In English - Bharat Heavy Electricals Ltd.

Annexure to the Auditors’ Report
(Referred to in paragraph 3 of our repor t of even date on the accounts of Bharat Heavy Electricals Limited for the year ended 31 st 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.
ANNUAL REPORT 2011-12
98