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Bharat Heavy Electricals
BSE: 500103|NSE: BHEL|ISIN: INE257A01026|SECTOR: Infrastructure - General
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Mar 12
Auditor's Report (Bharat Heavy Electricals) Year End : Mar '13
Report on the Financial Statements
 
 We have audited the accompanying financial statements of Bharat Heavy
 Electricals Limited (the Company), which comprise the Balance Sheet
 as at March 31, 2013, and the Statement of Profit and Loss and Cash
 Flow Statement for the year then ended, and a summary of significant
 accounting policies and other explanatory information.
 
 Management''s Responsibility for the Financial Statements
 
 Management is responsible for the preparation of these financial
 statements that give a true and fair view of the financial position,
 financial performance and cash flows of the Company in accordance with
 the Accounting Standards referred to in sub-section (3C) of section 211
 of the Companies Act, 1956 (the Act). This responsibility includes
 the design, implementation and maintenance of internal control relevant
 to the preparation and presentation of the financial statements that
 give a true and fair view and are free from material misstatement,
 whether due to fraud or error.
 
 Auditor''s Responsibility
 
 Our responsibility is to express an opinion on these financial
 statements based on our audit. We conducted our audit in accordance
 with the Standards on Auditing issued by the Institute of Chartered
 Accountants of India.  Those Standards require that we comply with
 ethical requirements and plan and perform the audit to obtain
 reasonable assurance about whether the financial statements are free
 from material misstatement.
 
 An audit involves performing procedures to obtain audit evidence about
 the amounts and disclosures in the financial statements. The procedures
 selected depend on the auditor''s judgment, including the assessment of
 the risks of material misstatement of the financial statements, whether
 due to fraud or error. In making those risk assessments, the auditor
 considers internal control relevant to the Company''s preparation and
 fair presentation of the financial statements in order to design audit
 procedures that are appropriate in the circumstances. An audit also
 includes evaluating the appropriateness of accounting policies used and
 the reasonableness of the accounting estimates made by management, as
 well as evaluating the overall presentation of the financial
 statements.
 
 We believe that the audit evidence we have obtained is sufficient and
 appropriate to provide a basis for our audit opinion.
 
 Opinion
 
 In our opinion and to the best of our information and according to the
 explanations given to us, the financial statements give the information
 required by the Act in the manner so required and give a true and fair
 view in conformity with the accounting principles generally accepted in
 India:
 
 (a) In the case of the Balance Sheet, of the state of affairs of the
 Company as at March 31, 2013;
 
 (b) In the case of the Statement of Profit and Loss, of the profit for
 the year ended on that date; and
 
 (c) In the case of the Cash Flow Statement, of the cash flows for the
 year ended on that date.
 
 Report on Other Legal and Regulatory Requirements
 
 1.  As required by the Companies (Auditor''s Report) Order, 2003 (the
 Order) issued by the Central Government of India in terms of
 sub-section (4A) of section 227 of the Act, we give in the Annexure a
 statement on the matters specified in paragraphs 4 and 5 of the Order.
 
 2.  As required by section 227(3) of the Act, we report that:
 
 a.  we have obtained all the information and explanations which to the
 best of our knowledge and belief were necessary for the purpose of our
 audit;
 
 b.  in our opinion proper books of account as required by law have been
 kept by the Company so far as appears from our examination of those
 books and proper returns adequate for the purposes of our audit have
 been received from branches not visited by us.
 
 c.  The Branch Auditors Reports have been furnished to us and have been
 appropriately dealt with while preparing our report.
 
 d.  the Balance Sheet, Statement of Profit and Loss, and Cash Flow
 Statement dealt with by this Report are in agreement with the books of
 account and with the returns received from branches not visited by us.
 
 e.  in our opinion, the Balance Sheet, Statement of Profit and Loss,
 and Cash Flow Statement comply with the Accounting Standards referred
 to in subsection (3C) of section 211 of the Companies Act, 1956;
 
 f.  In terms of Notification No. GSR 829(E) dated 21.10.2003 issued by
 the Department of Company Affairs, Government of India, the provisions
 of Section 274(1)(g) of the Companies Act, 1956 are not applicable to
 the Company.
 
 g.  Since the Central Government has not issued any notification as to
 the rate at which the cess is to be paid under section 441A of the
 Companies Act, 1956 nor has it issued any Rules under the said section,
 prescribing the manner in which such cess is to be paid, no cess is due
 and payable by the Company.
 
 Annexure to Independent Auditors'' Report
 
 (Referred to in Paragraph 1 under the heading Report on Other Legal
 and Regulatory Requirements of our report of even date on the accounts
 of Bharat Heavy Electricals Limited for the year ended March 31, 2013)
 
 i) (a) The Company has maintained proper records showing full
 particulars including quantitative details and situation of its fixed
 assets.
 
 (b) According to the information and explanations given to us, physical
 verification of fixed assets is being conducted in a phased manner by
 the management under a programme designed to cover all the fixed 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. In respect of 65
 locomotives given to Indian Railways on lease instead of physical
 verification a certificate confirming physical possession of these
 locomotives has been obtained from Indian Railways as per the lease
 agreement.
 
 (c) According to the information and explanations given to us, the
 Company has not disposed off any substantial part of its fixed assets
 during the year.
 
 ii) (a) As explained to us physical verification of inventory has been
 conducted by the management under Perpetual Inventory Programme at
 regular intervals during the year except for stock of work in progress
 and finished goods in few units where these are verified at the year
 end with reference to the inspection reports and production reports of
 the Production Planning Department of such units. In regard to stocks
 lying with contractors/fabricators and other parties, confirmations
 were received in a few cases only. In our opinion the frequency of
 verification is reasonable.
 
 (b) In our opinion and according to the information and explanations
 given to us, the procedures of physical verification of inventories
 followed by the management are reasonable and adequate in relation to
 the size of the Company and the nature of its business.
 
 (c) In our opinion and according to the information and explanations
 given to us, the Company has maintained proper records of its
 inventories and discrepancies noticed on physical verification of
 inventories were not material with regard to the size and nature of
 operations of the Company and have been properly dealt with in the
 books of account.
 
 iii) (a) According to the information given to us, the Company has not
 granted any loans, secured or unsecured to companies, firms and other
 parties covered in the register maintained under section 301 of the
 Companies Act, 1956. Therefore clauses (iii) (b) to (iii)(d) of
 Paragraph 4 of the Order are not applicable to the Company.
 
 (b) According to the information given to us, the Company has not taken
 any loans, secured or unsecured, from companies, firms or other parties
 covered in the register maintained under Section 301 of the Companies
 Act, 1956. Therefore clauses (iii) (f) and (iii) (g) of Paragraph 4
 Order are not applicable to the Company.
 
 iv) In our opinion and according to the information and explanations
 given to us, there is an adequate internal control system commensurate
 with the size of the Company and the nature of its business with regard
 to purchase of inventory and fixed assets and for the sale of goods and
 services. Further on the basis of our examination of the books and
 records of the Company, and according to the information and
 explanations given to us, we have neither come across nor have been
 informed of any continuing failure to correct major weaknesses in the
 internal control systems.
 
 v) According to the information and explanations given to us, we are of
 the opinion that during the year there are no contracts and
 arrangements that need to be entered in the register maintained under
 Section 301 of the Companies Act, 1956. Therefore clause (v) (b) of
 Paragraph 4 of the Order is not applicable to the Company.
 
 vi) According to the information and explanations given to us, the
 Company has not accepted any deposits from public during the year
 within the meaning of sections 58A and 58AA or any other relevant
 provisions of the Companies Act, 1956 and the Companies (Acceptance of
 Deposits) Rules 1975.
 
 vii) According to the information and explanations given to us, the
 Company has an internal audit department responsible for carrying out
 internal audit of various sections at head office, regional offices and
 units at periodical intervals as per the approved audit plan. In our
 opinion, the internal audit system of the Company is generally
 commensurate with size and nature of its business.
 
 viii) We have broadly reviewed the books of account and records
 maintained by the Company pursuant to the Companies (Cost Accounting
 Records) Rules 2011 prescribed by the Central Government under section
 209(1) (d) of the Companies Act, 1956 and are of the opinion that prima
 facie the prescribed accounts and records have been made and
 maintained. We have, however, not made a detailed examination of the
 cost records with a view to determine whether they are accurate &
 complete.
 
 ix) (a) According to the information and explanations given to us, in
 our opinion, the Company is generally regular in depositing with
 appropriate authorities undisputed statutory dues including Provident
 Fund, Investor Education and Protection Fund, Employees State
 Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Excise Duty,
 Customs Duty, Cess and any other material statutory dues as applicable
 to it.
 
 (b) According to the information and explanations given to us, no
 undisputed amounts payable in respect of Provident Fund, Investor
 Education and Protection Fund, Employees State Insurance, Income Tax,
 Sales Tax, Wealth Tax, Service Tax, Excise Duty, Customs Duty, Cess and
 other statutory dues outstanding as at March 31, 2013 for a period of
 more than six months from the date they become payable except in the
 case of Libya project, where as per the agreement, the income tax
 liability has to be discharged by the customer directly to the Libyan
 Government. The amount outstanding for more than six months is Rs.
 32.88 Crore pertaining to financial year 2008-09 & 2009-10.
 
 (c) According to the information and explanations given to us, the
 particulars of Sales Tax, Income Tax, Excise Duty, Service Tax, Custom
 Duty and Cess which have not been deposited on account of dispute are
 as under:
 
 Sl.   Name of the Statute     Nature of the Dues           Pending 
 No.                                                        Amount 
                                                           (Rs. in Crore)
 
 1     Central Sales Tax Act,  Sales Tax, Entry Tax             35.78
       Work Contract Tax Act,  & Work Contract 
                                                               249.20 
       Lease Tax, Entry Tax    Tax
       Act and Sales Tax Act 
       of various States                                       344.94
 
                                                               125.82
 
                                                                 3.43
 
                                                               117.30
 
 2     Income Tax Act, 1961    Income Tax                         3.4
 
                                                                26.50
 
                                                                 4.15
 
 3     Central Excise 
       Act, 1944               Excise Duty                      30.26
 
                                                                 1.15
 
                                                               259.13
 
                                                                43.02
 
                                                                    -
 
 4     Service Tax under the   Service Tax                      54.38 
       Finance Act, 1994
                                                               105.33
 
                                                                    -
 
                                                                 5.70
 
 Name of the Statute    Amount paid     Forum where dispute is pending
                        under protest  
                       (Rs. in Crore)
 
 Central Sales Tax
 Act Work Contract
 Tax Act, Lease Tax, 
 Entry Tax Act and
 Sales Tax Act of
 various States             10.38       Assessing Officer 
 
                            21.44       Dy. Commissioner / Jt. 
                                        Commissioner/ Commissioner
                                        Appeals 
 
                            49.72       Appellate Tribunal 
 
                            28.25       High Court 
 
                             3.38       Supreme Court
 
                             8.69       Various Appellate Authorities
 
 Income Tax Act, 1961           -       High Court
 
                                -       Appellate Tribunal 
 
                                -       Commissioner(Appeals)
 
 Central Excise Act, 1944    0.06       Assessing Officer
 
                             0.48       Commissioner (Appeals)
 
                             3.61       Appellate Tribunal 
 
                             4.37       High Court
 
                                -       Various Appellate Authorities
 
 Service Tax umder the 
 Finance Act 1994            0.01       Commissioner (Appeals)
 
                                -       Appellate Tribunal
 
                                -       Assessing Officer 
 
                                -       High Court
 
 x) The Company has no accumulated losses as at March 31, 2013 and has
 not incurred any cash losses during the financial year covered by our
 audit and the immediately preceding financial year.
 
 xi) According to the records of the Company examined by us and the
 information and explanations given to us, the Company has not defaulted
 in repayment of dues to financial institutions, banks or debenture
 holders.
 
 xii) According to the information and explanations given to us, the
 Company has not granted any loans and advances on the basis of security
 by way of pledge of shares, debentures and other securities.
 
 xiii) In our opinion, the Company is not a chit fund or a Nidhi /mutual
 benefit fund/ society. Therefore, provisions of clause (xiii) of
 Paragraph 4 of the Order are not applicable to the Company.
 
 xiv) In our opinion and according to the information and explanations
 given to us, the Company is not dealing or trading in shares,
 securities, debentures and other investments. Accordingly, the
 provisions of clause (xiv) of the Paragraph 4 of the Order are not
 applicable to the Company.
 
 xv) In our opinion and according to the information and explanations
 given to us, the Company has not given guarantees for loans taken by
 others from banks or financial institutions.
 
 xvi) As per information and explanations given to us, the Company has
 not obtained any term loan during the year.
 
 xvii) According to the information and explanations given to us and on
 an overall examination of the Balance Sheet of the Company, we report
 that no funds raised on short-term basis have been used for long-term
 investment.
 
 xviii) According to the information and explanations given to us, the
 Company has not made any preferential allotment of shares to parties
 and companies covered in the register maintained under section 301 of
 the Companies Act, 1956.
 
 xix) In our opinion, the Company has not issued any debentures during
 the year. Therefore, provisions of clause (xix) of Paragraph 4 of the
 Order are not applicable to the Company.
 
 xx) The Company has not raised any money by way of public issue during
 the year. Therefore, provisions of clause (xx) of Paragraph 4 of the
 Order are not applicable to the Company.
 
 xxi) During the course of our examination of the books and records of
 the Company, carried out in accordance with the generally accepted
 auditing practices in India, and according to the information and
 explanations given to us, no fraud on or by the Company has been
 noticed or reported during the year.
 
                      For Gandhi Minocha & co    For S. N. Dhawan & Co.
 
                      Chartered Accountants     Chartered Accountants
 
                         FRN 000458N                 FRN 000050N
 
 Date : May 23, 2013   (Bhupinder Singh)           (Suresh Seth)
 
 Place : New Delhi       M.No 092867               M.No 010577
Source : Dion Global Solutions Limited
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