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Bharat Heavy Electricals

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« Mar 14
Auditor's Report (Bharat Heavy Electricals) Year End : Mar '15
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, 2015, 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 in which are
 incorporated the returns for the year ended on that date audited by us
 for 11 branches and 24 branches audited by the branch auditors of the
 company.
 
 Management''s Responsibility for the Standalone Financial Statements
 
 The Companys Board of Directors is responsible for the matters stated
 in Section 134(5) of the Companies Act, 2013 (the Act) with respect
 to the preparation of these standalone financial statements that give a
 true and fair view of the financial position, financial performance and
 cash flows of the Company in accordance with the accounting principles
 generally accepted in India, including the Accounting Standards
 specified under Section 133 of the Act, read with Rule 7 of the
 Companies (Accounts) Rules, 2014. This responsibility also includes
 maintenance of adequate accounting records in accordance with the
 provisions of the Act for safeguarding the assets of the Company and
 for preventing and detecting frauds and other irregularities; selection
 and application of appropriate accounting policies; making judgments
 and estimates that are reasonable and prudent; and design,
 implementation and maintenance of adequate internal financial controls,
 that were operating effectively for ensuring the accuracy and
 completeness of the accounting records, 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 standalone
 financial statements based on our audit.
 
 We have taken into account the provisions of the Act, the accounting
 and auditing standards and matters which are required to be included in
 the audit report under the provisions of the Act and the Rules made
 thereunder.
 
 We conducted our audit in accordance with the Standards on Auditing
 specified under Section 143(10)of the Act. 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 the 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 financial control relevant
 to the Company''s preparation of the financial statements that give a
 true and fair view in order to design audit procedures that are
 appropriate in the circumstances but not for the purpose of expressing
 an opinion on whether the Company has in place an adequate internal
 financial controls system over financial reporting and the operating
 effectiveness of such controls. An audit also includes evaluating the
 appropriateness of the accounting policies used and the reasonableness
 of the accounting estimates made by the Companys Directors, 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 on the standalone
 financial statements.
 
 Opinion
 
 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 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, 2015;
 
 (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.
 
 Emphasis of Matter
 
 We draw attention to :
 
 Amount outstanding in projects under hold for more than 3 years
 amounting to Rs. 1845 Crores (Refer note no. 31(26))
 
 Our opinion is not qualified in respect of above matter.
 
 Other Matter
 
 We did not audit the financial statements/information of 24 (Twenty
 Four ) branches included in the standalone financial statements of the
 Company whose financial statements / financial information reflect
 total assets of Rs. 46378.71 Crores as at 31st March, 2015 and total
 revenue of Rs. 24922.28 Crores for the year ended on that date, as
 considered in the standalone financial statements. The financial
 statements / information of these branches have been audited by the
 branch auditors whose reports have been furnished to us, and our
 opinion in so far as it relates to the amounts and disclosures included
 in respect of these branches, is based solely on the report of such
 branch auditors.
 
 Our opinion is not modified in respect of this matter.
 
 Report on Other Legal and Regulatory Requirements
 
 (1) As required by the Companies (Auditor''s Report) Order, 2015 (the
 Order) issued by the Central Government of India in terms of
 sub-section (11) of section 143 of the Act, we give in the Annexure (A)
 a statement on the matters specified in paragraphs 3 and 4 of the
 Order, to the extent applicable.
 
 (2) As required by Section 143 (3) of the Act, we report that:
 
 (a) We have sought and obtained all the information and explanations
 which to the best of our knowledge and belief were necessary for the
 purposes of our audit.
 
 (b) In our opinion, proper books of account as required by law have
 been kept by the Company so far as it appears from our examination of
 those books and proper returns adequate for the purposes of our 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 branch auditors have been
 sent to us and have been properly dealt with by us in preparing this
 report.
 
 (d) The Balance Sheet, the Statement of Profit and Loss, and the Cash
 Flow Statement 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 Accounting Standards specified under Section 133 of the
 Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.
 
 (f) On the basis of the written representations received from the
 directors as on 31st March, 2015 taken on record by the Board of
 Directors, none of the directors appointed during 2014-15 is
 disqualified as on 31st March, 2015 from being appointed as a director
 in terms of Section 164(2) of the Act. Prior to 01-04-2014, in terms of
 notification no.  GSR 829(E) dated 21.10.2013 issued by the Department
 of Company Affairs, Govt.  of India, the provisions of section 274(1)
 (g) of the Companies Act, 1956 were not applicable to the company.
 
 (g) ith respect to the other matters to be included in the Auditor''s
 Report in accordance with Rule 11 of the Companies (Audit and Auditors)
 Rules, 2014, in our opinion and to the best of our information and
 according to the explanations given to us:
 
 i. The Company has disclosed the impact of pending litigations on its
 financial position in its financial statements - Refer Note 31(5) to
 the financial statements.
 
 ii. The Company has made provision, as required under the applicable
 law and accounting standards, for material foreseeable losses, if any,
 on long-term contracts – Refer Note 31(11) to the financial statements.
 
 iii. There has been no delay in transferring amounts, required to be
 transferred, to the Investor Education and Protection Fund by the
 Company.
 
 (3) As required by section 143(5) of the Act, we have considered the
 directions issued by the Comptroller and Auditor General of India, the
 action taken thereon and its impact on the accounts and financial
 statements of the company (Annexure B)
 
 Annexure (A) 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 (the Company),for the year ended
 March 31, 2015)
 
 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.
 
 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 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) 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 189 of the
 Companies Act, 2013. Therefore clauses (iii) (a) and (iii)(b) of
 Paragraph 3 of the 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, for the
 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, the
 Company has not accepted any deposits from public during the year
 within the meaning of sections 73 to 76 or any other relevant
 provisions of the Companies Act, 2013 and the Companies (Acceptance of
 Deposits) Rules 2014.
 
 vi) We have broadly reviewed the books of account and records
 maintained by the Company pursuant to the Companies (Cost Records and
 Audit) Rules 2014 prescribed by the Central Government under section
 148(1) of the Companies Act, 2013 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 and
 complete.
 
 vii) (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, Employees'' State Insurance, Income Tax, Sales Tax, Wealth Tax,
 Service Tax, duty of Customs, duty of Excise, Value Added Tax, Cess and
 any other 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, Employees
 State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, duty
 of Customs, duty of Excise, Cess and any other statutory dues were
 outstanding as at March 31, 2015 for a period of more than six months
 from the date they became payable.
 
 (c) According to the information and explanations given to us, the
 particulars of Income Tax, Sales Tax, Wealth Tax, Service Tax,duty of
 Customs, duty of Excise, Value Added Tax and Cess which have not been
 deposited on account of dispute are as under:
 
                                                       (Rs. in Crore)
 
 Sl.  Name of the Statute                   Nature of          Pending
 No.                                        the Dues           Amount
 
 1    Central Sales Tax Act, Work           Sales Tax,          89.55
      Contract Tax Act, Lease Tax,          Entry Tax
      Entry Tax Act and Sales Tax Act       & Work             302.03
      of various States                     Contract Tax
 
                                                               378.77
 
                                                               409.35
 
                                                                 3.43
 
                                                               360.81
 
 2    Income Tax Act, 1961                  Income               1.17
                                            Tax
 
                                                                15.01
 
                                                                 0.32
 
 3    Central Excise Act, 1944              Excise              54.12
                                            Duty
 
                                                               359.63
 
                                                                45.89
 
 4    Service Tax under the Finance         Service             77.96
      Act, 1994                             Tax
 
                                                               366.51
 
                                                                14.47
 
 5    Customs Act,1962                      Custom               2.93
                                            duty
 
 6    The Building and Other                Cess                11.78 
      Construction Workers Welfare
      Cess Act, 1996
 
 Name of the Statute               Amount      Forum where dispute is
                                   paid under  pending
                                   protest
 
 Central Sales Tax Act, Work
 Contract Tax Act, Lease Tax,
 Entry Tax Act and Sales 
 Tax Act of various States           25.15     Assessing Officer
 
                                     35.96     Dy. Commissioner / Jt.
                                               Commissioner/ 
                                               Commissioner (Appeals)
 
                                     80.28     Appellate Tribunal
 
                                    107.49     High Court
 
                                      3.38     Supreme Court
 
                                     20.25     Various Appellate 
                                               Authorities
 
 Income Tax Act, 1961                    -     Assessing Officer
 
                                      0.70     Commissioner (Appeals)
 
                                         -     High Court
 
 Central Excise Act, 1944             9.47     Commissioner (Appeals)
 
                                      8.44     Appellate Tribunal
 
                                      5.50     High Court
 
 Service Tax under the Finance
 Act, 1994                            2.13     Commissioner (Appeals)
 
                                      2.23     Appellate Tribunal
 
                                         -     High Court
 
 Customs Act, 1962                    2.83     Assessing Officer
 
 The Building and Other 
 Construction Workers Welfare
 Cess Act, 1996                       2.50     High Court
 
 (d) The company has transferred the amount required to be transferred
 to Investor Education and Protection Fund within time in accordance
 with the relevant provisions of the Companies Act, 1956 (1 of 1956) and
 rules made thereunder.
 
 viii) The Company has no accumulated losses as at March 31, 2015 and
 has not incurred any cash losses during the financial year covered by
 our audit and the immediately preceding financial year.
 
 ix) 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.
 
 x) 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.
 
 xi) As per information and explanations given to us, the Company has
 not obtained any term loan during the year.
 
 xii) 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 Wahi & Gupta        For DSP & Associates
 
                      Chartered Accountants     Chartered Accountants
 
                         FRN 002263N               FRN 006791N
 
 Date : May 26, 2015   (CA Anuj Gupta)           (CA Sanjay Jain)
 
 Place : New Delhi      M.No.076560               M.No.084906
Source : Dion Global Solutions Limited
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