TO THE MEMBERS OF
BHARAT ELECTRONICS LIMITED
Report on the Audit of the Standalone Financial Statements Opinion
We have audited the accompanying standalone financial statements of BharatElectronics Limited (the Company) which comprise the Balance Sheet as at31 March 2019 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 thenended and notes to financial statements including a summary of significant accountingpolicies and other explanatory information in which are included the Returns for the yearended on that date audited by the branch auditors of the companys branches atGhaziabad Panchkula and Kotdwara Pune Navi Mumbai and Machilipatnam.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone information required by the Companies Act 2013(the Act) in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India of the state ofaffairs of the company as at 31 March 2019 and its profit (including other comprehensiveincome) the changes in equity and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditors Responsibilities for the Audit ofthe Standalone Financial Statements section of our report. We are independent of theCompany in accordance with the Code of Ethics issued by the Institute of CharteredAccountants of India (ICAI) together with the ethical requirements that are relevant toour audit of the standalone financial statements under the provisions of the CompaniesAct 2013 and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtainedis to provide a basis for our opinion on thestandalone financial statements.
Key Audit Matters
Key audit mattersstatementsare thosegive the matters that in our professionaljudgment were of most significance in our audit of the standalone financial statements ofthe current period. These matters were addressed in the context of our audit of thestandalone financial statements as a whole and in forming our opinion thereon and we donot provide a separate opinion on these matters. We have determined the matters describedbelow to be the key audit matters to be communicated in our report.
Information Other than the Standalone Financial Statements and Auditors ReportThereon
The Companys Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the Boards Report including itsannexures Corporate Governance and shareholders information but does not include thestandalone Financial Statements and our auditors report thereon. Our opinion on thestandalone financial statements does not cover the other information and we do not expressany form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained 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 materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the StandaloneFinancial Statements
The Companys Board of Directors is responsible for the matters stated in section134(5) of the Companies Act 2013 with respect to the preparation of these standalonefinancial statements that give a true and fair view of the financial position financialperformance total comprehensive income changes in equity and cash flows of the Companyin accordance with the accounting principles generally accepted in India including theaccounting standards specified under Section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding the assets of the Company and for preventing and detecting fraudsand other irregularities; selection and application of appropriate accounting policies;making judgments and estimates that are reasonable and prudent; and design implementationand maintenance of adequate internal financial controls that were operating effectivelyfor ensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone financial statements that give a true andfair view and are free from material misstatement whether due to fraud or error.
In preparing the standalone financial statements management is responsible forassessing the Companys ability to continue as a going concern disclosing asapplicable matters related to going concern and using the going concern basis ofaccounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.
The Board of Directors are also responsible for overseeing the Companys financialreporting process.
Auditors Responsibility for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditors report that includes our opinion. Reasonableassurance is a high level of assurance but is not a guarantee that an audit conducted inaccordance with SAs will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these standalone financial statements. As part of an auditin accordance with SAs we exercise professional judgment and maintain professionalskepticism throughout the audit. We also :
Identify and assess the risks of material misstatement of the standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.
Obtain an understanding of internal control relevant to the audit in order todesign 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 whetherthe Company has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by the management.
Conclude on the appropriateness of managements use of the going concernbasis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompanys ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditors report to therelated disclosures in the standalone financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditors report. However future events or conditionsmay cause the Company to cease to continue as a going concern.
Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.
Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial quantitative statements may be influenced.materiality and qualitative factors in (i) planning the scope of our audit work and inevaluating the results of our work; and (ii) to evaluate the effect of any identifiedmisstatements in the financial statements.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditors report unless law or regulation precludes public disclosure aboutthe matter or when in extremely rare circumstances we determine that a matter should notbe communicated in our report because the adverse consequences of doing so wouldreasonably be expected to outweigh the public interest benefits of such communication.
We have considered the audit report of 6 branches audited by branch auditors in formingour opinion on the standalone financial statements.
We did not audit the financial statements of six branches included in the standalonefinancial statements of the Company whose financial statements reflect total assets of Rs.655945 lakhs as at 31 March 2019 and total revenues of Rs. 458862 lakhs for the yearended on that date as considered in the standalone financial statements. The financialstatements of these branches have been audited by the branch auditors appointed byComptroller & Auditor
General of India whose reports have been furnished to us and our opinion in so far asit relates to the amounts and disclosures included in respect of these branches is basedsolely on the report of such branch auditors.
Our opinion is not modified in respect of the above matter.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors Report) Order 2016 (theOrder) issued by the Central Government of India in terms of sub-section (11) ofsection 143 of the Companies Act 2013 we give in the Annexure A a statement on thematters specified in paragraphs 3 and 4 of the Order to the extent applicable.
2. As required by Section 143(3) of the Act we report that :
a) We have sought and obtained all the information and explanations which to the bestof 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 thecompany so far as it appears from our examination of those books. The audit of theaccounts of Bangalore complex Hyderabad and Chennai units and Corporate office werecarried out by us whilst the audit of Ghaziabad Panchkula Kotdwara Pune Navi Mumbaiand Machilipatnam units were audited by the respective branch auditors. The report of thebranch auditors have been considered by us while preparing our report. In case of NewYork Singapore and other offices not visited by us the returns/records received fromthe said offices have been verified and found to be adequate for the purpose of our audit.
c) The reports on the accounts of the branch offices of the Company audited underSection 143(8) of the Act by branch auditors (in respect of Ghaziabad PanchkulaKotdwara Pune Navi Mumbai and Machilipatnam units) have been sent to us and have beenproperly dealt with by us in preparing this report.
d) The Balance Sheet the Statement of Profit and Loss including Other ComprehensiveIncome Statement of Changes in Equity and Statement of Cash Flow dealt with by thisReport are in agreement with the books of accounts of the Company and with the Returnsreceived from the offices not visited by us.
e) In our opinion the aforesaid standalone financial statements comply with the IndianAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.
f) The Company being a Government Company the provisions of Section 164(2) of theCompanies Act 2013 in respect of disqualification of Directors are not applicable.
g) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in Annexure B.
h) With respect to the other matters to be included in the Auditors Report inaccordance with the requirement of Section 197(16) of the Companies Act 2013 as amended :
In our opinion the Company being a Government Company the provisions in relation topayment of managerial remuneration as mandated by Section 197 read with Schedule V to theCompanies Act 2013 is not applicable.
i) With respect to the other matters to be included in the Auditors Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand 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 financialposition in its standalone financial statements as at 31 March 2019 -Refer Note 30(8) tothe standalone financial statements.
ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long term contracts- Refer NoteNo.21 to the standalone financial statements. The Company do not have any derivativecontracts Refer Note No 30(16) to the standalone financial statements.
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
3. As required by Section 143(5) of the Act we have considered the directions issuedby the Comptroller and Auditor General of India the action taken there on and its impacton the standalone financial statements of the Company in Annexure C.
| ||For |
| ||Chartered Accountants |
| ||Firm Registration No. 004283S |
| ||Natarajan V |
|Bengaluru ||Partner |
|29 May 2019 ||Membership No. 223118 |