FUTURE BEML Auditors Report

Report on the Standalone Ind AS Financial Statements


We have audited the accompanying standalone Ind AS financial statements of BEML LIMITED (“the Company”) which comprise the Balance Sheet as at March 31, 2017, the Statement of Profit and Loss,(including other comprehensive income), Cash Flow Statements and the Statement of changes in equity for the year then ended and a summary of the significant accounting policies and other explanatory information ( herein after referred to as “standalone Ind AS financial statements”)


Management’s Responsibility for the Standalone Ind AS Financial Statements


The Company’s 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 Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) prescribed under section 133 of the Act read with relevant Rules issued there under. 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 standalone Ind AS 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 Ind AS 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 there under.


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 standalone Ind AS financial statements are free from material misstatement.


An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone Ind AS financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the standalone Ind AS 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 standalone Ind AS financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company’s Management and Board of Directors, as well as evaluating the overall presentation of the standalone Ind AS 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 Ind AS financial statements.


Opinion


In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone Ind AS 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 including Ind AS , of the financial position of the Company as at March 31, 2017 and its financial performance including other comprehensive income, its Cash Flow and changes in equity for the year ended on that date.


Emphasis of Matter:


We draw our attention to:


a) Note No.14 (i) in respect of Trade receivables from Ministry of Defense (MOD) Rs.925.87 lakhs towards interest rate difference on advance amount received from MOD. This amount pertains to interest rate difference between deposit rate and interest recovered @ 9.50% by MOD during FY 2006-07, 2007-08, and 2009-10 from various bills. The matter has been taken up with MOD and it is under their consideration. And Note No. 14(ii) in respect of Trade receivable from MOD Rs.4899.99 lakhs towards exchange rate difference and escalation for import of components in respect of a long term contract for Design, Development and Supply, entered into with MOD in 2001. The realisation of these receivables depends on the final determination of the amount payable by the MOD.


b) Note No.11 (a) in respect of the amount advanced to MAMC consortium for Rs.5744.31 lakhs, realization/ settlement of which depends on approval from Ministry of Defence and viable business plan.


c) Note No.39 (G) regarding pending confirmation, reconciliation, review/adjustment of balances in respect of advances, balances with government departments, trade payable, trade receivable, other loans and advances and deposits.


Our opinion is not qualified in respect of the above matters.


Other Matters :


We have issued an Audit Report dated 30th May, 2017 (“the original report”) at New Delhi on the financial statements as adopted by Board of Directors on even date. Pursuant to the observation of Comptroller and Auditor General of India under section 143(6)(a) of the Companies Act, 2013, we have revised the said Audit Report. This revised Audit Report has no impact on the reported figures in the financial statements of the Company. This Audit Report supersedes the original report, which has been suitably revised to consider observations of Comptroller and Auditor General of India and amendment made to the point No. (vii) (b) of “Annexure A” to Independent Auditors’ Report.


Our Audit procedure on events subsequent to the date of the original report is restricted soley to the amendment to Clause vii (b) of “Annexure A” to the Independent Auditors Report (CARO 2016).


Report on Other Legal and Regulatory Requirements


1. As required by the Companies (Auditor’s Report) Order, 2016 (“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.


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 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 it appears from our examination of those books;


c. the Balance Sheet, the Statement of Profit and Loss ,the Cash Flow Statements and the Statement of changes in equity dealt with by this Report are in agreement with the books of account;


d. in our opinion, the aforesaid standalone Ind AS financial statements comply with the Accounting Standards specified under section 133 of the Act, read with relevant Rule issued there under .


e. being a Government Company provisions of Sec 164(2) of the Act, relating to disqualification of directors are not applicable.


f. 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 B” : and


g. with 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 standalone Ind AS financial statements - Refer Note 39(D)(1)(a)(ii) to the standalone Ind AS financial statements;


ii) the Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.


iii) there were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.


iv) the Company has provided requisite disclosures in its standalone Ind AS financial statements as to holdings as well as dealings in Specified Bank Notes during the period from 8th November, 2016 to 30th December, 2016 and these are in accordance with the books of accounts maintained by the Company (Refer to Note No. 15 e to the standalone Ind AS financial statements).


3. As required by section 143 (5) of the Act, we give our separate Report in “Annexure C”.


“Annexure A” to the Independent Auditors’ Report


Referred to in paragraph 1 under the heading ‘Report on Other Legal & Regulatory Requirements of our report of even date to the members on the standalone Ind AS financial statements of the Company for the year ended March 31, 2017.


On the basis of such checks as we considered appropriate and according to the information and explanations given to us during the course of our audit, we report that,


i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets;


(b) The Fixed Assets have been physically verified by the management in a phased manner, designed to cover all the items 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. Pursuant to the program, a portion of the fixed asset has been physically verified by the management during the year and as informed to us, no material discrepancies between the books records and the physical fixed assets have been noticed.


(c) The title deeds of immovable properties are held in the name of the company except in the following cases.


1) As explained to us, Building costing Rs. 33.00 lakhs ( carrying value Rs. 16.92 lakhs ) situated at Mumbai and Ranchi are pending for registration / khatha transfer .


2) As explained to us, Lease Hold land costing Rs. 129.41 Lakhs at Hyderabad for which registration will be completed after development of showroom.


3) As explained to us, free hold land measuring 555.37 acres at Mysore costing Rs. 321.23 lakhs (including additional compensation of Rs. 183.57 lakhs demanded by KIADB) for which title deeds have to be obtained from KIADB.


4) Kerala Industrial Infrastructure Development Corporation (KIIDC) has allotted Leased land measuring 374.59 acres for a lease premium of Rs. 2547.21 lakhs for 99 years lease period w.e.f 01.07.2009. The actual land handed over by KIIDC was measuring 374.16 acres and revised lease premium payable is Rs. 2544.29 lakhs only and execution of formal amendment of lease agreement is pending.


5) As explained to us, the Company has taken land measuring 1109 acres and two workshops on lease for a period of 10 years vide Lease Agreement dated 5th May 2004, w.e.f. 28.04.2004 from M/s Bharat Gold Mines Limited (BGML) and a sum of 100 Lakhs was paid as non-refundable deposit, The Company had incurred on the above land a sum of Rs. 1452.95 lakhs ( with carrying value of Rs. 1044.44 Lakhs) on Buildings included in Property, Plant and Equipment (Note 3) as at the year end. Vide order dated 09.07.2013, the Hon’ble Supreme Court of India upheld the decision of the Union Government to float a global tender of BGML assets with an observation about the existence of sub-lease of a portion of the land to BEML Ltd expired on 28.04.2014 to be included in the tender documents. The Company filed an Interlocutory application before the Hon’ble Supreme Court of India, praying for exclusion of land leased to BEML from the purview of global tender, which was dismissed. Since the lease agreement provides for the continuation of the lease even after the expiring of lease period on 28.04.2014 till the final decision of the Company/ Government in this regard, the operations of the company on the above land is continued.


6) As explained to us, the Company has taken action to obtain title documents in respect of the following immovable properties;


a) Flat at Roshan Complex Madras - Rs. 4.04 lakhs


b) Flat at Ashadeep, New Delhi - Rs. 2.80 lakhs


c) Office building at Nagpur - Rs. 27.18 lakhs


d) Lease Hold Land at Singrauli - Rs. 1.75 lakhs.


ii) The company has conducted the physical verification of the inventory excluding materials lying with third parties and work in progress during the year in accordance with programme designed to cover all items over a phased manner. According to the information and explanation given to us, and in our opinion the frequency of physical verification is reasonable. The discrepancies noticed on physical verification of the inventory as compared to books records which has been properly dealt with in the books of account were not material.


iii) The Company has not granted any loans, secured or unsecured to companies, firms, limited liability partnerships or other parties covered in the Register maintained under section 189 of the Act. Accordingly, the provisions of paragraph 3 (iii) (a) (b) and (c) of the Order are not applicable to the Company.


iv) There are no transactions of loans to directors, and being a Government Company engaged in defence production, provisions of Sec 185 and 186 of the Companies Act, 2013 in respect of loans, investments, guarantees and security are not applicable.


v) The Company has not accepted any deposits to which the provisions of Sections 73 to 76 or any other relevant provisions of the Act and the rules framed there under and also the directions issued by the Reserve Bank of India.


vi) Maintenance of Cost Records has been specified by the Central Government under sub-section (1) of Section 148 of the Act, in respect of the activities carried on by the company. We are of the opinion that prima facie, the prescribed records have been made and maintained.


vii) (a) The Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Employees State Insurance, Income-Tax, Sales tax, Service Tax, Duty of Customs, Duty of Excise, Value added Tax, Cess and any other statutory dues with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of the above were in arrears as at March 31, 2017 for a period of more than six months from the date they became payable.


(b) The details of dues of income-tax, sales tax, service tax, duty of customs, duty of excise, value added tax outstanding on account of any dispute, is furnished below :











































































































































Name Of The Statute



Nature of Disputed Tax



Amount (Rs. Lakhs)



Period To Which The Amount Relates



Forum Where The Dispute Is Pending



Excise Duty incl. Interest and Penalty



32667.63



2003-04 to 2007-08



CESTAT,


Bangalore



Central Excise Act 1944



Excise Duty incl. Interest and Penalty



722.76



2005-06 to 2010-11



Appellate


Authority



National Calamity Contingency Duty



7673.05



2006-07 to 2011-12



CESTAT



Total Excise Duty



41,063.44



SERVICE TAX ACT,1994



Service Tax incl. penalty



854.91



2004-05, 2006-07 & 2010-11



CESTAT,


Bangalore



Service Tax



494.07



2006-07 to 2010-11



Appellate


Authority



Total Service Tax



1348.98



The Customs Act, 1962



Customs Duty



7140.61



2006-07



CESTAT,


Chennai



The Karnataka Municipal Corporation Act, 1976



Municipality Taxes



738.11



2012



City Muncipality Council - KGF "



Property Tax



109.11



1995-96 to 2005-06



City Civil Judge, Bangalore



Total ED, Service Tax, CD & Property tax



50400.25



Sales Tax /VAT



9.79



2003-04



Maharashtra Sales Tax tribunal



Sales Tax Act of Various States



Sales Tax /VAT



5500.70



December 2005 to March 2008 & 2008-09, 2009-10, 2010-11



Karnataka Sales Tax tribunal



Sales Tax /VAT



892.69



1999-00, 2001-02, 2002-03, 2003-04, 2005-06, 2006-07, 2007-08, 2009-10



Revision & Appellate Board of Various States



Sales Tax /VAT



2503.97



From 1983-84 to 2012-13



Other appellate authorities



Total Sales Tax / VAT



8907.15



Grand Total



59307.40



Amount Deposited under protest



Central Excise / Customs



243.50



viii) The Company has not defaulted in repayment of loans or borrowings due to financial institutions, banks, Government and to debenture holders.


ix) The company has not raised moneys by way of initial public offer or further public offer including debt instruments and term Loans during the year.


x) Based upon the audit procedures performed and the information and explanations given by the management, we report that no fraud by the Company or on the company by its officers or employees has been noticed or reported during the year.


xi) Being a Government company, the provisions of sec 197 read with schedule V to the Act, relating to the managerial remuneration are not applicable.


xii) The Company is not a Nidhi Company and accordingly paragraph 3 (xii) of the Order is not applicable to the Company.


xiii) All transactions with the related parties are in compliance with section 177 and 188 of Companies Act, 2013 and the details have been disclosed under Note 39C in the standalone Ind AS financial Statements as required by the applicable Accounting Standards.


xiv) The company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year and accordingly paragraph 3 (xiv) of the Order is not applicable to the Company.


xv) The company has not entered into any non-cash transactions with directors or persons connected with him and accordingly paragraph 3 (xv) of the Order is not applicable to the Company.


xvi) The Company is not required to be registered under section 45 IA ofthe Reserve Bank of India Act, 1934 and accordingly paragraph 3 (xvi) of the Order is not applicable to the Company.


For S R R K Sharma Associates


Chartered Accountants


Firm’s registration No.: 003790S


CA S ANANDA KRISHNA


Partner


Membership No. : 027986


Place: Bengaluru


Date: 25.07.2017

CIN: U67190WB2003PTC096617. Trading in Commodities is done through our Group Company Dynamic Commodities Pvt. Ltd. The company is also engaged in Proprietory Trading apart from Client Business.
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