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Bharat Heavy Electricals
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« Mar 13
Auditor's Report (Bharat Heavy Electricals) Year End : Mar '14
We have audited the accompanying financial statements of Bharat Heavy
 Electricals Limited (the company), which comprise the Balance Sheet
 as at March 31, 2014, 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 notified under the Companies Act, 1956 (the
 Act) read with the General Circular 15/2013 dated 13th September 2013
 of the Ministry of Corporate Affairs in respect of section 133 of the
 Companies Act, 2013. 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 auditors 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 but not for the
 purpose of expressing an opinion on the effectiveness of the company''s
 internal control. 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, 2014;
 
 (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.
 
 bb. the report on the accounts of branch offices audited under section
 228 by a person other than the company''s auditor has been forwarded to
 us as required by clause (c) of sub-section (3) of section 228 and have
 been dealt with in preparing our report in the manner considered
 necessary by us;
 
 c.  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.
 
 d.  in our opinion, the Balance Sheet, Statement of Profit and Loss,
 and Cash Flow Statement comply with the Accounting Standards notified
 under the Companies Act, 1956 read with the Gene- ral Circular 15/2013
 dated 13th September 2013 of the Ministry of Corporate Affairs in
 respect of section 133 of the Companies Ac t, 2013;
 
 e.  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.
 
 Annexure to Independent Auditors'' Repor (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, 2014)
 
 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 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 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, 2014 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. 37.09
 Crore pertaining to financial year 2008-09 & 2 0 0 9 -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     Pending     Amount     Forum where dispute
 No.               Dues      Amount      paid          is pending
                                         under
                                         protest
 
 1  Central Sales 
    Tax Act, 
    Work         Sales Tax, 
                 Entry       101.57      37.67      Assessing Officer
    Contract Tax 
    Act, Lease 
    Tax,         Tax & Work
    Entry Tax 
    Act and 
    Sales Tax    Contract 
                 Tax         192.49      17.84      Dy. Commissioner /
    Act of 
    various 
    States                                          Jt. Commissioner/
                                                    Commissioner
                                                    (Appeals)
 
                             247.42      55.07      Appellate Tribunal
 
                             444.30      59.66      High Court
 
                               3.43       3.38      Supreme Court
 
                             377.11      21.75      Various Appellate
                                                    Authorities
 
 2 Income Tax 
   Act, 1961    Income Tax     0.30       -         Assessing Officer
 
                               0.32       -         High Court
 
                               0.28       -         Commissioner(Appeals)
 
 3 Central 
   Excise Act, 
   1944         Excise Duty   52.25       3.29      Commissioner
                                                    (Appeals)
 
                             332.29      10.09      Appellate Tribunal
 
                              43.25       4.37      High Court
 
 4 Service Tax  
   under the 
   Finance      Service Tax   55.35        -        Commissioner
   Act, 1994                                        (Appeals)
 
                             224.74       0.61      Appellate Tribunal
 
                              11.62        -        High Court
 
 5 Customs 
   Act,1962     Custom duty    0.21       0.06      Commissioner
                                                    (Appeals)
 
                               2.93       2.83      Various Appellate
                                                    Authorities
 
 x) The company has no accumulated losses as at March 31, 2014 and has
 not incurred any cash losses during the financial year covered by our
 audit and the immediately preceding financial ye a r.
 
 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.  However, the company is yet to redeem the bonds (including
 interest) amounting to Rs. 6.52 Crore issued by the erstwhile subsidiary
 company (Bharat Heavy Plates & Vessels Limited) merged with the BHEL in
 the current ye a r.
 
 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 major fraud on or by the company has been
 noticed or reported during the year.
 
 For Wahi & Gupta                       For S. N. Dhawan & Co.
 
 Chartered Accountants                   Chartered Accountants
 
 FRN 002263N                                        FRN 000050N
 
 (Y.K.Gupta)                                     (S.K. Khattar)
 
 Partner
 
 M.No 016020
 
 Date : May 29, 2014                                   Partner 
                                                
 
 Place: New Delhi                                 M. No 084993
 
 
 
 
 
Source : Dion Global Solutions Limited
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