i. Freehold land consists of 2,086.21 acres (2,086.07 acres) and Leasehold land consists of 989.28 acres (989.28 acres). Freehold land includes INR 176 (INR 155) [represents absolute figure] transferred to investment property during the year.

ii. Freehold land includes 5.49 acres (5.32 acres) leased to commercial/ religious organisations and in their possession.

iii. Contractual Commitments

Refer Note 30(6) for outstanding Contractual Commitments.

iv. Deemed Cost

On transition to Ind AS (01.04.2015), the company has elected to continue with the carrying value of all its property, plant and equipment as at 1 April 2015 measured as per previous GAAP and use that carrying value as the deemed cost of the property, plant & equipment.

v. Estimation of Useful Life of Assets

The management has estimated the useful life of the various categories of Property, Plant and Equipment (which are different from the useful life indicated in Schedule II to the Companies Act, 2013) after taking into consideration, factors like expected usage of assets, risk of technical and commercial obsolescence, etc.

The estimated useful lives of various categories of Property, Plant and Equipment is as follows:

vi. Depreciation / Amortisation

Depreciation is calculated on a straight-line basis over the estimated useful lives of the Assets.

Leased Assets are amortised on a straight-line basis over their estimated useful lives or their respective lease term whichever is shorter.

vii. Method of Accounting Depreciation

Depreciation / Amortisation has been calculated as per the Accounting Policy No. 8 of the Company and recognised as expenses in the Statement of Profit and Loss. Amount of Depreciation recognised as part of Cost of Other Asset is Nil (Nil).

viii. Impairment of Assets

Refer Note 30 (4).

ix. Refer Note 12 in respect of Unadjusted Capital Advance paid towards Property, Plant & Equipment.

x. Land acquired free of cost from the Government in some units has been accounted in line with provisions of Ind AS 101.

xi. Details of Registration, Pending Litigation etc.,

a. Pending execution of title/sale deed and handing over physical possession of land allotted by Andhra Pradesh Industrial Infrastructure Corporation (APIIC) in respect of land admeasuring 5.60 acres (5.60 acres) in Mallapur allotted to BEL, Hyderabad and the matter being under litigation, no provision towards registration and other costs has been made in the books of account. Cost of land paid to APIIC amounting to ' 65 (' 65) has been shown in Note 12 - Other Non current Assets to the Financial Statements under the heading Capital Advances.

b. Based on the Memorandum of Understanding reached with the Defence authorities, assets constructed on the land allotted to BEL and in possession of BEL are capitalised under respective heads for setting up of the Hyderabad Unit. Pending finalisation of the terms and conditions by the appropriate authorities, the cost of land admeasuring 25.11 acres (25.11 acres) has not been accounted in the books of accounts.

c. Land admeasuring 122.82 acres (122.82 acres) at Ibrahimpatnam allotted by APIIC/TSIIC possession is given, for which sale deed is pending.

d. A demand of ' 648 (' 648) being 50% of the compensation amount decreed by City Civil Court, Hyderabad has been received towards additional compensation from TSIIC dated 31.01.2015 for land of 22.375 acres (22.375 acres) which is part of the Freehold Land mentioned above. The demand is under dispute and hence, no provision in respect of the same has been made in the books of accounts.

e. Free hold Land to the extent of 1.22 acres (1.22 acres) which was allotted by Government Authorities in Bengaluru in return for handing over of Land measuring 1.24 acres (1.24 acres) is under litigation.

f. The Company has installed Windmill Generator at three locations. Out of which: Windmill Generator-I capitalised in the year 2006-07 on Lease Land. Lease deed in respect of aforesaid land is under litigation with High Court of Karnataka.

g. The title deed in respect of land in Panchkula measuring 0.979 acres (0.566 acres) is under litigation. Three cases are pending in the Civil Court Ambala, SDM Cum. Assistant Collector, UT, Chandigarh and District Court Panchkula.

h. Sale deed is pending for finalisation of the land admeasuring 913.99 acres (913.99 acres) at Palasamudram (Defence System Integration Complex - DSIC), Ananthapur Dist. AP.

i. Land measuring 0.67 acres (12.52 acres) at Sohna (Haryana), mutation is pending with concerned Tehsildar (Ghaziabad Complex).

xii. Company has installed solar power plants on lease land in Ordnance Factory Board at Medak, Itarsi, Bolangir, HVF Avadi, GCF Jabalpur, VFJ Jabalpur, Hazratpur, Muradnagar, Nalanda, MSF lshapore by paying a nominal value of INR 1 [represents absolute figure] as annual lease rent for every plant.

xiii. Prepaid rent for 3 MW Hassan & 8.4 MW Davangere windmill plants are capitalised as Right of Use on transition to Ind AS 116.

xiv. Physical possession in respect of 31.15 acres of land located at Devanahalli, Bengaluru is received from Karnataka Industrial Area Development Board (KIADB) and capitalised under Lease hold land at ' 8,916 (' 8,916). As per the terms of the lease agreement,on successful commencement of the project the same will be converted as freehold land. Since it is a lease cum sale agreement, depreciation is not provided for the same.

xv. Short term lease amount expended during the year is Nil (Nil).

xvi. Repayment of Lease for Right to Use Asset during the year amounts to ' 724 (' 597).

xvii. Gross block and Accumulated Depreciation for Electronic Equipments include ' 247 and ' 247 (' 247 & ' 247) towards assets procured out of Other Grants.

xviii. Electronic Equipments of acquisition value ' 21,630 (' 14,615) are lying with vendors. Plant & Machinery of acquisition value ' 55 (' 55) and Furniture of acquisition value ' 125 (Nil) is lying outside the factory premises.

xix. Additions related to R&D assets during the year which are not included in the R&D assets class however capitalised under natural code heads amounts to ' 4,805 (' 3,762).

xx. Site Restoration Obligation: Refer Note 21 (iii) for Site Restoration Obligation in respect of Wind Mill & Solar Power Plants. Gross Block Value of Plant & Machinery includes Site Restoration Obligation of ' 2,494 (' 2,440) in respect of Wind Mill & Solar Power Plants. Difference of ' 53 between SRO Assets and SRO Provision under note 21 is due to the revision of Gross Block Value as the deemed cost of the Property, Plant & equipment on transition to Ind AS (01.04.2015).

xxi. Investment property transferred to Freehold Land during the Year INR 533 (Nil) [represents absolute figure].

v. Estimation of Useful Life of Assets

The management has estimated the useful life of the various categories of Property, Plant and Equipment (which are different from the useful life indicated in Schedule II to the Companies Act, 2013) after taking into consideration, factors like expected usage of assets, risk of technical and commercial obsolescence, etc.

vi. Depreciation

Depreciation is calculated on a straight-line basis over the estimated useful lives of the Assets. The amount of Depreciation has been recognised as expense in the Statement of Profit and Loss.

vii. Method of Accounting Depreciation

Depreciation has been calculated as per the Accounting Policy No. 8 of the Company and recognised as expenses in the Statement of Profit and Loss.

viii. Related Party Transactions

Investment Property includes Building and land measuring 0.48 acres (0.48 acres) given under cancellable operating lease to Subsidiary Company BEL Thales Systems Ltd. Also Refer Note 31.

ix. Details of Registration, Pending Litigation etc.

A. Nil (Nil).

x. Restriction on the realisability of Investment Property : There is no restriction on the land alloted to the Company by Government.

xi. Estimation of Fair Value : The Company has estimated the fair value of Investment Property based on the Government Guidance Value (muncipal value) of the similar properties in the investment property's location and not based on the valuation by registered valuer.

xii. Freehold Land comprises of 1.51 acres (1.65 acres) in Bengaluru.

xiii. Freehold Land transferred to investment Property during the Year INR 176 (INR 155) [represent absolute figure]. Investment property transferred to Freehold Land during the Year INR 533 (Nil) [represent absolute figure].

i. Deemed Cost

On transition to Ind AS (01.04.2015), the company has elected to continue with the carrying value of all its other intangible assets as at 1 April 2015 measured as per previous GAAP and used that carrying value as the deemed cost of other intangible assets.

iii. Amortisation

Amortisation is calculated on a straight-line basis over the estimated useful lives of the Assets. The amount of amortisation has been recognised as expense in the Statement of Profit and Loss.

iv. Method of Accounting Amortisation

Amortisation has been calculated as per the Accounting Policy No. 8 of the Company and recognised as expenses in the Statement of Profit and Loss.

v. Refer Note 30(6) for Contractual Commitments.

vi. Impairment of Assets

Refer Note 30(4).

vii. The restriction on the title of the assets is governed by the terms of agreement.

b. Company has not received any dividend so far on these Investments.

c. No strategic investments were disposed off during 2025-26, and there were no transfers of any cumulative gain or loss within equity relating to these investments.

iv. Related party disclosure

For Related Party Disclosures refer Note 31.

v. An amount of INR 50,000 [represents absolute figure] has been contributed towards equity capital in M/s Defence Innovation Organisation (DIO) during FY 2018-19. DlO was incorporated on 10 April 2017 as a 'Not for Profit' Company as per the provisions of Section 8 of the Companies Act, 2013 with an authorised share capital of ' 100 (BEL 50%; HAL: 50%) with an objective of funding innovation in defence sector. The registered office of the company situated in BEL's premises in Bengaluru. An amount of ' 5,000 has been provided in the books of account towards contribution to initial corpus fund. As on 31.03.2026, pending for disbursement is nil.

vi. An amount of ' 164 has been contributed towards equity capital in M/s BEL IAI Aerosystem Private Limited (BIAPL) during FY 2024-25. BIAPL was incorporated on 25 September 2024 under Companies Act, 2013 with an authorised share capital of ' 410 (BEL: 40%; IAI 60%) with an objective to establish Single Point of Contact (SPOC) for Carrying out Post Warranty Product Support Services.

vii. An amount of ' 469 has been contributed towards equity capital in M/s Electronic Warfare (Defence) Testing Foundation (EWDTF) during FY 2024-25. EWDTF was incorporated on 21 May 2024 as a 'Not for Profit' Company as per the provisions of Section 8 of the Companies Act, 2013 with an authorised share capital of ' 1,175 (BEL: 40%; HAL 20%, IOL 20%, BDL 10%, TIDCO 10%) with an objective Defence Testing Infrastructure Scheme (DTIS) under Electronic Warfare (EW) Domain.

viii. An amount of ' 418 has been contributed towards equity capital in M/s Communication (Defence) Testing Foundation (CDTF) during FY 2024-25. CDTF was incorporated on 31 May 2024 as a 'Not for Profit' Company as per the provisions of Section 8 of the Companies Act, 2013 with an authorised share capital of ' 1,045 (BEL: 40%; HAL 25%, BEML: 25%, AWEIL 10%) with an objective Defence Testing Infrastructure Scheme (DTIS) under Communication (C) Domain.

ix. An amount of ' 300 has been contributed towards equity capital in M/s UAS Testing Foundation (UASTF) during FY 2024-25. UASTF was incorporated on 31 May 2024 as a 'Not for Profit' Company as per the provisions of Section 8 of the Companies Act, 2013 with an authorised share capital of ' 1,500 (BEL: 20%; HAL 33.33%, BEML 20%, YIL I 0%, GIL 10% and Endure Air 6.67%) with an objective Defence Testing Infrastructure Scheme (DTIS) under Unmanned Aerial System (UAS) Domain.

x. An amount of ' 155 has been contributed towards equity capital in M/s LENS (Laboratory for Electro-Optical Navigational System) Foundation during FY 2024-25. LENS was incorporated on 15 May 2024 as a 'Not for Profit' Company as per the provisions of Section 8 of the Companies Act, 2013 with an authorised share capital of ' 1,500 (IOL: 35%; AVNL 35%, BEL 15%, GSL 10% and TIDCO 5%) with an objective of Defence Testing Infrastructure Scheme (DTIS), Laboratory for ElectroOptical Navigational System Domain. However, issued share capital is ' 1,031 as on 31.03.2026.

i. Payment Terms

A. I n majority of contracts, payment (net of advance received, if any) is due on delivery of items. However, in some contracts a portion of dues (Typically 5% to 10%) is linked to satisfaction of further performance obligation like completion of installation and commission activity etc. In respect of turnkey contracts, payment (net of advance, if any) is linked to achievement of specified milestone.

B. Advance including progressive payments received from customer are classified as contract liability and adjusted on completion of related performance obligation.

C. Amount retained by customer in respect of completed performance obligation, due to linking of payment with completion of other performance obligations in the contract, is classified as contract asset. Balance amount receivable is classified as Trade receivable.

ii. Financial instruments

Refer Note 32 for classification of financial instruments.

iii. Impairment of financial assets

Provisions for impairment has been made in line with Accounting Policy No. 30 of the company.

iv. Related party disclosure

For Related Party Disclosures refer Note 31.

v. Security, Hypothecation etc

Refer Note 34.

i. Raw Materials and Components include ' 24,487 (' 15,762) being materials with sub-contractors, out of which ' 19 (' 85) of materials is subject to confirmation and reconciliation. Against ' 19 (' 85) an amount of ' 19 (' 84) has been provided for.

ii. Raw Material and Components (RMC) Stock verification discrepancies for the year are as follows :

Shortages of' 1,377 (' 3,263) and surplus of ' 423 (' 587). Pending reconciliation, an amount of ' 340 (' 2,630) has been provided for.

iii. Valuation of Inventories has been made as per Company's Accounting Policy No. 18.

iv. A. The United Nations Climate Change Secretariat has granted 15,856 (15,856) TON CO2EQ carbon credit for the 2.5

MW BEL Grid Connected Wind Power Project Davangere District, Karnataka for the verification period from 05.11.2007 to 31.03.2012 (05.11.2007 to 31.03.2009). The carbon credits are included under Finished Goods at a value of ' 2 (' 2). The CER is valued at cost as required by Guidance Note on CER issued by ICAI.

v. Security, Hypothecation etc

Refer Note 34.

vi. Amount recognised in Statement of Profit & Loss

Write-down of inventories (including stock verification discrepancies) to net realisable value amounted to ' 3,076 (' 1,282) has been recognised in the statement of profit and loss for Work in progress and Finished goods.

vii. Reversal of write down of inventories (including stock verification discrepancies) of ' 228 (' 1,146) has been made during the year, which were recognised as an expenses in the previous year for Work in progress and Finished goods.

viii. Impairment of Assets

Provisions for inventory has been made in line with Accounting Policy No. 18 of the Company.

ix. Materials amounting to ' 13,948 (' 5,884) are located physically at Customer Premises.

x. The Company has received/retained the assets of the customer as per the contractual terms and those do not form part of the inventory.

i. Impairment of Assets

Provisions for impairment of non financial assets has been made in line with accounting policy No. 13 of the company.

ii. Related Party Disclosure

For related party disclosures refer Note 31.

iii. Closing balance of contract costs represents, cost to obtain the contract from customer ' 12,922 (' 281) & cost to fulfill contract is ' 15,329 (' 46,324).

iv. Amortisation and Impairment of Contract Costs

Amortisation of contract costs determined based on the period of benefit expected from the contract cost is ' 36,961 (' 20,139). Impairment of contract costs recognised is Nil (Nil).

v. Impairment of a contract asset

Impairment of a contract asset charged during the year is ' 5,196 (' 17,027).

vi. Security, Hypothecation etc

Refer Note 34.

i. Refer Note 32 for classification of financial instruments.

ii. There are no repatriation restrictions with regard to cash and cash equivalents.

iii. Cash and cash equivalents includes Term Deposits with original maturity period up to three months. Term Deposits with original maturity period beyond Three months upto Twelve months have been included in Bank balances (Refer Note 14) and Term Deposits with maturity period beyond Twelve months have been included in Other financial assets (Refer Note 9).

iv. Security, Hypothecation etc

Refer Note 34.

v. Balance with banks include: Pursuant to Stay Order received from the Excise and Taxation Department Gurugram (South), bank authorities have held ' 21(Nil) based on the Garnishee order issued by the Excise and Taxation Officer, Gurugram.

vi. Balance with banks include: Pursuant to Stay Order received from the Police Station Chandigarh, bank authorities have held ' 363 (Nil) based on the Garnishee order issued by the Station House Officer, Chandigarh.

x. Terms, Rights, preferences and restrictions attaching to each class of shares

A. The Company has only one class of shares viz, Equity Shares.

B. Each holder of Equity Shares is entitled to one vote on show of hands and in poll in proportion to the Number of shares held.

C. Each Shareholder has a right to receive the dividend declared by the Company.

D. On winding up of the Company, the equity shareholders will be entitled to get the realised value of the remaining assets of the Company, if any, after distribution of all preferential amounts as per law. The distribution will be in proportion to the number of equity shares held by the shareholders.

B. Nature and purpose of Reserves

a. Capital Reserve

Capital Reserve is created by transfer from Retained earnings an amount equal to capital profit earned by the company. The reserve is utilised in accordance with the provisions of the Companies Act, 2013.

b. Capital Redemption Reserve

Capital Redemption Reserve is created by transfer from General Reserve an amount equal to face value of the Shares bought back. The reserve is utilised in accordance with the provisions of the Companies Act, 2013.

c. Equity Investment through Other Comprehensive Income (OCI)

The company has elected to recognise changes in fair value of certain equity investments in other comprehensive income. The change in fair value is accumulated in this reserve. If and when the investment is de-recognised the accumulated amount will be transferred to Retained earnings.

d. Other Comprehensive Income (OCI)

Other comprehensive income are those gains or losses which are not yet realised and excluded from the statement of profit and loss. It mainly consists of remeasurement of the net defined benefit liability/asset (net of tax).

xii. Government of India being the Promoter holding 51.14% (51.14%) of Shares as on 31.03.2026. No. of Equity Shares held as on Balance Sheet date is 373,79,21,934 (373,79,21,934).

ii. Provision for Warranties - as per Accounting Policy No. 20 of the Company.

Provision for warranties is made in respect of products whose normal warranty period is outstanding. As the warranty provision period varies from product to product, provision is made at Strategic Business Unit (SBU) level based on average period of warranty period. Provision is made based on trend based estimate of the likely expenses to be incurred. The provision is measured at the present value of the estimated cost of Warranty.

iii. Provision for Site restoration - as per Accounting Policy No. 23 of the Company.

In accordance with the terms and conditions of the Lease agreement entered into with Lessor, the company is required to return the land in its original condition. Accordingly provision in respect of Site restoration obligation has been made. The provision required is reviewed and required adjustment made at each year end.

The provision is measured at the present value of the best estimate of the cost of restoration.

iv. Provision for Onerous contracts - as per Accounting Policy No. 23 of the Company.

In respect of certain contracts entered into by the company, it is expected that the likely cost to complete the contract would exceed the Revenue received / receivable against the contract. In such cases, provision in respect of the expected losses has been made. The provision required is reviewed and required adjustment made at each year end. The provision is measured at the present value of the best estimate of loss likely to be incurred.

v. Performance warranty obligation in respect of sale where back to back warranty of vendor is available, potential liability, if any, in the event of default of vendor is not ascertainable and not expected to be significant.

vi. An amount of ' 18,932 (' 13,622) has been debited against Natural Code Heads with respect to Warranty Cost.

(A) POST EMPLOYMENT BENEFIT OBLIGATION (i) GRATUITY:

The Company provides gratuity to employees in India as per payment of Gratuity Act, 1972. The Company has a Gratuity Scheme for its employees, which is a funded plan. Every year, the Company remits fund to the Gratuity Trust to the extent of shortfall of the assets over the fund obligations, which is determined through actuarial valuation. As per the Gratuity Scheme, gratuity is payable to an employee on the cessation of his employment after he has rendered continuous service in the Company. For every completed year of service or part thereof in excess of six months, the Company shall pay gratuity to an employee at the rate of fifteen days salary based on the last drawn basic & dearness allowance.

Satisfaction of performance obligation

A. In majority of the contract, performance obligation is satisfied "at a point in time" which is primarily determined on customer obtaining control of the asset. One of the prime indicator considered for this is transfer of significant risk and rewards to the customer based on Inco terms. Where a contract involves multiple performance obligation, the criteria specified in Ind AS 115 is applied to determine the point in time when the performance obligation is satisfied.

B. Under "Bill and hold" arrangement performance obligation is satisfied on unconditional appropriation of the goods to the contract. Normally no obligation towards custodial service exists.

C. Contract with the customer normally do not contain significant financing component and any advance payment received and /or amount retained by customer is with intention of protecting either parties to the contract.

D. Variable consideration primarily consists of amount receivable/reimbursable against foreign exchange variation clause. The amount of revenue recognised in respect of the same is determined based on the methodology specified in the contract. The amount is recognised as revenue on accrual basis.

E. The company's turnover mainly includes supply of defence electronics equipments and systems.

F. Contract entered into with customer, typically do not have a return/refund clause.

G. Warranties provided are primarily in the nature of performance warranty.

H. The company normally uses the input method to recognise revenue in respect of contracts in which performance obligation are satisfied over a period of time. For revenue recognition, the percentage of completion method is adopted where in the percentage of actual cost incurred to total estimated cost is applied to the contract price for arriving at the quantum of revenue to be recognised.

I. Contract with customer (other than AMC) in respect of which revenue is recognised over a period of time typically involves multiple activities of different nature like construction of building, supply and installation of equipments, networking of equipment and system etc. Due to this it is not possible to quantify in physical terms the quantum of work done (i.e., output) reliably. Whereas, under input method, the cost incurred in respect of these varied activities can be captured and compared to the total estimated cost to be incurred (which can be estimated reliably), for arriving at the percentage of completion. In case of AMC contracts, output method is used to recognise revenue where passage of time is the criteria for satisfaction of performance obligation.

J. For revenue recognition in respect of performance obligation satisfied at a "point in time"the following criteria is used for determining; whether customer has obtained 'Control on asset"

• Control is not retained

• Customer has legal title to the asset

• The entity has transferred physical possession of the asset

• Customer has accepted the asset

• Entity has the present right to payment for the asset

K. Transaction price is typically determined based on contract entered into with customer. Allocation of transaction price in respect to multiple obligation is based on relative standalone selling price.

L. No non-cash considerations are received/given during the current/previous year.

iii. Retention Sale

The Value of Retention Sales (i.e., Goods retained with the Company at the Customers' request and at their risk) included in Turnover during the year is ' 2,67,503 (' 53,008).

2 Statement of Compliances

The standalone financial statements are prepared in accordance with Indian Accounting Standards (Ind AS) [as notified under section 133 of the Companies Act, 2013 (the "Act") read with the Companies (Indian Accounting Standards) Rules, 2015, as amended.] and other relevant provision of the Act.

The Company's standalone financial statements up to and for the year ended 31 March 2016 were prepared in accordance with the Companies (Accounting Standards) Rules, 2006, notified under Section 133 of the Act and other relevant provisions of the Act.

3 Operating Cycle

As per the requirement of Schedule III to the Companies Act, 2013, the Operating Cycle has been determined at Strategic Business Unit (SBU) / Unit level, as applicable.

4 Impairment of Assets

The Company has analysed Indications of impairment of assets of each geographical composite manufacturing unit considered as Cash Generating Units (CGU). On the basis of assessment of internal and external factors, an accumulated amount of ' 4,996 (' 9,170) is provided as provision for impairment as on Balance Sheet date. During the year an amount of ' 4,826 (Nil) has been provided as impairment of asset.

5 Short Term Borrowings

a The Company has been sanctioned working capital limit of ' 5,00,000 (' 5,00,000) by Consortium Bankers (SBI Lead Bank). The sanctioned limit includes fund based limit of ' 50,000 (' 50,000) and non fund based limit of ' 4,50,000 (' 4,50,000).

b The interest rate payable on fund based limit is linked to SBI 3 Months MCLR Rate. [Interest rate payable as on 31.03.2026 is 8.25 % p.a. (8.55%)].

c The amount utilised is repayable on demand. Utilisation as on 31.03.2026 is Nil (Nil).

d The above sanction limit is secured by hypothecation of Current Assets of the Company (Refer Note 34).

10 Confirmation of Balances

Letters requesting confirmation of balances have been sent in respect of Trade Receivables, Trade Payables, Advances and Deposits. Wherever replies have been received, reconciliation is under process and impact on Financial Statements is not expected to be material.

11 Leases

Adoption of Ind AS 116

Effective 1 April 2019, the company has adopted Ind AS 116 "Leases" using modified retrospective approach. The adoption of the standard did not have any material impact on the financial statements of the company.

b) As a Lessee:

The right of use asset is recognised at :

a) The carrying amount of prepaid rent when no future lease payments are payable; or

b) At the carrying amount and discounted at incremental borrowing rate.

The company has not recognised any expenses as contingent rent.

The maturity analysis of Contractual Cash flows of Lease Liabilities is disclosed in Note 33.

12 Segment Reporting

Ministry of Corporate Affairs vide Notification no. 463 (E) dated 5 June, 2015 as amended has exempted the Companies engaged in Defence Productions from the requirement of Segment Reporting.

13 Unhedged Foreign Exchange Exposure

The disclosure of "Foreign Exchange Exposure", the major currency-wise exposure as on 31 March 2026 is given below. [Foreign currencies are shown in Lakhs]. (Previous year figures are shown in brackets).

f The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:

a. 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

b. provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries,

g The Company has not done any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).

21 Receivable other than trade receivable includes, a fraud on the company by the employees during the year 2018-19 amounting to ' 1,000 has been detected during the routine internal audit. Out of the said amount, ' 64 has been recovered and the balance amount of ' 936 is recognised as receivable, pending recovery, the same has been provided for as doubtful in the Statement of Profit and Loss. The company has filed civil suits on respective employees and vendor. During the Financial Year 2022-23, ' 54 has been incurred towards court fees for filing civil suits.

22 Previous years's figure have been regrouped/reclassified wherever necessary. Figure in brackets relate to previous years.

23 All figures in financial statements are rounded off to nearest rupees in lakhs unless otherwise mentioned.

24 The standalone Ind AS financial statements were approved for issue on 19 May 2026 by the Board of Directors.

f. All Outstanding balances are Unsecured. All Outstanding balances (Other than loan) is repayable in cash within next 6 months.

g. Management Contracts including deputation of Employees

Two Officials of BEL have been deputed to BELOP (Subsidiary) and Seven Officials of BEL have been deputed to BEL-THALES Systems Limited (Subsidiary) and their Salary and Other Costs is paid by BELOP and BEL-THALES System Limited. respectively during the year as per terms and conditions of employment.

h. Transaction with Government and Government Related Entities

As BEL is a government entity under the control of Ministry of Defence (MoD), the company has availed exemption from detailed disclosures required under Ind AS 24 with respect to related party transactions with government and government related entities.

However as required under Ind AS 24, following are the individually significant transactions : -An amount of ' 1,06,531 (' 85,979) was paid as Dividend during the FY 2025-26.

In addition to the above, around 94% (96%) of the Company's Turnover, around 94% (94%) of Trade Receivables and around 98% (97%) of Customer's Advance is with respect to government and government related entities.

i. Investment with respect to BELOP includes fair valuation of loan.

j. Defence Innovation Organisation (DIO) was incorporated on 10 April 2017 as a 'Not for Profit' Company as per the provisions of Section 8 of the Companies Act, 2013 with an authorised share capital of ' 100 (BEL: 50%; HAL: 50%) with an objective of funding innovation in defence sector. The registered office of the company is situated in BEL's premises in Bengaluru.

k. BEL IAI Aerosystems Private Limited (BIAPL) was incorporated on 25 September 2024 under Companies Act, 2013 with an authorised share capital of ' 410 (BEL: 40%; IAI 60%) with an objective to establish Single Point of Contact (SPOC) for Carrying out Post Warranty Product Support Services.

l. Electronic Warfare (Defence) Testing Foundation (EWDTF) was incorporated on 21 May 2024 as a 'Not for Profit' Company as per the provisions of Section 8 of the Companies Act, 2013 with an authorised share capital of ' 1,175 (BEL: 40%; HAL 20%, IOL 20%, BDL 10%, TIDCO 10%) with an objective Defence Testing Infrastructure Scheme (DTIS) under Electronic Warfare (EW) Domain.

m. Communication (Defence) Testing Foundation (CDTF) was incorporated on 31 May 2024 as a 'Not for Profit' Company as per the provisions of Section 8 of the Companies Act, 2013 with an authorised share capital of ' 1,045 (BEL: 40%; HAL 25%, BEML 25%, AWEIL 10%) with an objective Defence Testing Infrastructure Scheme (DTIS) under Communication (C) Domain .

n. UAS Testing Foundation (UASTF) was incorporated on 31 May 2024 as a 'Not for Profit' Company as per the provisions of Section 8 of the Companies Act, 2013 with an authorised share capital of ' 1,500 (BEL: 20%; HAL 33.33%, BEML 20%, YIL 10%, GIL 10% and Endure Air 6.67%) with an objective Defence Testing Infrastructure Scheme (DTIS) under Unmanned Aerial System (UAS) Domain.

Note 33 - Financial risk managementi) Risk Management framework and policies

The Company is broadly exposed to credit risk, liquidity risk and market risk (fluctuations in exchange rates, interest rates and price risk) as a result of financial instruments.

Board of Directors have the overall responsibility for the establishment, monitoring and supervision of the Company's Risk Management framework. The Board has set up a Risk Management Committee, for this purpose, which is responsible for developing and monitoring the risk management policies. The Company has an established Risk Management Policy that outlines risk management structure and provides a comprehensive frame work for identification, evaluation, prioritisation, treatment of various risks associated with different areas of finance and operations.

The company has a centralised Treasury function which is responsible to undertake appropriate measures to mitigate financial risk in accordance with the policies and procedures formulated by the Board. Hedging transactions are undertaken by a team with appropriate skills and experience in consultation with an external expert. The Company does not trade in derivatives for speculation.

ii) Market Risk

Market risk is the risk that changes in market prices such as foreign exchange rates, interest rates will affect the Company's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

The Company's activities expose it primarily to the financial risks of changes in foreign exchange rates and interest rate movements (refer to notes below on currency risk and interest risk).

iii) Currency Risk

BEL is exposed to foreign exchange risk arising from foreign currency transactions primarily relating to purchases and sales made in foreign currencies such as US Dollar, Euro, Great Britain Pound, Swiss franc and Japanese Yen. Foreign exchange risk arises from existing and future commercial transactions and recognised assets and liabilities denominated in a currency that is not the Company's functional currency (INR).

The Company has a Board approved currency risk management policy implemented by a Risk Management Committee that reviews the Company's exposure to this risk on a regular basis. The Risk Management Policy recommends hedging upto 50% of the open foreign currency exposure. However the decision to enter into a hedging arrangement is made by the Risk Management Committee based on the relevant data inputs and the advice of the external specialist consultant retained for this purpose.

The Company's export proceeds are realised mostly by remittance into an Export Earners Foreign Currency account (EEFC) which is then utilised for payments to be made in foreign currency, thereby mitigating the currency risk on exports. Imports to the extent of around 17% (13%) of annual foreign exchange outgo are not covered by the Exchange Rate Variation (ERV) clause in the related customer contract and hence are open to currency risk. These imports are benchmarked as per the policy and appropriate decision on covering the risk is taken on a case to case basis. The Company's currency risk policy advocates forward contract hedging for mitigating risk wherever required.

As on 31 March 2026, there are no outstanding forward contracts.

pay its liabilities when they are due. To ensure continuity of funding, the Company has access to short-term bank facilities in the nature of bank overdraft facility, cash credit facility and short-term borrowings to fund its ongoing working capital requirements and growth needs when necessary.

The Company meets its liquidity requirement mainly through internally generated cash flows which is monitored centrally by treasury. There is an established process of rolling cash forecasts from various operating units which form the basis for mapping expected cash inflows, to meet the liabilities.

The table below analyses the company's financial liabilities based on their contractual maturities. The amounts disclosed are contractual undiscounted cash flows.

The cash and cash equivalent with banks are in the form of short term deposits with maturity period of upto 1 year. The Company has a well structured Risk Mitigation Policy whereby there are preset limits for each bank based on its net worth and earning capacity which is reviewed on a periodic basis. The Company has not incurred any losses on account of default from banks on deposits. The credit risk in respect of other financial assets is negligible as they are mostly due from Government department / parties.

x) Capital Management

The Company's Capital Management objective is to maintain a strong capital base to provide adequate returns to the shareholders and ensure the ability of the company to continue as a going concern. The Company has a conservative approach for raising capital through debt but reserves the right to leverage this alternative at an appropriate time to fuel growth and maintain optimal capital structure.

The Company has a well defined Dividend Distribution Policy which lays the framework for payments of dividend and retention of surplus for future growth and enhancing shareholders wealth. The Company has been sanctioned borrowing limits with banks to the tune of ' 5,00,000.

ix) Credit Risk

Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in financial loss to the Company. Credit risk arises from credit exposures from customers, cash and cash equivalent with banks, security deposits and loans. The credit risk of the Company is managed at a corporate level by the risk management committee which has established the credit policy norms for its customers and other receivables. Significant amount of trade receivables are due from Government / Government Departments, Public Sector Companies (PSUs) consequent to which the Company does not have a credit risk associated with such receivables. In case of non Government trade receivables, sales are generally carried out based on Letter of Credit established by the customer thereby reducing the credit risk. In a few cases credit is extended to customers based on market conditions after assessing the solvency of the customer and the necessary due diligence to determine credit worthiness. Advance payments are made against bank guarantee which safeguards the credit risk associated with such payments. Impairment losses on financial assets (representing mainly liquidated damages leviable for delayed deliveries and other disallowances) have been made after factoring contractual terms, etc and other indicators.

Note 35 - Critical estimates and judgments

While preparing the financial statements, management has made certain judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised prospectively.

Judgments made in applying accounting policies that have the most significant effects on the amounts recognised in the financial statements and estimates that have a significant risk of resulting in a material adjustment are as under:

i. Research and Development Expenditure - Accounting Policy No. 10 - (Refer Note 5 and 12)

Developmental expenditure incurred with respect to No Cost No Commitment (NCNC) Projects and Joint developmental projects which are not fully compensated by the development partner are carried forward till the completion of project.

ii. Estimation of defined benefit obligation - Key actuarial assumptions - (Refer Note 21)iii. Estimation of provision for warranty claims - (Refer Note 21)

Warranty provision computation involves estimation of average warranty cost based on trend based analysis. If the estimations made varies, the same will impact the expense recognised.

iv. Recognition of Revenue - (Refer Note 23)

Input methods towards performance obligations over time involves estimation of Stage of completion based on actual costs incurred to the estimated total costs expected to complete the contract. If the estimations made varies, the same will impact the Revenue recognised.

v. Intangible assets (Refer Note 4 and 5)

Amount carried forward as other intangible assets and Intangible assets under development are tested for impairment annually with respect to certainity of future economic benefits.

vi. Lease (Refer Note 1)

The company evaluates if an arrangement qualifies to be a lease as per the requirement of Ind AS 116. Identification of lease requires significant judgements. The company uses significant judgement in assessing the lease term (including anticipated renewals) and the applicable discount rate.

The discount rate is generally based on the incremental borrowing rate specific to the lease being evaluated.

Note 36 - Recent accounting pronouncements

Ministry of Corporate Affairs ("MCA") notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time.

For the year ended 31 March 2026, MCA has not issued any such notification that would have been applicable from 1 April 2026.

Income Tax Act 2025:

During 2025-26, Government of India amended the Income Tax Act and new Income Tax Act, 2025 is effective from 1 April 2026. The Company has reviewed the new pronouncements and based on its evaluation has determined that it does not have any significant impact in its financial statements.