We have audited the accompanying
standalone Ind AS financial statements
of M/s. BEML LIMITED (“the Company”),
which comprise the Balance Sheet as at
March 31, 2026, and the Statement of Profit
and Loss (including Other Comprehensive
Income), the Statement of Changes in Equity
and the Statement of Cash flow for the year
then ended, and Notes to the standalone Ind
AS financial statements including summary
of the Material Accounting Policies and
other explanatory information (hereinafter
referred to as “Standalone Ind AS financial
statements”).
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 and give a true and fair view in
conformity with the Indian Accounting
Standards prescribed under section 133
of the Act read with 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, 2026, and Profit (Including Other
Comprehensive Income), changes in Equity
and its Cash Flows for the year ended on that
date.
We conducted our audit in accordance with
the Standards on Auditing (SAs) specified
under Section 143 (10) of the Act. Our
responsibilities under those SAs are further
described in the Auditor’s Responsibilities for
the Audit of the Standalone Ind AS Financial
Statements section of this 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 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.
Key Audit Matters
Key Audit Matters (“KAM”) are those matters
that, in our professional judgment, were
of the most significance in our audit of the
standalone Ind AS financial statements
for the year ended March 31, 2026. 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. We have
determined the matters described below to
the Key Audit Matter to be communicated in
our report.
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Key Audit Matter
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How our audit addressed the
Key Audit Matter
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l.Provision for Onerous
Contracts:
The Company enters into long-term
contracts for manufacture and supply
of products / equipment, some of
which involve extended execution
cycles, customer approvals, inspection
milestones and exposure to changes
in material prices, labour costs, directly
attributable overheads, foreign exchange
rates and delivery schedules.
Under Ind AS 37, a provision is recognised
when the unavoidable costs of meeting
the obligations under a contract exceed
the economic benefits expected to
be received from that contract. The
assessment involves significant
management judgement in estimating
costs to complete, expected recoveries
/ escalations, costs of non-performance,
expected completion timelines, and
foreign currency denominated revenues
and costs.
We consider this matter to be a key audit
matter because the amount recognised
is significant and due to high degree
of estimation uncertainty involved in
determining the unavoidable costs and
economic benefits associated with such
contracts
Reference:
Note # 37: Onerous Contract Provision
(Expenditure for the year - f 23,257.52
lakhs.
Note # 28: Provision for Onerous
Contracts @ 31.03.2026 - f 25,024.15
lakhs.
Accounting Policy: P
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Our audit procedures included the following:
- Obtained an understanding of management's
process and tested the design and operating
effectiveness of relevant controls over
identification, assessment and measurement of
onerous contracts.
- Tested, on a sample basis, contracts executed
and under execution, including review of
contract terms, pricing arrangements, delivery
schedules, escalation / variation clauses,
penalty clauses and foreign currency terms.
- Compared management's estimated costs
to complete with, bill of materials, purchase
orders, service orders, latest procurement
prices, technical estimates, production plans,
historical cost trends and subsequent cost
experience, where available.
- Assessed whether the costs considered as
unavoidable costs were directly related to
fulfilling the contracts and were determined
consistently with the requirements of Ind AS 37.
- Evaluated management's assumptions relating
to expected completion dates, production
efficiencies, design changes if any, material and
labour cost estimates, overhead absorption and
expected recoveries / escalations.
- Tested the exchange rates used for foreign
currency denominated revenue and cost
components and checked the mathematical
accuracy of the computation.
- Evaluated whether impairment indicators
existed for assets dedicated to such contracts
before recognition of the onerous contract
provision.
- Assessed the adequacy of the related
disclosures in the standalone financial
statements.
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Key Audit Matter
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How our audit addressed the
Key Audit Matter
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2. Capitalisation of property, plant
and equipment, intangible assets
and capital work-in-progress
The Company has incurred during the
year substantial capital expenditure on
infrastructure and capacity expansion,
technology upgradation, refurbishment
/ improvement of existing facilities and
long-gestation projects.
Determining whether expenditure
meets the recognition criteria for
capitalisation under Ind AS 16 and Ind
AS 38 involves judgement, particularly in
distinguishing capital expenditure from
revenue expenditure, identifying directly
attributable costs, ascertaining the need
for capitalisation of borrowing costs,
determining the point at which an asset is
ready for its intended use, and assessing
the appropriateness of amounts classified
as capital work-in-progress.
We consider this matter to be a key
audit matter because of the significance
of the balances and additions during
the year, and because management
judgement is involved in capitalisation,
commencement of depreciation /
amortisation and assessment of long-
outstanding capital work-in-progress.
Reference:
Additions to PPE & Intangible Assets
during the year:
' 17,964.47 lakhs.
CWIP @ 31.03.2026 - ' 27,632.71 lakhs
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Our audit procedures included the following:
- Obtained an understanding of management's
process for initiation, approval, recording
and monitoring of capital expenditure and
evaluated the accounting policies adopted by
the Company with reference to Ind AS 16 and
Ind AS 38.
- Tested the design and operating effectiveness
of relevant controls over approval of capital
expenditure, recording of additions, transferfrom
capital work-in-progress and commencement
of depreciation / amortisation.
- Tested, on a sample basis, additions to
property, plant and equipment, intangible assets
and capital work-in-progress by inspecting
purchase orders, invoices, goods receipt
records, work completion certificates, technical
approvals, commissioning documents and trial
run / readiness certificates, as applicable.
- Evaluated whether expenditure was
appropriately classified as capital or revenue
with reference to the nature of expenditure,
underlying technical assessment and the
expected future economic benefits.
- Assessed whether directly attributable costs
and eligible borrowing costs were capitalized
were consistent with the requirements of
applicable Ind AS and whether items not eligible
for capitalisation were expensed.
- Reviewed ageing of capital work-in-progress,
status of major projects, delays, cost overruns
and management's assessment of impairment
indicators in respect of long-pending projects.
- Evaluated the appropriateness of useful lives,
residual values and depreciation / amortisation
commencement dates based on management's
assessment and technical evaluation, where
applicable.
- Assessed the adequacy of the related
disclosures in the standalone financial
statements.
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Key Audit Matter
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How our audit addressed the
Key Audit Matter
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3. Estimation and accounting of
liquidated damages and other
customer recoveries
The Company's contracts with customers
include clauses for liquidated damages in
the event of delayed delivery and other
recoveries for specified deficiencies. The
Company's products generally involve
extended manufacturing periods, design
approvals and inspection by customers
at various stages, which may result in
delays in certain cases.
Management estimates liquidated
damages with reference to contractual
terms, expected or actual delivery dates,
period and cause of delay, customer
approvals / waivers, contractual caps,
correspondence with customers, past
experience and subsequent settlements.
Depending on the substance of the
contractual terms, such amounts are
accounted for as provision / expense for
contracts executed during the year. The
LD for contracts to be executed before
the end of the financial year but delayed
is stated as Contingent Liability. Other
recoveries are recognised when the
customer makes the deduction.
We consider this matter to be a key audit
matter because the amount recognised
is significant and the estimate involves
judgement in assessing contractual
obligations, probability of levy / waiver and
the appropriate accounting treatment.
Reference:
Liquidated Damages expensed:
' 6,788.78 lakhs.
Liquidated Damages @ 31.03.2026 on
contracts pending execution:-Contingent
Liability: ' 2,240.20 lakhs
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Our audit procedures included the following:
- Obtained an understanding of management's
process and tested relevant controls over
identification, monitoring, estimation and
accounting of liquidated damages.
- Selected samples of customer contracts
and inspected the relevant clauses relating to
delivery obligations, liquidated damages rates,
contractual caps, waiver provisions and other
relevant terms.
- Compared management's assessment of
period of delay with production records, dispatch
records, customer inspection reports, delivery
documents, correspondence with customers
and subsequent settlement / waiver evidence,
where available.
- Evaluated management's assessment of
causes of delay, enforceability of liquidated
damages clauses, probability of levy or waiver,
and expected settlement amount.
- Tested the mathematical accuracy of the
computation, including period of delay, rate
of liquidated damages, contractual caps and
amounts already recovered / deducted by
customers.
- Evaluated whether the accounting treatment
as provision / expense was consistent with the
substance of the contracts and applicable Ind
AS requirements.
- Performed subsequent event procedures
by reviewing post year-end customer
correspondence, deductions, settlements and
waivers, where relevant.
- Assessed the adequacy of the related
disclosures in the standalone financial
statements.
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We draw attention to Note No. 11 to the
standalone financial statements regarding
the company’s outlay on the MAMC
Consortium and the related advance to
MAMC Industries Ltd.
Our opinion is not modified in respect of the
above matter.
Information other than the
Standalone Financial Statements
and Auditor’s Report thereon
The Company’s Board of Directors is
responsible for the other information. The
other information comprises the information
included in the Director’s Report and
Management discussion and analysis but
does not include the Standalone Financial
Statements and auditor’s report thereon,
which we obtained prior to the date of this
auditors’ report.
Our opinion on the Standalone 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
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
Financial Statements, or our knowledge
obtained in the audit or otherwise appears to
be materially misstated.
If, based on the work we have performed on
the other information that we obtained prior to
the date of this auditor’s report, we conclude
that there is a material misstatement of this
other information; we are required to report
that fact. We have nothing to report in this
regard.
When we read the Management Discussion
and Analysis and Board of Directors’ Report
along with its Annexures, if we conclude that
there is a material misstatement therein, we
are required to communicate the matter to
those charged with governance and describe
actions applicable under the applicable laws
and regulations.
Responsibilities of Management and
Those Charged with Governance for
the Standalone 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, 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)
prescribed under Section 133 of the Act read
with relevant rules issued thereunder.
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 the estimates that are reasonable and
prudent; and the 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 financial
statements, management and Board of
Directors are responsible for assessing the
Company’s ability to continue as a going
concern, disclosing, as applicable, matters
related to going concern and using the
going concern basis of accounting unless
management either intends to liquidate the
Company or to cease operations, or has no
realistic alternative but to do so. The Board of
Directors are also responsible for overseeing
the Company’s financial reporting process.
Auditor’s Responsibilities for the Audit of
the Standalone Financial Statements
Our objectives are to obtain reasonable
assurance about whether the standalone
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 of 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 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 standalone
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 controls.
• Obtain an understanding of internal
financial controls relevant to the audit in
order to design audit procedures that are
appropriate in the circumstances. Under
section 143(3)(i) of the Act, we are also
responsible for expressing our opinion
on whether the Company has adequate
internal financial control with reference
to standalone 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 in preparation of
Standalone Financial Statements 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.
Materiality is the magnitude of misstatements
in the standalone Ind AS financial statements
that, individually or in aggregate, makes it
probable that the economic decisions of
a reasonably knowledgeable user of the
financial statements may be influenced.
We consider quantitative materiality and
qualitative factors (i) in planning the scope of
our audit work and in evaluating the results
of our work; and (ii) to evaluate the effect of
any identified misstatements in the financial
statements.
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.
Other Matter
We draw attention to the fact that as on
March 31, 2026, the Board of Directors of
the Company comprised one Nominee
Director and two Independent Directors
and six Executive Directors including the
Chairman & Managing Director. Subsequent
to the year end and up to the date of approval
of the financial statements, the cessation of
tenure of the Independent Directors resulted
in the Board comprising of one Government
Nominee Directorand six Executive Directors
including the Chairman & Managing Director.
The composition of the Board is not in
terms of Regulation 17(1) of SEBI (Listing
Obligations and Disclosure Requirements)
Regulation, 2015 and not in terms of section
149 of the Companies Act, 2013 due to
non-appointment of requisite number of
Independent Directors on the Board of the
Company. The Company has intimated the
Ministry of Defence, Government of India
and awaits suitable orders.
Consequent to the Company incorporating
certain changes in the disclosures contained
in Notes to the financial statements,
pursuant to the observations arising from
the supplementary audit conducted by the
Comptroller and Auditor General of India
under section 143(6) of the Companies
Act, 2013, we are issuing this Amended
Independent Auditor’s Report, which
supersedes our earlier Independent Auditor’s
Report dated 29 May 2026.
The aforesaid changes are restricted to
disclosures in the Notes to the financial
statements and do not have any impact on
the amounts reported in the Balance Sheet,
the Statement of Profit and Loss, including
Other Comprehensive Income or the
Statement of Cash Flows, or on our opinion
expressed on the financial statements.
Our audit procedures subsequent to 29
May 2026 were restricted solely to the
amendments to the disclosures described
above.
Our opinion is not modified in respect of the
above matters.
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 in
terms of sub-section (11) of Section
143 of the Act, we give in Annexure A,
a statement on the matters specified in
Paragraphs 3 and 4 of the Order, to the
extent applicable.
2. As required under 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
it appears from our examination of
those books.
c) The Balance Sheet, the Statement
of Profit and Loss, including Other
Comprehensive Income, the
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 prescribed
under Section 133 of the Act and the
Rules made thereunder.
e) In terms of Notification no.
G.S.R.463(E)dt. 05.06.2015 issued
by Ministry of Corporate Affairs, the
provision of Section 164(2) of the
Companies Act, 2013 in respect of
disqualification of Director are not
applicable to the Company.
f) With respect to adequacy of the
internal financial controls with
reference to financial statements
of the Company and the operating
effectiveness of such controls, refer
to our separate report in Annexure B;
g) With respect to Directions issued by
the Comptroller and Auditor General
of India under Section 143 (5) we
give our report in Annexure C:
h) The provisions of Section 197 are
not applicable to this government
company (in terms of MCA
Notification NO.GSR 463 (E)
dated 05th June 2015) as the
managerial remuneration is paid as
per the appointment letter from the
Government of India, and
i) 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 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
impact of pending litigations on its
financial position in its standalone
Ind AS financial statements. [Refer
Note No. 39(D)(1)(a)(i) & (ii)]
ii) The company has made provision
as required under Ind AS for
material foreseeable losses on long
term contracts - ' 23,257.52 lakhs
(Previous Year - ' 2,000.11 lakhs).
The company does not have any
derivative contracts.
iii) There has been no delay in
transferring amounts required to be
transferred to the Investor Education
and Protection Fund
iv) The management has represented
that, to the best of its knowledge
and belief that no funds have
been advanced to or in any other
persons or entities, 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.
v) The management has represented
that, to the best of its knowledge
and belief that the company has
not received any funds from any
persons or entities, 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
other than those disclosed in the
notes to accounts
vi) Based on the audit procedures
that we considered reasonable and
appropriate in the circumstances,
nothing has come to our notice that
that has caused us to believe that the
representations under sub clause(iv)
and (v) contain any material mis¬
statement.
vii) a. The final dividend paid by the
Company during the year in respect
of the same declared for the previous
year is in accordance with Section
123 of the Companies Act 2013 to
the extent it applies to payment of
dividend.
b. The interim dividend declared
and paid by the Company during the
year and until the date of this audit
report for the financial years 2024-25
and 2025-26 are in accordance with
section 123 of the Companies Act,
2013.
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 dividend declared is
in accordance with section 123 of
the Act to the extent it applies to
declaration of dividend.
viii) The company has used such
accounting software for maintaining
its books of account which has a
feature of recording audit trail (edit
log) facility and the same has been
operated throughout the year for all
transactions recorded in the software
and the audit trail feature has not
been tampered with and the audit trail
has been preserved by the company
as per the statutory requirements for
record retention.
For G Natesan & Co,
Chartered Accountants
FRN: 002424S
Sd/-
CA Varalakshmi Murali
Partner, M. No: 028863
UDIN: 26028863QYRURM3608
Place: Chennai
Date: 17.07.2026
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