We have audited the accompanying Standalone Financial
Statements of Bharat Dynamics Limited (‘the company'),

which comprise the Balance Sheet as at 31 March 2026, the
Statement of Profit and Loss (including Other Comprehensive
Income), the Cash Flow Statement, the Statement of Changes
in Equity for the year then ended, and notes to the standalone
financial statements, including a summary of Material
Accounting Policies and other explanatory information
(hereinafter referred to as "Standalone Financial Statements”).

In our opinion and to the best of our information and
according to the explanations given to us, the aforesaid
standalone financial statements give the information required
by the Companies Act, 2013, as amended (‘the Act') in the
manner so required and give a true and fair view in conformity
with the Indian Accounting Standards (‘Ind AS') specified
under section 133 of the Act read with the Companies (Indian
Accounting Standards) Rules, 2015 and other accounting
principles generally accepted in India, of the state of affairs
of the Company as at 31 March 2026 and its profit (including
other comprehensive income), its cash flows and the changes
in equity for the 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 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
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 Financial Statements.

Emphasis of matter

We draw attention to the following matter in the notes to the
Standalone Financial Statements:

a) note 38(7) which describes inventory not moved for more
than five years amounting to '8,327.07 lakh ('8,331.44
lakh as of 31 March 2025) for which no provision for
redundancy were made as is required by the company's
accounting policy for the reasons stated there at

Our opinion is not modified in respect of this matter

Key Audit Matters

1. Key audit matters are those matters that, in our
professional judgement, were of most significance in our
audit of the standalone financial statements of the year
ended 31 March 2026. These matters were addressed
in the context of our audit of the standalone financial
statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion
on these matters.

2. For each matter below, our description of how our
audit addressed the matter is provided in that context.
We have determined the matters described below to be
the key audit matters to be communicated in our report.

Information other than the Standalone Financial
Statements and auditors’ report thereon

The Company's Board of Directors is responsible for the other
information. The other information comprises the information
included in the Annual Report, but does not include the
standalone financial statements and our auditors' report
thereon. The Annual Report is expected to be made available
to us after 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
identified above when it becomes available 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, 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 Annual Report, if we conclude that
there is a material misstatement therein, we are required to
communicate the matter to those charged with governance.

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 Act with respect to
the preparation of these standalone 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
accounting principles generally accepted in India, including the
Indian Accounting Standards (Ind AS) prescribed under Section
133 of the Act read with the 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 judgements 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
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, the 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 the Board of Directors either intend
to liquidate the Company or to cease operations, or has no
realistic alternative but to do so.

Those Board of Directors is also responsible for overseeing
the Company's financial reporting process.

Auditors’ 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 auditors' 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 judgement 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 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 Act, we are also responsible for expressing our
opinion on whether the company has adequate Internal
Financial Controls 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 the management.

» Conclude on the appropriateness of Board of Director'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 auditors' report to the related disclosures in the

Standalone 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 auditors' 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 Financial Statements, including the
disclosures, and whether the Standalone 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 Financial
Statements of the current period and are therefore the key
audit matters. We describe these matters in our auditors'
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 Matters

We draw attention to the fact that the composition of the
Board of Directors of the Company was not in compliance
with the requirements of Section 149 of the Companies Act,
2013 ("the Act") and Regulation 17 read with Schedule II of
the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015 ("SEBI LODR Regulations") during the year
ended 31 March, 2026, due to non-availability of the requisite
number of Independent Directors including Woman Director.
Consequently, the composition of certain Committees of
the Board was not in compliance with the requirements of
Sections 149, 177 and 178 of the Act and Regulations 17, 18
and 19 read with Schedule II of the SEBI LODR Regulations.
Further, as on the date of approval of these financial results,
the Company does not have the requisite number of
Independent Directors on its Board, resulting in suspension
of the Audit Committee and other Committees of the board.
As informed to us, the appointment of Independent Directors
being the prerogative of the Government of India, the matter
is under active consideration.

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 Section 143(11) of the Act, we
give in the Annexure-1, a statement on the matters
specified in paragraphs 3 and 4 of the said Order, to the
extent applicable.

2. Further to our comments in 'Annexure -1', as required by
section 143(3) of the Act, based on our audit, we report,
to the extent applicable, 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 purpose of
our audit of the accompanying Standalone
Financial Statements.

(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 Standalone Financial Statements dealt
with by this report are in agreement with the
books of account.

(d) I n our opinion, the aforesaid Standalone Financial
Statements comply with Indian Accounting
Standards prescribed under Section 133 of the
Act read with the Companies (Indian Accounting
Standards) Rules, 2015 as amended.

(e) The company being a Government Company as
defined under section 2(45) of the Act, pursuant
to the Notification No. GSR 463(E) dated 05 June,
2015 issued by the Ministry of Corporate Affairs,
Government of India, the provisions of sub-section
(2) of Section 164 of the Act, are not applicable
to the company.

(f) With respect to the adequacy of the internal financial
controls with reference to Standalone Financial
Statements of the company as on 31 March 2026
and the operating effectiveness of such controls,
refer to our separate report in Annexure-2.

(g) The company being a Government Company as
defined under section 2(45) of the Act, pursuant
to the Notification No. GSR 463(E) dated 05 June,
2015 issued by the Ministry of Corporate Affairs,
Government of India, the provisions of section 197
of the Act, are not applicable to the company.

(h) With respect to the other matters to be included
in the Auditors' 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, as detailed in note 38(6) to the
standalone financial statements, has disclosed
the impact of pending litigations on its financial
position as at 31 March 2026;

ii. The Company does not have any long-term
contracts requiring a provision for material
foreseeable losses;

iii. The company does not have any amount
required to be transferred, to the Investor
Education and Protection Fund;

iv. (a) The management has represented that,

to the best of its knowledge and belief no
funds have been advanced or loaned or
invested (either from borrowed funds or
securities premium or any other sources
or kind of funds) by the Company to or
in any person(s) or entity(ies), including
foreign entities (‘the 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 (‘the 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 have been received by the Company
from any person(s) or entity(ies), including
foreign entities (‘the 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 such audit procedures
performed as considered reasonable
and appropriate in the circumstances,
nothing has come to our notice that
has caused us to believe that the
management representations under
sub-clauses (a) and (b) above contain any
material misstatement.

v. (a) The final dividend proposed for the

previous year, declared and paid by the
company during the year is in accordance
with Section 123 of the Act, as applicable.

(b) As stated in note no. 38(9) (b) to the
accompanying standalone financial
statements, the Board of Directors of the
Company have proposed final dividend
for the year ended 31 March 2026 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.

(c) The interim dividend declared and paid
by the company is in accordance with
section 123 of the Act.

vi. Based on our examination which included test
checks, the company has used accounting
software for maintaining its books of account
which has a feature of recording audit trail
(edit log) facility and the same has operated
throughout the year for all relevant transactions
recorded in the software. Further, during the
course of our audit we did not come across
any instance of audit trail feature being
tampered with. Additionally, the audit trail has
been preserved by the company as per the
statutory requirements for record retention.

3. As required by section 143(5) of the Act, we give in
‘Annexure-3', a statement on the matters specified in
the directions issued by the Comptroller and Auditor
General of India in respect of the Company.