BEML LIMITED
Report on the Audit of Standalone Indian Accounting Standards (Ind AS) Financial Statements
Pursuant to the observations arising from the Audit by the Comptroller and Audit General of India, our earlier report dated 26-05-2023, Emphasis of matter has been revised by making changes in the Emphasis of matter para c) and adding para i). This report supersedes our earlier report. Our opinion has not been modified in this regard.
Opinion
We have audited the accompanying Standalone Quarterly/Annual Ind AS Financial Statements of BEML LIMITED ("the Company"),for the quarter & year ending 31st March 2023 which comprise the standalone Balance Sheet as at March 31, 2023, the standalone Statement of Profit and Loss (including Other Comprehensive Income) for Quarter/Year ending 31st March 2023, the standalone Cash Flow Statement for quarter/year ending 31st March 2023 , the standalone Statement of Changes in Equity for the quarter/year ended 31st March 2023 , and notes to the Standalone Indian Accounting Standards ("Ind AS") Financial Statements, including a summary of significant accounting policies and other explanatory information (hereinafter referred to as "Standalone Ind AS Financial Statements") for the quarter/year ended 31st March 2023.
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 Companies Act, 2013 ("the
Act") in the manner so required a nd give a true and fair view in conformity with the Ind AS prescribed under section 133 read with the Companies (Indian Accounting Standards) Rules, 2015 as amended, ("Ind AS") and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2023 and its Profit and total comprehensive income, its cash flows and the changes in equity for the quarter & year ended on that date.
Basis for Opinion:
We conducted our audit in accordance with the Standards on Auditing ("SAs") specified under Section 143 (10) of the Act. Our
responsibilities under those Standards are further described in the Auditors' Responsibilities for the Audit of the Standalone Ind AS Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with the ethical requirements that are relevant to our audit of the Standalone Ind AS Financial Statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI's Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on the standalone Ind AS financial statements.
Emphasis of Matter
We draw attention to;
a) Accounting policy 2.1.E - Current/Non-current classification, the company has different operating cycles for 3 Business Verticals viz Mining & Construction,
Defence & Aerospace and Rail & Metro. For the purpose of current/non-current classification of assets and liabilities, the Company has evaluated and considering the operating cycle as twelve months in accordance with IND AS 1 - Presentation of Financial Statements.
b) Note No. 12 - Inventories includes a provision for shortage of stock of Spares amounting to '5.90 Lakhs, which is pending to be adjustment in the books of accounts and under reconciliation.
c) We draw attention to Note no. 14 - Trade Receivables amounting to '1,23,670.02 Lakhs, Note no. 14a - Contract Assets amounting to '61,265.72 Lakhs, Note no. 18 - Claims Receivable (net) (Other current Assets) amounting to '3,488.79 Lakhs of the notes forming part of the Financial statement which includes various contracts which could be onerous and regular contracts which are in various stages of completion, pending to be renewed, expired contracts or contracts pending to be executed for which finality and outcome are to be arrived at in the future.
Hence, no provision for onerous contracts has been created in respect of these contracts.
d) Note No. 18 with respect to Claims Recievable from railway board amounting to '3,839.12 Lakhs an InterMinisterial Committee has been formed by MOD to resolve the issues. Pending final recommendations of the Committee, based on the deliberations in the committee and based on Company's assessment, provisions have been made wherever required excluding a sum of '177.22 lakhs which is covered in payable to Sub-Contractors on back to back terms.
e) Note No. 39(F) regarding Ind AS 108
(Operating Segments) - Vide Notification No. S.O.802(E) dated 23-02-2018 issued by Ministry of Corporate Affairs, companies engaged in Defence Production are exempted from
segmental disclosure as required under Ind AS 108, accordingly the disclosure requirements under Ind AS 108 have not been made.
f) 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
g) We draw attention to Note No.7 - Noncurrent Investments amounting to '252.60 Lakhs and Note No. 16 - Current Loans amounting to '1,250,76 Lakhs relating to Investment in Subsidiary M/s. Vignyan Industries Limited (VIL) and '103.54 lakhs relating to inter corporate loan to BLAL.
Based on the explanation and information as furnished to us, we were given to understand that As per the approaval of the CCEA dtd 8th September 2021,Vignyan Industries limited (VIL), a subsidiary of BEML Ltd, is under Voluntary Liquidation and official Liquidator has been appointed on 12 . 1 0 . 20 2 1 b a se d on EG M d td 11.10.2021. Movable assets of VIL have been disposed off and disposal of immovable assets (land) is under process.
Land (factory, helipad, guest house) have been revalued at fair value amounting to '4,266.47 lakhs in line with latest reserve price fixed by NBCC India Limited and a sum of '2,285.97
lakhs had been given credit in Property, Plant and Equipment with suitable adjustment in other equity.
There are no employees under the rolls of VIL. Hence, no acturial valuation under IND AS 19 (employee benefits) has been done.
h) We draw attention to note no 11 (a) -Other Non-current Assets forming part of Financial statements relating to Advance to MAMC Consortium amounting to '7,197.70 Lakhs (Previous Year -'6,827.18 Lakhs)
i) During the year the Company has transferred the following assets at book value to M/s BEML Land Assets Ltd(BLAL) under the MCA approved Scheme of Arrangement for demerger filed with ROC on 25th August 2022.The same has been disclosed under Note-3 B(i) -PPE of the Financial Statements
Land = '636.58 Lakhs
Buildings = '327.89 Lakhs
Our Opinion is not qualified in respect of these matters.
Key Audit Matters
Key Audit Matters are those matters that, in our professional judgment, were of most significance in our audit of the Standalone Ind AS financial statements for the Quarter & financial year ended March 31, 2023. These matters were addressed in the context of our audit of the standalone Ind AS financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matters described in the Emphasis of Matter sections, we have determined the matters described below to be the key audit matters to be communicated in our report:
I. Accuracy of recognition, measurement, presentation and disclosures of revenues and other related balances in view of adoption of Ind AS 115 "Revenue from Contracts with Customers":
Refer Note 30 to the Standalone Ind AS Financial Statements
Key Audit Matters
The application of the revenue accounting standard involves certain key judgements relating to identification of distinct performance obligations, determination of transaction price of the identified performance obligations, the appropriateness of the basis used to measure revenue recognised over a peri od , a n d d i scl osu res i n cl ud i ng presentations of balances in the financial statements. Additionally, revenue accounting standard contains disclosures which involves collation of information in respect of disaggregated revenue and periods over which the remaining performance obligations will be satisfied subsequent to the Balance Sheet date.
Auditor's Response to Key Audit Matters
We understood and evaluated the Company's process, procedure and designed our audit approach consisted testing of the design and operating effectiveness of the internal controls and procedures as follows:
• Evaluated the effectiveness of control
over the preparation of information that are designed to ensure the completeness and accuracy.
• Selected a sample of continuing and new
contracts, and tested the operating effectiveness of the internal control, relating to identification of the distinct performance obligations and determination of transaction price. We carried out a combination of procedures involving enquiry and observation, reperformance and inspection of evidence in respect of operation of these controls.
• Tested the relevant information,
accounting systems and change relating to contracts and related information used in recording and disclosing revenue in accordance with Ind AS 115.
• Reviewed a sample of contracts to identify possible delays in achieving milestones, which require change in estimated efforts to complete the remaining performance obligations.
• Performed analytical procedures and test of details for reasonableness and other related material items.
• Selected a sample of continuing and new contracts and performed the following procedures:
Ý Read, analysed and identified the distinct performance obligations in these contracts.
Ý Compared these performance obligations with that identified and recorded by the Company.
Ý Considered the terms of the contracts to determine the transaction price including any variable consideration to verify the transaction price used to compute revenue and to test the basis of estimation of the variable consideration.
Ý In respect of samples relating to metro contracts, progress towards satisfaction of performance obligation used to compute recorded revenue was verified with actual cost incurred up to that stage with estimation. We also tested the access and change management controls relating to these systems.
Ý Sample of revenues disaggregated by type and service offerings was tested with the performance obligations specified in the underlying contracts.
Ý Performed analytical procedures for reasonableness of revenues disclosed by type and service offerings.
Ý We reviewed the collation of information from the budgeted information of the management used to prepare the disclosure relating to the periods over which the remaining performance obligations will be satisfied subsequent to the Balance Sheet date.
II. Inventory
Refer Note 12 to the Standalone Ind AS Financial Statements
Key Audit Matters
Inventories with reference to Note No. 12 includes Raw Material, Work-In-Progress and Finished Goods which have been physically verified by the management based on physical verification instructions.
Auditor's Response to Key Audit Matters
We have carried out following procedures with respect to the existence of Inventory as at the year-end
• Evaluated the design and implementation of the controls over physical verification of inventory and tested the operating effectiveness of these controls during the interim periods.
• Management had carried out the physical verification of inventory at the year end. We have performed the following alternate procedures to audit the existence of inventory:
Ý The physical verification of inventory of inventory conducted by the management and we performed roll back procedures.
Ý As explainted in Note No. 12(a) in case of Inventory held at third party locations, obtained direct confirmation of the inventory held by third party locations subsequent to the year end and performed roll back procedures.
Ý Obtained physical verification reports of the Management of the company based on inventory verification process. We verified the instructions provided by the management and examined the basis of valuation on a test check basis.
III. Disputes and potential litigations:
Refer to Note 39.D.I.a.i. in the
standalone financial statements
Key Audit Matters
The Company is subject to a number of legal, regulatory and tax cases for which final outcome cannot be easily predicted and which could potentially result in significant liabilities.
The assessment of the risks associated with the litigations is based on complex assumptions. This requires use of judgment to establish the level of provisioning, increases the risk that provisions and contingent liabilities may not be appropriately provided against or adequately disclosed. Management judgement is involved in assessing the accounting for demands, and in particular in considering the probability of a demand being successful. The risk related to the claims is mainly associated with the completeness of the disclosure, and the completeness of the provisions in the financial statements.
Accordingly, this matter is considered to be a key audit matter.
Auditor's Response to Key Audit Matters
In order to get a sufficient understanding of litigations and contingent liabilities, we have discussed the process of identification implemented by the Management for such provisions through various discussions with Company's legal and finance departments.
We read the summary of litigation matters provided by the Company's/ Unit's Legal and Finance Team. We read, where applicable, external legal or regulatory advice sought by the Company.
We discussed with the Company's/ Unit's Legal and Finance Team certain material cases noted in the report to determine the Company's assessment of the likelihood, magnitude and accounting of any liability that may arise.
In light of the above, we reviewed the amount of provisions recorded and exercised our professional judgment to assess the adequacy of disclosures in the Standalone Ind AS financial statements.
Information Other than the Standalone Ind AS Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the preparation of the other information. The other information comprises the information included in the Board's Report including Annexures to Board's Report, Management Discussion and Analysis, Business Responsibility Report, Corporate Governance and Shareholder's Information, but does not include the standalone Ind AS financial statements and our auditor's report thereon.
Our opinion on the standalone Ind AS financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone Ind AS financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone Ind AS financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
Responsibilities of Management and Those Charged with Governance 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, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015 (as amended). 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.
In preparing the standalone Ind AS financial statements the Board of Directors is responsible for assessing the Company's ability to continue as a going concern, disclosure, as applicable, matters relating to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the company or cease operations or has no realistic alternative but to do so.
The Board of Directors are responsible for overseeing the Company's financial reporting process.
Auditor's Responsibilities for the Audit of the Standalone Ind AS Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalone Ind AS financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone Ind AS financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
• Identify and assess the risks of material
misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a
basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal
control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Companies Act, 2013, we are also responsible for expressing our opinion on whether the company has internal financial controls with reference to financial statements in place and the operating effectiveness of such controls.
• Evaluate the appropriateness of
accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of
management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the standalone Ind AS financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation,
structure and content of the standalone
Ind AS financial statements, including the disclosures, and whether the standalone Ind AS financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone Ind AS financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order, 2020 ("the Order") issued by the Central Government of India in terms of sub-section (11) of section 143 of the Companies Act, 2013, 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 appears from our examination of those books.
c) The Balance Sheet, the Statement of Profit and Loss including Other Comprehensive Income, Statement of Changes in Equity and Cash Flow Statement 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 Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Act, read with relevant rules issued there under.
e) As per notification No. GSR 463(E) dated 5th June 2015 issued by the Ministry of Corporate Affairs, Government of India, provisions of Section 164(2) of the Companies Act, 2013 relating to disqualification of directors are not applicable to the Company, being a Government Company.
f) With respect to the adequacy of the internal financial controls with reference to financial statements of the Company in place and the operating effectiveness of such controls, refer to our separate Report in Annexure B.
g) With respect to the other matters to be included in the Auditors' Report in accordance with the requirements of
Section 197(16) of the Act, as amended, we are informed that the provisions of Section 197 read with Schedule V of the Act relating to managerial remuneration are not applicable to the Company, being a Government Company in terms of notification No. GSR 463(E) dated 5th June 2015 issued by the Ministry of Corporate Affairs, Government of India.
h) With respect to other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014 (as amended), in our opinion and to the best of our information and according to the explanations given to us:
i. The Company has disclosed the i mpact of pending litigations on its financial position in its standalone Ind AS financial statements. [Refer Note No. 39(D)(I)(a)(ii)]
ii. The Company did not have any derivative contracts but have provided a sum of 'NIL Lakhs for Onerous contract (PY '20.85 Lakhs) (Refer Note 37).
iii. There are no amounts which are required to be transferred by the Company to the Investor Education and Protection Fund.
iv.
(a) The Management has represented that, to the best of its knowledge and belief, no funds (which are material either individually or in the aggregate) have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person or entity, including foreign entities ("Intermediaries"), with the
understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;
(b) The Management has represented, that, to the best of its knowledge and belief, no funds (which are material either individually or in the aggregate) have been received by the Company from any person or entity, including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; and
(c) Based on the audit procedures that have been considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations
under sub-clause (i) and (ii) of Rule 11(e), as provided under (a) and (b) above, contain any material misstatement.
v. As stated in the Ind AS financial statements
(a) The final dividend proposed in the previous year, declared, and paid by the Company during the year is in accordance with Section 123 of the Act, as applicable.
(b) The interim dividend declared and paid by the Company during the year and until the date of this report is in compliance with Section 123 of the Act.
(c) The Board of Directors of the Company have proposed final dividend for the year which is subject to the approval of the members at the ensuing Annual General Meeting. The amount of dividend proposed is in accordance with section 123 of the Act, as applicable.
vi. As proviso to Rule 3(1) of Companies (Accounts) Rules, 2014 is applicable for the company only w.e.f. April 1, 2023, reporting under this clause is not applicable.
2. As required by Section 143(5) of the Act, we have given in "Annexure-C", a statement on the matters specified in the directions and additional directions issued by the Comptroller and Auditor General of India for the company.
|