BHARAT HEAVY ELECTRICALS LIMITED
ANNUAL REPORT 2011-2012
AUDITORS` REPORT
TO
THE MEMBERS OF
BHARAT HEAVY ELECTRICALS LIMITED
1. We have audited the attached Balance Sheet of Bharat Heavy Electricals
Limited as at 31st March, 2012, the Statement of Profit and Loss and also
the Cash Flow Statement for the year ended on that date annexed thereto.
These financial statements are the responsibility of the Company`s
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
2. We conducted our audit in accordance with the Auditing Standards
generally accepted in India. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatements. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by the
management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
3. As required by the Companies (Auditor`s Report) Order, 2003, as amended,
issued by the Central Government of India in terms of sub-section (4A) of
Section 227 of the Companies Act, 1956, we enclose in the Annexure a
statement on the matters specified in paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to in paragraph 3
above, 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 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 appears from our examination of the books and
proper returns adequate for the purposes of our audit have been received
from the branches not visited by us.
(c) The Branch Auditor`s Reports have been furnished to us and have been
appropriately dealt with while preparing our report.
(d) The Balance Sheet, the 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 audited returns received from the branches.
(e) In our opinion, the Balance Sheet, the Statement of Profit and Loss and
Cash Flow Statement dealt with by this report comply with the Accounting
Standards referred to in sub Section (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) In our opinion and to the best of our information and according to the
explanations given to us, the said accounts read together with the
Significant Accounting Policies and Notes thereon, give the information
required by the Companies Act, 1956, in the manner so required and give a
true and fair view in conformity with the accounting principles generally
accepted in India:
(i) In the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March, 2012;
(ii) In the case of the Statement of Profit & Loss of the profit for the
year ended on that date; and
(iii) In the case of Cash Flow Statement of the cash flows for the year
ended on that date.
For Gandhi Minocha & Co. For S.N. Dhawan & Co.
Chartered Accountants Chartered Accountants
FRN 000458N FRN 000050N
(Bhupinder Singh) (Suresh Seth)
M.No. 092867 M.No. 010577
Date : May 23, 2012
Place : New Delhi
ANNEXURE TO THE AUDITORS` REPORT
(Referred to in paragraph 3 of our report of even date on the accounts of
Bharat Heavy Electricals Limited for the year ended 31st March, 2012)
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 with regard
to the size and nature of operations of the Company were not material 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 31st March, 2012 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. 31.94 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:
Name of the Statute Nature of Pending Amount Forum where dispute is
the Dues Amount paid pending
(Rs. in under
Crore) protest
(Rs. in
Crore)
1. Central Sales Sales Tax, 25.28 5.55 Assessing Officer
Tax Act, Work
Contract Tax Act, Entry Tax 258.23 11.12 Dy. Commissioner/
Lease Tax, Entry Jt. Commissioner
Tax Act and Sales
Tax Act of various & Work Commissioner Appeals
States
Contract 218.44 29.11 Appellate Tribunal
Tax 119.75 43.47 High Court
3.43 3.38 Supreme Court
107.57 5.76 Various Appellate
Authorities
2. Income Tax Income Tax 3.18 - High Court
Act, 1961 26.50 - Appellate Tribunal
15.52 - Commissioner (Appeals)
3. Central Excise Excise Duty 30.20 0.06 Assessing Officer
Act, 1944 72.96 0.40 Commissioner (Appeals)
174.25 3.06 Appellate Tribunal
42.88 4.37 High Court
Various Appellate
Authorities
4. Service Tax Service Tax 24.73 - Commissioner (Appeals)
under the Finance 4.53 - Appellate Tribunal
Act, 1994 97.21 - Assessing Officer
5.70 - High Court
x) The Company has no accumulated losses as at 31st March, 2012 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 (xiv) 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
(Bhupinder Singh) (Suresh Seth)
M.No. 092867 M.No. 010577
Date : May 23, 2012
Place : New Delhi |