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Bharat Heavy Electricals Ltd.-இன் இயக்குநர் அறிக்கை

Mar 31, 2023

The Board of Directors takes pleasure in presenting the 59th Annual Report on the business and operations of your Company and the Audited Financial Statements for the year ended March 31, 2023.

Financial Results

For the year ended

March 31, 2023

March 31, 2022

Revenue

22136

20153

Revenue from operations

23365

21211

Profit/(loss) after tax

448

410

Total comprehensive income /(loss)

430

487

EPS (in ?)

1.29

1.18

State of Company Affairs

The company posted a growth of 10% in Revenue from Operations, achieving ?23,365 Crore during FY 2022-23 as against ?21,211 Crore in last financial year and a growth of 9.3% in Profit After Tax achieving ?448 Crore as against ?410 Crore in the previous year.

The results of continued focus in recent years on project execution, closures and physical performance have become clearly visible with erection tonnage at project sites at a record 5.41 lakh MT (doubled over a period of previous 3 years) despite decline in order book on the back of ''nil'' ordering in thermal sector for over three years as well as increase in liquidation of Current Year billing to 86% in FY 2022-23 from 59% over the past four years. This is a clear indication of success of the major initiatives including implementation of Integrated Project Management System (IPMS) for real time project monitoring, Site Data Digitization for ensuring single source of data, focus on sequential supplies and technical & financial closure of completed projects. Focused project management efforts saw excellent results with commissioning of North Karanpura Unit 1, Nation''s first utility scale thermal power plant fitted with Air Cooled Condenser (ACC), as well as commissioning of Unit 1 of the prestigious 2x660 MW Maitree Super Thermal Power Project, Bangladesh. Further, Unit 2 of the Maitree Project has been synchronized on 28 June 2023 ahead of a very tough time target given by Government of Bangladesh, for the same.

Diversification efforts in recent years saw fruits in the form of signing of MoU with Coal India Ltd for setting-up of 2,000 TPD Coal to Ammonium Nitrate plant based on BHEL''s indigenous technology for gasification of high ash Indian coal (first proven technology for the same), which has been followed with completion of engineering, optimization & validation by international experts and formation of the Joint Venture is progressing well. Further efforts for increasing our

rail transportation business led to award of prestigious order for manufacturing and maintenance of 80 sets of ''''Vande Bharat" trainsets. This project is being taken-up by BHEL as lead partner in consortium with Titagarh Rail Systems Ltd. and is valued at over ?23,000 Crore excluding taxes (BHEL share at about ?13,500 Crore).

With regard to future growth perspective, the order booking for the company in FY 2022-23 touched ?23,548 Crore (net of taxes), which is highest in the last 5 years. It is also pertinent to note that the company''s efforts in the Industry Sector have borne fruits and the order booking at ?9,537 Crore (net of taxes) is highest in the last 13 years, with its share at 40% of the yearly order book. The reporting of order book is done excluding applicable taxes for better understanding of all stakeholders, and is in line with the reporting of revenue numbers.

The total outstanding order book as on 31st March 2023 stands at ?91,336 Crore, net of taxes (PY ?90,084 Crore). With the receipt of the prestigious “Vande Bharat" trainset order in April 2023, the total outstanding order book has crossed ?1 Lakh crore (excluding taxes), which is the highest in last 4 years.

The increase in revenue in FY 2022-23 has been achieved despite challenges persisting for material availability on account of geopolitical issues and scarcity of key inputs such as semiconductors. The spares & services business, which has been a focus area for your company, recorded a growth of about 25%.

Material cost in the recent past has been a challenge, not only for BHEL but also across the industry spectrum, domestic as well as global. Though metal prices have seen some corrections, they are still at substantially elevated levels. Despite these constraints, your company was able to maintain the material cost during FY 2022-23, at levels similar to previous year. In the coming year, rising raw material prices as well as execution of old projects, won through highly competitive bidding, are expected to continue to affect the financial position & liquidity of the company.

Higher fuel prices have adversely impacted the bottom-line. Furthermore, inflation in general is also putting persistent pressures on operational budgets which are being dealt through stringent budgetary controls measures. The company is focusing on project completion despite poor margins in civil revenues, which would continue to challenge the bottom-line.

Your company optimized the inventory levels by unlocking the blocked inventories, and during the year 2022-23, ?230 Crore worth of non-moving inventory was liquidated. The efforts in sale of scrap, disposal of non-moving inventory, etc., in the company have helped increase other operational income and has assisted in improving EBITDA levels to ?1,231 Crore, up by about 11% from EBITDA of ?1,106 Crore for FY 2021-22. Profit After Tax for FY 2022-23 was further aided by the gains made in the taxation area. During the year, the company received Income Tax refunds (including interest) totalling ?266 Crore, which have helped in the net cash generation as well as the bottom line.

Other operational income, directly contributing to bottom line, reached its highest levels at ? 1,229 Crore during FY 202223, which is up by 16% over FY 2021-22. The increase in Profit After Tax was also aided by continued stringent budgetary control on Manufacturing, Administrative and S&D expenses, which have been at their lowest level at 6.6% of Revenues, reflecting strong budgetary controls in the company.

Concerted efforts & thrust on ''Project Centric'' operations resulted in liquidation of current year billing at 86% in FY 2022-23, which is similar to last year. The trade receivables

in terms of no. of days of Revenue from Operations, have reduced to 102 days during FY 2022-23, as against 107 days during FY 2021-22.

The Trade Receivables were at ?6,544 Crore as on 31st March 2023 (?6,229 Crore as on 31st March 2022) and Contract Assets stand at ?29,740 Crore as on 31st March 2023 (?26,940 Crore as on 31st March 2022). Though overall receivables have increased during FY 2022-23, there is a reduction in terms of no. of days of Revenue from Operations from 571 days last year to 567 days current year. The increase in receivables is mainly on account of skewed payment terms in contracts under execution that resulted in higher accumulation of deferred debts that are payable on completion of intermediate and final milestones.

Due to high investment in contract assets, the company had some pressures on cash position. However, the company retained its debt free status with closing positive cash & bank balance (net of short-term borrowings) of ?1,258 Crore, and has enough leverage to invest in capex and diversification initiatives.

Transfer to Reserve

The company has not transferred any amount to the Reserves during FY 2022-23.

Dividend

The Board of Directors, in its meeting held on May 26, 2023 has recommended a final dividend @20 % (?0.40 per share of X2 each), amounting to ?139.28 Crore, out of profit for FY 2022-23, subject to your approval.

The Company has a dividend distribution policy in place in pursuance of the requirements of Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR"). Dividend distribution policy is available on the Company''s website at https://www.bhel.com/dividend-distribution-policy-bhel-0.

Deposits

The Company has not accepted deposits from the public falling within the ambit of Section 73 of the Companies Act, 2013 during FY 2022-23.

Capital & Finance

During FY 2022-23, the company has met its CAPEX and operating fund requirements through internal accruals. The company invests any available surplus funds to maximize the interest income to the company. To meet any intermittent operational fund requirement, short term borrowing options used by the company including WCDL, Commercial Papers (listed on NSE and BSE), PCFC, etc. PCFC borrowings provide a natural forex hedge to the company. The company continues to retain its status as Zero Debt Company.

Loans and Investments

There are no instances of investments by the loanee in the company or its subsidiary.

Credit Rating

The credit ratings of your Company are as follows:

Rating

Agency

Date of Rating

Long Term Rating

Outlook

Short

Term

Rating

CRISIL

18-06-2021

CRISIL AA-

Negative

CRISIL A1

25-07-2022

CRISIL AA-

Negative

CRISIL A1

INDIA RATINGS & RESEARCH

01-07-2021

Ind AA-

Negative

Ind A1

30-06-2022

Ind AA-

Negative

Ind A1

CARE

24-06-2021

CARE AA-

Stable

CAREA1

17-06-2022

CARE AA-

Stable

CAREA1

19-06-2023

CARE AA-

Stable

CAREA1

Persistent efforts by the company during the financial year for cutting down miscellaneous expenses and liquidation of old outstanding resulted in positive cash flows from operations and helped maintain the credit rating of the organization.

Material Changes and Commitments affecting the Financial Position

There are no material changes and commitments affecting the financial position of the Company between the end of FY 2022-23 and the date of this report. There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company''s operations in future.

Suspension of Trading

The Equity Shares of the company are listed on NSE & BSE. The shares of the company were not suspended from trading during FY 2022-23.

Directors'' Responsibility Statement

Pursuant to section 134(5) of the Companies Act, 2013, the Board of Directors confirm that:

a) In the preparation of the Annual Accounts, the applicable Accounting Standards (Ind AS) have been followed along with proper explanations relating to material departures;

b) The Directors have selected such accounting policies & applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of financial year and of the profit of the Company for that period;

c) The Directors have taken proper and sufficient care for maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) The Directors have prepared the Annual Accounts on a going concern basis;

e) The Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and operating effectively;

f) The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Management Discussion & Analysis

This report conveys the Management''s perspective on the external environment, company''s strategy for the future, operating and financial performance, risks and concerns, and initiatives taken in various areas during the year; such as diversification of business areas, revamping project execution, cost optimization, technology development, digitalization, quality, etc.

In the midst of a continuously challenging business and economic environment, your company has continued to focus on regaining growth. Strengthening the core business, focus on execution, and determined efforts towards diversification including increased business in non-coal areas are critical enablers for long term sustainable growth. For further details, please refer Annexure-I to the Board''s report.

Corporate Governance

Pursuant to Regulation 34 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, a report on Corporate Governance (including Board & Committee Meetings details) is given at Annexure-II to the Board Report together with the following,

i. Certificate of Non-Disqualification of Directors under Schedule V of the SEBI Listing Regulations.

ii. Auditors certificate on Corporate Governance under SEBI Listing Regulations & Department of Public Enterprises (DPE) guidelines on Corporate Governance.

iii. Secretarial Audit Report under Section 204 (1) of the Companies Act, 2013.

Declaration of Independence

Declaration under Section 149(6) of the Companies Act, 2013 pertaining to criteria of independence has been given

by the Independent Directors to the Board of Directors. AH the Independent Directors have registered themselves on the online database of the Indian Institute of Corporate Affairs (IICA), notified under Section 150 of the Companies Act, 2013. In the opinion of the Board, the Independent Directors possess integrity and necessary expertise & experience.

Compliances

In addition to focus on many other areas, the company continuously reviews and strengthens its compliance of systems and processes.

• The Company considers sound Corporate Governance as one of its core values committing itself to maintaining high degree of transparency in disclosures.

• To strengthen compliance mechanism across various laws, a quarterly legal compliance report on the Applicable laws/ Acts is reviewed by the Board of Directors.

• Being a listed company, compliance with the SEBI -(Listing Obligations and Disclosure Requirement) Regulations, 2015 is ensured. There is no adverse comment from SEBI for the FY 2022-23 on any financial matter.

• The Company has complied with the applicable secretarial standards.

• For preparation of financial statements, the company ensures compliance to the Indian Accounting Standards (Ind AS), Guidance Notes and other authoritative literature issued by the ICAI, Companies Act 2013 and other applicable statutes.

The company endeavours to constantly improve its disclosures and transparency standards in the Financial Statements.

Contribution to the Exchequer

The Company, over the years, has been consistently making significant contribution to the Exchequer, and maintaining high standards of integrity with respect to tax compliances. During the current year, the company''s contribution to exchequer stood at over ?3,831 Crore.

Audit Committee

The Company has in place a Board Level Audit Committee in terms of the requirements of the Companies Act, 2013 read with rules made thereunder and Regulation 18 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015, the details in respect of which are given in the Corporate Governance Report. All the issues are fairly and transparently deliberated in the meetings which are held at regular intervals. The views and suggestions of the Board Level Audit Committee members are taken into account and imbibed into the Company''s processes. Further, there has been no instance where the Board of Directors have not accepted the recommendation of the Board Level Audit Committee.

Details of changes in Directors & Key Managerial Personnel Appointment

Ms. Arti Bhatnagar, Additional Secretary & Financial Advisor, Ministry of Commerce & Industry has been appointed as Part-time Official Director w.e.f. February 14, 2023.

Shri Ramesh Patlya Mawaskar has been appointed as Parttime Non-Official (Independent) Director w.e.f. June 8, 2023.

Shri Jai Prakash Srivastava, Director (E, R&D) & Director (Finance) - additional charge has been designated as Chief Financial Officer (CFO) of the Company w.e.f. May 26, 2023.

Shri Krishna Kumar Thakur has been appointed as Whole Time (Functional) Director w.e.f. July 4, 2023 and has taken charge as Director (Human Resources).

In accordance with applicable statutory provisions and Article 67(iv) of the Articles of Association of the Company, Ms. Arti Bhatnagar, Shri Ramesh Patlya Mawaskar and Shri Krishna Kumar Thakur having been appointed as additional directors, shall hold directorship upto the 59th Annual General Meeting of the Company and are eligible for appointment as Directors at the Meeting.

Further, pursuant to Section 152 of the Companies Act, 2013 and Article 67(i) of the Articles of Association of the Company, Shri Upinder Singh Matharu and Shri Jai Prakash Srivastava will retire by rotation at the Annual General Meeting and being eligible, offers themselves for re-appointment.

Cessation

Dr. Raj K. Agarwal, who was appointed as Part-time NonOfficial (Independent) Director on November 9, 2021, ceased to be a Director of the Company consequent to his resignation on September 12, 2022 from BHEL''s Board of Directors. Dr. Raj K. Agarwal tendered his resignation citing his pre-occupation in personal affairs and inability to devote sufficient time towards discharge of his responsibilities as an Independent Director of the Company. Further, he also confirmed that there are no other reasons other than those provided by him for resignation.

Shri Raj Kamal Bindal and Shri Manish Kapoor, who were appointed as Part-time Non-official (Independent) Directors on January 31, 2020, ceased to be Directors of the Company on completion of their tenure on January 27, 2023.

Shri Shashank Priya, then Special Secretary & Financial Adviser, Ministry of Commerce & Industry who was appointed as Part-time Official Director on October 4, 2019, ceased to be Part-time Official Director on February 14, 2023.

Shri Subodh Gupta who was appointed as Director (Finance) w.e.f. April 18, 2018 ceased to be Director (Finance) w.e.f. April 18, 2023 in terms of Ministry of Heavy Industries'' communication dated May 17, 2023. Further, he also ceased to be CFO of BHEL w.e.f. April 18, 2023.

The Board of Directors place on record their deep appreciation for the valuable services rendered as well as advice and guidance provided by Dr. Raj K. Agarwal, Shri Raj

Kamal Bindal, Shri Manish Kapoor, Shri Shashank Priya and Shri Subodh Gupta during their respective tenure on the BHEL Board.

In compliance with Regulation 36(3) of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, brief resume of the Directors proposed for appointment and re-appointment along with the nature of their expertise in specific functional areas and names of companies in which the person holds directorship along with the membership of the Committees of the Board are given in the explanatory statement/ annexure to the Notice.

CEO/ CFO Certificate

CEO/CFO certificate as per Regulation 17(8) of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 is placed at Annexure- III to the Board''s Report.

Consolidated Financial Statements

The brief on consolidated financial statements prepared pursuant to section 129 (3) of the Companies Act, 2013 and Regulation 34 of the SEBI (Listing Obligations & Disclosure Requirement) Regulations 2015, is given in section 1.8.3 under Management Discussion & Analysis.

Sustainable Development

We, at BHEL, tirelessly endeavour for sustainable operations in our various business processes & activities. Our mission statement - ''Providing sustainable business solutions in the fields of Energy, Industry & Infrastructure'' bears testimony to our commitment for contributing towards Sustainable Development and aspires to augment the industrial effort in this direction.

Sustainable development at BHEL addresses all three pillars of sustainability; namely- Environmental, Economic and Social. Being a responsible and sustainable organisation, BHEL strives towards integration of environmental, health, social equity and economic vitality within the organisation and beyond. Manifestation of this vision is evident in our actions apropos greener product development, increased renewable energy generation and usage, efficient water management, enhanced green cover, emission reduction, optimization of natural resources usage and improved energy efficiency and conservation.

The brief of some of these activities that help us move towards a sustainable future are given in Annexure-IV to the Board''s Report.

Green Company

Climate change has today occupied the centre stage in policy making across the globe and is seriously impacting the way businesses work. At the national level, Govt. of India has adopted ''Panchamrit'' to deal with these challenges as well as committed to Net Zero target by 2070. As part of our ethos for sustainable development, the company has now undertaken a major initiative for “Making BHEL a Green

Company". This initiative will further strengthen BHEL''s position as a responsible and sustainable organization. In addition to generating goodwill for the company, it is expected to reduce costs and improve availability of borrowings & insurance in the long run and will also help to create a culture of innovation within the company to design, engineer and manufacture environment friendly products.

Business Responsibility and Sustainability Report

In line with the requirement of the listing regulations, Business Responsibility and Sustainability Report providing disclosures in environmental, social and governance perspectives is enclosed at Annexure-V to the Board''s Report.

Achievements of R&D and Technological Development

BHEL, in line with country''s vision towards net zero carbon emissions by 2070 for a sustainable future, has realigned its innovation ecosystem for development of cleaner technologies. The company is working towards development of products and systems in new business areas; such as coal to chemicals, high efficiency thermal plants, rail transportation, defence, aerospace, hydrogen value chain, downstream oil & gas, etc.

In FY 2022-23, BHEL has incurred an expenditure of ?691 Crore towards R&D activities, which is approx. 3% of the revenue. This includes expenditure incurred on R&D projects taken up for development of new products, processes and systems as well as efforts made for modifications/ improvements in products and designs against customer requirements. During the year, BHEL has filed 503 patents and copyrights applications, enhancing the company''s intellectual capital to more than 5400 nos. Approx. 19% of the company''s revenue, amounting to ?4,212 Crore has been achieved from its in-house developed products, systems and services. Further details of major developments have been provided in Annexure-VI to the Board''s Report.

Implementation of Official Language

Official Language cells and Official Language Implementation Committees have been established in all Units/Divisions/ Offices of BHEL, with Rajbhasha Officers working in all these cells. Additionally, in the last two years, a lot of emphasis has been given on Rajbhasha implementation. More than 100 Rajbhasha Chakras have been formed across the company to motivate the employees to use Hindi in their day to day official work and expedite Rajbhasha implementation which has enhanced the use of Hindi across the Company. Quarterly meetings were held by the committees in all the Units/ Divisions including Corporate Office during the year. Several activities in the form of events, workshops, competitions were organized during the year. Your company is also contributing as a member in the Testing Committee of the Memory Based Translation Software ''Kanthastha 2.0'' and its mobile-app version by the Department of Official Language, Ministry of Home Affairs, Government of India. Further details have been provided in Annexure-VIII to the Board''s Report.

Vigil Mechanism

BHEL advocates the principles of Good Governance, Transparency, Probity and Ethics so as to ensure highest level of integrity in its functioning. The company has in place a full-fledged Vigil Mechanism consisting of Vigilance, Internal Audit, Whistle Blower Policy, Independent External Monitors as well as Board Level Committee.

Vigilance function of BHEL is headed by Chief Vigilance Officer (CVO) who acts as an extended arm of Central Vigilance Commission (CVC) for monitoring the affairs of the Company. Units & Divisions of BHEL have a Vigilance set-up headed by a senior officer reporting to the CVO.

A panel of Independent External Monitors (IEMs) is in place to oversee implementation of Integrity Pact, and address concerns related to the same. The Company also encourages reporting of unfair & unethical practices and has a Whistle Blower Policy which provides adequate safeguard to the complainant against victimization.

The “Board Level Audit Committee" (BLAC) reviews the functioning of the Whistle Blower / Vigil Mechanism, and annual review of the Vigilance function is also done by CMD / Board of Directors through structured meeting(s). Further, details are provided in Annexure-VIII to the Board''s Report.

Health, Safety & Environment (HSE)

BHEL focusses on developing sustainable practices for ensuring the safety & health of its workforce as well as protecting the planet from various environmental impacts

of its operations. We believe that good health, safety and environmental performance will result in long-term benefits, in terms of enhanced customer loyalty, valuable partnerships & collaborations and sustainable development.

BHEL, in its pursuit of achieving the highest levels of Occupational, Health & Safety and Environmental performance, has got its manufacturing units and Power Sector regions certified under Occupational Health and Safety Certification (ISO 45001:2018) and Environmental Management Systems Certification (ISO 14001:2015). To enhance regular compliance, internal audits of manufacturing units and project sites are also carried out by a team of HSE experts from within the organisation.

Further details are provided in Annexure-VIII to the Board''s Report.Data and Cyber Security

In today''s hyper connected world, data and cyber security is of paramount importance, especially for the country''s foremost engineering organization in heavy engineering sector. In this regard, BHEL has implemented advanced security measures to protect its IT assets and data from cyber threats. These measures include a multi-layered defence system that incorporates the latest technologies such as perimeter security for datacentres, data networks, applications, and end user devices. Further details have been included in Section 1.16 of the Board Report.

Other disclosures

Information in accordance with the provisions of Section 134(3)(m) of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 regarding conservation of energy, technology absorption and foreign exchange earnings and outgo is given at Annexure-VII to the Board''s Report.

As per provisions of section 197 of the Companies Act, 2013 read with the Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, every listed company is required to disclose the details of the remuneration of the Directors etc. in the Board report. However, as per Notification No. GSR 463(E) dated June 5, 2015 issued by the Ministry of Corporate Affairs, Government Companies are exempted from complying with provisions of section 197 of the Companies Act, 2013. BHEL being a Government Company, such particulars are not included as part of Board''s Report.

Statement pursuant to Section 129 of the Companies Act, 2013 (Form AOC-1) relating to subsidiary companies & joint ventures and Form AOC-2 pursuant to section 134(3)(h) of the Companies Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014 is given at Annexure-IX to the Board''s Report.

Auditors

The Statutory Auditors of your Company are appointed by the Comptroller and Auditor General of India. Three firms of statutory auditors were appointed as joint statutory auditors and four firms were appointed as branch auditors. The names of audit firms appointed for FY 2022-23 are given separately in the Annual Report.

Auditors'' Report on the Accounts

The Auditors'' Report on Standalone and Consolidated Financial Statements for FY 2022-23 of the Company are given at Annexure- X to the Board''s Report. There is no qualification in the Auditors report on the Financial Statements of the Company. The Supplementary Audit report under section 143(6) read with section 129(4) of the Companies Act,2013 issued by the Comptroller & Auditor General of India also forms part of Annexure-X.

Secretarial Audit

In terms of section 204(1) of the Companies Act, 2013, the Company engaged M/s Agarwal S. & Associates, Company Secretaries in whole-time practice, as Secretarial Auditors for conducting Secretarial Audit for FY 2022-23 and their report forms part of Corporate Governance section.

Secretarial Auditor in their Audit Report have observed noncompliance in composition of the Board of Directors as per Regulation 17 (1) (a) & (b) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, Section 149 (4) of the Companies Act, 2013 and paras 3.1.2 & 3.1.4. of the DPE Guidelines on Corporate Governance on account of (i) resignation of one independent director on 30.05.2022, resulting in the Company not having

requisite number of independent directors on its Board and (ii) completion of tenure of two non-executive directors on 27.01.2023, resulting in the Company not having requisite number of non-executive directors on its Board.

The Management noted the observation and explained that BHEL, being a Government Company, the directors, including the independent directors are appointed by the Government of India. The Company has been in constant communication with the Government for appointment of requisite number of independent directors on its Board so as to ensure compliance with Corporate Governance norms enunciated under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Companies Act, 2013 as well as the DPE Guidelines on Corporate Governance. The matter of filling up of these vacancies is under process at the end of Government.

Cost Auditors

In terms of provisions of Section 148 of the Companies Act, 2013 and as per the Companies (Cost Records and Audit) Rules, 2014 and amendments thereof, the Board, on the recommendation of the Audit Committee, approved the appointment of seven firms of Cost Accountants as Cost Auditors for auditing the cost accounts of your Company for FY 2022-23. Cost accounts and records as specified by the Central Government under sub-section (1) of section 148 of the Companies Act, 2013 have been properly maintained and complied with.

The detail of cost auditors appointed for FY 2022-23 are given separately in the Annual Report. The Cost Audit Report for FY 2021-22 has been filed under XBRL mode on September 02, 2022, well within the due date of filing and there was no qualification in the cost audit report.

Appreciation and Acknowledgements

Your Directors gratefully acknowledge with deep sense of appreciation, the co-operation and guidance received from the Government of India, particularly the Ministry of Heavy Industries in various spheres of the company''s operations and strategic initiatives.

We are deeply appreciative of and thankful to various ministries and statutory authorities/ departments of the Government of India for their valuable support and continuous cooperation.

The Directors place on record their sincere appreciation towards the Company''s valued customers in India and abroad for their co-operation in addressing various issues faced in complex long gestation construction contracts.

The Directors also express their gratitude to the Comptroller and Auditor General of India, professional bodies, Statutory Auditors, Branch Auditors, Secretarial Auditor and Cost Auditors for their constructive suggestions and continuous cooperation.

The Directors place on record their sincere appreciation towards the company''s esteemed shareholders for the support and confidence reposed by them in the management of the company and look forward to the continuance of in future.

The Directors also wish to place on record their appreciation for the continued cooperation received from all the technology collaborators, suppliers and contractors. The support provided by the financial institutions, bankers and stock exchanges are also acknowledged and appreciated.

Last but not the least, your Directors wish to place on record their sincere appreciation for the diligent efforts, hard work and commitment put in by all BHEL employees, who have worked day and night, to meet the company''s commitments.


Mar 31, 2021

The Board of Directors have pleasure in presenting the 57th Annual Report on the business and operations of your Company and the Audited Financial Statements for the year ended March 31, 2021.

Financial Results

('' Crore)

For the year ended

March 31, 2021

March 31, 2020

Revenue

16296

20491

Revenue from operations

17308

21459

Profit/(loss) after tax

(2717)

(1473)

Total comprehensive income /(loss)

(2697)

(1747)

EPS (in 1)

(7.80)

(4.23)

Note: Figures in () represent negative values.

State of Company Affairs

The nationwide lockdown, consequent to spread of Covid 19 pandemic globally caused disturbance & slowdown of the economic activity. This impacted the Company''s operations during the FY 2020-21, which then recouped progressively. Also, the issues arising out of the geo political situation across the globe severely disrupted the supply chains which further impacted operations. The production and supplies from units were also regulated in line with site progress status to maintain sequential supply and optimisation of working capital.

For FY 2020-21, the company has incurred a loss of 12717 Crore as against a loss of 11473 Crore in FY 2019-20, mainly due to lower revenue, higher material cost and additional merit based provisioning of about 11800 Crore. Based on comprehensive review, the provisioning was done as a matter of utmost financial prudence so as to strengthen receivables management process and improve quality of assets in the balance sheet. However, stringent budgetary control measures and reduction in operating expenses resulted in restricting the loss.

The Company secured orders worth 113472 Crore in FY 202021. This comprises orders worth 18984 Crore in the Power segment, 14283 Crore in the Industry segment and 1205 Crore in International operations. The order book outstanding at the end of March 31, 2021 was around 1102090 Crore against 1108443 Crore as on March 31, 2020. The order book figures are inclusive of applicable taxes.

Covid 19 not only impacted the topline of the company but also led to delay in tendering/ finalization of orders by customers. There is a significant decline in the new project proposals during FY 202021 which also impacted the company''s order book. It is worthwhile to mention that there is a significant correlation between new project proposals (as per CMIE) and the company''s order booking.

Transfer to Reserve

Due to the loss in the current financial year , the company has not transferred any amount to the Reserves.

Dividend

In line with the Dividend distribution policy of the company and the losses in the current financial year, the Board has not recommended any dividend for the year 2020-21 in its meeting held on June 11, 2021.

The Company has a dividend distribution policy in place in pursuance to the requirements of Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR"). Dividend distribution policy is available on the Company''s website at https: /www.bhel. com/dividend-distribution-policy-bhel-0

Deposits

The Company has not accepted deposits from the public falling within the ambit of Section 73 of the Companies Act, 2013 during FY 2020-21.

Capital & Finance

During FY 2020-21, the company has met its CAPEX and operating fund requirements through internal accruals. As a treasury function, the company invests surplus funds in available investment opportunities maximising the interest income to the company. To meet any intermittent operational fund requirement, various short term borrowing options used by the company include commercial papers, PCFC, buyers credit etc. PCFC borrowings also provide a natural forex hedge to the company. Effective treasury management led to the closing cash & bank balance rising by 26% in the current financial year as compared to the previous period.

The commercial papers of the company are listed on NSE and BSE. The details of the commercial papers are available at Note [24] of the Standalone financial statements.

Loans and Investments

Details of loans and investments covered under the provisions of Section 186 of the Companies Act, 2013 form part of financial statement. Loan of 13 Crore towards working capital was given during 2015-16 to M/s BHEL EML, BHEL''s subsidiary company, and has been already provided for impairment. The disclosure on loans and advances to subsidiary form part of note No [54] of the financial statements. There are no instances of investments by the loanee in the company or its subsidiary.

The company''s long term credit rating during the financial year was changed to “AA-“ from “AA" The revision in ratings is primarily due to lower execution and losses, caused mainly due to Covid-19 pandemic. The company has taken stern measures to cut down its controllable costs to the extent possible. The efforts on the cash front have also borne fruit with cash & bank balances (net of short term borrowings) in the current financial year rising by about 26% and trade receivables reducing by about 38%. The funds released from working capital amount to 12620 Crore in FY 20-21, as against blockage of funds in the earlier years. The company is resolutely working to improve its execution levels and consequently achieve positive EBIDTA and improve profitability accordingly.

The company''s short term rating stands affirmed at A1 (Highest safety).

Material Changes and Commitments Affecting the Financial Position

There are no material changes and commitments affecting the financial position of the Company between the end of the financial year and the date of this report of FY 2020-21. There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company''s operations in future.

Suspension of Trading

The Equity Shares of the company are listed on NSE & BSE. None of the securities of the company have been suspended from trading during the FY 2020-21.

Directors'' Responsibility Statement

Pursuant to section 134(5) of the Companies Act, 2013, the Board of Directors confirms that:

a) In the preparation of the Annual Accounts, the applicable Accounting Standards (Ind AS) have been followed along with proper explanations relating to material departures;

b) The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the


Credit Rating

The credit ratings of your Company are as follows:

Rating

Agency

Date of Rating

Long Term Rating

Outlook

Short

Term

Rating

CRISIL

24-07

2020

CRISIL AA

Negative

CRISIL A1

18-06

2021

CRISIL AA-

Negative

CRISIL A1

INDIA RATINGS & RESEARCH

06-07

2020

Ind AA

Negative

Ind A1

01-07

2021

Ind AA-

Negative

Ind A1

CARE

27-06

2020

CARE AA

Stable

CARE A1

24-06

2021

CARE AA-

Stable

CARE A1

state of affairs of the Company at the end of financial year and of the profit of the Company for that period;

c) The Directors have taken proper and sufficient care for maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) The Directors have prepared the Annual Accounts on a going concern basis;

e) The Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and operating effectively;

f) The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Management Discussion & Analysis

This report conveys the Management''s perspective on the external environment, as well as company''s strategy for the future, operating and financial performance, risks and concerns, and initiatives taken in various areas such as revamping Project Execution, Cost optimization, Digitalisation, Quality, Development of Futuristic technologies, etc., during the financial year 2020-21.

The year gone by has been challenging for economies across the globe. Your company has taken these challenges as an opportunity to strengthen the core with focus on improving internal systems and processes. It has also been a year of consolidation wherein many of the initiatives started in the previous year have started maturing. For further details, please refer Annexure-I to the Board''s report. AatmaNirbhar Bharat

To capitalize on the opportunities arising out of our Hon''ble Prime Minister''s vision of an AatmaNirbhar Bharat, BHEL has taken the lead for “Make In India" and has formed a new and dedicated business group—the “Make in India Business Development Group" with the following objective:

• In-house development and manufacture of items currently being imported by the company

• In-house development and manufacture of major items in the country''s engineering imports basket.

• Working with global OEM''s for manufacturing items for India as well as for exports, i.e., ''Make in India, Make for the World''

• Collaborative working with PSUs for addressing their imports

The company believes in successful development of partners/ vendors, especially MSME''s, which also forms an integral part of its growth strategy giving the twin benefit of lowering cost as well as speeding up the development process. Accordingly, your company is working towards supplier/ partner development (especially MSMEs), and has organized a workshop- SAMVAAD under the aegis of Department of Heavy Industry, for promoting collaborations between PSUs, private industry as well as R&D institutions & academia. BHEL identified items worth more than 13,000 Crore for import substitution through development of local suppliers and hosted an EOI on its website for the same. BHEL has conducted more than ten online workshops- during December 2020 to February 2021, with the support of Ministry of Heavy Industries (M/o HI), Department for Promotion of Industry and Internal Trade (DPIIT) and Ministry of MSME.

COVID Response

BHEL launched a speedy and comprehensive response to the COVID crisis on multiple fronts, including strict implementation of Government guidelines, support to employees and their families as well as the society at large and worked with local administration to ensure continuity of work across various manufacturing units and project sites. Your company also rose to the occasion to support the national efforts through monetary contributions as well as through development of multiple products for use by various govt. departments/ municipalities.

During the first phase of COVID-19, the company:

• Ensured strict implementation of Standard Operating Procedure (SOP) duly incorporating Government directives on social distancing, compulsory wearing of face cover in public places, hygiene, sanitization, etc.

• Conducted regular fumigation, sanitization, etc., at factories, offices, townships and nearby areas including ensuring distribution of essential supplies such as food, medicines, milk etc.

• Facilitated Work from Home through policy intervention as well as remote access through IT network for seamlessly carrying out office activities and conducting meetings through VC

• Quick implementation of eOffice to ensure continuity of work as well as speeding up the decision making process

• Swiftly transformed the training process and adopted online training methods including introduction of eModules to ensure continual learning of employees.

• Developed atomized liquid sanitizing equipment called BHEL MISTER. More than 150 Nos. of BHEL MISTERs have been delivered to various parts of the country.

• Developed Electrostatic Disinfection Machines (EDMs), also called Covid-Spray, based on CSIR technology, for sanitizing office spaces and hospitals. Apart from various other places, the EDM machines have also been deployed at MHI, NDLS Railway station, among others.

During the second wave of COVID-19, apart from the numerous activities as continued since the first wave, the company additionally supplemented the national efforts by:

• Supplying over 5,75,000 cubic meters (over 80,000 cylinders) of medical oxygen from its Bhopal and Haridwar manufacturing plants by enhancing capacities as well as logistics for filling oxygen cylinders from 200/300 cylinders per day to reach a maximum of 3,860 cylinders per day

• Developed prototype for oxygen generating plant of 500LPM (based on design by CSIR-IIP, Dehradun) in a record time of 40 days from signing of Transfer of Technology and delivered the first order within 35 days from receipt of the order

• Assistance Scheme has been introduced for extending support (financial, medical, housing) to families of employees who succumbed to COVID 19 Pandemic.

Corporate Governance

Pursuant to Regulation 34 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, a report on Corporate Governance (including Board/Committee meeting details) together with the following, is given at Annexure-II to the Board Report.

(i) Certificate of Non-Disqualification of Directors under Schedule V of the Listing Regulations.

(ii) Auditors certificate on Corporate Governance under Listing Regulations & DPE guidelines on Corporate Governance.

(iii) Secretarial Audit Report under Section 204(1) of the Companies Act, 2013.

Department of Public Enterprises has graded BHEL as "Excellent" on the basis of their compliance with Guidelines on Corporate Governance of CPSEs for the Year 2019-20.

Declaration of independence

Declaration under Section 149(6) of the Companies Act, 2013 pertaining to criteria of Independence has been given by the Independent Directors to the Board of Directors. All the Independent Directors, who are qualified Chartered Accountants, have registered themselves in the online database of Indian Institute of Corporate Affairs (IICA). Shri Manish Kapoor has qualified the online proficiency self-assessment test conducted by IICA (notified under Section 150). In the opinion of the Board, the Independent Directors possess integrity and necessary expertise & experience.

Compliances

In addition to focus on many other areas, the company has also relooked into its compliance of systems and processes and wherever, there was an opportunity for improvement, company further strengthened its finance and non-finance compliance process & systems for the better satisfaction of stakeholders. As regards preparation of financial statements, the company ensures that preparation and presentation are compliant with the Indian Accounting Standards (Ind AS), Guidance Notes and other authoritative literature issued by the ICAI, Companies Act 2013, CSR regulations and other applicable statutes. The Company discloses full information and fulfils its compliance obligations under applicable Taxation Laws. Being a listed company, Compliances with the SEBI Listing Obligations and Disclosure Requirement Regulations are also being ensured. There is no adverse comment from SEBI for the FY 2020-21 on any compliance related matter. The Company endeavours to transcend beyond the regulatory requirements of corporate governance and considers sound Corporate Governance as one of its core values and is committed to maintaining high degree of transparency in disclosures.

The company has endeavoured to constantly improve its disclosures and transparency standards and the statutory auditors have also commended the compliances and the quality of disclosures in the Financial Statements.

Contribution to the Exchequer

The Company, over the years, has been making a significant contribution to the Exchequer. During the current year, the Company contributed close to 12948 Crore The Company has adopted guiding tax principle to maintain high standards of integrity with respect to tax compliances and reporting.

The company has been discharging all its GST and other dues on time and even before the due date [ out of the GST liability for the month of March 2021,1119 Crore. has been deposited on March 31, 2021 itself ].

The Company participated in Direct Tax Vivad Se Vishwas Scheme (VsVs), 2020 promulgated by the GOI and exercised the option

by settling eight Income Tax appeals under VsVs, which ended ambiguity around the likely outcome of disputes, bringing an expeditious end to protracted litigation and helped in resolving legacy issues.

Audit Committee

The Company has in place a Board Level Audit Committee in terms of the requirements of the Companies Act, 2013 read with rules made thereunder and Regulation 18 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, the details in respect of which are given in the Corporate Governance Report. For the first time all the three independent directors being chairman/ members of BLAC, are also members of Institute of Chartered Accountants of India having diverse experience. All the issues are fairly and transparently deliberated in the meetings which are held at regular intervals. The views and suggestions of BLAC members are positively taken into account and imbibed into the company''s processes. Further, there has been no instance where the Board of Directors have not accepted the recommendations of the Audit Committee.

Compliance with Secretarial Standards

The Company has complied with applicable Secretarial Standards. Details of changes in Directors & Key Managerial Personnel Appointment

Shri Amit Mehta, Joint Secretary, Ministry of Heavy Industries was appointed as Part-time Official Director w.e.f. September 2, 2020. In line with Section 161 of the Companies Act, 2013 and Article 67(iv) of the Articles of Association of the Company, Shri Amit Mehta was appointed as additional director to hold directorship upto the ensuing Annual General Meeting. He was subsequently appointed as Director in the 56th Annual General Meeting of the Company.

Ms. Renuka Gera has been appointed as Whole Time (Functional) Director w.e.f. December 1, 2020 to take charge of the office of Director (Industrial Systems & Products).

Shri Jeetendra Singh, Joint Secretary, Ministry of Heavy Industries was appointed as Part-time Official Director w.e.f. June 18, 2021.

In accordance with Section 161 of the Companies Act, 2013 and Article 67(iv) of the Articles of Association of the Company, Ms. Renuka Gera and Shri Jeetendra Singh having been appointed as additional directors, shall hold directorship upto the 57th Annual General Meeting of the Company and are eligible for appointment as Directors at the Meeting.

Cessation

Shri Amit Varadan, Joint Secretary, Ministry of Heavy Industries, who was appointed as Part-time Official Director on March 27,

2019, ceased to be Part-time Official Director on September 2,

2020.

Shri Desh Deepak Goel and Shri Ranjit Rae, who were appointed as Part-time Non-official (Independent) Directors on September 23, 2017, ceased to be Directors of the Company on completion of their tenure on September 11, 2020.

Shri S. Balakrishnan, who was appointed as Director (Industrial Systems & Products) on June 1, 2018, ceased to be a Director of the Company on attaining the age of superannuation on November 30, 2020.

Shri Manoj Kumar Varma, who was appointed as Director (Power) on December 19, 2018, ceased to be a Director of the Company on attaining the age of superannuation on January 31, 2021.

Shri Amit Mehta, Joint Secretary, Ministry of Heavy Industries, who was appointed as Part-time Official Director on September 2, 2020, ceased to be Part-time Official Director on June 18, 2021.

Shri Kamalesh Das, who was appointed as Director (E,R&D) on March 1, 2019, ceased to be a Director of the Company on attaining the age of superannuation on July 31, 2021.

The Board of Directors place on record their deep appreciation for the valuable services rendered as well as advice and guidance provided by S/ shri Amit Varadan, Desh Deepak Goel, Ranjit Rae, S. Balakrishnan, Manoj Kumar Varma, Amit Mehta and Kamalesh Das during their tenure.

Further, pursuant to Section 152 of the Companies Act, 2013 and Article 67(i) of the Articles of Association of the Company, Shri Subodh Gupta and Shri Shashank Priya will retire by rotation at the Annual General Meeting and being eligible, offer themselves for reappointment.

In compliance with Regulation 36(3) of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, brief resume of the Directors proposed for appointment and re-appointment along with the nature of their expertise in specific functional areas and names of companies in which the person also holds directorship along with the membership of the Committees of the Board are given in the explanatory statement/ annexure to the Notice. CEO/CFO Certificate

CEO/CFO certificate as per Regulation 17(8) of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 is placed at Annexure- III to the Board''s Report.

Consolidated Financial Statements

The brief on consolidated financial statements prepared pursuant to section 129 (3) of the Companies Act, 2013 and Regulation 34 of the SEBI (Listing Obligations & Disclosure Requirement) Regulations 2015, is given in para 1.5.4 under Management Discussion & Analysis.

Sustainable Development

Sustainable Development tenets are ingrained in the business processes of BHEL and our mission statement - “Providing Sustainable business solutions in the fields of Energy, Industry & Infrastructure"bears the testimonial of the same.

Sustainability is a continuous journey which helps us in reaching newer summits of corporate excellence through implementing sound corporate governance framework, enhancing stakeholder value, reducing environmental footprint of our products & services as well as internal processes, promoting inclusive growth in the society, and enhancing brand equity.

The brief of these activities conducted during 2020-21 (including CSR policy - also available at https:/ www.bhel.com/csr) are given in Annexure - IV to the Board''s report.

Business Responsibility Report

In line with the requirement of the listing regulations, Business Responsibility Report describing the initiatives taken by the company from environmental, social and governance perspectives as per the suggested format is enclosed at Annexure V to the Board''s Report.

Achievements of R & D and Technological Development

BHEL has a robust innovation and R&D framework in place to address the technology challenges emanating from business requirements. The R&D expenditure of the company for 2020-21 was 1726 Crore, approx. 4.45% of the revenue. The company filed 526 patent and copyright applications during the year, enhancing the company''s intellectual capital to more than 5000. More than 24% of the company''s revenue has been achieved from its in-house developed products.

Additionally, the company has also created a technology innovation platform (Sanrachna) for finding innovative solutions by involvement of students, academia, experts, etc., a step towards self-reliance in technology.

Further details are available in Annexure-VI to the Board''s Report. Implementation of Official Language

Official Language Implementation Committees are constituted in all units / divisions of BHEL and regular quarterly meetings were held in all units / divisions including corporate office. To speed up the pace of implementation of Official Language in the company, more than 30 nos. of Rajbhasha Chakra were formed across the Company. Various activities/ programmes on Rajbhasha implementation were held during the year. Company was awarded with many Rajbhasha awards for excellent efforts towards Rajbhasha implementation. Further details have been provided in Annexure-VIIA to the Board''s Report.

Vigil Mechanism

Transparency, fairness and objectivity form the basis for all decision making processes for the company.

The Company has in place a full-fledged Vigil Mechanism consisting of Vigilance Department, Internal Audit, Whistle-blower Policy mechanism, Independent External Monitor(s), as well as Board Level Audit Committee.

The Vigilance function of BHEL is headed by Chief Vigilance Officer who acts as an extended arm of Central Vigilance Commission (CVC) in the Company. All units & divisions of BHEL have a Vigilance setup headed by a Senior Officer reporting to the CVO.

Preventive Vigilance has been the focus area of BHEL as proactive vigilance is better than the re-active one and it reduces the chances of corruption. The main objective is to progressively reduce ambiguity and discretion in the process by plugging the loopholes in the system, thereby making decision making process more and more objective & transparent and also reducing the scope for engaging in malpractices. The audit reports (internal, statutory and CAG reports) relating to BHEL are regularly scrutinized so as to determine whether there is any vigilance angle involved in respect of the irregularities brought out in such reports.

A panel of two Independent External Monitors (lEMs) has been appointed to oversee implementation of Integrity Pact and address any concerns related to the same.

The company encourages reporting of unfair and unethical practices and has a Whistle-blower Policy mechanism which provides adequate safeguard against victimisation to the complainant.

The Board Level Audit Committee reviews the functioning of the Whistle Blower/ Vigil mechanism.

Further details have been provided in Annexure-VIIA to the Board''s Report.

Health, Safety & Environment (HSE)

BHEL is committed to providing a safe and healthy working environment and achieving an injury and illness-free work place. BHEL conducts all its activities in a manner that is protective for the environment, and in ensuring the health and safety of its employees, contractors, visitors, and the community around which it operates.

In recognition of this, BHEL has been awarded the ISO 14001 Environmental Management Systems Certification and OHSAS 18001 / ISO 45001 Occupational Health & Safety Management Systems Certification.

It is our firm belief that safe and healthy workplace not only boosts people''s morale but is also a precondition for greater productivity at workplace. BHEL has taken all possible preventive measures to ensure health of their employees in this pandemic situation i.e. guidelines were issued, SOPs were prepared, DO''s and DON''Ts were circulated, regular hygiene audits were conducted etc. Also, BHEL has taken initiatives which helped not only its employees and their families but also proved boon for the society. Further details have been provided in Annexure-VIIA to the Board''s Report.

Data and Cyber Security

BHEL deploys multi-layered protection for its IT assets and data, with state-of-the-art security features such as firewalls at Internet gateways, secured email gateways integrated with on premise sandboxing solution and end-point protection. All Internet traffic going in and coming out of BHEL is monitored through a Cyber Security Operations Centre (C-SOC), integrated with Global Threat Intelligence. User awareness and sensitization is continuously ensured through interventions like phishing simulation exercises, training programmes, communications etc. across the company. Compliance to security advisories from agencies like Indian Computer Emergency Response Team (CERT-In) and National Critical Information Infrastructure Protection Centre (NCIIPC) is ensured.

The overarching initiative in the field of information security in BHEL is the implementation of the Information Security Management System (ISMS) since 2005 to ensure the Confidentiality, Integrity and Availability of its information systems. Auditors from the Standardization, Testing and Quality Certification (STQC) Directorate, an organization under the Ministry of Electronics and Information Technology, Government of India, audit the information security infrastructure of the organization and certify it against ISO27001:2013 periodically in addition to internal audits. Integration of pan-India BHEL ISMS achieved in February, 2021 is a manifestation of the maturity of this initiative. All BHEL units are now certified against a common policy framework which will result in improved compliance & cyber security, enforcement of common policies, procedures & formats.

The Covid-19 pandemic and the resultant lockdown which required employees to Work From Home added a new dimension to the cyber threat landscape. Despite no prior experience of Work from Home culture and managing geographically spread IT operations on a huge scale, BHEL adapted quickly to the changed scenario and

ensured security of the entire gamut of IT operations

Other disclosures

Information in accordance with the provisions of Section 134(3)(m) of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 regarding conservation of energy, technology absorption and foreign exchange earnings and outgo is given at Annexure-VII to the Board''s Report.

As per provisions of section 197 of the Companies Act, 2013 read with the Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, every listed company is required to disclose the details of the remuneration of the Directors etc. in the Board''s report. However as per Notification No. GSR 463(E) dated June 5, 2015 issued by the Ministry of Corporate Affairs, Government Companies are exempted from complying with provisions of section 197 of the Companies Act, 2013. BHEL being a Government Company, such particulars are not included as part of Board''s Report.

Statement pursuant to Section 129 of the Companies Act, 2013 (Form AOC-1) relating to subsidiary companies & joint ventures and Form AOC-2 pursuant to section 134(3)(h) of the Companies Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014 is given at Annexure-VIII to the Board''s Report.

Auditors

The Statutory Auditors of your Company are appointed by the Comptroller and Auditor General of India. Three firms of statutory auditors were appointed as joint statutory auditors and four firms were appointed as branch auditors. The names of audit firms appointed for FY 2020-21 are given separately in the Annual Report.

Auditors'' Report on the Accounts

The Auditors'' Report on Standalone and Consolidated Financial Statements for FY 2020-21 of the Company are given at Annexure- IX to the Board''s Report. There is no qualification in the Auditors report on the Financial Statements of the Company. During FY 2020-21, there has not been any fraud reported by the Auditors of the company. The Supplementary Audit report under section 143(6) read with section 129(4) of the Companies Act,2013 issued by the Comptroller & Auditor General of India also forms part of Annexure IX.

Secretarial Audit

In terms of Section 204(1) of the Companies Act, 2013, the Company engaged M/s P.P. Agarwal & Co., Company Secretaries in whole-time practice, as Secretarial Auditors for conducting Secretarial Audit for FY 2020-21 and their report is forming part of Corporate Governance section.

Secretarial Auditor in his Audit report has observed regarding the non-compliance in composition of the Board of Directors as per Regulation 17(1) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Para 3.1.4 of the DPE Guidelines on Corporate Governance as the Company did not have requisite number of independent directors including at least one independent woman director on its Board.

The Management noted the observation and explained that BHEL, being a Government Company, the independent directors are selected by Govt of India and the Company is in constant communication for the appointment of requisite number of independent directors including at least one independent woman director on its Board.

Cost Auditors

In terms of provisions of Section 148 of the Companies Act, 2013 and as per the Companies (Cost Records and Audit) Rules, 2014 and amendments thereof, the Board, on the recommendation of the Audit Committee, approved the appointment of seven firms of Cost Accountants as Cost Auditors for auditing the cost accounts of your Company for FY 2020-21. Cost accounts and records as specified by the Central Government under sub-section (1) of section 148 of the Companies Act, 2013 have been properly maintained and complied with.

The detail of cost auditors appointed for FY 2020-21 are given separately in the Annual Report. The Cost Audit Report for FY 2019-20 has been filed under XBRL mode on September 24, 2020, well within the due date of filing and there was no qualification in the cost audit report.

Appreciation and Acknowledgement

Your Directors gratefully acknowledge all the support and guidance extended by Ministry of Heavy Industries and all other departments and agencies of the Government of India in the Company''s operations and developmental plans. The Directors also express their gratitude to the Comptroller and Auditor General of India, Chairman and Members of Audit Board, Professional bodies, Statutory Auditors, Branch Auditors, Secretarial Auditor and Cost Auditors for constructive suggestions and continuous cooperation.

The Directors place on record their sincere appreciation towards the Company''s valued customers in India and abroad and esteemed shareholders for the support and confidence reposed by them in the management of the Company and look forward to the continuance of this mutually supportive relationship in future.

The Directors also wish to place on record their appreciation for the continued cooperation received from all the technology collaborators, suppliers, contractors and for the support provided by the financial institutions, bankers and stock exchanges.

Your Directors also wish to place on record their sincere appreciation for the diligent efforts, hard work and commitment put in by all BHEL employees.

For and on behalf of the Board of Directors of BHARAT HEAVY ELECTRICALS LTD.

Dr. Nalin Shinghal

Chairman & Managing Director

Place: New Delhi Dated: 27.08.2021


Mar 31, 2018

Dear Members,

The Board of Directors have pleasure in presenting the 54th Annual Report on the business and operations of your Company and the Audited Financial Statements for the year ended March 31, 2018.

Financial Results

(Rs. crore)

For the year ended

March 31, 2018

March 31, 2017

Turnover

27850

27740

Revenue from operations

28813

28599

EBIDTA

2626

1827

Operational EBIDTA

1933

1061

Profit before tax

1585

628

Profit after tax

807

496

Total comprehensive income

890

467

Dividend (including interim dividend ) paid #

485

294

EPS (in Rs.)

2.20

1.35

Note:

a) Turnover and Revenue from operations exclude excise duty & taxes, unless specifically stated, for better comparison.

b) # Dividend includes final dividend for the previous year and interim dividend for the current year.

State of Company Affairs

As a result of enhanced focus on increasing market share and diversification, the Company secured orders worth Rs. 40,932 crore, a significant 74% rise over FY 2016-17. This comprises orders worth Rs. 33,342 crore in the power segment and Rs. 7,590 crore in the industry and overseas segments combined. The Company ended the year with a total order book of over Rs. 1,18,000 crore, the highest in the last five years.

In a shrunken and highly competitive Indian power sector market, your Company has reinforced its leadership position by securing 100% of the market share in main plant equipment for thermal utility segment during FY 2017-18.

Turnover in FY 2017-18 was Rs. 27,850 crore as against Rs. 27,740 crore in FY 2016-17. However, on like to like basis, turnover for FY 2017-18 is Rs. 28,338 crore, higher by 2.2%, w.r.t FY 2016-17 despite subdued business environment. (Refer details in note 27 of Annual Accounts “Revenue from Operations”).

The Company registered Profit before tax (PBT) of Rs. 1,585 crore in FY 2017-18 as compared to Rs. 628 crore in FY 2016-17 - a growth of 152 % .

Your Company has reinforced its leadership position by securing 100% of the market share in main plant equipment for thermal utility segment during FY 2017-18.

Net profit (PAT) stood at Rs. 807 crore in FY 2017-18, against Rs. 496 crore in FY 2016-17, a 63% jump. Your Company has delivered a significant improvement in operational EBIDTA, which could be achieved through various cost reduction initiatives.

BHEL has commissioned/synchronised 4,319 MW of power generating sets in FY 2017-18.

Your Company has delivered a significant improvement in operational EBIDTA, which could be achieved through various cost reduction initiatives.

Change in Share Capital

As approved in the Annual General Meeting held on September 22, 2017, bonus shares were allotted on October 3, 2017 in the ratio of 1:2 i.e. one equity share for two existing fully paid up equity shares. Consequently, the paid-up share capital has increased from Rs. 489.52 crore in FY 2016-17 to Rs. 734.28 crore in FY 2017-18 by capitalization of reserves.

Transfer to Reserve

The Company has not transferred any amount to the reserves during FY 2017-18.

Dividend

Your Company has paid an interim dividend of Rs.0.80 per equity share (@ 40% on equity share of Rs.2/- each) amounting to Rs.293.71 crore on the paid up share capital of Rs.734.28 crore, in February 2018. Further, the Board of Directors has recommended, in its meeting held on May 29, 2018, a final dividend of Rs.1.02 per equity share (@ 51% on equity share of Rs.2/- each) amounting to Rs.374.48 crore, out of profit for FY 2017-18, subject to your approval. With this, the total dividend for FY 2017-18 amounts to Rs.668.19 crore (91% on the enhanced equity), registering a growth of 73% over FY 2016-17.

The Company is committed to enhance shareholder value and has a track record of paying dividend uninterruptedly since 1976-77.

The Company has in place a dividend distribution policy in pursuance to the requirements of Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR”). Dividend distribution policy is available on the Company’s website at www.bhel.com and also provided separately in the Annual Report.

Deposits

The Company has not accepted deposits from the public falling within the ambit of Section 73 of the Companies Act, 2013 during FY 2017-18.

MoU Rating

Your Company has been rated as ‘Excellent’ on MoU performance for FY 2016-17 by Government of India. The MoU performance for FY 2017-18 is under evaluation.

Material Changes and Commitments Affecting the Financial Position

There are no material changes and commitments affecting the financial position of the Company between the end of the financial year and the date of this report of FY 2017-18.

Directors’ Responsibility Statement

Pursuant to section 134(5) of the Companies Act, 2013, the Board of Directors confirms that:

a) In the preparation of the Annual Accounts, the applicable Accounting Standards (Ind AS) have been followed along with proper explanations relating to material departures;

b) The Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of financial year and of the profit of the Company for that period;

c) The Directors have taken proper and sufficient care for maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) The Directors have prepared the Annual Accounts on a going concern basis;

e) The Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and operating effectively;

f) The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Management Discussion & Analysis

Domestic economy is experiencing a recovery. GDP growth improved continuously every quarter during FY 2017-18, though annual growth was at 6.7% compared to 7.1% in FY 2016-17 (as per CMIE). For FY 2018-19, RBI has projected GDP growth of 7.4%. Government initiatives and interventions are expected to stimulate capital expenditure, rural demand, and social & physical infrastructure development, invigorating economic activity.

Though operating in a difficult business environment, the Company is aiming to maintain leadership in existing businesses and focus on diversification by harnessing opportunities in the areas of solar power, transmission, transportation, defence & aerospace and water businesses, to drive the next wave of growth.

Driven by the vision of ‘Creating BHEL of Tomorrow’, the Company has embarked upon a transformational journey in order to enhance responsiveness to emerging opportunities and building new levels of robustness, thereby laying the foundation for a sustainably rising BHEL. The Company is focusing its efforts through specific strategies and their enablers to ensure sustained growth in the future. For further details pl refer Annexure-I .

Corporate Governance

Pursuant to Regulation 34 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, a report on Corporate Governance (including Board/Committee meeting details) together with the following, is given at Annexure - II.

(i) Auditors certificate on Corporate Governance under Listing Regulations & DPE guidelines on Corporate Governance.

(ii) Secretarial Audit Report u/s 204(1) of the Companies Act, 2013 and management reply thereon.

(iii) Extracts of Annual Return pursuant to section 92(3) of the Companies Act, 2013 read with rule 12(1) of the Companies (Management and Administration) Rules, 2014.

Declaration under section 149(6) of the Companies Act, 2013 pertaining to criteria of Independence has been given by the Independent Directors to the Board of Directors.

Links to Company Websites:

1. Details regarding familiarization programme of Independent Directors are available on the website of the Company ‘www.bhel.com’ at web link ‘www.bhel.com/ index.php/ind_dir’ under the heading ‘Familiarisation Programme for Independent Directors {under Independent Director- Related Information}’.

2. Policy determining material subsidiaries and policy dealing with related party transactions, weblink : www.bhel.com/pdf/Policy_with_regard_to_Related_Party_Transactions.pdf

Audit Committee

The Company has in place a Board Level Audit Committee, in terms of the requirements of the Companies Act, 2013 read with rules made thereunder and Regulation 18 of the SEBI (Listing Obligation & Disclosure Requirements) Regulations, 2015, the details in respect of which are given at point 2.3 of the Corporate Governance Report. Further, there has been no instance where the Board of Directors has not accepted the recommendation of Audit Committee.

Compliance with Secretarial Standards

The Company has complied with applicable Secretarial Standards.

Changes in Directors & Key Managerial Personnel

Appointment

Shri Desh Deepak Goel and Shri Ranjit Rae have been appointed as Part-time Non-official (Independent) Directors w.e.f. September 23, 2017.

Shri Subodh Gupta has been appointed as Whole Time (Functional) Director w.e.f. April 18, 2018 to take charge of the office of Director (Finance).

Shri Pravin L. Agrawal, Joint Secretary, Department of Heavy Industry, Ministry of Heavy Industries & Public Enterprises has been appointed as Part-time Official Director w.e.f. May 18, 2018.

Shri S. Balakrishnan has been appointed as Whole Time (Functional) Director w.e.f. June 1, 2018 to take charge of the office of Director (IS&P).

In accordance with Section 161 of the Companies Act, 2013 and Article 67(iv) of the Articles of Association of the Company, S/Shri Desh Deepak Goel, Ranjit Rae, Subodh Gupta, Pravin L. Agrawal and S. Balakrishnan, having been appointed as additional directors, shall hold directorship upto the 54th Annual General Meeting of the Company and are eligible for appointment as Directors at the Meeting.

Cessation

Shri A.N. Roy, who was appointed as Part-time Non-official (Independent) Director on August 27, 2014, ceased to be a Director of the Company on completion of his tenure on August 20, 2017.

Shri T. Chockalingam, who was appointed as Director (Finance) on February 11, 2016, ceased to be a Director of the Company on attaining the age of superannuation on November 30, 2017.

Shri Bhaskar J. Mahanta, the then Joint Secretary, Department of Heavy Industry, Ministry of Heavy Industries & Public Enterprises, who was appointed as Part-time Official Director on January 3, 2017, ceased to be Part-time Official Director on May 18, 2018.

Shri Amitabh Mathur, who was appointed as Director (IS&P) on September 1, 2015, ceased to be a Director of the Company on attaining the age of superannuation on May 31, 2018.

The Board of Directors place on record their deep appreciation for the valuable services rendered as well as advice and guidance provided by S/Shri A.N. Roy, T. Chockalingam, Bhaskar J. Mahanta and Amitabh Mathur during their tenure.

Further, pursuant to Section 152 of the Companies Act, 2013 and Article 67(i) of the Articles of Association of the Company, Dr. Subhash Chandra Pandey and Shri Akhil Joshi will retire by rotation at the Annual General Meeting and being eligible, offered themselves for re-appointment.

In compliance with Regulation 36(3) of the SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015, brief resume of the Directors proposed for appointment and re-appointment alongwith the nature of their expertise in specific functional areas and names of companies in which the person also holds directorship alongwith the membership of the Committees of the Board are given in the explanatory statement/ annexure to the Notice.

No Director has resigned during the year.

CEO/CFO Certificate

CEO/CFO certificate (as per Regulation 17(8) of Listing Regulations) is placed at Annexure- III.

Loans and Investments

Details of loans and investments covered under the provisions of Section 186 of the Companies Act, 2013 form part of financial statement. Loan of Rs.3 crore towards working capital was given during FY 2015-16 to M/s BHEL EML, BHEL’s subsidiary Company, and has been provided for in FY 2017-18.

Consolidated Financial Statements

The brief on consolidated financial statements prepared pursuant to section 129 (3) of the Companies Act, 2013 and Regulation 34 of the SEBI (Listing Obligations & Disclosure Requirement) Regulations 2015, is given in para 1.5.4 under Management Discussion & Analysis.

Sustainable Development

Sustainability, amply reflected in our mission statement “Providing Sustainable Business Solutions in the fields of Energy, Industry & Infrastructure”, is ingrained in our business processes. It is our constant endeavor to minimise our environmental footprint across our value chain. Optimizing product designs to minimise cost as well as environmental footprint, reducing material consumption in products, continuously reducing/controlling use of natural resources in all operations, sound waste management based on the concept of reduce/recycle/reuse, energy conservation activities, moving towards greater use of greener fuels and increasing use of solar energy in our operations, protecting/preserving existing plantations and carrying out new plantations every year are the corner stones of our environmental sustainability strategy. For social sustainability, BHEL has focused its CSR programs towards inclusive and sustainable development of the society. The details of these initiatives pertaining to Sustainable Development are given in Annexure-IV.

Business Responsibility Report

As per Regulation 34 of the SEBI (Listing Obligation & Disclosure Requirements) Regulations, 2015, Business Responsibility Report describing the initiatives taken by the Company from environmental, social and governance perspectives as per the prescribed format is enclosed at Annexure - V.

Achievements of R&D and Technological Development

BHEL’s R&D strategy, structure and infrastructure are aligned to meet the challenges of present & future business environment. The R&D expenditure of the Company for FY 2017-18 is Rs. 753 crore which is 2.7% of the turnover. This includes the expenditure incurred on R&D efforts made at manufacturing units for major modifications/ improvements in products/ designs/ against customer requirements apart from R&D projects. The Company has filed 530 patent and copyright applications during the year, enhancing the Company’s intellectual capital to 4,357. Approximately 19% of the company’s turnover, amounting to Rs. 5,247 crore has been achieved from its in-house developed products. Further details have been provided in Annexure- VI.

Implementation of Official Language

Continuous efforts are being made for propagation and effective implementation of Rajbhasha in all units of the Company and the progress is being reviewed and monitored continuously. Committee of Parliament on Official Language appreciated the efforts being made in this area during their inspection of various Units. Department of Heavy Industry also carried out the inspection of certain units.

Hindi Diwas / Week / Fortnight / Month was celebrated in all the units / divisions including corporate office, during which various competitions, seminars, cultural programs and kavi-sammelans were organized. Rajbhasha Ullas Parva was organized in the offices based in Delhi / NCR. Hindi Diwas function was held in corporate office under the chairmanship of Director (Power) in which Dr. Satyanarayan Jatiya, Vice President of Committee of Parliament on Official Language, was the Chief Guest. Meeting of Hindi Advisory Committee of the Ministry of Heavy Industries and Public Enterprises was held in Gangtok, Sikkim in November 2017 under the chairmanship of the Minister of Heavy Industries and Public Enterprises.

Your Company is playing an active role in Town Official Language Implementation Committees located in different cities. Many competitions, seminars, conferences and programs are organized under the auspices of these committees.

Fifteen Hindi magazines are published in the Company and employees are encouraged to contribute articles for publishing and selected entries are awarded.

Vigil Mechanism

BHEL advocates the principles of Good Governance, Transparency, Probity and Ethics so as to ensure maintenance of highest level of integrity in its functioning. The Vigilance function in the Company is headed by the Chief Vigilance Officer (CVO) who functions as a link between the Central Vigilance Commission (CVC), Central Bureau of Investigation (CBI) and the Management. Besides a Vigilance Department at the Corporate Office, all manufacturing Units / Power Sector Regions of BHEL also have a vigilance set up which is headed by a senior level executive reporting to the CVO. The Vigilance apparatus in BHEL facilitates an environment for the employees to work with integrity, efficiency, transparently, while upholding highest ethical standards for the Company. Vigilance Department has adopted a multipronged strategy and approach to combating corruption, which encompasses punitive, preventive and participative vigilance.

Preventive Vigilance has been the focus area of BHEL Vigilance. The main objective of Preventive Vigilance is not to wait for commission of an offence but to ensure its prevention by identifying the vulnerable areas in the organization & plugging the loopholes. Some of the significant preventive measures undertaken during the year are as follows:

- Surprise inspections, routine inspections and Chief Technical Examiner (CTE) type inspections were conducted across 23 units/ regions/ offices of the Company. Systemic improvements are being undertaken based on the learnings from such inspections.

- Continuous review/ updation of various policies/ guidelines is undertaken in order to align them with the Govt. Policies / guidelines, to minimize discretionary powers and bring clarity in provisions where there is scope for interpretations.

- Works Account Manual and Capital Budget Manual were reviewed and revised versions issued.

- Awareness programmes on Preventive Vigilance and for promoting ethical & value based culture were organized. One session of vigilance has been included as mandatory input for the General Management Programme/Strategic Management Programmes, for middle and senior level executives. About 2800 BHEL employees were sensitized on vigilance issues during the training programmes held in various units/ regions.

Vigilance Awareness Week (VAW) was observed from October 30 to November 4, 2017 on the theme of “My Vision - Corruption Free India”. Besides BHEL employees, outreach programmes were undertaken for vendors and public with a view to make them aware about corruption and to publicize the menace of corruption and to emphasize its ill effects on the wellbeing of the country with an aim to encourage them prevent and combat corruption. The initiatives included publicizing of the Integrity e-Pledge; conducting awareness Gram Sabhas and awareness Campaigns in schools / colleges; organizing lectures, panel discussions, debates, quizzes, essay writing, slogans/elocution/cartoon/poster competitions on topics such as moral values, ethics, good governance practices etc. The events were organized in over 70 schools/ colleges by the Company reaching out to more than 8000 students and youth.

BHEL had signed Integrity Pact with Transparency International on December 16, 2008 and the same was adopted in February 2009. Structured meetings are held with the Independent External Monitors (IEMs) every quarter wherein procurement related issues and complaints thereupon are taken up. The threshold value for tenders has been brought down from Rs. 10 crore to Rs. 5 crore (w.e.f. February, 2016) so as to increase the coverage under Integrity Pact. Presently, about 56% of the total procurement is covered under Integrity pact.

The Company is also having a Complaint Handling Policy in place in line with the guidelines / instructions issued by Government of India and CVC. It provides guidance on the manner in which BHEL receives and handles complaints. Out of total 162 complaints handled during the year, 09 cases were taken up for detailed investigation and appropriate actions were initiated, wherever necessary.

Publication of Quarterly e-Newsletter ‘DISHA’ by the Vigilance Department was initiated in June 2013 with a view to create awareness about procurement policy, rules and procedures, disseminate instructions/ guidelines issued by CVC and Government of India from time to time, sharing best practices and also case studies that reveal lapses observed/investigated in various critical areas of work and learning(s). This newsletter is being uploaded on the intranet sites of all the regions/ units and the link is being sent to all the employees through e-mails. Twenty issues of ‘DISHA” have been published.

Health, Safety & Environment (HSE)

The responsibilities of Occupational Health and Safety (OHS) are driven by our commitment to protect our employees, people we work with, and the community at large. The Company believes in zero tolerance for unsafe work and non-conformance to safety in all its business activities.

There are well established systems, procedures and practices related to Health, Safety and Environment (HSE). Efforts for strengthening the HSE Management Systems & Procedures are made continuously in the organization. All manufacturing units and project sites have HSE departments and required resources, including qualified safety officers. Safety inspections, HSE audits, work place environment monitoring, health monitoring etc. are carried out as per laid down systems and procedures. All units and regional offices, having certification for ISO 14001 & OHSAS 18001, have undergone periodic audits by the certifying agency to ensure effectiveness of systems.

During the year, training programs were organised for all cadre of employees, as well as contract workers on various HSE related issues. Efforts towards enhancing awareness on HSE issues continued through celebrating Industrial Safety Week, Road Safety Week, National Safety Week, World Environment Day etc. During these events, various competitions like slogan writing, poster making, essay writing, quiz, etc. were organized for employees, contract workers and school children. Mimes were also organized on importance of safety at shop floors at HPEP Hyderabad and HEP Bhopal units.

As a recognition of their good safety practices and performance, many units won several awards. EDN, Bengaluru unit won second prize in the State Level Safety competition under Mega- Industry category for adopting best safe practices in the year 2017. A team of artisans from EDN, Bengaluru unit won the Third prize in the State Level Safety Quiz competition. BHEL Trichy unit won two international awards during the 27th Annual Global Conclave of International Institute of Security & Safety Management (IISSM) -2017 and six National Safety Awards.

Data and Cyber Security

Your Company has established a state-of-the-art Security Operations Centre (SOC), a facility in which an information security team continuously monitors and improves the organisation’s security posture while preventing, detecting, analysing and responding cyber security incidents with the aid of both technology as well as well-defined processes and procedures.

The hardware and software of the SOC have been installed at BHEL Hyderabad unit and the Control Centre has been established at BHEL Noida office. SOC collects and analyses security event data in real time for early detection of targeted attacks and data breaches. All Internet traffic that goes out of BHEL and enters BHEL across the organisation is being monitored in SOC on 24x7 basis. SOC has reduced enterprise risk since it protects the business and helps BHEL to move from reactive response to pro-active mitigation.

Establishment of SOC also complies with the advice of Government appointed national nodal agencies like National Critical Information Infrastructure Protection Centre (NCIIPC) and Indian Computer Emergency Response Team (CERT-In).

Other disclosures

Information in accordance with the provisions of Section 134(3)(m) of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 regarding conservation of energy, technology absorption and foreign exchange earnings and outgo is given at Annexure-VII.

As per provisions of section 197 of the Companies Act, 2013 read with the Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, every listed Company is required to disclose the details of the remuneration of the Directors etc. in the Board’s Report. However as per Notification No. GSR 463(E) dated June 5, 2015 issued by the Ministry of Corporate Affairs, Government Companies are exempted from complying with provisions of section 197 of the Companies Act, 2013. BHEL being a Government Company, such particulars are not included as part of Board’s Report.

Statement pursuant to Section 129 of the Companies Act, 2013 (Form AOC-1) relating to subsidiary companies & joint ventures and Form AOC-2 pursuant to section 134(3)(h) of the Companies Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014 are given at Annexure-VIII.

Auditors

The Statutory Auditors of your Company are appointed by the Comptroller and Auditor General of India. Three firms of statutory auditors were appointed as joint statutory auditors and five firms were appointed as branch auditors. The names of audit firms appointed for FY 2017-18 are given separately in the Annual Report.

Auditors’ Report on the Accounts

The Auditors’ Report and Comments of the Comptroller and Auditor General of India on Standalone and Consolidated Financial Statements for FY 2017-18 of the Company are given at Annexure- IX. There is no qualification in the Auditors report on the Financial Statements of the Company. The Comptroller & Auditor General of India, has also given ‘NIL’ Comments on the Financial Statements of the Company after conducting supplementary audit under Section 143 (6) (a) read with Section 129 (4) of the Companies Act, 2013.

Secretarial Audit

In terms of section 204(1) of the Companies Act, 2013, the Company has engaged M/s P.P. Agarwal & Co., Practising Company Secretaries, as Secretarial Auditors for conducting Secretarial Compliance Audit for FY 2017-18 and their report is forming part of Corporate Governance section.

Cost Auditors

In terms of provisions of Section 148 of the Companies Act, 2013 and as per the Companies (Cost Records and Audit) Rules, 2014 and amendments thereof, the Board, on the recommendation of the Audit Committee, approved the appointment of seven firms of Cost Accountants as Cost Auditors for auditing the cost accounts of your Company for FY 2017-18.

The detail of cost auditors appointed for FY 2017-18 are given separately in the Annual Report. The Cost Audit Report for FY 2016-17 has been filed under XBRL mode on September 8, 2017, well within the due date of filing.

Acknowledgement

Your Directors gratefully acknowledge all the help, support and guidance received from Ministry of Heavy Industries & Public Enterprises and all other departments/agencies of the Government of India, in the Company’s operations and developmental plans. The Directors also express their gratitude to the Comptroller and Auditor General of India, Chairman and Members of Audit Board, Statutory Auditors, Branch Auditors, Secretarial Auditor and Cost Auditors for constructive suggestions and continuous cooperation. The Directors also wish to place on record their appreciation for the continued cooperation received from all the technology collaborators, suppliers, contractors and for the support provided by the financial institutions, bankers and stock exchanges.

Your Directors place on record their sincere appreciation towards the Company’s valued customers in India and abroad and esteemed shareholders for the support and confidence reposed by them in the management of the Company and look forward to the continuance of this mutually supportive relationship in future.

Last but not the least, your Directors wish to place on record their sincere appreciation for the diligent efforts and contributions of all BHEL employees, to ensure that the Company continues to grow and prosper.

For and on behalf of the Board of Directors of

BHARAT HEAVY ELECTRICALS LTD.

Atul Sobti

Chairman & Managing Director

Place : New Delhi

Dated : July 25, 2018


Mar 31, 2017

To the Members,

The Directors are pleased to present the 53rd Annual Report on the business and operations of the company and the audited Ind AS financial statements for the year ended March 31, 2017 along with comparative Financial Statements of 2015-16 and opening Ind AS Transition Balance Sheet as on 01.04.2015.

During the year, the company regained growth and profitability by recording a turnover of RS.28,840 Crore, a growth of 10.7% over 2015-16 and profit of RS.496 Crore as against loss of RS.710 Crore in previous year. The Company achieved a capacity addition of 45,274 MW of power projects during 12th plan (2012-17), 9% higher than the target of 41,661 MW set by Government of India for BHEL.

Financial Performance

Figures (in Rs. Crore except per

Financial Year

share data)

2016-17

2015-16

(a)

Turnover

28,840

26,050

(b)

Other Operational Income

635

588

(c)

Revenue from operations

29,475

26,638

(d)

Operating Expenses

(28,643)

(28,005)

(e)

Operating Profit/(Loss)

832

(1,367)

(f)

Other Income

996

1498

(g)

Profit/ (Loss) before Depreciation, Finance cost & Tax expense

1,828

131

(h)

Depreciation & amortisation expenses

(849)

(936)

(i)

Finance Cost

(351)

(359)

(j)

Profit/ (Loss) before tax

628

(1,164)

(k)

Tax expense

(132)

454

(l)

Profit/ (Loss) for the period from continuing operations

496

(710)

(m)

Other Comprehensive Income

(29)

(76)

(n)

Total Comprehensive Income for the period

467

(786)

(o)

Dividend (including interim dividend )#

294

152

(p)

Corporate Dividend tax (incl. CDT on interim dividend)

60

31

(q)

NAV per share (in K)

131.94

131.48

Figures in brackets denote expenses or losses

# Dividend includes final dividend for the previous year and interim dividend for the current year.

Dividend

The Company has paid interim dividend for 2016-17 @ 40% (RS.0.80 per share) amounting to RS.195.81 Crore on paid up share of capital of RS.489.52 Crore and corporate dividend tax of RS.39.86 Crore, out of profit for the year. With this, the total payout was at RS.235.67 Crore. The company has also paid final dividend of 2015-16 in 2016-17 of RS.97.90 Crore (RS.0.40 per share) on paid up share capital of RS.489.52 Crore, alongwith corporate dividend tax of RS.19.93 Crore.

The Board has recommended a final dividend for 2016-17 @ 39% (RS.0.78 per share) amounting to RS.190.91 Crore on paid up share capital of RS.489.52 Crore and corporate dividend tax of RS.38.87 Crore, out of profit for the year. With this, the total payout shall amount to RS.229.78 Crore.

The Dividend Distribution Policy of the company is provided separately in the Annual Report (under Additional Information) and is available on BHEL website (www.bhel.com).

Orders Received

BHEL secured orders worth RS.23,489 Crore during 2016-17. This was achieved despite subdued business conditions in the power and infrastructure sectors coupled with intense competition in domestic and overseas markets. Sector wise orders booked are as follows:

(Rs. in Crore)

2016-17

2015-16

Power Sector

7,261

38,529

Industry Sector

6,181

5,125

International Operations

10,047

73

Total Orders Booked

23,489

43,727

Order Book outstanding at the end of the year

1,05,200

1,10,730

Events Occurring after the Balance Sheet Date

There were no significant events occurring after the Balance Sheet date.

Directors’ Responsibility Statement

Pursuant to Section 134(5) of the Companies Act, 2013, it is hereby confirmed that:

(i) In the preparation of the annual accounts for the financial year ended March 31, 2017, the applicable accounting standards (Ind AS) have been followed and proper explanation relating to material departures has been provided;

(ii) The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;

(iii) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(iv) The Directors have prepared the annual accounts on a going concern basis;

(v) The Directors have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively;

(vi) The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

Management Discussion and Analysis

Domestic economy is experiencing a turnaround but is still reeling under the impact of uncertainties. RBI has projected Gross Value Added (GVA) growth of 7.3 % in 2017-18 as compared to 6.6% in 2016-17. Over the medium run, the roll out of the Goods and Services Tax (GST) and enacting other structural reforms should push the economy towards a higher growth path. However, capacity underutilization and delayed revival of capital investment still pose major challenge to the growth of Indian industry.

BHEL recorded a turnover of RS.28,840 Crore, up 10.7% over the previous year, reversing the trend of negative topline growth prevailing for the last three years. Company returned to profitability with a Profit Before Tax of RS.628 Crore, compared to a loss before tax of RS.1,164 Crore in the last year. Profit After Tax stood at RS.496 Crore, against a net loss of RS.710 Crore in the previous year. BHEL secured orders worth RS.23,489 Crore during 2016-17. This was achieved despite subdued business environment coupled with intense competition in domestic and overseas markets. Enhanced focus on project execution has resulted in BHEL achieving a capacity addition of 45,274 MW during the 12th Five Year Plan period (2012-17), surpassing the target of 41,661 MW set by the government for BHEL, by 9%. Company’s strategy is to maintain leadership in existing businesses and focus on diversification to drive the next wave of growth which includes harnessing opportunities in the areas of solar power, transmission, transportation, defence and water.

BHEL too is transforming and has embarked upon a transformation journey with a vision of ‘Creating BHEL of Tomorrow’ - creating an organization which will be Rising, Robust and Responsive to the needs of customers, employees, shareholders and society. With several initiatives taken under Execution, Consolidation & Simplification as a part of this transformation process, the company is also putting a series of efforts focused on sustaining growth and profit; asserting leadership in core business and developing people & digital capabilities; and finally, building capabilities in new businesses and technology for sustained growth.

Further details are given in Annexure-I.

Board of Directors

Details of changes in Directors & Key Managerial Personnel Appointment

Shri Anshu Prakash, Additional Secretary, Department of Heavy Industry, Ministry of Heavy Industries & Public Enterprises was appointed as Part-time Official Director w.e.f. 31.10.2016.

Shri Bhaskar Jyoti Mahanta, Joint Secretary, Department of Heavy Industry, Ministry of Heavy Industries & Public Enterprises has been appointed as Part-time Official Director w.e.f. 03.01.2017.

Ms. Surama Padhy has been appointed as Part-time Nonofficial Director (Independent Director) w.e.f. 02.02.2017.

In accordance with Section 161 of the Companies Act, 2013 and Article 67(iv) of the Articles of Association of the Company, Shri Bhaskar Jyoti Mahanta and Ms. Surama Padhy, being appointed as additional directors, shall hold directorship upto the 53rd Annual General Meeting of the Company and are eligible for appointment as Directors at the Meeting.

Cessation

Shri Rajesh Kumar Singh, the then Joint Secretary, Department of Heavy Industry, Ministry of Heavy Industries & Public Enterprises, who was appointed as Part-time Official Director w.e.f. 22.12.2014, relinquished his charge of the post of Part-time Official Director on the Board of BHEL w.e.f. 06.10.2016 on his transfer to UIDAI, Ministry of Electronics & IT.

Shri Anshu Prakash, the then Additional Secretary, Department of Heavy Industry, Ministry of Heavy Industries & Public Enterprises, who was appointed as Part-time Official Director w.e.f. 31.10.2016, relinquished his charge of the post of Part-time Official Director on the Board of BHEL w.e.f. 03.01.2017 on his transfer to Department of Rural Development.

Ms. Harinder Hira who was appointed as Part-time Nonofficial Director (Independent Director) w.e.f. 08.05.2014 ceased to be a Director of the Company on completion of her tenure on 01.05.2017.

The Board of Directors place on record their deep appreciation of the valuable services rendered as well as the advice and guidance provided by S/Shri Rajesh Kumar Singh, Anshu Prakash and Ms. Harinder Hira during their tenure.

Further, pursuant to Section 152 of the Companies Act, 2013 and Article 67(i) of the Articles of Association of the Company, S/Shri Subrata Biswas and T. Chockalingam will retire by rotation at the Annual General Meeting and being eligible, offered themselves for re-appointment.

In compliance with Regulation 36(3) of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, brief resume of the Directors proposed for appointment and re-appointment alongwith the nature of their expertise in specific functional areas and names of companies in which the person also holds directorship alongwith the membership of the Committees of the Board are given in the explanatory statement/ annexure to the Notice.

No Director has given resignation during the year.

Audit committee details

Details of Board Level Audit Committee are given at Point 6.3 of the Corporate Governance Report. Further, there has been no instance where the Board of Directors has not accepted recommendation of the Audit Committee.

CEO/CFO Certificate

CEO/CFO certificate (as per Regulation 17(8) of Listing Regulations) is placed at Annexure-II.

Sustainable Development

BHEL’s strong belief in Sustainable Development resonates in its mission statement - “Providing Sustainable Business Solutions in the fields of Energy, Industry & Infrastructure”. Sustainability is integral to our business processes. Thrust on reducing environmental footprint throughout our value chain to enhance environmental sustainability continued during the reporting period. To promote inclusive growth, the focus on CSR initiatives continued which resulted in the creation of additional social infrastructure benefitting the society. During 2016-17, an amount of RS.37.50 Crore was allocated for various CSR initiatives by the company. The details of various initiatives related to Sustainable Development undertaken during 2016-17 is provided in Annexure-III.

Business Responsibility Report

In line with the requirement of the listing regulations, Business Responsibility Report describing the initiatives taken by the company from environmental, social and governance perspectives as per the suggested format is enclosed at Annexure-IV.

R&D and Technological Achievements

BHEL’s R&D strategy, structure and infrastructure are aligned to meet the challenges of present & future business environment. The R&D expenditure of the company for 2016-17 is RS.793.62 Crore which is 2.75 % of the turnover. This includes the expenditure incurred on R&D efforts made at manufacturing units for major modifications/ improvements in products/designs against customer requirements which are not covered in R&D projects. The company filed 508 patents and copyright applications during the year 2016-17, enhancing the company’s intellectual property in terms of number of such rights to 3,915. Further details have been provided in Annexure-V.

Official Language Implementation

Continuous efforts were made for propagation and effective implementation of Rajbhasha in the company. Inspection of 12 units/divisions was done to monitor and review the progress in this area. Committee of Parliament on Official Language appreciated the efforts being made in this area during the inspection of PS-NR, ROD-Mumbai & Corporate R&D on 12.04.16, 20.10.2016 & 20.01.2017 respectively.

A special session on Rajbhasha was held in Management Committee Meeting on 12.05.2016. For this session, Shri S.N. Singh, Director, Central Translation Bureau was invited to deliver a lecture on ‘Rajbhasha Implementation-Our Responsibility’.

Second meeting of Hindi Advisory Committee of Ministry of Heavy Industries and Public Enterprises was organized by BHEL Hyderabad under Chairmanship of Shri Anant G. Geete, Union Minister of Heavy Industries and Public Enterprises on 29.12.2016.

Under Inter-Unit Rajbhasha Shield Scheme, 10 units/ divisions were presented the shield by CMD for excellent Rajbhasha Implementation. In addition, 380 employees who perform exemplary work in Hindi were also awarded with cash awards.

Our Company is playing an active role in Town Official Language Implementation Committees (TOLICs), constituted in various cities. Many interesting competitions, Seminars and programs are conducted under auspices of these committees. This year 9 units/ divisions of BHEL were awarded by the TOLICs for their various achievements in this area.

Vigilance

Vigilance Department of BHEL is headed by the Chief Vigilance Officer (CVO) appointed by Department of Heavy Industry (DHI), Ministry of Heavy Industries & Public Enterprises, Govt. of India. Major manufacturing units / Power Sector Regions of BHEL have a vigilance set up headed by a senior vigilance executive reporting to the CVO.

Preventive Vigilance has always remained the focus area of BHEL Vigilance. Additional impetus was also given for systemic improvements during 2016-17. Some of the preventive measures initiated are as under:

- Revision of Works Policy, 2016

- Revision of Supplier Evaluation, Approval and Review Procedure (SEARP), 2016

- Revision of Guidelines for Reverse Auction

- Revision of Guidelines for Suspension of Business Dealings with Suppliers / Contractors

- Utilization of Unused Material

- Review of Material Estimation Procedure

- Implementation of Sequential Material Supply System by units

- Revision of NIT conditions to check Cartelization in Transport and Fabrication contracts

- Review of Corruption Mitigation Action Plan for Potential areas

- Emphasis of Open Tendering and Transparency in Tendering value for money

- Online Vigilance Clearance System

- Review of Township Revenue Collection System

During the year, various training programmes were conducted in different units/divisions for the employees as part of preventive vigilance. In all the General Management Programme/Strategic Management Programmes organised by Corporate Learning & Development (CLD) department, a session on vigilance administration is being included on a regular basis.

With a view to create awareness about procurement policy, rules and procedures etc., to disseminate the instructions/ guidelines issued by CVC and Government of India from time to time, to share best practices and case studies, Vigilance Department publishes Quarterly e-Newsletter ‘DISHA’. Sixteen issues have already been published.

The Vigilance Awareness Week was observed from 31st October to 5th November, 2016. To spread awareness about ill effects of corruption amongst cross section of society, various programmes i.e. quizzes, debates, essay writing competition, elocution, panel discussions, lectures, training programmes, Poster competition, slogan competition, walkathon etc. were organized for students of various schools / colleges (30 colleges / 39 schools) and employees of the organization.

Routine / Surprise inspections were carried out by Vigilance. The learnings from inspections and surprise checks were shared with the management. Based on these feedbacks, various system improvements have been initiated by the management. In addition, various circulars for systemic improvements were also issued.

BHEL signed the Integrity Pact with Transparency International on 16.12.2008 and the same was adopted in Feb. 2009. Structured meetings are held with the Independent External Monitors (IEMs) every quarter wherein the procurement related issues and complaints thereupon are discussed.

With a view to ensure efficient Vigilance Clearance of officers who are applying for senior level posts in various CPSEs, Department of Personnel & Training (DoPT), Ministry of Personnel, Public Grievances and Pensions has launched a web portal for Vigilance status of Board Level and below Board level officials. Data in respect of officials of one level below the Board of BHEL has been updated in the system.

Safety & Security

BHEL is fully committed to providing a safe and healthy work environment in all its manufacturing units and project sites. It is our firm belief that safe and healthy workplace not only boosts people’s morale but is also a precondition for greater productivity at workplace. It has always been our endeavour to consolidate good safety practices and make them a part of our work culture. Due to various initiatives taken to improve safety performance at project sites, the number of fatal accidents and man-days lost due to reportable accidents have decreased. In manufacturing units, the number of reportable accidents has reduced by almost 8% with respect to 2015-16.

Occupational Health Services (OHS) centres are being run in the factory premises providing preventive as well as curative occupational health services to employees. Health monitoring of employees is carried out at these centres as a preventive health management measure.

Some of the initiatives taken in our units/divisions to build and maintain safety and health culture at workplace during 2016-17 included:

- Awareness training on Material Safety Data Sheet (MSDS) and Safe Operating Procedures (SOP) to ensure safety in handling and use of hazardous chemicals.

- Health & Safety related training sessions for Regular Employees, Contract Workers & Trade Apprentices.

- Training at workplace for Crane Operators, Riggers, and Helpers for ensuring safety in Material Handling.

- Demonstration of Rescue operation in the event of fall from height and awareness creation on appropriate use of Personal Protective Equipment (PPEs) at project sites.

- Providing sponsorship to company officials/ supervisors for 1-year Advanced Diploma Course in Industrial Safety conducted by Central/Regional Labour Institute at Mumbai, Kanpur, Kolkata, Chennai and Faridabad.

- Hazard Identification and Risk Assessment exercise for all new activities/process modification/ equipment installation.

- Tool box talk/pep talks at workplace covering area specific safety issues.

- Conducting periodic maintenance & testing of material handling equipments (cranes, lifting tackles, hoists, forklifts, pallets etc.), pressure vessels/air receivers, power presses etc.

- Celebration of Road Safety Week to create awareness amongst employees and drivers associated with transportation of our products.

- Celebration of National Safety Day/week to create awareness about safety topics amongst the employees, contract workers and other stakeholders in our society. The theme of the Safety Day-2017 was “Leadership in Safety and Health Enhances Business Sustainability”. Employees took safety pledge and several competitions were organised to promote safety.

- Sharing of good practices through publication of inhouse magazines and handbooks on various safety related topics.

Data and Cyber Security

An organizational Crisis Management Group (CMG) is in place in BHEL for countering cyber-attacks and cyber terrorism, in pursuance of priorities and directives from Ministry of Heavy Industries & Public Enterprises, Govt. of India. Crisis Management Plan for BHEL is also in place. All database administrators across various locations of company are notified.

BHEL has created a total workforce of 225 Information Security professionals including 50 in 2016-17, through training and certification courses, meeting one of the key objectives of national cyber security policy of Govt. of India to protect Indian cyber space.

All units, regions and divisions of BHEL have been certified for ISO/IEC 27001:2013 for Information Security Management System (ISMS).

Enterprise Risk Management (ERM) system exists in BHEL and Cyber Security is identified as one of the top risks.

Corporate Governance

As per the requirements of the Listing Regulations, a detailed report on Corporate Governance (including Board/ Committee meeting details) together with the following is given at Annexure - VI.

(i) Auditors certificate on Corporate Governance under Listing Regulations & DPE guidelines on Corporate Governance.

(ii) Secretarial Audit Report u/s 204(1) of the Companies Act, 2013 and management reply thereon.

(iii) Extracts of Annual Return pursuant to section 92(3) of the Companies Act, 2013 read with rule 12(1) of the Companies (Management and Administration) Rules, 2014.

Declaration under section 149(6) of the Companies Act, 2013 pertaining to criteria of independence has been given by the Independent Directors to the Board of Directors.

Loans and Investments

Details of loans and investments covered under the provisions of Section 186 of the Companies Act, 2013 forms part of financial statement, attached as a separate section in the Annual report FY 2016-17. Loan of RS.3 Crore towards working capital was given during 2015-16 to M/s BHEL EML, BHEL’s subsidiary company. The repayment timeline of the loan is extended to MarcRs.2018.

Other Disclosures

Information in accordance with the provisions of Section 134(3)(m) of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 regarding conservation of energy, technology absorption and foreign exchange earnings and outgo is given at Annexure-VII.

As per provisions of section 197 of the Companies Act, 2013 read with the Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, every listed company is required to disclose the details of the remuneration of the Directors etc. in the Directors’ Report. However as per Notification No. GSR 463(E) dated 5th June, 2015 issued by the Ministry of Corporate Affairs, Government Companies are exempted from complying with provisions of section 197 of the Companies Act, 2013. BHEL being a government company, such particulars are not included as part of Directors’ Report.

Statement pursuant to Section 129 of the Companies Act, 2013 (Form AOC-1) relating to subsidiary companies & joint ventures and Form AOC-2 pursuant to section 134(3)(h) of the Companies Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014 are given at Annexure-VIII.

Links to Company Websites :

1. Familiarisation Programme of Independent Directors, Weblink : http://www.bhel.com/investor_relations/investor.php

2. Policy Determining Material Subsidiaries and Policy Dealing with Related Party Transactions, Weblink : http://www.bhel.com/pdf/Policy_with_regard_to_Related_Party_Transactions.pdf

Auditors

The auditors of BHEL are appointed by the Comptroller and Auditor General of India. The names of auditors appointed for the year 2016-17 are printed separately in the Annual Report.

The detail of cost auditors appointed for the year 2016-17 and cost audit details are printed separately in the Annual Report.

The Auditors’ Report and Comments of the Comptroller and Auditor General of India are given at Annexure- IX.

Acknowledgements

The Board places on record its sincere appreciation towards the company’s valued customers in India and abroad and esteemed shareholders for the support and confidence reposed by them in the management of the company and look forward to the continuance of this mutually supportive relationship in future.

The Board also gratefully acknowledges the support and guidance received from various ministries of the Govt. of India, particularly the Department of Heavy Industry, in the company’s operations and developmental plans. The Directors also express their gratitude to the Comptroller and Auditor General of India, Chairman and Members of Audit Board, Statutory Auditors, Branch Auditors, Secretarial Auditor and Cost Auditors. The Directors also wish to place on record their appreciation for the continued cooperation received from all the technology collaborators and suppliers and for the support provided by the financial institutions, bankers, stock exchanges and various stakeholders. Last but not the least, the Board wishes to place on record its deep gratitude to all BHELites whose enthusiasm, team effort, devotion and sense of belongingness have made this great company proud.

For and on behalf of the Board of Directors of

BHARAT HEAVY ELECTRICALS LTD.

Atul Sobti

Chairman & Managing Director

Place: New Delhi

Dated: July 19, 2017


Mar 31, 2015

To the Members,

The Directors are delighted to present the 51st Annual Report on the business and operations of the Company and the statement of accounts for the year ended March 31, 2015.

Financial Performance

Financial Year Figures (in Rs. Crore except 2014-15 2013-14 per share data)

a) Turnover (Gross) 30947 40338

b) Revenue from operations (Net) 29542 38389

c) Other Operational Income 641 720

d) Operating expenses 28094 34595

e) Operating profit 2089 4514

f) Add : Other income 1220 1616

g) Profit before depreciation, finance cost & tax expense 3309 6130

h) Less: Depreciation 1077 983

i) Less: Finance costs 92 133

j) Profit before tax 2140 5014

k) Less: Tax expense 721 1553

l) Profit after Tax 1419 3461

m) Add: Balance brought forward from the previous year 1171 1102

n) Profit available for appropriation 2590 4563

i) Adjustment pursuant to Amalgamation 0 81

ii) Depreciation Adjustment 41 0

iii) Dividend (including interim dividend) 284 693

iv) Corporate Dividend tax (incl. on interim dividend) 57 118

v) Amount transferred to General Reserve 1000 2500

o) Balance in Statement of Profit & Loss 1208 1171

p) Earnings per Share (Rs.) 5.80 14.14

q) NAV per share (Rs.) 139.26 135.02

Despite various issues relating to power projects like fuel linkages, fund constraints, land acquisition etc., BHEL recorded turnover of Rs. 30947 Crore in the year 2014-15. Net worth of the company has gone up by 3.14 %.

Performance of BHEL for the year 2013-14 has been rated as Good'' in terms of MoU signed with the Government of India. BHEL has been awarded the MoU Composite score of 3.131''.

Details of changes in Market Capitalisation

Description As at 31st March Increase/ Decrease 2015 2014 in %

Market Capitalization (Rs. in Crore) 57604.27 47985.20 20.05

Price - Earnings Ratio 40.58 13.86 192.78

Note: Data based on share prices quoted on NSE.

Percentage increase over/ decrease in the market quotations of the shares of the company in comparison to the rate at which the company came out with the last public offer- BHEL has not offered shares to the public at large in an IPO.

Dividend

The Board has recommended a Final Dividend of 31 % (Rs. 0.62 per share), Rs. 151.75 Crore, for the year 2014-15. An interim dividend of 27 % (Rs. 0.54 per share), Rs. 132.17 Crore, on share capital of Rs. 489.52 Crore, has already been paid for the year 2014-15. Thus the total dividend (exclusive of dividend tax) for the year 2014-15 is Rs. 283.92 Crore (Rs. 1.16 per share) as against Rs. 692.68 Crore (Rs. 2.83 per share) paid in the previous year.

Provision of Rs. 30.89 Crore has been made for Corporate Dividend Tax on the Final dividend proposed. Corporate Dividend Tax of Rs. 26.43 Crore has already been paid on the interim dividend.

Orders Received

Despite operating in a subdued but healthy competitive business environment, the company secured orders worth Rs. 30814 Crore during the year. Sector-wise orders booked are as follows:

(Rs. in Crore)

2014-15 2013-14

Power Sector 24873 20433

Industry Sector* 5221 5007

International Operations 720 2567

Total Orders Booked 30814 28007

Order Book outstanding at the end of the year 101000 101500

*excludes inter sectoral orders

Events Occurring after the Balance Sheet Date

There were no significant events occurring after the Balance sheet date.

Directors'' Responsibility Statement

Pursuant to Section 134(5) of the Companies Act, 2013, it is hereby confirmed that:

(i) In the preparation of the annual accounts for the financial year ended March 31, 2015, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(ii) the directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;

(iii) The directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(iv) The directors have prepared the annual accounts on a going concern basis;

(v) The directors have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively;

(vi) The directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively;

Management Discussion and Analysis

A report on Management Discussion and Analysis is placed at Annexure – I.

Board of Directors

Appointment

Shri Rajesh Kumar Singh, Joint Secretary, Department of Heavy Industry, Ministry of Heavy Industries & Public Enterprises, has been appointed as Part-time Official Director w.e.f. 22.12.2014.

Shri T.N. Veeraraghavan has been appointed as an Additional Director w.e.f. 07.01.2015 to take charge of the office of Director (E,R&D).

Shri D. Bandyopadhyay has been appointed as an Additional Director w.e.f. 01.08.2015 to take charge of the office of Director (HR).

In accordance with Section 161 of the Companies Act, 2013 and Article 67(iv) of the Articles of Association of the Company, Shri Rajesh Kumar Singh and Shri D. Bandyopadhyay shall hold their directorships up to the 51st Annual General Meeting of the Company and is eligible for appointment as Director at the Meeting.

Cessation

Shri Ambuj Sharma, Additional Secretary, Department of Heavy Industry, Ministry of Heavy Industries & Public Enterprises, consequent to DHI order No. 1(2)/1995- PEXI dated 17th December, 2014 has relinquished his position as Part-time Official Director on 21.12.2014.

Shri P.K. Bajpai, who was appointed as Director (Finance) w.e.f. 01.07.2011 ceased to be a Director of the Company on attaining the age of superannuation on 31.05.2015.

Shri T.N. Veeraraghavan, who was appointed as Director (E,R&D) w.e.f. 07.01.2015 ceased to be a Director of the Company on attaining the age of superannuation on 30.06.2015.

Shri R. Krishnan, who was appointed as Director(HR), w.e.f. 01.04.2012 ceased to be a Director of the Company on attaining the age of superannuation o n 31.0 7. 2 015 .

The Board of Directors place on record their deep appreciation of the valuable services rendered as well as advice and guidance provided by S/shri Ambuj Sharma, P.K. Bajpai, T.N. Veeraraghavan and R. Krishnan during their tenure.

Further, pursuant to Section 152 of the Companies Act, 2013 and Article 67(i) of the Articles of Association of the Company, Shri Atul Sobti and Shri S.K. Bahri will retire by rotation at the Annual General Meeting and being eligible, offers themselves for re-appointment.

In compliance with Clause 49(VIII)(E)(1) of the Listing Agreement, brief resumes of the Directors proposed for appointment and re-appointment along with requisite details are given in the Explanatory Statement/ Annexure to the Notice.

No Director has given resignation during the year.

CEO/CFO Certificate

CEO/CFO certificate {as per Clause 49(IX) of Listing Agreement} is placed at Annexure – II.

Sustainable Development

Sustainability is just a natural extension of the way BHEL sees itself and its responsibilities. For almost fifty years of its existence, the company has been leveraging technology and innovations for providing products, systems and services to its customers enabling them to use resources with better efficiency and productivity which is also reflected in its Mission Statement – "Providing

Sustainable Business solutions in the fields of Energy, Industry & Infrastructure".

BHEL has ingrained the triple bottom line approach for Sustainable Development in its business processes. It has been creating value for its stakeholders since inception. Its R&D efforts have always been directed towards development and diffusion of technologies which are having reduced environmental footprints. Its structured CSR programme is directed towards bringing prosperity to the society and is aligned to the efforts being made by Government of India towards inclusive growth.

BHEL has undertaken numerous CSR initiatives and more than 300 such CSR projects/activities implemented during 2014-15 covered majorly all Units/ Regions. In addition, company has undertaken many environmental sustainability initiatives which falls broadly in the areas of renewable energy generation, material and natural resource management, energy management, water & bio-diversity management and carbon management. The details of all such sustainability initiatives are provided in Annexure-III.

Business Responsibility Report

In line with the requirement of clause 55 of the listing agreement, Business Responsibility Report describing the initiatives taken by the company from an environmental, social and governance perspective as per the suggested format is enclosed at Annexure -IV.

R&D and Technological Achievements

Continuous product development is the cornerstone of strategy for meeting the challenges in today''s environment. BHEL places strong emphasis on innovation and creative development, which are the important drivers of BHELs R&D programmes for achieving growth. The R&D efforts of the company are not only aimed at improving the performance and efficiency of the existing products, but also developing new products using state-of-the-art technologies and processes.

BHEL has recorded significant achievements during the year. The R&D expenditure of the company for the current financial year is Rs. 1018.59 Crore which is 3.29% of the turnover. This also includes the expenditure incurred on R&D efforts gone into major modifications/ improvements in product/ designs against customer requirements which are not covered in R&D projects. The company filed 453 patent and copyright applications filed during the year 2014-15, enhancing the company''s intellectual capital to 3010.

It is imperative to focus on newer areas to meet the challenges of a changing business scenario while continuing development in traditional areas of business. To meet this objective, BHEL has taken several technology development initiatives covering various business verticals viz. Power, Transportation, Transmission, Solar, Water, Defence and other areas. Company will continue to pursue various projects undertaken in recent years with focus on low-carbon path technologies including faster assimilation of Supercritical Technology development of Advanced Ultra Super Critical Technology, IGCC Technology commercialization, Carbon capture, Solar PV & Thermal, 765/1200 kV Transmission System, GIS up to 765 kV, ±800 kV HVDC system, IGBT based Propulsion Systems for higher rating Locos, EMU, Metro coaches on mission mode. The company is also engaged in development of emerging technologies like Fuel Cells for distributed environment friendly power generation, development of new materials with addition of Nano-/micro-particles for improving characteristics, and superconducting application in Transformers, Generators, Motors, etc. Further details are given in Annexure-V.

Official Language Implementation

Continuous efforts were made for propagation and effective implementation of Rajbhasha in the company. Inspection of 12 Units/Divisions was done to monitor and review the progress in this area. Committee of Parliament on Official Language appreciated the efforts being made in this area during the inspection of Corporate Office o n 16 .01.15 .

More than 900 non Hindi speaking employees were imparted training under Hindi teaching scheme of Govt. of India. Training for using latest version of Unicode Hindi on computer was also imparted to more than 5000 employees of all the Units/Divisions. 70 Hindi workshops were organized to motivate employees to work in Hindi covering more than 1800 employees. In addition, 1 Translation Training Programme was conducted with the help of Central Translation Bureau, Rajbhasha Vibhag, Ministry of Home Affairs.

Under Inter Unit Rajbhasha Shield Scheme, 13 Units were given award for excellent Rajbhasha Implememtation. 03 executives were awarded for Hindi Book writing under Hindi Book Award Scheme. In addition, 350 employees who do their work in Hindi were also awarded with cash awards.

All the Units/Divisions of the company, including Corporate Office, celebrated Hindi Divas and Hindi Week/ Fortnight/Month during which various competitions, Seminars, Cultural Programme and Kavi Sammelan were held.

BHEL is playing an active role in Town Official Language Implementation Committees constituted in various cities. Many interesting competitions, Seminars and programmes are conducted under auspices of these committees. This year 15 Units/ Divisions of BHEL were awarded by the TOLICs for various achievements in this area.

A handbook "Rajbhasha Sahayika" has been prepared as helping material for doing work in Hindi. It is being distributed to employees in Hindi workshops and it has been uploaded on Corporate intranet also.

13 Hindi Magazines are being published all over the Company to motivate the employees for Hindi writing and these are getting awards from various institutes. "Arunima" from Corporate Office was awarded with Second Prize by TOLIC (PSU), Delhi for excellent House Journal.

All BHEL Rajbhasha Coordinators Meet was held on 9th & 10 th October, 2014 at EPD, Bengaluru. 35 employees from various Units/Division of the Company attended the Meet.

Vigilance

The Vigilance organization of BHEL is headed by a Chief Vigilance Officer (CVO) appointed by the Ministry. All major manufacturing Units / Power Sector Region of BHEL have vigilance set up, headed by senior vigilance executive reporting to the CVO.

Preventive vigilance remained the focus area of BHEL Vigilance, with special emphasis on systemic improvements. To strengthen the vigilance administration, Whistleblower Policy of the company was issued. Further, action was initiated for review of Works policy, Works Account Manual and HR Manual.

Public Awareness is an important cornerstone for good governance. An enlightened employee not only can contribute in achieving the organizational goal but also in system improvements. Training programmes / sessions were conducted to update employees about Company''s policies, rules and procedures in various BHEL Units and Regions. In addition, interactive sessions were held with line executives representing different functional areas to sensitize them about the risk prone areas.

With a view to create awareness about procurement and works policy, rules and procedures etc., to disseminate the instructions/ guidelines issued by CVC and Government of India from time to time and to share best practices and case studies, a quarterly e-Newsletter DISHA is being published by Corporate Vigilance.

Corporate Vigilance teams inspected 9 Units. The issues observed during inspections were discussed in interactive sessions with the respective Unit Managements. It was impressed upon officials to focus on the aspects of estimation and price reasonability while dealing with procurement to remain competitive in the market. The interactive sessions helped BHEL officials to appreciate the role of Vigilance in promoting a strong, viable and competitive organization.

The critical review of tender conditions was also undertaken with a view to increase competition and check cartel formation. Due to proactive action of Vigilance, savings to the tune of Rs. 37.03 Crore (approx.) have been achieved.

BHEL Vigilance prepared a detailed Corruption Mitigation Action Plan in respect of potential areas of corruption, which has been taken up for implementation by all Units.

Routine / Surprise Inspections were carried out by Unit / Corporate Vigilance to verify the compliance of rule and procedures. Instructions/Guidelines were issued concerning following issues for further improvement in the system:

a) Deficiencies in Tendering Process of Transportation Contracts

b) Clarification on clause 4.0 of Guidelines on Suspension on Business Dealings with Suppliers / Contractors

c) Prequalification Criteria (PQ)

d) Receipt and Opening of Tenders

e) Deficiency in Quality Inspections

f) Reasonableness of Rates

Some specific areas concerning Estate Management, Stores Management, Procurement were identified and Unit Managements were advised to initiate action in these areas:

- Recovery of outstanding dues on account of rent and allied charges from the allottees of quarters/ shops in Townships.

- Identification/ segregation of surplus / usable stores/ scrap material from the stores lying outside the workshops in the premises of units and not used/ disposed of for very long time.

- Installation of Bio-metric Attendance System linked with pay system.

- Procurement through open tender route particularly for high value packages and review of PMDs to weed out inactive suppliers.

To improve record management, Guidelines for Retention / Weeding out of Old Records in Vigilance Department issued on 20.08.2014.

To enhance the skills of Vigilance Officers, a workshop for Vigilance Officers was organized from 27.08.2014 to 29.08.2014 at BHEL, Bhopal

BHEL is committed to bring transparency in day to day operations of the Company by leveraging technology. The information regarding procurement related matters like status of purchase orders and Contracts, Vendor registration along with their current status is hosted on the Company website. In addition, e-tendering route is being promoted for procurement and e-payment system has been implemented to reduce vendor interface. Further, steps have been taken to promote e-procurement in the Company. The percentage of e-procurement increased from 25% to 37% and around 26% of tenders (value wise) were decided through Reverse Auction during 2014-15.

Vigilance examined 144 complaints and investigated 30 complaints during the year.

Safety & Security

Though BHEL has an established and mature Safety Management System accredited to OHSAS 18001: 2007, BHEL''s management has further enhanced its focus on building a strong safety culture. To reinforce the organisation setup for safety and to improve our safety practices safety performances and other safety related issues are now reviewed in MCM on quarterly basis.

The result of efforts to improve safety are gradually becoming visible as there has been a marked improvement in safety statistics in recent past. It is reflected in data related to fatalities and man-days lost for the calendar year 2013 and 2014. At project sites, there was approximately 45% reduction in incidences of fatalities and 50 % reduction in the man-days lost due to various types of accidents during calendar year 2014 in comparison to calendar year 2013.

Dedicated Safety and Occupational Health Centres are being run in the factory premises taking care of safety and health issues at the work place. Some of the initiatives taken in our units to build and maintain safety and health culture at work place during the year are:

- Sponsoring BHEL officials for 1 year advanced Diploma course in Industrial Safety conducted by Central / Regional Labour institute at Mumbai, Kanpur, Kolkata, Chennai and Faridabad

- Periodic health and safety awareness campaigns

- Regular health and safety related training programmes

- Display of posters and safety instructions

- Safety pledge & Tool box meetings

- Regular Plant Safety Inspections

- Encouraging use of Personal Protective Equipment

- Mock Drills in identified hazardous areas at specified frequency

- Publication of in-house magazines and hand books on various safety topics

- Work Permit system for carrying out critical activities

- Conducting periodic safety drills, Internal audits & 3rd party audits

- Job Safety Analysis for identified activities

- Monthly departmental Safety Committee meetings and plant safety committee meetings

- Scheduling preventive maintenance of machine/ equipment

- Periodic maintenance & testing of material handling equipment (including cranes, hoists, lifting tackles, forklifts, pallets); all pressure vessels/ air receivers, power presses

- Making available Material Safety Data Sheet (MSDS) for all the hazardous chemicals and safe work procedures are followed

- Developing operation control procedures (OCPs) and providing it to the concerned for effective implementation

Further, Annual Safety Heads Meet was conducted at Corporate Office on 16th & 17th Sep, 2014 for sharing of experience amongst the people directly involved in ensuring safety at their respective workplaces.

The Companys security mechanism is sufficient to provide security to each Plant/Unit. Security of most of the plants of the company is being managed by the CISF except for in some smaller plants where the company has its own security. Also, in some plants, Corporate Office and Regional Offices, the security is being looked after by the private agencies sponsored by Directorate General Resettlement, Govt. of India or Ex-Servicemen Corporations.

Adequate measures have been taken for security of computers. Department of Electronics, Govt. of India (SRAC) has also carried out audit/review of our software security mechanism and their suggestions have been implemented.

Security audit of major plants is being done by the Intelligence Bureau periodically and the additional requirements, wherever pointed out by them, are immediately complied with by the concerned units. Review of security is done internally also from time to time. Monthly report on theft/ pilferage and fire incident compiled by Corporate Security Department along with quarterly reports on various security related issues as per the decisions taken in the meetings of HR & Security Heads.

Adequate measures have been taken by installation of CCTV''s and SOP in many plants and offices to mitigate any security threats.

The Management, security staff and employees of company are sensitized to the security needs of the company.

Corporate Governance

As per the requirements of Clause 49 of the Listing Agreement a detailed report on Corporate Governance (including Board/Committee meeting details) together with the following is given at

Annexure - VI:

(i) Auditors certificate on Corporate Governance (CG) under clause 49 of Listing Agreement & DPE guidelines on Corporate Governance.

(ii) Secretarial Audit Report u/s 204(1) of the Companies Act, 2013 and Management reply thereon.

(iii) Extracts of Annual Return pursuant to section 92(3) of the Companies Act, 2013 read with rule 12(1) of the Companies (Management and Administration) Rules, 2014.

Declaration under section 149(6) of the Companies Act, 2013 pertaining to criteria of Independence has been given by the Independent Directors to the Board of Directors.

Other Disclosures

Information in accordance with the provisions of Section 134(3)(m) of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 regarding conservation of energy, technology absorption and foreign exchange earnings and outgo is given at

Annexure-VII.

As per provisions of section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, every listed company is required to disclose the details of the remuneration of directors etc. in the Directors Report. However as per Notification No. GSR 463(E) dated 5th June, 2015 issued by the Ministry of Corporate Affairs, Government Companies are exempted from complying with provisions of section 197 of the Companies Act, 2013. BHEL being a Government Company, therefore, such particulars have not been included as part of Directors'' Report.

Statement pursuant to Section 129 of the Companies Act, 2013 (AOC-1) relating to Subsidiary Companies & Joint ventures and Form AOC-2 pursuant to section 134(3)(h) of the Companies Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014 are given at Annexure-VIII.

Links to Company Websites

1. Familiarisation Programme of Independent Directors, Weblink :

http://www.bhel.com/investorrelations/pdf/ familiriazationprogrmforIDs.pdf

2. Policy Determining Material Subsidiaries and Policy Dealing with Related Party Transactions, Weblink :

http://www.bhel.com/pdf/Policywithregard toRelatedPartyTransactions.pdf

Auditors

The Auditors of your Company are appointed by the Comptroller and Auditor General of India. The names of auditors appointed for the year 2014-15 are printed separately in the Annual Report.

The details of cost auditors appointed for the year 2014-15 and Cost Audit details are printed separately in the Annual Report.

The Auditors'' Report and Comments of the Comptroller and Auditor General of India are given at Annexure - IX.

Acknowledgements

The Board places on record its sincere appreciation towards the Company''s valued customers in India and abroad and esteemed shareholders for the support and confidence reposed by them in the management of the company and look forward to the continuance of this mutually supportive relationship in future.

The Board also gratefully acknowledges the support and guidance received from various Ministries of the Government of India, particularly the Department of Heavy Industry, in Company''s operations and developmental plans. The Directors express their grateful thanks also to the Comptroller and Auditor General of India, Chairman and Members of Audit Board, Statutory Auditors, Branch Auditors, Secretarial Auditors and Cost Auditors. The Company also wishes to place on record its appreciation for the continued co-operation received from all the Technology Collaborators and Suppliers and support provided by the Financial Institutions and bankers. Last, but not the least, the Board wishes to place on record its deep gratitude to all BHELites whose enthusiasm, team efforts, devotion and sense of belongingness has made this great company proud.

For and on behalf of the Board of Directors of

BHARAT HEAVY ELECTRICALS LTD.

B. Prasada Rao

Chairman & Managing Director

Place : New Delhi

Dated : 06.08.2015


Mar 31, 2014

To the Members,

The Directors feel privileged to present the 50th Annual Report on the business and operations of the company and the statement of accounts for the year ended March 31, 2014.

Financial Performance

Financial Year

Figures (in Rs. Crore except 2013-14 2012-13 per share data)

a) Turnover (Gross) 40338 50156

b) Revenue from 38389 47618 operations (Net)

c) Other Operational 720 807 Income

d) Operating expenses 34595 39037

e) Operating profit 4514 9388

f) Add : Other income 1616 1122

g) Profit before 6130 10510 depreciation, finance cost & tax expense

h) Less: Depreciation 983 953

i) Less: Finance costs 133 125

j) Profit before tax 5014 9432

k) Less: Tax expense 1553 2817

l) Profit after Tax 3461 6615

m) Add: Balance brought 1102 1031 forward from the previous year

n) Profit available for 4563 7646 appropriation

i) Adjustment 81 pursuant to Amalgamation

ii) Dividend (including 693 1323 interim dividend)

iii) Corporate 118 221 Dividend tax ((incl. on interim dividend)

iv) Amount transferred 2500 5000 to General Reserve

o) Balance in Statement 1171 1102 of Profit & Loss

p) Earnings per Share (Rs.) 14.14 27.03

q) NAV per share (Rs.) 135.02 124.38

Despite various issues relating to power projects like fuel linkages, fund constraints, land acquisition etc., BHEL recorded a turnover of Rs. 40338 Crore in the year 2013-14. Net worth of the company has gone up by 8.55 %.

Performance of BHEL for the year 2012-13 has been rated as ''Very Good'' in terms of MoU signed with the Government of India. BHEL has been awarded MoU Composite score of ''2.49''.

Dividend

The Board has recommended a final dividend of 76 % (Rs. 1.52 per share), Rs. 372.04 Crore, for the year 2013-14. An interim dividend of 65.5 % (Rs. 1.31 per share), Rs. 320.64 Crore, on share capital of Rs. 489.52 Crore, has already been paid for the year 2013-14. Thus the total dividend (exclusive of dividend tax) for the year 2013-14 is Rs. 692.68 Crore (Rs. 2.83 per share) as against Rs. 1323 Crore (Rs. 5.41 per share) paid in the previous year.

Provision of Rs. 63.23 Crore has been made for Corporate Dividend Tax on the final dividend proposed. Corporate Dividend Tax of Rs. 54.49 Crore has already been paid on the interim dividend.

Orders Received

Despite operating in a subdued but healthy competitive business environment, the company secured orders worth Rs. 28007 Crore during the year. Sector-wise orders booked are as follows:

(Rs. in Crore)

2013-14 2012-13

Power Sector 20433 25560

Industry Sector* 5007 4086

International

Operations 2567 2004

Total Orders

Booked 28007 31650

Order Book outstanding at the end of the year 101500 115100

*excludes inter sectoral orders

Events Occurring after the Balance Sheet Date

There were no significant events occurring after the Balance sheet date.

Directors'' Responsibility Statement

Pursuant to Section 217(2AA) of the Companies Act, 1956, it is hereby confirmed:

(i) that in the preparation of the annual accounts for the financial year ended 31st March, 2014 the applicable Accounting Standards have been followed along with proper explanation relating to material departures;

(ii) that the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the company as at the end of the financial year 2013-14 and of the profit of the company for that period;

(iii) that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act,1956 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(iv) that the Directors have prepared the annual accounts for the financial year ended 31st March, 2014 on a going concern'' basis.

Management Discussion and Analysis

A report on Management Discussion and Analysis is placed at Annexure -

I. Board of Directors

Appointment

Shri Atul Sobti has been appointed as an Additional Director w.e.f. 01.12.2013 to take charge of the office of Director (Power).

Pursuant to DHI letter no. 1(18)/2011-PEXI, dated 31.12.2013, the term of Shri B. Prasada Rao, CMD, has been extended by the President of India for a period of two years w.e.f. 01.01.2014.

Shri S.K. Bahri, Additional Secretary & Financial Adviser, Department of Industrial Policy & Promotion, Ministry of Commerce & Industry has been appointed as Part-time Official Director w.e.f. 31.03.2014.

Ms. Harinder Hira has been appointed as Part-time Non-official Director w.e.f. 08.05.2014.

In accordance with Section 161 of the Companies Act, 2013 and Article 67(iv) of the Articles of Association of the company, Shri Atul Sobti, Shri S.K Bahri and Ms. Harinder Hira shall hold their directorships upto the 50th Annual General Meeting of the company and are eligible for appointment as Directors at the Meeting.

Cessation

Shri Trimbakdas S. Zanwar who was appointed as Part-time Non-Official Director w.e.f. 12.11.2010 ceased to be a Director of the company on completion of his tenure on 11.11.2013.

Shri Atul Saraya, who was appointed as Director (Power) w.e.f. 01.10.2009 ceased to be a Director of the company on attaining the age of superannuation on 30.11.2013.

Ms. Kusumjit Sidhu, IAS, former Additional Secretary & Financial Adviser, Ministry of Commerce & Industry, consequent upon her appointment as Secretary, Department of Public Enterprises, has relinquished her position as Part-time Official Director w.e.f. 01.01.2014.

Shri S. Ravi who was appointed as Part-time Non- Official Director w.e.f. 10.03.2011 ceased to be a Director of the company on completion of his tenure on 09.03.2014.

The Board of Directors place on record their deep appreciation for the valuable services rendered as well as advice and guidance provided by Shri Trimbakdas S. Zanwar, Shri Atul Saraya, Ms. Kusumjit Sidhu and Shri S. Ravi during their tenure.

Further, pursuant to Section 152 of the Companies Act, 2013 and Article 67(i) of the Articles of Association of the company, S/shri R. Krishnan and W.V.K Krishna Shankar will retire by rotation at the Annual General Meeting and being eligible, offer themselves for re-appointment.

In compliance with Clause 49(IV)(G)(i) of the Listing Agreement, brief resumes of the Directors proposed for appointment and re-appointment along with the nature of their expertise in specific functional areas and names of companies in which the person also holds directorship along with the membership of the Committees of the Board are given at Annexure-II forming part of the Directors'' Report.

Sustainable Development

The concept of sustainability is ingrained in the DNA of BHEL which is evident from the mission statement- "Providing Sustainable Business solutions in the fields of Energy, Industry & Infrastructure". BHEL is committed to be an environment friendly company in all its areas of activities, products and services and providing a safe & healthy work environment.

The company is putting in efforts to reduce the carbon footprint of its organisational activities and also its customers by adopting sustainable business practices. Various projects and initiatives are being undertaken in the areas of Renewable Energy Generation, Material and Natural Resource Management, Energy Management, Water & Bio- Diversity Management and Carbon Management.

BHEL has always been endeavouring to act as a responsible corporate citizen committed to the welfare of society through inclusive growth aimed at capacity building, empowerment of communities, environment protection and development of backward regions and upliftment of the marginalised & under-privileged sections of the society.

During 2013-14, BHEL spent 1.64% of PAT of the year 2012-13 towards CSR & Sustainability activities. company has supported various social initiatives across the country by undertaking projects in diversified areas like Community Development, Health & Hygiene, Education, Environment Protection, Disaster Management, and Talent up gradation/Skill development. Further details are given in Annexure–III.

In line with the requirement of clause 55 of the listing agreement, Business Responsibility Report describing the initiatives taken by the company from an environmental, social and governance perspective as per the suggested format is enclosed at Annexure - IV.

R&D and Technological Achievements

BHEL''s products and systems are technology intensive and thus, BHEL has adopted R&D and technology development as the central driver for implementing its strategy and fulfilling its endeavour to become a global engineering enterprise. As part of Strategic Plan 2012-17, the company is transforming its R&D and innovation in a structured and focused manner through five pronged approach consisting of Strategic Direction, Portfolio Management, Partnerships & Alliances, Knowledge Management and Enablers to improve the performance of existing products and develop new product for meeting global benchmarks.

The R&D expenditure of the company during 2013- 14 was Rs. 1114 Crore which was 2.76% of the turnover as against 2.49% for the previous year. This also includes the expenditure incurred on R&D efforts gone into major modifications / improvements in products/designs against customer requirements which are not covered in R&D projects. Similarly, the IPR capital of the company has grown by 19% as compared to 2012-13, taking the total to 2589.

Further, investments in R&D are being intensified to enhance capabilities in Product Development & Engineering. Company will continue to pursue various projects undertaken in recent years with focus on low-carbon path technologies including faster assimilation of supercritical technology, development of Advanced Ultra Super Critical Technology, IGCC Technology commercialisation, Carbon capture, Solar (PV, Thin Film, CSP), 765/1200 kV Transmission System, GIS up to 765 kV, ±800 kV HVDC system, IGBT based Propulsion Systems for higher rating Locos, EMU, Metro coaches on mission mode. Further details are given in Annexure-V.

Official Language Implementation

Continuous efforts were made for propagation and effective implementation of Rajbhasha in the company. All the Units and Divisions have Hindi cells for assistance in fulfilling the Rajbhasha requirements. Quarterly Meetings of Official Language Implementation Committee were conducted on regular basis to monitor and review the progress made in achieving the targets fixed in Annual Programme for 2013-14.

More than 600 non Hindi speaking employees were imparted training under Hindi teaching scheme of Govt. of India. Training for using Unicode Hindi on computer was also imparted to employees of all the Units/Divisions. To motivate employees to work in Hindi 80 Hindi workshops were organized covering more than 2000 employees. In addition, 2 Translation Training Programmes were conducted with the help of Central Translation Bureau, Rajbhasha Vibhag, Ministry of Home Affairs.

Inter Unit Rajbhasha Scheme has been introduced to increase the competition amongst the Units and Divisions in this area. Under the scheme, 12 Units were given award for excellent Rajbhash Implementation. Two executives were awarded for Hindi Book writing under Hindi Book Award Scheme.

All the Units/Divisions of the company, including Corporate Office, celebrated Hindi Divas and

Hindi Week/ Fortnight/Month during which various competitions, Seminars, Cultural Programme and Kavi Sammelan were held.

Twelve wards of employees who obtained B-2 grade or above in Hindi subject at Board level examinations were given awards.

Our company is playing an active role in Town Official Language Implementation Committees constituted in various cities. Many interesting competitions, seminars and programmes are conducted under auspices of these committees. This year 10 Units/ Divisions of BHEL were awarded by the TOLICs for various achievements in this area.

Vigilance

The Vigilance organisation of BHEL is headed by a Chief Vigilance Officer (CVO) appointed by the Ministry. Major manufacturing Units / Power Sector Region of BHEL have a vigilance set up headed by a senior vigilance executive reporting to the CVO.

Preventive vigilance has remained the focus area of BHEL Vigilance all through the years. During 2013-14 emphasis was on systemic improvements. Based on system studies carried out, suggestions towards system improvements were rendered for incorporation in the policies / guidelines. Consequently policies / guidelines were revised during the year:

Purchase Policy

Reverse Auction Guidelines

Guidelines for Suspension of Business

Dealings with Vendors

Amendments to Vendor Registration Procedures

- SEARP, 2010.

Public Awareness is an important corner stone for good governance. An enlightened employee not only can contribute in achieving the organisational goal but also in system improvements. Training programmes were conducted to update employees about companys policies, rules and procedures. 104 such programmes were organized during the year 2013-14 in various BHEL Units and Regions. In addition, interactive sessions were held with line executives representing different functional areas to sensitise them about the risk prone areas.

To create awareness about the procedures of procurement in BHEL, to disseminate the instructions issued by Statutory Authorities and to share the case studies, quarterly e-Newsletter "DISHA" is being published.

The Vigilance Awareness Week was observed from 28th October to 2nd November, 2013 in Corporate Office, Manufacturing Units, Power sector Regions and Project Sites of BHEL. Observance of Vigilance Awareness Week commenced with the PLEDGE of Integrity by the employees.

Interactive sessions/discussions on the theme "Promoting Good Governance-Positive Contribu- tion of Vigilance", were organized at Corporate Office and in Units/Regions. Lectures and interactions with various eminent personalities, expert speakers on relevant topics varying from RTI, Fraud Risk Management to Ethics and Values etc. were also organized across the organisation during Vigilance Awareness Week.

During 2013-14, Vigilance emphasised on procure- ment through open tender route particularly for high value packages. Tender conditions related to rate contracts were studied and suitable terms and conditions were incorporated to thwart cartelisation by vendors. Further, quality inspections and utilization of BHEL T&Ps in sub-contracted/ outsourced works were selected as focus area for enhancing the end quality of products and productivity.

Corporate Vigilance teams inspected 6 Vigilance Units of BHEL. The findings were discussed in interactive sessions with the Unit Managements. It was impressed upon officials to focus on the aspects of estimation and price reasonability while dealing with procurement to remain competitive in the market. The interactive sessions helped

BHEL officials to appreciate the role of Vigilance in promoting a strong, viable and competitive organisation.

BHEL is committed to bring transparency in day to day operations of the company by leveraging technology. The information regarding procurement related matters like status of purchase orders and Contracts, vendor registration along with their current status is hosted on the company web site. In addition, e-tendering route is being promoted for procurement and e-payment system has been implemented to reduce vendor interface.

Safety & Security

Dedicated Safety and Occupational Health Centers are being run in the factory premises taking care of safety and health issues at the work place. Various measures like periodic health and safety awareness campaigns, mock drills in identified hazardous areas once in 6 months, job safety analysis for identified activities, periodic maintenance & testing of material handling equipment, monitoring of quality of food & water etc. are being taken to ensure best possible safe working environment. Most of the manufacturing units and other entities have been accredited to Environmental Management Systems (ISO 14001:2004) and Occupational Health & Safety Management Systems (OHSAS 18001:2007).

The company''s security mechanism is sufficient and geared up to provide security to each Plant/Unit. Installation of CCTV''s and SOP have been installed in many of the plants. Security audit of major plants is being done by the Intelligence Bureau periodically and the additional requirements, wherever pointed out by them, are immediately complied with by the concerned units. The Management, security staff and the employees of company are sensitised to the security needs of company.

Adequate measures have been taken for Security of computers and software. Department of Electronics, Govt. of India (SRAC) has also carried out audit/ review of our software security mechanism and their suggestions have been implemented.

Corporate Governance

As per the requirements of Clause 49 of the Listing Agreement a detailed report on Corporate Governance together with the following is given at

Annexure - VI:

(i) CEO/CFO Certificate [as per Clause 49(V)] and

(ii) Certificate from the company''s Auditors [as per Clause 49(VII)].

Other Disclosures

Information in accordance with the provisions of Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 regarding conservation of energy, technology absorption and foreign exchange earnings and outgo is given at Annexure-VII.

As per Notification No. GSR 289(E) dated March 31, 2011 issued by the Ministry of Corporate Affairs, amending the provisions of the Companies (Particulars of Employees) Rules, 1975 issued in terms of Section 217(2A) of the Companies Act, 1956, it is not necessary for Government companies to include the particulars of employees drawing salaries of Rs. 60 lakh or more per annum, employed throughout the financial year or Rs. 5 lakh per month, if employed for part of the financial year. The company being a Government company, the information has not been included as a part of the Directors'' Report. However such particulars will be made available to any member on receiving a specific request in this regard during the course of Annual General Meeting.

Statement pursuant to Section 212 of the Companies Act, 1956 relating to Subsidiary Companies is given at Annexure-VIII.

Auditors

The Auditors of your company are appointed by the Comptroller and Auditor General of India. The names of auditors appointed for the year 2013-14 are printed separately in the Annual Report.

The detail of cost auditors appointed for the year 2013-14 and Cost Audit details are printed separately in the Annual Report.

The reply to the point referred to in the Auditors Report and Comments of the Comptroller and Auditor General of India are given at Annexure - IX.

Acknowledgements

The Board places on record its sincere appreciation towards the company''s valued customers in India and abroad and esteemed shareholders for the support and confidence reposed by them in the management of the company and look forward to the continuance of this mutually supportive relationship in future.

The Board also gratefully acknowledges the support and guidance received from various Ministries of the Government of India, particularly the Department of Heavy Industry, in company''s operations and developmental plans. The Directors express their grateful thanks also to the Comptroller and Auditor General of India, Chairman and Members of Audit Board, Statutory Auditors, Branch Auditors and Cost Auditors. The company also wishes to place on record its appreciation for the continued co-operation received from all the Technology Collaborators and Suppliers and support provided by the Financial Institutions and bankers. Last but not the least the Board wishes to place on record its deep gratitude to all BHELites whose enthusiasm, team efforts, devotion and sense of belongingness has made this great company proud.

For and on behalf of the Board of Directors of BHARAT HEAVY ELECTRICALS LTD.

B. Prasada Rao

Chairman & Managing Director

Place : New Delhi Dated : July 14, 2014


Mar 31, 2013

To the Members,

The Directors are delighted to present the 49th Annual Report on the business and operations of the Company and the statement of accounts for the year ended March 31, 2013.

Financial Performance

Financial Year

Figures 2012-13 2011-12 (in Rs. Crore except per share data)

(a) Turnover (Gross) 50156 49510

(b) Revenue from operations 47618 47228 (Net)

(c) Other Operational Income 807 751

(d) Operating expenses 39037 38092

(e) Operating profit 9388 9887

(f) Add : Other income 1122 1266

(g) Profit before depreciation, 10510 11153 finance cost & tax expense

(h) Less: Depreciation 953 800

(i) Less: Finance costs 125 51

(j) Profit before tax 9432 10302

(k) Less: Tax expense 2817 3262

(l) Profit after Tax 6615 7040

(m) Add: Balance brought forward 1031 812 from the previous year

(n) Profit available for 7646 7852 appropriation

i) Dividend (including 1323 1567 interim dividend)

ii) Corporate Dividend tax 221 254 (incl. on interim dividend)

iii) Amount transferred to 5000 5000 General Reserve

(o) Balance in Profit & Loss 1102 1031

(p) Earnings per Share (Rs.) 27.03 28.76

(q) NAV per share (Rs.) 124.38 103.67

(r) Economic Value Added (Rs. Crore) 2657 4032

Financial Highlights

During 2012-13, BHEL recorded its highest-ever turnover of Rs. 50156 Crore. Profit before tax is Rs. 9432 Crore and Profit after tax is placed at Rs. 6615 Crore.

Net worth of the company has gone up from Rs. 25373 Crore to Rs. 30444 Crore registering an increase of 19.9%. Net asset value (NAV) per share has been placed at Rs. 124.38 in 2012-13 as against Rs. 103.67 in 2011-12.

Dividend

The Board has recommended a Final Dividend of 164.5% (Rs. 3.29 per share), Rs. 804.11 Crore, for the year 2012-13. An interim dividend of 106% (Rs. 2.12 per share), Rs. 518.89 Crore, on share capital of Rs. 489.52 Crore, has already been paid for the year 2012-13. Thus the total dividend (exclusive of dividend tax) for the year 2012-13 is Rs. 1323 Crore (Rs. 5.41 per share) as against Rs. 1566.47 Crore (Rs. 6.40 per share) paid in the previous year.

Provision of Rs. 136.66 Crore has been made for Corporate Dividend Tax on the Final dividend proposed. Corporate Dividend Tax of Rs. 84.18 Crore has already been paid on the interim dividend.

Orders Received

Orders worth Rs. 31650 Crore were received during the year as against Rs. 22096 Crore in 2011-12. Sector-wise orders booked are as follows:

(Rs. in Crore)

2012-13 2011-12

Power Sector 25560 14012

Industry Sector* 4086 7850

International Operations 2004 234

Total Orders Booked 31650 22096

Order Book outstanding at the end of the year 115100 135300

*excludes inter sectoral orders

Rating of BHEL vis-a-vis MoU Targets

Performance of BHEL for the year 2011-12 has been rated as ''Excellent'' in terms of MoU signed with the Government of India. BHEL has been awarded the MoU Composite score of Rs.1.085''.

Maharatna Status

Consistent performance in a highly competitive environment enabled BHEL attain the coveted ''Maharatna'' Status and be counted among seven select PSU''s having this status.

Management Discussion and Analysis

A report on Management Discussion and Analysis is placed at Annexure -I.

Board of Directors Appointment

Smt. Chandra Iyengar has been appointed as Part-time Non-official Director w.e.f. 01.04.2013.

Ms. Kusumjit Sidhu, IAS, Additional Secretary & Financial Adviser, Department of Industrial Policy & Promotion, Ministry of Commerce & Industry has been appointed as Part-time Official Director w.e.f. 10.05.2013.

Shri W.V.K. Krishna Shankar has been appointed as an Additional Director w.e.f. 01.08.2013 to take charge of the office of Director (IS&P).

In accordance with Section 260 of the Companies Act, 1956 and Article 67(iv) of the Articles of Association of the Company, Ms. Kusumjit Sidhu and Shri W.V.K. Krishna Shankar shall hold their directorships upto the 49th Annual General Meeting of the Company and are eligible for appointment as Directors at the Meeting.

Cessation

Shri V.K. Jairath who was appointed as Part-time Non-official Director w.e.f. 12.11.2009 ceased to be a Director of the Company on completion of his tenure on 11.11.2012.

Shri Vijay S. Madan, IAS, former Additional Secretary & Financial Adviser, Ministry of Commerce & Industry, consequent upon his appointment as Officer on Special Duty in the Unique Identification Authority of India has relinquished his position as Part-time Official Director w.e.f. 22.03.2013.

Smt. Chandra Iyengar, Part-time Non-official Director, consequent upon her appointment as Member on the Maharashtra Electricity Regulatory Commission, has resigned from the BHEL Board on 29.05.2013.

Shri O.P. Bhutani, who was appointed as Director (E,R&D) w.e.f. 24.12.2009 ceased to be a Director of the Company on attaining the age of superannuation on 31.05.2013.

Shri M.K. Dube, who was appointed as Director (IS&P) w.e.f. 25.06.2011 ceased to be a Director of the Company on attaining the age of superannuation on 31.07.2013.

The Board of Directors place on record their deep appreciation of the valuable services rendered as well as advice and guidance provided by Shri V.K. Jairath, Shri Vijay S. Madan, Smt. Chandra Iyengar, Shri O.P. Bhutani and Shri M.K.Dube during their tenure.

Further pursuant to Sections 255 and 256 of the Companies Act, 1956 and Article 67(i) of the Articles of Association of the Company, S/Shri P.K. Bajpai and Atul Saraya will retire by rotation at the Annual General Meeting and being eligible, offer themselves for re- appointment.

In compliance with Clause 49(IV)(G)(i) of the Listing Agreement, brief resumes of the Directors proposed for appointment and re-appointment along with the nature of their expertise in specific functional areas and names of companies in which the person also holds the directorship along with the membership of the Committees of the Board are given at Annexure-II forming part of the Directors'' Report.

Official Language Implementation

1. Corporate Office was awarded first prize by Town Official Language Implementation Committee (Undertaking), Delhi for excellent implementation of Official Language.

2. RC Puram, Hyderabad won first prize for excellent O.L. implementation from TOLIC, Hyderabad.

3. PS-WR got third prize from TOLIC, Nagpur for excellent editing of their Hindi Magazine ''Tarangini''.

4. PS-ER was awarded second prize for excellent editing of their Hindi Magazine ''Poorvabha'' by TOLIC, Kolkata.

5. PS-WR got award of Active Member of TOLIC, Nagpur from TOLIC, Nagpur.

6. With a view to create favourable atmosphere for usage of Hindi in the Company, all the Units/ Divisions of the company, including Corporate Office, celebrated Hindi Divas and Hindi Week/Fortnight/Month during which various competitions were held. 11 Hindi competitions were held by Corporate Office. 230 participants participated in the competitions and 85 of them were given cash awards.

7. In addition, wards of the employees of various Units/Divisions, who secured minimum 60% in class XII exam and B2 grade in class X exam in Hindi subject were given cash prize.

8. ''Hindi Shabdakosh Jnan'' competition was held by Corporate Office under auspices of TOLIC (Undertaking), Delhi. Various Hindi competitions and programmes were also conducted by the Units/Divisions under auspices of TOLIC existing at their cities.

9. 13 Hindi magazines were published by Units and Divisions of the company during the year. Corporate Office also brought out 2 issues of its half yearly Hindi magazine ''Arunima'' during the year.

10. 40 Translation Assistants (FTA) and 14 Typing Assistants (FTA) were recruited in various Units/ Divisions of the company during the year. 6 days Rajbhasha Orientation Programme was oraganized for Translation Assistants.

Participation in the Global Compact of the United Nations

BHEL is an environment friendly company in all its activities, products & services, besides providing safe and healthy working environment to all its stakeholders and it has made United Nations Global Compact (UNGC) programme as part of the Company''s strategy, culture and day-to-day operations.

BHEL continues to be a member of the United Nations Global Compact (UNGC) Programme and stands commited to the core values enshrined in its principles on human rights, labour standards, and environment and anti corruption. BHEL is now a Lifetime Corporate member of Global Compact Network, India.

Vigilance

The Vigilance organisation of BHEL is headed by a Chief Vigilance Officer (CVO) appointed by the Ministry. Each manufacturing Unit / Power Sector Region of BHEL has a vigilance set up headed by a senior vigilance executive reporting to the CVO.

In addition to preventive vigilance which has remained the focus area of BHEL Vigilance all through the years, additional impetus was also given for effective vigilance administration through leveraging technology during 2012-13. This has helped in proactive and predictive Vigilance Management.

Training programmes were conducted to update employees on Company''s policies, rules and procedures. 119 such programmes were organized during the year 2012-13 in various Units, Regions and offices of BHEL. Interactive sessions were held with line executives representing different functional areas, in order to sensitize employees and to enhance their knowledge of the Company''s rules, procedures and policies.

To create awareness about the procedures of procurement in BHEL, to disseminate the instructions issued by Statutory Authorities and to share the case studies, the inaugural issue of quarterly e-Newsletter "DISHA" was published on 01.07.2013.

With a view to making systems more effective and transparent, Vigilance had carried out system studies during the year 2012-13 based on which suggestions towards system improvement have been rendered. Some of the major areas where suggestions for improvement were given are:

- Purchase Policy

- Amendments to ''Vendor Registration Procedures - SEARP, 2010''.

- Systemic changes in ''Reverse Auction Guidelines''.

- Amendments to certain provisions in ''Guidelines for Suspension of Business Dealings with Vendors''.

- Formulation of Common Loading Criteria in evaluation of tenders.

With a view to restructure the mechanism for effective and timely disposal of complaints a ''Complaint Handling Policy'' was issued on 24.06.2013 wherein the complaints received by Vigilance can be dealt in a consistent manner, in accordance with the extant instructions issued by the CVC.

A workshop was organized at Corporate Office on 29.05.2013 wherein senior executives of major PSUs- SAIL, ONGC, IOCL, EIL, NLC, RINL, BPCL, participated to share the best practices being followed by various PSUs for Reverse Auction (RA). The inputs will be helpful while revising the RA guidelines of BHEL.

As per the directions of the Central Vigilance Commission (CVC), the Company has taken many initiatives to make available all relevant information on the web on real time basis. Following have been ensured to make available all relevant information on the web:

- Status of Purchase Orders, Works Contracts concluded every month, as per CVC format, is being uploaded by all Units.

- Procedure and forms related to Vendor registration are hosted on the Company web site.

- Status of vendor registration applications is hosted on the web and can be viewed by vendors.

- E-payment of vendor bills is being implemented throughout the organization and principle of first in first out is being followed as a rule in payment of vendor bills.

- Status of bill payment can be viewed by the vendors on-line.

- Indents are being raised on-line in most of the Units.

- Information relating to Rules/Procedures of the Company is available on the BHEL/Units websites.

- This year the Company has initiated uploading of project documentation on VIGEYE GPMS, an initiative taken up by the CVC, with a view to raise alerts on probable inconsistencies during project execution.

Security

The Company''s Security mechanism is sufficient and geared up to provide security to each Plant/Unit. Whereas, the security of the most of the Plants of the Company is being managed by the CISF, in some smaller plants, the Company has its own Security. In other Plants, Corporate Office and Regional Offices, the security is being looked after by the private agencies sponsored by Directorate General Resettlement, Govt. of India or Ex-Servicemen Corporation.

Adequate measures have been taken for Security of computers. Department of Electronics, Govt. of India (SRAC) has also carried out inspection of our software security mechanism and their suggestions have been implemented.

Security audit of major plants is being done by the Intelligence Bureau periodically and the additional requirements, wherever pointed out by them, are immediately complied with by the concerned Units. Review of Security is done internally also from time to time. Monthly report on theft / pilferage and fire incidents is being compiled by Corporate Security Department along with quarterly reports on various security related issues as per the decisions taken in the meetings of HR & Security Heads.

CCTV''s are being installed and standard operating procedures (SOP) are being prepared to deal with any security threat.

The Management, security staff and the employees of Company are sensitized to the security needs of Company.

Sustainability

The concept of Sustainability has been ingrained in the DNA of BHEL which is evident from the Mission Statement - "Providing Sustainable Business solutions in the fields of Energy, Industry & Infrastructure". Sustainability is an integral part of the company''s strategy.

BHEL is committed to be an Environment friendly company in all its areas of activities, products and services while providing a safe and healthy working environment. In line with the company''s strategy, Environment Improvement Projects (EIP) / Sustainable Development (SD) Projects and Community Development Programmes are being given special thrust.

BHEL has defined its Sustainable Development (SD) policy keeping in view the scale & nature of organization''s activities, products & services. The SD projects undertaken in 2012-13 were in the areas of Rain water harvesting, afforestation, captive power generation based on solar energy, use of renewable energy, energy efficiency & conservation, and responsible waste disposal. A broad strategic management framework has also been developed for ensuring Sustainable Development in BHEL through its product and services as well as in-house activities. Through these initiatives, organization is directing its efforts to minimize the carbon footprint of the organizational activities. Further it is also helping the customer to reduce the carbon footprint in their operations as well through development of cleaner technologies.

In keeping with the commitment to promote the use of renewable power in manufacturing units, the company has installed 250 KWp Solar power plant at Bhopal unit and Roof Top Solar power plant of 20 KWp at Trichy unit in 2012-13. Company also installed more than 1200 Turbo ventilators across its units to encourage energy conservation. As a part of Energy Efficiency more than 20 energy efficiency projects were completed at the units. Total expenditure incurred on such activities taken under Sustainable Development Projects for the year 2012-13 was Rs. 8.16 Crore against target of Rs. 7.44 Crore.

All manufacturing Units/ Regions of the company are accredited to international standards viz. ISO-14001 certification for environmental management and OHSAS-18001 certification for occupational health and safety management systems.

BHEL has been awarded with the prestigious "Golden Peacock Award for Sustainability" 2012.

EPD Bangalore was honored with the "Gold Award" during 2012 for its outstanding achievement in the Safety Management by M/s Greentech Foundation.

BHEL, EPD-Bangalore & BHEL, Trichy units received "CII-ITC Sustainability Award 2012" for being India''s, ''one of the most Sustainable organization''.

Directors'' Responsibility Statement

Pursuant to Section 217(2AA) of the Companies Act, 1956, it is hereby confirmed:

(i) that in the preparation of the annual accounts for the financial year ended 31st March, 2013 the applicable Accounting Standards have been followed along with proper explanation relating to material departures;

(ii) that the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at the end of the financial year 2012-13 and of the profit of the company for that period;

(iii) that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) that the Directors have prepared the annual accounts for the financial year ended 31st March, 2013 on a ''going concern'' basis.

Corporate Governance

As per the requirements of Clause 49 of the Listing Agreement a detailed report on Corporate Governance together with the following is given at Annexure - III:

(i) CEO/CFO Certificate [as per Clause 49(V)] and

(ii) Certificate from the Company''s Auditors [as per Clause 49(VII)].

Other Disclosures

Information in accordance with the provisions of Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 regarding conservation of energy, technology absorption and foreign exchange earnings and outgo is given at Annexure-IV.

None of the employees have drawn remuneration in excess of the limits prescribed under section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of employees) Rules, 1975 during the year 2012-13.

Statement pursuant to Section 212 of the Companies Act, 1956 relating to Subsidiary Companies is given at Annexure-V.

Events Occurring After The Balance Sheet Date

There were no significant events occurring after the Balance sheet date.

Auditors

The Auditors of your Company are appointed by the Comptroller and Auditor General of India. The names of auditors appointed for the year 2012-13 are printed separately in the Annual Report.

The detail of cost auditors appointed for the year 2012-13 and Cost Audit details are printed separately in the Annual Report.

The reply to the point referred to in the Auditors'' Report and Comments of the Comptroller and Auditor General of India are given at Annexure - VI.

Acknowledgements

The Board places on record its sincere appreciation towards the Company''s valued customers in India and abroad for the support and confidence reposed by them in the management of the company and look forward to the continuance of this mutually supportive relationship in future.

The Board also gratefully acknowledges the support and guidance received from various Ministries of the Government of India, particularly the Department of Heavy Industry, in Company''s operations and developmental plans. The Directors express their grateful thanks also to the Comptroller and Auditor General of India, Chairman and Members of Audit Board, Statutory Auditors, Branch Auditors and Cost Auditors. The Company also wishes to place on record its appreciation for the continued co-operation received from all the Technology Collaborators and Suppliers and support provided by the Financial Institutions and bankers. Last but not the least the Board wishes to place on record its deep gratitude to all BHELites whose enthusiasm, team efforts, devotion and sense of belongingness has made this great company proud.

For and on behalf of the Board of Directors of

BHARAT HEAVY ELECTRICALS LTD.

Place : New Delhi (B.Prasada Rao)

Dated : August 3, 2013 Chairman & Managing Director


Mar 31, 2012

The Directors are delighted to present the 48th Annual Report on the business and operations of the Company and the statement of accounts for the year ended March 31,2012.

FINANCIAL PERFORMANCE

Financial Year

Figures (in Rs. crore except per share data) 2011-12 2010-11

(a) Turnover (Gross) 49510 43337

(b) Revenue from operations (Net) 47228 41566

(c) Other Operational Income 751 680

(d) Operating expenses 38092 33663

(e) Operating profit 9887 8583

(f) Add : Other income 1266 1021

(g) Profit before depreciation, finance cost & tax expense 11153 9604

(h) Less: Depreciation 800 544

(i) Less: Finance costs 51 55

(j) Profit before tax 10302 9005

(k) Less: Tax expense 3262 2994

(l) Profit after Tax 7040 6011

(m) Add: Balance brought forward from the previous year 812 575

(n) Profit available for appropriation 7852 6586

i) Dividend (including interim dividend) 1567 1525

ii) Corporate Dividend tax (incl. on interim dividend) 254 249

iii) Amount transferred to General Reserve 5000 4000

(o) Balance in Profit & Loss 1031 812

(p) Earnings per Share (Rs.) @ 28.76 24.56

(q) NAV per share (Rs.) @ 103.67 82.34

(r) Economic Value Added (Rs. crore) 4032 3793

@ Calculated on post-split on number of shares for 2010-11 on like to like basis.

FINANCIAL HIGHLIGHTS

During the year, the company witnessed growth in Turnover by 14.2% to Rs. 49510 crore from Rs.43337 crore in the previous year. The Revenue from operations (Net) increased by 13.6% from Rs. 41566 crore in 2010-11 to Rs. 47228 crore in 2011-12. Profit before Tax for the year 2011-12 is placed at Rs. 10302 crore as against Rs. 9005 crore during 2010-11, a growth of 14.4% as compared to previous year. Profit after Tax is placed at Rs. 7040 crore as against Rs. 6011 crore during 2010-11, a growth of 17.1% over previous year.

Excluding impact of change in policy related to warranty obligation for earlier years in 2010-11, the turnover, PBT and PAT were Rs.41299 crore, Rs. 8487 crore and Rs. 5665 crore respectively, an increase of 19.9%, 21.4% and 24.3% respectively in 2011-12 as compared to 2010-11.

The company has registered a significant growth in turnover, profit and other financial parameters during the year 2011-12.

During the year company has sub-divided existing equity shares of face value of Rs. 10/- into 5 equity shares of face value of Rs. 2/- each and the record date was fixed October 04, 2011.

Net worth of the company has gone up from Rs. 20154 crore to Rs.25373 crore registering an increase of 25.9%. Net asset value (NAV) per share has been placed at Rs. 103.67 in 2011-12 as against Rs. 82.34 (post-split) in 2010-11.

The company had filed Draft Red Herring Prospectus (DRHP) dated 28.09.2011 with Securities and Exchange Board of India (SEBI) on 30.09.2011 for disinvestment of 5% of the paid up equity capital out of Government of India's shareholding. Consequent upon the receipt of 'no-objection' for withdrawal of DRHP for FPO, from Department of Heavy Industry/ Department of Disinvestment, the Board of Directors in its meeting held on April 03, 2012 has approved the withdrawal of DRHP filed by the company with SEBI.

DIVIDEND

The Board has recommended a Final Dividend of 184% (Rs. 3.68 per share), Rs. 900.72 crore, for the year 2011-12. An interim dividend of 136% (Rs.2.72 per share), Rs. 665.75 crore, on share capital of Rs. 489.52 crore, has already been paid for the year 2011-12. Thus the total dividend (exclusive of dividend tax) for the year 2011-12 is Rs.1566.47 crore (Rs. 6.40 per share) as against r 1524.85 crore paid in the previous year.

Provision of Rs. 146.12 crore has been made for Corporate Dividend Tax on the Final dividend proposed. Corporate Dividend Tax of Rs. 108 crore has already been paid on the interim dividend.

ORDERS RECEIVED

Orders worth Rs.22096 crore were received during the year as against Rs. 60507 crore in 2010-11. Sector-wise orders booked are as follows:

(Rs in Crore) 2011-12 2010-11

Power Sector 14012 46393

Industry Sector* 7850 10375

International Operations 234 3739

Total Orders Booked 22096 60507

Order Book outstanding at the end of the year 135300 164145

* excludes inter sectoral orders

The decrease in order book is mainly due to sharp slow down witnessed in the Indian power sector. The developers are facing numerous constraints like coal allocation, gas allocation, environment clearance, land acquisition, legal issues, financing and fund tie-ups etc.

As a result bidding process of many projects was delayed and many projects, including those for which the bids have been opened in last financial year, could not be concluded for one or more of the above issues. Further, the year 2011-12 witnessed unforeseen turmoil in various parts of the globe influencing BHEL's international business prospects.

RATING OF BHEL VIS-A-VIS MOU TARGETS

Performance of BHEL for the year 2010-11 has been rated as 'Excellent' in terms of MoU signed with the Government of India. BHEL has been awarded the MoU Composite score of '1.02'.

The MoU rating for 2011-12 is under finalisation by the Government of India. However, company's own assessment places performance of the company in 'Excellent' category for Financial Year 2011-12.

MANAGEMENT DISCUSSION AND ANALYSIS

A report on Management Discussion and Analysis is placed at Annexure -I.

BOARD OF DIRECTORS

Appointment

Shri Trimbakdas S. Zanwar has been re-appointed as Part-time Non-Official Director w.e.f. 11.10.2011.

Shri R. Krishnan has been appointed as an Additional Director w.e.f. 01.04.2012 to take charge of the office of Director (HR).

Shri Vijay Shankar Madan, IAS, Additional Secretary & Financial Advisor Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce & Industry has been appointed as Part-time Official Director w.e.f. 19.07.2012.

In accordance with Section 260 of the Companies Act, 1956 and Article 67(iv) of the Articles of Association of the Company, S/Shri Trimbakdas S. Zanwar, R. Krishnan and Vijay Shankar Madan shall hold their directorships upto the 48th Annual General Meeting of the Company and are eligible for appointment as Directors at the Meeting.

Cessation

Shri Trimbakdas S. Zanwar who was appointed as Part- time Non-Official Director w.e.f. 12.11.2010 had resigned and ceased to be a Director of the Company w.e.f. 20.09.2011.

Shri Anil Sachdev, who was appointed as Director (HR) w.e.f. 01.09.2007 ceased to be a Director of the Company on attaining the age of superannuation on 31.03.2012.

Shri Saurabh Chandra, IAS, former Additional Secretary & Financial Advisor, Ministry of Commerce & Industry, consequent upon his appointment as Secretary, Department of Industrial Policy & Promotion has relinquished his position as Part-time Official Director w.e.f. 17.04.2012.

Shri Ashok Kumar Basu, Shri M.A. Pathan and Smt. Reva Nayyar who were appointed as Part-time Non-Official Directors w.e.f. 22.06.2009 ceased to be Directors of the Company on completion of their tenure on 21.06.2012.

The Board of Directors place on record their deep appreciation of the valuable services rendered as well as advice and guidance provided by S/Shri Anil Sachdev, Saurabh Chandra, Ashok Kumar Basu, M.A. Pathan and Smt. Reva Nayyar during their tenure.

Further pursuant to Sections 255 and 256 of the Companies Act, 1956 and Article 67(i) of the Articles of Association of the Company, S/Shri V.K. Jairath, O.P Bhutani and S. Ravi will retire by rotation at the Annual General Meeting and being eligible, offer themselves for re-appointment.

In compliance with Clause 49(IV)(G)(i) of the Listing Agreement, brief resumes of the Directors proposed for appointment and re-appointment along with the nature of their expertise in specific functional areas and names of companies in which the person also holds the directorship along with the membership of the Committees of the Board are given at Annexure-II forming part of the Directors' Report.

OFFICIAL LANGUAGE IMPLEMENTATION

The company continued its thrust on official language implementation in line with Govt. of India's policy. Other important activities undertaken during the year for the compliance of Official Language policy of Govt. of India are as under:

1. In order to remove hesitation among the employees, and give necessary impetus to work in Hindi, Hindi workshops and Hindi computer training programmes were organised in all the Units/Divisions including Corporate Office.

2. With a view to create favourable atmosphere for usage of Hindi in the Company, all the Units/ Divisions of the company, including Corporate Office, celebrated Hindi Divas on 14.09.2011 and organised various Hindi competitions during the celebration of Hindi Week/ Fortnight/Month in the month of September, 2011.

3. BHEL Hindi Coordinators Meet was held on 11th & 12th October, 2011 in Cochin, Kerala to discuss the various issues relating to the Official Langauge implementation.

4. Various Hindi competitions and programmes were organised by most of the Units/Divisions including Corporate Office for member organisations under the auspices of Town Official Language Implementation Committees during the year.

5. All national level functions e.g Republic Day, Independence Day, International Women's Day etc. were conducted in Hindi in Corporate Office and major Units of the Company.

6. All the major Units and some of the Divisions of the Company published 12 Hindi magazines namely, BHEL Chandan by EDN, BHEL Darpan by EPD,BHEL Kiran by Tiruchi, Surya Kiran by ISG, BHEL Yashasvi by RC Puram, Hyderabad, BHEL Bharati by Bhopal, BHEL Ganga by Haridwar, Srijan by Jhansi, Shakti Punj by Power Sector (Hq), Abhivyakti by Power Sector-NR, Poorvabha by Power Sector-ER and Tarangini by Power Sector- WR during the year. Corporate Office also brought out issues of its half yearly Hindi Magazine "Arunima" during the year.

7. A Hindi Booklet 'Rajbhasha Digdarshika' was published consolidating the various provisions regarding Official Langauge and useful information's for the employees for Hindi work e.g. English-Hindi glossary and notings, Manak Vartani, bilingual addresses of the Units/Divisions, incentive schemes etc.

8. Many awards were received by the employees of major Units/divisions in various Hindi Competitions organised under the auspices of Town Official Language Implementation Committee.

9. Haridwar unit was awarded third prize by the Town Official Language Implementation Committee for active contribution in Official Langauge implementation. In addition, Town Official Language Implementation Committee, Haridwar constituted and being operated under the Chairmanship of our Haridwar Unit received second prize from Deptt. of Official Langauge, Ministry of Home Affairs.

10. Committee of Parliament on Official Language inspected our Industry Sector, Power Sector-SR, ROD-Hq. during the year and appreciated the efforts being made in implementing Official Language Policy of the Govt. of India, while taking a few assurances from us to enhance the use of Hindi in official work.

11. BHEL Units/Divisions were inspected by Corporate Rajbhasha Implementation Group for facilitating them to make progressive use of Hindi as per the Govt. policy.

PARTICIPATION IN THE GLOBAL COMPACT OF THE UNITED NATIONS

BHEL is an environment friendly company in all its activities, products & services, besides providing safe and healthy working environment to all its stakeholders and has made UNGC programme as part of the Company's strategy, culture and day-to-day operations.

BHEL reiterates its commitment to United Nations Global Compact (UNGC) Programme and set core values enshrined in its principles on human rights, labour standards, and environment and anti corruption.

Company intends to advance GLOBAL COMPACT (GC) principles, as a responsible corporate citizen. BHEL has taken a lead role in promoting GC principles in other Indian organization through Global Compact Network (GCN) - an apex level nodal agency, formed by the leading Indian organizations. BHEL continued to remain in the forefront of all activities of the network as Secretary/GCN being BHEL nominee. Noteworthy activities of the year were participating in the national Convention and holding of monthly meetings of the Network through case studies/ organizational experience sharing, addressing the Global Compact principles in Indian context.

In recognition of BHEL's contribution in support of Global Compact programme and its outstanding Communication on Progress (COP), UNGC continued to place BHEL under 'Notable COP' category.

VIGILANCE

The Vigilance organisation of BHEL is headed by the Chief Vigilance Officer (CVO). Each Unit/Region of BHEL has a vigilance set up headed by a senior vigilance executive reporting to the CVO.

Preventive vigilance has been the thrust area of BHEL Vigilance throughout all the years and the same received focused attention during the year. A climate of preventive vigilance was generated to sensitize officials at all levels about the ill effects of corruption and malpractices.

Apart from the above, an attitudinal shift was made to inculcate greater seriousness in observance of rules / procedures / guidelines. Awareness amongst employees of the organization was generated by organizing training programmes. 83 such programmes were organized during the year 2011-12 in various Units, Regions and offices of BHEL. Interactive sessions were held with line executives representing different functional areas, in order to create vigilance awareness and to enhance their knowledge of the Company's rules, procedures and policies.

With a view to making systems more effective and transparent, Vigilance had carried out regular surveillance checks and system studies during the year 2011-12. Many suggestions towards system improvement have been rendered. Some of the major areas where suggestions for improvement were given are:

- Customer approval of vendors

- Expanding vendor base in single vendor/ two vendor categories

- Guidelines for appointment of agents for export contracts

In addition, suitable recommendations were made for correction in certain provisions of the following procedures:

- Supplier Evaluation, Approval & Review Procedure

- Purchase Policy

- Reverse Auction Guidelines

- Criteria for financial loading of commercial offers, received during the tendering process

- Suspension of Business Dealings with suppliers / contractors

As per CVC directions, the Company has taken many initiatives to make available all relevant information on the web on real time basis. One of the major initiatives was to start pilot implementation of e-procurement in select Units of BHEL. In addition, periodic checks are undertaken to ensure that :

- Status of Purchase Orders, Works Contracts concluded every month, as per CVC format, is being uploaded by all Units.

- Procedure and forms related to Vendor registration are hosted on the Company web site.

- Status of vendor registration applications is hosted on the web and can be viewed by vendors.

- List of banned firms is uploaded on Company web site.

- E-payment of vendor bills is being implemented throughout the organization and principle of first-in, first-out is being followed as a rule in payment of vendor bills.

- Status of bill payment can be viewed by the vendors on-line.

- Indents are being raised on-line in most of the Units.

- Information relating to Rules/Procedures governing the issue of license, permissions, clearances etc., is available on the BHEL/Units websites.

SECURITY

The Company's security mechanism is sufficient and geared up to provide security to each Plant / Unit. Whereas the security of most of the Plants of the Company is being managed by the CISF, in some smaller Plants, the Company has its own security. In other Plants, Corporate Office and Regional Offices, the security is being looked after by the private agencies like M/s EATS sponsored by Directorate General Resettlement, Govt. of India or Ex-Servicemen Corporations.

Adequate measures have been taken for security of computers Department of Electronics Govt. of India (SRAC) have also carried out inspection of our software security mechanism and their suggestions have been implemented.

Security audit of major Plants is being done by the Intelligence Bureau periodically and the additional requirements, wherever pointed out by them, are immediately complied with by the concerned Units. Review of security is done internally also from time to time. Monthly report on theft/ pilferage and fire incident is being complied by Corporate Security Department alongwith quarterly reports on various security related issues as per the decision taken after meeting of HR & Security Heads on 20th March, 2012. Quarterly meetings have also been envisaged and likely to take place in the month of July 2012.

The Management, Security Staff and the employees of Company are sensitized to the security needs of Company.

SUSTAINABILITY

Sustainability is an integral part of the company's strategy. BHEL is committed to be an Environment friendly company in all its areas of activities, products and service, providing safe and healthy working environment.

In line with the company's strategy, Environment Improvement Projects and Community Development Programmes are given special thrust. Some of the major EIPs executed in the past at BHEL plants and townships included tree plantation drives, installation of rain harvesting plants, efficient water and energy management, reduction in noise level, improvement in chemical storage and handling systems etc.

The Department of Public Enterprises (DPE) has issued guidelines on Sustainable Development on 23rd Sept. 2011. In conformance to the guidelines, a Board-Level Committee for Corporate Social Responsibility & Sustainable Development (BLC for CSR & SD), has been constituted. BHEL has defined its SD policy in keeping in view the scale & nature of activities, products & services.

The SD projects will have thrust on the projects in the fields of Rain water harvesting, afforestation, captive power generation based on Solar energy, use of renewable energy, energy efficiency & conservation and waste disposal.

All manufacturing Units/ Regions of the company are accredited to international standards viz. ISO-14001 certification for environmental management and OHSAS-18001 certification for occupational health and safety management systems.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956, it is hereby confirmed:

(i) that in the preparation of the annual accounts for the financial year ended 31st March, 2012 the applicable Accounting Standards have been followed along with proper explanation relating to material departures;

(ii) that the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at the end of the financial year 2011-12 and of the profit of the company for that period;

(iii) that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act,1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv)that the Directors have prepared the annual accounts for the financial year ended 31st March, 2012 on a 'going concern' basis.

CORPORATE GOVERNANCE

As per the requirements of Clause 49 of the Listing Agreement a detailed report on Corporate Governance together with the following is given at Annexure - III:

(i) CEO/CFO Certificate [as per Clause 49(V)] and

(ii) Certificate from the Company's Auditors [as per Clause 49(VII)].

OTHER DISCLOSURES

Information in accordance with the provisions of Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 regarding conservation of energy, technology absorption and foreign exchange earnings and outgo is given at Annexure-IV.

None of the employees have drawn remuneration in excess of the limits prescribed under section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of employees) Rules, 1975 during the year 2011-12.

Statement pursuant to Section 212 of the Companies Act, 1956 relating to Subsidiary Companies is given at Annexure-V.

EVENTS OCCURRING AFTER THE BALANCE SHEET DATE

There were no significant events occurring after the Balance sheet date.

AUDITORS

The Auditors of your Company are appointed by the Comptroller and Auditor General of India. The names of auditors appointed for the year 2011-12 are printed separately in the Annual Report.

The detail of cost auditors appointed for the year 2011-12 and Cost Audit details are printed separately in the Annual Report.

The replies to the points referred to in the Auditors' Report and to the Comments of the Comptroller and Auditor General of India are given at Annexure - VI.

ACKNOWLEDGEMENTS

The Board places on record its sincere appreciation towards the Company's valued customers in India and abroad for the support and confidence reposed by them in the management of the company and look forward to the continuance of this mutually supportive relationship in future.

The Board also gratefully acknowledges the support and guidance received from various Ministries of the Government of India, particularly the Department of Heavy Industry, in Company's operations and developmental plans. The Directors express their grateful thanks also to the Comptroller and Auditor General of India, Chairman and Members of Audit Board, Statutory Auditors, Branch Auditors and Cost Auditors. The Company also wishes to place on record its appreciation for the continued co-operation received from all the Technology Collaborators and Suppliers and support provided by the Financial Institutions and bankers. Last but not the least the Board wishes to place on record its deep gratitude to all BHELites whose enthusiasm, team efforts, devotion and sense of belongingness has made this great company proud.

For and on behalf of the Board of Directors of

BHARAT HEAVY ELECTRICALS LTD.

B.Prasada Rao

Chairman & Managing Director

Place : New Delhi

Dated : July 26, 2012


Mar 31, 2011

To the Members,

We are delighted to present our 47th Annual Report on the business and operations of the Company for the year ended March 31, 2011.

FINANCIAL PERFORMANCE

Financial Year

(In R Crore except per share data) 2010-11 2009-10

(a) Turnover(Gross) 43337 34154

(b) Profit before depreciation,

interest & tax 9605 7083

(c) Less: Depreciation 544 458

(d) Less: Interest & Finance charges 55 34

(e) Profit before tax 9006 6591

(f) Less: Provision for Taxes 2995 2280 (including deferred tax)

(g) Profit after Tax 6011 4311

(h) Add:/(less) Statutory appropriation - 1

(i) Distributable Profit 6011 4312

(j) Add: Balance brought forward from the previous year 575 595

(k) Balance available for appropriation 6586 4907

i) Dividend (including interim dividend) 1525 1141

ii) Corporate Dividend tax (incl. on interim dividend) 249 191

iii) Amount transferred to General Reserve 4000 3000

(l) Balance in P&L account to be carried forward 812 575

(m) Earnings per Share (s) 122.80 88.06

(n) NAV per share (s) 411.71 325.16

(o) Economic Value Added (s Crore) 3793 2670

FINANCIAL HIGHLIGHTS

During the year, the company witnessed growth in Turnover by 26.89% to Rs 43337 Crore from Rs 34154 Crore in the previous year. The Turnover (net of excise duty) increased by 26.49% from Rs 32861 Crore in 2009-10 to s 41566 Crore in 2010-11. Profit before Tax for the year 2010-11 is placed at Rs 9006 Crore as against Rs 6591 Crore during 2009-10, a growth of 36.64% as compared to previous year. Profit after Tax is placed at Rs 6011 Crore as against Rs 4311 Crore during 2009-10, a growth of 39.43% over previous year.

Increase in turnover coupled with savings in material cost over previous year has contributed to the better financial performance during the year.

Net worth of the company has gone up from Rs 15917 Crore to Rs 20154 Crore registering an increase of 26.62%. Net asset value (NAV) per share has increased from Rs. 325.16 in 2009-10 to Rs 411.71 in 2010-11.

DIVIDEND

The Board has recommended a Final Dividend of 179% (RS. 17.90 per share), Rs.876.24 Crore, for the year 2010-11. An interim dividend of 132.50% (RS. 13.25 per share), Rs. 648.61 Crore, on share capital of Rs.489.52 Crore, has already been paid for the year 2010-11. Thus the total dividend payment for the year 2010-11 is Rs.1524.85 Crore (exclusive of dividend tax) as against Rs.1140.58 Crore paid in the previous year.

Provision of Rs.142.15 Crore has been made for Corporate Dividend Tax on the Final dividend proposed. Corporate Dividend Tax of Rs.107.73 Crore has already been paid on the interim dividend.

ORDERS RECEIVED

Orders worth Rs. 60507 Crore were received during the year as against s 59037 Crore in 2009-10. Sector-wise orders booked are as follows:

(Rs in Crore) 2010-11 2009-10

Power Sector* 46393 41982

Industry Sector* 10375 13484

International Operations 3739 3571

Total Orders Booked 60507 59037

Order Book outstanding

at the end of the year 164145 144300

* Excludes inter Sectoral Orders

RATING OF BHEL VIS-A-VIS MOU TARGETS

Performance of BHEL for the year 2009-10 has been rated as 'Excellent' in terms of MoU signed with the Government of India. BHEL has been awarded the MoU Composite score of '1.17'.

The MoU rating for 2010-11 is under finalisation by the Government of India. However, company's own assessment places performance of the company in 'Excellent' category for FY 2010-11.

MANAGEMENT DISCUSSION AND ANALYSIS

A report on Management Discussion and Analysis is placed at Annexure – I.

BOARD OF DIRECTORS

Appointment

Shri Trimbakdas S. Zanwar has been appointed as Part- time Non-official Director w.e.f. 12.11.2010.

Shri S. Ravi has been re-appointed as Part-time Non- official Director w.e.f. 10.03.2011.

Shri Ambuj Sharma, IAS, Joint Secretary, Department of Heavy Industry, Ministry of Heavy Industries & Public Enterprises has been appointed as Part-time Official Director w.e.f. 15.03.2011.

Shri M.K. Dube has been appointed as an Additional Director w.e.f. 25.06.2011 to take charge of the office of Director (IS&P).

Shri P.K. Bajpai has been appointed as an Additional Director w.e.f. 01.07.2011 to take charge of the office of Director (Finance).

In accordance with Section 260 of the Companies Act, 1956 and Article 67(iv) of the Articles of Association of the Company, S/Shri Trimbakdas S. Zanwar, S. Ravi, Ambuj Sharma, M.K.Dube and P.K. Bajpai shall hold their directorships upto the 47th Annual General Meeting of the Company and are eligible for appointment as Directors at the Meeting.

Cessation

Shri S. Ravi who was appointed as Part-time Non-official Director w.e.f. 29.11.2007 ceased to be a Director of the Company on completion of his tenure on 28.11.2010.

Shri Rajiv Bansal, IAS, Joint Secretary, Department of Heavy Industry, Ministry of Heavy Industries & Public Enterprises ceased to be a Part-time Official Director w.e.f. 15.03.2011.

The Board of Directors place on record their deep appreciation of the valuable services rendered as well as advice and guidance provided by Shri S. Ravi and Shri Rajiv Bansal during their tenure.

Further pursuant to Sections 255 and 256 of the Companies Act, 1956 and Article 67(i) of the Articles of Association of the Company, Smt. Reva Nayyar, Shri Anil Sachdev and Shri Atul Saraya will retire by rotation at the Annual General Meeting and being eligible, offer themselves for re-appointment.

In compliance with Clause 49(IV)(G)(i) of the Listing Agreement, brief resumes of the Directors proposed for appointment and re-appointment along with the nature of their expertise in specific functional areas and names of companies in which the person also holds the directorship along with the membership of the Committees of the Board are given at Annexure - II forming part of the Directors' Report.

OFFICIAL LANGUAGE IMPLEMENTATION

The Company continued its thrust on Official Language implementation in line with Govt. of India's policy. Apart from other activities important activities undertaken during the year are as under:

1. In order to facilitate the employees to work in Hindi and also to give necessary input to work in Hindi, Hindi workshops and Hindi computer training programmes in prescribed numbers were organised in all the Units/Divisions including Corporate Office.

2. With a view to create favourable atmosphere for usage of Hindi in the Company, all the Units/ Divisions of the company, including Corporate Office, celebrated Hindi Divas on 14/9/2010 and organised various Hindi competitions during the celebration of Hindi Week in the month of September, 2010.

3. All national level functions e.g Republic Day, Independence Day, International Women's Day etc. were conducted in Hindi in Corporate Office and major Units of the Company.

4. All the major Units and some of the Divisions of the Company published 11 annual Hindi magazines namely, BHEL Chandan by EDN, BHEL Darpan by EPD,BHEL Kiran by Tiruchi, Surya Kiran by ISG, BHEL Yashasvi by RC Puram, Hyderabad, BHEL Bharati (Half yearly) by Bhopal, BHEL Ganga by Haridwar, Srijan by Jhansi, Shakti Punj by Power Sector (Hq), New Delhi, Abhivyakti by Power Sector- NR,Noida, Poorvabha by Power Sector-ER, Kolkata during the year. Corporate Office also brought out 04 issues of its quarterly Hindi Magazine "Arunima" during the year.

5. To recognise the best performers and enhance competitive spirit for implementation of Official Language Policy among our Units/Divisions, six Units namely Power Sector-NR,Jhansi, Bhopal, EDN, ISG & EPD were awarded Rajbhasha Shield by the Company for excellent implementation of Official Language Policy in their Units.

6. Many awards were received by the employees of major Units in various Hindi Competitions organised under the auspices of Town Official Language Implementation Committee.

7. Committee of Parliament on Official Language inspected our Power Sector(Hq), New Delhi, Power Sector-ER, ROD-Mumbai and Power Sector-NR during the year and appreciated the efforts being made in implementing Official Language Policy of the Govt. of India, while taking a few assurances from us to enhance the use of Hindi in official work.

8. BHEL Units/Divisions were inspected by Corporate Rajbhasha Implementation Group for facilitating them to make progressive use of Hindi as per the Govt. policy.

PARTICIPATION IN THE GLOBAL COMPACT OF THE UNITED NATIONS

BHEL reiterates its commitment to United Nations Global Compact (UNGC) Programme and set of core values enshrined in its ten principles on human rights, labour standards, and environment and anti corruption.

Company intents to advance GLOBAL COMPACT (GC) principles, as a responsible corporate citizen. BHEL has taken a lead role in promoting G.C. principles in other Indian Organization through Global Compact Network (GCN) – an apex level nodal agency, formed by the leading Indian organizations. BHEL continued to remain in the forefront in all activities of the Network as Secretary/GCN being BHEL nominee. Noteworthy activities of the year were participating in the National Convention and holding of monthly meetings of the Network through case studies/ organizational experience sharing, addressing the Global Compact principles in Indian context.

In recognition of BHEL's contribution in support of Global Compact programme and its outstanding Communication on Progress (COP), UNGC continued to place BHEL under 'Notable COP' category.

BHEL is an environment friendly company in all its activities, products & services, besides providing safe and healthy working environment to all its stakeholders and has made UNGC programme as part of the Company's strategy, culture and day-to-day operations.

VIGILANCE

The Vigilance organisation of BHEL is headed by the CVO. Each Unit/Region of BHEL has a vigilance set up headed by a senior vigilance executive reporting to the CVO.

Preventive vigilance has been the thrust areas of BHEL Vigilance throughout the years and the same received focused attention during 2010-11. In line with the directions of the CVC for improving Vigilance Administration, efforts were put in to shift priority from preventive vigilance to proactive and predictive Vigilance Management.

Lack of knowledge or misinterpretation of the Company's policies, rules and procedures may lead to lapses/irregularities. Awareness amongst employees of the organization is generated by organizing training programmes. 67 such programmes were organized during the year 2010-11 in various Units, Regions and offices of BHEL. Interactive sessions were held with line executives representing different functional areas, in order to create vigilance awareness and to enhance their knowledge of the Company's rules, procedures and policies.

With a view to make systems more effective and transparent, Vigilance had carried out system studies during the year 2010-11. Many suggestions towards system improvement have been rendered. Some of the major areas where suggestions for improvement were given are:

- Amendments to Vendor Registration Procedures

- Purchase Policy

- Reverse Auction Guidelines

- Criteria for financial loading of offers, on account of acceptable deviations from tendered scope / specifications.

As per CVC directions, the Company has taken many initiatives to make available all relevant information on the web on real time basis. Towards this end, periodic checks are undertaken to ensure that:

- Status of Purchase Orders, Works Contracts concluded every month is being uploaded by all Units as per the CVC format.

- Procedure and forms related to Vendor registration are hosted on the web site.

- Status of vendor registration is hosted on the web and can be viewed by vendors.

- E-payment of vendor bills are being implemented throughout the organization and principle of first come first served is being followed as a rule in payment of vendor bills.

- Status of bill payment can be viewed by the vendors on-line.

- Indents being raised on-line.

- Information relating to Rules/Procedures governing the registration of vendors, clearance of bills etc. is available on the BHEL/Units websites.

SECURITY

The Company's Security mechanism is at present sufficient and it is geared up to provide security to each Plant/Unit. Whereas, the security of the most of the Plants of the Company which are categorized in 'A' category is being managed by the CISF, in some plants, the Company has its own Security. In other Plants, Corporate Office and Regional Offices, the security is being looked after by the private agencies like M/s. EATS sponsored by Directorate General Resettlement, Govt. of India or Ex-Servicemen Corporation.

Adequate measures have been taken for Security of computers. Department of Electronics, Govt. of India (SRAC) have also carried out inspection of our software

security mechanism and their suggestion have been implemented. Security audit of major plants is being done by the Intelligence Bureau periodically and the additional requirements, wherever pointed out by them, are immediately complied with by the concerned Units. Review of Security is done internally also from time to time and necessary corrective measures are being taken as per the requirements. The Management, Security staff and employees of the Company are sensitized to the Security needs of Company.

SUSTAINABILITY

Sustainability is an integral part of the company's strategy. BHEL is committed to be an Environment friendly company in all its areas of activities, products and services, providing safe and healthy working environment.

In line with the company's strategy, Environment Improvement Projects and Community Development Programmes are given special thrust. Some of the major EIPs executed in the past at BHEL plants and townships included tree plantation drives, installation of rain harvesting plants, efficient water and energy management, reduction in noise level, improvement in chemical storage and handling systems etc.

BHEL's scheme on Corporate Social Responsibility has evolved over the years and has been endorsed by the top management as a policy statement, on the underlying principle that BHEL is a Committed Corporate Citizen and its Corporate Social Responsibility is not only to build synergy between business and Corporate Social Responsibility but is an integral part of business strategy.

All manufacturing Units/Regions of the company are accredited to international standards viz. ISO-14001 certification for environmental management and OHSAS-18001 certification for occupational health and safety management systems.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956, it is hereby confirmed:

(i) that in the preparation of the annual accounts for the financial year ended 31st March, 2011 the applicable Accounting Standards have been followed along with proper explanation relating to material departures;

(ii) that the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at the end of the financial year 2010-11 and of the profit of the company for that period;

(iii) that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act,1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) that the Directors have prepared the annual accounts for the financial year ended 31st March, 2011 on a 'going concern' basis.

CORPORATE GOVERNANCE

As per the requirements of Clause 49 of the Listing Agreement a detailed report on Corporate Governance together with the following is given at Annexure – III:

(i) CEO/CFO Certificate [as per Clause 49(V)] and

(ii) Certificate from the Company's Auditors [as per Clause 49(VII)].

OTHER DISCLOSURES

Information in accordance with the provisions of Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 regarding conservation of energy, technology absorption and foreign exchange earnings and outgo is given at

Annexure-IV.

None of the employees have drawn remuneration in excess of the limits prescribed under section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of employees) Rules, 1975 during the year 2010-11.

Statement pursuant to Section 212 of the Companies Act, 1956 relating to Subsidiary Companies is given at Annexure-V.

AUDITORS

The Auditors of your Company are appointed by the Comptroller and Auditor General of India. The names of auditors appointed for the year 2010-11 are printed separately in the Annual Report.

The detail of cost auditors appointed for the year 2010- 11 and Cost Audit details are printed separately in the Annual Report.

The replies to the points referred to in the Auditors' Report and to the Comments of the Comptroller and Auditor General of India are given at Annexure – VI.

ACKNOWLEDGEMENTS

The Board places on record its sincere appreciation towards the Company's valued customers in India and abroad for the support and confidence reposed by them in the management of the company and look forward to the continuance of this mutually supportive relationship in future.

The Board also gratefully acknowledges the support and guidance received from various Ministries of the Government of India, particularly the Department of Heavy Industry, in Company's operations and developmental plans. The Directors express their grateful thanks also to the Comptroller and Auditor General of India, Chairman and Members of Audit Board, Statutory Auditors, Branch Auditors and Cost Auditors. The Company also wishes to place on record its appreciation of the continued co-operation received from all the Technology Collaborators and Suppliers and support provided by the Financial Institutions and bankers. Last but not the least the Board wishes to place on record its deep gratitude to all BHELites whose enthusiasm, commitment and sense of ownership has made this great company proud.

For and on behalf of the Board of Directors of

BHARAT HEAVY ELECTRICALS LTD.

B.Prasada Rao

Chairman & Managing Director Place : New Delhi

Dated : July 26, 2011


Mar 31, 2010

We are delighted to present our 46th Annual Report on the business and operations of the Company for the year ended March 31, 2010.

FINANCIAL PERFORMANCE

Financial Year

(In Rs. Crore except per share data) 2009-10 2008-09

(a) Turnover 34154 28033

(b) Profit before depreciation, 7083 5214 interest & tax

(c) Less: Depreciation 458 334

(d) Less: Interest & Finance charges 34 31

(e) Profit before tax 6591 4849

(f) Less: Provision for Taxes 2280 1711 (including deferred tax & Fringe benefit tax)

(g) Profit after Tax 4311 3138

(h) Add:/(less) Statutory appropriation 1 1

(i) Distributable Profit 4312 3139

(j) Add: Balance brought forward from the previous year 595 430

(k) Balance available for appropriation 4907 3569

i) Dividend (including interim dividend) 1141 832

ii) Corporate Dividend tax (incl. on interim dividend) 191 142

iii) Amount transferred to General Reserve 3000 2000

(l) Balance in P&L account to be carried forward 575 595

(m) Earnings per Share (Rs.) 88.06 64.11

(n) NAV per share (Rs.) 325.16 264.32

(o) Economic Value Added (Rs. crore) 2670 2008

FINANCIAL HIGHLIGHTS

During the year, the company witnessed a healthy growth in Turnover by 21.83% to Rs. 34154 crore from Rs. 28033 crore in the previous year. The Turnover (net of excise duty) increased by 25.37% from Rs. 26212 crore in 2008-09 to Rs. 32862 crore in 2009-10. Profit before Tax for the year 2009-10 is placed at Rs. 6591 crore as against Rs. 4849 crore during 2008-09, a growth of 35.92% as compared to previous year. Profit after Tax is placed at Rs. 4311 crore as against Rs.3138 crore during 2008-09, a growth of 37.38% over previous year.

Increase in turnover coupled with savings in material cost over previous year have contributed to the better financial performance during the year.

The changes in estimated contract revenue and estimated contract cost for AS 7 (R) contracts under execution in 2008-09 and continuing in 2009-10 is (+) 0.62% and (-) 2.43% respectively, with the consequential impact on turnover.

The wage revision settlement with employees has been finalised during the year. The arrears due from 01.01.2007 to 31.03.2009 amounting to Rs. 2087.51 crore (Net of Rs. 798.59 crore Ad-hoc and 50% DA merger impact accounted up to 31.03.2009) have been charged to Profit and Loss Account and provision available up to 31.03.2009 amounting to Rs. 1749.34 crore has been withdrawn in the Profit and Loss Account.

Net worth of the company has gone up from Rs. 12939 crore to Rs. 15917 crore registering an increase of 23.02%. Net Asset Value(NAV) per share has increased from Rs. 264.32 in 2008-09 to Rs. 325.16 in 2009-10.

DIVIDEND

The Board has recommended a Final Dividend of 123% (Rs. 12.30 per share), Rs. 602.11 crore, for the year 2009-10. An interim dividend of 110% (Rs. 11 per share), Rs. 538.47 crore, on share capital of Rs. 489.52 crore, has already been paid for the year 2009-10. Thus the total dividend payment for the year 2009-10 is

Rs. 1141 crore (exclusive of dividend tax) as against Rs. 832 crore paid in the previous year.

Provision of Rs. 100 crore has been made for Corporate Dividend Tax on the Final Dividend proposed. Corporate Dividend Tax of Rs. 91 crore has already been paid on the interim dividend.

ORDERS RECEIVED

Orders worth Rs. 59037 crore were received during the year as against Rs. 59678 crore in 2008-09. Sector- wise orders booked are as follows:

(Rs. in Crore) 2009-10 2008-09

Power Sector 41982 47167

Industry Sector * 13484 9245

International Operations 3571 3266

Total Orders Booked 59037 59678

Order Book outstanding at the end of the year 144300 117000

* Excludes Inter Sectoral Orders

RATING OF BHEL VIS-A-VIS MOU TARGETS

Performance of BHEL for the year 2008-09 has been rated as Good in terms of MoU signed with the Government of India. BHEL has been awarded the MoU Composite score of 2.64. Two major aspects that impacted the companys performance during 2008-09 were: enhancement in provisioning for wage revision and steep increase in cost of input material procured by the company. However, except in 2008-09, BHEL was rated "Excellent" every year from 2001 -02 onward.

The MoU rating for 2009-10 is under finalisation by the Government of India. However, companys own assessment places performance of the company in Excellent category for F.Y. 2009-10.

MANAGEMENT DISCUSSION AND ANALYSIS

A report on Management Discussion and Analysis is placed at Annexure-1.

BOARD OF DIRECTORS

Appointment

Shri B. Prasada Rao, the then Director (IS&P), BHEL was appointed as Chairman & Managing Director, BHEL w.e.f. 01.10.2009 vide Order No. 1(4)/2008-PE.XI. Pursuant to Orders from DHI, Shri B.P. Rao is holding additional charge of the post of Director (IS&P) w.e.f.

01.10.2009 and of the post of Director (Finance) w.e.f.

10.06.2010 till the appointment of regular incumbents.

Shri B. Prasada Rao also held the additional charge of the post of Director (E.R&D), BHEL for the period 01.10.2009 to 23.12.2009.

Shri Atul Saraya, has been appointed as Additional Director to take charge of the office of Director (Power), BHEL w.e.f. 01.10.2009.

Shri V.K. Jairath has been appointed as Part-time Non- Official Director w.e.f. 12.11.2009.

Shri Shekhar Datta has been appointed as Part-time Non-Official Director w.e.f. 27.11.2009.

Shri O.P. Bhutani has been appointed as Additional Director to take charge of the office of Director (E.R&D) w.e.f. 24.12.2009.

In accordance with Section 260 of the Companies Act, 1956 and Article 67(iv) of the Articles of Association of the Company, S/Shri Atul Saraya, V.K. Jairath and O.P. Bhutani shall hold their directorships upto the 46th Annual General Meeting of the Company and are eligible for appointment as Directors at the Meeting.

Cessation

Shri K. Ravi Kumar was appointed as Director (Power) w.e.f. 16.05.2005 and was holding additional charge of the post of Chairman & Managing Director from 01.03.2008. On completion of his tenure, he laid down the office of Director (Power) and Chairman & Managing Director on 30.09.2009.

Shri OS. Verma, Director (Finance), consequent upon his appointment as Chairman, SAIL, has relinquished the charge of the post of Director (Finance) and was relieved from the services of BHEL on 10.06.2010. Shri Shekhar Datta, who was appointed as Part-time Non-Official Director on 27.11.2009, has since resigned and ceased to be a Director of the company w.e.f. 23.04.2010.

The Board of Directors place on record their deep appreciation of the valuable services rendered as well as advice and guidance provided by Shri K. Ravi Kumar, Shri C.S. Verma and Shri Shekhar Datta during their tenure.

Further pursuant to Sections 255 and 256 of the Companies Act, 1956 and Article 67(i) of the Articles of Association of the Company, S/Shri S. Ravi, A.K. Basu and M.A. Pathan will retire by rotation at the Annual General Meeting and being eligible, offer themselves for re-appointment.

In compliance with Clause 49(IV)(G)(i) of the Listing Agreement, brief resumes of the Directors proposed

for appointment and re-appointment along with the nature of their expertise in specific functional areas and names of companies in which the person also holds the directorship along with the membership of the Committees of the Board are given at Annexure -2 forming part of the Directors Report.

OFFICIAL LANGUAGE IMPLEMENTATION

The Company continued its thrust on Official Language implementation in line with Govt, of Indias policy. Important activities undertaken during the year are as under:

- Hindi workshops and Hindi computer training programme in prescribed numbers were organised in all the Units/Divisions including Corporate Office.

- All the Units/Divisions of the company, including Corporate Office, celebrated Hindi Divas on 14/9/2009 and organised various Hindi competitions during the celebration of Hindi Week/ Fortnight/ Month in the month of September, 2009.

- 04 employees of the Company were given cash award for writing books in Hindi under Hindi Pustak Lekhan Puraskar Yojana.

- A five day Refresher Course was organised in the month of October,2009 for Rajbhasha Officers and Translators working in the Company.

- All BHEL Hindi Coordinators Meet was held in the month of January, 2010 in Udaipur,Rajasthan to discuss the various issues relating to the official language implementation.

- With a view to create interest towards Hindi among the employees,all the Units/Divisions including Corporate Office spent the required amount on purchase of Hindi books during the year.

- All the major Units and some of the Divisions of the Company published annual Hindi magazine and Corporate Office brought out 04 issues of its quarterly Hindi Magazine "Arunima" during the year.

- Committee of Parliament on Official Language inspected our Varanasi, Tiruchy, EPD Units during the year and appreciated the efforts being made in implementing Official Language Policy of the Govt. and took some assurances from us to enhance the use of Hindi in official work.

- Power Sector-ER bagged Third Prize from the Department of Official Language,Ministry of Home Affairs, Govt, of India for excellent performance in the area of Official Language Implementation among the PSUs located in Kolkata.

- Many awards were received by the employees of major Units including Corporate Office in various Hindi Competitions organised under the auspices of Town Official Language Implementation Committee.

- 12 BHEL Units/Divisions were inspected by Corporate Rajbhasha Implementation Group.

- All the functions e.g Republic Day, Independence Day, International Womens Day etc. were conducted in Hindi in Corporate Office and major Units of the Company located in Region A.

PARTICIPATION IN THE GLOBAL COMPACT OF THE UNITED NATIONS

BHEL reiterates its commitment to United Nations Global Compact (UNGC) Programme and set of core values enshrined in its ten principles on human rights, labour standards, environment and anti corruption.

Company intents to advance GLOBAL COMPACT (G.C.) Principles as a responsible corporate citizen. BHEL has taken a lead role in promoting G.C principles in other Indian organizations through Global Compact Network (GCN) - an apex level nodal agency, formed by the leading Indian organizations. BHEL continued to remain in the forefront in all activities of the Network as Secretary/GCN being BHEL nominee. Notable activities of the year were organizing National Convention, Asia Pacific Regional Conclave and holding of monthly meetings of the Network through case studies/ organizational experience sharing, addressing the Global Compact principles in Indian context.

In recognition of BHELs contribution in support of Global Compact programme and its outstanding Communication on Progress (COP), UNGC continued to place BHEL under Notable COP category.

BHEL is an environment friendly company in all its activities, products & services, besides providing safe and healthy working environment to all its stakeholders and has made UNGC programme as part of the Companys strategy, culture and day-to-day operations.

VIGILANCE

The vigilance organisation of BHEL is headed by the CVO. Each Unit / Region of BHEL has a vigilance set up headed by a senior vigilance executive reporting to the CVO.

As in earlier years, preventive vigilance was one of the thrust areas of BHEL Vigilance during 2009-10. Inadequate awareness or wrong interpretation of the Companys policies, rules and procedures often leads to lapses / irregularities. This awareness amongst employees of the organization is generated by organizing training programmes. 76 such programmes were organized during the year 2009-10 in various Units, Regions and offices of BHEL.

During the year 2009-10 Vigilance Heads of all Units / Regions have carried out system studies with a view to make systems more effective and transparent. Some of the major areas where suggestions/recommendations were made to the Management are as under:

- Preparation of estimates for Civil and Structural Works with special focus on Bill of Quantity (BOQ) descriptions, preparation and basis of estimates

- Vendor Registration procedure (SEARP, 2010)

- Purchase Policy

- Uniform Loading / evaluation criteria in tenders

- Parking of BHEL PF funds with the Arrangers

- Guidelines for dealings with Indian Agents of Foreign Principals

Transparency in various areas of Company operations, especially those requiring interface with customers and suppliers helps instill confidence in the stakeholders and achieve vigilance objectives. Some of these successfully implemented measures include:

- Tender notifications are uploaded on web.

- Purchase Orders, Works Contracts, procedure and forms related to Vendor registration are also being hosted on the web site.

- E-payment of vendor bills is being implemented throughout the organization and principle of first come first served is being followed as a rule in payment of vendor bills.

SECURITY

The companys security mechanism is sufficient and gear up to provide security to each plant/unit. Whereas the security of most of the Plants of the company is being managed by the CISF, in some Plants, the company has its own security. In other Plants, Corporate Office and Regional Offices, the security is being looked after by the private agencies like M/s EATS sponsored by Directorate General Resettlement, Govt, of India or Ex-Servicemen Corporations.

Adequate measures have been taken for security of computers. Deptt. of Electronics, Govt of India(srac) have also carried out inspection of our software security mechanism and their suggestions have been implemented.

Security audit of major plants is being done by the Intelligence Bureau periodically and the additional requirements, wherever pointed out by them, are immediately complied with by the concerned units. Review of security is done internally also from time to time.

The Management, security staff and the employees of company are sensitized to the security needs of company.

SUSTAINABILITY

Sustainability is an integral part of companys strategy. BHEL is committed to be an Environment friendly company in all its areas of activities, products and services, providing safe and healthy working environment. In fact, this aspect has become an integral part of the companys business performance. Significantly, BHEL has also taken initiatives on Clean Development Mechanism (CDM) projects to reduce green house gas emissions in a more focused way and vigorous efforts are being made to achieve milestones in this area.

In line with the companys strategy, BHEL undertakes a lot of Environment Improvement projects and Community Development Programmes. Some of the major EIPs executed in the past at BHEL plants and townships included tree plantation drives, installation of rain harvesting plants, efficient water and energy management, reduction in noise level, improvement in chemical storage and handling systems etc.

BHEL scheme on Corporate Social Responsibility has evolved over the years and has been endorsed by the top management as a policy statement, on the underlying principal that BHEL is a Committed

Corporate Citizen and its Corporate Social Responsibility is not only to build synergy between business and Corporate Social Responsibility but is an integral part of business strategy.

A journal is also published for wider circulation on Health, Safety and Environment.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956, it is hereby confirmed:

(i) that in the preparation of the annual accounts for the financial year ended 31st March, 2010 the applicable Accounting Standards have been followed along with proper explanation relating to material departures;

(ii) that the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at the end of the financial year 2009-10 and of the profit of the company for that period;

(iii) that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) that the Directors have prepared the annual accounts for the financial year ended 31st March, 2010 on a going concern basis.

CORPORATE GOVERNANCE

As per the requirements of Clause 49 of the Listing Agreement a detailed report on Corporate Governance together with the following is given at Annexure-3:

(i) CEO/CFO Certificate [as per Clause 49(V)] and

(ii) Certificate from the Companys Auditors [as per Clause 49(VII)].

OTHER DISCLOSURES

Information in accordance with the provisions of Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 regarding conservation of energy, technology absorption and foreign exchange earnings and outgo is given at Annexure-4.

The detail of the employees who are drawing remuneration in excess of the limits prescribed under section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of employees) Rules, 1975 is given at Annexure-5.

Statement pursuant to Section 212 of the Companies Act, 1956 relating to Subsidiary Company is given at Annexure-6.

AUDITORS

The Auditors of your Company are appointed by the Comptroller and Auditor General of India. The names of auditors appointed for the year 2009-10 are printed separately in the Annual Report.

We are glad to inform that there is no qualification in the Auditors Report and there is no comment of Comptroller and Auditor General of India on the Annual Accounts of the Company for the year 2009-10. The reports are given at Annexure-7.

ACKNOWLEDGEMENTS

The Board places on record its sincere appreciation towards the Companys valued customers in India and abroad for the support and confidence reposed by them in the organisation and looks forward to the continuance of this mutually supportive relationship in future.

The Board also gratefully acknowledges the support and guidance received from various Ministries of the Government of India, particularly the Department of Heavy Industry, in Companys operations and developmental plans. The Directors express their grateful thanks also to the Comptroller and Auditor General of India, Chairman and Members of Audit Board, Statutory auditors, Branch auditors and Cost auditors. The Company also wishes to place on record its appreciation of the continued co-operation received from all the Technology Collaborators and Suppliers and support provided by the Financial Institutions and bankers. The Board wishes to record its deep gratitude to all members of the BHEL family whose enthusiasm, dedication and co-operation has made the continued achievement of an excellent performance possible.

For and on behalf of the Board of Directors of BHARAT HEAVY ELECTRICALS LTD.

B. Prasada Rao

CHAIRMAN & MANAGING DIRECTOR

Place : New Delhi Dated : July 23, 2010

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