In our opinion, there is no core Investment Company within 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) The Company has not incurred cash losses during the financial year covered by our audit and the immediately preceding financial year.

(xviii) There has been no resignation of the Statutory Auditor of the Company during the Year.

(xix) On the basis of the financial ratios, ageing and expected dates of realisation of financial assets and payments of financial liabilities, other information accompanying the financial statements and 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 indicating that Company is not capable of meeting its liabilities existing at the date of balance sheet as and when they fall due within a period of one year from the balance sheet date.

We, however, state that this is not an assurance as to the future viability of the Company.

We further state that our reporting is based on the facts up to the date of the audit report and we neither give any guarantee nor any assurance that all liabilities falling due within a period of one year from the balance sheet date, will get discharged by the Company as and when they fall due.

(xx) a) 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, 2013 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) There is no unspent amount towards Corporate Social responsibility (CSR) on ongoing projects requiring a transfer to a special account in compliance with provisions of sub section (6) of section 135 of the said Act.

	FOR GUPTA NAYAR & CO.
	Chartered Accountants
	Firm Reg. No. 008376N
	Nandlal Agarwal
	Partner
Place: Bengaluru	M No. 091272
Date: 14.05.2025	UDIN: 25091272BMSCAJ4838

ANNEXURE - "C TO THE INDEPENDENT AUDITORS REPORT

(Referred to in paragraph 3 under Report on Other Legal and Regulatory Requirements Rs.section of our report to the Members of HINDUSTAN AERONAUTICS LIMITED of even date)

Report on directions issued by the Comptroller and Auditor General of India under Section 143(5) of the Companies Act, 2013

S. No. Areas Examined	Observation/Finding
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 ERP System in place and the accounting entries are generated in the System as and when transaction is made. The ERP system is not linked to Internet and the modules in the ERP system are not interlinked. In view of the same some Journal Entries are required to be made to account for certain adjustment/correction derived basically from the System and then fed in to the system through required accounting process with a maker and checker concept to ensure the integrity of the System.
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	Not applicable
3 Whether funds (grants/subsidy etc.) received/ receivable for specific schemes from Central/ State Government or its agencies were properly accounted for/utilized as per its term and conditions? List the cases of deviation.	Not applicable

 

	FOR GUPTA NAYAR & CO.
	Chartered Accountants
	Firm Reg. No. 008376N
	Nandlal Agarwal
	Partner
Place: Bengaluru	M No. 091272
Date: 14.05.2025	UDIN: 25091272BMSCAJ4838