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Directors Report of BEML Ltd.

Mar 31, 2023

Your Board of Directors has pleasure in presenting 59th Annual Report of the Company along with Audited Financial Statement for the year ended 31.03.2023 as under:

Value of Production is ?3802 crore as against ?3993 crore in the previous year, down by 4.79%.

Financial results:

(Rs. in Crs)

Particulars

2022-23

2021-22

Revenue from Sale of Products & Services

3839

4143

Revenue from Operations

3899

4337

Value of Production

3802

3993

Profit before Depreciation, Interest and Tax

389

321

Finance costs

46

49

Depreciation and amortization expense

64

66

Profit Before Tax

279

206

Tax Expense

120

71

Profit After Tax

159

135

Other Comprehensive Income

(19)

(27)

Total Comprehensive Income

140

108

Profit available for appropriations

550

437

Net worth

2395

2307

With increased business contribution and continued focus on cost control, your Company registered a Profit before Tax of ?279 crore as against of ?206 crore in the previous financial year, up by 35.41%.

Revenue from Operations & Profitability:

During year, Revenue from Operations was ?3899 crore as against ?4337 crore in the previous year, down by 10%.

Revenue from Operations

Improvements/ achievements in other financial/ operational parameters are provided hereunder:

• Defence Business registered a revenue growth of 3.43 % over the previous year.

• Mining & Construction Business registered a revenue growth of 1.78 % over the previous year.

• Spare parts business has achieved Revenue of ? 956.58 crore registering a growth of 2.64 % over the previous year.

• Working capital has reduced by 12%.

• Value added per employee is f33 lakhs as

against ?31 lakhs in the previous year, a jump of 6.45%.

• Trade Receivables have reduced by 34%. Exports:

Your company made exports aggregating ?830.14 crore (which includes physical exports of ?178.42 crore and deemed export of ?651.72 crore) and got export incentive of ?1.92 crore during FY 2022-23 as against exports of ?564.74 crore (which includes physical exports of ?48.75 crore and deemed exports of ?515.99 Crore) and export incentive of ?1.11 Crore during the previous year.

Order Book Position:

The order book position of your Company as on 01.04.2023 is ?8570 crore as against ?9,192 crore in the previous year. The Order book comprises of three business verticals, i.e., Mining & Construction, Defence & Aerospace and Rail & Metro.

Performance vis-a-vis MoU:

In terms of the Memorandum of Understanding (MoU) signed with the Department of Defence Production, Ministry of Defence (MoD), Government of India,

performance of your Company was rated as ''Very Good'' for the financial year 2021-22 and the rating for the financial year 2022-23 is under self-evaluation.

Transfer to General Reserve:

During the year under review, your Company has not transferred any amount to General Reserve.

Dividend:

Your Board of Directors approved an interim dividend of ?5/- per equity share i.e., 50% on equity shares of ?10/- each on 10.02.2023 which was distributed among the eligible shareholders. Further, the Board of Directors have recommended a final dividend of ?5/- per equity share i.e., 50% on equity share of ?10/-each, aggregating to a total dividend of ?10/-(i.e. 100% on equity share capital) for FY 2022-23 keeping in view the future prospects of the Company and at the same time meeting the aspirations of the shareholders.

Your Company formulated a ''Dividend Distribution Policy'' which includes the parameters and circumstances in determining the distribution of dividend to its shareholders and/or retaining profits earned by the Company in terms of Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The said policy is posted on the Company''s website https://alumni.bemlindia.in/writereaddata/D ownloads/201806251810Dividend%20Distrib ution%20Policy.pdf

Change in the Nature of Business:

There was no change in the nature of business of the Company during the year.

Material Change/ Commitment affecting the Financial Position:

No material change/ commitment has

occurred affecting the financial position of the Company subsequent to the financial year ended 31.03.2023 till the date of this report.

Capital Structure:

There was no change in paid up share and authorized capital of the company during the year.

Finance:

The working capital requirements were met from the internal accruals and credit facilities availed from banks. There was no overdue instalment of principal and/or interest to the banks.

M/s Care Ratings have reaffirmed CARE A ; Stable for fund based facilities and CARE A ;Stable & CARE A1 for non-fund based bank guarantee & letter of credit facilities for an amount of Rs. 5,500 crores (where Rs. 4,500 crores are Secured Working Capital limits and Rs. 1000 crore are Unsecured Working Capital limits).

ICRA & Brickwork Ratings have withdrawn their ratings assigned to company''s bank facilities, commercial paper and nonconvertible debentures during the year, at the request of the company.

Any change in the credit ratings is being communicated to Stock Exchanges and the same is placed on Company''s website https://www.bemlindia.in/investors/credit-rating/

Further, the Company had issued Nonconvertible Debentures (NCDs) of Rs. 300 crores during 2012, out of which Rs. 100 crores was redeemed on 18.05.2022 being the 3rd and final tranche (1st and 2nd tranches of Rs. 100 crores each were redeemed on 18.05.2020 and18.05.2021 respectively). With this redemption, the Company has paid the entire NCD amount along with interest to the debenture holders.

Pursuant to SEBI notification and BSE Circular, BEML is identified as Large Corporate (LC) for the year 2022-23 as per the framework provided. As mandated by the Ministry of Corporate Affairs, the financial statements for the year ended 31.03.2023 has been prepared in accordance with the Indian Accounting Standards (IND AS) notified under Section 133 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014. The estimates and judgments relating to the Financial Statements are made on a prudent basis, so as to reflect in a true and fair manner, the form and substance of transactions and reasonably present the Company''s state of affairs, profits and cash flows for the year ended 31.03.2023.

The Company''s contribution to Central and State Exchequers was in the order of Rs. 746.56 crores during the year by way of Corporate tax, Customs Duty, GST, Dividend etc.

Internal Financial Controls:

The Company has various manuals such as Accounts, Cost Accounting and Pricing, Stores, Purchase, Audit etc. For easy reference, the manuals are available in ''BEML Bulletin Board" portal, so that the same can be viewed and complied easily by employees and officers concerned for carrying out various activities in a transparent manner. The manuals are in line with the delegation of powers and are being updated periodically. The changes made, if any, to the manuals are circulated and also updated in the portal. No instance of material weakness in the process has been observed.

The internal audit process is designed to review the adequacy of internal control checks in the system and covers all significant areas of the Company''s operations. Further the company has put in place adequate Internal Financial Controls (IFCs) with respect to Financial Statements.

The adequacy of IFCs over financial reporting is covered by the Statutory Auditors in their Audit Report. In addition, the details of the IFCs are included under the heading ''Internal control systems and their adequacy'' in the Management Discussion & Analysis Report which forms part of this report

Fixed Deposits:

The Company did not accept any fixed deposits during the year, and there was no outstanding Fixed Deposits at the beginning/ end of the year. Accordingly, there was no default in payment of deposits/ interest thereon.

Particulars of Loans, Guarantees or Investments:

As per the provisions of Section 186 of the Companies Act, 2013, the details of Loans, Guarantees and Investments are given in the notes to the Financial Statement.

Strategic Disinvestment:

Ministry of Defence (MoD) vide its letter dated 01.12.2016 communicated that Cabinet Committee on Economic Affairs (CCEA) had accorded "in-principle" approval for strategic disinvestment of 26% equity in the Company, out of Government of India shareholding of 54.03% along with management control. Inter-Ministerial Group (IMG) was constituted by the competent authority. Department of Investment & Public Asset Management (DIPAM) has appointed M/s SBI Capital Markets Limited as Transaction Advisor (TA) & M/s Crawford Bayley as Legal Advisor (LA) and Ministry of Defence (MoD) has appointed M/s RBSA Valuation Advisers LLP, Ahmedabad as Asset Valuer (AV) respectively. Further based on the advice of Inter-Ministerial Group (IMG), road shows were completed and Preliminary Information Memorandum (PIM) was published on 04.01.2021 for global invitation of Expression of Interest (EOI). EOI from

interested bidders have been received and evaluated by TA.

VDR (Virtual Data Room) has been set up by the Company and required data has been provided to TA for due diligence by qualified bidders.

Based on IMG advice, BEML had appointed M/s Deloitte Haskins & Sells LLP, as consultants for advising, undertaking and implementing the Demerger of identified surplus/ non-core assets of the Company which are not part of BEML strategic disinvestment. For demerger, transfer and vesting of identified surplus/ noncore assets, BEML incorporated "BEML Land Assets Limited".

Later on, Petition were filed with MCA for approval of Scheme of Arrangement and on

28.07.2022, MCA had passed order approving Scheme of Arrangement for demerger of "BEML Land Assets Limited" (Resulting Company).

In compliance with MCA order, BEML Limited had fixed 09.09.2022 as record date for issuing share of Resulting Company in the ratio of 1:1 and same were issued to all shareholders whose name were recorded in the Register of Member on above date. Further, the said shares were listed on both stock exchanges (BSE & NSE) and trading has started on 19.04.2023.

Directors & Key Managerial Personnel:

(1) Appoi ntment/re-a ppo i ntment of Independent Directors

During the year 2022-23, Shri Bipin Kumar Gupta (DIN: 00293673), appointed as Independent Director (ID) on the Board of the Company. In terms of section 149 of the Companies Act, 2013, the provisions of section 152(6) and (7) in respect of retirement of directors by rotation shall not be applicable to IDs. Pursuant to Schedule IV of the Companies Act, 2013, the appointment/ re-appointment of the Independent Directors would be formalized through a letter of appointment setting out the terms and conditions in case of their appointment, which is also placed on the web-site of the Company at www.bemlindia.in.

(2) Statement on declaration by Independent Directors

Independent Directors had furnished necessary declarations, in terms of Section 149(7) of the Companies Act, 2013, stating that they had fulfilled the criteria of independence as provided under Section 149(6) of the said Act and Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014 subject to the exemptions granted to the Government Companies. The Board reviewed the said declarations and noted the same.

(3) Change of Key Managerial Personnel

In terms of Article 97 of the Articles of Association of the Company, the President of India is vested with the power to appoint the Directors of the Company from time to time and also shall determine the term of office of such Directors. Accordingly, the following appointments on the Board of your Company were effected during 2022-23 as per the directives of the President of India:

(i) Dr. Shri G. Jawahar (DIN: 10043602), appointed as Director (Human Resources) of the Company vide MoD letter No.8(7)/2019-D(BEML), dated

06.01.2023. He took charge on

11.01.2023.

(ii) Shri Bipin Kumar Gupta (DIN: 00293673), appointed as Independent Director (ID) on the Board of the Company vide MoD letter No.8(6)/2021-D(BEML), dated 10.02.2023. He took charge on 10.02.2023.

(iii) Shri Shantanu Roy (DIN: 10053283), appointed as Director (Mining & Construction Business) of the Company vide MoD letter No.8 (3)/2021-D (BEML), dated 17.02.2023. He took charge on

17.02.2023.

Shri Ajit Kumar Srivastav (DIN: 08741858) Director (Defence) and Shri Anil Jerath (DIN: 09543904) Director (Finance) are liable to retire by rotation at the ensuing annual general meeting and being eligible, offer themselves for reappointment.

Shri MV Rajasekhar, (DIN: 087467141) Director (Mining & Construction), ceased to be Directors consequent upon attaining the age of superannuation w.e.f.

31.10.2022. Further, Shri Arvind Kumar Arora (DIN 07409509) and Smt. Balmuri Vanitha (DIN 08679028), ceased to be Independent Director consequent upon completion of his/ her tenure of three years on 10.07.2022 and 21.01.2023 respectively. The Board placed on record its deep appreciation for invaluable services rendered by the Shri MV Rajasekhar, Shri Arvind Kumar Arora and Smt. Balmuri Vanitha on the Board.

(4) Remuneration of Director:

As per the provision of section 197(12) of Companies Act, 2013 read with rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rule, 2014, every listed company is required to disclose the ratio of remuneration of each Director to the

median employees'' remuneration and details of employees receiving remuneration exceeding limit as prescribed from time to time in the Board Report.

However, as per notification dated June 5th, 2015 issued by MCA, Government Companies are exempted from complying with the provision of section 197 of Companies Act, 2013. Therefore, such particulars have not been included in Board Report.

Government Nominee Directors were neither paid any remuneration nor sitting fee for attending Board/ Committee meetings.

Independent Directors are paid sitting fee of ?20,000 per meeting of the Board/ Committee of the Board attended by them.

Neither there was payment of commission to the Board of Directors nor any stock option scheme offered to them during the year. Further, none of the Directors had any pecuniary relationship nor entered into any related party transactions with the Company during the year.

(5) Number of meetings of Board:

During the year, nine meetings of the Board were held on 22.04.2022,

27.05.2022, 04.08.2022, 24.08.2022,

09.11.2022, 13.12.2022, 09.01.2023, 1 0 . 0 2 . 2 0 2 3 a n d 2 3 . 0 3 . 2 0 2 3 . Requirements on number and frequency of meetings, in terms of Section 173(1) of the Companies Act, 2013, Regulation 17(2) of Listing Regulations, and Para 3.3.1 of the DPE Guidelines, were complied with in full.

(6) Directors'' Responsibility Statement:

Pursuant to section 134(3)(c) and 134(5)

of the Companies Act, 2013, your

Directors state that,

(a) in the preparation of the annual accounts for the year ended

31.03.2023, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(b) the directors had 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 2022-23 and of the profit of the Company for that period;

(c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) the directors had prepared the annual accounts on a going concern basis;

(e) the directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

(f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

(7) Board Evaluation:

The Board of Directors of the Company comprises Functional Directors, Government Nominee Directors and Independent Directors appointed by the Government of India from time to time pursuant to Article 97 of Articles of Association of the Company. Further, the Government communication also indicates the detailed terms and conditions of their appointment based on applicability of the relevant rules of the Company.

In view of the above, the performance of all Functional Directors and Government Nominee Directors is being evaluated by the Administrative Ministry every year based on own evaluation methodology. Further, considering the educational qualifications, age, rich and varied experience of the applicants, the Administrative Ministry/ Department would appoint the IDs on the Board on the recommendation of Search Committee after obtaining approval of competent authority. In addition, the assessment/ evaluation of performance of Independent Directors who will be completing their tenure/ seeking extension was undertaken by the Department of Public Enterprises through Administrative Ministry periodically. As per requirement of SEBI (LODR), Independent Directors in their meeting held on 26.12.2022 undertook the evaluation of performance of functional directors and the minutes of said meeting were placed in the subsequent Board Meeting for information of the Board.

Committees of the Board

The following mandatory Committees required under Companies Act, Listing Regulations, DPE guidelines/ MoD Directives are constituted by the Board to function according to their respective roles and defined scope:

• Audit Committee

• Nomination and Remuneration

Committee

• Stakeholders'' Relationship Committee

• Risk Management Committee

• Corporate Social Responsibility and

Sustainability Committee.

• Procurement Committee

• Share Certificate Committee

The details of the Committees along with their composition, number of meetings held and attendance at the meetings are provided in the Corporate Governance Report as annexure to the Board Report.

Enterprise Risk Management:

It terms of Section 134 of the Companies Act, 2013, Regulation 17 & 21 of the Listing Regulations and Chapter 7 of DPE Guidelines, your Company has constituted Risk Management Committee (RMC) and implemented Board approved "Risk Management Policy (RMP)" Further, the composition, reconstitution and the terms of reference in line with quorum, minimum number of meetings, gap between two meetings of RMC and Powers, roles and responsibilities of RMC a s d u l y a pproved by the Boa rd a re incorporated/ amended in the RMP as per the SEBI Listing Regulations. With the induction of Independent Director, all Business Group Directors, Director (Finance), Director (HR) and Independent Director will be the members of the Committee and senior most Functional Director will head the Committee. During the year, two meetings of RMC was held on 04.08.2022 and 30.01.2023.

The Corporate Risk Committee prepares the key risks along with mitigation plans and report to the Risk Management Committee

constituted in terms of Regulation 21 of the Listing Regulations. The said key risks and mitigation plans will be placed before Audit Committee, which recommends it for review and approval of the Board.

The Board reviews the key risks along with mitigation plans and monitor the status on risk management periodically. The RMP is placed on the Company''s website https://alumni.bemlindia.in/writereaddata/D ownloads/202107051916Risk Management Policv.pdf

Related Party Transactions:

Pursuant to Regulation 23 of the Listing Regulations, your Company has formulated a "Policy on Related Party Transactions", to regulate transactions entered into between the Company and its related parties. Further, in terms of Regulation 46(2)(g) of the Listing Regulations, the said policy is placed on the website of the Company at https://alumni.bemlindia.in/writereaddata/D ownloads/202003301756Related Party Tran sactions Policy.pdf

During the year 2022-23, all transactions that were entered into with the related parties were fair, transparent and at arm''s length basis and also in the ordinary course of business of the Company. The said related party transactions were also duly considered and noted by the Audit Committee. Information as required under section 188 in Form AOC-2, pursuant to Section 134(3)(h) of the Companies Act,2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014, is attached to this report as Annexure-II.

Compliance of applicable Secretarial Standards:

Your Company has complied with the provisions of applicable secretarial standards

with respect to Meetings of Board of Directors (SS-1) and General Meetings (SS-2) issued by the Institute of Company Secretaries of India in terms of Section 118(10) of the Companies Act 2013. Further, as stipulated in Standard 9 of SS-1, a statement on compliances of applicable Secretarial Standards is included in the Report of the Board of Directors.

Corporate Governance Report:

In terms of Regulation 34 of the Listing Regulations and Chapter 8 of the DPE Guidelines, a report on Corporate Governance (CG) compliance is included in the Board''s Report. M/s V N Associates, Practicing Company Secretaries (PCS) have issued a Compliance Certificate on the same. In terms of Para 8.2.3 of the DPE Guidelines of CPSEs, the Company''s compliance level as per the grading report on Corporate Governance is rated at ''Excellent'' with 97.10% (average for 4 quarters) for FY 2022-23 based on selfevaluation. The aforesaid report on Corporate Governance along with Compliance Certificate is placed at Annexure-III.

Management Discussion and Analysis Report:

In terms of Regulation 34 of Listing Regulations and Chapter 7 of the DPE Guidelines, report on Management Discussion and Analysis Report is placed at Annexure-IV.

Business Responsibility & Sustainability Report:

A Business Responsibility & Sustainability Report (BRSR) for FY 2022-23 in terms of Regulation 34 of Listing Regulations, describing the initiatives taken by the Company on environmental, social and governance perspective, in the format as specified by SEBI from time to time is placed at

Annexure-V.

Corporate Social Responsibility & Sustainability Committee:

Your Company has constituted Corporate Social Responsibility & Sustainability (CSR) Committee and implemented Board approved "CSR Policy" pursuant to Section 135 of the Companies Act, 2013, read with Companies (Corporate Social Responsibility Policy) Rules, 2014 as amended from time to time and DPE Guidelines on MoU. Further, the composition, reconstitution and enhanced terms of reference as duly approved by the Board are incorporated in the CSR Policy.

On 31.03.2023, the Committee comprises of Shri Siva Makutam, Independent Director as Chairperson, Shri Ajit Kumar Srivastav, Director (Defence Business) and Shri Anil Jerath, Director (Finance) as members. The CSR Committee met twice during the year on 24.05.2022 and 09.02.2023. An amount of ?4.28 crore was spent during FY 2022-23 towards CSR activities which was more than 2% which is ?2.15 crore as stipulated under the Companies Act, 2013 and was in line with the Board''s approved purposes and the same was certified by the Chief Financial Officer/ Director (Finance). Annual Report on CSR activities for FY 2022-23 is placed at Annexure-VI.

Quality:

Your Company views quality improvement as a business strategy and hence remains proactive in the areas of product and service quality. At BEML, Corporate Quality Policy emphasizing Total Quality Management (TQM), ensures that, Products, Services and Processes meet stringent standards and requisite performance criteria. A separate Quality Department spearheads the thrust towards Total Quality Management.

All manufacturing divisions have been certified for Quality Management System (QMS) to ISO 9001:2015 Standard. Also, all the manufacturing divisions are certified for Environmental Management System (EMS) to ISO 14001: 2015 Standard.

Further, Bengaluru Complex is certified for Occupational Health & Safety standard, as per ISO 45001: 2018. BEML Aerospace manufacturing division (ASMD), Mysore complex is certified to AS9100D Aerospace standard.

BEML has been awarded "EEPC India Quality Award for outstanding performance" under the PSU category".

Key initiatives/ actions taken during the year for continuous improvement towards Quality Assurance, are as under:

• Quality Assurance system is being continuously monitored across all the manufacturing divisions to ensure Quality improvements in Design, Processes and Systems. Few initiatives taken through Cross Functional Team (CFT), towards Quality Improvement across the divisions are as under.

i. 421 Kaizen projects were implemented across the divisions.

ii. 140 Quality Improvement projects were implemented to reduce rejection and overcome field issues.

i ii. 77 nos. Jigs & Fixture were added and upgraded to improve manufacturing Quality.

i v. 138 Vendor visits and Vendor process Audits were carried out to improve Incoming Material Quality.

• Division level Field Failure review meetings are being held regularly based

on Quality/ service issues reported. Actions are initiated to address the issues and close the issues at the earliest.

Make in India Initiative and Indigeniza-tion of products:

BEML recognizes indigenization activity (Atmanirbhar Bharat) as one of the strategic tools to achieve cost benefits and also complement the strengths of private sector to build a strong industrial base.

BEML has achieved level of indigenization of, over 90% in the mainline M&C products and Rail coaches & EMU''s, over 84% in High Mobility vehicles (HMV) and over 65% in Metro cars. Further efforts are underway to reach higher levels.

BEML has nominated a Chief Indigenisation officer for Make in India drive and list of items for indigenization are hosted on Srijan portal website: www.srijan.gov.in.

Under this initiative Company has designed and developed products in all Business Verticals.

New Initiatives:

• BEML handed over the first rake of indigenously built Rail Grinding machine (RGM96) to M/s LORAM Maintenance BY WAY, USA from its manufacturing facility located in KGF Rail Coach Unit-II. This is the first time RGM96 is being manufactured outside of USA.

• Further during the year 2022-23, your Company had set a target of 335 items for indigenization under Atmanirbhar Bharat, wherein 66 items has been indigenized.

Renewable Energy Development, Energy Conservation, Research & Development, Technology Absorption and foreign exchange earnings and outgo:

In terms of Section 134 of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, the information on energy conservation, technology absorption and foreign exchange earnings and outgo including the products developed by the Company during the year is placed at Annexure-I.

Vigilance:

The Company has a Vigilance Department headed by an independent & full-time Chief Vigilance Officer. The Vigilance Activities were carried out in a holistic manner and covered prevention, detection and enforcement.

Vigilance is basically and admittedly a managerial function and, therefore, it is an integral part of the duties of an executive. CVO advises management on all matters pertaining to Vigilance. As an extended arm of the Central Vigilance Commission in its exercise of superintendence over Vigilance Administration of the Company, CVO provides the link to the Administrative Ministry and the CBI.

Complaints received by the Vigilance Department were handled as per Complaint Handling Policy of the Company & CVC guidelines. Such complaints were registered after owning and investigated only after determining ''Vigilance Angle''. The registered complaints are disposed after detailed investigation. During the year 2022-23 (April to March), one (01) registered complaint was Carried forward from 2021-22 and five (05) fresh complaints were received, out of which three (03) complaints were disposed during the year. After due verification/ investigation,

recommendations were made to the Management.

Surprise checks, periodic checks, scrutiny of purchase orders/ contracts, Scrutiny of TA/DA & Medical reimbursement claims, scrutiny of Annual Property Returns, ten (10) CTE type of in-house inspections and fifteen (15) system studies were conducted during the fiscal year 2022-23. Based on the outcome of these, Systemic Improvements were recommended to management & implemented, which mainly pertain to process improvements, management of procurement activities, contract, stores/ inventory, Vendor assessment, weigh bridge operation, processing of OSP claims (union members), clearing of bills, quality of products/ aggregates etc.

From April 2022 to March 2023, 4343 vigilance clearances have been processed on-line (and some special cases off-line) for executives and employees of BEML on the ''SAMPARK'' Portal.

MAJOR IT INITIATIVES IN 2022-23:

• SRM IMPROVEMENTS: Improvements in

the linking processes between SAP and SRM systems to make the processes more automated and reduce manual work and also building better user experience while vendor onboarding. Auto selection of vendors is enabled. Tracking & Protecting tender documents while downloading from public.

• Network Management & Monitoring

Software.

• Implementation of Firewalls for VCs.

• Re-Design of BEML Website.

• Hyper Converged Virtual Servers Infrastructure Set-up for Non-SAP Applications.

• Extraction of VC clearance data with latest date of VC receipt from HR.

• Providing one more option "Vigilance status/ statement" in VC clearance.

• Provision for maintaining the Sensitive post sub area in SAP system.

Vigilance Awareness Week-2022 (VAW-2022) with the theme "Corruption free India for a developed Nation" was observed in the Company during 31st October 2022 to 6th November 2022 in line with the directives by Central Vigilance Commission (CVC). Citizens Integrity pledge was also administered to the Staff of BEML Limited as well as students and staff at schools and colleges and in some Gram Sabhas where the Company had organized events as part of observance of VAW-2022. Also, many Guest Lectures by eminent personalities in relevant field with topics of current relevance were organized by Vigilance Dept at the respective locations.

Central Vigilance Commission has appreciated two Vigilance officers Mr. Subash R -AGM(Vig.) and Mr. Srivatsa GY - AGM(Vig.) for their contribution towards preventive vigilance.

Sensitization programme had been conducted by in-house faculties on the eve of VAW-22 across BEML Ltd and at some vendor premises too.

A ''Vendor Meet'' was organised at Corporate Office of BEML on 28th October 2022 virtually & simultaneously across all divisions of BEML linked through Video Conferencing facility with Corporate/ Divisional Executives and Vendors. There was active participation from vendors (around 80 vendors participated). CMD, CVO, all functional Directors and other senior

officers of BEML have addressed the queries/ grievance raised by vendors online.

Whistle Blower policy:

In terms of the provisions of Section 177 of the Companies Act, 2013, Regulation 22 of the Listing Regulations and Chapter 4 of the DPE Guidelines, your Company has formulated "Vigil Mechanism/ Whistle Blower Policy" for directors and employees to report genuine concerns. The said policy is placed on the Company''s website https://www.bemlindia.in/wp-content/uploads/2023/05/Whistle Blower Policy.pdf

The policy provides for adequate safeguards against victimization of director/s or employee/s or any other person who avail the said mechanism and also provides for direct access to the Chairperson of the Audit Committee in appropriate or exceptional cases. The Audit Committee reviews the functioning of the whistle blower mechanism periodically as per Schedule II (A)(18) of Listing Regulations and Chapter 4 of DPE Guidelines, As per the said policy, none of the employees have been denied access to Audit Committee.

Integrity Pact

Pursuant to the directives from Central Vigilance Commission and Ministry of Defence, Integrity pact is being adopted with all Vendors/ Supplier''s/ Contractor''s/ service providers for all orders/ contracts of value of Rs.1 crore and above.

The pact essentially envisages an agreement between the prospective vendors/bidders and the Company, committing the persons/officials of both sides, not to resort to any corrupt practices in any aspect/ stage of the contract.

Only those vendors/bidders, who commit themselves to such a pact with the principal, would be considered competent to participate in the bidding process.

Integrity pact, in respect of a particular contract, would be operative from the stage of invitation of bids till the completion of contracts. Any violation of the same would entail disqualification of bidders and exclusion for future business dealings.

Two Independent External Monitors (IEMs) have been appointed to review the cases on bimonthly or quarterly basis.

During the FY 2022-23, Rs. 1003.72 crores of purchase orders were entered into Integrity pact out of total purchase orders value of Rs 1696.60 crores

e-Procurement:

BEML Supplier Relationship Management (SRM) is aiming to establish web based seamless relationship and collaboration of procurement process with its Global business partners.

BEML endeavors to procure materials and services through e-procurement platform on ERP system. BEML upgraded the e-procurement software i.e. SRM version from SRM-5 to SRM-7, which is having encryption facility for better security.

"Online Vendor payment tracking option" provides facility to check status of payments against supplier/ services/ payment orders.

Tender status updates are provided through automatic emails to bidders with reasons for rejections.

After opening of the price bids, all technically qualified/ pre-qualified bidders will be able to see the price details of other bids submitted against the tender.

During the year, about 88% of the total requirement was sourced through e-procurement.

Procurement through GeM:

Government e-Marketplace (GeM) is implemented by the Government with the aim to transform the way in which procurement of goods and services is done by Government Ministries & departments, Public sector undertakings and other apex autonomous bodies of the Central Government. Procurement throu g h GeM ha s been authorized by General Financial Rules by making necessary changes in government rules. GeM is a completely paperless, cashless and system driven e-market place that enables procurement of common use goods and services with minimal human interface.

During the year 2022-23, materials worth Rs 993.88 crores has been procured through GeM against the target value of Rs 527 crores (MoU parameter) i.e. 25% of previous year procurement. The same is being reviewed by Audit Committee & Board regularly.

Micro and Small Enterprises:

Company is procuring materials required for production & for others through Micro & Small Enterprises (MSE''s). 358 items which are reserved for MSEs, are being procured exclusively from MSEs.

Appropriate weightage has been given for MSEs in the MoU from the year 2015-16 onwards.

As per the directive of Government, minimum 25% (Notified from 9th Nov'' 2018) of procurements have to be procured from MSE''s amended from 20% earlier, provided a minimum 3% reservation be kept for women owned MSE''s and 4% for SC/ST Enterprises.

Further MSE procurement data is uploaded on "MSME SAMBANDH" portal on monthly basis.

During the year 2022-23, Company has procured Rs 558.75 Crores from MSE''s out of Rs.1750.55 Crores local procurement, which constitutes 32% from MSE''s

Vendor Development:

Vendor development is a continuous process to identify and develop new vendors to bring in competition among the vendors and to reduce costs. The following methods are generally followed to identify potential new vendors.

• Publication of Expression of Interest (Eol) in BEML Website

• Uploading of imported items in Srijan portal for Indigenisation

• Participation in exhibitions and seminars (Including Virtual)

• Organize Vendor meets (Including Virtual)

Further to encourage parts development, following EoI''s has been published

Eol''s Published: (For Vendor Development/ Make in India)

• Open ended Expression of Interest (Eol) has been published in BEML website for registering the new vendors.

• Eol for development of the critical items.

• Import items have been uploaded in

Srijan portal to identify potential Vendors for indigenization.

The procurements from Single source are being reviewed bi-monthly by Audit Committee & Board.

The objective of Outsourcing & Vendor Development policy is to achieve cost

effectiveness & improve competitiveness of Company in global market.

BEML recognizes outsourcing as one of the strategic tools to achieve cost benefits and also complement the strengths of private sector to build a strong industrial base. BEML is well on its journey to become a system integrator by outsourcing a substantial part of manufacturing activities from Indian vendors, enabling BEML to enhance the capacity, attain cost effectiveness and improve competitiveness in the global market. As a policy BEML is not making any capital investments where facilities are available in the Indian industry. To facilitate outsourcing, the company has well established policies, procedures and guidelines.

• New vendors are supported by way of imparting knowledge on manufacturing processes, specifications, quality plans, etc.

• BEML also extends its testing facilities to its vendors wherever required.

• To enhance transparency in all its

procurement processes, BEML has well established e-Procurement Portal.

Further as per the directives of Ministry of Defence, BEML has framed an "Outsourcing and Vendor Development Policy" as duly approved by the Board. The objective of the policy is to enhance cost effectiveness and improve competitiveness of the Company in Global market. The other significant objective of this Outsourcing and Vendor Development Policy is to build a manufacturing eco system in the Country to attain self-reliance. On the other hand, participation of Indian private industry will be an enabler in building technological and manufacturing capability

inside the country. Based on the policy so framed, a Road Map for Vendor Development has been prepared with yearly targets and monitored at the Board level periodically.

Rajbhasha:

The Hindi cell is functioning in the Corporate office of the Company and also in all Complexes & Divisions. It is responsible for ensuring the compliance of the Official Languages Act, the Rules made there under and the administrative instructions regarding use of Hindi received from the Ministry of Defence and the Department of Official Language from time to time, under its manufacturing complexes and Regional/ District Offices.

Compliance of Section 3(3) of Official Languages (OL) Act, 1963

Section 3(3) of Official Languages Act, 1963 has been complied with fully during the period under review and all the documents covered under this section have been issued bilingually. The position of the same is being monitored through the quarterly meetings of the Official Language Implementation Committee.

Hindi Fortnight Celebrations: -

Hindi Fortnight was observed in the Corporate Office, all Complexes and ROs/DOs from September 14, 2022 to September 28, 2022. During this period, executives and employees were motivated to do their maximum work in Hindi and competitions such as Hindi Crossword, Hindi Administrative Terminology, Hindi Quiz, Hindi Antakshari and Hindi Essay Competitions were organised. Instructions were issued to all offices to take the pledge on Hindi Day i.e. on September 14, 2022 in accordance with the guidelines issued by the Ministry of Defence and Department of Official

Language, Ministry of Home Affairs.

Hindi Training :-

• Training in Hindi Prabodh, Praveen and

Pragya courses were conducted during January-May, 2022 and July-November, 2022 and a total of 200 executives/ employees (Prabodh:25; Praveen: 75 and Pragya: 100) have been trained in these two sessions.

Incentive scheme for original work in Hindi:-

• Cash incentive scheme for original work in Hindi has been implemented in the Company.

Hindi Online Workshop:-

• In continuation of the practice of conducting all India level Hindi workshop through Online by BEML, the Corporate office and other offices on turn basis have conducted a total of 9 Hindi workshops and a total of 446 executives/ employees across BEML were trained.

Parliamentary Committee on Official Language

Inspection:-

• The first Sub-committee of the

Parliamentary Committee on Official Language inspected our District Office (DO), Udaipur on 17th January, 2023 on Official Language aspects and the Committee has expressed its satisfaction over the progress made in Official Language in DO, Udaipur and across BEML.

MOD inspection on Official language:-

• The Joint Director, DDP, MoD, New Delhi inspected our Regional Office, Nagpur on 27th April, 2022 on Official Language aspects and suggested some more

implementation measures for the progressive use of Official Language Policy.

Internal Rajbhasha Inspection: -

• A total of 5 internal Official Language

Inspections have been conducted by Sr. Executives of Corporate office at various offices of BEML during the year 2022-23. Detail as follows:

S.

No.

Date of Inspection

Inspection

Officer

Office

1

21.04.2022

MK

RO, Singrauli

2

08.09.2022

K

DO, Bhubaneshwar

3

16.09.2022

KPO

DO, Ahmedabad

4

22.09.2022

ED(M)

RO, Dhanbad

5

22.11.2022

K

DO, Ahmedabad

Awards and Accolades:

• Shri Sudipt sen, Sr. Manager (Parts) and Shri Pandurang Korade, Manager (Service) of District office, Bhilai have been awarded with Rajbhasha Vishisht Seva Samman and First Prize respectively by Town Official Language Implementation Committee, Bhilai-Durg for their best performance in implementing Hindi in DO, Bhilai for the year 2021-22.

Bilingual Equipment Manuals:

• The manuals of High Mobility Vehicles Sarvatra Drivers'' manual, Global positioning system of Command Post Vehicle, Navigational SAT Satellite Handbook, Manuals of Rugged Workstation, RLCD and Monitor Changeover Switch, received from PPI, Palakkad Complex.

Other achievements:

• Hindi version of the Questionnaire has

been prepared for submission to the

Committee on study visit of the parliamentary standing committee on industry.

• Translation work of Company''s Annual report for FY 2021-22 was completed and submitted on time.

• All translation work and Hindi typing work relating to Annual Reports, Comptroller and Auditor General Audit Paras, Technical Reports, Memorandum of Understanding, Reports on SC/ST, RTI, Reservation policy, Standing orders, Product Profiles, Advertisement Materials

and important standard forms were printed and published bilingually.

Manpower:

The number of employees of the Company as on 31.03.2023 stood at 5197 as against 5574 of the previous year resulting in over 6.76% reduction.

The category-wise number of SC/ ST and ExServicemen employees as on 01.01.2023 and representation of SC/ ST and Ex-servicemen as of the same date as compared to total strength is as under:

Category/

Group

Total Strength as on

No. of SC/ST and Ex-Servicemen

31.3.2023

31.3.2022

SC

ST

Ex-Servicemen

31.3.2023

31.3.2022

31.3.2023

31.3.2022

31.3.2023

31.3.2022

Group - A*

1816

1859

340

345

102

104

19

19

Group - B

86

50

14

11

2

2

0

0

Group - C

3283

3653

772

833

208

218

192

211

Group - D

6

7

4

5

0

0

0

0

Total

5191

5569

1130

1194

312

324

211

230

* Excluding Board Level Executives

Recruitment of SC/ ST/ OBC/ Economically weaker Section (EWS)

The Company has adopted the best practices for providing equal opportunities and harmonious environment for advancement of SC, ST, OBC and EWS. During the year, 26 employees were appointed under Group A and 50 employees on contract basis belonging to SC, ST, OBC and EWS.

Particulars of Employees

There were no employees of the Company who received remuneration in excess of the limits prescribed under Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

Industrial Relations:

The transparent and continuous communication with all Employees in the shop floor is the driving mantra of smooth and peaceful Industrial Relations scenario in the Company. The thrust was given to participatory culture which was instrumental in maintaining a constructive harmonious relationship between the Management and the Unions/ Associations. Regular Meetings with the representatives of the recognized Unions/ Officers Associations at the Divisional, Complex and Corporate Levels were held and employee related issues were resolved amicably. The functioning of various bi-partite Committees at Complex level focused on

improvement of overall performance of the Company and resolved the issues in production related matters.

Skill Development Initiatives (SDI)

Employees and their Knowledge & Skills are the key factors for retaining the Competitive edge. Thus, Training has become a vital part of every business activity at BEML and its importance would increase with the fastchanging technology, product life and market requirements.

The Highlights of Skill Development initiatives during 2022-23:

a. DPE Sponsored Training Programmes &

Workshops:

• Department of Public Enterprises (DPE), Ministry of Finance takes initiative to tie-up with top Academic institutions (including IIMs, IITs, ASCI) and Professional Bodies (ICMI, NPC, NIFM etc.) for Training Programmes & Workshops (through Classroom & on-line sessions).

• The above process involves deep scanning of PMS/ TNI data, ADC Reports, HOD inputs & approval process, post-which the registration process involves Adhaar seeding, OTP verification, seats availability (among the 300 participating organisations).

• As approved, total 46 Executives have been nominated for various programmes (15 Training Programmes & 8 Workshops) and registered through OTNS.

b. Mission Raksha Gyan Shakti (MRGS)''

initiative by GoI:

• With increasing impetus on indigeni-

sation (''Atmanirbhar Bharat''), under the "Mission Raksha Gyan Shakti (MRGS)" initiative by MoD, BEML has

been directed to provide Intellectual Property Rights (IPR)Training.

• BEML has achieved the target for the FY 2022-23 as appended below:

Description

No. of personnel to be trained

Target

Achieved

Awareness Programme on IPR by Virtual/ Physical Mode

100

167

E-certification course on COLT Platform

100

109

c. Assessment Development Centre (ADC):

• The concept of ADC was implemented in BEML during 2014 and presently it is linked to promotion policy as well as used as a base for developing Leadership pipeline (Succession Planning).

• During 2022-23, total 17 batches of ADC have been conducted and Post-ADC, 11 batches of Individual Development Plan (IDP) workshops have been organized encompassing 250 Senior Management level Executives (AGM & above).

d. Mentoring Scheme "BANDHAN"

• During 2022-23, two batches of Mentors have undergone 2-days Certification programme on ''Mentoring" through M/s Dale Carnegie. With this, total 54 No. of senior Executives are certified as "Mentors''.

e. Training Programme for SC/ ST Welfare

Association Office Bearers:

• 3-days Residential Training Programme on ''Reservation Policy for SC/ST & Maintenance of Roster'' for SC/ST Welfare Association Office Bearers were organized during February, 2023 at IPE, Hyderabad.

f. Induction Programme for Management

Trainees:

• Induction process plays a vital role in integrating new joinees to BEML family. The Management Trainees (MTs) are provided orientation/ induction programme at all Manufacturing Complexes (Bangalore, Mysore, Palakkad & KGF Complexes).

• In addition to the above, 3-days special Technical Focused Training was organized for Technical MTs and Non-technical MTs and exposed to 3-days exclusive familiarisation in their domain at KGF Complex.

• At Corporate Office, the HODs of all Functions have made presentation apart from Behavioural Training programme organised through M/s Dale Carnegie.

g. Knowledge Sharing Sessions:

• In order to leverage the knowledge & skills acquired by the participants after attending DPE Sponsored Training Programmes, Knowledge Sh a ri n g Sessi on (KSS) were organized on every Friday for the Bemlians to embrace the change and sustain the Journey towards Excellence. The KSS on topics like Supply Chain Management, Industrial Artificial Intelligence in Industry 4.0, Risk Management, Building Competencies for Personal Excellence, Corporate Branding in Digital Era, Project Planning & Monitoring, Contract Management/ Safeguards in tendering, public procurement and contracting with special focus to Public Procurement Policy for Micro and Small Enterprises (MSEs) etc.

h. Centre of Excellence (CoE):

• BEML established its Centres for Excellence (CoE) at all major manufacturing Complexes to continuously learn, train and improve the technology, be it in field of Engine development, Metro Coach Fabrication, Aerospace etc. BEML also believes in developing people capability across the value chain including the Contract Workmen to retain their relevance and employability.

KGF Complex: At KGF, School of Hydraulics & Welding is specialized in Hydraulic System and Welding Process Training for various Equipments.

Bangalore Complex: CoE at Bangalore

Complex imparts Training in Stainless Steel Welding and Wire-Harnessing to support the Metro Car manufacturing. This CoE also provides Skill Training on Crane operations to Contract Operators & BEML Employees.

Mysore Complex: Mysore Complex houses specialized CoE in Electrical & Electronics systems for heavy equipments like Dumper, Motor Grader etc. The Centre also provides intensive practical & theorical Training on Calibration, Wire-Harnessing, Trouble Shooting of Equipments.

Palakkad Complex: CoE at Palakkad specializes on Power-Train mechanism including Axle, Engine, Transmission, Differential Assembly & Electrical system of heavy vehicles like TATRA and other equipments used for Defence Applications.

i. Apprenticeship Mela:

• Ministry of Skill Development & Entrepreneurship (MSDE) has organized "Apprentices Mela" at different locations towards developing Technical manpower for the industry by providing opportunities to the Apprentices.

• BEML has actively participated in this unique initiative of MSDE Apprenticeship Mela, to engage candidates as apprentices under the Apprentice Act, 1961.

j. Azadi Ka Amrit Mahotsav (AKAM):

• As per Ministry directives, various programmes conducted towards celebrating the occasion of ''Azadi Ka Amrit Mahotsav (AKAM)'' as appended below:

♦ Debate/ Slogan/ Extempore Competition on "Empowerment of Women and Children" by Executives/Employees (inclusive of Apprentices),

* Circulation of Pamplets/ Brochure on "Unity of Country" through

digital mode to all Executives & Employees including Apprentices (IT Announcement)

♦ Lecture on "Language (Bhasha) of India for Executives/ Employees/ Apprentices

♦ Organise webinars on Shram Dhaan move by Executives/ Employees/ Apprentices on ''Swachta''

♦ Lecture on "Health and Wellness (with emphasis on Ayush)" for E x e c u t i v e s / E m p l o y e e s / Apprentices or Lecture on "Health and Wellness (with emphasis on Ayush)" for BEML Family members.

♦ Skill competition on ''Atmanirbhar Bharat'' for Executives/Employees/ Apprentices

k. Apart from the regular training programmes at all locations (KGF, Bangalore, Mysore, Palakkad Complexes, Marketing Division & Corporate Office), the Executives/ Employees participated in the specific training programmes are as follows:

Sl

No

Title of the programme

From

To

No. of Days

Venue/

Platform

Orgnaniser

No.

attended

1

GeM

19-04-2022

19-04-2022

0.5

Hotel Le

Meridien,

Delhi

Hotel Le

Meridien,

Delhi

2

2

Interactive workshop on ''Drafting Charter party Contracts''

22-04-2022

23-04-2022

2

Delhi

Delhi

5

3

Training programme on

''Parliamentary

Procedures''

26-04-2022

27-04-2022

2

New Delhi

New Delhi

6

4

Prevention of Sexual Harassment (POSH)

21-04-2022

21-04-2022

0.5

MC

Minerva

Solutions

5

Sl

No

Title of the programme

From

To

No. of Days

Venue/

Platform

Orgnaniser

No.

attended

5

Training on Developing positive attitude/ value for better performance

11-04-2022

12-04-2022

2

KGF

IIPM

46

6

Risk Mgmt requirements and

implementation in Labs

13-04-2022

13-04-2022

1

Online

Quality Council of India, New Delhi

3

7

Uncertainty of measurement and decision rule as per ISO/ IEC 17025:2017

21-04-2022

22-04-2022

2

Online

M/s.Quality Council of India, New Delhi.

2

8

49th IFTDO World Conference & Exhibition

19-05-2022

21-05-2022

3

Vigyan Bhawan & Hotel Le-Meridien , New Delhi

Vigyan Bhawan & Hotel Le-Meridien , New Delhi

4

9

Training programme on ''Preventive Vigilance''

25-05-2022

27-05-2022

2

NFSU,

Gujarat

CVC, New Delhi

1

10

CNC Part Programming

24- 05-2022

25- 05-2022

24- 05-2022

25- 05-2022

Centre of excellence

M/s.IIPM,

Odisha

20

11

Hydraulics Basics Session-1

21-05-2022

21-05-2022

online

Mktg.

99

12

Contract Management & Arbitration

25-05-2022

25-05-2022

online

Mktg.

63

13

Communication Skills & Corporate Etiquette

27-05-2022

27-05-2022

online

Mktg.

321

14

BG825 Shift Tower, Function, Error Codes, Diagnosis, Trouble shooting

27-05-2022

27-05-2022

online

Mktg.

67

15

Two days Training on Electrical Safety

27-06-2022

28-06-2022

2

Hotel

Ashraya

International

M/s.National

Safety

Council,

Mumbai

2

16

ISO 14001:2015 Internal Auditor Training on EMS

01-07-2022

02-07-2022

2

PC

IR Class, Chennai

15


Compliance under Persons with Disabilities Act, 1995:

In terms of various provisions under The Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 (PWD Act), your Company has ensured reservation of vacancies for the posts identified for each disability and carry forward

of vacancies which could not be filled up due to non-availability of suitable persons with disability during the year.

Grievance Redressal System for SCs/STs:

The Company has constituted SC/ST Cell at all Complexes/ Divisions in terms of Department of Personnel & Training (DOPT) guidelines and Cell Officers are nominated at each

Complexes, wherein the HR heads, being Liaison Officers of the respective Complex/ Division are conducting periodical meetings with respective representatives of SC/ ST Employees Welfare Associations to redress the grievances/ issues appropriately. Further, the Chief Liaison Officer who is in the rank of Executive Director/ Chief General Manager/ General Manager meets all the Cell Officers, Liaison Officers and Office Bearers of SC/ST Welfare Associations periodically and monitor the status on redressal of grievances.

Public Grievance Redressal through CPGRAMS:

The Department of Administrative Reforms and Public Grievances under the Ministry of Personnel, Public Grievances and Pensions has initiated Centralized Public Grievance Redress and Monitoring System (CPGRAMS), which is the platform based on web technology primarily aims to enable submission of grievances by the aggrieved citizens for scrutinizing and acting for speedy redressal of these grievances. For this purpose, your Company has nominated General Manager -HR as the Nodal Officer to deal with various public grievances and to ensure prompt and proper feedback to the concerned persons.

Prohibition of Sexual Harassment of Women at Workplace:

Internal Complaints Committee (ICC) has been constituted as per Sec 4(1) of the Sexual Harassment of Women at Work Place (Prevention, Prohibition & Redressal) Act, 2013. The same is functional in all the Complexes/Divisions for receiving complaints of Sexual Harassment if any, and it has been displayed in all the prominent locations across the Complex/ Divisions for the information of all the Women employees. No Complaint has been received under this Act, during the year 2022-23.

Also, the Sexual Harassment of Women at Work place is notified as Misconduct as per

BEML CDA Rules, 2019 applicable to Officers and Certified Standing Orders applicable to Workmen.

Environment and Pollution Controli) Joint Tree Plantation Program:

Your Company in association with the State Forest Department had undertaken planting of saplings at its Manufacturing Complexes and Townships on a regular basis. During the period from April 2022 to March, 2023 a total of 3305 Nos. of Tree Saplings have been planted at Corporate Office, KGF, Bengaluru, Mysuru and Palakkad Complexes.

ii) Energy use and Conservation Measures:

The Company''s 5MW Windmill at Gadag and 18 MW Windmill at Bagalkot Districts in Karnataka have contributed towards ensuring clean energy by mitigating 23704 Tons (approx) of Carbon up to March, 2023.

iii) "PAVI" distribution of solar LED Tube lights:

The company has distributed Solar LED light in Nabaguba village, Phulbani (Kandhama), Odhisha, under the project "PAVI" through the parichay Foundation. The Solar lights will help the Communities make use of sustainable and green energy as there is scarcity of electricity in the village.

Swachh Bharat Abhiyan:

The Company in continuing with its endeavor towards being a Socially Responsible entity had undertaken the various initiatives under Swachh Bharat Campaign & Swachh Vidyalaya Abhiyaan during the current year 2022-23. Important Swachh Bharat Initiatives at BEML Limited for 2022-23 are as under:

i. Swachh Bharat Initiatives:

BEML has adopted all Swachh Bharat initiatives like pledge taking, conducting public awareness programmes on cleanliness, Swachh Vidyalaya, Environment protection, public awareness on cleaning nearby areas, arranged for fixing of awareness boards, participation of employees/ officers in ''Shramadaan'' (100 Hrs in a year) to ensure cleanliness of the work area & surroundings, Training programme on waste management, importance of cleanliness, walkathon, organizing skit/ street play to create awareness on cleaning and cleanliness, construction of toilets, vermi-compost bins, painting of buildings, extensive cleaning of hangars, clean my street, continuous House-keeping & renovation of toilets, fogging & eradication of mosquito menace, focus on creating plastic free zones etc.

ii. Celebration of Ninth Anniversary of Swachh Bharat Campaign & Birth Anniversary of Mahatma Gandhi:

BEML had organized "Celebration of Birth Anniversary of Mahatma Gandhi" on 2nd Oct, 2022. The Company paid its tribute to The Father of the Nation in all the Divisions/ Complexes at Bangalore, KGF, Mysore, Palakkad and at Regional & District Offices. In addition, Swachhta Pledge was taken by all present and the need to strive towards Clean India, the dream of Mahatma Gandhi was emphasized among all the employees/ officers of the Company.

iii. Annual Action Plan for Swachh Bharat Activities:

In addition, BEML has undertaken various activities as per the Annual Action Plan based on the recommendations of the

Group of Secretaries (GoS) on ''Swachh Bharat & Ganga Rejuvenation'' during the year 2022-23. The main activities are: Conducting awareness programmes, Construction of Toilet Blocks under Swachh Vidyalaya Campaign, Collection, Segregation and Disposal of Waste specially Plastic waste Horticultural activities, Planting and distribution of Tree Saplings in association with the State Forest Department and cleanliness activities within the Factory premises, Townships and Public places.

iv. Outdoor Cleanliness Campaign during the period from 2nd to 31st October, 2022.

Under the Special Campaign 2.0, Outdoor cleanliness was undertaken in BEML Regional/ District offices of Hyderabad, Bilaspur, Ranchi, Neyveli and Kolkatta. The Special Campaign was carried out in two phases viz., Preparatory and Implementation phase. In the Preparatory phase from 14th to 30th September, 2022, sites were identified for carrying out the outdoor cleanliness drive and in the Implementation phase, the outdoor cleanliness activity was carried out with much publicity towards creating awareness among the general Public and the surrounding communities.

v. Celebration of Swachh Bharat Pakhwada:

BEML had organized ''Swachh Bharat Pakhwada'' from 1st to 15th Dec, 2022. Various activities in line with the Action plan was held at Corporate Office, Manufacturing Complexes, Townships and Regional & District Offices. The following activities were conducted across the Company, as per the calendar of activities/ events:

• Oath Taking ceremony and March Past in the complex for spreading the awareness about cleanliness

• Display of posters and Banners in the complex for spreading the awareness about cleanliness among the employees, their families and common public.

• Cleanliness Drive in the public places like shopping complex, children parks, Townships etc.

• Organising Plogging like activities (picking of Single Use Plastic during Jogging) and collection of plastic waste

• Disposing off scrap material in the factory premises and storage in organized manner

• Weeding out of old files and office equipments. Cleaning of Furniture and fittings of offices

• Sapling distribution/ plantation in the Company''s township/ residential complexes and Factory premises etc

• Painting/ Drawing competition on the subject of importance of cleanliness for Employees/ Officers and their children and contract personnel

• Organise seminar, display of posters & banners to create awareness among the people for reducing uses of Single Use Plastic & other Plastics.

• Seminar on importance of cleanliness in daily life and making plastic free Zone. Collection of plastic waste in Factory premises and residential complexes.

• Fumigation of insecticides in the township for prevention of mosquitoes and other insects.

• Essay competition on the subject of importance of cleanliness for Employees/ Officers and their children and contract personnel

• Disposal of e-wastes in Administrative offices & Plastic Waste collected in Township

• Cleanliness drive of the drainage

systems in Factory premises and residential complexes.

• Organising Mini-Marathon for employees and their families to spread the message of cleanliness

• Branding and Publicity of Pakhwada activities in electronic and print media platforms at both field and central level. The need to make use of social media such as myGov, Twitter and Facebook extensively for the purpose.

• Concluding ceremony and distribution of prizes. Organized a press conference.

Medical/ Healthcare & Nutritioni) The Medical facilities to Ex-BGML Employees and their Dependents:

The Company has been extending free medical facilities by conducting free Mobile Medical camps to the Ex-BGML Employees and their families after the closure of BGML Hospital. The Company is also extending Out-patient medical facilities by deputing Doctor and Paramedical staff to BGML areas such as Marikuppam, Champion Reef and Oorgaum. Medicines prescribed by the Doctors are being dispensed free of cost for general illness.

On 14th Nov, the World Diabetes day,

Medical camp was conducted at Koorgalli village in Mysore district, Karnataka. Diabetes Rally was also conducted in and around the village to create awareness among the communities. Banners, Placards and slogans on diabetes were

displayed. Around 113 patients suffering from various illnesses and chronic diseases viz respiratory illness, UTI, gastritis, colitis, viral fever diabetes mellitus, Hypertension, IHD etc., were treated at the Camp. The patients were educated about Diabetes mellitus, early diagnoses, maintaining optimal blood sugar level, life style modifications, Medicine Compliance etc., during the Camp.

ii) Medical Assistance:

Medical Centers for employees and dependent family members at all the three Manufacturing Units viz., Bangalore, Mysore and KGF are operational, Medical facilities are also extended to the villagers in Company adopted Dasarahosahalli, Ajjapalli village near KGF. Medical facilities are also being extended to all the Contract Labour, in the Company Medical Centre.

The Company is also extending the Medical Insurance facilities for the benefit of retired Employees/ Officers & their spouses for Medical treatment/ Hospitalization.

iii) Establishing Women Healthcare Center

The Company has associated with My Home India for establishing Women Healthcare Center at Bhadohi District in Uttar Pradesh for providing quality healthcare especially for women. The Villages covering the suriyawan Block in Bhadohi district have very poor healthcare facilities and do not meet the needs of the communities due to distance. The Women in these village are not sensitized with regard to Healthcare and approach the centers only in case of emergencies/ critical health conditions.

The Healthcare centers will not only provide the medical needs of the Women but also sensitize women with regard to Healthcare in association with Health service providers like Aangan Wadi, ASHA and ANM.

iv) Support for Mid-Day Meals:

The Company in association with the Akshaya Patra Foundation has

provided support for food distribution vehicle for the Mid-Day meals programme for the Government Schools in Mysore District, Karnataka. The program avoids classroom hunger, increases school enrolment & attendance, addresses malnutrition and also empowers women through employment.

The Company has also provided Mid-Day Meals to the Specially Challenged Children and the aged of ''The United Orphanage for the disabled'' at Coimbatore, in Tamil Nadu. This program will provide nutritious and healthy meals for children and the aged who require the special care.

Contribution to Armed Forces Flag Day Fund:

Keeping in view the sacrifice of the war heroes of the country, the Company has contributed towards the ''Vocational Training Grant of Widows''. The Company has expressed its solidarity for the welfare of the family of the War Heroes.

Educationi) Educational Programme :

BEML runs one Junior College and two Primary & Nursery Schools at KGF and one at Bangalore. These Institutions, although meant primarily for the children of the employees but also caters to a large extent to the Local population. BEML also

runs a Kendriya Vidyalaya at KGF, for the benefit of the employees'' children and also for the local population. The Company also provided School building, Furniture, Attender for Mid-day Programme and Security Personnel for the Government English Model Higher Primary School. For the Academic Year 2022-23, the Company is providing education to 3020 students, out of which 1897 non-BEML Students have enrolled at BEML Schools for their education during the current academic year and have availed online education.

ii) Promotion of Health, welfare, and allround development of orphan and poor children and youth- enhancing employability through vocational and skill development training :

The Company has associated with Matru Chaya to promote Health, welfare, and all-round development of orphan and poor children and youth-enhancing employability through vocational and skill development training. In this endeavour, Grameen Kousal Vikas Kendra is established in Guntur District of Andhra Pradesh in association with Matru Chaya to empower and enhance employability through vocational and skill development training to underprivileged youth of the surrounding villages.

Welfare Activities:

Welfare Activities like Medical facilities, Housing facilities, Canteen facilities at Complexes, Educational facilities at KGF and Bengaluru for Employee''s children, Facility for Sports events etc. have been extended for welfare of Employees. Moreover, various Schemes are in operation for benefit of Executives and Employees including Insurance benefits viz., BEML Executive Superannuation (Pension) Scheme, BEML Post Superannuation Medical Benefit Scheme, Group Insurance

Scheme, BEML Life Risk Coverage Insurance Scheme, BEML Death Relief Fund (DRF) etc.

The Company has extended all help and support to the Labour Welfare Funds (LWF) functioning in the production units for the benefits of Employees, their dependents and local population. The LWF conducted training programmes in Tailoring, Driving, Computer, Typing/ Shorthand course, diploma course in Laboratory Technology, Para-medical, Job Oriented courses, Music/ Dance classes, spoken English Course, Summer camps for art/ painting and sports and various entertainment activities.

Compliance under the Right to Information Act, 2005

The information required to be provided to citizens under Section 4(1)(b) of RTI Act, 2005 is available on your company website, i.e., www.bemlindia .in It contains general information about the Company, its functions and duties, powers and duties of employees/ officers, decision making process, relevant rules, regulations, manuals & records held by BEML, directory of the Company''s officers, pay scales of officers/ employees etc., and procedure for seeking information and inspection of Records. The Company has nominated a Central Public Information Officer, Appellate Authority, Transparency Officer and Six Central Assistant Public Information Officers representing for Complex/ Divisions to attend to the Applications & Appeals. Further, during the year 2022-23 the Company received 258 Applications seeking information pertaining to human resources, recruitment, contracts, tenders, business related matters etc., and the same were disposed of.

Digital Transformation Initiatives:

Company has embarked to implement the digital transformation (DT) initiatives for the business processes covering all the 3 business verticals.

DT initiatives in the areas of Infrastructure, Cyber Security, Business Applications & Systemic Improvements have been fully implemented and all the projects have positive impact on business both top-line and bottomline while aligning people and processes.

Some of the initiatives implemented during 2022-23 are viz., Industry 4.0 at H&P Division, KGF Complex, Improvements in FLM System, HCI Server for Non-SAP Applications, IT Tools deployed for managing IT Assets like Network & Desktop monitoring, EPS Applications for declaration and display, Monthly cyber security awareness security training sessions and Daily cyber Security Tips.

DT Roadmap for next 3 years:

1. Upgrade & Re-implement SAP ERP ECC6.0 to SAP S4HANA: Current ERP version reaching End-of-Life by Dec'' 2026, thereby we need to upgrade to HANA for better productivity.

2. Upgrade OS, PC & Switches: To comply with cyber security norms & MoD Guidelines.

3. Industry 4.0: Implementation at all Manufacturing Complexes in phased manner to achieve Overall Equipment Effectiveness (OEE) with real time data.

4. GeM procurement using Alternate Part Nos: This project will update the Part no in SAP for all trading spare parts.

5. SAP HCM/SAP success factor solution: This project will replace Net based PMS and HR Portal there by no dependency on 3rd party vendors.

Report on the performance and financial position of subsidiaries and Joint Venture Company

Subsidiary Companies:

(i) M/s Vignyan Industries Limited (VIL):

MoD vide letter dated 10.09.2021

informed that the union cabinet has accorded approval for closure of VIL. Accordingly, Members of the Company at its Extraordinary General Meeting held on 11.10.2021 accorded approval for Voluntary Liquidation and appointed Shri Venkataraman Jayagopal as liquidator. Realization of Assets and settlement of accounts by the liquidator is under process.

(ii) M/s MAMC Industries Limited (MIL):

Your Company entered into a Consortium Agreement with M/s. Coal India Limited (CIL) and M/s. Damodar Valley Corporation (DVC) on 08.06.2010 for acquiring specified assets of M/s. Mining and Allied Machinery Corporation Limited (under liquidation). The agreement, inter-alia, provided for formation of a Joint Venture Company (JV) with a shareholding pattern of 48:26:26 among BEML, CIL and DVC respectively. The Company has paid the proportionate share of ?48 crore towards the total bid consideration of ?100 crore for the said acquisition, based on the order passed by the Hon''ble High Court of Calcutta. The said assets were taken possession by the MAMC Consortium. Further up to 202223, the Company has incurred a sum of ?23.98 crore (Previous Year- ?20.27 crore), towards maintenance, security and other related expenditure. The total sum of ?71.98 crore (Previous Year ?68.27 crore) is disclosed as ''Advance to MAMC Consortium'' due to delay in conversion of MIL into a JV.

In the meantime, a company in the name of ''MAMC Industries Limited'' (MIL) was formed and incorporated by your Company as a wholly owned subsidiary for the intended purpose of JV formation. Shareholders'' agreement, as duly approved by the Boards of all three members of the consortium, has been submitted to MoD for necessary approval.

Further, MoD has directed to submit ''Business Plan'' and ''Financial Viability Report'' of the proposed JV. Preparation of the said report has not materialized due to exorbitant fee quoted by the consultant firms.

Further, it was proposed to register all properties in the name MAMC Industries Limited'' and accordingly, M/s Fox & Mondal Advocates & Solicitors have prepared the final draft sale deed of the Mining and Allied Machinery Corporation Limited properties at different locations for registration purpose. The same shall be submitted to the Official Liquidator for his concurrence. However, to proceed for collaboration agreement, CIL support on partnership basis or assured orders on nomination basis was requested. Later on, GoI has taken up strategic disinvestment of BEML and it is in advance stage of formation of Joint Venture, BEML has requested to CIL and DVC to take back the shares of BEML and settle the value of properties purchase by BEML during court auction. Reply is awaited from both parties.

Joint Venture Company -(i) M/s BEML Midwest Limited (BMWL):

BMWL was formed and registered with the Registrar of Companies at Hyderabad on 18.04.2007. BEML holds 45% share and M/s Midwest Granite Pvt. Ltd. (MGPL) and P T Sumber Mitra Jaya of Indonesia as partners hold the balance 55% share. The Company was established to capitalize on the growing business opportunities in the contract mining segment. However, due to certain unauthorized transactions and the oppression and mismanagement by the nominees of MGPL, your Company had filed an application before Hon''ble Company Law Board (CLB) seeking for suitable relief. As a counter measure, MGPL had also filed a petition on the matter. CLB vide its common order dated 01.06.2012 directed the Central Government to appoint an inspector to investigate the

affairs of BMWL and take appropriate action. Based on the legal advice, your Company preferred two appeals before Hon''ble High Court of Andhra Pradesh at Hyderabad against the said common order of CLB. The Hon''ble High Court passed the order on 19.08.2013, thereby setting aside the said common order and directing CLB to proceed with a fresh enquiry, and decide the issue in accordance with law and merits, also taking into consideration the report of investigation as directed by CLB and pass appropriate orders without getting influenced by the impugned common order of CLB. In the meanwhile, the Government has constituted National Company Law Tribunal (NCLT) by dissolving CLB and notified that the jurisdiction is shifted to Hyderabad from Chennai. The case files were transferred to NCLT. Regional Director-MCA has submitted the investigation report dated 29.03.2022 to NCLT. Regular hearings are taking place at NCLT, Hyderabad.

Ceased to be Subsidiary, Joint Venture or Associate during the yearBEML Land Assets Limited:

During year, BEML Land Assets Limited ceased to be a subsidiary as per the Scheme of arrangement approved by the MCA vide order dated 28.07.2022. Listing of shares of BEML Land Assets Limited had taken place on both Stock exchange (BSE & NSE) and trading has started on 19.04.2023.

There was no company which became or ceased to be a subsidiary, joint venture or associate of the Company during the year except mentioned above.

A separate section on report on the performance and financial position of each of the Subsidiaries, Joint Venture Company are placed under Form AOC-1 provided in the consolidated financial statement of the Company, in terms of section 129(3) of the Companies Act, 2013 read with rule 5 of Companies (Accounts) Rules, 2014.

Consolidated Financial Statement:

Your Company has prepared the Consolidated Financial Statement of its subsidiaries in terms of Section 129(3) of the Companies Act, 2013, excepting consolidation with respect to JV Company, M/s BEML Midwest Limited due to complete cessation of activities as the matter is sub-judice, which is attached to this report.

Statutory Auditors:

M/s Sundaram & Srinivasan, Chartered Accountants, Bengaluru, were appointed as the Statutory Auditors for the financial year 2022-23 by the Comptroller & Auditor General of India.

Observations made in the Independent Auditors'' Report on the financial statement including consolidated financial statement and the reply of the Board of Directors thereto are placed by way of an addendum at page No 304 to the annual report.

Cost Auditors:

In terms of Section 148 of Companies Act, 2013, read with the Companies (Cost Records and Audit) Rules, 2014, M/s R M Bansal and Co, Cost Accountants, Bengaluru, were appointed as Cost Auditors for the year 202223 to conduct the audit of the cost records of the Company. The Company maintains Cost records as specified by the Central Government under section 148(1) of the Companies Act, 2013, in respect of the Railway and Rolling Stocks (Bengaluru Complex), other Machinery (Truck, Engine, EM, H&P Divisions) and Power (EM Division).

Further, as required under the said Rules, the remuneration payable to the Cost Auditor for FY 2022-23 was ratified by the members in the 58th Annual General Meeting held on 23.09.2022.

Secretarial Auditors:

In terms of Section 204 of the Companies Act, 2013 read with the Companies (Appointment

and Remuneration of Managerial Personnel) Rules, 2014, your Company had appointed M/s V N Associates, Practicing Company Secretaries (PCS), Bengaluru, to undertake the Secretarial Audit of the Company for the year 2022-23. The Secretarial Audit Report issued by the PCS and the replies to the observations made in the said Report are annexed to the Board''s Report as Annexure-VII.

In addition, an Annual Secretarial Compliance Report issued by the PCS has been filed with the Stock Exchanges within the due date from the end of financial year 2022-23.

C&AG Audit:

The Comments of the Comptroller & Auditor General of India under section 143(6)(b) of the Companies Act, 2013 on the financial statement including consolidated financial statement and reply thereto, if any, are appended at page No 216 & 306 to the annual report.

Frauds Reported by Auditor:

No frauds are reported by the auditors which fall under the purview of sub-section 12 of section 143 of Companies Act, 2013.

General disclosure:

Your Directors confirm that no disclosure or reporting is required in respect of the following items as there was no transaction on these items during the year under review:

i. No Significant and Material order was passed by any regulators or courts or tribunals that may impact the going concern statues and company''s operations in future.

ii. No application made or any proceeding p e n d i n g u n d e r I n s o l v e n cy a n d Bankruptcy Code, 2016 as at the end of the Financial Year 2022-23.

iii. Details of difference between the amount of valuation at the time of one time settlement and valuation done while taking loan from banks or financial institutions are not applicable to the company.

Extract of Annual Return

An extract of the Annual Return in the prescribed form in terms of Section 92(3) of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014, is placed at https://www.bemlindia.in/investors/annual-reports/

Acknowledgements

Your Directors express their hearty thanks to the Company''s valued customers, Government of India, Administrative Ministry, the Ministry of Defence and in particular, the Department of Defence Production, M/s Coal India Limited and its Subsidiaries, M/s Singareni Collieries Company Limited, M/s Steel Authority of India Limited, Railway Board, M/s Delhi Metro Rail Corporation Limited, M/s Bengaluru Metro Rail Corporation Limited, M/s Jaipur Metro Rail Corporation, M/s Kolkata Metro Rail Corporation, M/s Maha Metro Rail Corporation Limited, Integral Coach Factory-Chennai, M/s Bharat Electronics Limited, M/s Bharat Dynamics Limited, Ordnance Factory Board, Defence Research & Development Organization (DRDO), M/s Brahmos Aerospace Pvt. Ltd., Indian Space Research Organization, M/s Hindustan Aeronautics Limited, Aeronautical Develop-

ment Agency for their patronage and confidence reposed in the Company. The Directors also acknowledge and thank all collaborators, vendors and other service providers for their valuable assistance and cooperation extended to the Company.

The Directors express their appreciation to the members of Company''s Consortium of Banks and other Bankers and Financial Institutions for their continued support to the Company''s operations. The Directors also thank all the shareholders/ investors for reposing continued confidence in the Company.

The Directors wish to thank the Comptroller & Auditor General of India, the Principal Director of Commercial Audit & Ex-officio Member, Audit Board and Statutory Auditors for their valued co-operation.

The Directors also acknowledge the valuable support and assistance received from various Ministries of Government, in particular Ministry of Defence, Ministry of Coal, Ministry of Mines, Ministry of Steel, Ministry of Railways, Ministry of Housing and Urban Affairs, Ministry of External Affairs and Ministry of Home Affairs. The Directors are also grateful to the Government of Karnataka and Kerala for the support and co-operation extended to the Company.

Your Directors take this opportunity to place on record their appreciation for the invaluable contribution made and excellent co-operation extended by the employees and executives at all levels for the continued progress and prosperity of the Company.


Mar 31, 2022

Your Board of Directors has pleasure in presenting 58th Annual Report of the Company along with Audited Financial Statements for the year ended 31.03.2022 as under:

Financial results:

('' in crore)

Particulars

2021-22

2020-21

Revenue from Sale of Products

4143

3557

& Services

Revenue from Operations

4337

3597

Value of Production

3993

3556

Profit before Depreciation,

321

203

Interest and Tax

Finance costs

49

39

Depreciation and amortization

66

71

expense

Profit Before Tax

206

93

Tax Expense

71

18

Profit After Tax

135

75

Other Comprehensive Income

(27)

(76)

Total Comprehensive Income

108

(1)

Profit available for

437

329

appropriation

Net worth

2307

2224

Achieved highest ever Value of Production of ''3993 crore as against ''3556 crore in the previous year, increased by 12.29 %.

Value of Production

With increased business contribution and continued focus on cost control, Company has registered a growth of 121.51% in Profit before Tax over previous year i.e., ''206 crore against ''93 crore in the previous financial year.

Profit Before Tax

Revenue from Operations & Profitability:

Your Company achieved all-time record Revenue from Operations of ''4337 crore as against ''3597 crore in the previous year, increased by 20.57%.

Revenue from Operations

Improvements/achievements in other financial/

operational parameters are provided hereunder:

• Defence Business registered double digit growth of 60.54% over the previous year.

• Rail & Metro Business registered a growth of 9.78% over the previous year.

• Mining & Construction Business achieved highest ever Revenue and registered a growth of 7.91% over the previous year.

• Spare parts business has achieved highest ever Revenue of ''932 crore registering a

growth of 1.75% over the previous year of ''916 crore.

• Revenue from operations per employee increased by 32%.

• Value added per employee is ''31 lakhs as against ''25 lakhs in the previous year, a jump of 24%.

• Employee cost to revenue from operations, reduced by 3.82% from 23.60% to 19.78% in the previous financial year.

Despite the spread of second wave of COVID-19 Pandemic during the year, your Company has achieved improvement in all parameters as mentioned above with the unstinted efforts of employees and executives of the Company.

There was no change in the nature of business of the Company during the year. Further, there was no material change/commitment occurred affecting the financial position of the Company subsequent to the financial year ended 31.03.2022 till the date of this report.

Exports:

Your Company made exports aggregating ''564.74 crore which includes physical exports of ''48.75 crore, deemed exports of ''515.99 crore and export incentive of ''1.11 crore during FY 2021-22, as against ''463.14 crore which includes physical exports of ''28.24 crore, deemed exports of ''434.90 crore and export incentive of ''0.49 crore during the previous year.

Order Book Position:

The order book position of your Company as on 01.04.2022 is ''9,192 crore as against ''11,363 crore orders in the previous year. The Order book comprises of three business verticals, i.e., Mining & Construction, Defence & Aerospace and Rail & Metro.

Performance vis-a-vis MoU:

In terms of the Memorandum of Understanding (MoU) signed with the Department of Defence Production, Ministry of Defence (MoD), Government of India, performance of your Company was rated

as ''Good'' for the financial year 2020-21 and the rating for the financial year 2021-22 is under selfevaluation.

Dividend:

Your Board of Directors approved an interim dividend of ''5.00 per equity share i.e., 50% on equity shares of ''10 each on 22.03.2022 which was distributed among the eligible shareholders. Further, the Board of Directors has recommended a final dividend of ''5.00 per equity share i.e., 50% on equity share of ''10 each, aggregating to a total dividend of ''10.00 (i.e. 100% on equity share capital) for FY 2021-22 keeping in view the future prospects of the Company and at the same time meeting the aspirations of the shareholders.

Your Company formulated a ''Dividend Distribution Policy'' which includes the parameters and circumstances in determining the distribution of dividend to its shareholders and/or retaining profits earned by the Company in terms of Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The said Policy is posted on Company''s website https://www.bemlindia.in/writereaddata/ Downloads/201806251810Dividend%20 Distribution%20Policy.pdf.

Strategic Disinvestment:

Ministry of Defence (MoD) vide its letter dated 01.12.2016 communicated that Cabinet Committee on Economic Affairs (CCEA) had accorded "inprinciple" approval for strategic disinvestment of 26% equity in the Company out of Government of India shareholding of 54.03% along with management control. Inter-Ministerial Group (IMG) was constituted by the competent authority. Department of Investment & Public Asset Management (DIPAM) has appointed M/s. SBI Capital Markets Limited as Transaction Advisor (TA) & M/s. Crawford Bayley as Legal Advisor (LA) and Ministry of Defence (MoD) has appointed M/s. RBSA Valuation Advisers LLP, Ahmedabad as Asset Valuer (AV). Further based on the advice of Inter-Ministerial Group (IMG), road shows were completed and Preliminary Information Memorandum (PIM) was published on 04.01.2021 for global invitation of Expression of Interest (EOI).

EOI from interested bidders have been received and evaluated by TA.

VDR (Virtual Data Room) has been set up by the Company and required data has been provided to TA for due diligence by qualified bidders.

Based on IMG advice, BEML had appointed M/s. Deloitte Haskins & Sells LLP, as consultants for advising, undertaking and implementing the Demerger of identified surplus/non-core assets of the Company which are not part of BEML strategic disinvestment. For demerger of identified surplus/ non-core assets a separate Wholly Owned Subsidiary (WOS) of BEML by name "BEML Land Assets Limited" has been incorporated on 15.07.2021.

Based on approval of the Stock Exchanges, Scheme of arrangement has been filed with MCA for its approval. MCA vide order dated 28.07.2022 has sanctioned the scheme of arrangement for the de-merger of identified surplus/Non - Core assets, listing formalities are under process.

Finance:

The working capital requirements were met from the internal accruals and credit facilities availed from banks. There was no overdue installment of principal and/or interest to the banks. During the current Financial Year, Board has approved ''1,000 crores towards Unsecured Working Capital limit (fund based and non-fund based) in addition to the existing ''4500 crores Secured Working Capital Limit (fund based and non-fund based). The overall ''5500 crores limit (''4500 crores Secured Working Capital limit and ''1000 crore Unsecured Working Capital limit) is rated by M/s Brickworks Rating with fund-based facilities as BWR AA/Stable and non-fund based facilities as BWR A1 and M/s Care Rating Agency has rated fund based facilities as A /Stable and non-fund based facilities as A /Stable, A1 .

Further, the Company had issued Non-convertible Debentures (NCDs) of ''300 crores during 2012, out of which ''100 crores was redeemed on 18.05.2021 being second tranche (first tranche of ''100 crores was redeemed on 18.05.2020). The Company has paid the redemption amount along with interest to the debenture holders. Brickwork Rating has

affirmed the rating for NCDs with BWR AA/Stable. These ratings are considered to have a high degree of safety regarding timely servicing of financial obligations. Further, the last tranche of ''100 Crores was redeemed on 18.05.2022 and the redemption amount along with interest has been paid to eligible debenture holders. With this all NCDs have been redeemed.

Your Company has raised funds through Commercial Paper (CP) within the sanctioned limits on five occasions i.e.,

(i) 4000 units valuing ''200 crores on 19.05.2021 and matured on 17.08.2021,

(ii) 4000 units valuing ''200 crores on 27.07.2021 and matured on 25.10.2021,

(iii) 4000 units valuing ''200 crores on 27.08.2021 and matured on 25.11.2021,

(iv) 4000 units valuing '' 200 crores on 02.11.2021 and matured on 31.01.2022 and

(v) 4000 units valuing ''200 crores on 08.12.2021 and matured on 08.03.2022.

ISIN numbers have been generated through NSDL/ CDSL and listed with BSE. M/s Brickworks Rating has rated [BWR] A1 and M/s CARE Ratings has rated [CARE] A1 for CP which is considered to have very strong degree of safety regarding timely payment of financial obligations. Such instruments carry lowest credit risk. Any change in the credit ratings is being communicated to Stock Exchanges and the same are placed on Company''s website https://www.bemlindia.in/Credit_Rating.aspx.

Pursuant to SEBI notification and BSE Circular, BEML is identified as Large Corporate (LC) for the year 2021-22 as per the framework provided. As mandated by the Ministry of Corporate Affairs, the financial statements for the year ended 31.03.2022 has been prepared in accordance with the Indian Accounting Standards (IND AS) notified under Section 133 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014. The estimates and judgments relating to the Financial Statements are made on a prudent basis, so as to reflect in a true and fair manner, the form and substance of transactions and reasonably present

the Company''s state of affairs, profits and cash flows for the year ended 31.03.2022.

The Company''s contribution to Central and State Exchequers were in the order of ''622.78 crores during the year by way of Customs Duty, GST, Dividend etc.

Internal Financial Controls:

The Company has various manuals such as Accounts, Cost Accounting and Pricing, Stores, Purchase, Shop, Audit etc. For easy reference, the manuals are available in ''BEML Bulletin Board" portal, in intranet so that the same can be viewed and complied easily by employees and officers concerned. The manuals are in line with the delegation of powers and are being updated periodically after approval of the Board. The changes made, if any, to the manuals are circulated and also updated in the portal.

The internal audit process is designed to review the adequacy of internal control checks in the system and covers all significant areas of the Company''s operations. Further the Company has put in place adequate Internal Financial Controls (IFCs) with respect to Financial Statements.

The adequacy of IFCs over financial reporting is covered by the Statutory Auditors in their Audit Report. In addition, the details of the IFCs are included under the heading ''Internal control systems and their adequacy'' in the Management Discussion & Analysis Report which forms part of this report.

Fixed Deposits:

The Company has not accepted any fixed deposits during the year, and there was no outstanding Fixed Deposits at the beginning/end of the year. hence, there was no default in payment of deposits/interest thereon.

Foreign Exchange Earnings and Outgo:

During the year, the Company''s foreign exchange earnings stood at ''193.65 crore and the total foreign exchange utilized was ''778.26 crore.

A sum of ''0.25 crore was incurred towards deputation of personnel abroad for business/export promotion, after-sales-service and training purposes.

Particulars of Loans, Guarantees or Investments:

As per the provisions of Section 186 of the Companies Act, 2013, the details of Loans, Guarantees and Investments are given in the notes to the Financial Statement.

Quality:

Your Company views quality improvement as a business strategy and hence remains proactive in the areas of product and service quality. At BEML, Corporate Quality Policy emphasizing Total Quality Management (TQM) ensures that products, services and processes meet stringent standards and requisite performance criteria. A separate Quality Department spearheads the thrust towards Total Quality Management.

All manufacturing divisions continue to be certified for Quality Management System (QMS) ISO 9001:2015 Standard and also for Environmental Management System (EMS) ISO 14001:2015 Standard. Further, Bengaluru Complex is certified for Occupational Health & Safety standard, as per ISO 45001:2018. BEML Aerospace manufacturing division (ASMD) at Mysuru complex is certified to AS9100D Aerospace standard.

Key initiatives/actions taken during the year for continuous improvement towards Quality Assurance are as under:

• To improve quality and life of transmission and axle aggregates, in-house products manufactured by HP division, KGF, facility is added by installing new Samputensili G500H machine & Gleason 600HC machines during the year.

• To improve engine quality and reliability, third party inspection agency services were hired for inspection and to bring process improvement, across various bought out items procured from vendors by the Engine division. This process has resulted in bringing down warranty cost and improve engines quality.

• Vendor development remains the "focus area" to improve quality of vendor supplies.

During the year, focus was given to develop major Tatra Defence Truck items (mainly Chassis Frame, Platform, etc.,) & TWMP Kits, by extending technical support and encouraging vendors to improve their quality control mechanism, which has resulted in improvement of major aggregate quality, and in turn has resulted in achieving timely production.

• Quality Assurance system is being continuously monitored across all the manufacturing divisions to ensure Quality improvements in Design, Processes, and Systems. Few initiatives taken through Cross Functional Team (CFT), towards Quality Improvement across the divisions are as under:

(i) 570 Kaizen projects were implemented

across the divisions.

(ii) 170 Quality improvement projects

were implemented to reduce rejection and overcome field issues.

(iii) 111 No of Jigs & Fixture were added and upgraded to improve manufacturing quality.

(iv) 223 Vendor visits and Vendor process audits were carried out to improve incoming material quality.

(v) Continuous training through Centre

of Excellence established at all

Complexes is being carried out for skill upgradation.

• To encourage quality improvement initiatives at divisions, Quality Circle activities are promoted in the organization. Quality Circle teams MARVEL, DALFON & METRO participated in international ICQCC competition held at Hyderabad, and bagged GOLD medal.

Make in India initiative and indigenization of products:

BEML recognizes indigenization activity (Atmanirbhar Bharat) as one of the strategic tools to achieve cost benefits and also complement

the strengths of private sector to build a strong industrial base. BEML has achieved over 90% level of indigenization in the mainline M&C products, over 84% Rail coaches & EMUs, in High Mobility Vehicles (HMV) and over 65% in Metro cars. Further efforts are underway to reach higher levels.

BEML has nominated a nodal officer for Make in India drive and list of items for indigenization are hosted on Company''s website: www.bemlindia.in Also a display center is set-up in Bengaluru Complex where prospective vendors can have access to samples, drawings and technical specifications and explore opportunities to partner with Company.

Srijan Defence Portal is being utilized for indigenization of items by uploading imported items. So far 1645 items have been uploaded in Srijan Portal for indigenization, out of which orders for 430 items have been released. 215 items have been indigenized with an import negated value of ''256 Crores approx.

BEML has identified major aggregates for Armoured Recovery Vehicle (ARV) and High Mobility Vehicle (HMV) 12x12 for indigenisation. Further, during the year 2021-22, the Company had set a target of 216 items for indigenization under Atmanirbhar Bharat & 82 items have been indigenized.

Under this initiative, Company has designed and developed products in all three Business Verticals. Some of recently developed products are:

• Arjun Armoured Recovery & Repair Vehicle, Minefield Marking equipment MK-II, Medium Bullet Proof Vehicle MK II GAUR, Mobile Health Diagnostic System based in Defence segment.

• India''s first indigenously developed Driverless Metro Car for Mumbai Metro, Stainless Steel EMU & Overhead Inspection Car in Rail & Metro segment.

• 190T & 150T Dump truck, 180T

Electrical/Diesel Excavator, 850 hp Dozer and Heli portable dozer in Mining & Construction segment.

Also, to further improve indigenization levels in High Mobility Vehicles (HMVs), ToT has been signed for manufacture of cabins which are under development.

Further, with the overarching objective of ''Make in India'' and enhancing ''Atmanirbharta'' in line with the vision of Hon''ble Prime Minister of India, growth strategy (Project Abhyudhay) exercise has been taken up by your Company to achieve the accelerated growth and sustainable financial performance over next 4-5 years. BEML is looking to significantly augment its business by strengthening and broadening its core businesses and exploring adjacent and new opportunities with adaptive strategies for enhancing resilience in today''s uncertain business environment with a thrust on exports and globalization as the driving theme. M/s Mckinsey & Company is appointed as the management consultant. The expected revenue contributions from Railways & Metro will be around 40%, Aerospace & Defence around 25%, Mining & Construction around 25% and Exports around 10% for which immediate-term initiatives like accelerating strategic partnership with global OEMs in the Aerospace & Defence and Rail & Metro segment and Industry 4.0 technology integration in Mining & Construction segment have been recommended. The study has been completed and report has been submitted by M/s. McKinsey during May 2021 for final approval. Further, the report has been submitted to MoD during June 2021. In view of the disinvestment process being underway, permission from MoD has been sought to proceed for finalizing partnerships including signing of NDAs.

Renewable Energy Development, Energy Conservation, Research & Development and Technology Absorption:(i) Renewable Energy Development:

Your Company has been utilizing Green Energy from Wind Mill Projects (23MW) and Solar Project (260KW) to an extent of over 85% of Grid Power Consumption by the Production Divisions. Achieved GHG emission reduction of about 23,871 Ton of Co2 equivalent by utilisation of Green Energy from Wind & Solar Projects.

(ii) Energy Conservation:

Your Company continues to give emphasis to conservation of energy. The efficiency of energy utilization is closely monitored to attain higher level of energy conservation across all units and offices of BEML. All the conventional lighting viz., Bulbs /Fluorescent Tubes/CFL have been switched over to LED Lighting system and reconditioning of furnaces to reduce heat loss and conserve energy.

(iii) Research & Development and Technology Absorption:

Your Company has its own world-class composite R&D establishment in KGF, Bengaluru and Mysuru and is engaged in Design & Development of products and continuous upgradation of existing products to meet customer requirements. The average R&D expenditure is around 2.48% of its Revenue from Sale of Products & Services. More than 88% of Company''s Revenue from Sale of Products & Services is through inhouse R&D developed products.

During the year 2021-22, R&D took many initiatives for in-house design and development of high technology products, aggregates and up-gradation of existing products, including up-gradation to meet emission compliance wherever applicable and engineering of safety features as recommended by regulating authorities in all the three business verticals viz. Mining & Construction, Defence & Aerospace and Rail & Metro including design and development of Mechanical Mine Field Marking Equipment (MMFME), 1500 HP Engine for Future Main Battle Tank, Sub-assemblies for Geo Synchronous Satellite Launch Vehicle (GSLV) Mk-III for ISRO, BMP Transportation Platform, 60 Ton Dump truck with wet brakes in both front & rear axles and independent wheel mounting, engineering of CEV Stage-IV compliant engine on Motor Grader, 3.5

Ton capacity Tyre Handler meeting DGMS safety features for usage in mines, special attachments like tree pusher with forestry cabin for 324 and 180 HP dozer, wood grasper for 5 Ton Loader and Driverless Metro car (Unattended Train Operation) for Mumbai Metropolitan Region Development Authority.

The Company is also working with industry partners to leverage technology for the benefit of customers such as introducing AI features in machines. Till date following AI based products were developed:

• Mobile Medical Health Diagnostic System.

• Sleep/Fatigued operator alert system on Dump Trucks.

• Predictive maintenance of Mining equipment thru big data analytics and Machine learning algorithms.

• 360° Surrounding View Monitoring System.

• Automation of water sprinkling system.

Further, BEML has identified the following AI projects for development:

• Lighting Control system on HEMM -under progress

• Driver alcohol detection system -under progress

Your Company has given special focus to spread awareness about innovation culture and intellectual property rights (IPRs) in the Company. To foster innovation and inculcate IPR culture, BEML has initiated several steps by engaging academia, start-ups & MSME. During the year, 42 IPRs which includes 07 patents, 8 designs, 19 copyrights and 08 trademarks were registered which was 105% of the MoU target (40). During the year, 31 IPRs which includes 01 patent, 06 designs, 19 copyrights and 05 trademarks were Granted/ Certificate received.

In terms of Section 134 of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, the information on energy conservation and technology absorption including the products developed by the Company during the year is placed at Annexure-I.

Vigilance:

Your Company has a Vigilance Department headed by an independent & full-time Chief Vigilance Officer. The Vigilance Activities were carried out in a holistic manner and covered prevention, detection and enforcement.

Vigilance is basically and admittedly a managerial function and therefore, it is an integral part of the duties of an executive. CVO advises management on all matters pertaining to Vigilance. As an extended arm of the Central Vigilance Commission in its exercise of superintendence over Vigilance Administration of the Company, CVO provides the link to the Administrative Ministry and the CBI.

Complaints received by the Vigilance Department were handled as per Complaint Handling Policy of the Company & CVC guidelines. Such complaints were registered after owning and investigated only after determining ''Vigilance Angle''. The registered complaints are disposed after detailed investigation. During the year 2021-22, one registered complaint was carried forward from 2020-21 and six fresh complaints were received, out of which six complaints were disposed during the year. After due verification/investigation, recommendations were made to the Management.

Surprise checks, periodic checks, scrutiny of purchase orders/contracts, Scrutiny of TA/DA & Medical reimbursement claims, scrutiny of Annual Property Returns, ten CTE type of in-house inspections and fifteen system studies were conducted during the Financial year 2021-22. Based on the outcome of these, Systemic Improvements were recommended to management & implemented, which mainly pertain to process improvements, management of procurement activities, contract, stores/inventory, Vendor assessment, weigh bridge operation, processing of OSP claims (union members), clearing of bills, quality of products/ aggregates etc.

From April 2021 to March 2022, 3967 vigilance clearances have been processed on-line (and some special cases off-line) for executives and employees of BEML on the ''SAMPARK'' Portal.

Major IT initiatives in 2021-22:

- Visitor Management and Digital Register

Management System (VMS & DRM)

- Smart Interactive Classroom Projector in HR Training Halls

- Implementation of shelf life and batch

management for all medicines in medical centre

- Setting up Cyber Security Operations Centre (CSOC)

- New email system

- Digitalization of BEML Provident Fund

Vigilance Awareness Week-2021 (VAW-2021) with the theme "Independent India @ 75: Self Reliance with Integrity" was observed in the Company during 26th October 2021 to 2nd November 2021 in line with the directives by Central Vigilance Commission (CVC). Citizens Integrity pledge was also administered to the Staff of BEML Limited as well as students & staff at schools and colleges and in some Gram Sabhas where the company had organized events as part of observance of VAW -2021. Also, considering the pandemic situation, many Guest Lectures by eminent personalities in relevant field with topics of current relevance were organized by Vigilance Dept through Video Conference.

A ''Vendor Meet'' was organised at Corporate Office of BEML on 22nd October 2021 virtually & simultaneously across all divisions of BEML linked through Video Conferencing facility with corporate / divisional executives and vendors. There was active participation from vendors (around 60 vendors participated). CMD, CVO, all functional Directors and senior officers of BEML have addressed the queries/grievance raised by vendors online.

Sensitization (Training) programmes were conducted by in house faculties on the eve of VAW-21 across BEML Ltd through on-line/offline.

Whistle Blower Policy

In terms of the provisions of Section 177 of the Companies Act, 2013, Regulation 22 of the Listing

Regulations and Chapter 4 of the DPE Guidelines, your Company has formulated "Vigil Mechanism/ Whistle Blower Policy" for directors and employees to report genuine concerns. The said policy provides for adequate safeguards against victimization of director/s or employee/s or any other person who avail the said mechanism and also provides for direct access to the chairperson of the Audit Committee in appropriate or exceptional cases. Further, pursuant to Schedule II (A) (18) of Listing Regulations and as per Chapter 4 of DPE Guidelines, the Audit Committee reviews the functioning of the whistle blower mechanism periodically. As per the said policy, none of the employees have been denied access to Audit Committee and Competent Authority. In terms of Regulation 46 of the Listing Regulations, the said policy is placed on the Company''s website https://www.bemlindia.in/ writereaddata/Downloads/202102251405_Whistle _Blower_Mechanism.pdf.

Integrity Pact

Your Company has adopted Integrity Pact with all Vendors/Suppliers/Contractors/service providers for all orders/contracts of value ''1 crore and above, pursuant to the directives from Central Vigilance Commission and Ministry of Defence. The pact essentially envisages an agreement between the prospective vendors/bidders and the Company, committing the persons/officials of both sides, not to resort to any corrupt practices in any aspect/ stage of the contract. Only those vendors/bidders, who commit themselves to such a pact with the principal, would be considered competent to participate in the bidding process. Integrity pact, in respect of a particular contract, would be operative from the stage of invitation of bids till the completion of contracts. Any violation of the same would entail disqualification of bidders and exclusion for future business dealings.

Two Independent External Monitors (IEMs) have been appointed to review the cases on bi-monthly or quarterly basis. During the year 2021-22, ''1069.08 Crore of purchase orders were entered into Integrity Pact, out of total purchase orders value of ''1893.03 Crore constituting over 56%.

E-Procurement:

BEML Supplier Relationship Management (SRM) is aiming to establish web based seamless relationship and collaboration of procurement process with its Global business partners. BEML endeavors to procure materials and services through e-procurement platform on ERP system. BEML upgraded the e-procurement software i.e., SRM version from SRM-5 to SRM-7, which is having encryption facility for better security.

Online Vendor payment tracking option to check status of payments against supplier/services/ payment orders. Tender status updates are provided through automatic emails to bidders with reasons for rejections. After opening of the price bids, all technically qualified/pre-qualified bidders will be able to see the price details of other bids submitted against the tender.

During the year, about 89% of the total requirement was sourced through e-procurement.

Procurement through GeM:

Government e-Marketplace (GeM) is implemented by the Government with the aim to transform the way in which procurement of goods and services is done by the Government Ministries and Departments, Public Sector Undertakings and other apex autonomous bodies of the Central Government. Procurement through GeM has been authorized by General Financial Rules by making necessary changes in government rules. GeM is a completely paperless, cashless and system driven e-market place that enables procurement of common use goods and services with minimal human interface. During the year 2021-22, materials worth ''343.28 Crores had been procured through GeM constituting 19.88% of the target value out of 25% to be achieved as per MoU parameter and efforts are being made to improve the procurement through GeM. The same is being reviewed by the Audit Committee and Board Periodically.

Micro and Small Enterprises:

Company is procuring materials required for production and for others through Micro & Small Enterprises (MSEs). 358 items which are reserved

are being procured exclusively from MSEs. Appropriate weightage has been given for MSEs in the MoU from the year 2015-16 onwards.

As per the directive of Government, minimum 25% (notified from 9th Nov'' 2018) of procurements have to be procured from MSEs amended from 20% earlier. Provided a minimum 3% reservation for women owned MSEs and 4% for SC/ST Enterprises. Further, MSE procurement data is uploaded on "MSME SAMBANDH" portal on monthly basis.

During the year 2021-22, Company has procured ''666.91 Crore out of ''2109.27 Crore local procurement which constitutes 32% from MSEs.

Vendor Development:

Vendor development is a continuous process to identify and develop new vendors to bring in competition among the vendors and to reduce costs. The methods generally followed to identify potential new vendors are; Publication of Expression of Interest (Eol) in BEML Website, development of critical items and Import substitute Items, participation in exhibitions and seminars (including Virtual) and organize Vendor meets including virtual. Accordingly, 42 vendors have been included in the Approved Vendor List (AVL).

BEML recognizes outsourcing as one of the strategic tools to achieve cost benefits and also complement the strengths of private sector to build a strong industrial base. BEML is well on its journey to become a system integrator by outsourcing a substantial part of manufacturing activities from Indian vendors. Policies, procedures and guidelines are put in place to facilitate outsourcing and the Company has established Vendor Development Cell as a single window helpdesk:

• New vendors are supported by way of imparting knowledge on manufacturing processes, specifications, quality plans, etc.

• BEML also extends its testing facilities to its vendors wherever required.

• To enhance transparency in all its procurement processes, BEML has well established e-Procurement Portal.

Further, BEML has framed an "Outsourcing and Vendor Development Policy" as duly approved by the Board as per the directives of Ministry of Defence. The objective of the policy is to enhance cost effectiveness and improve competitiveness of the Company in Global market. Other significant objective of this Outsourcing and Vendor Development Policy is to build a manufacturing eco system in the Country to attain self-reliance. Based on the policy so framed, a Road Map for Vendor Development has been prepared with yearly targets and monitored at the Board periodically. The procurements from single source are being reviewed bi-monthly by Audit Committee & Board.

Rajbhasha:

Your Company has achieved various targets prescribed in the Annual Program 2021-22 issued by department of official Language, Ministry of Home Affairs & Government of India to transact official work in Hindi. Company is committed to adhere to the various guidelines issued on the Implementation Official Language (OL) Policy of the Government of India. The efforts made towards implementation of OL include:

• BEML Corporate office has conducted Hindi Crossword competition on 19.08.2021 and various PSUs took part in the competition.

• Hindi Fortnight Celebrations: Hindi Fortnight was observed across the Company from September 14, 2021 to September 28, 2021. During this period, officers and employees were motivated to do their maximum work in Hindi and competitions such as Hindi Crossword, Hindi Shabd Gyan, Administrative Terminology, Hindi written Quiz, Hindi Antakshari and Hindi Essay Competitions were organised. Pledge was taken on Hindi Day i.e. on September 14, 2021 across the Company in accordance with the guidelines issued by the Ministry of Defence and Department of Official Language, Ministry of Home Affairs.

• Hindi Training: A total of 242 Executives/ Employees were trained in various courses of Hindi under Hindi Teaching Scheme of

Government of India during the period under review.

• Hindi Online Workshop: A total of 8 Hindi Workshops have been convened virtually and a total of 380 Executives/Employees were trained in these workshops across BEML.

• "Hindi translation Workshop" held under the aegis of TOLIC(U), Chennai on 12-13th and 19th July, 2021 conducted by Food Corporation of India, Chennai and a total of 12 participants from BEML took part in the training.

• MoD inspection: Inspection at DO, Chennai on Official Language aspects was conducted on October 29, 2021 by the officials of Department of OL, DDP, Ministry of Defence, New Delhi

• Incentive scheme for original work in Hindi: Cash incentive scheme for doing original work in Hindi has been implemented across the Company

Awards:

• BEML Corporate office, Bengaluru has been adjudged with First position in Big offices category and won TOLIC Rajbhasha award for the best implementation of Rajbhasha Policy for the year 2021-22 among all PSUs situated in Bengaluru.

• BEML Regional Office, Dhanbad has won Third prize of TOLIC Rajbhasha Award for the best implementation of Rajbhasha policy for the year 2021-22 among all PSUs situated in Dhanbad.

• Shri Sudipta Sen, Sr. Manager (Parts), District Office, at Bhilai has been honored with "Rajbhasha Vishisht Seva Samman-2021" for his significant services rendered in administrative works in field of Hindi.

Manpower:

The number of employees of the Company as on

31.03.2022 stood at 5573 as against 6053 in the

previous year resulting in over 7.93% reduction.

The category-wise number of SC/ST and ExServicemen employees as on 01.01.2022 and

Particulars of Employees

There were no employees across the Company who had received remuneration in excess of the limits prescribed under Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

Human Resource Development & Industrial Relations:

With an objective of achieving self-reliance (Atmanirbhar Bharat) in Defence and making India a global-hub for Defence manufacturing, BEML as a part of Indian Defence Industry ecosystem, has been upgrading its capabilities by inducting new product innovations, streamlining the processes & continuously upgrading knowledge & skills of its people. With the advent of new Technologies e.g., Artificial Intelligence (AI), Robotic Process Automation (RPA), Virtual/ Augmented Reality, Block Chain, 5-G etc., and being a part of the global system, it is of absolute necessity to ensure higher competency development amongst our people on application of these cutting-edge technologies through & across our products while meeting the ever-changing customer requirements.

During 2021-22, amidst second wave of COVID 19 & challenging situation, BEML continued to impart various Training programmes through classroom & on-line mode (Hybrid System). During the year, BEML systematically focused on "Result Oriented Training" by emphasizing on clear measurability on "Transfer of Knowledge & Skills" and Return on Training Investment. Due importance was given

representation of SC/ST and Ex-servicemen as of the same date as compared to total strength are as under:

No, of SC/ST and Ex-Servicemen

Total Strength as on

SC

ST

Ex-Servicemen

1.1.2022

1.1.2021

1.1.2022

1.1.2021

1.1.2022

1.1.2021

1.1.2022

1.1.2021

Group - A*

1890

1977

355

367

106

108

19

23

Group - B

35

61

7

10

2

2

0

0

Group - C

3739

4112

853

941

220

235

208

215

Group - D

7

8

5

5

0

1

0

0

Total

5671

6158

1220

1323

328

346

227

238

* Excluding Board Level Executives

on Pre-Training & Post-Training follow-ups and application for business benefits.

During 2021-22, 319 External and 124 Internal Training & Skill Development Programmes on various Technical, Functional, Behavioural areas were conducted covering 5787 Executives and 7078 Employees encompassing all manufacturing Complexes, Marketing Division & Corporate Office, equivalent to 15,709 Man-days, surpassing the Annual Training Target by 30% which is the highest training coverage achieved.

During the period, BEML focused on developing its internal faculty capability by certifying 41 internal trainers through 2 batches of 4 days each on "Training for Trainers" Programme by one of the leading global firm in the field M/s. Dale Carnegie, India. A three-pronged strategy-Train, engage & recognize has been adopted to develop BEML''s own training capability to deliver the skill training to its Employees, Vendors, Customers (Indian Army, Coal India Limited, NLC etc.), contract workmen etc.

BEML introduced a series of training programmes covering new concepts like Design Thinking, Warehouse Design & Management (IIM-A), Managing Strategic Alliance (IIM-A), Quality Leader to Strategic Quality Leader (CII-Chennai), Leadership & Competency Building (Art of Living, Bengaluru), Contract Management & safeguards to be taken (ICWAI), IRFS in CPSEs (ICWAI), Best Practices for below-Board Level professionals (IICA), Mentoring programme for senior executives etc. BEML truly acknowledges the support of Department of Public Enterprises (DPE) for sponsoring BEML Executives to High-end Training Programmes at premier institutions during the Year.

BEML introduced a new initiative called "Window on World" facilitating interactions between

the BEML Executives/Employees and external experts/eminent personalities on various contemporary subject like "Creativity, Accountability & Positivity", Industry 4.0, Emerging Technology & its Applications etc.

As a part Govt of India directives, under ''Mission Raksha Gyan Shakti (MRGS)'', to promote creation of Intellectual Property (IP) in the Defence sector,

BEML imparted comprehensive IPR Training Programmes to 178 personnel against the target of 150 no of Ministry of Defence. Besides, IPR training was also extended to the Vendors covering 154 no across locations against the Target of 100 no. These programmes provide major impetus to the culture of innovation, source of competitive advantage & long-term revenue source.

BEML continue to reinforce development of Project Management skills among its people by nominating 20 key Officials for Executive Diploma in Project Management (EDPM). A detailed webinar on ''Safety in Defence Industry'' by SODET was attended by 11 BEML Executives.

The transparent and continuous communication and feedback with all Employees in the shop floor is the driving mantra for smooth and peaceful Industrial Relations Scenario across the Company. The thrust given to participatory culture which was instrumental in maintaining a constructive & harmonious relationship between the Management and the Unions/Associations. Regular Meetings with the representatives of the recognized Unions/ Officers Associations at the Divisional, Complex and Corporate Levels were held and resolved employee related issues amicably. The functioning of various bi-partite Committees at Complex level focused on improvement of overall performance of the Company and resolved issues in production related matters.

In view of the todays'' business context, there is a need to optimize the utilization of the Company''s resources (Manpower, Machineries, Common facilities) towards meeting the delivery targets (Quality & Date) and to leverage the talents (Knowledge & skills) by sharing the same within the complex/divisions for different business verticals/ Functions. In this process, many key people require to have the dual reporting structure between Business Verticals and Functions or in combination thereof. With the above, from FY 2022-23, the ''Dual Reporting'' System is introduced under PMS process for setting Goals & Targets in the beginning of the year, Mid-Term & Final Assessment. It will initially be on paper-based (for Goals and Target setting in April, 22), followed by IT-based systems in the

Sampark Portal. In this connection, SOP''s have been formulated

Skill Development Initiatives (SDI)

As an integral part of the Govt of India Policy, BEML is committed to Skill & Competency development of its Employees, Contract Workmen, Vendors, Customers, local Youth etc. The umbrella framework for Skill Development activities includes Centres of Excellence, Service Training Centres, Apprenticeship Training Centres and continuous Capability Building processes across the Company as detailed below:

A. Centre of Excellence (CoE)

Mysore Complex:

The CoE at Mysore Complex is known as School of Electrical & Electronics devices which is used for heavy equipments, viz Dumper, Motor Grader etc. Mysore Complex have taken following initiatives to develop required skill to meet production target and skilled Manpower.

KGF Complex:

The CoE of KGF Complex is known as School of Hydraulics & Welding, specialized in Hydraulic System and Structural Welding used in equipments like Dozers, Hydraulic Excavators, Hydraulic Cylinders & Pumps.

Bangalore Complex:

The CoE of Bangalore Complex is known as School of Stainless Steel Welding and Wire-Harnessing which is known to support the High-tech Metro Car manufacturing. It also provides Training on Mild Steel Welding & provides Welders'' Certification Training, conduct Tests to meet the requirement as per EN15085 Standards.

• 112 No of Executives/Employees/

Contract workers are provided training/ Certification in welding in Mild Steel welding to meet the requirement at Bogie, Under frame, Machine shop, Car body -II Departments. In addition to this, Welder Certification Training was also conducted for Regular

employees/Contract Operators to meet the requirement as per EN15085 standard and certification done as per IS9606-1 standard.

• 18 nos of BEML Engineers are trained

as per EN15085 standard.

Palakkad Complex:

The CoE of Palakkad Complex is known as Power-Train mechanism which includes Axle, Engine, Transmission, Differential Assembly & Electrical system of heavy vehicles like TATRA and other equipment used for Defence Applications. The CoE also provides systematic training for Defence Service personnel on various Skill Training.

B. Apprentices Training

BEML has been ensuring the mandatory compliance of Trade Apprentice strength as minimum 2.5% of total manpower of the Company. As end of 31.03.2022, 7.38% of apprentices of the total work force including Contract Labour were engaged.

Mysore Complex:

a. Implementing Apprentice training under Apprenticeship act 1961 in various trades like Fitter (63), Turner (2), Machinist (11), Welder (27), Electrician (39) and Electronics Mechanic (15) for ITI Trade apprentices through RDSDE Bangalore for a period of one Year.

b. Providing Apprenticeship training as per Apprenticeship Act, 1973 by BOAT Chennai for Diploma (36) & Graduate (69) Trainees for a period of one Year.

c. Trade Apprentices are facilitated with basic practical training classes and related Trade Theory classes arranged at Training Centre. All trainees are allotted to different shops as per their Trade & on-the- job training is being provided under the supervision of line supervisors and employees. At the end of the training period apprentices

have to undergo practical test and theory exams conducted by regional directorate board and Proficiency Certificate is issued for passed out candidates.

KGF Complex:

a. Provided On-the-job Training for 167 Trade apprentices as per The Apprentices Act, 1961, in various Trades.

b. Provided On-the-job Training for 32 Diplomaand30BE Graduate Apprentices in the different departments, like Machine shop, assembly, Quality, Material Management, Planning and Administration departments.

c. Engaged 8 Diploma students from JSS Polytechnic, Nanjanagudu, to provide Industrial Training to improve their skills in their own field for 6 months.

d. Conducted Trade Theory and Practical classes on weekly basis and also Tests are conducted for Both Practical and Trade Theory on Quarterly basis for 167 Apprentice Trainees to Improve their practical skills and Theory Knowledge other than their on job Training.

e. Providing Internship Training /Facilities for Project work to 130 students those who are studying Final Year BE/B.Tech/M Tech.

f. Conducted Technical class from Training Centre Staff for KV Students of 6th, 7th & 8th Standard to bring knowledge and awareness of using Technical Tools and Engineering machines as requirement of MSDE Govt. of India.

Bangalore Complex:

a. Provided training as per Apprentices Act, 1961, in various Trades: ITIs -164 Nos.

b. Providing training as per Apprentices (Amendment) Act, 1973, for

Engineering Graduates and Diplomas (Technicians) - 80 Nos.

Palakkad Complex:

Regular Training is provided to the Apprentices - ITI, Diploma & Graduates to sharpen their skills

C. Service Training Centers:

At BEML, Service Training Centers at KGF and Mysore Complexes provide systematic & customized training on new equipments, sub-systems, trouble shooting, efficient operations, etc. for BEML personnel, Defence officials & employees of major Customers.

D. Commemoration of 75 Years of India''s Independence:

As a part of celebration of 75 years of India''s Independence, a week-long activities per quarter were planned & implemented as directed/guided by MOD:

a. Debate/Slogan/Extempore Competition on "Atmanirbhar Bharat" by various Trade Apprentices group.

b. Launch of Brochure on "New BEML Products" , as a part of "Atmanirbhar Bharat".

c. Lecture by External Faculty from RDAT & BOAT (SR) on "Atmanirbhar Bharat" theme Titled "Skill Requirements for Trade Apprentice (TA)s & How it will benefit them"

d. Organise webinars for MSME Vendors on Indigenisation & Quality improvement in the Supply Chain.

e. Lecture on Entrepreneurship opportunities for the new generation talent by Internal/External Experts.

f. Skill competition with pre-defined problems and Tasks by Trade Apprentices Groups.

E. Participation in Apprenticeship MELA:

BEML Participation in Apprenticeship Mela held on 21.04.2022 organized by Ministry of

Skill Development & Entrepreneurship:

KGF Complex:

BEML (KGF Complex) actively participated in the Apprenticeship Mela on 21.04.2022 in Govt. ITI (Woman), Antharagange Road, Kolar which is organized by Joint Director, DIC, Kolar along with 34 establishments. A large No. of young students visited BEML stall to know details on various Trades, vacancies available, admission process. BEML officials guided these students with all the details and 104 applications were received from students of various trades.

Bangalore Complex:

BEML (Bangalore Complex) participated in the Apprenticeship Mela conducted by the Ministry of Skill Development & Entrepreneurship organised through Regional Directorate of Skill Development & Entrepreneurship (RDSDE), Bangalore and the Department of Employment & Training, Bangalore on 21.04.2022.

The mela has commenced with inauguration by Shri Dharmendra Pradhan, Hon''ble Minister of Skill Development & Entrepreneurship, GoI through video-conferencing, followed by Interaction by the Hon''ble Minister with the Regional Heads of RDSDE. The mela has then commenced with the Chief Guest Address by Shri Rao, Regional Director, RDSDE, Bengaluru at Main Auditorium at the premises of National Skill Training Institute (NSTI), Bengaluru.

Around 50 Companies including large PSUs like HAL, BHEL, BEL & Private Organisations like BOSCH, WIPRO etc have participated in the event. Various Govt. & Private ITIs have also participated.

Around 50 ITI passed out candidates in different trades have come to the mela, with resume & credentials to undergo Apprenticeship Training out of which 6 candidates approached BEML stall with the resume in the trade of COPA and Offer Letters were issued to all of them.

Mysore Complex

a. The Ministry of Skill Development and Entrepreneurship (MSDE) organized an Industry Drive and Apprenticeship Mela on "21st April 2022" in Mysuru. The Apprenticeship mela was organized by RDSDE jointly with State Apprenticeship Advisor for engagement of Apprentices under Apprenticeship Act 1961.

b. Accordingly, Shri. Arunkumar T S, Asst. General Manger Training, and Shri. Jayachandra represented BEML Mysore Complex at Govt. ITI NR Mohalla Mysuru.

c. The programme was inaugurated by Mrs. Manjula S, Joint Director Industrial Training and Employment, Shri. Jayendra (Nodal Officer) Vice Principal Govt. ITI Mysuru, Shri. Nagaraju, Asst. Director Apprenticeship Training Scheme Mysuru and Shri. Arunkumar T S, Asst. General Manager Training BEML Limited Mysuru.

d. Mrs. Manjula S, Joint Director, addressed the representatives of various organisations and emphasised on engaging maximum number of Apprentices with the view of skill development in the nation.

e. Students participated from different institutes in and around Mysuru, around 68 ITI Students of different trades have shown their interest and registered names with BEML Ltd. Mysore Complex to undergo one-year Apprenticeship Training.

Palakkad Complex:

BEML Palakkad Complex (State of Kerala), participated in the Apprenticeship Mela held at Govt. ITI Malampuzha, Palakkad. Around 50 Organizations participated in the Mela. This Mela aimed at information & process sharing to facilitate the young candidates to know the process, benefits of the Apprenticeship

Training etc. 31 candidates from various trades eg: welder, fitter & plumber trades attended interview at BEML stall.

Compliance under the Right to Information Act, 2005

Pursuant to Section 4(1)(b) of Right to Information Act, 2005 (RTI), the requisite information for citizens is provided on Company website, i.e., www. bemlindia.in. It contains general information of the Company, functions and duties, powers and duties of employees/officers, decision making process, relevant rules, regulations, manuals & records held by BEML, directory of the Company''s officers, pay scales of officers/employees etc., and procedure for seeking information and inspection of Records. The Company has nominated a Central Public Information Officer, Appellate Authority, Transparency Officer and Six Central Assistant Public Information Officers representing for Complex/Divisions to attend to the Applications & Appeals. Further, during the year 2021-22 the Company received 154 Applications seeking information pertaining to human resources, recruitment, contracts, tenders, business related matters etc., and the same were disposed off.

Compliance under Persons with Disabilities Act, 1995:

In terms of various provisions under The Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 (PWD Act), your Company has ensured reservation of vacancies for the posts identified for each disability, carry forward of vacancies which could not be filled up due to non-availability of suitable persons with disability during the year.

Grievance Redressal System for SCs/STs:

Your Company has constituted SC/ST Cell at all Complexes/Divisions in terms of Department of Personnel & Training guidelines, wherein the HR heads, being Liaison Officers of the respective Complex/Division are conducting periodical meetings with respective representatives of SC/ST Employees Welfare Associations to redress the grievances/issues appropriately. Further, the Chief Liaison Officer who is in the rank of Executive

Director/Chief General Manager meets all the Cell Officers, Liaison Officers and Office Bearers of SC/ ST Welfare Associations periodically and monitor the status on redressal of grievances.

Public Grievance Redressal through CPGRAMS:

The Department of Administrative Reforms and Public Grievances under the Ministry of Personnel, Public Grievances and Pensions has initiated Centralized Public Grievance Redress and Monitoring System (CPGRAMS), which is the platform based on web technology primarily aims to enable submission of grievances by the aggrieved citizens for scrutinizing and taking action for speedy redressal of these grievances. For this purpose, your Company has nominated General Manager (HR)-officiating., as the Nodal Officer to deal with various public grievances and to ensure prompt and proper feedback to the concerned persons.

Prohibition of Sexual Harassment of Women at Workplace:

Internal Complaints Committee (ICC) has been constituted as per Section 4(1) of the Sexual Harassment of Women at a Work Place (Prevention, Prohibition & Redressal) Act 2013. The same is functional in all the Complex/Division for receiving complaints of Sexual Harassment if any, and it has been displayed in all the prominent locations across the Complex/Divisions for the information of all the women employees. One Complaint has been received under this Act, during the year 2021-22 and ICC has observed that there is no evidence to establish that the complaint is maintainable and not proceeded further. Also, the Sexual Harassment of Women at Work place is notified as Misconduct as per BEML CDA Rules, 2019 applicable to Officers and Certified Standing Orders applicable to Workmen.

Environment and Pollution Control

Your Company in association with the State Forest Department had undertaken planting of saplings at its Manufacturing Complexes and Townships on a regular basis. During the period from April 2021 to March 2022, a total of 6630 Nos. of Tree Saplings have been planted at Corporate Office, KGF,

Bengaluru, Mysuru and Palakkad Complexes.

The Company''s 5 MW Windmill at Gadag and 18 MW Windmill at Bagalkot Districts in Karnataka have contributed towards ensuring clean & green energy by mitigating 23871 Ton (approx) of Carbon for the year ending March, 2022.

In order to conserve energy, the Company has undertaken to replace all its office light fittings with LED Lighting in a phased manner. The Company in association with the Local Authorities and the Communities of the adopted villages has facilitated Desilting & Rejuvenation of Ajjappanahalli Village Lake, Kodi Kannur Village Pond, Bethmangala and Ramasagar Lake by providing BEML Dozers. These Lakes have sustained the adopted village with the required water facilities especially during Covid.

Swachh Bharat Abhiyan:

The Company in continuing with its endeavor towards being a Socially Responsible entity had undertaken various initiatives under CSR & SD, Swachh Bharat Campaign & Swachh Vidyalaya Abhiyaan during the current year 2021-22. Important Swachh Bharat Initiatives at BEML Limited for 2021-22 are as under:

(a) Swachh Bharat Initiatives:

BEML has adopted all Swachh Bharat initiatives like Pledge taking, conducting public awareness programmes on cleanliness, Swachh Vidyalaya, Environment protection, public awareness on cleaning nearby areas, arranged for fixing of awareness boards, participation of employees/officers in ''Shramadaan'' (100 Hrs in a year) to ensure cleanliness of the work area & surroundings, Training programme on waste management, importance of cleanliness, walkathon, organizing skit/street play to create awareness on cleaning and cleanliness, construction of toilets, vermi-compost bins, painting of buildings, extensive cleaning of hangars, clean my street, continuous Housekeeping & renovation of toilets, fogging & eradication of mosquito menace, focus on creating plastic free zones etc.

(b) Celebration of Eighth Anniversary of Swachh Bharat Campaign & Birth Anniversary of Mahatma Gandhi:

BEML had organized "Celebration of Birth Anniversary of Mahatma Gandhi" on 2nd

Oct, 2021. The Company paid its tribute to The Father of the Nation in all the Divisions/Complexes Bengaluru, KGF, Mysuru, Palakkad, Regional & District Offices. In addition, Swachhta Pledge was taken by all present and the need to strive towards Clean India, the dream of Mahatma Gandhi was emphasized among all the employees/officers of the Company.

(c) Annual Action Plan for Swachh Bharat Activities:

In addition, BEML has undertaken various activities as per the Annual Action Plan based on the recommendations of the Group of Secretaries on ''Swachh Bharat & Ganga Rejuvenation''(GoS) for the period from 2021-22. The main activities are: Conducting awareness programmes, Construction of Toilets, Tree plantation, Renovation of Toilets, Maintenance and Up-keeping of buildings etc. The Company has successfully completed the projects and has fully utilized the budget allocated for the year 2021-22.

(d) Celebration of Swachh Bharat Pakhwada:

BEML had organized ''Swachh Bharat Pakhwada'' from 1st Dec, 2021 to 15th Dec, 2021. Various activities in line with the Action plan were held at Corporate Office, Manufacturing Complexes, Townships and Regional & District Offices. Various events/activities like Oath Taking ceremony and March Past, Display of posters and Banners, Cleanliness Drive in the public places & townships, Organising Plogging like activities and collection of plastic waste, Disposing off of scrap material in the factory premises and storage in organized manner, weeding out of old files and office equipment, Cleaning of Furniture and almirah of offices, Tree plantation in township area, residential

complexes and Factory premises etc., Painting and essay competitions, Organising seminar on cleanliness, Making plastic free Zone, Collection of plastic waste in Factory premises and residential complexes, Fumigation of insecticides in the township, Disposal of e-wastes in Administrative offices & Plastic Waste collected in Township, Cleanliness drive in drainage systems in Factory premises and residential complexes, Organising MiniMarathon for employees and their families to spread the message of cleanliness, Branding and Publicity of Pakhwada activities in electronic and print media platforms at both field and central level, make use of social media such as myGov, Twitter and Facebook extensively for the purpose, Concluding ceremony with distribution of prizes and organizing press conference.

(e) Outdoor Cleanliness Campaign during the period from 2nd October to 31st October, 2021.

The Company has undertaken Outdoor cleanliness Campaign in the vicinity of our Complexes at Bengaluru, KGF, Mysuru, Palakkad and Regional Office at Bilaspur under Marketing Division. Various cleanliness activities in the vicinity and Townships of the Complexes/Divisions & Offices were undertaken. In addition, Special cleanliness drive to dispose off the pending issues were carried out by the Complexes/Divisions and offices.

Welfare Activities:

• The Company has been extending free medical facilities by conducting free Mobile Medical camps to the Ex-BGML Employees and their families after the closure of BGML Hospital. The Company is also extending Outpatient medical facilities by deputing Doctor and Para-medical staff to BGML areas such as Marikuppam, Champion Reef and Oorgaum. Medicines prescribed by the Doctors are being dispensed free of cost for general illness.

• On 22nd December 2021, Medical Camp was conducted at Koorghalli village in Mysuru District, Karnataka. BEML Doctors along with the para-medical staff conducted the one-day camp and distributed Chronic medicines to the aged, women and children of the village. Around 200 beneficiaries availed the benefit of the camp.

• Medical Centers for employees and dependent family members at all the three Manufacturing Units viz., Bengaluru, Mysuru and KGF are operational, Medical facilities are also extended to the villagers in Company adopted Dasarahosahalli, Ajjapalli village near KGF. Medical facilities are also being extended to all the Contract Labour, in the Company Medical Centre.

• The Company is also extending the Medical Insurance facilities for the benefit of retired Employees/Officers & their spouses for Medical treatment/Hospitalization.

• The Company has associated with other PSUs under the Ministry of Defence and contributed for establishing 500 bed Covid Care Center at Lucknow to meet the growing needs of the pandemic.

• Keeping in view critical needs of the pandemic situation in Kerala State, the Company has contributed to the Kerala Chief Minister''s Pandemic Relief Fund to combat the Covid Situation.

• In addition to the above, the Company has also contributed to Vidarbha Relief Committee, Nagpur for providing assistance during the Covid Pandemic.

• The Company has set-up Oxygen Generating Unit at Civil General Hospital, KGF. The oxygen generating unit has the capacity for supplying oxygen for 200 beds. This unit will cater to emergency needs of the communities living in and around KGF.

• Keeping in view the sacrifice of the war heroes of the country, the Company has contributed towards the ''Vocational Training Grant of Widows''. The Company has expressed its

solidarity for the welfare of the family of the War Heroes.

• BEML runs one Junior College and two Nursery Schools at KGF and one at Bengaluru. These Institutions, although meant primarily for the children of the employees but also cater to a large extent to the Local population. BEML also runs a Kendriya Vidyalaya at KGF, for the benefit of the employees'' children and also for the local population. The Company also provided School building, Furniture, Attender for Mid-day Programme and Security Personnel for the Government English Model Higher Primary School. For the Academic Year 2021-22, the Company has provided education to 2924 students, out of which 1937 non-BEML Students have enrolled at BEML Schools for their education during the current academic year and have availed online education.

• The Company is in the process of establishing Mini-Science Center at BEML PU College at KGF. The Mini Science Centre is a platform where students can learn the 150 concepts of science and mathematics through practical approach. The hands on exhibits enable students to learn through self-exploration and inquiry based approach "HANDS ON LEARNING IS ACTIVE LEARNING''''. The MiniScience Center will be opened for the use of all students of the schools in the surrounding villages so as to facilitate a learning platform.

• The Company in association with the Akshaya Patra Foundation has provided support for the Mid-Day meals programme. The program increases school enrolment & attendance, addresses malnutrition and also empowers women through employment.

• In order to meet the objectives of Atmanirbhar Bharat, the company has associated with iDEX Partner incubators to help fructify BEML''s efforts of setting up an incubation centre and other related projects.

• The Company has extended all help and support to the Labour Welfare Funds

functioning in the production units for the benefits of Employees, their dependents and local population. The LWF conducted training programmes in Tailoring, Driving, Computer, Typing/Shorthand course, diploma course in Laboratory Technology, Para-medical, Job Oriented courses, Music/Dance classes, spoken English Course, Summer camps for art/painting and sports and various entertainment activities.

Digital Transformation Initiatives:

Digital Transformation, how it is orchestrated, deployed and used in an organization, is one of the critical success factors and are increasingly bringing DT strategy as part of corporate''s business strategy.

At BEML, the extent of digitization has picked up in the last few years with support of visionary leadership that wishes to leverage DT to deliver top-class experience to stakeholders, adopt digitization, automation of internal business processes and use of technology as an enabler to improve effectiveness, efficiency and responsiveness across various business systems as well as support functions, extending DT to shop floor automation in the form of Industry 4.0 initiatives.

Digital transformation strategy framework includes:

• Deliver better user experience.

• Improved business processes and productivity.

• Workforce enablement and adoption.

DT projects implemented and in use:

The following DT initiatives have been fully implemented and all these projects have positive impact on business both top-line and bottom-line while aligning people and processes:

A. Infrastructure:

1. VC User Experience: Improvements in VC

users experience by achieving Crystal clear video quality for all virtual meetings.

2. WFH with Secure VPN: Laptops for senior

executives to work anywhere securely with hard disk encryption, making laptop secure

over Internet using secure VPN.

3. Network De-bottlenecking: Improvements in Internet Leased Line & MPLS network performance.

4. AD & Patch Management: Implementation of Active Directory, Patch Automation & Asset management.

5. Thin Client PC: Deployment of low-cost thin client PCs for Airgap network for Internet browsing.

6. DR Enhancement: Disaster Recovery (DR) enhancement at Mysuru by adding Online Back-up Servers.

7. PC Refresh: Phased Refresh of XP/Win7 OS & old Desktop Hardware as per MoD Guidelines.

8. Smart Interactive Classroom Solution: Smart Projector in HR Training Halls at 4 locations.

9. eWaste Management: eWaste Disposal across all complexes & House-keeping of DT department at all locations.

B. Cyber Security:

1. Security Assurance Level: Achieved Cyber Security Assurance Level from 2 to 3 in FY 2021-22. Future target is to achieve level 4 by completely eliminating Win XP OS/non-compliant PCs by end of the Current financial year.

2. Firewalls: Implementation of Firewalls at 6 complexes, 27 ROs/DOs, 3 R&Ds and Internet Leased lines at all conference halls.

3. CSOC: Established Cyber Security Operations Center (CSOC).

4. CSG-MoD Guidelines: Implementing

Guidelines of Cyber Security Group (CSG)-MoD, CIRA & Meity on a continuous basis.

5. VAPT Audit: 3rd party VAPT Audit completed by Cert-In empaneled auditor, C-DAC.

6. Secured Linux based Email: Implemented Linux based secured email system as per MoD Guidelines.

7. Airgap: Complete implementation of Airgap

network as per MoD Guidelines.

8. Daily Cyber Tips: Cyber Security Awareness Tips are being sent by mail to all users on daily basis.

9. Cyber Awareness Training: Awareness to users across all locations through continuous training. DT staff is being trained under deep dive courses.

10. Internal Audit: Internal Audit of systems is being conducted every 06 months.

11. Password Policy: Implemented complex password policy to improve security with advanced policy controls.

C. Business Applications:

1. QR Code Digitalization of CQA Requirements: New process has been developed to capture QA test results, RFR, and Traceability of each defense Equipment/Aggregators information with QR code automation. All defense equipment are being shipped with QR code for traceability built into.

2. Online Vendor Registration: Development of new Online Vendor Registration Portal for Vendors.

3. VMS-Security Gate Paperless Operation: Implementation of Visitor Management System (VMS) at all security gates.

4. Direct Medical Billing Automation: Robotic Process Automation Solution for Medical direct bill processing.

5. SRM Major Improvements: Major

improvements in SRM (SAP) were carried out successfully. Vendors are very impressed and complex processes followed by procurement team are made much easier.

6. SAP ERP Improvements: Significant

improvements were made in ERP as per the business requirements.

7. eWay Bill: Implementation of eWay Bill with integration to SAP.

8. PF Portal: Implementation of PF Portal with Mobile access benefitting executives and employees through online.

9. CMS: Successful implementation of

Compliance Management Solution (CMS) portal.

10. BEML eConnect: Significant improvements were made in BEML eConnect.

D. Vigilance Systemic Improvements:

Implemented all Vigilance suggested systemic improvements.

E. DT Road Map for Next 3 Years:

1. Upgrade & Re-implement SAP ERP ECC6 to SAP S4HANA: As current ERP version reached end of life.

2. PLM for R&D: Revival and phased implementation of PLM.

3. Big Data and Analytics Platform: For business KPIs, Dashboard & interactive reports.

4. Upgrade OS, PC & Switches: To comply with cyber security norms & MoD Guidelines.

5. Industry 4.0: Implementation at all

Manufacturing Complexes.

6. Hyper Converged Virtual Server Infrastructure Set-up: High-end configuration clustered server with multiple VMs for hosting non-SAP applications.

7. Customer Complaint Handling System: Implementation of Customer Complaint portal along with SAP integration and Mobile App.

8. Improvements on FLM Module: To make it more user friendly with traceability, Dashboard, Integration, etc.

9. Re-design of BEML Website: Redesign the existing BEML website to a modern dynamic website.

10. Cyber Security Improvements: To achieve level 4 by completely eliminating Win XP OS/non-compliant PCs.

11. Capacity Building: Outsource/Recruit people with technical skills and upskilling existing staff on SAP, Hands-On Technical Subject Matter Expert, Industry 4.0, Cyber Security, etc.

Related Party Transactions:

Pursuant to Regulation 23 of the Listing Regulations, your Company has formulated a "Policy on Related Party Transactions", to regulate transactions entered into between the Company and its related parties. Further, in terms of Regulation 46(2)(g) of the Listing Regulations, the said policy is placed on the website of the Company at https://www.bemlindia.in/ writereaddata/Downloads/202003301756 Related_ Party_Transactions_Policy.pdf

During the year 2021-22, all transactions that were entered into with the related parties were fair, transparent and at arm''s length basis and also in the ordinary course of business of the Company. The said related party transactions were also duly considered and noted by the Audit Committee. Information as required under section 188 in Form AOC-2, pursuant to Section 134(3)(h) of the Companies Act,2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014, is attached to this report as Annexure-II.

Compliance of applicable Secretarial Standards:

Your Company has complied with the provisions of applicable secretarial standards with respect to Meetings of Board of Directors (SS-1) and General Meetings (SS-2) issued by the Institute of Company Secretaries of India in terms of Section 118(10) of the Companies Act 2013. Further, as per Standard 9 of SS-1 stipulated, a statement on compliances of applicable Secretarial Standards is included in the Report of the Board of Directors.

Corporate Governance Report:

In terms of Regulation 34 of the Listing Regulations and Chapter 8 of the DPE Guidelines, a report on Corporate Governance (CG) compliance is included in the Board''s Report. M/s Velichety & Co., Chartered Accountants have issued a Compliance Certificate on the same. In terms of Para 8.2.3 of the DPE Guidelines of CPSEs, the Company''s compliance level as per the grading report on Corporate Governance is rated at ''Excellent'' with 97.44% (average for 4 quarters) for FY 2021-22 based on self-evaluation. The aforesaid report on Corporate

Governance along with Compliance Certificate is placed at Annexure-III.

Management Discussion and Analysis Report:

In terms of Regulation 34 of Listing Regulations and Chapter 7 of the DPE Guidelines, report on Management Discussion and Analysis Report is placed at Annexure-IV.

Business Responsibility Report:

A Business Responsibility Report (BRR) for FY 202122 in terms of Regulation 34 of Listing Regulations, describing the initiatives taken by the Company on environmental, social and governance perspective, in the format as specified by SEBI is placed at Annexure-V.

Committees of the Board

The following mandatory Committees required under Companies Act, Listing Regulations, DPE guidelines/MoD Directives are constituted by the Board to function according to their respective roles and defined scope:

• Audit Committee

• Nomination and Remuneration Committee

• Stakeholders'' Relationship Committee

• Risk Management Committee

• Corporate Social Responsibility and Sustainability Committee.

• Procurement Committee

• Share Certificate Committee

The details of the Committees along with their composition, number of meetings held and attendance at the meetings are provided in the Corporate Governance Report.

Composition of Audit Committee

In terms of Section 177 of the Companies Act, 2013, Regulation 18 of the Listing Regulations and Chapter 4 of the DPE Guidelines, your Company has constituted the Audit Committee. The Committee comprises of Shri Arvind Kumar Arora, Independent Director as Chairman, Smt. Balmuri Vanitha, Independent Director, Shri Arun Daga, Independent

Director and Shri M V Rajasekhar, Director (Mining & Construction Business) as its members. All the recommendations made by the Audit Committee during the year were accepted by the Board.

Enterprise Risk Management:

It terms of Section 134 of the Companies Act, 2013, Regulation 17 & 21 of the Listing Regulations and Chapter 7 of DPE Guidelines, your Company has constituted Risk Management Committee (RMC) and implemented Board approved "Risk Management Policy (RMP)" Further, the composition, reconstitution and the terms of reference in line with quorum, minimum number of meetings, gap between two meetings of RMC and Powers, roles and responsibilities of RMC as duly approved by the Board are incorporated/amended in the RMP as per the SEBI Listing Regulations. The members of the Committee are Business Group Directors, Director (Finance), Director (HR) and Independent Director and senior most Functional Director heads the Committee. During the year, two meetings of RMC were held on 14.09.2021 and 03.03.2022.

The Corporate Risk Committee prepared the key risks along with mitigation plans and reported to the Risk Management Committee constituted in terms of Regulation 21 of the Listing Regulations. The said key risks and mitigation plans were placed before the Audit Committee and it recommended 13 key risks having risk exposure rating of 12 and above along with mitigation plans and 1 concern for review and approval of the Board.

The Board reviewed the aforesaid key risks along with mitigation plans and 1 concern and approved for implementation. The RMP is placed on the Company''s website https://www.bemlindia.in/ writereaddata/Downloads/202003302233Risk_ Management_Policy.pdf.

Corporate Social Responsibility & Sustainability Committee:

Your Company has constituted Corporate Social Responsibility & Sustainability (CSR) Committee and implemented Board approved "CSR Policy" pursuant to Section 135 of the Companies Act, 2013, read with Companies (Corporate Social Responsibility policy) Rules, 2014 as amended from

time to time and DPE Guidelines on MoU. Further, the composition, reconstitution and enhanced terms of reference as duly approved by the Board are incorporated in the CSR Policy.

The Committee comprises of Smt. Balmuri Vanitha, Independent Director as Chairperson, Shri Siva Makutam, Independent Director, Shri MV Rajasekhar, Director (Mining & Construction Business) and Shri Ajit Kumar Srivastav, Director (Defence Business) as members. The CSR Committee met Four times during the year on 22.04.2021, 10.06.2021, 11.11.2021 and 09.02.2022. An amount of ''5.66 crore was spent during FY 2021-22 towards CSR activities which was more than 2% of the average net profit of the Company made during the three immediately preceding financial years, which is ''1.65 crore as stipulated under the Companies Act, 2013 and was in line with the Board''s approved purposes and the same was certified by the Chief Financial Officer/Director (Finance). Further your Company has proposed to spend ''5.28 crore towards long term and new projects in FY 2022-23. Annual Report on CSR activities undertaken during FY 2021-22 are placed at Annexure-VI.

Report on the performance and financial position of subsidiaries and Joint Venture CompanySubsidiary Companies:

(i) M/s Vignyan Industries Limited (VIL):

VIL has achieved Revenue from Operations of ''0.79 crore and Value of Production of ''0.14 crore for the year ended 31.03.2022 as against ''1.45 crore of Revenue from Operations and ''1.43 crore of VoP during the corresponding period in the previous year. VIL incurred a loss of about ''6.00 crore for the year ended 31.03.2022 as against loss of ''6.12 crore in the corresponding period in previous year. However, the figures of FY 2021-22 are not comparable with the figures of 2020-21 since production was stopped with effect from 10.10.2020 as VIL is under closure.

MoD vide letter dated 10.09.2021 informed that the union cabinet has accorded approval

for closure of VIL. Accordingly, Members of the Company in their Extraordinary General Meeting held on 11.10.2021 accorded approval for Voluntary Liquidation and appointed Shri Venkataraman Jayagopal as the liquidator. Realization of Assets and settlement of liabilities by the liquidator is under process.

(ii) M/s MAMC Industries Limited (MIL):

Your Company entered into a Consortium Agreement with M/s. Coal India Limited (CIL) and M/s. Damodar Valley Corporation (DVC) on 08.06.2010 for acquiring specified assets of M/s. Mining and Allied Machinery Corporation Limited (under liquidation). The agreement, inter-alia, provided for formation of a Joint Venture company (JV) with a shareholding pattern of 48:26:26 among BEML, CIL and DVC respectively. The Company has paid the proportionate share of ''48 crore towards the total bid consideration of ''100 crore for the said acquisition, based on the order passed by the Hon''ble High Court of Calcutta. The said assets were taken possession by the MAMC Consortium. Further up to 2021-22, the Company has incurred a sum of ''20.27 crore (Previous Year ''16.87 crore), towards maintenance, security and other related expenditure. The total sum of ''68.27 crore (Previous Year ''64.87 crore) is disclosed as ''Advance to MAMC Consortium'' due to delay in conversion of MIL into a JV.

In the meantime, a company in the name of ''MAMC Industries Limited'' (MIL) was formed and incorporated by your Company as a wholly owned subsidiary for the intended purpose of JV formation. Shareholders'' agreement, as duly approved by the Boards of all three members of the consortium, has been submitted to MoD for necessary approval. Further, MoD has directed to submit ''Business Plan'' and ''Financial Viability Report'' of the proposed JV. Preparation of the said report has not materialized due to exorbitant fee quoted by the consultant firms.

Further, it was proposed to register all properties in the name of MAMC and accordingly, M/s. Fox & Mondal Advocates & Solicitors have prepared the final draft sale deed of the MAMC properties at different locations for registration purpose. The same shall be submitted to the Official Liquidator for his concurrence. However, to start the operations CIL support on partnership basis or assured orders on nomination basis was requested. Since, GoI has taken up strategic disinvestment of BEML and it is in advance stage, BEML has requested CIL and DVC to take back the shares of BEML and settle the value of properties purchased by BEML during court auction. Reply awaited.

(iii) M/s BEML Land Assets Limited (BLAL)

Your Company has incorporated as a Wholly Owned Subsidiary (WOS) of BEML by name "BEML Land Assets Limited (BLAL)" on 15.07.2021 for the purpose of demerger of identified surplus/non-core assets between BEML and BLAL as part of strategic disinvestment process initiated by the Government of India. A scheme of arrangement has been prepared and submitted to stock exchanges/SEBI for approval. Based on approval of the Stock Exchanges, Scheme of Arrangement has been filed with MCA for its approval. Process of approval as per guidelines of MCA is in progress. MCA vide order dated 28.07.2022 sanctioned the Scheme of Arrangement for de-merger. Listing formalities for BLAL is under process.

Joint Venture Company:M/s BEML Midwest Limited (BMWL):

BMWL was formed and registered with the Registrar of Companies at Hyderabad on 18.04.2007. BEML holds 45% share and M/s Midwest Granite Pvt. Ltd. (MGPL) and P T Sumber Mitra Jaya of Indonesia as partners holding the balance 55% share. The Company has been established to capitalize on the growing business opportunities in the

contract mining segment. However, due to certain unauthorized transactions and the oppression and mismanagement by the nominees of MGPL, your Company had filed an application before Hon''ble Company Law Board (CLB) seeking for suitable relief. As a counter measure, MGPL had also filed a petition on the matter. CLB vide its common order dated 01.06.2012 directed the Central Government to appoint an inspector to investigate the affairs of BMWL and take appropriate action. Based on the legal advice, your Company preferred two appeals before Hon''ble High Court of Andhra Pradesh at Hyderabad against the said common order of CLB. The Hon''ble High Court passed the order on 19.08.2013, thereby setting aside the said common order and directing CLB to proceed with a fresh enquiry, and decide the issue in accordance with law and merits also taking into consideration the report of investigation as directed by CLB and pass appropriate orders without getting influenced by the impugned common order of CLB. In the meanwhile, the Government has constituted National Company Law Tribunal (NCLT) by dissolving CLB and notified that the jurisdiction is shifted to Hyderabad from Chennai. The case files were transferred to NCLT. Regular hearings are taking place at NCLT. However, RD-MCA is yet to submit the investigation report before Hon''ble NCLT for deciding the matter.

There was no company which had ceased to be a subsidiary, joint venture or associate of the Company during the year under review. A separate section on report on the performance and financial position of each of the subsidiaries, Joint Venture Company are placed under Form AOC-1 provided in the consolidated financial statement of the Company, in terms of section 129(3) of the Companies Act, 2013 read with rule 5 of Companies (Accounts) Rules, 2014.

Consolidated Financial Statement:

Your Company has prepared the Consolidated Financial Statement of its subsidiaries in terms of Section 129(3) of the Companies Act, 2013, excepting consolidation with respect to JV Company, M/s BEML Midwest Limited due to complete

cessation of activities as the matter is subjudice, which is attached to this report.

Statutory Auditors

M/s. Sundaram & Srinivasan, Chartered Accountants, Bengaluru, were appointed as the Statutory Auditors for the financial year 2021-22 by the Comptroller & Auditor General of India.

Observations made in the Independent Auditors'' Report on the financial statement including consolidated financial statement and the reply of the Board of Directors thereto are given by way of an addendum at page No. 252 to the annual report.

Cost Auditors

M/s R M Bansal and Co, Cost Accountants, Bengaluru, were appointed as Cost Auditors for the year 202122 to conduct the audit of the cost records of the Company in terms of Section 148 of Companies Act, 2013, read with the Companies (Cost Records and Audit) Rules, 2014. The Company maintains Cost records as specified by the Central Government under section 148(1) of the Companies Act, 2013, in respect of the Railway and Rolling Stocks (Bengaluru Complex), other Machinery (Truck, Engine, EM, H&P Divisions) and Power (EM Division).

Further, as required under the said Rules, the remuneration payable to the Cost Auditor for FY 2021-22 was ratified by the members in the 57th Annual General Meeting held on 24.09.2021.

Secretarial Auditors

Your Company had appointed M/s V N Associates, Practicing Company Secretaries (PCS), Bengaluru, to undertake the Secretarial Audit of the Company for the year 2021-22 in terms of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. The Secretarial Audit Report given by the PCS and the replies to the qualification made in the said Report are annexed to the Board''s Report as Annexure-VII. In addition, an Annual Secretarial Compliance Report issued by the PCS has been filed with the Stock Exchanges within the due date from the end of financial year 2021-22.

C&AG Audit

The Comments of the Comptroller & Auditor General of India under section 143(6)(b) of the Companies Act, 2013 on the financial statement including consolidated financial statement are appended at page No 172 & 253 to the annual report.

Extract of Annual Return

An extract of the Annual Return in the prescribed form in terms of Section 92(3) of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014, is placed at https://www.bemlindia.in/Annual_ Report_ Investors.aspx.

Directors & Key Managerial Personnel:

(1) Appointment/re-appointment of Independent Directors

During the year 2021-22, three Independent Directors (ID) have been appointed on the Board of the Company. In terms of section 149 of the Companies Act, 2013, the provisions of section 152(6) and (7) in respect of retirement of directors by rotation shall not be applicable to IDs. Pursuant to Schedule IV of the Companies Act, 2013, the appointment/ re-appointment of the Independent Directors has been formalized through a letter of appointment setting out the terms and conditions of their appointment, and the draft of the same is placed on the web-site of the Company at www.bemlindia.in. In terms of Regulation 17(1C) of the Listing Regulations, the said appointments have been approved by the shareholders by way of special resolution through postal ballot from 18.05.2022 to

16.06.2022.

(2) Statement on declaration by Independent Directors

Independent Directors had furnished necessary declarations, in terms of Section 149(7) of the Companies Act, 2013, stating that they had fulfilled the criteria of independence as provided under Section 149(6) of the said Act and Rule 6 of the Companies (Appointment and Qualification

of Directors) Rules, 2014 subject to the exemptions granted to the Government Companies. The Board reviewed the said declarations and noted the same.

(3) Change of Directors/Key Managerial Personnel

In terms of Article 97 of the Articles of Association of the Company, the President of India is vested with the power to appoint the Directors of the Company from time to time and also shall determine the terms of office of such Directors. Accordingly, the following appointments on the Board of your Company were effected during 2021-22 as per the directives of President of India:

1. Shri Surendra Prasad Yadav (DIN: 02267582), Joint Secretary (Naval System), Department of Defence Production, Ministry of Defence, has been appointed as Government Nominee Director of the Company vide MoD letter No.8/2021-D(BEML) dated 08.11.2021 in place of Shri Puneet Agarwal. His appointment has taken effect from 08.11.2021.

2. Shri Arun Daga (DIN: 07054958), Shri Vikas Ramkrishna Kakatkar (DIN: 02372234) and Shri Siva Makutam (DIN: 09450599) have been appointed as Independent Directors of the Company vide MoD letter No. 8(6)2021-D(BEML) dated 24.12.2021. The Appointment of Shri Arun Daga and Shri Vikas Ramkrishna Kakatkar has taken effect from 24.12.2021, whereas appointment of Shri Siva Makutam has taken effect from 28.12.2021 after obtaining fresh DIN.

3. Shri Anil Jerath (DIN: 09543904), Chief General Manager (Finance) has been appointed as Director (Finance) of the Company vide MoD letter No. 8(1)/2020-D(BEML) dated 22.03.2022. He took charge of the post w.e.f.

22.03.2022.

Pursuant to the provision of the Companies Act, 2013, Regulation 17(1C) and Regulation 25(2A) of SEBI Listing regulations, the aforesaid appointments have been approved by the shareholders through postal ballot issued on 17.05.2022 by voting through electronic means from 18.05.2022 to

16.06.2022.

Shri Amit Banerjee (DIN-08783660) and Shri MV Rajasekhar (DIN-08467141) retires by rotation at the ensuing annual general meeting and being eligible, offer themselves for re-appointment.

Dr. Gurmohinder Singh ceased to be Independent Director consequent upon completion of his tenure of 3 years on

09.08.2021. The Board placed on record its deep appreciation for invaluable services rendered by the aforesaid Director on the Board whose term of office ended during the year.

(4) Remuneration of Directors/Key Managerial Personnel:

Your Company being a Central Public Sector Enterprise, the appointment, tenure and remuneration of Directors are decided by the Government of India. The Government communication appointing the Functional Directors indicate the detailed terms and conditions of their appointment including a provision for the applicability of the relevant rules of the Company.

Government Nominee Directors were neither paid any remuneration nor sitting fee for attending Board/Committee meetings.

Independent Directors are paid sitting fee of ''20,000 per meeting of the Board/Committee of the Board attended by them. Further, if there are more than one such meeting on the same day, a sitting fee @ ''20,000 is paid w.e.f 01.04.2022 for the Committee meeting/s.

Neither there was payment of commission to the Board of Directors nor any stock option scheme offered to them during the year. Further, none of the Directors had any

pecuniary relationship nor entered into any related party transactions with the Company during the year.

Pursuant to the provisions of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the details of remuneration paid to the Directors during 2021-22 are provided under the ''Report on Corporate Governance'' annexed to this report.

(5) Number of meetings of Board:

During the year, fourteen meetings of the Board were held on 08.04.2021, 23.04.2021,

11.06.2021, 24.06.2021, 23.07.2021,

06.08.2021, 18.08.2021, 13.09.2021,

15.09.2021, 12.10.2021, 13.11.2021,

21.01.2022, 10.02.2022 and 22.03.2022. Requirements on number and frequency of meetings, in terms of Section 173 of the Companies Act, 2013, Regulation 17 of Listing Regulations, and Chapter 3 of the DPE Guidelines, were complied with in full.

(6) Directors'' Responsibility Statement:

Pursuant to section 134(3)(c) and 134(5) of the Companies Act, 2013, your Directors state that,

(a) in the preparation of the annual

accounts for the year ended

31.03.2022, the applicable accounting standards has been followed along with proper explanation relating to material departures;

(b) the directors had 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 2021-22 and of the profit of the Company for that period;

(c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in

accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) the directors had prepared the annual accounts on a going concern basis;

(e) the directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

(f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

(7) Board Evaluation:

The Board of Directors of the Company comprises Functional Directors, Government Nominee Directors and Independent Directors appointed by the Government of India from time to time pursuant to Article 97 of Articles of Association of the Company. Further, the Government communication also indicates the detailed terms and conditions of their appointment based on applicability of the relevant rules of the Company.

In view of the above, the performance of all Functional Directors and Government Nominee Directors is being evaluated by the Administrative Ministry every year based on own evaluation methodology. Further, considering the educational qualifications, age, rich and varied experience of the applicants, the Administrative Ministry/Department would appoint the IDs on the Board on the recommendation of Search Committee after obtaining approval of competent authority. In addition, the assessment/evaluation of

performance of Independent Directors who will be completing their tenure/seeking extension was undertaken by the Department of Public Enterprises through Administrative Ministry periodically.

Acknowledgements

Your Directors express their hearty thanks to the Company''s valued customers, Government of India, Administrative Ministry, the Ministry of Defence and in particular, the Department of Defence Production, M/s Coal India Limited and its Subsidiaries, M/s Singareni Collieries Company Limited, M/s Steel Authority of India Limited, Railway Board, M/s Delhi Metro Rail Corporation Limited, M/s Bengaluru Metro Rail Corporation Limited, M/s Jaipur Metro Rail Corporation, M/s Kolkata Metro Rail Corporation, M/s Maha Metro Rail Corporation Limited, Integral Coach Factory-Chennai, M/s Bharat Electronics Limited, M/s Bharat Dynamics Limited, Ordnance Factory Board, Defence Research & Development Organization (DRDO), M/s Brahmos Aerospace Pvt. Ltd., Indian Space Research Organization, M/s Hindustan Aeronautics Limited, Aeronautical Development Agency for their patronage and confidence reposed on the Company. The Directors also acknowledge and thank all collaborators, vendors and other service providers for their valuable assistance and cooperation extended to the Company.

The Directors express their appreciation to the members of Company''s Consortium of Banks and other Bankers and Financial Institutions for their continued support to the Company''s operations. The Directors also thank all the shareholders/investors for reposing continued confidence in the Company.

The Directors wish to thank the Comptroller & Auditor General of India, the Principal Director of Commercial Audit & Ex-officio Member, Audit Board and Statutory Auditors for their valued co-operation.

The Directors also acknowledge the valuable support and assistance received from various Ministries of Government, in particular Ministry of Defence, Ministry of Coal, Ministry of Mines, Ministry of Steel, Ministry of Railways, Ministry of Housing and Urban Affairs, Ministry of External Affairs and Ministry of Home Affairs. The Directors are also grateful to the Government of Karnataka and Kerala for the support

and co-operation extended to the Company.

Your Directors take this opportunity to place on record their appreciation for the invaluable contribution made and excellent co-operation extended by the employees and executives at all levels for the continued progress and prosperity of the Company.

For and on behalf of the Board of Directors

Sd/-

Amit Banerjee Chairman & Managing Director


Mar 31, 2018

BOARD’S REPORT

The Board of Directors has pleasure in presenting the 54th Annual Report and Audited Accounts for the year ended 31.03.2018.

Financial results:

(Rs, Crores,

Particulars

2017-18

2016-17

Gross Revenue

3306

2837

Revenue from operations

3305

2835

Profit before Depreciation, Interest and Tax

276

208

Finance costs

48

48

Depreciation and amortization expense

64

62

Profit Before Tax

164

98

Tax Expense

34

14

Other Comprehensive Income

71

12

Total Comprehensive Income

59

73

Profit available for

280

292

appropriations

Debenture Redemption Reserve

-

31

Balance c/f

280

261

Turnover & Profitability:

Your Company achieved all time high Revenue from Operations of Rs,3305 crores as against Rs,2835 crores in the previous year, registering growth of 16.61% compared to previous year Revenue from Operations. The increase in sales is mainly on account of increase in the turnover of Rail & Metro Business due to increase in sale of metro cars to Delhi Metro Rail Corporation under RS-10, RS-13 and Kolkata Metro Rail Corporation projects. In addition to the above, Mining & Construction business and Defence business also contributed to the growth in turnover over previous year.

The Value of Production (net of consortium supplies and excise duty) is Rs,3227 crores as against Rs,2624 crores in the previous year. The Profit before Tax was about Rs,164 crores as against Profit before Tax of Rs,98 crores recorded in the previous financial year, which is the highest ever in the last six years.

There was no change in the nature of business of the Company during the year. Further, there was no material change / commitment occurred affecting the financial position of the Company subsequent to the financial year ended 31.03.2018 till the date of this report.

Performance vis-a-vis MoU:

Performance of your Company, in terms of the Memorandum of Understanding (MoU) signed with the Department of Defence Production, Ministry of Defence (MoD), Government of India, was rated as “Very Good” for the financial year 2016-17 and the rating for the financial year 2017-18 is under selfevaluation.

Dividend:

Your Board of Directors has recommended a dividend of Rs,8/- per equity share i.e., 80%, for the year 2017-18 keeping in view the future prospects of the Company and at the same time meeting the aspirations of the shareholders.

Order Book Position:

The Order Book of Company as on 01.04.2018 is over Rs,6700 crores. The Order book comprises of three business verticals, i.e., Mining & Construction, Defence, Rail & Metro.

Exports:

During 2017-18, your Company made exports aggregating Rs,28.53 crores (physical exports of Rs,28.13 crores and export incentive of Rs,0.40 crores) as against Rs,30.80 crores (physical exports of Rs,20.18 crores, deemed exports of Rs,9.98 crores and export incentive of Rs,0.64 crores) during the previous year.

Strategic Disinvestment:

Ministry of Defence vide its letter dated 01.12.2016 communicated that Cabinet Committee on Economic Affairs (CCEA) had accorded “in-principle” approval for strategic disinvestment of the Company. Department of Investment and Public Asset Management (DIPAM) vide its O.M. dated 19.12.2016 communicated that an Inter-Ministerial Group (IMG) had been constituted by the competent authority for the purpose of appointing intermediaries such as Asset Valuer (AV), Transaction Advisor (TA) and Legal Advisor (LA) for the strategic disinvestment of 26% equity in the Company out of Government of India shareholding of 54.03%. After confirmation, the Company vide letter dated 06.01.2017 intimated NSE and BSE about the ‘inprinciple’ approval of CCEA and also posted on the web-site of the Company, in terms of Regulation 30 of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 [hereinafter referred to as ''Listing Regulations''].

As per the terms, MoD has appointed M/s RBSA Valuation Advisors LLP Ahmedabad as Asset Valuer, and DIPAM has appointed M/s. SBI Capital Markets Limited as TA and M/s Crawford Bayley as LA respectively.

Further, DIPAM has advised that due diligence to be undertaken for taking further action in the matter.

Quality:

Your Company views quality improvement as a business strategy and hence remains proactive in the areas of product and service quality. At BEML, Corporate Quality Policy emphasizing Total Quality Management (TQM), ensures that quality system adopted, results in products, services and processes that meet stringent standards and performance criteria. Quality Department is empowered to spearhead the thrust towards Total Quality Management.

All manufacturing divisions have been certified for Quality Management System (QMS) as per ISO 9000-2008 standard. KGF Complex, Bengaluru Complex and Mysuru Complex are also certified for Environmental Management System (EMS) as per ISO 14000. Two manufacturing divisions, Bengaluru

Complex and Hydraulics & Power line Division have been awarded with the above certifications as per 2015 version standards and for remaining manufacturing units, the same certification is planned by September 2018.

Further, Bengaluru Complex is certified as per BS OHSAS 18001-2007 Integrated Management System standard and Aerospace Manufacturing Division (ASMD), Mysuru complex is certified as per AS9100C standard.

Key initiatives / actions taken during the year for continuous improvement towards Quality Assurance, is as under:

- Customer complaint handling system was created to enable direct on-line logging of complaints through company website and analysing complaints to channelize quality improvement actions.

- Vendor development remains a continuous “focus area” to improve quality of vendors’ supplies. Focus is given to upgrade the quality system of vendors by extending support and encouraging vendors to upgrade facilities and implement quality systems. These initiatives have resulted in increase in the number of ISO 9000 certified vendors and improved quality performance.

- Various Quality Assurance initiatives have been taken up such as introduction of additional jigs and fixtures, imbibing the Concept of 5S, Kaizen, Zero defect work centers and Quality Circles, across the company with target based monitoring of progress by each manufacturing division, and have resulted in lower internal and external failure costs.

- Periodic process / system audits are being conducted, and feedbacks are given to vendors on continuous basis with regard to the rejections and necessary guidance given for corrective and preventive action, for process / system improvements right from development stage to ensure quality in their supplies.

- Quality Improvement Projects are identified across the divisions, through Cross Functional Teams. Wherever design modifications are required the same is effected to enhance product reliability in the form of Design improvement projects.

- Quality Circle Team “Metro” from Bengaluru complex has won the prestigious QCI - DL Shah National Quality award 2017 for the case study “Ensuring Zero defect in Metro coach bogie manufacturing by Business Process Reengineering”.

- Your Company has upgraded the existing Laboratory facilities, at Kolar Gold Fields and Mysuru manufacturing divisions, and is in the process of obtaining National Accreditation Board for Testing and Calibration Laboratories certification during 2018-19.

Make in India Initiative and Indigenization:

Your Company is committed for the success of “Make in India” programme and has adopted various initiatives under ‘Make in India’ concept launched by the Government of India. It is Company’s endeavour to achieve self-reliance by wholeheartedly participating in ''Make in India'' drive with increased sourcing from local manufacturers.

During the year, under this initiative Company has designed and developed products such as 180T (BE1800D) Diesel Excavator, 850HP BD475-1Bull Dozer under Mining & Construction Segment, Arjun Armed Repair & Recovery Vehicle, Truck Mounted Crane, Medium Bullet Proof Vehicle, High Mobility Vehicle for 155mm caliber Mounted Gun System under Defence Segment and Metro Cars for Kolkata Metro Rail Corporation and Intermediate Metro Cars for Bangalore Metro Rail Corporation Limited under Rail & Metro Segment.

Your Company has achieved level of indigenization over 90% in the mainline M&C products, Rail Coaches & EMU’s, over 80% in High Mobility Vehicles (HMV) and over 60% in Metro cars. Further, efforts are underway to reach higher levels. Company has nominated a Nodal Officer for ''Make in India'' drive and list of items for indigenization are hosted on Company’s website www.bemlindia.in. Also a display center is set-up in Bengaluru Complex, where prospective vendors can have access to samples, drawings and technical specifications and explore opportunities to partner with the Company. The new Public Procurement (Preference to Make in India), Order 2017 announced by Govt. of India has given a new impetus for local manufacturers by way of eligibility to address the surging metro market in India.

Start Ups:

The Ministry of Commerce & Industry, Government of India has launched ‘Start Up’ concept under ‘Make in India’ initiative during 2016.

An entity working towards innovation, development, deployment or commercialization of new products, processes or services driven by technology or intellectual property, if it aims to develop and commercialize a new product or service or process or a significantly improved existing product or service or process, that will create or add value for customers or workflow are covered under this Start-up.

A Company that has been in existence for less than seven years and with sales revenues not exceeding ''25 crores will be recognized under Start Ups. However, your Company has relaxed the aforesaid eligibility criteria of prior turnover and experience for registration from Start Ups in order to encourage them to participate in supplies for Company’s procurements. Further, the Company’s identified areas of Start Up are hosted on Company’s web-site www.bemlindia.in and vendors need to contact Quality wing of the Company for Start Up activities.

Renewable Energy Development, Energy Conservation, Research & Development and Technology Absorption:

(i) Renewable Energy Development:

In realizing the goal of ‘Go Green’, your Company has commenced its initiation by setting up a 5MW Windmill Project at Gadag District, Karnataka which is generating power since 2007. It has generated 84 Lakh Kwh power during 2017-18 aggregating to 899 Lakh Kwh from the date installation resulting in greenhouse gas reduction. In addition, the Company has also set up 9MW Windmill Project at Dammur Village, Koppal district and has generated 87 Lakh Kwh power during 2017-18, aggregating to 193 Lakh Kwh from the date of installation. Another, 9MW project at Mittalkode has been commissioned. With this, the total commissioned renewable energy capacity of over 23MW which will meet major portion of captive consumption of the Company. The Company’s 5MW Windmill at Gadag and 9MW Windmill at Bagalkot District have contributed towards ensuring clean energy as part of sustainable development by mitigating 15710 tons of carbon during the year 2017-18.

(ii) Energy Conservation:

Your Company continues to give emphasis on conservation of energy. The efficiency of energy utilization is closely monitored to attain higher level of energy conservation. In order to conserve energy, your Company has replaced all its light fittings with LED Lighting and has undertaken to replace other energy saving equipment in a phased manner.

(iii) Research & Development and Technology Absorption:

Your Company has an in-house Research and Development setup. It continues to play a vital role in design and development of new products/ aggregates, continuous up-gradation of existing products and indigenization activity.

R&D centre at KGF Complex (“R&D Facility”), the biggest design and development center for earth moving machinery in India is supplemented by R&D centers located at Truck Division and Engine Division at Mysuru Complex and Product Engineering teams co-located at all manufacturing divisions. Facilities in specialized areas like hydraulics, power train, structural engineering, and material science are available at the R&D Centre. Computer Aided Design (CAD) / Computer Aided Engineering facilities are established for digital design and virtual simulation for product design and validation. R&D facilities for diesel engine design and development, including emission measuring infrastructure and testing facilities are located at Mysuru Complex.

The R&D set-up in Defence business vertical is engaged in the areas of High Mobility Heavy Duty vehicles, Armoured Recovery and Repair Vehicles (ARRVs), Mine Ploughs, Transmissions and Engines. The Company has entered into technology tie-ups with M/s. Pearson Engineering Ltd, UK for Mine ploughs.

The R&D set-up in Rail & Metro business vertical is basically involved in design & development of Metro & Railway rolling stock products, up-gradation of existing products based on the market need and indigenization of imported aggregates. In this regard, the Company has entered into technology tie-up with M/s. Hyundai Rotem Company for Metro Cars.

During the year, R&D designed, developed and launched upgraded version of various products under Mining & Construction, Rail & Metro and Defence segments of the Company.

In terms of Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, the information on energy conservation and technology absorption including the products developed by the Company during the year is placed at Annexure-I.

Foreign Exchange Earnings and Outgo:

During the year, the Company’s foreign exchange earnings stood at Rs,23 crores and the total foreign exchange utilized was Rs,396 crores.

A sum of Rs,0.88 crores was incurred towards deputation of personnel abroad for business / export promotion, after-sales-services and training purposes.

Finance:

The working capital requirements were met from the internal accruals and credit facilities availed from banks. There was no overdue installment of principal and/or interest to the banks. ICRA has reaffirmed the long-term rating of [ICRA]A and the short-term rating of [ICRA]A1 for Rs,2,750 Crores limit towards fund based cash credit and non fund based bank guarantee limit for the year 2017-18. The outlook on the long term rating is Stable.

The Vision-2018 for Payment and Settlement Systems in India brought by the RBI in June 2016 reiterated the commitment to encourage greater use of electronic payments by all sections of society so as to achieve a “less-cash” society. Government also made fiscal measures for the encouragement of card culture in 2016 budget. In this direction, BEML has also adopted cashless transactions across the Company. The Company has organised various awareness programmes on Digital India initiative, for employees and executives including their dependants residing in townships also. To take stock of the effectiveness of the cashless initiatives of the Company, Internal Audit has taken up the Audit on cashless transactions periodically.

Goods and Service Tax (GST), one of the biggest tax reforms since independence, has been rolled out by Govt. of India with effect from 01.07.2017. GST has subsumed several of the erstwhile indirect taxes levied by Union of India and States/Union Territories. GST is an integrated tax which works on the concept of “One Nation One Tax”. Some of the major benefits of GST implementation accruing to the industry at large and your Company in particular, would be removal of cascading effect of taxes and seamless flow of Input Tax credit benefits, reduced compliances. The Company has migrated to GST regime by enrolling in 17 States covering all its plants, Regional and District offices spread across the country within the statutory time lines. The Company has upgraded and customized ERP system to be totally GST compliant. With the above, GST was effectively implemented from

01.07.2017. Further to the implementation of GST, all transactions are being carried out in compliance to the GST law.

The Company’s contributions to Central and State Exchequers were in the order of ''948.44 crores during the year by way of Excise Duty, Customs Duty, Sales Tax, Service Tax, GST, Dividend and Tax there on, and other taxes and duties.

Internal Financial Controls:

Your Company has put in place adequate Internal Financial Controls (IFCs) with respect to Financial Statements. The Company has various manuals such as, Manual for Accounts, Cost Accounting & Pricing, Stores, Purchase, Audit, etc., and the same are being periodically updated, circulated and also uploaded in ‘BEML Bulletin Board’ for viewing and compliance by concerned employees and officers for carrying out various activities in a transparent manner and in line with the delegation of powers and no instances of material weakness in the operations has been observed. The adequacy of internal financial controls over financial reporting is covered by the Statutory Auditors in their Audit Report. In addition, the details of the IFCs are included under the heading ‘Internal control systems and their adequacy’ in the Management Discussion & Analysis Report which forms part of this report.

Fixed Deposits:

The Company did not accept any fixed deposits during the year, and there was no outstanding Fixed Deposits at the beginning / end of the year. Accordingly, there was no default in payment of deposits / interest thereon.

Enterprise Risk Management:

In terms of Section 134(3)(n) of the Companies Act, 2013, Regulation 17(9) of the Listing Regulations, and Para 7.3 of DPE Guidelines, your Company has formulated “Risk Management Policy” with an objective to ensure sustainable business growth with stability and to promote a pro-active approach in identifying, evaluating, reporting and managing or mitigating risks associated with the business. In order to achieve the key business objectives, the policy establishes a structured and disciplined approach to risk management in order to manage or mitigate risk related issues. The said policy is also placed on the Company''s website www.bemlindia.in.

In terms of Regulation 21 of the Listing Regulations, the Company has constituted Risk Management Committee consists of Director (Rail & Metro Business), Director (Mining & Construction Business), Director (Defence Business), Director (Finance) and one Independent Director as per the policy.

Further, the aforesaid Risk Management Committee shall appraise the key risks along with mitigation plans and report to the Board periodically.

Related Party Transactions:

Your Company has formulated a “Policy on Related Party Transactions” to regulate transactions entered into between the Company and its related parties. In terms of Regulation 46(2)(g) of the Listing Regulations, the said policy is placed on the web-site of the Company at www.bemlindia.in.

During the year 2017-18, all transactions that were entered into with the related parties were fair, transparent and at arm’s length basis and also in the ordinary course of business of the Company. The said related party transactions were also duly considered and noted by the Audit Committee. Information as required under section 188 in Form AOC-2, pursuant to Section 134(3)(h) of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014, is attached to this report as Annexure-II.

Report on the performance and financial position of Subsidiaries and Joint venture company

Subsidiary Companies:

(i) M/s Vignyan Industries Limited (VIL):

VIL has recorded Revenue from Operations (Net of ED) of Rs,30 crores which is at the same level recorded during FY 2016-17. The value of production of the Company stood at Rs,31 crores as against Rs,29 crores and the Company achieved Profit before Tax of Rs,0.43 crores as against profit of Rs,0.13 crores in the previous year. Further, VIL Board has recommended a dividend of Rs,5 per share i.e., 5% on the paid up equity share capital amounting Rs,14 lakhs excluding tax, after a gap of 7 years.

VIL is planning to explore new markets for reducing dependency on M/s BEML Limited, the holding company. However, in anticipation of order from BEML for high alloy grade castings like T-72 and Tatra Variants relating to Defence business, Axle Box and Buffer Assembly relating to Rail business, and new castings for Mining & Construction business, necessary development and production are planned. These proposals would help VIL to achieve about Rs,74 Crs by 2020-21 as envisaged in the Perspective Plan.

The order book position remained at 1,444 MTs as on 01.04.2018. More and more casting requirements are expected from Holding Company as well as from other customers. With this, VIL is confident of achieving better results for the financial year 2018-19.

(ii) M/s MAMC Industries Limited (MIL):

Your Company entered into a Consortium Agreement with M/s. Coal India Limited (CIL) and M/s. Damodar Valley Corporation (DVC) on 08.06.2010 for acquiring specified assets of M/s. Mining and Allied Machinery Corporation Limited (under liquidation). The agreement, inter-alia, provided for formation of a Joint Venture company (JV) with a shareholding pattern of 48:26:26 among BEML, CIL and DVC respectively. The Company has paid the proportionate share of Rs,48 crores towards the total bid consideration of Rs,100 crores for the said acquisition, based on the order passed by the Hon’ble High Court of Calcutta. The said assets were taken possession by the MAMC Consortium. Further up to 2017-18, the Company has incurred a sum of Rs,10.01crores towards maintenance, security and other related expenditure. The expenditure incurred by CIL and DVC on account of this proposal is not ascertained. The total sum of Rs,58.01 crores is disclosed as ''Advance to MAMC Consortium'' pending allotment of equity shares in the capital of JV company.

In the meantime, a company in the name of ‘MAMC Industries Limited’ (MIL) was formed and incorporated by your Company as a wholly owned subsidiary for the intended purpose of JV formation. Shareholders’ agreement, as duly approved by the Boards of all three members of the consortium, has been submitted to MoD for necessary approval. Further, MoD has directed to submit ‘Business Plan’ and ‘Financial Viability Report’ of the proposed JV. A meeting of Interim Board of Management of Consortium has decided to engage M/s SBI Caps for preparing the “Financial viability & Business Plan” report.

Considering that further investment / expenditure on this project would be an additional burden on the Company, the Board of Directors suggested taking up the matter with Interim Board of Management of Consortium of BEML, CIL and DVC for exit option rather than pursing with M/s. SBI Caps for the aforesaid report. Hence, it was proposed to take up with IBM for exploring the possibility of selling the assets of erstwhile MAMC purchased through Court auction either by Consortium as a whole or the share of BEML to a prospective buyer, if any. Further to the discussion held on 25.04.2018 among the members of MAMC Consortium, a draft Deed of Conveyance has been proposed to submit to the Official liquidator of Calcutta High Court for further action.

(iii) M/s. BEML Brazil Industrial Ltda (BBIL):

Your Company entered the Brazil market for brand building exercise and local value addition for the products to meet local standards in anticipation of good business potentials for Freight Wagons and Mining & Construction equipment. As per the requirement under the local laws, BBIL was established. Based on the enquiries, few mining equipment were also supplied to local customers. In the meantime, low cost Chinese equipment flooded the Brazilian market along with their local manufacturing facilities. Further, your Company faced stiff competition in high-end equipment segment from international players like CAT and Komatsu. In view of these developments, it is proposed to handle the Brazilian market directly and to wind up the existing facilities in Brazil. In view of this, BBIL is kept under dormant state. BEML has decided to close the office for which legal action is underway and BBILs registration will be cancelled soon after capital repatriation.

Joint Venture Company - M/s BEML Midwest Limited (BMWL):

BMWL was formed and registered with the Registrar of Companies at Hyderabad on 18.04.2007. BEML holds 45% share and M/s Midwest Granite Pvt. Ltd. (MGPL) and P T Sumber Mitra Jaya of Indonesia as partners holding the balance 55% share. The Company has been established to capitalize on the growing business opportunities in the contract mining segment. However, due to certain unauthorized transactions and the oppression and mismanagement by the nominees of MGPL, your Company had filed an application before Hon’ble Company Law Board (CLB) seeking for suitable relief. As a counter measure, MGPL had also filed a petition on the matter. CLB vide its common order dated 01.06.2012 directed the Central Government to appoint an inspector to investigate the affairs of BMWL and take appropriate action. As per the legal advice, your Company preferred two appeals before Hon''ble High Court of Andhra Pradesh at Hyderabad against the said common order of CLB. The Hon’ble High Court passed the order on 19.08.2013, thereby setting aside the said common order and directing CLB to proceed with a fresh enquiry, and decide the issue in accordance with law and merits also taking into consideration the report of investigation as directed by CLB and pass appropriate orders without getting influenced by the impugned common order of CLB. The Company has filed an application with CLB praying for necessary directions to Regional Director (RD), Ministry of Corporate Affairs, Hyderabad for time bound completion of investigation so that the matter could effectively be heard by CLB. In the meanwhile, the Government has constituted National Company Law Tribunal (NCLT) by dissolving CLB and notified that the jurisdiction is shifted to Hyderabad from Chennai. The case files were transferred to NCLT. Regular hearings are taking place at NCLT, however, RD, MCA is yet to submit the investigation report for deciding the matter. In the meanwhile, based on the order of NCLT dated 22.12.2017 consequent to the request from the landlord to vacate the premises of Registered Office (RO) of BMWL for his bonfire use, it has been shifted to a suitable place.

There was no company which became or ceased to be a subsidiary, joint venture or associate of the Company during the year under review.

A separate section on report on the performance and financial position of each of the subsidiaries, Joint Venture Company are placed under Form AOC-1 provided in the consolidated financial statement of the Company, in terms of section 129(3) of the Companies Act, 2013 read with rule 5 of Companies (Accounts) Rules, 2014.

Particulars of Loans, Guarantees or Investments:

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statement.

Consolidated Financial Statement:

Consolidated Financial Statement of your Company and its subsidiaries and Joint Venture Company prepared in terms of Section 129(3) of the Companies Act, 2013, is attached to this report.

Vigilance:

The Company has an independent Vigilance department headed by Chief Vigilance Officer (CVO). The Vigilance activities were carried out in a holistic manner and covered prevention, detection and enforcement. CVO has provided aid and advice to the executives of the Company on all matters pertaining to Vigilance, as an extension of the CVC in its exercise of superintendence over Vigilance Administration of the Company and provided the link to the Administrative Ministry and the CBI.

- Complaint Handling Policy - The CVO after determining the ‘Vigilance Angle’, handled 16 registered Complaints during the FY 2017-18 (12 Complaints added during the FY 2017-18, 04 Complaints brought forward from last year).

- During the year, 16 complaints were handled, out of which 7 complaints were disposed. Disciplinary action and system / process improvements have been recommended and implemented.

- Online Vigilance Clearance for Executives and Employees has been set up.

- CCTV Cameras at Sensitive areas and Display of Vigilance Boards at prominent locations were positioned across BEML complexes.

- Vigilance Manual of 2nd edition (updated version) was published during August 2017, wherein, certain new topics have been added. All the latest Revisions to the Rules, Instructions & Circulars issued by Central Vigilance Commission, are also incorporated into this Edition, in a user friendly format.

- Keeping in view the changing business scenario, after risk assessment exercise the sensitive areas list was reviewed and fresh areas were notified as sensitive.

- The Vigilance Awareness Week-2017 with the theme “My Vision - Corruption Free India” was observed in BEML Limited from 30.10.2017 to 04.11.2017. Citizens Integrity pledge was also administered to the Students & Staff at Schools and Colleges where the Company had organized events as part of Observance of Vigilance Awareness Week - 2017 (VAW). Vendors meet organised on 07.11.2017, wherein, vendors from all over India were invited to share business prospects of the Company and also to address their Grievances. Company jointly with BEL and HAL, has organised a 2 km Walkathon -Vigithon on 05.11.2017 with the caption ‘Clean-Green-Vigil’. About 400 staff from all the three organisations participated in the Vigithon. To inculcate values of Integrity, Morality and Ethics among school students, an “Integrity Club” was opened at BEML Shishya School, Bengaluru, and Kendriya Vidyalaya & BEML Composite Pre-university College at Kolar Gold Fields. Thus, VAW-2017 was observed at all BEML Complexes/ Divisions in line with the directives of CVC.

Integrity Pact

Pursuant to the directives from Central Vigilance Commission and Ministry of Defence, your Company is adopting Integrity Pact with all vendors / suppliers / contractors / service providers for all orders / contracts of value Rs,1 crore and above. The pact essentially envisages an agreement between the prospective vendors / bidders and the Company, committing the persons / officials of both sides, not to resort to any corrupt practices in any aspect / stage of the contract. Only those vendors / bidders, who commit themselves to such a pact with the principal, would be considered competent to participate in the bidding process. Integrity Pact, in respect of a particular contract, would be operative from the stage of invitation of bids till the final completion of contract. Any violation of the same would entail disqualification of the bidders and exclusion for future business dealings. Two Independent External Monitors (IEMs) have been appointed to review the cases on bi-monthly basis. During the year, Rs,858 crores worth of purchase orders were entered into Integrity pact.

Procurements

BEML Supplier Relationship Management (SRM) is aiming to establish web based seamless relationship and collaboration of procurement process with its global business partners. Your Company endeavours to procure all materials and services through e-procurement platform on ERP system. Presently, the

Company upgraded the SRM e-procurement software which is having encryption facility for better security. During the year, about 86% of the total requirements were sourced through e-procurement.

Micro and Small Enterprises:

Following steps have been adopted under the Micro and Small Enterprises (MSEs) Order 2012:

- Your Company is procuring materials required for production and for others through Micro & Small Enterprises (MSEs). 358 items which are reserved are being procured exclusively from MSEs.

- Appropriate weightage has been given for MSEs in the MoU from the year 2015-16 onwards in order to ensure the objective of achieving overall procurement of 20% from MSEs.

- In order to encourage MSEs, vendors meet has been organized and list of components that could be sourced from MSEs are placed on the Company’s website www.bemlindia.in for the information of MSE vendors. Further, local procurement made by your Company is uploaded on ‘MSME SAMBANDH’ Portal.

- As per the directives of Government, minimum 20% of procurements have to be procured from MSE’s, out of which 4% from SC/ST Enterprises. During 2017-18, your Company placed orders for goods and services to the extent of Rs,323 crores from MSEs which constituted 26.09% (includes Rs,0.18 crores constituting 0.0145% from SC/ST Enterprises) of the indigenous procurement of Rs,1238 crores.

Vendor Development:

Vendor development is a continuous process to identify and develop new vendors to bring in competition among the vendors and to reduce costs. The methods followed to identify potential new vendors are publication of Expression of Interest (EoI) in BEML website, participation in exhibitions and seminars and organize vendor meets. In order to increase vendor base, open ended EoI is published and made available on BEML website. During the year 2017-18, 44 vendors have responded. The procurements from single source are being reviewed periodically by Audit Committee and at Board Level.

Your Company recognizes outsourcing as one of the strategic tools to achieve cost benefits and also complement the strengths of private sector to build a strong industrial base. Your Company is well on its journey to become a system integrator by outsourcing a substantial part of manufacturing activities from Indian vendors, enabling the Company to enhance the capacity, attain cost effectiveness and improve competitiveness in the global market. To facilitate outsourcing, the Company has well established policies, procedures and guidelines -

- Your Company has a Vendor Development Cell to work as a single window help desk for new vendors.

- New vendors can register through Online / Manual.

- New vendors are supported by way of imparting knowledge on manufacturing processes, specifications, quality plans, etc.

- Company also extends its testing facilities to its vendors wherever required.

- To attract new vendors, Company resorts to publishing of EoI periodically, participation in all vendor development programs organized by MSMEs, CII, FICCI, CODISSIA, NSIC, PIA, NSSH and other agencies.

- To enhance transparency in all its procurement processes, Company has well established e-Procurement Portal.

Further, as per the directives of Ministry of Defence, the Company has framed an ‘Outsourcing and Vendor Development Policy’ as duly approved by the Board. The objective of the policy is to enhance cost effectiveness and improve competitiveness of the Company in global market. The other significant objective of this Outsourcing and Vendor Development Policy is to build a manufacturing eco system in the country to attain self-reliance. On the other hand, participation of Indian private industry will be an enabler in building technological and manufacturing capability inside the country. Based on the policy so framed, a Road Map for vendor development has been prepared with yearly targets and monitored at the Board level periodically.

Compliance under the Right to Information Act, 2005:

The information required to be provided to citizens under Section 4(1)(b) of RTI Act, 2005 is placed on Company website at www.bemlindia.in. It contains general information of the Company and its functions and duties, powers and duties of employees / officers, decision making process, rules, regulations, manuals and records held by the Company, directory of the Company’s officers, pay scales of officers / employees etc., and procedure for seeking information and inspection of records. The Company has nominated a Central Public Information Officer, Appellate Authority, Transparency Officer and six Central Assistant Public Information Officers representing Complex / Divisions to attend to the queries and appeals. Further, during the year 2017-18 the Company received 154 applications seeking information pertaining to human resources, recruitment, contracts, tenders, business related matters etc and the same were disposed of.

Rajbhasha:

Your Company continued its efforts in implementing the Official Language (OL) Policy. OL Implementation Committee is constituted under the Chairmanship of CMD to review the status of the use of Hindi across the Company. The said Committee met quarterly during the year and reviewed the implementation status.

OL inspection was carried out by the Officials of Department of Defence Production, Ministry of Defence, New Delhi at Palakkad complex, Regional office at Kolkata and District offices at Guwahati and Bhilai. Further OL inspection carried out by Deputy Director (RIO) at RO, Kolkata.

252 executives/employees were trained in various courses of Hindi under Hindi Teaching Scheme of Government of India during the period under review. 15 Hindi workshops were organized in which 394 officials were trained. Hindi Fortnight was observed from 14.09.2017 to 28.09.2017 throughout the Company and variety of competitions was organized. World Hindi Day was observed on 10.01.2018 at RO, Singrauli.

District office, Bhilai has been awarded with Rajbhasha Vishisht Seva Samman-2017 by TOLIC, Bhilai.

The newly revamped website of your company is made available in Hindi also and the contents are updated periodically.

Composition of Audit Committee:

In terms of Section 177 of the Companies Act, 2013, Regulation 18 of the Listing Regulations and Chapter 4 of the DPE Guidelines on Corporate Governance for CPSEs, your Company has constituted the Audit Committee. The Committee comprises of Shri B P Rao, Independent Director as Chairman, Shri Sudhir Kumar Beri and Shri M G Raghuveer, Independent Directors and Shri B R Viswanatha, Director (Mining & Construction Business) as its members. All the recommendations made by the Audit Committee were accepted by the Board.

Whistle Blower Policy:

In terms of the provisions of Section 177(9) of the Companies Act, 2013, Regulation 22 of the Listing Regulations and Para 4.3 of the DPE Guidelines, your Company has formulated necessary “Vigil Mechanism/ Whistle Blower Policy” for directors and employees to report genuine concerns. The said policy provides for adequate safeguards against victimization of director/s or employee/s or any other person who avail the said mechanism and also provides for direct access to the chairperson of the Audit Committee in appropriate or exceptional cases. As per the said policy, none of the employees have been denied access to Audit Committee. In terms of Regulation 46(2) (e) of the Listing Regulations, the said policy is placed on the Company''s website www.bemlindia.in.

Compliance of applicable Secretarial Standards:

Section 118(10) of the Companies Act 2013, stipulates that the Company shall observe secretarial standards with respect to Meetings of Board of Directors (SS-1) and General Meetings (SS-2) as specified by the Institute of Company Secretaries of India. Further, the Standard 9 of SS-1 stipulated that the Report of the Board of Directors shall include a statement on compliances of applicable Secretarial Standards. Accordingly, your Company has complied with the provisions of applicable standards of SS-1 and SS-2 issued by the Institute of Company Secretaries of India in letter and spirit.

Corporate Governance Report:

In terms of Para 8.2.3 of the DPE Guidelines of CPSEs grading is done by DPE on the basis of compliance with Corporate Governance guidelines / norms. Accordingly, your Company is graded as ‘Excellent’ for the year 2017-18. Further, in terms of Regulation 34 of the Listing Regulations and Chapter 8 of the DPE Guidelines, a report on Corporate Governance along with Compliance Certificate is placed at Annexure-III.

Management Discussion and Analysis Report:

In terms of Regulation 34(2) (e) of the Listing Regulations and Para 7.5.1 of the DPE Guidelines of CPSEs, a report on Management Discussion and Analysis Report is placed at Annexure-IV.

Business Responsibility Report:

In terms of Regulation 34(2) (f) of SEBI (Listing Obligations and Disclosure Requirements) Regulations

2015, the annual report of the top 500 listed entities based on market capitalization shall contain Business Responsibility Report (BRR) w.e.f. FY 2016-17. The said BRR contains the initiatives taken by the Company from an environmental, social and governance perspective, which is placed at Annexure-V.

Awards & Recognitions:

- On 15.08.2017, your Company has bagged many prizes during the Independence Day Horticulture Show 2017 conducted by Mysore Horticultural Society, Bengaluru, which is a matter of pride to the Company.

- On 22.09.2017, “Metro Team” of your Company won the prestigious QCI - DL Shah National Quality Award -2017. The team made a presentation on ‘Metro Quality Assurance’ with a case study on “Ensuing Zero Defect in Metro Coach Bogie Manufacturing by Business Process Reengineering” based on six sigma using Taguchi Method.

- On 12.12.2017, your Company received Certificate of Yellow Dot Award for 50 plus years of invaluable contribution in the field of infrastructure and construction sector to build strong Nation.

- On 17.12.2017, your Company has bagged the SKOCH ORDER-OF-MERIT Award for qualifying amongst “Top 80 Technology Projects in India” for Design and Development of “180T Electric Excavator BE1800E”.

- On 16.01.2018, your Company bagged best seller award for Crawler Dozers at the “5th Annual Equipment India Awards 2018” held in New Delhi.

- On 19.01.2018, the Company has bagged “Top Public Sector Exporter in Southern Region (GOLD)” award for the year 2015-16 organized by Federation of Indian Export Organisations (FIEO), under Ministry of Commerce. The award was presented to BEML after considering various parameters including export turnover, presence in emerging markets, product diversification and growth.

- On 23.01.2018, Mr. M.S. Nagendra of Mysuru Complex won the Gold medal in the All India level open Rifle shooting championship in the Para Senior men section held at Hubballi.

- On 25.01.2018, Mr T.M Thammaiah, Machinist, Mysuru Complex was awarded Prime Minister’s “Shram Shree” award for the year 2016 in recognition of his duties.

- On 25.01.2018, Company has bagged many prizes under Industrial category at the Republic Day Horticultural Flower Show, which is a matter of pride to the Company.

- On 10.02.2018, two R&D engineers received Technology Innovation awards from SODET (Society of Defence Technologists) for Design & Development of ‘Stainless Steel EMU'' & “Design and Development of All Wheel Steering System (AWS) for BEML HDT 8x8 Vehicle”.

Manpower:

The number of employees of the Company as on 31.03.2018 stood at 7,722 as against 8,221 of the previous year, resulting in 6% reduction.

The category-wise number of SC/ST and Ex-serviceman employees as on 01.01.2018 and recruitment made are as under :

Category

Group

Total Strength As on

No. of SC/ST and Ex-servicemen

Scheduled Caste

Scheduled Tribe

Ex-Service Men

1.1.2018

1.1.2017

1.1.2018

1.1.2017

1.1.2018

1.1.2017

1.1.2018

1.1.2017

Group-A

1824

1735

394

318

109

73

13

6

Group-B

383

518

5

88

5

43

8

15

Group-C

5619

6041

1286

1373

279

284

246

258

Group-D

19

23

10

13

3

4

0

0

Total

7845

8317

1695

1792

396

404

267

279

The Company has recruited 45 candidates in Group A during the year under review as under:

- 29 from General category

- 8 from OBC category and

- 7 from Scheduled Caste and 1 from Scheduled Tribe category

Human Resource Development & Industrial Relations:

In your Company’s approach to value creation, emphasis is given on the people and their engagement, well-being and development which has been the key factor in achieving business success in today’s competitive scenario.

The financial year 2017-18 was a milestone year for the Company, as major improvements and initiatives were implemented in the HR areas related to leveraging IT for HR, Succession Planning for critical senior positions, process re-engineering and optimization of human capital, Leadership development programmes through training abroad and also at IIM’s / XLRI etc.

Special efforts have been put in place to create a comprehensive HR Portal “SAMPARK” which provides various Employee Self Services, On-line Performance Management System, On-line Vigilance Clearance System, On-line Promotion Test, On-line submission of Property Returns, On-line Attendance Management System etc.

During the year, based on the Assessment Development Centres (ADC) scores and Individual Development Plan recommendation senior level executives were nominated for Strategic and Leadership Programmes abroad and also premier institutions such as IIM’s/ XLRI. Continued importance was also given on Project Management, Creativity, Ethical & Moral Competencies, Conflict Resolutions & Skill Development.

To ensure systematic Talent Management, Company implemented revised Promotion Policy for more objectivity and transparency with due linkage to Assessment Development Centres scores and also through on-line written test.

The Industrial Relations Scenario in the Company has been peaceful. Cordial and smooth relations were maintained between the Management and the Unions / Associations. Regular Meetings with the representatives of the recognized Unions / Officers Associations at the Divisional, Complex and Corporate Levels were held and employee related matters were resolved amicably.

The functioning of various bi-partite Committees at Complex level resolved production related matters.

Outstanding contribution and dedication of our employee to his duties was also recognized through winning of Prime Minister Shram Shree Award by Shri. T.M.Thammaiah, Mysuru Complex.

Grievance Redressal System for SCs/STs

In terms of Department of Personnel & Training guidelines, your Company has constituted SC/ST Cell at all Complexes / Divisions, wherein the HR heads, being Liaison Officers, of the respective Complex/ Division are conducting periodical meetings with respective representatives of SC / ST Employees Welfare Associations to redress the grievances / issues appropriately. Further, the Chief Liaison Officer who is in the rank of Executive Director meets all the Cell Officers, Liaison Officers and Office Bearers of SC/ ST Welfare Associations periodically and monitor the status on redressal of grievances.

Public Grievance Redressal through CPGRAMS

Centralized Public Grievance Redress and Monitoring System (CPGRAMS) initiated by the Department of Administrative Reforms and Public Grievances under Ministry of Personnel, Public Grievances and Pensions, is the platform based on web technology primarily aims to enable submission of grievances by the aggrieved citizens for scrutinizing and taking action for speedy redressal of these grievances. For this purpose, your Company has nominated Deputy General Manager (HR) as the Nodal Officer to deal with various public grievances and to ensure prompt and proper feedback to the concerned persons.

Compliance under Persons with Disabilities Act, 1995:

Your Company complies with the provisions under the Persons with Disabilities (Equal opportunities, Protection of rights and full participation) Act, 1995 (PwD Act). In terms of various provisions under PwD Act, your Company has ensured reservation of vacancies for the posts identified for each disability, carry forward of vacancies which could not be filled up due to non-availability of suitable persons with disability during the year.

Corporate Social Responsibility & Sustainability:

The Company has constituted Corporate Social Responsibility & Sustainability (CSR) Committee in terms of Section 135 of the Companies Act, 2013 and DPE Guidelines on MoU. The Committee comprises of Shri. Sudhir Kumar Beri, Independent Director as Chairman, Shri. B R Viswanatha, Director (Mining & Construction Business) and Shri. R H Muralidhara, Director (Defence Business) as members. The CSR Committee oversees the CSR & SD activities and its implementation in compliance with the Companies Act, 2013 and DPE Guidelines on the subject. Further details of CSR are placed under the same heading in Annexure-III and an annual report on CSR activities undertaken during the year are placed at Annexure-VI.

Environment and Pollution Control

In order to protect the environment in the vicinity of the factory premises / township, tree plantation were undertaken. Your Company planted saplings of various types of avenue trees / flower bearing trees in the vacant lands belonging to the Company for maintaining ecological balance in the surrounding areas. The Company in association with the Stats Forest Department had undertaken planting of saplings at all its Manufacturing Complexes and Townships on a regular basis. During the year, a total of 10,298 Nos. of Tree Saplings have been planted at Bengaluru, Mysuru and Palakkad Complexes as part of sustainable development. Apart from this an exclusive Dr. B.R. Ambedkar ‘Environment Park’ was inaugurated at KGF Complex on the eve of ‘World Environment Day’ and around 4,500 saplings were planted. Thus total saplings planted during the year is about 14,798.

Particulars of Employees

There were no employees of the Company who received remuneration in excess of the limits prescribed under Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

Skill India Initiatives

Your Company has undertaken ''Skill Development Initiatives’ (SDI) in line with Government of India’s ''Skill India'' initiative launched during 2015. Skill development programmes in your Company is aimed to hone the skills of the productive manpower, ensure optimum utilization of resources and also to skill the marginalized / unskilled manpower of the organization. Apart from such organizational requirements, various other skill development initiatives have also been undertaken to contribute towards ‘Skilling India’ in addition to apprenticeship training conducted to hone the skill/trade of students passing out of various ITIs/ Polytechnics/Engineering Colleges. At BEML, the SDI includes the following main activities:

(a) Centres of Excellence(CoE) for Hydraulics, Structural Welding, Electrical and Engine at KGF Complex, Stainless Steel welding & Electrical and Wire Harnessing at Bengaluru Complex and for Electrical & Electronics at Mysuru(Imparting training Programme on assembling and Testing of Electrical aggregates, skill development of advanced/upgraded electrical system of BEML Equipments), Power Train of Tatra vehicle at Palakkad are established.

(b) Service training Programme for the customers from all over the country and abroad, and for BEML Service personnel are conducted at Global Service Centre at Nagpur, Service Training Centre at KGF and at Mysuru.

(c) Apprenticeship training under the Apprenticeship Act is imparted at Training Centres to upgrade the skills of ITI passed students in their respective Trades as also that of Diploma Holders and Engineering Graduates. As per the Apprentices Act 1961, the Company has imparted training to the apprentices constituting 10.08% of the total workforce.

(d) Capability Building in the area of Technology to enhance the capability of the Engineers working in Production, R&D and allied areas, a tie-up has been established with Indian Institute of Technology - Madras (IIT-M) and a MoU signed for long term collaboration for Sponsoring R&D projects and training of Engineers through Continuing Education Programmes. Having a permanent BEML facility at IIT-M Technology Park for utilizing R&D facilities of IIT-M is also under consideration. Tie-up with Advanced Product Design and Prototyping (APDAP) setup of Indian Institute of Science, Bengaluru (IISc), Centre for Railway Research at IIT Kharagpur and National Institute of Design, Ahmedabad (NID) for Engineering Consultancy Services are in advanced stages of finalization.

(e) Other SDI such as Unskilled to Skilled training, Skilling the unskilled by imparting Semi-Skilled Training and multi-skilling for training in other trade/s viz. Welder/Fitter/Electrician/Crane Operators etc. so that their services can be optimally utilized.

For the Society at large, your Company has also adopted Govt. ITI at KGF and Govt. ITI at Mysuru as a part of SDI. Trainees of Govt ITI at KGF are being provided with six month practical training in KGF Complex while Mysuru Complex is the industrial partner to ITI at KM Dodi and is being provided with assembly items etc.

Prohibition of Sexual Harassment of Women at Workplace:

In terms of the provisions of the Sexual Harassment of Women at a Work Place (Prevention, Prohibition & Redressal) Act, 2013, an Internal Complaints Committee is functional in all Complexes / Divisions for receiving complaints of Sexual Harassment, if any, and it has been displayed in all the prominent locations for the information of all women employees. No cases have been filed under this Act during the year 2017-18.

IT Initiatives:

IT is being seen as a great enabler at your Company having undertaken several initiatives on Technology front. State-of-the-art video conferencing facilities at Corporate Office and at other major offices have improved communication capabilities. The Company has improved infrastructure resiliency by setting up disaster recovery data center and redundant connectivity to improve availability of the systems. File Life-Cycle Management (FLM), a step towards paperless office has been introduced. ‘Sampark’ a portal for employee has been launched and the same is aimed at improving employee experience through several workflow enabled processes like performance appraisal and is going to work as a platform for further automation to be added in future. Further, transparent information sharing has been enabled using ‘BEML Bulletin Board’.

Your Company is investing in securing the business environment by implementing the concept of Air Gap and Network Operations Centre monitoring links, device health and security alerts. Implementation of Customer Complaint Management System will help to improve customer service experience and bring in more transparency through on-line tracking. Company has implemented Biometric Attendance Tracking system that integrates with ERP system to improve workforce management process by recording accurate attendance of our workforce.

Swachh Bharat Abhiyan:

Swachh Bharat Mission was launched by the Government of India during 2014 with the objective of fulfilling the dream of transforming urban India in totally sanitized, healthy and livable cities and towns during next five years. The Company has committed towards realization of the dream of Father of the Nation for a ‘Clean India'' through the Swachh Bharat Abhiyan.

Your Company had organized ‘Swachh Bharat Pakhwada’ from 1st December to 15th December 2017, across the Company. Various Programmes related to cleanliness and competitions were conducted across the Company on daily basis during the fortnight, as per the calendar of activities drawn for the purpose.

Your Company has celebrated the “Third Anniversary of Swachh Bharat Campaign” on October 2, 2017 to coincide with the ‘Gandhi Jayanthi’. Various programmes like administration of Swachhta Pledge, organizing special cleaning drives, Walkathon to spread the message of cleanliness, distribution and planting of saplings etc, were conducted across the Company including its subsidiary, VIL.

The following activities were undertaken during the year 2017-18 under the Swachh Bharat Abhiyan:

- Pledge taking and conducting public awareness programmes on cleanliness and environment protection such as walkathons, skit/street play to create awareness on cleaning surroundings etc. All employees have taken a pledge to devote 100 hours in a year as ‘Shramadaan’ to ensure cleanliness of the work area & surroundings. Various training programmes on waste management, need and significance of cleanliness have been conducted as part of the initiative.

- Construction of toilets, bio-gas units for utilization of organic waste and vermi-compost bins, painting of buildings, extensive cleaning of production hangars, high standard of housekeeping, renovation of toilets, fogging and eradication of mosquito menace etc are being undertaken.

- Separate bins for collection of dry / wet waste, paper, plastic etc are kept at required places to ensure segregation of waste.

- In addition, your Company has undertaken various activities as per the Annual Action Plan based on the recommendations of the Group of Secretaries on ‘Swachh Bharat & Ganga Rejuvenation’(GoS) for the period from 201718 up to 02.10.2019. The main activities are conducting awareness programmes, construction of Toilets, construction of Bio-gas Units, Vermi-Compost Bins, Tree plantation, Renovation of Toilets, Adoption of Dual Pipeline system & Rain Water Harvesting System etc.

Dividend Distribution Policy

In terms of Regulation 43A of the Listing Regulations, the top five hundred listed entities based on market capitalization (calculated as on March 31 of every financial year) shall formulate a dividend distribution policy which shall be disclosed in its annual report and on its website. Accordingly, the Board of Directors at their meeting held on 25.05.2018 has approved the Dividend Distribution Policy including the parameters and circumstances in determining the distribution of dividend to its shareholders and/or retaining profits earned by the Company. The said Policy is posted on Company’s website www.bemlindia.in.

Statutory Auditors

The Comptroller & Auditor General of India has appointed M/s. S.R.R.K Sharma Associates, Chartered Accountants, Bengaluru, as the Statutory Auditors for the financial year 2017-18.

Observation, if any, made in the Independent Auditors’ Report on the financial statement including consolidated financial statement and the reply of the Board of Directors thereto will be given by way of an addendum to this report.

Cost Auditors

Your Company appointed M/s R M Bansal and Co, Cost Accountants, Bengaluru, as Cost Auditors for the year 2017-18 in terms of Section 148 of Companies Act, 2013, read with the Companies (Cost Records and Audit) Rules, 2014 to conduct the audit of the cost records of the Company. Further, as required under the said Rules, the remuneration payable to the Cost Auditor was ratified by the members in the 53rd Annual General Meeting held on 21.09.2017.

Secretarial Auditors

In terms of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules,

2014, the Company appointed M/s. V N Associates, Practicing Company Secretaries, Bengaluru, to undertake the Secretarial Audit of the Company for the year 2017-18.

The Secretarial Audit Report and the replies to the observations made in the said report are placed at Annexure-VII.

C&AG Audit

The Comments of the Comptroller & Auditor General of India under section 143(6)(b) of the Companies Act, 2013 on the financial statement including consolidated financial statement are appended at page No. 154 & 220 to the annual report.

Extract of Annual Return

In terms of Section 92(3) of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014, an extract of the Annual Return in the prescribed form is placed at Annexure-VIII.

Directors:

(1) Appointment of Independent Directors

During the year, no Independent Directors have been appointed on the Board of the Company.

Pursuant to Schedule IV of the Companies Act, 2013, the appointment of the Independent Directors would be formalized through a letter of appointment setting out the terms and conditions of their appointment, which is also placed on the web-site of the Company at www.bemlindia.in. In terms of section 149 of the Companies Act, 2013, the provisions of section 152(6) and (7) in respect of retirement of directors by rotation shall not be applicable to appointment of independent directors.

(2) Statement on declaration by Independent Directors

Independent Directors have given declarations u/s 149(7) of the Companies Act, 2013 that they meet the criteria of independence as laid down u/s 149(6) of the said Act.

(3) Board Evaluation:

The Board of Directors of the Company comprises Functional Directors, Government Nominee Directors and Independent Directors appointed by the Government of India from time to time pursuant to Article 97 of Articles of Association of the Company.

Further, the tenure and remuneration of Functional Directors including Chairman and Managing Director are decided by the Government of India through Public Enterprises Selection Board / Search Committee and the pay scales are governed by the Presidential Directives received from the Ministry of Defence. The Government communication also indicates the detailed terms and conditions of their appointment based on applicability of the relevant rules of the Company. The Government Nominee Directors are not entitled to any remuneration / sitting fee. The Independent Directors are entitled to sitting fees for attending the Board / Committee meetings as duly approved by the Board considering the government directives, statutory acts, rules and regulations.

In view of the above, the performance of all Functional Directors and Government Nominee Directors is being evaluated by the Administrative Ministry every year based on own evaluation methodology. Further, considering the educational qualifications, age, rich and varied experience of the applicants, the Administrative Ministry / Department would appoint the IDs on the Board on the recommendation of Search Committee after obtaining approval of competent authority. In addition, the assessment / evaluation of performance of Independent Directors who will be completing their 3 years tenure was undertaken by the Administrative Ministry.

Considering the above, a separate evaluation criteria has not been framed by the Company.

(4) Remuneration of Directors:

Your Company being a Central Public Sector Enterprise, the appointment, tenure and remuneration of Directors are decided by the Government of India. The Government communication appointing the Functional Directors indicate the detailed terms and conditions of their appointment including a provision for the applicability of the relevant rules of the Company.

Government Nominee Directors were neither paid any remuneration nor sitting fee for attending Board / Committee meetings.

Independent Directors are paid only sitting fee of ''20,000 per meeting of the Board / Committee of the Board attended by them. Further, if there are more than one such meeting on the same day, a sitting fee @ ''10,000 is paid for the second and subsequent meeting/s.

Neither there was payment of commission to the Board of Directors nor any stock option scheme offered to them during the year.

Further, none of the Directors had any pecuniary relationship nor entered into any related party transactions with the Company during the year.

Pursuant to the provisions of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the details of remuneration paid to the Directors during 2017-18 are provided under the ‘Report on Corporate Governance’ annexed to this report.

(5) Change of Directors and Key Managerial Personnel

In terms of Article 97 of the Articles of Association of the Company, the President of India is vested with the power to appoint the Directors of the Company from time to time and also shall determine the term of office of such Directors. Accordingly, the following appointments on the Board of your Company were effected as per the directives of the President of India:

- Shri Suraj Prakash (DIN-08124871), was appointed as Director (Finance) of the Company vide MoD letter No.8 (2)/2016-D (BEML) dated

09.05.2018. He assumed the charge of the post w.e.f 10.05.2018. Further, in terms of section 179 read with Rule 8 of the Companies (Meetings of Board and its Powers) Rules, 2014 and Section 203 of the Companies Act, 2013, Shri Suraj Prakash is appointed as a Key Managerial Personnel and Chief Financial Officer of the Company.

- Shri Rajib Kumar Sen (DIN-07669981), Economic Adviser, Ministry of Defence was appointed as Government Nominee Director on the Board vide MoD letter No.8(80)/2015-D(Coord/DDP) dated 30.05.2018 in place of Shri Sanjay Prasad. Consequent to the supersession of earlier orders issued by MoD for appointment of Government Directors on the Board, nomination of Smt. Surina Rajan, Government Nominee Director was withdrawn on 13.06.2018.

- Shri Gurmohinder Singh (DIN-08199586), was appointed as Independent Director vide MoD letter No. 8(2)/2014-D(BEML) dated 10.08.2018 and his appointment had taken effect from

13.08.2018.

Shri B R Viswanatha (DIN- 07363486), Director (Mining & Construction Business) and Shri R H Muralidhara (DIN-07363484), Director (Defence Business) retires by rotation at this annual general meeting and being eligible, offered themselves for reappointment. Shri. Aniruddh Kumar (DIN - 06861374) Director (Rail & Metro Business), ceased to be Director with effect from 01.11.2017 on attaining the age of superannuation.

The Board placed on record its deep the appreciation of the valuable services rendered by the Directors whose term of office ended during the year.

(6) Number of meetings of Board:

During the year, seven meetings of the Board were held on 12.04.2017, 30.05.2017, 11.08.2017, 20.09.2017, 10.11.2017, 18.12.2017 and 07.02.2018. Requirements on number and frequency of meetings, in terms of Section 173(1) of the Companies Act, 2013, Regulation 17(2) of the Listing Regulations, and Para 3.3.1 of the DPE Guidelines, were complied with in full.

(7) Directors’ Responsibility Statement:

Pursuant to section 134(3)(c) and 134(5) of the Companies Act, 2013, your Directors state that,

(a) in the preparation of the annual accounts for the year ended 31.03.2018, the applicable accounting standards has been followed along with proper explanation relating to material departures;

(b) the directors had 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 2017-18 and of the profit of the Company for that period;

(c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) the directors had prepared the annual accounts on a going concern basis;

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

(f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Acknowledgements

Your Directors express their hearty thanks to the Company’s valued customers, in particular Defence Services, M/s Coal India Limited and its Subsidiaries, M/s. Singareni Collieries Company Limited, M/s Steel Authority of India Limited, Railway Board, M/s Delhi Metro Rail Corporation Limited, M/s Bangalore Metro Rail Corporation Limited, M/s Jaipur Metro Rail Corporation, M/s Kolkata Metro Rail Corporation, Integral Coach Factory-Chennai, M/s Bharat Electronics Limited, M/s Bharat Dynamics

Limited, Ordnance Factory Board, Defence Research & Development Organization (DRDO), M/s Brahmos Aerospace Pvt. Ltd., Indian Space Research Organization, M/s Hindustan Aeronautics Limited, Aeronautical Development Agency for their patronage and confidence reposed on the Company. The Directors also acknowledge and thank all collaborators, vendors and other service providers for their valuable assistance and cooperation extended to the Company.

The Directors express their appreciation to the members of Company’s Consortium of Banks and other Bankers and Financial Institutions for their continued support to the Company’s operations. The Directors also thank all the shareholders / investors for reposing continued confidence in the Company.

The Directors wish to thank the Comptroller & Auditor General of India, the Principal Director of Commercial Audit & Ex-officio Member, Audit Board and Statutory Auditors for their valued co-operation.

The Directors also acknowledge the valuable support and assistance received from various Ministries of Government, in particular Ministry of Defence, Ministry of Coal, Ministry of Mines, Ministry of Steel, Ministry of Railways, Ministry of External Affairs and Ministry of Home Affairs. The Directors are also grateful to the Government of Karnataka and Kerala for the support and co-operation extended to the Company.

Your Directors take this opportunity to place on record their appreciation for the invaluable contribution made and excellent co-operation

extended by the employees and executives at all levels for the continued progress and prosperity of the Company.

For and on behalf of the Board of Directors

Sd/-

Bengaluru D K Hota

25.05.2018 Chairman & Managing Director


Mar 31, 2017

The Board of Directors has pleasure in presenting the 53rd Annual Report and Audited Accounts for the year ended 31.03.2017.

Financial Results: (Rs. Crores)

Particulars

2016-17

2015-16

Gross Revenue

2836.98

3422.92

Revenue from operations

2834.66

3284.33

Profit before Depreciation,

208.07

182.72

Interest and Tax

Finance costs

47.80

49.03

Depreciation and amortization

61.98

55.77

expense

Profit Before Tax

98.29

77.92

Tax Expense

13.85

14.26

Other Comprehensive Income

11.89

10.51

Total Comprehensive Income

72.55

53.15

Profit available for

292.29

272.40

appropriations

Debenture Redemption Reserve

30.96

32.61

Balance c/f

261.33

239.79

Turnover and Profitability:

Your Company achieved gross revenue of Rs.2836.98 crores including the value of consortium supplies against Rs.3422.92 crores of corresponding value in the previous year. The revenue from operations stood at Rs.2834.66 crores as against Rs.3284.33 crores in the previous year, registering decline in growth of 13.69%. The drop in sales is primarily because of lack of orders from Indian Railways and due to the fact that RS-10 Metro Car contract being only a labour contract. Further, there was a drastic drop in placement of orders by Coal companies by over 70% vis-a-vis FY 2015-16. However, Defence Business had posted a growth of over 50.39% in sales vis-a-vis FY 2015-16.

The Value of Production (net of consortium supplies and excise duty) is Rs.2623.90 crores as against Rs.2736.90 crores in the previous year. The Profit before Tax was Rs.98.29 crores as against

Profit before Tax of Rs.77.92 crores recorded in the previous financial year, which is the highest ever in the last five years. In addition, the positive factor is considerable decrease in the finance costs and increase in the other income during the year.

There was no change in the nature of business of the Company during the year. Further, there was no material change / commitment occurred affecting the financial position of the Company subsequent to the financial year ended 31.03.2017 till the date of this report.

Performance vis-a-vis MoU:

Performance of your Company, in terms of the Memorandum of Understanding (MoU) signed with the Department of Defence Production, Ministry of Defence (MoD), Government of India, was rated as “Good” for the financial year 2015-16 and the rating for the financial year 2016-17 is estimated as ‘Very Good’ based on self-evaluation.

Further, to achieve ‘Very Good’ rating for FY 2017-18, the MoU targets proposed are Rs.2,900 crores for Revenue from Operations and 0.8% of the Revenue from Operations as Operating Profit.

Dividend:

Your Board of Directors has recommended a dividend of Rs.8 per equity share i.e.,80%, for the year 2016-17 keeping in view the future prospects of the Company and at the same time meeting the aspirations of the shareholders.

Amount transferred to reserves:

During the year under review, your Company has transferred an amount of Rs.30.96 crores to Debenture Redemption Reserve.

Exports:

During 2016-17, your Company made exports aggregating Rs.30.80 crores (physical exports of Rs.20.18 crores, deemed exports of Rs.9.98 crores and export incentive of Rs.0.64 crores) as against Rs.275.23 crores (physical exports of Rs.31.55 crores, deemed exports of Rs.240.57 crores and export incentive of Rs.3.11 crores) during the previous year. The international presence of the Company increased to 67 countries with the entry to Benin during the year.

Strategic Disinvestment:

Ministry of Defence vide its letter dated 01.12.2016 communicated that Cabinet Committee on Economic Affairs (CCEA) has accorded “in-principle” approval for strategic disinvestment of the Company. DIPAM vide its O.M. dated 19.12.2016 has communicated that an Inter-Ministerial Group (IMG) has been constituted by the competent authority for the purpose of appointing intermediaries such as Transactional Adviser (TA) and Legal Adviser (LA) for the strategic disinvestment of 26% equity in the Company out of Government of India shareholding of 54.03%.

After confirmation, the Company vide letter dated 06.01.2017 intimated NSE and BSE about the ‘inprinciple’ approval of CCEA and also posted on the web-site of the Company, in terms of Regulation 30 of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015.

As per the terms, MoD has appointed M/s RBSA Valuation Advisers LLP, Ahmadabad, as Asset Valuer, and DIPAM has appointed M/s. SBI Capital Markets Limited as TA and M/s Crawford Bayley as LA respectively. Preliminary Information Memoradum (PIM) and Expression of Interest (EoI) has been submitted by TA.

Quality:

Your Company views quality improvement as a business strategy and hence remains proactive in the areas of product and service quality. At BEML, a Corporate Quality Policy emphasizing Total Quality Management ensures that quality system adopted results in products, services and processes that meet stringent standards and requisite performance criteria. A separate Quality Department spearheads the thrust towards Total Quality Management.

All manufacturing divisions have been certified for ISO 9001-2008 Quality Management System (QMS). KGF Complex, Bengaluru Complex and Mysuru Complex are also certified for ISO 14001-2004 Environmental Management System (EMS). ISO body has revised these standards to 2015 version. Accordingly, in order to upgrade these certifications, awareness training programmes, internal auditor programmes and lead auditor programmes are being conducted in the Company.

Further, Bengaluru Complex is certified for BS OHSAS 18001-2007 Integrated Management System and Aerospace division, Mysore complex is certified for AS9100C Aerospace certification.

Key initiatives / actions taken during the year for continuous improvement towards Quality Assurance are as under:

- Vendor development remains the “focus area” to improve quality of supplies made by the vendors. Revised vendor registration procedure and applicable formats have been uploaded on Company’s website to enable the new vendors for fast and easy registration.

- Various Quality Assurance initiatives have been taken up to bring in Quality improvements on continuous basis towards Processes/System/ Product Quality improvements. Concept of 5S, Kaizen and Quality Circles are practised at grass root level throughout the Company.

- Periodic process / system audits are being conducted and feedbacks are given to the vendors on day-to-day basis with regard to the rejections and necessary guidance given for corrective and preventive action for process / system improvements right from development stage to ensure quality in their supplies.

- Quality Improvement Projects are identified across the divisions through Cross Functional Teams. Pertaining to feedback from Customers and most of the them have been completed and balance are under observation.

- Team “METRO” from Bengaluru Complex, has participated in International Competition ICQCC 2016 at Bangkok from 23rd August to 26th August 2016 and bagged “GOLD” award in the competition.

- A dedicated screen ‘BEML Quality BOARD’ on intranet has been updated with the display of quality related improvements and service bulletins periodically.

- Your Company has planned to upgrade the existing Production testing facilities at KGF and Mysuru for obtaining NABL certifications with enhanced scope during 2017-18, for meeting the Defence production requirements.

Make in India Initiative:

Your company is committed for the success of ‘Make in India’ programme and has adopted various initiatives under ‘Make in India’ concept launched by the Government of India. It is Company’s endeavour to achieve self-reliance by wholeheartedly participating in ‘Make in India’ drive with increased sourcing from local manufacturers.

Your Company recognizes outsourcing as one of the strategic tools to achieve cost benefits and also complement the strengths of private sector to build a strong industrial base. Your Company is well on its journey to become a system integrator by outsourcing a substantial part of manufacturing activities from Indian vendors, enabling the Company to enhance the capacity, attain cost effectiveness and improve competitiveness in the global market. To facilitate outsourcing, the Company has well established policies, procedures and guidelines.

Company has nominated a Nodal Officer for ‘Make in India’ drive and list of items for indigenization are hosted on Company’s website www.bemlindia. com. Also a display center is set-up in Bengaluru Complex, where prospective vendors can have access to samples, drawings and technical specifications and explore opportunities to partner with the Company.

Under this initiative, the Company has designed and developed various products such as BH205E Dump Truck, BE1800E Electrical Excavator, BL120H Loader cum Excavator under Mining & Construction segment, Stainless steel EMU, Overhead Inspection Car under Rail & Metro segment and 10x10 HMV for SMERCH project, indigenization of engine and axle assemblies for High Mobility Vehicles under Defence segment.

Start Ups :

The Ministry of Commerce & Industry, Government of India has launched ‘Start Ups’ concept under ‘Make in India’ initiative on 16.01.2016.

An entity working towards innovation, development, deployment or commercialization of new products, processes or services driven by technology or intellectual property, if it aims to develop and commercialize a new product or service or process or a significantly improved existing product or service or process, that will create or add value for customers or workflow are covered under this Start Ups.

A Company that has been in existence for less than five years and with sales revenues not exceeding Rs.25 crores will be recognised under Start Ups.

However, your Company has relaxed the aforesaid eligibility criteria of prior turnover and experience for registration from Start Ups in order to encourage them to participate in supplies for Company’s procurements. Further, the Company’s identified areas of Start Ups are hosted on Company’s web-site www.bemlindia.com and vendors need to contact Quality wing of the Company for Start Ups activities.

Renewable Energy Development, Energy Conservation, Research & Development and Technology Absorption:

(i) Renewable Energy Development:

In realizing the goal of go green and achieve 100% renewable energy, your Company has commenced its initiation by setting up a 5MW Windmill Project at Gadag District, Karnataka which is generating power since 2007. It has generated 90 Lakhs Kwh power during 2016-17 resulting in green house gas reduction. In addition, the Company has also set up 18MW Windmill Project at Dammur Village, Koppal district and Mittalkode, Bagalkot district in Karnataka. 9MW Windmill at Dammur Village is already commissioned and has generated 110 Lakhs Kwh power during 2016-17. The balance 9MW project at Mittalkode is under commissioning. With this, the total commissioned renewable energy capacity of over 23MW would meet the total power requirement of the Company.

Further, your Company has installed and commissioned 200 kWp grid connected roof top solar project at Mysuru Complex to support the green energy mission to make the country the green energy capital.

(ii) Energy Conservation:

Your Company continues to give emphasis on conservation of energy. The efficiency of energy utilization is closely monitored to attain higher level of energy conservation.

(iii) Research & Development and Technology Absorption:

Your Company has an in-house design, research and development setup. It continues to play a vital role in design and development of new products / aggregates, continuous up-gradation of existing products and indigenization activity.

R&D Centre at KGF Complex (“R&D Facility”), the biggest design and development center for earth moving machinery in India is supplemented by R&D centers located at Truck Division and Engine Division at the Mysuru Complex and Product Engineering teams colocated at EM and H&P divisions in KGF. Facilities in specialized areas like hydraulics, powertrain, structural engineering, and material science are available at the R&D Centre. Computer Aided Design (CAD) / Computer Aided Engineering facilities are established for digital design and virtual simulation for product design and validation. R&D facilities for diesel engine design and development, including emission measuring infrastructure and testing facilities are located at the Mysuru Complex.

The R&D set-up in Defence business vertical is engaged in the areas of High Mobility Heavy Duty vehicles, Armoured Recovery and Repair vehicles (ARRVs), Mine Ploughs, Transmissions and Engines. The Company has entered into technology tie-up with M/s. Pearson Engineering Ltd, UK for Mine Ploughs.

The R&D set-up in Rail & Metro business vertical is basically involved in design & development of Metro & Railway rolling stock, up-gradation of existing products based on the market need and indigenisation of imported aggregates. In this regard, the Company has entered into technology tie-up with M/s. Hyundai Rotem Company for Metro Cars.

During the year, R&D designed, developed and launched upgraded version of 100T Dumper (BH 100-1) to suit customer requirements, in addition to successful up-gradation of other existing products of the Company.

In terms of Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, the information on energy conservation and technology absorption including the products developed by the Company during the year is placed at Annexure-I.

Foreign Exchange Earnings and Outgo:

During the year, the Company’s foreign exchange earnings stood at Rs.16.86 crores and the total foreign exchange utilized was Rs.638.66 crores.

A sum of Rs.0.76 crores was incurred towards deputation of personnel abroad for business / export promotion, after-sales-services and training purposes.

Finance:

The working capital requirements were met from the internal accruals and credit facilities availed from banks. There was no overdue installment of principal and/or interest to the banks.

The Company’s contributions to Central and State Exchequers were in the order of Rs.693.46 crores during the year by way of Excise Duty, Customs Duty, Sales Tax, Service Tax, Dividend and Tax there on, and other taxes and duties.

Internal Financial Controls:

Your Company has put in place adequate Internal Financial Controls (IFCs) with respect to Financial Statements. The Company has various manuals such as, Accounts, Cost Accounting & Pricing, Stores, Purchase, Audit, etc., and the same are being periodically updated for carrying out various activities in a transparent manner as per the delegation of powers and no instances of material weakness in the operations has been observed. The adequacy of internal financial controls over financial reporting is covered by the Statutory Auditors in their Audit Report. Further, the details of the IFCs are included under the heading ‘Internal control systems and their adequacy’ in the Management Discussion & Analysis Report which forms part of this report.

Fixed Deposits:

The Company did not accept any fixed deposits during the year, and there was no outstanding Fixed Deposits at the beginning / end of the year. Accordingly, there was no default in payment of deposits / interest thereon.

Enterprise Risk Management:

In terms of Section 134(3)(n) of the Companies Act. 2013, Regulation 17(9) of the Listing Regulations, and Para 7.3 of DPE Guidelines, your Company has formulated “Risk Management Policy” with an objective to ensure sustainable business growth with stability and to promote a pro-active approach in identifying, evaluating, reporting and managing or mitigating risks associated with the business. In order to achieve the key business objectives, the policy establishes a structured and disciplined approach to risk management in order to manage or mitigate risk related issues. The said policy is also placed on the Company’s website www.bemlindia. com.

In terms of Regulation 21 of the Listing Regulations, the Company has constituted Risk Management Committee consists of Director (Rail & Metro Business), Director (Mining & Construction Business), Director (Defence Business), Director (Finance) and one Independent Director.

Further, the aforesaid Risk Management Committee shall appraise the key risks along with mitigation plans and report to the Board periodically.

Related Party Transactions:

Your Company has formulated a “Policy on Related Party Transactions” to regulate transactions entered into between the Company and its related parties. In terms of Regulation 46(2)(g) of the Listing Regulations, the said policy is placed on the website of the Company at www.bemlindia.com.

During the year 2016-17, all transactions that were entered into with the related parties were fair, transparent and at arm’s length basis and also in the ordinary course of business of the Company. The said related party transactions were also duly considered and noted by the Audit Committee.

Report on the performance and financial position of subsidiaries and joint venture company

Subsidiary Companies:

(i) M/s Vignyan Industries Limited (VIL):

VIL has recorded a turnover of Rs.33.21 crores as against Rs.32.18 crores, thereby registering a growth of 3.20% over the previous year. The value of production of the Company stood at Rs.32.29 crores as against Rs.30.88 crores and the Company achieved Profit before Tax of Rs.0.13 crores as against profit of Rs.0.67 crores in the previous year.

VIL is planning to explore new markets for reducing dependency on M/s BEML Limited, the holding company. However, in anticipation of order from BEML for high alloy grade castings like T-72 and Tatra Variants relating to Defence business, Axle Box and Buffer Assembly relating to Rail business, and new castings for Mining & Construction business, necessary development and production are planned. VIL has executed order for MIDHANI, another DPSU, Hyderabad to manufacture and supply 100 MTs of ballast casting of U-2 grade steel valued about Rs.1.35 Crs. These proposals would help VIL to achieve about Rs.74 Crs by 2020-21 as envisaged in the Perspective Plan.

The order book position remained at 1,710 MTs as on 01.04.2017. More and more casting requirements are expected from Holding Company as well as from other customers. With this, VIL is confident of achieving better results for the financial year 2017-18.

(ii) M/s MAMC Industries Limited (MIL):

Your Company entered into a Consortium Agreement with M/s. Coal India Limited (CIL) and M/s. Damodar Valley Corporation (DVC) on 08.06.2010 for acquiring specified assets of M/s. Mining and Allied Machinery Corporation Limited (under liquidation). The agreement, inter-alia, provided for formation of a Joint Venture company (JV) with a shareholding pattern of 48:26:26 among BEML, CIL and DVC respectively. The Company has paid the proportionate share of Rs.48 crores towards the total bid consideration of Rs.100 crores for the said acquisition, based on the order passed by the Hon’ble High Court of Calcutta. The said assets were taken possession by the MAMC Consortium. Further up to 2016-17, the Company has incurred a sum of Rs.9.44 crores towards maintenance, security and other related expenditure. The expenditure incurred by CIL and DVC on account of this proposal is not ascertained. The total sum of Rs.57.44 crores is included under the head other loans and advance’s pending allotment of equity shares in the capital of JV company. Since the Company intends to treat this as long term investment, no independent valuation of the said assets has been carried out and the diminution in the value of investments, if any, can be ascertained only after the formulation of business plan and obtaining necessary approval for shareholders’ agreement from Ministry of Defence (MoD) and consequential allotment of shares in the JV.

In the meantime, a company in the name of ‘MAMC Industries Limited’ (MIL) was formed and incorporated by your Company as a wholly owned subsidiary for the intended purpose of JV formation. Shareholders’ agreement, as duly approved by the Boards of all three members of the consortium, has been submitted to MoD for necessary approval. Further, MoD has directed to submit ‘Business Plan’ and ‘Financial Viability Report’ of the proposed JV. A meeting of Interim Board of Management of Consortium has decided to engage M/s SBI Caps for preparing the “Financial viability & Business Plan” report for taking further decision in the matter.

(iii) M/s BEML Brazil Industrial Ltda. (BBIL):

Your Company entered the Brazil market for brand building exercise and local value addition for the products to meet local standards in anticipation of good business potentials for Freight Wagons and Mining & Construction equipment. As per the requirement under the local laws, BBIL was established. Based on the enquiries, few mining equipment were also supplied to local customers. In the meantime, low cost Chinese equipment flooded the Brazilian market along with their local manufacturing facilities. Further, your Company faced stiff competition in high-end equipment segment from international players like CAT and Komatsu. In view of these developments, it is proposed to handle the Brazilian market directly and to wind up the existing facilities in Brazil. In view of this, BBIL is kept under dormant state.

Joint Venture Company - M/s BEML Midwest Limited (BmWL):

BMWL was formed and registered with the Registrar of Companies at Hyderabad on 18.04.2007. BEML holds 45% share and M/s Midwest Granite Pvt. Ltd. (MGPL) and P T Sumber Mitra Jaya of Indonesia as partners holding the balance 55% share. The Company has been established to capitalize on the growing business opportunities in the contract mining segment. However, due to certain unauthorized transactions and the oppression and mismanagement by the nominees of MGPL, your Company had filed an application before Hon’ble Company Law Board (CLB) seeking for suitable relief. As a counter measure, MGPL had also filed a petition on the matter. CLB vide its common order dated 01.06.2012 directed the Central Government to appoint an inspector to investigate the affairs of BMWL and take appropriate action. As per the legal advice, your Company preferred two appeals before Hon’ble High Court of Andhra Pradesh at Hyderabad against the said common order of CLB. The Hon’ble High Court passed the order on 19.08.2013, thereby setting aside the said common order and directing CLB to proceed with a fresh enquiry, and decide the issue in accordance with law and merits also taking into consideration the report of investigation as directed by CLB and pass appropriate orders without getting influenced by the impugned common order of CLB. The Company has filed an application with CLB praying for necessary directions to Regional Director, Ministry of Corporate Affairs, Hyderabad for time bound completion of investigation so that the matter could effectively be heard by CLB. In the meanwhile, the Government has constituted National Company Law Tribunal (NCLT) by dissolving CLB and notified that the jurisdiction is shifted to Hyderabad from Chennai. The case files were transferred to NCLT. However, hearings are yet to commence due to the reason that investigation report is pending submission by RD, MCA, Hyderabad.

There was no company which became or ceased to be a subsidiary, joint venture or associate of the Company during the year under review.

A separate section on report on the performance and financial position of each of the subsidiaries, joint venture company are placed under Form AOC-1 provided in the consolidated financial statement of the Company, in terms of section 129(3) of the Companies Act, 2013 read with rule 5 of Companies (Accounts) Rules, 2014.

Particulars of Loans, Guarantees or Investments:

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statement.

Consolidated Financial Statement:

Consolidated Financial Statement of your Company and its subsidiaries and joint venture company is attached to this report.

Vigilance:

The Company under the aegis of full-time Chief Vigilance officer, has undertaken several preventive vigilance activities like surprise checks of stores, medical centres, inspection of works and contracts, study of tenders etc, with the objective of promoting integrity, transparency, accountability. equity, efficiency and productivity by leveraging technology and many systemic improvements were recommended and successfully implemented.

Vigilance Awareness Week-2016 with the theme “Public participation in promoting integrity and eradicating Corruption” was observed in the Company.

Online Vigilance Clearance for below Board level executives has been set up and Integrity Pact has been fully implemented.

During the year, 22 complaints were handled, out of which 19 complaints were disposed. Disciplinary action and system / process improvement has been recommended in some cases where lapses were observed.

Procurements

Your Company endeavours to procure materials and services through e-procurement platform on ERP system. During the year, about 70% of the total requirements were sourced through e-procurement.

Micro and Small Enterprises:

Following steps have been adopted under the Micro and Small Enterprises (MSEs) Order 2012:

- List of components that could be sourced from MSEs are placed on the Company’s website www.bemlindia.com for the information of MSE vendors.

- Appropriate weightage has been given for MSEs in the MoU from the year 2015-16 onwards in order to ensure the objective of achieving overall procurement of 20% from MSEs.

- In order to enhance the vendor base for MSEs and MSEs owned by SC/ST entrepreneurs, your Company has organized Vendor Development Programmes for MSEs and exclusively for MSEs owned by SC/ST entrepreneurs and participated in various exhibitions organized by Micro, small and Medium Enterprises, National Small Industries Corporation, CII etc, wherein components are displayed for MSEs and details/ advantages of the above policy is propagated.

- During 2016-17, your Company placed orders for goods and services to the extent of Rs.303.93 crores from MSEs which constituted 20.42% of the total procurement value of Rs.1488.14 crores and 32.93% of indigenous procurement of Rs.922.90 crores.

Vendor Development:

As per the directives of Ministry of Defence, the Company has framed an ‘Outsourcing and Vendor Development Policy’ as duly approved by the Board. The objective of the policy is to enhance cost effectiveness and improve competitiveness of the Company in global market. The other significant objective of this Outsourcing and Vendor Development Policy is to build a manufacturing eco system in the country to attain self-reliance. On the other hand participation of Indian private industry will be an enabler in building technological and manufacturing capability inside the country. Based on the policy so framed, a Road Map for vendor development for two years i.e., 2016-17 and 2017-18 has been prepared with yearly targets and monitored at the Board level on quarterly basis.

Compliance under the Right to Information Act, 2005 :

The information required to be provided to citizens under Section 4(1)(b) of RTI Act, 2005 is placed on Company website, www.bemlindia.com. It contains general information of the Company, functions and duties, powers and duties of employees/officers. decision making process, rules, regulations, manuals and records held by the Company, directory of the Company’s officers, pay scales of officers / employees etc., and procedure for seeking information and inspection of records. The Company has nominated a Central Public Information Officer, Appellate Authority, Transparency Officer and six Central Assistant Public Information Officers representing Complex / Divisions to attend to the queries and appeals. During the year 2016-17 the Company received 256 applications and queries related to human resources, recruitment, contracts, tenders, business related matters etc., and the same were disposed off.

Rajbhasha:

Your Company continued its efforts in implementing the Official Language (OL) Policy. OL Implementation Committee is constituted to review the status of use of Hindi across the Company. The said Committee met quarterly during the year and reviewed the implementation status.

OL Inspection was carried out by the Officials of Department of Defence Production, Ministry of Defence, New Delhi, at Mysuru Complex and Regional Office at Hyderabad. Further, OL inspection carried out by Deputy Director (RIO), Kolkata at RO, Dhanbad. Parliamentary Committee on OL inspected Regional Office at Mumbai, reviewed the implementation of OL policy and expressed its satisfaction over the progress made.

402 executives / employees were trained in Hindi under Hindi Teaching Scheme of Government of India, during the period under review. 18 Hindi workshops were organized in which 374 officers/ employees were trained. Hindi Fortnight was observed from 14.09.2016 to 29.09.2016 throughout the Company and variety of competitions was organized. Hindi Conference was organized at RO-Singruali for two days from 20-21st January, 2017.

Website of your company is made available in Hindi also and updated the contents periodically.

Corporate Governance Report:

In terms of Para 8.2.3 of the DPE Guidelines of CPSEs grading is done by DPE on the basis of compliance with Corporate Governance guidelines/ norms. Accordingly, your Company is graded as ‘Excellent’ for the year 2016-17. Further, in terms of Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Chapter 8 of the DPE Guidelines, a report on Corporate Governance along with Compliance Certificate is placed at Annexure-II.

Management Discussion and Analysis Report:

In terms of Regulation 34(2)(e) of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 and Para 7.5.1 of the DPE Guidelines of CPSEs, a report on Management Discussion and Analysis Report is placed at Annexure-III.

Business Responsibility Report:

In terms of Regulation 34(2)(f) of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, the annual report of the top 500 listed entities based on market capitalization shall contain Business Responsibility Report (BRR) w.e.f. FY 2016-17 for the first time. The said BRR contains the initiatives taken by the Company from an environmental, social and governance prospective, which is placed at Annexure-IV.

Awards

- On 27.07.2016, Company was bestowed with Rajbhasha Award in Big PSU category for Corporate Office by the Town Official Language Implementation Committee for PSUs for commendable performance in implementation of Hindi during 2015-16.

- On 22.08.2016, Company received two awards- (i) Excellence in Training, Learning and Development Programmes, and (ii) Outstanding Contribution in CSR. These awards were presented in recognition of Talent Management. Talent Development and Talent Innovation, instituted by Employer Branding Institute, Mumbai.

- On 21.09.2016, Company won the prestigious QCI - DL Shah National Quality Award-2016 at the 11th National Quality Conclave held at New Delhi for metro quality assurance with a case study on ‘Optimization of painting process parameters’ for metro car interior panels.

- On 23.09.2016, Company was awarded the prestigious ‘International Gold Award’ for its Quality initiatives in the manufacture of Metro Cars at the International Convention of Quality Circle Competition held at Bangkok.

- On 25.10.2016, Company was bestowed with the prestigious award ‘Buildcon India’s Top Challenger 2015-16’ instituted by ASAPP Info Global Group during the 14th Construction World Annual Awards-2016 at Mumbai.

- On 29.11.2016, Company was bestowed with Rajbhasha Award in Small PSU category for RO-Sambalpur by the Town Official Language Implementation Committee for PSUs for commendable performance in implementation of Hindi during 2015-16.

- On 14.12.2016, Company had won prestigious ‘Star Performer Award’ in the Export category for the year 2014-15.

- On 16.12.2016, the Chairman & Managing Director of the Company was conferred with CEPM Fellowship Award-2016 at the 24th Global Symposium organized by Centre for Excellence in Project Management.

- On 26.01.2017, Company had bagged various awards for best maintenance of gardens at Complexes, Headquarters and Township Parks in the garden competitions held during Republic Day Horticultural Show-2017.

- On 17.04.2017, your Company is bestowed with Hindustan PSU Award under the category ‘Fastest Growing Organisation - Miniratna.’

- On 25.04.2017, your Company is bestowed with Equipment India Awards under two categories viz., Best Seller in Rigid Dump Trucks and Best seller in Crawler Dozers for the year 2017.

- On 30.05.2017, your Company is bestowed with Raksha Mantri award in the category “Design Effort: Own initiative projects” for the design and development of 180T Class Electric Hydraulic Excavator BE1800E.

Manpower:

The number of employees of the Company as on 31.03.2017 stood at 8,221 as against 8,827 of the previous year.

The category-wise number of SC/ST and Ex-Servicemen employees as on 01.01.2017 and recruitment made are as under :

Category / Group

Total Strength As on

No. of SC/ST and Ex-servicemen

Scheduled Caste

Scheduled Tribe

Ex-Service Men

1.1.2016

1.1.2017

1.1.2016

1.1.2017

1.1.2016

1.1.2017

1.1.2016

1.1.2017

Group-A

1549

1735

283

318

56

73

6

6

Group-B

794

518

135

88

65

43

13

15

Group-C

6568

6041

1475

1373

306

284

275

258

Group-D

25

23

14

13

4

4

0

0

Total

8936

8317

1907

1792

431

404

294

279

The Company has recruited 9 candidates during the year under review as under:

- 1 from General category in Group A

- 2 each from General category and OBC in Group B, and

- 1 each from General category and OBC & 2 from Scheduled Caste in Group C

Human Resource Development & Industrial Relations:

The HR Department identified several thrust areas for continuously updating technical/ professional knowledge and skills of employees towards fostering a performance driven work culture in all areas of operations particularly at shop floors. During the year, the Company organized several in-house and external training programs covering 17,849 man-days.

The overall industrial relation situation in the Company was cordial during the year.

Prohibition of Sexual Harassment of Women at Workplace:

In terms of the provisions of the Sexual Harassment of Women at a Work Place (Prevention, Prohibition & Redressal) Act, 2013, an Internal Complaints Committee is constituted in all the manufacturing units. No sexual harassment complaint was reported under the said Act during the year 2016-17.

Compliance under Persons with Disabilities Act, 1995:

Your Company complies with the provisions under the Persons with Disabilities (Equal opportunities, Protection of rights and full participation) Act, 1995 (PwD Act). In terms of various provisions under PwD Act, your Company has ensured reservation of vacancies for the posts identified for each disability, carry forward of vacancies which could not be filled up due to non-availability of suitable persons with disability and maintenance of requisite records / roster.

Corporate Social Responsibility & Sustainability:

In terms of Section 135 of the Companies Act, 2013 and DPE Guidelines on MoU, the Corporate Social Responsibility & Sustainability (CSR) Committee has been constituted. Further details of CSR are placed under the same heading in Annexure-II and an annual report on CSR activities undertaken during the year is placed at Annexure-V.

Environment and Pollution Control:

In order to protect the environment in and around the factory premises/township, tree plantation were undertaken. Your Company planted saplings of various types of avenue trees / flower bearing trees in the vacant lands belonging to the Company for maintaining ecological balance in the surrounding areas.

Particulars of Employees:

There were no employees of the Company who received remuneration in excess of the limits prescribed under Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

Skill India initiative:

Your Company has undertaken ‘Skill Development’ initiatives in line with Government of India’s ‘Skill India’ initiative launched during 2015. Continuous technical trainings are being organised to train Employees through in-house Centre for Excellence at each division / complex and at reputed technical training Institutes. To hone-up skills, in-house training is also imparted to ITI / NAC, Diploma / Engineering Graduate apprentices.

Your Company has adopted Govt. ITI at KGF and at KM Doddi, Mandya as part of skill development initiatives. Trainees of Govt. ITI at KGF are being provided with 6 months practical training in KGF Complex while Mysore Complex is the industrial partner to ITI at KM Doddi and is being provided with assembly items etc.

To enhance the capability of the Engineers working in Production, R&D and allied areas, a tie-up was established with IIT-Madras and IIT- Kharagpur.

Service training programmes for the customers from all over the country and abroad and for BEML Service personnel are conducted at Service Training Centres at KGF and at Mysore. For customer personnel, equipment-wise training programmes including operator training on Mining & Construction equipments are held while BEML service personnel are imparted training on dealer development in addition to training on Mining and Construction equipments.

Further, various organizational development initiatives such as Employee Satisfaction Survey, Development of Competency Assessment Framework & Leadership Pipeline, formalization of value statement of the Company; ‘BEML FIRST’ have been carried out to effect the cultural enhancement aligned with our organizational growth.

Various competency and leadership development initiatives are taken up to drive the ‘Development of Leadership Pipeline’ initiated during 2014-15.

Swachh Bharat Abhiyan:

Swachh Bharat Mission was launched by the Government of India during 2014 with the objective of fulfilling the dream of transforming urban India in totally sanitized, healthy and livable cities and towns during next five years. In this direction, your Company being a Socially responsible business entity has undertaken various initiatives at its Corporate Office, Manufacturing Complexes, Townships and Schools to ensure participation of its Employees, Officers and School Children. Company has charted out a ‘Five Year Swachh Bharat’ Plan to organize and conduct various Swachh Bharat initiatives. Some of the key ‘Swachh Bharat’ initiatives undertaken by the Company are as under:

- Company has adopted Ajjapalli Village, near KGF during the year 2015-16, under sustainable Rural Development plan and provided requisite amenities for conducive living.

- The first and second anniversary of Swachh Bharat Abhiyan was celebrated throughout the organization as ‘Swachh Bharat Diwas’ on 2nd October, coinciding with ‘Gandhi Jayanthi’ in the year 2015 & 2016 respectively and conducted various cleanliness programmes in this regard.

- Swachh Bharat Pakhwada’ was observed across the Company during the period from 1st May to 15th May 2016. Various activities/competitions focused on cleanliness were organized at Corporate Office, all its Manufacturing Complexes, Townships, Regional & District Offices, during the above period.

- In addition, Company has undertaken various activities under Annual Action Plan based on the recommendations of the Group of Secretaries on ‘Swachh Bharat & Ganga Rejuvenation’ (GoS) for the period from 2016-17 up to 02.10.2019.

Statutory Auditors

The Comptroller & Auditor General of India has appointed M/s. S.R.R.K Sharma Associates, Chartered Accountants, Bengaluru, as the Statutory Auditors for the financial year 2016-17.

Observation, if any, made in the Independent Auditors’ Report on the financial statement including consolidated financial statement and the reply of the Board of Directors thereto will be given by way of an addendum to this report.

Cost Auditors

Your Company appointed M/s Murthy & Co., LLP. Cost Accountants, Bengaluru, as Cost Auditors for the year 2016-17 in terms of Section 148 of Companies Act, 2013, read with the Companies (Cost Records and Audit) Rules, 2014 for preparing and filing necessary ‘Cost Audit Report’ for Railway Rolling Stock and its Parts. Further, as required under the said Rules, the remuneration payable to the said Cost Auditor was ratified by the members in the 52nd Annual General Meeting held on 15.09.2016.

Secretarial Auditors

In terms of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company appointed M/s V N Associates, Practicing Company Secretaries, Bengaluru, to undertake the Secretarial Audit of the Company for the year 2016-17.

The Secretarial Audit Report and the replies to the observations made in the said report are placed at Annexure-VI.

C&AG Audit

The Comments of the Comptroller & Auditor General of India under section 143(6)(b) of the Companies Act, 2013 on the financial statement including consolidated financial statement are appended at page no. 149 and 220 to the annual report.

Directors:

(1) Appointment of Independent Directors

During the year, no Independent Directors have been appointed on the Board of the Company.

Pursuant to Schedule IV of the Companies Act, 2013, the appointment of the Independent Directors would be formalized through a letter of appointment setting out the terms and conditions of their appointment, which is also placed on the web-site of the Company at www.bemlindia.com. In terms of section 149 of the Companies Act, 2013, the provisions of section 152(6) and (7) in respect of retirement of directors by rotation shall not be applicable to appointment of independent directors.

(2) Statement on declaration by Independent Directors

Independent Directors have given declarations u/s 149(7) of the Companies Act, 2013 that they meet the criteria of independence as laid down u/s 149(6) of the said Act.

(3) Board Evaluation:

The Board of Directors of the Company comprises Functional Directors, Government Nominee Directors and Independent Directors appointed by the Government of India from time to time.

Further, the tenure and remuneration of Functional Directors including Chairman and Managing Director are decided by the Government of India through Public Enterprises Selection Board / Search Committee. The Government communication also indicates the detailed terms and conditions of their appointment including a provision for the applicability of the relevant rules of the Company. The Government Nominee Directors are not entitled to any remuneration / sitting fee. The Independent Directors are entitled to sitting fees for attending the Board/Committee meetings as duly approved by the Board considering the government directives, statutory acts, rules and regulations.

In view of the above, the performance of all Functional Directors and Government Nominee Directors is being evaluated by the Administrative Ministry every year based on own evaluation methodology. Further, considering the educational qualifications, age, rich and varied experience of the applicants, the Administrative Ministry / Department would appoint the IDs on the Board on the recommendation of Search Committee after obtaining approval of competent authority.

Considering the above, a separate evaluation criteria was not framed by the Company.

(4) Remuneration of Directors:

Your Company being a Central Public Sector Enterprise, the appointment, tenure and remuneration of Directors are decided by the Government of India. The Government communication appointing the Functional Directors indicate the detailed terms and conditions of their appointment including a provision for the applicability of the relevant rules of the Company.

Government Nominee Directors were neither paid any remuneration nor sitting fee for attending Board / Committee meetings.

Independent Directors are paid only sitting fee of Rs.20,000 per meeting of the Board / Committee of the Board attended by them. Further, if there are more than one such meeting on the same day, a sitting fee @ Rs.10,000 is paid for the second and subsequent meeting/s.

Neither there was payment of commission to the Board of Directors nor any stock option scheme offered to them during the year.

Further, none of the Directors had any pecuniary relationship nor entered into any related party transactions with the Company during the year.

Pursuant to the provisions of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the details of remuneration paid to the Directors during 2016-17 are provided under the ‘Report on Corporate Governance’ annexed to this report.

(5) Change of Directors and Key Managerial Personnel

In terms of Article 97 of the Articles of Association of the Company, the President of India is vested with the power to appoint the Directors of the Company from time to time and also shall determine the term of office of such Directors. However, there was no fresh appointment made subsequent to last Annual General Meeting.

Further, in terms of section 179 of the Companies Act, 2013 read with Rule 8 of the Companies (Meetings of Board and its Powers) Rules, 2014, Key Managerial Personnel should be appointed by the Board of Directors. Accordingly, Shri S V Ravisekhar Rao is appointed as Company Secretary and Compliance officer of the Company w.e.f. 19.10.2016 in place of Shri M E V Selvamm, who had since resigned and joined M/s ONGC Limited.

(6) Number of meetings of Board:

During the year, six meetings of the Board were held on 20.04.2016, 27.05.2016, 28.06.2016, 14.09.2016, 25.11.2016 and 13.02.2017. Requirements on number and frequency of meetings, in terms of Section 173(1) of the Companies Act, 2013, Regulation 17(2) of the Listing Regulations, and Para 3.3.1 of the DPE Guidelines, were complied with in full.

(7) Directors’ Responsibility Statement:

Pursuant to section 134(5) of the Companies Act, 2013, your Directors state that, based on the representation received from the management,

(a) in the preparation of the annual financial statements for the year ended 31.03.2017, the applicable accounting standards has been followed along with proper explanation relating to material departures;

(b) such accounting policies have been selected and applied consistently and judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31.03.2017 and of the profit of the Company for that period;

(c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) the annual financial statements have been prepared on a going concern basis;

(e) proper internal financial controls were in place and that the said internal financial controls were adequate and operating effectively.

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

Extract of Annual Return

In terms ofSection 92(3) ofthe Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014, an extract of the Annual Return in the prescribed form is placed at Annexure-VII.

Acknowledgements

Your Directors express their hearty thanks to the Company’s valued customers, in particular Defence Services, M/s Coal India Limited and its Subsidiaries, M/s Singareni Collieries Company Limited, M/s Steel Authority of India Limited, Railway Board, M/s Delhi Metro Rail Corporation Limited, M/s Bangalore Metro Rail Corporation Limited, M/s Jaipur Metro Rail Corporation Limited, M/s Kolkata Metro Rail Corporation Limited, M/s Bharat Electronics Limited, M/s Bharat Dynamics Limited, Ordinance Factory Board and Defence Research & Developement Organisation for their patronage and confidence reposed on the Company. The Directors also acknowledge and thank all collaborators, vendors and other service providers for their valuable assistance and cooperation extended to the Company.

The Directors express their appreciation to the members of Company’s Consortium of Banks and other Bankers and Financial Institutions for their continued support to the Company’s operations. The Directors also thank all the shareholders / investors for reposing continued confidence in the Company.

The Directors wish to thank the Comptroller & Auditor General of India, the Principal Director of Commercial Audit & Ex-officio Member, Audit Board and Statutory Auditors for their valued cooperation.

The Directors also acknowledge the valuable support and assistance received from various Ministries of Government, in particular Ministry of Defence, Ministry of Coal, Ministry of Mines, Ministry of Steel, Ministry of Railways and the Ministry of External Affairs. The Directors are also grateful to the Government of Karnataka and Kerala for the support and co-operation extended to the Company.

Your Directors take this opportunity to place on record their appreciation for the invaluable contribution made and excellent co-operation extended by the employees and executives at all levels for the continued progress and prosperity of the Company.

For and on behalf of the Board of Directors

Sd/-

Bengaluru D K Hota

30.05.2017 Chairman & Managing Director


Mar 31, 2016

The Board of Directors has pleasure in presenting the 52nd Annual Report and Audited Accounts for the year ended 31.03.2016.

Financial results: (Rs. in Crs.)

Particulars 2015-16 2014-15

Gross Revenue including consortium supplies 3426.02 3129.65

Revenue including excise duty 3287.44 2999.17

Net Revenue from operations 2983.72 2809.19

Profit before Depreciation, Interest and Tax 166.51 129.56

Finance cost 49.03 70.51

Depreciation and amortization expense 53.21 52.14

Profit Before Tax 64.27 6.91

Tax Expense 11.62 0.15

Profit After Tax 52.65 6.76

Profit available for appropriations 272.76 231.87

APPROPRIATIONS :

Proposed Dividend 16.66 4.16

Dividend tax 3.39 0.85

Debenture Redemption Reserve 32.61 6.76

Profit & Loss Account 220.10 220.10

Net Worth 2109.36 2076.76

Turnover & Profitability:

Your Company achieved gross revenue of Rs.3426.02 crores including the value of consortium supplies against Rs.3129.65 crores recorded in the previous year. The revenue from operations (net of consortium supplies and excise duty) stood at Rs.2983.72 crores as against Rs.2809.19 crores in the previous year, registering a growth of 6.21%. The Value of Production (net of consortium supplies and excise duty) is Rs.2740.01 crores as against Rs.2599.93 crores in the previous year. The Profit before Tax was Rs.64.27 crores as against Profit before Tax of Rs.6.91 crores recorded in the previous financial year. Defence Business segment has achieved a Net Sales of Rs.329.60 crores in FY 2015-16 as against Rs.160.86 crores in FY 2014-15, registering a growth of about 105%. Despite non-receipt of orders relating to GS/GSCN Rail Coaches, Rail & Metro segment has registered a Net Sales of Rs.1038.80 crores in FY 2015-16 as against Rs.993.16 crores in FY 2014- 15, thereby registering a growth of 4.60%. Despite sluggish market conditions, Mining & Construction segment achieved a Net Sales of Rs.1615.32 crores in FY 2015-16 as against Rs.1655.17 crores in FY 2014-15, thereby resulting in negative growth of 2.41%.

There was no change in the nature of the business of the Company during the year. Further, there was no material change / commitment occurred affecting the financial position of the Company subsequent to the financial year ended 31.03.2016 till the date of this report.

Performance vis-a-vis MoU:

Performance of your Company, in terms of the Memorandum of Understanding (MoU) signed with the Department of Defence Production, Ministry of Defence (MoD), Government of India, was rated as "Good" for the financial year 2014-15 and the rating for the financial year 2015-16 is estimated as ''Good'' based on self-evaluation.

Further to achieve ''Very Good'' rating for 2016-17, the MoU targets are proposed at Rs.3,150 crores for revenue from operations (net of consortium and excise duty) and Rs.28 crores for Profit before Tax (excluding other income, extraordinary and exceptional items).

Dividend:

Your Board of Directors has recommended a dividend of Rs.4 per share i.e., 40%, for the year 2015-16 keeping in view the future prospects of the Company and at the same time meeting the aspirations of the shareholders.

Exports:

During 2015-16, your Company made exports aggregating Rs.275.23 crores (physical exports of Rs.34.66 crores and deemed exports of Rs.240.57 crores) as against Rs.484.33 crores (physical exports of Rs.106.78 crores and deemed exports of Rs.377.55 crores) during the previous year. The international presence of the Company increased to 66 countries with the entry to Djibouti and Congo during the year.

Quality:

Key initiatives / actions taken during the year for continuous improvement towards Quality Assurance, are as under:

- All the Manufacturing Divisions continue to hold the Quality Management certification based on the surveillance audit recommendations.

- MoU targets relating to increase in vendor base and quality improvement projects were achieved.

- Quality Circle team ''VENUS'' from Earth Moving Division, participated in International Convention on Quality Control Circles ICQCC-2015 held in South Korea, from 5th to 8th October 2015, and won ''GOLD'' medal.

- Around 400 Kaizen projects and 5''S'' with average score were successfully completed.

- The data relating to vendor list vis-a-vis part number for all categories of project items is made available on-line thereby the vendor base has been streamlined.

- A dedicated screen ''BEML Quality BOARD'' on intranet has been created for the display of Quality related improvements. In addition, the material standards and service bulletins are also uploaded.

- Towards customer satisfaction, cross functional teams are active Company-wide to address critical field quality issues.

- Vendor rejections were effectively monitored through Corrective and Preventive Action by Source Inspection Team.

Energy Conservation, Research & Development and Technology Absorption:

Your Company continues to give emphasis on conservation of energy. The efficiency of energy utilization is closely monitored to attain higher level of energy conservation.

Further, the Company''s Research & Development Centre (R&D) continues to play a vital role in design and development of products, critical aggregates and indigenization activity. During the year, R&D designed, developed and launched BL120H Backhoe Loader in addition to successful implementation of various improvement projects for the existing products of the Company.

In terms of Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, the information on conservation of energy and technology absorption including the products developed by the Company during the year is placed at Annexure-I.

Foreign Exchange Earnings and Outgo:

During the year, the Company''s foreign exchange earnings stood at Rs.140 crores and the total foreign exchange utilized was Rs.579.67 crores.

A sum of Rs.1.56 crores was incurred towards deputation of personnel abroad for business / export promotion, after-sales-services and training purposes.

Finance:

The working capital requirements were met from the internal accruals and credit facilities availed from banks. There was no overdue installment of principal and/or interest to the banks.

The Company''s contributions to Central and State Exchequers were in the order of Rs.671.63 crores during the year by way of Excise Duty, Customs Duty, Sales Tax, Service Tax, Dividend and Tax there on, and other taxes and duties.

Fixed Deposits:

The Company did not accept any fixed deposits during the year, and there was no outstanding Fixed Deposits at the beginning / end of the year. Accordingly, there was no default in payment of deposits / interest thereon.

Enterprise Risk Management:

Establishment of Risk Management System, as required under section 134(3)(n) of the Companies Act, 2013, regn. 17(9) of the Listing Regulations, and para 7.3 of DPE Guidelines, is under process. Your Company has engaged the services of M/s. PricewaterCoopers (PWC), to study and implement suitable system for the Company.

Related Party Transactions:

Your Company has formulated a "Policy on Related Party Transactions" to regulate transactions entered into between the Company and its related parties. In terms of Regn. 46(2)(g) of the Listing Regulations, the said policy is placed on the web-site of the Company at www.bemlindia.com.

During the year 2015-16, all transactions that were entered into with the related parties were fair, transparent and at arm''s length basis and also in the ordinary course of business of the Company. The said related party transactions were also duly considered and approved by the Audit Committee.

Report on the performance and financial position of subsidiaries and joint venture company

Subsidiary Companies:

(i) M/s. Vignyan Industries Limited (VIL):

VIL has recorded a turnover of Rs.32.18 crores as against Rs.30.67 crores, thereby registering a growth of about 5% over the previous year. The value of production of the Company stood at Rs.30.88 crores as against Rs.31.50 crores and the Company achieved Profit before Tax of Rs.0.32 crores as against loss of Rs.0.85 crores in the previous year. The Company has shown improvement in financial parameters mainly due to reduction in material consumption and also reduction in employee benefits expense on account of superannuation of employees.

Considering the market demand for high alloy grade castings like T-72 and Tatra Variants relating to Defence business, Axle Box and Buffer Assembly relating to Rail business, and new castings for Mining & Construction business, necessary development and production are planned. These proposals would help VIL to achieve about Rs.74 Crs by 2020-21 as envisaged in the Perspective Plan.

The order book position remained at 1,739 MTs as on 01.04.2016. More and more casting requirements are expected from Holding Company as well as from other customers. With this, VIL is confident of achieving better results for the financial year 2016-17.

(ii) M/s. MAMC Industries Limited (MIL):

Your Company entered into a Consortium Agreement with M/s. Coal India Limited (CIL) and M/s. Damodar Valley Corporation (DVC) on 08.06.2010 for acquiring specified assets of M/s. Mining and Allied Machinery Corporation Limited (under liquidation). The agreement, inter-alia, provided for formation of a Joint Venture company (JV) with the shareholding pattern of 48:26:26 among BEML, CIL and DVC respectively. The Company has paid the proportionate share of Rs.48 crores towards the total bid consideration of Rs.100 crores for the said acquisition, based on the order passed by the Hon''ble High Court of Calcutta. The said assets were taken possession by the MAMC Consortium. Further up to 2015-16, the Company has incurred a sum of Rs.8.76 crores towards maintenance, security and other related expenditure. The expenditure incurred by the CIL and DVC on account of this proposal is not ascertained. The total sum of Rs.56.76 crores is included under the head other loans and advances pending allotment of equity shares in the capital of JV company. Since the Company intends to treat this as long term investment, no independent valuation of the said assets has been carried out and the diminution in the value of investments, if any, can be ascertained only after the formulation of business plan and obtaining necessary approval for shareholders'' agreement from Ministry of Defence (MoD) and consequential allotment of shares in the JV.

In the meantime, a company in the name of ''MAMC Industries Limited'' (MIL) was formed and incorporated by your Company as a wholly owned subsidiary for the intended purpose of JV formation. Shareholders'' agreement, as duly approved by the Boards of all the three members of the consortium, has been submitted to MoD for necessary approval. Further as required by the MoD, ''Business Plan'' and ''Financial Viability Report'' of the proposed JV, is being prepared by Central Mine Planning & Design Institute Limited, a wholly owned subsidiary of CIL.

(iii) M/s. BEML Brazil Industrial Ltda (BBIL):

Your Company entered the Brazil market for brand building exercise and local value addition for the products to meet local standards in anticipation of good business potentials for Freight Wagons and Mining & Construction equipment. As per the requirement under the local laws, BBIL was established. Based on the enquiries, few mining equipment were also supplied to local customers. In the meantime, low cost Chinese equipment flooded the Brazilian market along with their local manufacturing facilities. Further, your Company faced stiff competition in high-end equipment segment from international players like CAT and Komatsu. In view of these developments, it is proposed to handle the Brazilian market directly and to wind up the existing facilities in Brazil.

Joint Venture Company - M/s. BEML Midwest Limited (BMWL):

BMWL was formed and registered with the Registrar of Companies at Hyderabad on 18.04.2007. BEML holds 45% share and M/s Midwest Granite Pvt. Ltd. (MGPL) and P T Sumber Mitra Jaya of Indonesia as partners holding the balance 55% share. The Company has been established to capitalize on the growing business opportunities in the contract mining segment. However, due to certain unauthorized transactions and the oppression and mismanagement by the nominees of MGPL, your Company had filed an application before Hon''ble Company Law Board (CLB) seeking for suitable relief. As a counter measure, MGPL had also filed a petition on the matter. CLB vide its common order dated 01.06.2012 directed the Central Government, to appoint an inspector to investigate the affairs of BMWL and take appropriate action. As per the legal advice, your Company preferred two appeals before Hon''ble High Court of Andhra Pradesh at Hyderabad against the said common order of CLB. The Hon''ble High Court passed the order on 19.08.2013, thereby setting aside the said common order and directing CLB to proceed with a fresh enquiry, and decide the issue in accordance with law and merits also taking into consideration the report of investigation as directed by CLB and pass appropriate orders without getting influenced by the impugned common order of CLB. The Company has filed an application with CLB praying for necessary directions to Regional Director, Ministry of Corporate Affairs, Hyderabad for time bound completion of investigation so that the matter could effectively be heard by CLB.

There was no company which became or ceased to be a subsidiary, joint venture or associate of the Company during the year under review.

A separate section on report on the performance and financial position of each of the subsidiaries, joint venture company are placed under Form AOC-1 provided in the consolidated financial statement of the Company, in terms of section 129(3) of the Companies Act, 2013 read with rule 5 of Companies (Accounts) Rules, 2014.

Consolidated Financial Statement:

Consolidated Financial Statement of your Company and its subsidiaries and joint venture company is attached to this report.

Vigilance:

The Company has an independent Vigilance Department headed by the Chief Vigilance Officer. The Vigilance Department handled the complaints, conducted investigations / verifications, recommended disciplinary action, did anti- corruption work, preventive vigilance and technical examination / inspections of works and contracts with the objective of promoting integrity, transparency, accountability, equity, as also increasing efficiency and productivity by leveraging technology, in the organization.

During the year, a concept paper on Preventive Vigilance including effective strategies and the measures to be adopted in the organisation was prepared mainly focusing on risk management approach to prevention of corruption. In addition, the Vigilance Department recommended certain system improvement based on the in-house experience as well as the best practices followed in other public system.

Procurements:

Your Company endeavours to procure materials and services through e-procurement platform on ERP system. During the year, about 75% of the total requirements were sourced through e-procurement.

Micro and Small Enterprises:

Keeping in view the effective implementation of Public Procurement Policy for Micro and Small Enterprises (MSEs) Order 2012, following steps have been adopted:

- List of components that could be sourced from MSEs are placed on the Company''s web-site at www.bemlindia.com for the information of MSE vendors.

- Communication has been sent to all the registered vendors regarding the said policy with the objective of achieving an overall procurement of 20% from MSEs. Further, for enhancing the procurement from MSEs owned by SC/ST, all the vendors are approached for capturing necessary details and update the data bank.

- Appropriate weightage was given for MSEs in the MoU from year 2015-16 onwards in order to ensure effective implementation of the policy.

- In order to enhance the vendor base from MSEs, your Company is participating in various exhibitions organized by Micro, Small and Medium Enterprises, National Small Industries Corporation, etc.

- During 2015-16, your Company placed orders for goods and services to the extent of Rs.188.58 crores from MSEs which constituted 12.37% of the total procurement value of Rs.1524.45 crores.

Compliance under the Right to Information Act, 2005:

The information required to be provided to citizens under Section 4(1)(b) of RTI Act, 2005 is placed on Company website, www.bemlindia.com. It contains general information of the Company, functions, powers and duties of employees/officers, decision making process, rules, regulations, manuals and records held by the Company, directory of the Company''s officers, pay scales of officers / employees etc., and procedure for seeking information and inspection of records. The Company has nominated a Central Public Information Officer, Appellate Authority, Transparency Officer and six Central Assistant Public Information Officers representing Complex / Divisions to attend to the queries and appeals. Further, during the year 2015-16 the Company received 206 applications and queries related to human resources, recruitment, contracts, tenders, business related matters etc., and the same were disposed off.

Rajbhasha:

Your Company continued its efforts in implementing the Official Language (OL) Policy. OL Implementation Committee is constituted to review the status of use of Hindi across the Company. The said Committee met four times during the year and reviewed the implementation status. OL Inspection was carried out by Joint Director, Departement of Official Language, Ministry of Defence, New Delhi, at Regional Offices at Delhi and Chennai. First Sub- Committee of the Parliamentary Committee on OL inspected Regional Office at Delhi and Kolkata, reviewed the implementation of OL policy and suggested additional measures for implementation. 542 executives/employees were trained in Hindi under Hindi Teaching Scheme of Government, of India, during the period under review. 10 Hindi workshops were organized in which 213 officers / employees were trained. Hindi Fortnight was observed from 01.09.2015 to 14.09.2015 throughout the Company and variety of competitions was organized. Website of your company is made available in Hindi also and updated the contents periodically.

Corporate Governance:

A report on Corporate Governance along with a Compliance Certificate and Management Discussion and Analysis Report as required under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and DPE Guidelines is placed at Annexure-II.

Awards:

- On 03.08.2015, your Company was bestowed with Rajbhasha Award in Big PSU category by the Town Official Language Implementation Committee for PSUs for the commendable performance in implementation of Hindi during the year 2014-15.

- On 20.11.2015, Shri Aniruddh Kumar, Director (Rail & Metro Business) was bestowed with the "Eminent Engineer Award" by the Institution of Engineers (India) for his excellent services rendered in the field of Heavy Engineering Industry.

- On 26.12.2015, your Company had bagged the "Star Performer Award" in the Export category for the year 2013-14 from Engineering Export Promotion Council.

- On 27.01.2016, your Company was bestowed with prestigious "Raksha Mantri''s Award for Excellence" under the Institutional Award category for Best Performance in Exports during 2012-13.

- On 12.04.2016, your Company won the "SCOPE Award for Excellence and Outstanding Contribution to the Public Sector Management - Special Institutional Category (Turnaround)" for the year 2013-14.

Manpower:

The number of employees of the Company as on 31.03.2016 stood at 8,827 as against 9,599 of the previous year.

The category-wise number of SC/ST and Ex-Servicemen employees as on 01.01.2016 and recruitment made are as under :

Category / Total No. of SC/ST and Ex-servicemen Strength Group As on Scheduled Caste

1.1.2015 1.1.2016 1.1.2015 1.1.2016

Group-A 1523 1549 268 283

Group-B 976 794 178 135

Group-C 7244 6568 1602 1475

Group-D 27 25 16 14

Total 9770 8936 2064 1907

Category/Group No of SC/ST and Ex-servicemen Scheduled Tribe Ex-Service Men 1.1.2015 1.1.2016 1.1.2015 1.1.2016

Group-A 56 56 7 6

Group-B 76 65 11 13

Group-C 339 306 308 275

Group-D 4 4 - -

Total 475 431 326 294

The Company recruited 19 candidates during the year under review as under:

- 1 from Scheduled Caste in Group C,

- 7 from Scheduled Tribe in Group B, and

- 11 from Other Backward Class, out of which 2 in Group A and 9 in Group B.

Human Resource Development and Industrial Relations:

The HR Department identified several thrust areas for continuously updating technical/professional knowledge and skills of employees towards fostering a performance driven work culture in all areas of operations particularly at shop floors. During the year, the Company organized several in- house and external training programs covering 23,156 man-days.

The overall industrial relation situation in the Company was cordial during the year.

Sexual Harassment of Women at Workplace:

In terms of the provisions of the Sexual Harassment of Women at Work Place (Prevention, Prohibition & Redressal) Act, 2013, an Internal Complaints Committee is constituted in all the manufacturing units. No sexual harassment complaint was reported under the said Act during the year 2015-16.

Corporate Social Responsibility & Sustainability:

In terms of Section 135 of the Companies Act, 2013 and DPE Guidelines on MoU, the Corporate Social Responsibility & Sustainability (CSR) Committee has been constituted. Further details of CSR are placed under the same heading in Annexure-II and an annual report on CSR activities undertaken during the year is placed at Annexure-III.

Environment and Pollution Control:

In order to protect the environment in and around the factory premises/township, tree plantation were undertaken. Your Company planted saplings of various types of avenue trees / flower bearing trees in the vacant lands belonging to the Company for maintaining ecological balance in the surrounding areas.

Particulars of Employees:

There were no employees of the Company who received remuneration in excess of the limits prescribed under Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

Statutory Auditors:

The Comptroller & Auditor General of India has appointed M/s. S.R.R.K Sharma Associates, Chartered Accountants, Bengaluru, as the Statutory Auditors for the financial year 2015-16.

Observation, if any, made in the Independent Auditors'' Report on the financial statement including consolidated financial statement and the reply of the Board of Directors thereto will be given by way of an addendum to this report.

Cost Auditors:

Your Company appointed M/s. Murthy & Co., LLP, Cost Accountants, Bengaluru, as Cost Auditors for the year 2015-16 in terms of Section 148 of the Companies Act, 2013, read with the Companies (Cost Records and Audit) Rules, 2014 for preparing and filing necessary ''Cost Audit Report'' for Railway Rolling Stock and its Parts. Further, as required under the said Rules, the remuneration payable to the Cost Auditor is placed in the notice convening 52nd Annual General Meeting for ratification of the members.

Secretarial Auditors:

In terms of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company appointed M/s VN & Associates, Practicing Company Secretaries, Bengaluru, to undertake the Secretarial Audit of the Company for the year 2015-16.

The Secretarial Audit Report and the replies to the observations made in the said report are placed at Annexure-IV.

C&AG Audit:

The Comments of the Comptroller & Auditor General of India under section 143(6)(b) of the Companies Act, 2013 on the financial statements including consolidated financial statement are appended at page No. 105 and 146 to the annual report.

Directors:

(1) Appointment of Independent Directors:

During the year, the Government, of India, vide letter Ref: No.10(4)/2012-D(BEML), dated 02.12.2015, appointed S/s B P Rao, Sudhir Kumar Beri and M G Raghuveer as Independent Directors on the Board of the Company.

Pursuant to Schedule IV of the Companies Act, 2013, the appointment of the aforesaid Independent Directors was formalized through a letter of appointment setting out the terms and conditions of their appointment, which is also placed on the web- site of the Company at www.bemlindia.com.

(2) Statement on declaration by Independent Directors:

Independent Directors have given declarations u/s 149(7) of the Companies Act, 2013 that they meet the criteria of independence as laid down u/s 149(6) of the said Act.

(3) Remuneration of Directors:

Your Company being a Central Public Sector Enterprise, the appointment, tenure and remuneration of Directors are decided by the President of India. The Government communication appointing the Functional Directors indicate the detailed terms and conditions of their appointment including a provision for the applicability of the relevant rules of the Company.

Government Nominee Directors were neither paid any remuneration nor sitting fee for attending Board/ Committee meetings.

Independent Directors are paid only sitting fee of Rs.20,000 per meeting of the Board / Committee of the Board attended by them. Further, if there are more than one such meeting on the same day, a sitting fee @ Rs.10,000 is paid for the second and subsequent meeting/s.

Neither there was payment of commission to the Board of Directors nor any stock option scheme offered to them during the year.

Further, none of the Directors had any pecuniary relationship nor entered into any related party transaction with the Company during the year.

Pursuant to the provisions of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the details of remuneration paid to the Directors during 2015-16 are provided under the ''Report on Corporate Governance'' annexed to this report.

(4) Change of Directors:

In terms of Article 97 of the Articles of Association of the Company, the President of India is vested with the power to appoint the Directors of the Company from time to time and also shall determine the term of office of such Directors. Accordingly, the following appointments on the Board of your Company were effected as per the directives of the President of India:

- Shri Sanjay Prasad, Joint Secretary (Land System), Department of Defence Production, Ministry of Defence (MoD), was appointed as Government Nominee Director vide MoD letter No.10(2)/2011-D(BEML) dated 01.10.2015 in place of Smt. Kusum Singh.

- Shri B P Rao, Shri Sudhir Kumar Beri and Shri M G Raghuveer were appointed as Independent Directors vide MoD letter No.10(4)/2012-D(BEML) dated 02.12.2015.

- Shri B R Viswanath was appointed as Director (Mining & Construction Business) of the Company vide MoD letter No. 10(14)/2014- D(BEML) dated 27.01.2016. He assumed the charge on 01.02.2016.

- Shri R H Muralidhara was appointed as Director (Defence Business) of the Company vide MoD letter No. 10(13)/2014-D(BEML) dated 08.02.2016. He assumed the charge on 01.03.2016.

- Smt. Surina Rajan, Additional Secretary (Defence Production), MoD, was appointed as Government Nominee Director vide MoD letter No.8(80)/2015-D(Coord/DDP) dated 02.06.2016.

- Shri D K Hota, Director (HR) of the Company was appointed as the Chairman & Managing Director of the Company vide MoD letter No. 8(2)/2015-D(BEML) dated 19.05.2016. He assumed charge on 01.07.2016.

The Board placed on record its deep appreciation of the valuable services rendered by the Directors whose term of office ended during the year.

(5) Number of meetings of Board:

During the year, 11 meetings of the Board were held on 29.04.2015, 28.05.2015, 29.05.2015, 10.07.2015, 17.07.2015, 14.08.2015, 15.09.2015, 06.11.2015, 21.12.2015, 13.01.2016 and 11.02.2016, Requirements on number and frequency of meetings, in terms of Section 173(1) of the Companies Act, 2013, Regn. 17(2) of the Listing Regulations, and Para 3.3.1 of the DPE Guidelines, were complied with in full.

(6) Directors'' Responsibility Statement:

Pursuant to section 134(5) of the Companies Act, 2013, your Directors state that, based on the representation received from the management,

(a) in the preparation of the annual financial statements for the year ended 31.03.2016, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(b) such accounting policies have been selected and applied consistently and judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31.03.2016 and of the profit of the Company for the year ended on that date;

(c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) the annual financial statements have been prepared on a going concern basis;

(e) proper internal financial controls were put in place and that the internal financial controls were adequate and operating effectively.

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

Extract of Annual Return:

In terms of Section 92(3) ofthe Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014, an extract of the Annual Return in the prescribed form is placed at Annexure-V

Acknowledgements:

Your Directors express their hearty thanks to the Company''s valued customers, in particular Defence Services, M/s. Coal India Limited and its Subsidiaries, M/s. Singareni Collieries Company Limited, M/s. Steel Authority of India Limited, Railway Board, M/s. Delhi Metro Rail Corporation Limited, M/s. Bangalore Metro Rail Corporation Limited and M/s. Jaipur Metro Rail Corporation for their patronage and confidence reposed on the Company. The Directors also acknowledge and thank all collaborators, vendors and other service providers for their valuable assistance and cooperation extended to the Company.

The Directors express their appreciation to the members of Company''s Consortium of Banks and other Bankers and Financial Institutions for their continued support to the Company''s operations. The Directors also thank all the shareholders / investors for reposing continued confidence in the Company.

The Directors wish to thank the Comptroller & Auditor General of India, the Principal Director of Commercial Audit & Ex-officio Member-Audit Board, Statutory Auditors, Cost Auditors and Secretarial Auditors for their valued co-operation.

The Directors also acknowledge the valuable support and assistance received from various Ministries of Government, in particular Ministry of Defence, Ministry of Coal, Ministry of Mines, Ministry of Steel, Ministry of Railways and the Ministry of External Affairs. The Directors are also grateful to the Government, of Karnataka and Kerala for the support and co-operation extended to the Company.

Your Directors take this opportunity to place on record their appreciation for the invaluable contribution made and excellent co-operation extended by the employees and executives at all levels for the continued progress and prosperity of the Company.

For and on behalf

of the Board of Directors

Sd/-

Bengaluru P Dwarakanath

27.05.2016 Chairman & Managing Director


Mar 31, 2015

Dear Members,

The Board of Directors has pleasure in presenting the 51st Annual Report and Audited Accounts for the year ended 31.03.2015.

Financial results: (Rs. in Crs )

Particulars 2014-15 2013-14

Gross Revenue including consortium supplies 3129.65 3262.20

Revenue including excise duty 2999.17 3120.17

Net Revenue from operations 2809.19 2911.51

Profit before Depreciation, Interest and Tax 129.56 173.10

Finance costs 70.51 110.46

Depreciation and amortization expense 52.14 53.56

Profit Before Tax 6.91 9.08

Tax Expense 0.15 4.40

Profit After Tax 6.76 4.68

Profit available for appropriations 231 .87 239.49 (after adjustment of carrying amount of assets with Nil useful life as on 01.04.2014 & profit during the year)

APPROPRIATIONS :

Proposed Dividend 4.16 4.16

Dividend tax 0.85 0.71

Debenture Redemption Reserve 6.76 4.68

Profit & Loss Account 220.10 229.94

Net Worth 2076.76 2079.84

Turnover & Profitability:

Your Company achieved gross revenue of Rs. 3129.65 crores including the value of consortium supplies against Rs. 3262.20 crores of corresponding value in the previous year. The revenue from operations (net of consortium supplies and excise duty) stood at Rs. 2809.19 crores as against Rs. 2911.51 crores in the previous year, registering a marginal decline of 3.51% in growth. The Value of Production (net of consortium supplies and excise duty) is ''2599.93 crores as against Rs. 2814.45 crores in the previous year. The Profit before Tax was Rs. 6.91 crores as against Profit before Tax of Rs. 9.08 crores recorded in the previous financial year. The reduction in revenue in Rail & Metro segment is due to lack of orders relating to GS/GSCN Rail Coaches. In spite of persistent follow-up, orders from Railway Board did not materialize. Further, Rail & Metro segment has registered a Net Sales of Rs. 993.16 crores during 2014-15 as against Rs. 1314.19 crores during 2013-14, thereby resulting in negative growth of 24.43%.

Defence Business segment has achieved a Net Sales of Rs. 160.86 crores in 2014-15 as against Rs. 143.42 crores in 2013-14, registering a growth of 12.16%. However, non-availability of required input materials for Defence supplies continued during the year due to which the set targets could not be achieved in this segment. Despite sluggish market conditions, Mining & Construction segment achieved a Net Sales of Rs. 1652.52 crores in 2014-15 as against Rs.1446.08 crores in 2013-14, thereby registering a growth of 14.28%.

There was no change in the nature of the business of the Company during the year.

Performance vis-a-vis MoU:

Performance of your Company, in terms of the Memorandum of Understanding signed with the Department of Defence Production, Ministry of Defence (MoD), Government of India, was rated as "Good" for the financial year 2013-14 and the rating for the financial year 2014-15 is estimated as ''Good'' based on self-evaluation.

Further to achieve ''Very Good'' rating for the 2015-16, the MoU targets are set at Rs. 3800 crores for net sales turnover and Rs. 380 crores for gross operating margin.

Dividend:

The Board of Directors of your Company has recommended a dividend of Rs. 1.00 per share i.e., 10%, for the year 2014-15 keeping in view the future prospects of the Company and at the same time meeting the aspirations of the shareholders.

Exports:

During 2014-15, your Company made exports aggregating ''484.33 crores (physical exports of Rs. 106.78 crores and deemed exports of Rs. 377.55 crores) as against ''81.05 crores (physical exports of Rs. 78.13 crores and deemed exports of Rs. 2.92 crores) in the previous year. The international presence of the Company increased to 64 countries with the entry of Vietnam during the year.

Quality:

Key initiatives taken during the year for continuous

improvement towards assuring Quality are as under:

* All the manufacturing divisions continue to hold the Quality Management Certification based on the surveillance audit recomme- ndations.

* MoU targets relating to internal failure cost, increase in vendor base, quality improvement projects and ''5S'' were achieved.

* Quality Circle (QC) team ''TITANS'' from Bengaluru Complex participated in International Convention on Quality Control Circles ICQCC-2014 held in Colombo, Sri Lanka, from 12th to 15th October 2014, and won ''SILVER'' award.

* Around 750 Kaizen projects across the divisions were successfully completed .

* Towards ''Swachh Bharat Abhiyan'', efforts are on for effective implementation of ''5S'' - Good Housekeeping Techniques, across the Company. Palakkad Complex competed for ''5S Excellence Award 2014'' instituted by M/s. CII-Southern Region and received ''Certificate of Merit''.

* As a part of vendor development activity, 12 firms have been accorded "Inspection Waiver" status based on auditing. Vendor rejections were effectively monitored through Corrective and Preventive Action by Source Inspection Team.

* Towards customer satisfaction, Cross functional teams are active Company-wide to address critical field quality issues.

* 13 personnel from Quality Engineering have been deputed to training programmes conducted by IIT-Madras, on the areas covering Foundry & Forging Engineering, Computational Fluid Dynamics, Diesel

Engine Systems and Performance, Noise Vibration & Harshness Analysis, Mobile Hydraulics & Electronic Controls.

Energy Conservation and Technology Absorption:

Your Company continues to give emphasis on conservation of energy. The efficiency of energy utilization is closely monitored to attain higher level of energy conservation.

Further, the Company''s Research & Development Centre continues to play a vital role in design and development of products, critical aggregates, indigenization activity, etc. During the year, R&D developed and launched certain products in Mining & Construction, Defence and Rail & Metro segments.

In terms of Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, the information on conservation of energy and technology absorption including the products developed by the Company during the year is placed at Annexure-I.

Foreign Exchange Earnings and Outgo:

During the year, the Company''s foreign exchange earnings stood at Rs. 258.46 crores and the total foreign exchange utilized was Rs. 313.85 crores.

A sum of Rs. 1.39 crores was incurred towards deputation of personnel abroad for business / export promotion, after-sales-services and training purposes.

Finance:

The working capital requirements were met from the internal resources and credit facilities availed from banks. There was no overdue installment of principal and/or interest to the banks.

The Company''s contribution to Central and State Exchequer was in the order of Rs. 557.65 crores during the year by way of Excise Duty, Customs Duty, Sales Tax, Service Tax, Dividend and Tax thereon, and other taxes and duties.

Fixed Deposits:

The Company did not accept any fixed deposits during the year, and there was no outstanding Fixed Deposits at the beginning / end of the year. Further, there is no default in payment of deposits / interest thereon during the year.

Enterprise Risk Management:

Establishment of Risk Management System in terms of Clause 49(VI) of the Listing Agreement and the provisions ofthe Companies Act, 2013 is under process.

Related Party Transactions:

Your Company has formulated a "Policy on Related Party Transactions" to regulate transactions entered into between the Company and its related parties. The said policy may be accessed at Company''s web- site http://www.bemlindia.com/documents/ Financials/Policy RPT.pdf.

During the year 2014-15, all transactions that were entered into with the related parties were fair, transparent and at arm''s length basis and also in the ordinary course of business of the Company. The said related party transactions were duly considered and approved by the Audit Committee.

Particulars of Loans, Guarantees or Investments:

Details of loans, guarantees or investments made under section 186 of the Companies Act, 2013 are given in the Note Nos.12,14 and 16 to the Financial Statements.

Report on the performance and financial position of subsidiaries and joint venture company

Subsidiary Companies:

(i) M/s. Vignyan Industries Limited (VIL):

VIL has recorded a turnover of Rs. 30.67crores as against Rs. 36.75 crores, thereby resulting in a decrease of about 17% over the previous year. The value of production of the Company stood at Rs. 31.50 crores as against Rs. 30.73 crores and the Company contained the loss at Rs. 0.85 crores as against loss of''1.45 crores in the previous year. The major reasons for loss were due to breakdown of critical equipments and non-availability of sand. Further, frequent and unscheduled power cut resulted in reduction of Fettling and Proof Machining facility with Tarikere based Fettlers.

As already planned to reduce dependency on Holding Company, VIL could secure order from MIDHANI to manufacture and supply 800 MTs of High Manganese U-2 Steel Castings valued at Rs. 10.82 Crores. Further, VIL has obtained extension from Integral Coach Factory for supply of Axle Box Housing Castings required for rail coaches.

Further, considering the market demand for high alloy grade castings like T-72 and Tatra Variants relating to Defence business, Axle Box and Buffer Assembly relating to Rail business, and new castings for Mining & Construction business, necessary development and production are planned. These proposals would help VIL to achieve Rs. 73.75 crores by 2020-21 as envisaged in the Perspective Plan.

The order book position remained at 3423 MTs as on 01.04.2015. More and more casting requirements are expected from Holding Company as well as from other customers. With this, VIL is confident of achieving better results for the financial year 2015-16.

(ii) M/s. MAMC Industries Limited (MIL):

Your Company has entered into a Consortium Agreement with M/s. Coal India Limited (CIL) and M/s. Damodar Valley Corporation (DVC) on 08.06.2010 for acquiring specified assets of M/s. Mining and Allied Machinery Corporation Limited (under liquidation). The agreement, inter-alia, provided for formation of a Joint Venture company with a shareholding pattern of 48:26:26 among BEML, CIL and DVC respectively. The Company has paid the proportionate share of Rs. 48 crores towards the total bid consideration of Rs. 100 crores for the said acquisition, based on the order passed by the Hon''ble High Court of Calcutta. The said assets were taken possession by the MAMC Consortium. Further up to 2014-15, the Company incurred a sum of Rs. 8.18 crores towards maintenance, security and other related expenditure. The expenditure incurred by the CIL and DVC on account of this proposal is not ascertained. The total sum of Rs. 56.18 crores is included under the head other loans and advances pending allotment of equity shares in the capital of JV company. Since the Company intends to treat this as long term investment, no independent valuation of the said assets has been carried out and the diminution in the value of investments, if any, can be ascertained only after the formulation of business plan and obtaining necessary approval for shareholders'' agreement from MoD and consequential allotment of shares in the JV.

In the meantime, a Company in the name of ''MAMC Industries Limited (MIL)'' was formed and incorporated by the Company as a wholly owned subsidiary for the intended purpose of JV formation. Shareholders'' agreement, as duly approved by the Boards of all the three members of the consortium, has been submitted to MoD for necessary approval. Further as required by the MoD, ''Business Plan'' and ''Financial Feasibility Report / Study'' of the proposed JV, is being prepared by engaging IIT-Kanpur.

(iii) M/s. BEML Brazil Industrial Ltda (BBIL):

Your Company entered the Brazil market for brand building exercise and local value addition for the products to meet local standards in anticipation of good business potentials for Freight Wagons and Mining & Construction equipment. As per the requirement under the local laws, BBIL was established. Based on the enquiries, few mining equipment were also supplied to local customers. In the meantime, low cost Chinese equipment flooded the Brazilian market along with their local manufacturing facilities. Further, your Company faced stiff competition in high-end equipment segment from international players like CAT and Komatsu. In view of these developments, it is proposed to handle the Brazilian market directly and to wind up the existing facilities in Brazil.

Joint Venture Company - M/s. BEML Midwest Limited (BMWL):

BMWL was formed and registered with the Registrar of Companies at Hyderabad on 18.04.2007. BEML holds 45% share and M/s Midwest Granite Pvt. Ltd. (MGPL) and P T Sumber Mitra Jaya of Indonesia as partners holding the balance 55% share. The Company has been established to capitalize on the growing business opportunities in the contract mining segment. However, due to certain unauthorized transactions and the oppression and mismanagement by the nominees of MGPL, your Company had filed an application before Hon''ble Company Law Board (CLB) seeking for suitable relief. As a counter measure, MGPL had also filed a petition on the matter. CLB vide its common order dated 01.06.2012 directed the Central Government to appoint an inspector to investigate the affairs of BMWL and take appropriate action. As per the legal advice, your Company preferred two appeals before Hon''ble High Court of Andhra Pradesh at Hyderabad against the said common order of CLB. The Hon''ble High Court passed the order on 19.08.2013, thereby setting aside the said common order and directing CLB to proceed with a fresh enquiry, and decide the issue in accordance with law and merits also taking into consideration the report of investigation as directed by CLB and pass appropriate orders without getting influenced by the impugned common order of CLB. CLB has commenced fresh hearing on the matter and the investigation is also under progress.

There was no company which became or ceased to be a subsidiary, joint venture or associate of the Company during the year under review.

A separate section on report on the performance and financial position of each of the subsidiaries, joint venture company are placed under Form AOC-1 provided in the consolidated financial statement of the Company.

Vigilance:

The Company has an independent Vigilance Department headed by the Chief Vigilance Officer. The Vigilance Activities were carried out in a holistic manner and covered prevention, detection and enforcement. The Vigilance Department handles the complaints and after due verification / investigation recommends for suitable measures including disciplinary action, change in policy and procedures, system improvement and establishing best practice.

During the year, the Vigilance Department initiated various progressive measures such as job rotation, information and communication technology solutions and exit interview format for implementation.

With the objective of professionalizing and building capacities of officials involved in procurement management, the Company has partnered with the World Bank sponsored Outreach Program in Public Procurement Management. Under this aegis 40 executives of the Company qualified the certificate program in public procurement.

To mark the observance of the Vigilance Awareness Week-2014 and in sync with the theme ''Combating Corruption-Technology as an enabler'' a one day workshop on "e-Procurement" was organized for the selected executives cutting across various functions of the Company.

Procurements:

Your Company endeavours to procure materials and services through e-procurement platform on ERP system. During the year, about 74% of the total requirements were sourced through e-procurement.

Further, all the contracts for procurements for value Rs. 2 Crs and above are subjected to Integrity Pact (IP) in line with Central Vigilance Commission (CVC) Guidelines. IP envisages an agreement between the vendor and the Company not to resort to corrupt practices of whatsoever nature in any aspect / stage of each such contract. Draft of the IP agreement is placed at www.bemlindia.com. Independent External Monitors (IEMs), as recommended by CVC, review the IPs periodically and confirm the implementation inline with the Guidelines. Further, the IEMs hold structural meetings with the Chairman and Managing Director and apprise accordingly. During the year, there were 62 IPs entered with the vendors for value aggregating Rs. 365.58 Crs.

Micro and Small Enterprises:

Keeping in view the effective implementation of Public Procurement Policy for Micro and Small Enterprises (MSEs) Order 2012, following steps have been adopted:

* List of components that could be sourced from MSEs are placed on the Company''s web-site (www.bemlindia.com) for the information of MSE vendors.

* Communication has been sent to all the registered vendors regarding the said policy with the objective of achieving an overall procurement of 20% from MSEs out of the total annual purchases. Further, for enhancing the procurement from MSEs owned by SC/ST, all the vendors are approached to capture the details and update the data bank.

* Appropriate weightage has been given for MSEs in the MoU from year 2014-15 onwards in order to ensure effective implementation of the policy.

* In order to enhance the vendor base from MSEs, your Company is participating in various exhibitions organized by Micro, Small and Medium Enterprises, National Small Industries Corporation, etc, wherein components are being displayed for MSEs and details / advantages of the above policy is propagated.

* During 2014-15, your Company placed orders for goods and services to the extent of * 169.34 crores from MSEs which constituted 12.70% of the total procurement value of Rs. 1333.80 crores.

Compliance under the Right to Information Act, 2005:

The information required to be provided to citizens under section 4(1)(b) of Right to Information Act, 2005 is placed on Company''s website, www.bemlindia.com. It contains general information of the Company, functions, powers and duties of employees/officers, decision making process, rules, regulations, manuals and records held by the Company directory of the Company''s officers, pay scales of officers / employees etc., and procedure for seeking information and inspection of records. The Company has nominated a Central Public Information Officer, Appellate Authority, Transparency Officer and five Central Assistant Public Information Officers representing Complex / Divisions to attend to the queries and appeals. Further, during the year 2014-15 the Company received 202 applications and queries and the same were disposed off.

Rajbhasha:

Your Company continued its efforts in implementing the Official Language (OL) Policy by adopting the following measures during the year:

* All the prescribed documents under the OL policy were prepared and issued in Hindi- English bilingual form.

* OL Implementation Committee is constituted to review the status of use of Hindi across the Company.

* OL Inspection was carried out by Joint Director, Department of Official Language, MoD, at District Offices in Cochin and Guwahati, Mysuru Complex and KGF Complex.

* First Sub-Committee of the Parliamentary Committee on OL inspected your Corporate Office and District Office-Udaipur, reviewed the implementation of OL policy and suggested additional measures for implementation.

* 354 executives/employees were trained in Hindi under Hindi Teaching Scheme of Government of India, during the period under review.

* 10 Hindi workshops were organized in which 204 officials were trained

* Hindi Fortnight was observed from 16.09.2014 to 30.09.2014 throughout the Company and variety of competitions was organized.

* To encourage the employees reading Hindi books, a separate Hindi Library is functioning at Corporate Office with good number of Hindi books and periodicals.

* Website of your Company is made available in Hindi and are updated the contents periodically.

Corporate Governance:

A report on Corporate Governance and Management Discussion and Analysis Report along with a Compliance Certificate as required under the Equity Listing Agreement is placed at Annexure-II.

Awards:

* On 22.11.2014, your Company was awarded with ''India''s Top Challenger Company'' in the category of Construction and Engineering at the 12th Annual Construction World Global Awards-2014 function held at Mumbai.

* On 16.12.2014, your Company received two Awards for its equipment under the categories of Best Seller-Rigid Dump Trucks and Best Seller-Crawler Dozers in the 2nd Equipment India Awards-2014 at Delhi.

* On 05.01.2015, your Company has won ''Star Performer'' award in the Export category for the year 2012-13 from EEPC India.

Manpower:

The number of employees of the Company as on

31.03.2015 stood at 9,599 as against 10,328 of the previous year.

The category-wise number of SC/ST and Ex- Servicemen employees as on 01.01.2015 and recruitment made are as under :

Category / Total No. of SC/ST and Ex-servicemen Group Strength - As 0n Scheduled Caste

1.1.2014 1.12015 1.1.2014 1.12015

Group-A 1504 1523 257 268

Group-B 1228 976 214 178

Group-C 7737 7244 1649 1602

Group-D 30 27 16 16

Total 10499 9770 2136 2064



Category / No. of SC/ST and Ex-servicemen Group Scheduled Tribe Ex-Service Men

1.12014 1.1.2015 1.1.2014 1.12015

Group-A 51 56 10 7

Group-B 82 76 14 11

Group-C 328 339 318 308

Group-D 4 4 - -

Total 465 475 342 326

The Company recruited only two candidates, each one in Group B and C, from General category during the year.

Human Resources Development & Industrial Relations:

The HR Department identified several thrust areas for continuously updating technical/professional knowledge and skills of employees towards fostering a performance driven work culture in all areas of operations particularly at shop floors. During the year, the Company organized several in- house and external training programs covering 24,546 man-days.

The overall industrial relation situation in the Company was cordial during the year.

Sexual Harassment of Women at Workplace:

In terms of the provisions of the Sexual Harassment of Women at a Work Place (Prevention, Prohibition & Redressal) Act, 2013, an Internal Complaints Committee is constituted in all the manufacturing units. No case was reported / filed under the said Act during the year 2014-15.

Corporate Social Responsibility & Sustainability:

In terms of DPE Guidelines on MoU and Section 135 of the Companies Act, 2013, the Corporate Social Responsibility & Sustainability Committee (CSRS) has been constituted to examine the proposals for the approval of CSRS plan and review the implementation / execution of the plan and steering the CSRS agenda of the Company. The CSRS Committee consists of the following Directors:

Shri. N P Gupta : Chairman / Independent Director

Shri. Deepak Kumar Hota : Member / Director (HR)

Shri. Aniruddh Kumar : Member/Director (Rail & Metro)

Board of Directors of your Company has approved a "Policy on Corporate Social Responsibility and Sustainability" to ensure commitment at all levels in the organization, operate the Company''s business in an economically, socially and environmentally responsible and sustainable manner, while recognizing the interests of all stakeholders. The CSRS activities are monitored periodically by the Committee and an annual report on CSRS activities undertaken during the year 2014-15 is enclosed at Annexure-III. The average net profit of the Company for the last three financial years is nil. Hence, the amount to be spent on CSRS activities for the year is nil as per the provisions of the Companies Act, 2013. However, in continuing with the endeavour towards being a socially responsible business entity, the Company incurred a sum of Rs. 3.89 Crs towards CSRS Activities during the year.

The CSR policy of the Company and the activities undertaken are placed on the Company''s web-link at http://www.bemlindia.com/documents/ aboutus/BEML CSR Policy 19092014.pdf and http://www.bemlindia.com/ documents/aboutus/BEML CSR SD Activities 2014-15.pdf, respectively.

Environment and Pollution Control:

In order to protect the environment in and around the factory premises/township,tree plantation were undertaken. Your Company planted saplings of various types of avenue trees / flower bearing trees in the vacant lands belonging to the Company for maintaining ecological balance in the surrounding areas.

Particulars of Employees:

There were no employees of the Company who received remuneration in excess of the limits prescribed under Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

Statutory Auditors:

M/s. S.R.R.K Sharma Associates, Chartered Accountants, Bengaluru, were appointed by Comptroller & Auditor General of India as Statutory Auditors for the year 2014-15.

Observation, if any, made in the Independent Auditors'' Report on the standalone and consolidated financial statements and the reply of the Board thereto will be given by way of an addendum to this report.

Cost Auditors:

Your Company appointed M/s. Murthy & Co., LLP, Cost Accountants, Bengaluru, as Cost Auditors for the year 2014-15 in terms of Section 148 of Companies Act, 2013, read with the Companies (Cost Records and Audit) Rules, 2014 for preparing and filing necessary ''Cost Audit Report'' for Railway Rolling Stock and its Parts. Further, as required under the said Rules, the remuneration payable to the Cost Auditor is placed in the notice convening 51st Annual General Meeting for ratification of the members.

Secretarial Audit Report:

In terms of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company appointed Shri S. Viswanathan, Practicing Company Secretary, to undertake the Secretarial Audit of the Company for the year 2014- 15. The report of the said Secretarial Audit is placed at Annexure-IV.

Reply of the Board of Directors to the observation made in the said report regarding composition of Board and fixation of remuneration to Directors are provided in the ''Report on Corporate Governance'' annexed to this report.

Directors:

(1) Appointment of Independent Directors:

No Independent Director was appointed during the year. The terms and conditions of the existing Independent Directors are posted on the web-site of the Company.

(2) Statement on declaration by Independent Directors:

Independent Directors have given declarations u/s 149(7) of the Companies Act, 2013 that they meet the criteria of independence as laid down u/s 149(6) of the said Act.

(3) Remuneration of Directors:

Your Company being a Central Public Sector Enterprise, the appointment, tenure and remuneration of Directors are decided by the President of India. The Government communication appointing the Functional Directors indicate the detailed terms and conditions of their appointment including a provision for the applicability of the relevant rules of the Company.

Pursuant to the provisions of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the details of remuneration paid to the Functional Directors during 2014-15 are provided under the ''Report on Corporate Governance'' annexed to this report.

Government Nominee Directors are not paid any remuneration including sitting fee for attending Board / Committee meetings. Further, none of the Government Nominee Directors had any pecuniary relationship or transactions with the Company during the year.

Independent Directors are paid sitting fee of Rs. 20,000 per meeting of the Board / Committee of the Board attended by them. Further, if there are more than one such meeting on the same day, sitting fee @ Rs. 10,000 is paid for second / subsequent meetings.

Neither there was payment of commission to the Board of Directors nor any stock option scheme offered to them during the year.

(4) Change of Directors :

In terms of Article 97 of the Articles of Association of the Company, the President of India is vested with the power to appoint the Directors of the Company from time to time and also shall determine the terms of office of such Directors. Accordingly, Smt. Kusum Singh, Joint Secretary, Department of Defence Production, MoD, was appointed as Government Nominee Director w.e.f. 05.11.2014 in place of Shri P. K. Mishra, as per the directives ofthe President of India.

The Board placed on record its deep appreciation for the valuable services rendered by Shri P. K. Mishra whose term of office ended during the year.

(5) Appointment of Key Managerial Personnel:

Your Board of Directors appointed all the six Functional Directors and Company Secretary as the Key Managerial Personnel of the Company with effect from 13.02.2015.

(6) Number of meetings of Board:

During the year, 6 meetings of the Board were held on 27.05.2014, 28.05.2014, 12.08.2014, 18.09.2014, 14.11.2014 and 13.02.2015. Requirements on number and frequency of meetings, in terms of Clause 49(II)(D)(1) of the Equity Listing Agreement and Para 3.3.1 of the DPE Guidelines, were complied with in full.

(7) Directors'' Responsibility Statement:

Pursuant to section 134(5) of the Companies Act, 2013, your Directors state that, based on the representations received from the management,

(a) in the preparation of the annual financial statements for the year ended 31.03.2015, the applicable accounting standards has been followed along with proper explanation relating to material departures;

(b) such accounting policies have been selected and applied consistently and judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31.03.2015 and of the profitability of the Company for the year ended on that date;

(c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) the annual financial statements have been prepared on a going concern basis;

(e) proper internal financial controls were in place and that the internal financial controls were adequate and operating effectively;

(f) proper systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

(8) Your Company being a Central Public Sector Enterprise (CPSE) and also all the Directors are appointed by the President of India from time to time, the personnel policies and guidelines issued by DPE are being adopted in line with other CPSEs. Accordingly, your Company has not formulated policy for evaluation ofthe performance of Directors.

Extract of Annual Return:

In terms of Section 92(3) of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014, an extract of the Annual Return in the prescribed form is placed at Annexure-V.

Acknowledgements

Your Directors express their hearty thanks to the Company''s valued customers, in particular Defence Services, M/s. Coal India Limited and its Subsidiaries, M/s. Singareni Collieries Company Limited, M/s. Steel Authority of India Limited, Railway Board, M/s. Delhi Metro Rail Corporation, M/s. Bangalore Metro Rail Corporation and M/s. Jaipur Metro Rail Corporation for their patronage and confidence reposed on the Company. The Directors also acknowledge and thank all collaborators, vendors and other service providers for their valuable assistance and cooperation extended to the Company.

The Directors express their appreciation to the members of Company''s Consortium of Banks and other Bankers and Financial Institutions for their continued support to the Company''s operations. The Directors also thank all the shareholders / investors for reposing continued confidence in the Company.

The Directors wish to thank the Comptroller & Auditor General of India, the Principal Director of Commercial Audit & Ex-officio Member, Audit Board and Statutory Auditors for their valued co-operation.

The Directors also acknowledge the valuable support and assistance received from various Ministries of Government, in particular Ministry of Defence, Ministry of Coal, Ministry of Mines, Ministry of Steel, Ministry of Railways and the Ministry of External Affairs. The Directors are also grateful to the Government of Karnataka and Kerala for the support and co-operation extended to the Company.

Your Directors take this opportunity to place on record their appreciation for the invaluable contribution made and excellent co-operation extended by the employees and executives at all levels for the continued progress and prosperity of the Company.

For and on behalf of the Board of Directors Sd/- Bengaluru P Dwarakanath 29.05.2015 Chairman & Managing Director


Mar 31, 2014

Dear members,

The Board of Directors has pleasure in presenting the 50th Annual Report and Audited Accounts for the year ended 31.03.2014.

FINANCIAL RESULTS:

(Rs. in Crs.)

Particulars 2013-14 2012-13

Revenue billed including consortium supplies 3262.20 3289.77

Revenue including excise duty 3120.17 2998.87

Revenue from operations 2911.51 2808.91

Profit before Depreciation, Interest and Tax 173.10 68.91

Interest 110.46 140.99

Depreciation 53.56 50.25

Profit Before Tax 9.08 (122.33)

Tax Expense 4.40 (42.46)

Profit After Tax 4.68 (79.87)

Profit available for appropriations 239.49 283.31

APPROPRIATIONS :

Proposed Dividend 4.16 10.41

Dividend tax 0.71 1.77

Debenture Redemption Reserve 4.68 -

General Reserve - 36.32

Profit & Loss Account 229.94 234.81

Net Worth 2079.84 2080.03

TURNOVER AND PROFITABILITY:

Your Company achieved revenue billing of Rs. 3262.20 crores including the value of consortium supplies against Rs. 3289.77 crores of corresponding value in the previous year. The revenue from operations (net of consortium supplies and excise duty) stood at Rs. 2911.51 crores as against Rs. 2808.91 crores in the previous year, registering a marginal growth of 3.65%. The Value of Production (net of consortium supplies and excise duty) is Rs. 2814.45 crores as against Rs. 2878.83 crores in the previous year. The Profit before Tax was Rs. 9.08 crores as against loss of Rs. 122.33 crores recorded in the previous financial year. Though the Sales (net of consortium supplies and excise duty) has registered a marginal growth of 3.65%, non- availability of further input material for Defence supplies have affected the sales (net) of the Defence business group registering a negative growth of 59%. Despite the sluggish market conditions in the Mining & Construction business segment, the Company could achieve a 5% increase in the sales (net) compared to the previous year. However, the sales of Rail & Metro segment registered a growth of 25% (net of consortium supplies and excise duty), which almost compensated the above reduction in Defence business, there was an overall marginal growth of 3.65%. Further, the value of production has shown declining trend of 2.24%. This is mainly because of reduction in production in Mining & Construction business keeping in view the higher level of finished goods inventory and also lower production in Defence business on account of the prevailing impasse in this line of activities.

PERFORMANCE vis-a-vis MoU:

Performance of your Company, in terms of the Memorandum of Understanding signed with the Department of Defence Production, Ministry of Defence, Government of India, was rated as "Good" for the year 2012-13 and the rating based on self-evaluation is also expected to be ''Good'' for the year 2013-14.

DIVIDEND:

The Board of the Company has recommended a dividend of Rs. 1.00 per share i.e., 10% for the year 2013-14 keeping in view the future prospects and at the same time meeting the aspirations of the shareholders.

EXPORTS:

During 2013-14, your Company made exports aggregating Rs. 81.05 crores as against Rs. 198.13 crores in the previous year. The international presence of the Company increased to 63 countries with the entry to Taiwan and Gabon during the year.

QUALITY:

The year 2013-14 was observed as "Year of Quality", as declared by the Ministry of Defence. During the year -

* Comprehensive Quality Assurance Plan & Inspection and Test Plan were documented for BD355 and BH60M.

* Action plan for strategic and consequential activities to realize the objectives of ''Total Quality Assurance'' was drawn and put into implementation.

* All the manufacturing divisions continue to hold the ''Quality Management Certification'' based on the surveillance audit recommendations.

* Inward / Process stage rejection of vendor items brought down to 0.57% (previous year 0.82%).

* MoU targets relating to internal / external failure cost, increase in vendor base and implementation of six-sigma and 5 S were achieved.

* New initiatives were taken up in organizing training programme in the areas like - Welding Technology, Hydraulics, Hose Assy., Preparation of Check sheet, Vendor assessment & QAP, CE Marking, Electrical & Electronic aggregates and Quality Concepts like SPC Techniques, Usage of Control Charts, Kaizen, Quality Circles, QMS/ EMS, etc.

RESEARCH & DEVELOPMENT:

The Company''s Research & Development Centre continues to play a vital role in the design and development of products, critical aggregates, indigenization activity, etc. During the year, R&D has developed and launched certain products in Mining & Construction, Defence and Rail & Metro segments.

The information on R&D, Technology

Absorption, Adaptation and Innovation including the products developed by the Company during the year is at Annexure.

FINANCE:

The working capital requirements were met from the internal resources and credit facilities availed from banks. There was no overdue installment of principal and/or interest to the banks.

The Company''s contribution to Central and State Exchequer was in the order of Rs. 653.67 crores during the year by way of Excise Duty, Customs Duty, Sales Tax, Service Tax, Dividend and Tax thereon, and other taxes and duties.

FIXED DEPOSITS:

The Company has not accepted/renewed any fixed deposits during the year, and there is also no outstanding Fixed Deposits.

RISK MANAGEMENT:

During the year, six functional groups of Risk Management were identified, viz., Mining & Construction Business, Rail & Metro Business, Defence Business, Marketing, Human Resource and Finance to take up the critical risks as identified by M/s Deloitte Haskin & Sells, Mumbai, the consultants engaged by the Company.

In addition to the functional risk teams, a Corporate Team has also been constituted which would co-ordinate the overall risk management system in the Company. The said teams hold monthly meetings to review the mitigation plans for the identified risks and also to identify emerging risks.

SUBSIDIARIES AND JOINT VENTURE COMPANY:

(i) Subsidiary Company - M/s Vignyan Industries Limited (VIL):

VIL has recorded the turnover of Rs. 36.75 crores as against Rs. 27.47 crores, which works out increase in turnover of about 34% over the previous year. The value of production of the Company stood at Rs. 30.73 crores as against Rs. 25.67 crores and the Company incurred a loss of Rs. 1.45 crores as against loss of Rs. 2.28 crores in the previous year. The reasons contributed were breakdown of equipments like Induction furnace, EoT crane, Air Compressor, apart from frequent and unscheduled power cut which affected the Fettling and Proof machining of castings available with the Sub- Contractors.

VIL is planning to explore new avenues for marketing its products so that the dependency on BEML could be reduced progressively over the periods. Accordingly, various types of steel castings used in Track Shoes for T-72, ARVs, BMP, etc., relating to Defence business and Axle Box, Buffer Assembly, etc., relating to Rail business are planned for development and production by VIL. Further, VIL is exploring opportunities to manufacture and supply high manganese U-2 steel castings in order to improve the performance level of the Company.

(ii) Subsidiary Company - M/s MAMC Industries Limited (MIL):

Your Company has entered into a Consortium Agreement with M/s. Coal India Limited (CIL) and M/s. Damodar Valley Corporation (DVC) on 08.06.2010 for acquiring specified assets of M/s. Mining and Allied Machinery Corporation Limited (under liquidation). The agreement, inter- alia, provided for formation of a Joint Venture company with a shareholding pattern of 48:26:26 among BEML, CIL and DVC respectively.

In the meantime, a Company in the name of ''MAMC Industries Limited'' (MIL) was formed and incorporated by the Company as a wholly owned Company for the intended purpose of JV formation. Shareholders'' agreement, as duly approved by the Boards of all the three members of the consortium, has been submitted to Ministry of Defence for necessary approval. After obtaining the said approval, MIL, would be converted into a joint venture Company by following due process of law to proceed with the re-opening of MAMC factory at Durgapur. Tendering process is underway to engage a consultant for preparation of Detailed Project Report.

The statement and particulars relating to VIL and MIL, pursuant to Section 212 of the Companies Act, 1956 are attached. In accordance with Section 212(8) of the Companies Act, 1956, your Company has been exempted from attaching the Balance Sheet, Statement of Profit and Loss, Cash Flow Statement, Auditors'' Report, Directors'' Report, etc., of the subsidiary Companies to the Balance Sheet of BEML Limited as per Government of India Order No.51/12/2007-CL- III dated 08.02.2011 issued under General Circular No.2/2011. However, the Company will make available these documents upon request by any member of the Company.

(iii) Joint Venture Company - M/s BEML Midwest Limited:

A JV Company, M/s BEML Midwest Limited was registered with the Registrar of Companies at Hyderabad, on 18.04.2007. BEML holds 45% share, M/s Midwest Granite Pvt. Ltd. (MGPL), and P T Sumber Mitra Jaya of Indonesia as partners holding the balance 55% share. The Company has been established to capitalize on the growing business opportunities in the contract mining segment. However, due to certain unauthorized transactions and the oppression and mismanagement by the nominees of MGPL, your Company had filed an application before Hon''ble Company Law Board (CLB) seeking for suitable relief. As a counter measure, MGPL had also filed a petition on the matter. CLB vide its common order dated 01.06.2012 directed the Central Government to appoint an inspector to investigate the affairs of BEML Midwest Limited and take appropriate action. In the meantime, as advised by legal experts, the Company had preferred two appeals before Hon''ble High Court of Andhra Pradesh at Hyderabad on 30.07.2012 against the said common order of CLB. The Hon''ble High Court passed the order on 19.08.2013, thereby setting aside the said common order and directing CLB to proceed with a fresh enquiry, and decide the issue in accordance with law and merits also taking into consideration the report of investigation and pass appropriate orders without getting influenced by the impugned earlier order of CLB. Subsequently, the CLB has commenced fresh hearing on the matter.

MICRO AND SMALL ENTERPRISES:

The Micro and Small Enterprises (MSEs) continue to get support and preference from your Company wherever there is shortage of in-house capacity. The Company extends technical guidance and requisite support to these industries wherever required. The quality control personnel visit these industries to assist and ensure that the quality of the products meet the requisite standards.

During 2013-14, your Company procured goods and services to the extent of Rs. 98.58 crores which constituted 6.67% of the total procurement value of Rs. 1476.86 crores.

VIGILANCE:

During the year, the Complaint Handling Policy of the Company was reviewed and revised to mirror Central Vigilance Commission (CVC) guidelines for ensuring all complaints / grievances received in the organization by any functionary containing an element of alleged corruption, malpractices or misconduct etc., be sent to the Chief Vigilance Officer of the organisation for determining the ''vigilance angle'' and taking further course of action.

Vigilance department, inter-alia, organized a programme on ''Tone from the Top'' at which the management interacted with senior executives across the Company via live simultaneous two way video and audio transmission system coinciding with the observance of the Vigilance Awareness Week 2013. The theme of the programme was "Promoting Good Governance - Positive Contribution of Vigilance".

Continuing the ''VIG-KIRAN'' series for the third year, the special journal ''VIG-KIRAN Ver.3'' dedicated to featuring Corruption Prevention and Corruption Risk Management was released and included a CD containing a compendium of International and National measures for promoting good governance.

Considering effectiveness of ICTs (Information & Communication Technologies), additional ICT initiatives were taken up during the year. Computerised File Tracking Management System and Medical Centre Procurement and Batch Management Automation, were implemented during the year following the recommendations made by Vigilance Department.

Other initiatives/good practices include:

* e-Library: As part of e-library CVC / Ministry of Defence Circulars are being uploaded on SAP/ERP.

* e-Vigilance: Purchase/Finance Modules on SAP-ERP are being monitored on regular basis to check for red flags and findings reported.

* e-Procurement: e-mode of procurement has been made mandatory for all procurement transactions/contract value above Rs. 1 lakh, except for Imported items.

CORPORATE GOVERNANCE:

A report on Corporate Governance and Management Discussion and Analysis Report along with a Compliance Certificate from the Auditors as required under the Listing Agreement entered into with the Stock Exchanges is annexed to this report.

RAJBHASHA:

Your Company continued its efforts in implementing the Official Language Policy envisaged under the Official Language Act, 1963. Towards this direction, the following steps were undertaken during the year:

* 327 executives/employees were trained in Hindi under Hindi Teaching Scheme of Govt. of India, during the period under review.

* 5 Hindi Workshops were organized whereat 128 officials were trained.

* Hindi Fortnight was observed with great zeal from 17.10.2013 to 31.10.2013 throughout the Company. Many competitions were organized for Hindi speaking, Non-Hindi speaking employees and prizes were given.

* To encourage the employees to read Hindi books, a separate Hindi Library is functioning at Corporate Office with good number of Hindi books and periodicals.

* Website of your company is made available in Hindi also and updated the contents periodically.

* Further, your Company has won the ''Rajbhasha Shield'' for the second consecutive year by the ''Town Official Language Implementation Committee'' for commendable progressive use of Hindi.

AWARDS:

* On 22.06.2013, your Company bagged ''Export Excellence Award'' for the year 2012- 13 for its excellent performance in exports in the special category of best exporter from Federation of Karnataka Chambers of Commerce & Industry.

* On 01.08.2013, your Company received Rajbhasha Award from Town Official Language Implementation Committee for its commendable performance in the implementation of Hindi during the year 2012-13.

* On 24.09.2013, your Company won the Export Award as a Star Performer in Large Enterprise section for the year 2011-12 from Engineering Export Promotion Council.

* On 26.10.2013, your Company won International Quality Circle Award in the NCQC competition for improvement in the manufacture of Metro Side Wall.

* On 14.11.2013, your Company''s R&D innovative product BH150E Dump Truck had bagged the "Engineering Excellence Award 2013", ''Best Engineering Marvel'' in the category of Self-Reliance and ''Public Choice Award''. Stainless Steel Electric Multiple Unit (SSEMU) also bagged the ''Engineering Excellence award 2013'' as ''Public Choice Award''.

* On 26.11.2013, your Company received

Raksha Mantri Award for design and development of country''s first SSEMU for Indian Railways.

* On 22.12.2013, your Company was conferred with the Award of "Outstanding Company in Mining Equipment" instituted by EPC World Group.

MANPOWER:

The manpower strength of the Company as on 31.03.2014 stood at 10,328 as against 11,005 of the previous year.

Representation of SC/ST and Ex-Servicemen category-wise as on 01.01.2014 and recruitment made are as under :

Representation of SC/ST/Ex-Servicemen as on 01.01.2014

Category / Total No. of SC/ST and Ex-servicemen Group Strength as on Scheduled Scheduled Ex-Service Caste Tribe Men

1.1. 1.1. 1.1. 1.1. 1.1. 1.1. 1.1. 1.1. 2013 2014 2013 2014 2013 2014 2013 2014

Group-A 1542 1504 256 257 48 51 10 10 Group-B 1348 1228 237 214 97 82 10 14

Group-C 8213 7737 1751 1649 336 328 316 318 Group-D 34 30 18 16 4 4 - -

Total 11137 10499 2262 2136 485 465 336 342

Recruitment during 2013

Group General OBC SC ST EX-S TOTAL

A 4 4 2 1 - 11

B 2 3 1 - - 6

C 6 2 - - - 8

D - - - - - -

TOTAL 12 9 3 1 - 25

HUMAN RESOURCES DEVELOPMENT & INDUSTRIAL RELATIONS:

The HR Department identified several thrust areas for continuously updating technical / professional knowledge and skills of employees towards fostering a performance driven work culture in all areas of operations particularly at shop floors. During the year, the Company organized several in-house and external training programs covering 23,089 man-days.

The overall industrial relation situation in the Company was cordial during the year.

CORPORATE SOCIAL RESPONSIBILITY & SUSTAINABILITY (CSRS):

Your Company has a structured multi-level committees upto the Board level to guide and monitor the successful identification and implementation of the projects in line with the MoU guidelines. The Board Committee on CSRS is headed by an Independent Director.

A few of the important projects successfully completed during the year 2013-14 are as follows :

(i) Rehabilitation of Differently abled Persons in Association with Other CPSEs:

Your Company has tied-up with M/s ALIMCO for helping differently-abled persons to overcome their disability. 25 Nos. of differently-abled persons were identified at Davangere district, in the backward region of Karnataka for distribution of aids & appliances to overcome their disability and lead a better life. The aids and appliances viz., Tricycles, Wheel Chairs, Braille Cane and MR Kits required by these people were procured and the distributed in the camp held on 30.01.2014.

(ii) Value Education:

Keeping in view the need to inculcate the values early in children''s education, 120 value education kits issued by CBSE, New Delhi were procured and distributed the to the teachers of Schools at KGF and Bengaluru.

(iii) Skill Development of SC/ST and BPL Youth:

Your Company has provided one BL-9H Loader, five numbers of Tool Kits along with aggregates to the Centurion University for the skill development of Schedule Caste(SC), Schedule Tribe(ST) and Below Poverty Line(BPL) youth in a naxal affected, Tribal and poorest district of Odisha through Centurion University and provided necessary training to the faculty to ensure proper training to the students.

(iv) CSR Program at Anandashram, Bengaluru:

BEML Ladies club celebrated Woman''s day to bring respite to the aged and children of Anandashram, Bengaluru by sharing a meal, providing ceiling fans and others.

(v) CSRS Seminar/Workshops/Training Sessions:

The Company towards incorporating the philosophy of CSR at all levels in the organization has trained 160 Employees / Officers during the year.

(vi) Formulation of Corporate Communication Strategy:

With a view towards better implementation of CSR Activities, corporate communication strategy has been formulated and the same is implemented for getting feedbacks from the beneficiaries of the CSR Projects. The feedback from the beneficiaries is being obtained once in a quarter and /or on completion of the project. A total of four meetings were held with the beneficiaries of Mobile medical camp at KGF and also the beneficiaries of the camp at Davangere for the current year. The feedback from these beneficiaries was positive for the services provided.

In addition to the above, there are several CSRS projects that the Company has been carrying out as an on-going process as listed below:

(a) Vocational Training:

The Company has extended support to the Labour Welfare Funds functioning in the production units for the benefits of Employees, their dependants and local population. The LWF conducted training programmes in Tailoring, Driving, Computer, Typing / Shorthand course, Diploma course in Laboratory Technology, Para-medical, Job Oriented Courses, Music / Dance classes, spoken English Course and 509 persons were trained during the year under these initiatives.

(b) Medical facilities to Ex-BGML employees and their dependants :

The Company extends out-patient medical facilities to ex-BGML employees by deputing a Doctor and 2 Para-medical staff to the areas of BGML such as Marikuppam, Champion Reef and Oorgaum and medicines prescribed by the Doctors are being dispensed free of cost for general illness. Further, 105 mobile medical camps were conducted during the year.

(c) Medical Assistance :

Medical facilities are extended to the villagers in Company adopted village, Dasarahosahalli near KGF.

(d) Distribution of Artificial Limbs:

Your Company has associated with M/s Palakkad Fort Town Lions Trust, Palakkad for the last three years and for the current year sponsored 5 Nos. of artificial limbs to beneficiaries at Palakkad.

ENVIRONMENT AND POLLUTION CONTROL:

In order to protect the environment in and around the factory premises/township, tree plantation were undertaken. Your Company planted about 20,000 saplings of various types of avenue tree/flower bearing trees in the vacant lands belonging to the Company for maintaining ecological balance in the surrounding areas.

The existing 5 MW Wind Mill generated 85.42 lakh kWh power resulting in green house gas reduction. Further, your Company is in the process of setting-up 18 MW Wind Mill power generation to develop clean green energy and also being self sufficient on power requirements.

ENERGY CONSERVATION:

The Company continues to give emphasis on conservation of energy. The efficiency of energy utilization is closely monitored to attain higher level of effective conservation. Some of the measures adopted during the year for energy conservation are:

A. Bangalore Complex:

(i) Introduction of 2 Nos. 5000 liters capacity solar water heating system in Workers Canteen for pre-heating of water at 60 degrees centigrade.

(ii) Introduction of 150W metal halide high bay fitting for street lights in place of 800W HPMV lamp at various places in the unit premises.

(iii) Installation of energy efficient induction type 120w high bay fittings in place of 400w HPMV lamp fittings at various places in the unit premises.

(iv) Replacement of 10 Inverter welding sets (1 5 KVA) in place of old type conventional motor generator sets (18 KVA).

(v) Introduction of 30 nos. of 36 watts CFL fitting for better illumination equivalent to 80 watts at admin corridor and office and at hangars.

(vi) Switching off of roof exhaust fans / extractors during idle hours.

B. Mysore Complex:

(vii) Introducing 100 KVA energy saver unit for road and perimeter lights.

The particulars as prescribed under sub-section (1)(e) of Section 217 of the Companies Act, 1956, read with the Companies (Disclosure of particulars in the Report of the Board of Directors) Rules 1988, are at Annexure.

PARTICULARS OF EMPLOYEES:

There were no employees of the Company who received remuneration in excess of the limits prescribed under the Companies (Particulars of Employees) Rules, 1975.

STATUTORY AUDITORS:

M/s. Padmanabhan Ramani & Ramanujam, Chartered Accountants, Chennai, were appointed by Comptroller & Auditor General of India as Statutory Auditors for the year 2013-14.

The Independent Auditors'' Report does not contain any qualification or adverse observations on the accounts for the year.

COST AUDITORS:

Your Company has appointed M/s Murthy & Co., LLP, Cost Accountants, Bengaluru, as Cost Auditors for the year 2013-14 with the approval of Central Government for preparing and filing necessary.

(i) Cost Audit Report'' for the Company''s product groups, namely, Machinery & Mechanical Appliances, Railway Rolling Stock, Parts of Railway Rolling Stock, Commercial Vehicles and Electrical Energy (Wind Power Energy) in terms of the Companies (Cost Audit Report) Rules, 2011; and

(ii) Compliance Report'' in respect of the Company''s product group, namely, Tanks, Armoured Vehicles and Parts thereof in terms of the Companies (Cost Accounting Records) Rules, 2011;

DIRECTORS: (a) Change of Directors

The President of India is empowered to appoint the Directors of the Company from time to time and also to determine the terms of office of such Directors in terms of Article 97 of the Articles of Association of the Company. Accordingly, the following changes on the Board of your Company were effected during the year as per the directives of the President of India:

* Shri Pradeep Swaminathan was appointed as Director (Finance) vide Ministry of Defence letter No.10(6)/2012-D (BEML) dated 24.09.2013 on superannuation of Shri M. Pitchiah. Shri Swaminathan took charge on 01.10.2013.

* Shri Aniruddh Kumar was appointed as Director (Rail & Metro Business) vide Ministry of Defence letter No.10(15)/2012-D (BEML) dated 27.03.2014 in place of Shri P. Dwarakanath, Chairman and Managing Director, who was holding additional charge. Shri Aniruddh Kumar took charge on 18.04.2014.

* Five Non-official (Independent) Directors, Dr. Rekha Bhargava, Lt. Gen. (Retd.) Noble Tamburaj, Shri Kanwal Nath, Shri Ramesh Bhat and Prof. S. Sadagopan, were retired on 08.11.2013 and filling of these vacancies is under process.

The Board placed on record its deep appreciation of the valuable services rendered by the Directors whose term of office ended during the year.

(b) Number of meetings of Board

During the year, 5 meetings of the Board were held on 29.05.2013, 08.08.2013, 12.09.2013, 08.11.2013 and 04.02.2014, thereby your Company complied with the requirements on number and frequency of meetings as provided under Clause 49(I)(C)(i) of the Listing Agreement and Para 3.3.1 of the DPE Guidelines on Corporate Governance.

DIRECTORS'' RESPONSIBILITY STATEMENT:

The Board of Directors of the Company confirm:

i) that in the preparation of the annual accounts, the applicable accounting standards have been followed and there has been no material departure;

ii) that the selected accounting policies were applied consistently and the Directors 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 as at 31.03.2014 and of the profit of the Company for the year ended on that date;

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

iv) that the annual accounts have been prepared on a going concern basis.

ACKNOWLEDGMENTS:

Your Directors express their hearty thanks to the Company''s valued customers, in particular Defence Services, M/s Coal India Limited and its Subsidiaries, M/s. Singareni Collieries Company Limited, Railway Board, M/s Steel Authority of India Limited, M/s Delhi Metro Rail Corporation, M/s Bangalore Metro Rail Corporation and M/s Jaipur Metro Rail Corporation for their patronage and confidence in the Company. The Directors also acknowledge and thank all collaborators, vendors and other service providers for their valuable assistance and cooperation extended to the Company.

The Directors express their appreciation to the members of Company''s Consortium of Banks and other Bankers and Financial Institutions for their continued support to the Company''s operations. The Directors also thank all the shareholders / investors for reposing continued confidence in the Company.

The Directors wish to thank the Comptroller & Auditor General of India, the Principal Director of Commercial Audit & Ex-officio Member, Audit Board and Statutory Auditors for their valued co- operation.

The Directors also gratefully acknowledge the valuable support and assistance received from various Ministries of Government, in particular Ministry of Defence, Ministry of Coal, Ministry of Mines, Ministry of Steel, Ministry of Railways and the Ministry of External Affairs. The Directors are also grateful to the Government of Karnataka and Kerala for the support and co-operation extended to the Company.

Your Directors take this opportunity to place on record their appreciation for the invaluable contribution made and excellent co-operation extended by the employees and executives at all levels for the continued progress and prosperity of the Company.

For and on behalf of the Board of Directors

Sd/- P. Dwarakanath Chairman & Managing Director

Bengaluru 28.05.2014


Mar 31, 2013

The Directors have pleasure in presenting the 49th Annual Report and Audited Accounts for the year ended 31.03.2013.

FINANCIAL RESULTS:

(Rs. in Crs.)

Particulars 2012-13 2011-12

Revenue billed including consortium supplies 3289.77 3648.37

Revenue including excise duty 2998.87 2920.58

Revenue from operations 2808.91 2726.49

Profit before Depreciation, Interest and Tax 68.91 198.81

Interest 140.99 88.43

Depreciation 50.25 43.92

Profit Before Tax (122.33) 66.46

Tax Expense (42.46) 9.21

Profit After Tax (79.87) 57.25

Profit available for appropriations 283.31 393.11

APPROPRIATIONS :

Proposed Dividend 10.41 20.82

Dividend tax 1.77 3.38

General Reserve 36.32 5.73

Profit & Loss Account 234.81 363.18

Net Worth 2080.03 2172.08

TURNOVER AND PROFITABILITY:

Your Company achieved revenue billing of Rs.3289.77 crores including the value of consortium supplies against Rs.3648.37 crores of corresponding value in the previous year. The revenue from operations (net of consortium supplies and excise duty) stood at Rs.2808.91 crores as against Rs.2726.49 crores in the previous year, registering a marginal growth of 3.02%. The Value of Production (net of consortium supplies and excise duty) is Rs.2878.83 crores as against Rs.3155.31 crores in the previous year. The Company incurred a loss of Rs.122.33 crores as against Profit before Tax of Rs.66.46 crores recorded in the previous financial year. Though the Sales (net of consortium supplies and excise duty) has registered a marginal growth, the sluggishness in the Mining & Construction business segment, non-availability of further input material for Defence supplies have affected the sales of the above two business groups registering a negative growth of 17% in Mining & Construction business and 23% in Defence business. However, the sales of Rail & Metro registered a growth of 90% (net of consortium supplies and excise duty), which almost compensated the above reduction in business resulting in the said overall marginal growth of 3.02%. Further, the value of production has shown declining trend of about 9%. This is mainly because of reduction in production in Mining & Construction business keeping in view the higher level of finished goods inventory and also lower production in Defence on account of the prevailing situation.

The reduction in profit was mainly on account of lesser volume of business in Defence and Mining & Construction business segments and considerable increase in the financial charges and other provisions during the year. However, your Company is poised to register higher turnover and profit in the current financial year.

DIVIDEND:

The Board of the Company has recommended a dividend of Rs.2.50/- per share i.e., 25% for the year 2012-13 keeping in view the past performance and future prospects and at the same time meeting the aspirations of the shareholders.

EXPORTS:

During 2012-13, your Company made exports aggregating Rs.198.13 crores as against Rs.144.05 crores in the previous year. The international presence of the Company has increased to 61 countries with the entry to Kuwait during the year.

QUALITY:

Initiatives / actions taken up during the year to ensure and enhance product and service quality are briefed below - Journey towards Quality Assurance:

M/s. National Institution for Quality & Reliability (NIQR), Chennai, consultancy was engaged to carry forward the implementation of Quality Control (QC)^Quality Assurance (QA) at divisions. Further, training in the areas ofRs.5S1, ''KAIZEN'', ''QC^ QA'' ''Statistical Process Control (SPC)", "TPM", "SPC Champions", "5S Internal Auditor", "5S General Awareness", "7 QC Tools", "Autonomous Maintenance" were imparted. In addition, new Quality Assurance Plans (QAPs) with Inspection & Test Plans (ITPs) are being prepared for implementation at divisions.

Quality Management Certification:

All manufacturing divisions and M/s. VIL, Tarikere continue to hold IS09001-2008 Quality Management System (QMS) certification. The KGF, Bangalore and Mysore Complexes are certified for ISO14001-2004 Environmental Management System (EMS). Bangalore Complex is certified for BS OHSAS 18001-2007 - Integrated Management system. Engine Division, Mysore complex is certified for AS9100 REV C for Aerospace activities. Laboratories at R&D, KGF and Mysore continue to holdNABL (National Accreditation Board for Testing and Calibration Laboratories) accreditations.

Quality Improvement:

Quality Circles / Kaizen / Six Sigma / 5S teams are active throughout the company. To motivate the Quality Circles, our annual event - ''BEML- Nonimara Award'' Competition, was conducted, wherein, 15 teams from across the divisions and M/s. VIL took part in the competition. During the year, around 2000 Kaizen projects have been successfully completed. ''5S'' implementation is in place at the manufacturing divisions. 44 Black Belts are working on various Six Sigma projects in the areas of Quality Improvement, Lead Time Reduction, Cost reduction, Product Improvement and Productivity Improvement. During the year, 15 projects have been successfully completed.

Quality Circles / Kaizen / Six Sigma / 5S teams were deputed for the competitions conducted by Quality Forums like M/s. Quality Circle Forum of India (QCFI) and M/s. NIQR and our teams have brought laurels by winning won "GOLD" / "SILVER" / "BRONZE: medals. QC Team "METRO" from Bangalore Complex has bagged first prize - "PAR EXCELLENCE" award in the National Level competition - NCQC -2012 conducted by M/s. QCFI. The team has become eligible for participating in the international competition ICQCC - 2013 which is scheduled at TAIPEI, Taiwan.

Vendor Development:

Efforts are continued in identifying, developing & evaluating the potential suppliers. 138 vendors have been included in the Approved Vendor list during the year. Vendors who are consistent in quality and self-reliable are encouraged by awarding "Self Certification" status for their supplies. During the year, 19 firms have been accorded "Self-certification" status.

Periodic process / system audits are being conducted and necessary feedbacks are given to the vendors for process / system improvements right from development stage to ensure quality in their supplies. During the year, around 70 process audits have been carried out.

Customer Satisfaction:

To achieve higher level of customer satisfaction, cross functional teams & Quality Improvement Teams are active throughout the company to address field issues and to gather customer feedback to enhance product & service quality.

RESEARCH & DEVELOPMENT:

The Company''s Research & Development Centre continues to play a vital role in the design and development of products, critical aggregates, indigenization activity etc. During the year, R&D has developed and launched certain products in Mining & Construction and Defence segments.

The information on R&D, Technology Absorption, Adaptation and Innovation including the products developed by the Company during the year is at Annexure-I.

FINANCE:

The working capital requirements were met from the internal resources and credit facilities availed from banks. There was no overdue installment of principal and interest.

The Company''s contribution to exchequer was in the order of Rs.628.76 crores during the year by way of Excise Duty, Customs Duty, Sales Tax, Income Tax, Wealth Tax, Service Tax, Cess, etc.

FOREIGN EXCHANGE EARNINGS AND OUTGO:

During the year, the Company''s foreign exchange earnings stood at Rs.179.42 crores. The total foreign exchange utilized during the year was Rs.672.90 crores.

A sum of Rs.1.23 crores was incurred towards deputation of personnel abroad for business/ export promotion, after-sales-services and training.

FIXED DEPOSITS:

The Company has not accepted / renewed any fixed deposits during the year, and there is also no outstanding Fixed Deposits.

LISTING OF DEBT SECURITIES:

3000 Secured Redeemable Non-convertible Debentures of face value of Rs.10 lakhs aggregating to Rs.300 Crores have been allotted to M/s Axis Bank Limited on 18.05.2012 on private placement basis and the same were listed on BSE Debt Segment on 02.07.2012.

DELISTING OF EQUITY SHARES:

Disclosure in terms of Regulation 7(1)(d) of SEBI (Delisting of Equity Shares) Regulations, 2009 - The equity shares of your Company are delisted from the Bangalore Stock Exchange Limited (BgSE) w.e.f 15.01.2013. This decision was taken since the equity shares of the Company are not traded on BgSE for a long time. However, the Company''s equity shares continued to be listed on the Bombay Stock Exchange Limited (BSE) and the National Stock Exchange of India Limited (NSE). This will provide sufficient access to the investors / shareholders for their dealing with the Company''s equity shares across the country through the nation-wide trading terminals of BSE and NSE.

VIGILANCE:

The Company has an independent Vigilance Department headed by a full-time Chief Vigilance Officer. The scope of work of the Vigilance Department has been set out to address risk factors in procurement and administration through investigation of complaints and through preventive measures with the objective of promoting integrity, transparency, accountability and equity as also increasing efficiency and productivity by leveraging technology in the organisation. The functional units of Vigilance department, viz., Investigation Wing, Disciplinary Wing, Anti- corruption Wing, Preventive Vigilance Wing and Technical Wing deal with various facets of vigilance mechanism. Several initiatives were taken in the process of creating awareness, sensitization and ensuring accountability, probity and transparency within the overarching vigilance functions of punitive, preventive and surveillance and detection.

A risk based approach to complaint resolution has been adopted whereby after resolving complaints, risks in the system are identified and corrective measures recommended reducing the scope for corruption. Accordingly, several system improvement recommendations were made and implemented.

To mark the observance of Vigilance Awareness Week-2012 ''VIG-KIRAN Ver.2'', a special journal, on the theme ''Transparency in Public Procurement'' was released with the objective of plugging the knowledge gap in public procurement measures and aid in setting up sound public procurement system. Beginning with the General Financial Rules 2005 embodying the basic tenets of public buying namely, ''every authority delegated with the financial powers of procuring goods in public interest shall have the responsibility and accountability to bring efficiency, economy, transparency in matters relating to public procurement and for fair and equitable treatment of suppliers and promotion of competition in public procurement'' (GFR 137), all regulations, guidelines, standards, governing the process of public procurement as well as e- procurement has been digitized in a CD and appended to ''VIG-KIRAN Ver.2'' constituting its USP.

A meet with the Vendors of BEML to engage them in the reform process of Public Procurement, in which they have an equal stake, was considered fitting during the Vigilance

Awareness Week 2012, particularly, in view of the theme, being ''Transparency in Public Procurement''. Vendor meet was organized in three divisions of BEML, Bangalore, Mysore and KGF with great success. A questionnaire was designed and circulated to the Vendors present at the meet to elicit their response regarding the transparency of the procurement processes adopted by BEML and their awareness of them. They were asked to rate their experience with the e-procurement system at BEML Ltd on a scale of 0 to 5, with 0 representing ''least transparent'' and 5 representing ''most transparent''. In response 59 vendors rated their experience, of them 34 have rated it between 4 to 5, 17 vendors have rated it between 3 to 4 and 8 vendors have rated it between 2 to 3, affirming thereby, that the e- Procurement system at BEML Limited is closer to being ''most transparent''.

In response to the priority flagged by the Central Vigilance Commissioner for the need to improve the knowledge base in the use of e- procurement tools like Reverse Auction in the Defence PSEs, a workshop on ''e-Procurement and Reverse Auction'' was organized by BEML Vigilance Department in association with the Central Vigilance Commission and Ministry of Defence. 34 participants, comprising Chief Vigilance Officers and Senior Executives dealing with Procurement, from nine Defence PSEs located all over India and OFB attended the workshop.

An Annual Inspection Plan of the Regional/District Offices of Marketing division of BEML was drawn up. A team of three Vigilance Officers from different divisions with diverse background are conducting the Inspection according to the Plan.

Objective and effective vigilance administration which is vital to overall efficient administration and governance is being ensured.

CORPORATE GOVERNANCE

A report on Corporate Governance and Management Discussion and Analysis Report along with a Compliance Certificate from the Auditors as required under the Listing Agreement entered into with the Stock Exchanges is annexed to this report.

SUBSIDIARY COMPANY :

M/s Vignyan Industries Limited (VIL):

VIL has recorded the turnover of Rs.27.47 crores as against Rs.39.21 crores, which works out reduction in turnover of 30% over the previous year. The value of production of the Company stood at Rs.25.67 crores against Rs.45.29 crores and the Company incurred a loss of Rs.2.28 crores as against a profit before tax of Rs.0.65 crores. The prime reason for the low performance was poor demand for the castings from customers due to market recession and non-availability of power and foundry grade sand.

The Company is planning to explore opportunities to supply various casting requirements to customer other than Mining & Construction of BEML. Accordingly, Defence business related steel castings like Track Shoes for T-72, ARVs, BMP, etc., would be developed and produced by VIL. In the area of Rail business, steps are being taken to focus on huge opportunities for castings like Axle Box, Buffer Assembly, etc., to improve the performance level of the Company.

The statement and particulars relating to VIL, pursuant to Section 212 of the Companies Act, 1956 is attached. In accordance with Section 212(8) of the Companies Act, 1956, your Company has been exempted from attaching the Balance Sheet, Statement of Profit and Loss, Cash Flow Statement, Auditors'' Report, Directors'' Report, etc., of the subsidiary Company to the Balance Sheet of BEML Limited as per Government of India Order No.51/12/2007-CL-III dated 08.02.2011 issued under General Circular No.2/2011. However, the Company will make available these documents upon request by any member of the Company.

JOINT VENTURE COMPANY:

M/s. BEML Midwest Limited:

A JV Company, M/s BEML Midwest Limited incorporated on 18.04.2007 at Hyderabad with BEML having 45% share, M/s Midwest Granite Pvt. Ltd., and P T Sumber Mitra Jaya of Indonesia as partners with 55% share. The Company has been established to capitalize the growing business opportunities in the mining segment. However, due to certain unauthorized transactions and the oppression and mismanagement by the nominees of M/s Midwest Granite P Limited, BEML had filed an application before Hon''ble Company Law Board seeking for suitable relief. Hon''ble CLB vide its order dated 01.06.2012 directed the Central Government to appoint an inspector to investigate the affairs of BEML Midwest Limited. In the meantime, as advised by legal experts, the Company has preferred two appeals before Hon''ble High Court of Andhra Pradesh at Hyderabad on 30.07.2012 against the said order of CLB. The appeals are pending disposal before the said High Court.

MICRO, SMALL AND MEDIUM ENTERPRISES

The Micro, Small and Medium Enterprises continue to get support and preference from BEML wherever there is shortage of in-house capacity. The company extends technical guidance and requisite support to these industries wherever required. Our quality control personnel visit the industries to assist and ensure that the quality of the products meet the requisite standards.

During 2012-13, the Company procured items worth Rs.145.04 crores from the said category of enterprises.

RAJBHASHA

- Your Company ensured compliance of the Official Languages Act, 1963, and the Rules made there under and administrative instructions regarding use of Hindi received from the Department of Official Language and Ministry of Defence from time to time.

- Your Company has been adjudged with TOLIC Rajbhasha shield for commendable progressive use of Hindi during the year 2011-12, which gives the mark of continuous efforts in propagation of Official Language Policy in the Company.

- Hindi training for all the three courses viz., Prabodh, Praveen and Pragya under Hindi Teaching Scheme of Ministry of Home Affairs, Department of Official Language were arranged regularly. A total of 270 employees have been trained during the year under review.

- Two officials of the Company have been trained in Computer Training programme in Hindi organised by Central Central Hindi Training Institute, Ministry of Home Affairs.

- To inculcate interest and efficiency among the staff, 12 Hindi workshops were organized for 204 employees at Corporate Office and Business Complex Offices during the year.

- Hindi Fortnight was observed with great zeal in the Corporate Office, all the Business Complex Offices and Regional offices of Hyderabad, Mumbai and Chennai from 14.09.2012 to 28.09.2012. During this period, to motivate the employees competitions viz. Hindi Quiz, Hindi Crossword and Noting and Drafting, were organized and the winners of these competitions were awarded. Further, Hindi Day i.e. 14.09.2012 was observed in accordance with the guidelines issued by the Ministry of Defence and Department of Official Language, Ministry of Home Affairs.

- During the period, all translation work and Hindi typing work relating to Annual Reports, Technical Reports, C&AG Audit Paras, MoUs, Reports on SC/ST, RTI, Reservation policy, Standing orders, Product Profiles, Advertisement Materials and standard forms were attended to with full efficiency and dedication.

- All the sign boards outside the premises of the Company displayed tri-lingually i.e. Kannada (Regional Language), Hindi and English and the name plates which are displayed within the premises of the Company are also in tri-lingual form.

- A session on "Official Language Policy" is included in all in-house training programmes.

- Hindi Library is functioning in Corporate Office with good number of Hindi Books and Hindi periodicals. Hindi Dictionaries, Administrative Glossaries, Help-literature are supplied to the staff to encourage them to do official work in Hindi.

- Website of BEML is made available in Hindi also.

AWARDS

- BEML won Safety Award 2012 under very large engineering industries category conducted by Department of Factories and Boilers, Government of Kerala for its Palakkad Complex.

MANPOWER

The manpower strength as on 31.03.2013 stood at 11,005 as against 11,644 of the previous year.

Representation of SC/ST & Ex-Servicemen category-wise as on 01.01.2013 and recruitment

HUMAN RESOURCES DEVELOPMENT & INDUSTRIAL RELATIONS

The HR Department identified several thrust areas for continuously updating technical / professional knowledge and skills of employees and brings about attitudinal changes in fostering a performance driven work culture in all areas of operations particularly at shop floors. During the year, the Company organized several in- house and external training programs covering 26,755 man-days.

The overall industrial relation situation in the Company was cordial during the year.

CORPORATE SOCIAL RESPONSIBILITY (CSR) & SUSTAINABLE DEVELOPMENT (SD) ACTIVITITES

CSR and SD are a modern philosophy which states that all individuals and organizations are obligated to help the community at large, while preserving its environment. This is typically an active effort involving acting on a social issue or prevention of committing harmful acts to the environment. Social responsibility is an idea that has been of concern to mankind for many years. Over the last two decades, however, it has become of increasing concern to the business world. In the past, businesses primarily concerned themselves with the economic results of their decisions. However, today businesses must also reflect on the legal, ethical, moral and social consequences of their decisions. This has resulted in the concept of CSR and SD.

BEML being the one to inculcate good practices has envisioned ''to commit for enhanced value- creation for the society, shareholders, other stakeholders, and the communities by taking-up activities and initiatives for sustainable growth for the society, with environmental concern''. In this endeavour, the Company has undertaken various activities like Community Development, Promoting Excellence in areas like Education, Sports, Science, Technology Environment Management, Preserving National Heritage and Culture and others.

BEML recognizes that effective management of social and environmental risks can improve its business performance. This realization has led to increased importance towards managing its social and environmental performance as part of its fiduciary responsibility. Towards this endeavour, BEML has a structured committee from the Division level to the Sub-Committee level to guide and monitor the successful identification and implementation of the projects in line with the MoU guidelines. The CSR Sub-Committee at the corporate level is headed by Director-HR and the SD Committee headed by an Independent Director.

There are several on-going CSR and SD activities undertaken by BEML and one of them is setting up of a new Wind Mill project with 18 MW capacity at Bagalkot which is under process and in the direction of being self-sufficient. With the implementation of this project, 90% of BEML''s requirement of energy will be met and also to mitigate the quantum of Carbon deposits. The Company through its Windmill at Bagalkot has mitigated the emission of 7847 Tons of Carbon dioxide for the current year.

A few of the important projects successfully completed for the year 2012-13 towards fulfilling its obligations and achieving its benchmarked goals in the area of CSR are as follows :

- The Company has established 8 Nos. of Borewells to supply drinking water to BGML Township at the cost of Rs.49.83 Lakhs for providing safe and clean drinking water to the people of BGML Township.

- The Company has provided vocational training to 52 persons of the employees1 dependants and the local population in areas such as Para Medical, Tailoring, Computer application, Typing, Shorthand, Music/ Dance courses etc., for gainful employment.

- The Company in order to provide medical facilities to the Ex-BGML employees and their families is conducting free medical camps on regular basis in addition to distributing free medicines. For the year 2012-13, the company has conducted 112 Mobile Medical camps for providing medical services to BGML Township at KGF.

- The Company adhering to its responsibility towards protecting and preserving its environment has through the years has been creating ''Green Belts'' in and around its area of operations and its immediate community. For the present year, the Company has planted / distributed around 15000 saplings in & around all its Divisions / Complexes.

- The Company has sponsored an amount of Rs.30,000/- to the Society for Disability and Rehabilitation Studies (New Delhi) for organizing a 3-day National Congress on "Disability, Barrier-Free Campus and Higher education in India" under CSR Activity.

- The Company has envisaged ''Five year CSR Plan'' and ''Long Term Sustainable Development Plan'' in line with its policy and the MoU guidelines to ensure fulfilling its responsibility to the society in the long run.

In addition to the above, there are several CSR & SD projects that the Company has been carrying out as an on-going process. A few of the on-going projects are listed as follows:

- BEML runs one Junior College and two Nursery Schools at KGF and one at Bangalore. These institutions, although meant primarily for the children of employees also caters to a large extent to the local population. The company has been spending an amount of Rs.144 lakhs (approx) per year, towards running of these institutions.

- In addition, BEML runs a Kendriya Vidyalaya project school at KGF, for the benefit of the employees'' children and also for the local population. The Company has provided School building, Furniture & other infrastructure, Attender for Mid-day meal programme and night watchmen.

- The Company has sponsored a scheme for award of Scholarship to the SC/ST students pursuing full time undergraduate Engineering course in Engineering Institutions all over the country. The scheme also aims at providing employment to students who successfully complete the Engineering programme.

- As a unique Corporate initiative, Company has introduced a scheme wherein, such of the students who could not pursue further education, after X/XII Std viz., ITI, Diploma etc., but have the requisite aptitude are being considered for specific training with requisite emoluments in BEML through enrollment in training schemes tailored to suit BEML''s requirements.

- Environmental Pollution control measures such as effluent treatment plants have been constructed inside the factory premises of the Production Units for treatment of domestic / industrial effluents. Further, treatment plants / oxidation ponds for treatment of natural process of treating effluents have been installed in various locations inside the factory and township. Treated effluent water is being utilized by the Landscaping Department in the production unit.

- Artificial tanks have been constructed in Manufacturing Complexes to harvest rain water, restrict soil erosion and to raise ground water level. Storage yard facility for Hazardous waste at salvage stores at Division is constructed as per ISO 14001 requirements.

- The Company has extended all help and support to the Labour Welfare Funds functioning in the production units for the benefits of Employees, their dependants and local population. The LWF conducted training programmes in Tailoring, Computer, Typing / Shorthand course, Diploma course in Laboratory Technology, Job Oriented Courses, Music / Dance classes, spoken English Course, Summer camps for art / painting and sports and various entertainment activities.

Corporate Social Responsibility and Sustainable Development are vital elements for maintaining high ethical standards and to realize the bottom-line benefits in all the business processes of the Company. The Company for the future is expected to have undergone significant transformation such that CSR no longer becomes managed as a separate deliverable, but is part of the experience of being an employee in an organization that lives its values. Therefore, your Company will remain firmly committed and will continue in its endeavor for fulfilling its social obligation to its community and society at large by incorporating CSR and SD in all its business processes.

ENVIRONMENT AND POLLUTION CONTROL

In order to protect the environment in and around the factory premises/township, tree plantation were undertaken. Saplings of various types of avenue tree/flower bearing trees were planted in the vacant lands belonging to the Company for maintaining ecological balance in the surrounding areas. Further, measures have also been taken to protect the existing flora and fauna from any basic interference.

Effluent treatment plants have been constructed inside the factory premises of the production units for treatment of domestic/industrial effluents. Further, treatment plants/oxidation ponds for treatment of natural process of treating effluents have been installed in various locations inside the factory and township. Treated effluent water is being utilized by the Landscaping Department in the production unit. Artificial tanks have been constructed in Manufacturing Complexes to harvest rain water, restrict soil erosion and to raise ground water level. Storage yard facility for Hazardous waste at salvage stores in the divisions is constructed as per ISO 14001 requirements.

In a bid to harness renewable energy, the Company commissioned a 5 MW Wind Mill during the year 2007-08 in Gadag District of Karnataka. The energy generated by the plant is fed into the KPTCL grid and sold to Hubli Electricity Supply Co. Ltd., and as of 31.03.2013, 513 lakh kWh power has been generated enabling green house gas reduction. Further, your company is setting up an additional 18 MW Wind Mill Farm to develop green energy towards being self-sufficient on power requirements.

ENERGY CONSERVATION

The Company continues to give emphasis on conservation of energy. The efficiency of energy utilization is closely monitored to attain higher level of effective conservation. Some of the measures adopted during the year for energy conservation are:

a) Replacement of 40 Inverter welding sets (18kw) in place of old type kirloskar make motor generator welding set (30kw).

b) Introduction of 2 Nos. 5000 litres capacity solar water heating system in Workers Canteen for pre-heating of water at 60 degrees centigrade.

c) Introduction of 150W metal halide high bay fitting for street lights in place of 800W HPMV lamp at various places in the unit premises.

d) Introducing 150 KVA energy saver unit for major assembly hanger high bay lights.

e) HT 135 installation surrendered and merged with HT 92 installation thereby saving fixed charges on 1200 KVA.

f) Installation of ESD for machine ship high bay lights (half portion).

g) Replaced 35 nos. of 125 watts induction type fittings in place of 250 watts at sheet metal hangar.

h) Establishment of Solar Power Perimeter Lighting at EM Division, KGF Complex in place of high energy halogen / HPMV lamps.

The particulars as prescribed under sub-section (1)(e) of Section 217 of the Companies Act, 1956, read with the Companies (Disclosure of particulars in the Report of the Board of Directors) Rules 1988, are annexed to this report.

PARTICULARS OF EMPLOYEES

There were no employees of the Company who received remuneration in excess of the limits prescribed under Section 217(2A) of the Companies Act, read with the Companies (Particulars of Employees) Rules, 1975.

STATUTORY AUDITORS

M/s. Padmanabhan Ramani & Ramanujam, Chartered Accountants, Chennai, were appointed by Comptroller & Auditor General of India as Statutory Auditors for the year 2012-13.

Reply to the observations made in the report of the Auditors on the Accounts is given in the addendum to this report.

COST AUDITORS

Your Company has appointed M/s Rao, Murthy & Associates, Bangalore, as Cost Auditors for the year 2012-13 with the approval of Central Government for -

a) Conducting Cost Audit of ''Heavy Earth Moving Equipments'' under the head ''Motor Vehicles'' at KGF, Mysore and Palakkad Divisions,

b) Conducting Cost Audit of ''IC Engines'' under the head ''Engineering Industries'' at Engine Division, Mysore, as per the Companies (Cost Audit Report) Rules, 2011, and

c) Submitting the Compliance Report in respect of Rail Coach Division, Bangalore and Hydraulic & Power-line Division, KGF, as per the Companies (Cost Accounting Records) Rules, 2011.

DIRECTORS

The President of India shall appoint the Directors of the Company from time to time and also shall determine the terms of office of such Directors as provided under Article 97 of the Articles of Association of the Company. Accordingly, the following changes on the Board of your Company were effected during the year as per the directives of the President of India:

- Shri P.K. Kataria, Additional Financial Adviser & Joint Secretary on 13.06.2012 was appointed as Part-time Government Director in place of Dr. S.C. Pandey. However, Shri Kataria was replaced by Shri Rajnish Kumar, Additional Financial Adviser & Joint Secretary with effect from 02.08.2012.

- Shri P. Dwarakanath, who was Chairman & Managing Director (CMD) In-charge was appointed as CMD with effect from 09.10.2012. Shri Dwarakanath took charge on 10.10.2012 as CMD.

- Shri C. Balakrishnan and Shri N.P. Gupta, Ex-Secretaries to the Government of India and Shri Suhas Anand Bhat, Ex-CMD, Indian Overseas Bank were appointed as Non-official (Independent) Directors on the Board of the Company with effect from 15.10.2012 in place of Shri M.B.N. Rao, Shri J.P. Batra and Shri J.P. Singh, who ceased to be Independent Directors with effect from 07.07.2012.

- Shri P.K. Mishra, Joint Secretary (Electronic Systems), Department of Defence Production, MoD, was appointed as Part-time Government Director with effect from 02.11.2012 in place of Smt. Rashmi Verma.

- Shri D K Hota was appointed as Director (HR) with effect from 01.07.2013 in place of Dr. M. Nellaiappan.

The Board placed on record its deep appreciation of the valuable services rendered by Dr. S.C. Pandey, Shri P.K. Kataria, Shri M.B.N. Rao, Shri J.P. Batra, Shri J.P. Singh, Smt. Rashmi Verma and Dr. M. Nellaiappan.

DIRECTORS'' RESPONSIBILITY STATEMENT

The Board of Directors of the Company confirm:

i) that in the preparation of the annual accounts, the applicable accounting standards have been followed and there has been no material departure ;

ii) that the selected accounting policies were applied consistently and the Directors 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 as at 31.03.2013 and of the profit of the Company for the year ended on that date ;

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

iv) that the annual accounts have been prepared on a going concern basis.

ACKNOWLEDGEMENTS

Your Directors express their hearty thanks to the Company''s valued customers, in particular Defence Services, M/s Coal India Limited and its Subsidiaries, M/s. Singareni Collieries Company Limited, Railway Board, M/s Steel Authority of India Limited, M/s Delhi Metro Rail Corporation, M/s Bangalore Metro Rail Corporation and M/s Jaipur Metro Rail Corporation for their patronage and confidence in the Company. The Directors also acknowledged and thanked all collaborators, vendors and other service providers for their valuable assistance and cooperation extended to the Company.

The Directors express their appreciation to the members of Consortium of Banks and other Bankers of the Company and Financial Institutions for their continued support to the Company''s operations. The Directors also thank all the shareholders / investors for reposing continued confidence in the Company.

The Directors wish to thank the Comptroller & Auditor General of India, the Principal Director of Commercial Audit & Ex-officio Member, Audit Board and Statutory Auditors for their valued co-operation.

The Directors also gratefully acknowledge the valuable support and assistance received from various Ministries of Government, in particular Ministry of Defence, Ministry of Coal, Ministry of Mines, Ministry of Steel, Ministry of Railways and the Ministry of External Affairs. The Directors are also grateful to the Government of Karnataka and Kerala for the support and co-operation extended to the Company.

Your Directors take this opportunity to place on record their appreciation for the invaluable contribution made and excellent co-operation extended by the employees and executives at all levels for the continued progress and prosperity of the Company.

For and on behalf of the Board of Directors

Sd/-

P. Dwarakanath

Chairman & Managing Director

Bangalore

29.05.2013


Mar 31, 2012

The Directors have pleasure in presenting the 48th Annual Report and Audited Accounts for the year ended 31.03.2012.

FINANCIAL RESULTS (Rs.crores)

Particulars 2011-12 2010-11

Revenue billed including 3648.37 3647.07 consortium supplies

Revenue including excise duty 2920.58 2826.16

Revenue from operations 2726.49 2652.24

Profit before Depreciation, 198.81 281.66 Interest and Tax

Interest 88.43 61.27

Depreciation 43.92 33.64

Profit Before Tax 66.46 186.75

Tax Expense 9.21 36.99

Profit After Tax 57.25 149.76

Profit available for 393.11 399.40 appropriations

APPROPRIATIONS :

Proposed Dividend 20.82 41.64

Dividend tax 3.38 6.92

General Reserve 5.73 14.98

Profit & Loss Account 363.18 335.86

Net Worth 2172.08 2139.04

TURNOVER AND PROFITABILITY

Your Company achieved all time high revenue billing of Rs.3648.37 crores including the value of consortium supplies against Rs. 3647.07 crores of corresponding value in the previous year. Thus, the performance remained almost at the same level as that of the previous year. The revenue from operations (net of consortium supplies) stood at Rs.2920.58 crores as against Rs.2826.16 crores in the previous year, posting a growth of 3.3%. The Value of Production is Rs. 3349.40 crores (Rs.4077.19 crores including consortium supplies) as against Rs.2974.16 crores (Rs.3795.07 crores including consortium supplies) in the previous year. The Profit before Tax was Rs.66.46 crores as against Rs.186.75 crores recorded in the previous financial year. The reduction in profit was mainly on account of change in product mix propelled by the market demand, lesser quantum of sales of Defence products and Mining and Construction spares coupled with severe competition that had exerted pressure on margins and also considerable increase in the financial charges during the year. However, your Company is poised to register higher turnover and profit in the current financial year.

DIVIDEND

The Board of the Company has recommended a dividend of Rs. 5/- per share i.e.,50% on the Paid- up Equity Share Capital for the year 2011-12 keeping in view the past performance and future prospects and simultaneously meeting the aspirations of the shareholders.

EXPORTS

International Business Division of the Company could do a revenue billing of Rs. 144.05 crores (including Trading) as against Rs. 217.50 crores in the previous year. The international presence of the Company has increased to 60 countries including Nigeria, to which entry was made during the year.

QUALITY

'Quality' being the most powerful factor to capture, retain and enlarge customer base in the modern business scenario, emphasis is on to achieve higher level of quality. Various measures were taken up during the year to demonstrate consistent performance as briefed below-

Journey towards quality assurance:

Quality Assurance (QA), a process-centered approach to ensure product quality, is being implemented across the Company. Journey from Quality Control (QC) to QA mode, which took off last year, has made a notable progress, wherein, various "Quality Assurance Teams" at divisions are working under the guidance of M/s. NIQR, Chennai, whose services are being utilized to accelerate the process of QC^QA implementation at all divisions.

Quality management certification :

All manufacturing divisions continue to hold ISO 9001-2008 Quality Management System (QMS) certification. The KGF, Bangalore and Mysore Complexes are certified for ISO 14001- 2004 Environmental Management System. Bangalore Complex is certified for BS OHSAS 18001-2007 Integrated Management System. Engine Division/Aerospace Division at Mysore Complex is audited and upgraded to AS9100C certification. Laboratories at R&D, KGF and Engine Division, Mysore continue to hold NABL accreditations.

Quality improvement :

Small group activities are encouraged throughout the Company. To motivate the Quality Circles, our annual event - 'BEML-Nonimara Award' Competition, is being conducted and the winning teams are deputed for the competitions conducted by other Quality forums. Accordingly, 5 teams were deputed during the year for CCQC- 2011 competition conducted by M/s. QCFI and all the teams have won 'Bronze" Medal in the competition. Two teams, one each from EM Division-KGF Complex and Equipment Division- Mysore Complex were deputed for State level QC Competition conducted by M/s. CII, Bangalore. Team from EM Division won the First prize in "Highest Business Impact" category.

KAIZEN projects have been taken up and successfully completed at all divisions. From the current year, 'Kaizen Rewarding Scheme' has been introduced, wherein best 30 Kaizen projects from divisions will be rewarded during Independence/ Republic day. All divisions put together, nearly 3000 Kaizen projects had planned, out of which 1563 projects have been completed during the year and the remaining are under regular review.

Implementation of '5S' concept is on throughout the Company. Every year, inter-shop competition on '5S' are conducted at all divisions and winners are awarded during quality month celebration. Training on '5S' and 'Kaizen' were conducted at all the divisions by M/s. NIQR experts as a part of QC^QA implementation.

Six-Sigma process approach is in place at all divisions with 53 black belts working on various projects in the areas of Quality Improvement, Lead Time Reduction, Cost reduction, Product Improvement and Productivity Improvement. Services of M/s.TQM International are being utilized for project guidance. During the year, two black belts from EM Division, KGF Complex took part in the regional competition conducted by M/s. QCFI and won 'Silver' medals for the case study presentation.

Vendor development :

Efforts are on in identifying, developing and evaluating the potential suppliers. Periodic process/system audits are being conducted and necessary feedbacks are given to the vendors for process/system improvements right from development stage to ensure quality in their supplies. Third party inspection agency is engaged for carrying out source inspection at vendors' premises to ensure quality of the incoming components, right at source itself.

Vendors who are consistent in quality and self- reliable are encouraged by awarding "Self Certification" status for their supplies. About 200 firms have already been accorded self-certification status and 56 firms have been granted waiver of source inspection.

Customer satisfaction :

Achieving customer satisfaction is the essential ingredient of any business. Cross functional teams and quality improvement teams are active throughout the Company to address field issues and to gather customer feedback to enhance product quality.

Technology up-gradation :

Professional expertise of M/s. WRI, Trichy is being sought for guidance to assure quality in critical areas including welding and fabrication.

Initiative was taken in organizing Lead Auditor/ Internal Auditor awareness training programme on QMS by M/s. BVCI, Bangalore. A 'Welders Training and Certification' course was conducted by M/s. TUV Rheinland, Bangalore for 160 identified welders and 8 welding inspectors across all divisions, and 111 welders have qualified the tests conducted under the course.

Quality engineering personnel at all levels are deputed to various training/seminar programmes covering topics in areas of technological updates and personality development.

RESEARCH & DEVELOPMENT

The Company's Research & Development Centre continues to play a vital role in the design and development of products, critical aggregates, indigenization activity etc. During the year, R&D has developed and launched various products in Mining & Construction and Defence segments.

The information on R&D, Technology Absorption, Adaptation and Innovation including the products developed by the Company during the year is at Annexure-I.

FINANCE

The working capital requirements were met from the internal resources and credit facilities availed from banks. There was no overdue installment of principal and interest.

The Company's contribution to exchequer was in the order of Rs. 682.58 crores during the year by way of Excise Duty, Customs Duty, Sales Tax, Income Tax, Wealth Tax, Service Tax, Cess, etc.

FOREIGN EXCHANGE EARNINGS AND OUTGO

During the year, the Company's export earning stood at Rs. 116.12 crores. The total foreign exchange utilized during the year was Rs. 683.50 crores.

A sum of Rs. 2.14 crores was incurred towards deputation of personnel abroad for business/export promotion, after-sales-services and training.

FIXED DEPOSITS

The Company has not accepted/renewed any fixed deposits during the year and there is no outstanding fixed deposits as on 31.03.2012.

VIGILANCE

The Company has an independent Vigilance Department headed by a full-time Chief Vigilance Officer. Following the dictum, 'there cannot be Management without Vigilance', the Chief Vigilance Officer provides aid and advice to the Company on all vigilance matters. The units of the vigilance department, namely, Investigation Wing, Disciplinary Wing, Anti-Corruption Wing, Preventive Vigilance Wing and Technical Wing deal with various facets of vigilance mechanism. Several initiatives were taken in the process of creating awareness, sensitisation, and ensuring accountability, probity, and transparency within the overarching vigilance functions of punitive, preventive and surveillance and detection. As part of the observance of the Vigilance Awareness Week 2011 and in sync with the theme 'Participative Vigilance' a unique journal 'VIG- KIRAN', which included a compact disc containing a compendium of essential guidelines and directives of the Central Vigilance Commission (CVC), Department of Public Enterprises, Ministry of Defence, Ministry of Corporate Affairs, SEBI and BEML for the engagement and empowerment of all the stakeholders, was released for circulation. The system of filing Annual Property Returns (APRs) by Public Servants has been evolved to check possession of assets disproportionate to known sources of income. A sensitisation programme was developed and conducted for the Executives on filing of the APRs which is mandatory as per Rule 16 of BEML Conduct, Discipline and Appeal (CDA) Rules 1976. To mitigate corruption in public procurement CVC has issued guidelines, promoted e-procurement and adoption of Integrity Pact, compliance of which have been ensured in the Company. BEML e-procurement solution is customized to process Open/Global Tenders, publishing of Tenders on website, publishing of contracts awarded on website, online Vendor Registration, e-payment and online Bill status. Integrity pact is signed for all procurement transactions/contracts above Rs. 20 Crores and monitored by two Independent External Monitors. The Public Interest Disclosure & Protection of Informers Resolution (PIDPIR) 2004, wherein CVC is the designated authority to handle the "Whistle blower" complaints and provide protection to the "Whistle blowers", has been uploaded on the BEML website www.bemlindia.nic.in with a link to the Vigilance portal for wider publicity and to encourage public and employees to come forward and lodge/report information of corrupt practices. In short, the Vigilance department has facilitated Good Corporate Governance.

CORPORATE GOVERNANCE

A report on Corporate Governance including Management Discussion and Analysis Report along with a Compliance Certificate from the Auditors as required under the Listing Agreement entered into with the Stock Exchanges is annexed to this report.

SUBSIDIARY COMPANY :

M/s Vignyan Industries Limited (VIL):

VIL has posted a turnover of Rs. 39.21 crores with profit before tax of Rs. 0.65 crores recording a growth of about 16% in turnover and 140% in profit. The value of production of the Company stood at Rs. 45.29 crores as against value of production of Rs. 35.70 crores recording a growth of about 27% in the previous year. The profit after tax recorded at Rs. 0.82 crores.

A perspective plan has been drawn for five years commencing from 2011-12 to 2015-16 for balancing the production capacity and upgrading the existing technology of the foundry. The capital expenditure has been estimated at Rs. 20 crores, out of which an amount of Rs. 10 crores is proposed to be spent in the first phase. At the end of second year, the plan would be reviewed and the investment of remaining Rs.10 crores considered.

The statement and particulars relating to VIL, pursuant to Section 212 of the Companies Act, 1956 is attached. In accordance with Section 212(8) of the Companies Act, 1956, your Company has been exempted from attaching the Balance Sheet, Statement of Profit & Loss, Cash Flow Statement, Auditors' Report, Directors' Report etc., of the Subsidiary Company to the Balance Sheet of BEML Limited as per Government of India Order No.51/12/2007-CL-III dated 08.02.2011 issued under General Circular No.2/2011. However, the Company will make available these documents upon request by any member of the Company.

JOINT VENTURE COMPANY

A JV Company, M/s BEML Midwest Limited incorporated on 18th April, 2007 at Hyderabad with BEML having 45% share, M/s Midwest Granite Pvt. Ltd., and P T Sumber Mitra Jaya of Indonesia as partners with 55% share. The Company has been established to capitalize the growing business opportunities in the mining segment. However, due to certain unauthorized transactions and the oppression and mismanagement by the nominees of M/s. Midwest Granite P Limited, BEML has filed a petition u/s 397 and 398 of the Companies Act, 1956 before Hon'ble Company Law Board seeking for suitable relief. Hon'ble CLB vide order dated 01.06.2012 directed the Central Government to appoint an inspector to investigate the affairs of BEML Midwest Limited. However, as advised by the legal counsels of the Company an appeal against the said order has been filed by the Company before the appellate authority. In the meantime, as a matter of abundant caution, provision has been made for the full value of Rs. 5.42 Crs. in the books of the Company towards possible diminution in the value of investment in the JV Company.

MICRO, SMALL AND MEDIUM ENTERPRISES

The Micro, Small and Medium Enterprises continue to get support and preference from BEML wherever there is shortage of in-house capacity. The Company extends technical guidance and requisite support to these industries wherever required. Our quality control personnel visit the industries to assist and ensure that the quality of the products meet the requisite standards.

During 2011-12, the Company procured items worth Rs. 600.84 crores from the said category of enterprises.

RAJBHASHA

- Your Company ensured compliance of the Official Languages Act, 1963, and the Rules made thereunder and administrative instructions regarding use of Hindi received from the Department of Official Language and Ministry of Defence from time to time.

- Hindi training for all the three courses viz., Prabodh, Praveen and Pragya under Hindi Teaching Scheme of Ministry of Home Affairs, Department of Official Language were arranged regularly. A total of 257 employees have been trained during the year.

- Seven officials of the Company have been trained in Computer Training programme in Hindi organised by National Informatics Centre in collaboration with Central Hindi Training Institute, Ministry of Home Affairs.

- To inculcate interest and efficiency among the staff, 12 Hindi workshops were organized for 204 employees at Corporate Office and Business Complex Offices during the year.

- Hindi Month was observed with great zeal in the Corporate Office, all the Business Complex Offices and Regional offices of Hyderabad, Mumbai and Chennai from 14th September to 13 th October, 2011. During this period, to motivate the employees competitions viz. Hindi Antakshari, Hindi Quiz, Hindi Crossword and Noting and Drafting, were organized and the winners of these competitions were awarded. Further, Hindi Day i.e. 14th September, 2011 was observed in accordance with the guidelines issued by the Ministry of Defence and Department of Official Language, Ministry of Home Affairs.

- During the period, all translation work and Hindi typing work relating to Annual Reports, Technical Reports, C&AG Audit Paras, MoUs, Reports on SC/ST, RTI, Reservation policy, Standing Orders, Product Profiles, Advertisement Materials and standard forms were attended to with full efficiency and dedication.

- The Parliamentary Committee on Official Language visited Mysore Complex on May 07, 2011 and satisfied over the progress being made and also devised some suggestive measures to implement the Official Language Policy further.

- All the sign boards outside the premises of the Company displayed tri-lingually i.e. Kannada (Regional Language), Hindi and English and the name plates which are displayed within the premises of the Company are also in tri-lingual form.

- A session on "Official Language Policy" is included in all in-house training programmes.

- Hindi Library is functioning in Corporate Office with good number of Hindi Books and Hindi periodicals. Hindi Dictionaries, Administrative Glossaries, Help-literature are supplied to the staff to encourage them to do official work in Hindi.

- Website of BEML is made available in Hindi also.

AWARDS

- BEML won National Safety Award on 29.11.2011, instituted by the Director- General, Factory Advice Service and Labour Institute under Ministry of Labour and Employment, Government of India, for its Heavy Fabrication Unit at KGF (performance year 2009) under Scheme-III (Lowest Average Frequency Rate) and under Scheme-IV (Accident Free Year 2009).

- BEML received the prestigious All India Export Excellence Award of EEPC India 'Star Performer Award' for the year 2010-11 on 23.03.2012.

MANPOWER

The manpower strength as on 31st March, 2012 stood at 11,644 as against 11,798 of the previous year.

Representation of SC/ST and Ex-Servicemen category-wise as on 01.01.2012 and recruitment made are as under :

Representation of SC/ST/Ex-Servicemen as on 01.01.2012

Total Category/ Strength Group As on 1.1.2011 1.1.2012

Group-A 1383 1433

Group-B 1405 1327

Group-C 9049 8716

Group-D 67 50

Total 11904 11526

No. of SC/ST and Ex-servicemen Category Scheduled Scheduled Ex-Service Group Caste Tribe Men 1.1.2011 1.1.2012 1.1.2011 1.1.2012 1.1.2011 1.1.2012

Group-A 207 221 41 43 8 8

Group-B 245 238 72 72 11 7

Group-C 1919 1881 344 332 343 328

Group-D 29 22 3 4 - -

Total 2400 2362 460 451 362 343

Recruitment during 2011

Group General OBC SC ST EX-S TOTAL

A 18 5 8 1 4 36

B 97 105 36 28 5 271

C 126 96 97 28 - 347

D - - - 2 - 2

TOTAL 241 206 141 59 9 656

HUMAN RESOURCES DEVELOPMENT & INDUSTRIAL RELATIONS

The HR Department identified several thrust areas for continuously updating technical / professional knowledge and skills of employees and bring about attitudinal changes in fostering a performance driven work culture in all areas of operations particularly at shop floors. During the year, the Company organized several in-house and external training programs covering 30,396 man-days.

The overall industrial relation situation in the Company was cordial during the year.

CORPORATE SOCIAL RESPONSIBILITY/ SOCIAL WELFARE

- BEML Limited provides opportunity to such of the unskilled literate Contract Labourers, by extending on-Job skilled training to consider them for regular employment.

- Extension of out-patient medical facilities to ex-BGML employees and their families by deputing a Doctor and 2 para-medical staff to the areas of Marikuppam, Champion Reef and Oorgaum and medicines are dispensed free of cost for general illness.

- Provided medical treatment through Company's medical centres and dispensaries to the common public dwelling in the adopted village of Dasarahosahalli at KGF.

- BEML runs one Junior College and two Nursery Schools at KGF and one Nursery School at Bangalore. These Institutions not only meant for BEML employees children, it also caters to a large extent to the local population. In addition, BEML runs a Kendriya Vidyalaya Project School at KGF by providing school building with infra- structure facilities, mid-day meal programme and other facilities.

- BEML has extended facilities viz., school building, furniture and other infrastructure and one attender for mid-day meal programme and night watchman to Govt. English Higher Primary School at KGF.

- The Company has extended all help and support to the Labour Welfare Fund (LWF) functioning in the production units for the benefits of Employees, their dependants and local population. The LWF had conducted training programmes in Tailoring, Computer, Typing / Shorthand course, Diploma course in Laboratory Technology, Job Oriented Courses, Music / Dance classes, spoken English Course, Summer camps for art / painting and sports and various entertainment activities during the year.

- Company has sponsored a scheme for award of Scholarship to the SC/ST students pursuing full time undergraduate Engineering course in Engineering Institutions all over the country. The scheme also aims at providing employment to students who successfully complete the Engineering programme.

- Your Company has adopted four children from the United Physically Handicapped School of Coimbatore and decided to continue the adoption till the children can be employed suitably under PH quota / services to orphans and unsupported.

- Your company has expressed solidarity towards the cause of helpless children in Prayasam, a Kolkata based NGO which look after social welfare of poor and destitute children in various places of West Bengal by issuing an advertisement every year in the annual report of Prayasam.

- Renovated Government ITI at Rajahmundry and Kakinada by constructing the compound wall and repairing 8 labs.

- Your Company has constructed comfortable waiting area at SBC Railway Station, Bangalore particularly for senior citizens.

PARTICULARS OF EMPLOYEES

There were no employees of the Company who received remuneration in excess of the limits prescribed under Section 217(2A) of the Companies Act, read with the Companies (Particulars of Employees) Rules, 1975.

ENVIRONMENT AND POLLUTION CONTROL

In order to protect the environment in and around the factory premises/township, tree plantation were undertaken. Saplings of various types of avenue tree/flower bearing trees were planted in the vacant lands belonging to the Company for maintaining ecological balance in the surrounding areas. Further, measures have also been taken to protect the existing flora and fauna from any basic interference.

Effluent treatment plants have been constructed inside the factory premises of the production units for treatment of domestic/industrial effluents. Further, treatment plants/oxidation ponds for treatment of natural process of treating effluents have been installed in various locations inside the factory and township. Treated effluent water is being utilized by the Landscaping Department in the production unit. Artificial tanks have been constructed in Manufacturing Complexes to harvest rain water, restrict soil erosion and to raise ground water level. Storage yard facility for Hazardous waste at salvage stores in the divisions is constructed as per ISO 14001 requirements.

In a bid to harness renewable energy, the Company commissioned a 5 MW Wind Mill during the year 2007-08 in Gadag District of Karnataka. The energy generated by the plant is fed into the KPTCL grid and sold to Hubli Electricity Supply Co. Ltd., and as of 31.03.2012, 396.44 lakh kWh power has been generated enabling green house gas reduction. Further, your company is setting up an additional 18 MW Wind Mill Farm to develop green energy towards being self sufficient on power requirements.

ENERGY CONSERVATION

The Company continues to give emphasis on conservation of energy. The efficiency of energy utilization is closely monitored to attain higher level of effective conservation. Some of the measures adopted during the year for energy conservation are :-

1. Introduction of 2 Nos. 5000 litres capacity solar water heating system in Workers Canteen for pre-heating of water at 60O centigrade.

2. Replacement of Inverter welding sets (18KW) in place of old type Kirloskar make Motor Generator welding set of 30KW.

3. Switching off of roof extractors during lunch time in I, II shifts and shift ending hours / non-working hours.

4. Introduction of 150W metal halide high bay fitting for street lights in place of 800W HPMV lamp at various places in the unit premises.

5. Introduction of 24 Watt LED solar lights in place of 250 Watt HPSV perimeter lighting.

6. Introduction of LED type DSL power supply indication lamps for EOT cranes and panel indication lamp in place of incandescent lamp.

The particulars as prescribed under sub-section (1)(e) of Section 217 of the Companies Act, 1956, read with the Companies (Disclosure of particulars in the Report of the Board of Directors) Rules 1988, are annexed to this report.

STATUTORY AUDITORS

M/s. Padmanabhan Ramani & Ramanujam, Chartered Accountants, Chennai, were appointed by Comptroller & Auditor General of India as Statutory Auditors for the year 2011-12.

Reply of the Board of Directors to the observations made in the report of the Auditors on the Accounts are given in the addendum to this report.

COST AUDITORS

Your Company has appointed the following firms as Cost Auditors with the approval of Central Government:

(i) M/s Rao, Murthy & Associates for 'Heavy Earth Moving Equipments', and

(ii) M/s AGI & Associates for 'IC Engines'.

DIRECTORS' RESPONSIBILITY STATEMENT

The Board of Directors of the Company confirm:

i) that in the preparation of the annual accounts, the applicable accounting standards have been followed and there has been no material departure ;

ii) that the selected accounting policies were applied consistently and the Directors 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 as at 31st March, 2012 and of the profit of the Company for the year ended on that date ;

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

iv) that the annual accounts have been prepared on a going concern basis.

ACKNOWLEDGEMENTS

Your Directors express their hearty thanks to the Company's valued customers, in particular Defence Services, M/s Coal India Limited and its Subsidiaries, M/s. Singareni Collieries Company Limited, Railway Board, M/s Steel Authority of India Limited, M/s Delhi Metro Rail Corporation, M/s Bangalore Metro Rail Corporation and M/s Jaipur Metro Rail Corporation for their patronage and confidence in the Company. The Directors also acknowledged and thanked all collaborators, vendors and other service providers for their valuable assistance and cooperation extended to the Company.

The Directors express their appreciation to the members of Consortium of Banks and other Bankers of the Company and Financial Institutions for their continued support to the Company's operations. The Directors also thank all the shareholders / investors for reposing continued confidence in the Company.

The Directors wish to thank the Comptroller & Auditor General of India, the Principal Director of Commercial Audit & Ex-officio Member, Audit Board and Statutory Auditors for their valued co-operation.

The Directors also gratefully acknowledge the valuable support and assistance received from various Ministries of Government, in particular Ministry of Defence, Ministry of Coal, Ministry of Mines, Ministry of Steel, Ministry of Railways and the Ministry of External Affairs. The Directors are also grateful to the Government of Karnataka and Kerala for the support and co-operation extended to the Company.

Your Directors take this opportunity to place on record their appreciation for the invaluable contribution made and excellent co-operation extended by the employees and executives at all levels for the continued progress and prosperity of the Company.

For and on behalf of the Board of Directors

P Dwarakanath

Chairman & Managing Director (I/c)


Mar 31, 2011

The Members,

The Directors have pleasure in presenting the 47th Annual Report and Audited Accounts for the year ended31.03.2011.

FINANCIAL RESULTS (Rs crores)

Particulars 2010-11 2009-10

Sales (Gross) 3623.52 3557.67

Value of Production 3768.60 3708.66

Profit (Before Depreciation,

Interest and Tax) 279.02 400.70

Interest 58.63 48.93

Depreciation 33.64 32.22

Profit Before Tax 186.75 319.55

Provision for Taxation 36.99 96.70

Profit After Tax 149.76 222.85

Profit available for appropriations 399.40 320.64

APPROPRIATIONS :

Proposed Dividend 41.64 41.64

Dividend tax 6.92 7.08

General Reserve 14.98 22.28

Profit & Loss Account 335.86 249.64

Net Worth 2139.04 2036.39

TURNOVER AND PROFITABILITY

Your Company attained an all time high turnover of*Rs.3,623.52, crores, an increase of Rs.65.85 crpres registering a growth of 1.85% over the previous year. The value of production was Rs.3,768.60 crores recording an increase of about 1.62% over the previous year. Despite the increase in sales volume, the Profit Before Tax was Rs. 186.75 crores as against Rs.319.55 crores recorded in the previous financial year. The reduction in profit was mainly on account of implementation of wage revision for employees, change in product mix propelled by the market demand, lesser quantum of sales of spares coupled with severe competition that had exerted pressure on margins. However, Company has initiated steps to maximize the profits.

DIVIDEND

The Board of the Company has recommended a dividend of Rs. 10 per share i.e., 100% on the Paid-up Equity Share Capital for the year 2010-11 keeping in view the past performance and future prospects and simultaneously meeting the aspirations of the shareholders.

EXPORTS

International Business Division of the Company has achieved a turnover of Rs. 217.50 crores (including Trading) as against Rs. 156.25 crores in the previous year recording a growth of 39.2% over previous year. The international presence of the Company has increased to about 58 countries including African countries viz., Kenya, Mali, to which entry was made during the year.

QUALITY

The year 2010-11 was observed as "Year of Quality" wherein necessary drive was undertaken to strengthen the 'quality team', to focus on quality, under the changed business environment and work towards building world class equipment so that the Company's 'Vision' of becoming 'Global market leader' is achieved. The measures taken up during the year are briefed below:

a. Quality Management System:

All manufacturing divisions have been updated, to J§O9001-2008 Quality Management System (QMS) certification. KGF, Bangalore and Mysore Complexes are certified for ISO14001-2004 Environmental Management System (EMS). Also, the Bangalore Complex is certified for BS OHSAS 18001-2007 Integrated Management System. Having diversified into Aerospace Division, Engine Division, Mysore Complex is certified for AS9100B Aerospace certification. Laboratories at R&D, KGF and Engine Division, Mysore continue to hold NABL accreditations.

Company's new manufacturing unit at Palakkad, Kerala has also successfully implemented and obtained ISO9001-2008 QMS Certification.

Consultancy services of M/s. NIQR, Chennai were engaged for study and review of the existing Quality Management System followed by Divisions, and to submit the recommendations. Task force teams have been formed to take forward and ensure effective implementation of the recommendations made by NIQR.

b. Quality Improvement:

To enhance the existing quality level, deviation approval system was withdrawn at divisional level thus avoiding re-works/ deviations at divisions. Professional expertise are being sought for guidance to analyze the bottleneck areas and to assure quality in critical areas like welding, fabrication, painting, oil testing, etc.

Concept of 5S, Kaizen and Quality Circles are practiced at grass root level throughout the Company to bring in continual improvements in product and process quality. To motivate the activity, our annual event 'BEML-Nonimara Award' Competition is being conducted and the winning teams are deputed for regional/national level competitions where our teams have achieved recognition as meritorious performers. Six-Sigma process approach is in place at all Divisions with 75 Black Belts working on various projects.

During the year, Quality Circle Team "WHEEL" of Earthmoving Division, KGF Complex has been conferred with the life time award by M/s. QCFI as the "Longest & Active Quality Circle". The prize has been awarded after the recommendation from the Evaluation Committee of M/s. QCFI, who visited KGF Complex for interaction and evaluating the QC team.

c. Vendor Development:

As vendor supplied items form the major share of the components that go into building up of the equipment, utmost care is taken right from the inclusion of vendor till clearance of their supplies for further assembly. Periodical visits are made and necessary inputs and expert guidance in respect of process/system improvements are given to the vendors' right from development stage to ensure quality in their supplies. To enhance the overall performance of vendor supplied items, the services of third party inspection agencies are engaged for carrying out source inspection at vendors' premises and also to carry out surveillance inspection of items received at all Divisions.

To motivate vendors and to make these self-reliable, dedicated vendors are identified based on their performance and encouraged by awarding "Self Certification" status for their supplies. "Cluster Vendor" concept - an idea to handhold and transform the vendor as "Zero Defect" supplier is practiced with few identified vendors by giving inputs with regard to the non-conformances observed in the supplies made, and necessary guidance in the areas covering technological aspects, skill improvement and quality initiatives like 5S, Kaizen etc.

d. Customer Satisfaction:

To ensure higher equipment availability and reliability, 'Task Force' comprising of Apex and Action drive teams are formed at KGF and Mysore Complexes to address the performance related issues pertaining to BH100/BG825/BE1600/BE1000 equipments available in the field. Action drive teams visited customers for implementation of improvements in BH100/BG825.

Minimum number of test hours have been stipulated for all models of Mining & Construction Equipments to take care of any possible errors which otherwise would have passed on to field/customer.

Also, to further with a view to enhance the customer confidence, third party inspection is being introduced at Earthmoving and Equipment Divisions for inspection and clearance of the Mining & Construction equipment at the final stage before despatching it to the customers.

e. Technology Up-gradation:

Quality Engineering personnel at all levels are deputed to various training/seminar programmes covering topics in areas of technological updates and data analysis tools which are essential for taking up quality improvement projects.

During the year, the services of M/s TQM International are engaged for Six Sigma Black Belt training and project guidance. 22 Black Belts across divisions have been trained and are all working on projects.

RESEARCH & DEVELOPMENT

The Company's Research & Development Centre continues to play a vital role in the design and development of products, critical aggregates, indigenization activity etc. During the year, R&D has developed BA10 Aircraft Towing Tractor with front cabin, GRAD BM21 MBRLS on special 6x6 Chassis, field artillery tractor for towing of heavy artillery guns, High mobility vehicle on 6x6 chassis integrated with material handling crane, Broad Gauge Catenary Maintenance Vehicle for DMRC and 8W Catenary Maintenance Vehicles.

The information on R&D, Technology Absorption, Adaptation and Innovation is at Annexure-I.

FINANCE

The working capital requirements were met from the internal resources and credit facilities availed from banks. There was no overdue installment of principle and interest.

The Company's contribution to exchequer was in the order of Rs. 657.92 crores during the year by way of Excise Duty, Customs Duty, Sales Tax, Income Tax, Wealth Tax, Service Tax and Cess.

FOREIGN EXCHANGE EARNINGS AND OUTGO

During the year, the Company's export earning stood at Rs. 179.37 crores. The total foreign exchange utilized during the year was Rs.652.67 crores.

A sum of Rs.2.02 crores Was incurred towards deputation of personnel abroad for business/ export promotion, after-sales-services and training.

FIXED DEPOSITS

The Company has not accepted / renewed any fixed deposits during the year. ,

VIGILANCE

The Company has an independent Vigilance Department headed by a Chief Vigilance Officer. The Vigilance Department of the Company functions on the premise that well laid down systems and procedures and their meticulous follow up are bound to pave way for the corporate growth. Regular inspections, surprise checks, scrutiny of purchase/contract files are part of these exercises which helped in streamlining systems and procedures and ensure greater transparency and accountability in decision-making. Carrying out system audits and system improvement studies as well as regular awareness cum sensitization programs have been inbuilt in the functioning of the department. These efforts were found to be useful in identifying the loopholes in the systems and procedures and their correction/ improvement. In addition, the Vigilance Department has made available a window in the Company's website for the stakeholders/ shareholders to lodge complaints.

Nevertheless, the Vigilance Department ensures that the Company adheres to the guidelines/ instructions issued by Central Vigilance Commission (CVC) from time to time in maintaining probity.

In nutshell, the conscientious functioning of the Vigilance Department has supported the Company in its enhanced efficiency combined with the code of accountability.

CORPORATE GOVERNANCE

A report on Corporate Governance including Management Discussion and Analysis Report along with a compliance certificate from the Auditors as required under the Listing Agreement entered into with the Stock Exchanges is annexed to this report.

SUBSIDIARY COMPANY

M/s Vignyah Industries Limited (VIL) achieved a turnover of Rs.33.82 crores and value of production of Rs.35.68 crores during the year. It incurred a loss of Rs. 1.60 crores, mainly due to the delay in stabilization of the expansion process for shifting from traditional "C02" to "no-bake" system and non-availability of quality sand due to heavy and unprecedented rainfall.

The statement and particulars relating to VIL, pursuant to Section 212 of the Companies Act, 1956 is attached.

In accordance with Section 212(8) of the Companies Act, 1956, your Company has been exempted from attaching the Balance Sheet, Profit & Loss Account, Auditors' Report, Directors' Report, etc., of the subsidiary Company to the Balance Sheet of BEML Limited as per Government of India order No.51/12/2007-CL-III, dated 08.02.2011 issued under General Circular No.2/2011. However, the Company will make available these documents upon request by any member of the Company.

JOINT VENTURE COMPANY

A JV Company, M/s BEML Midwest Limited incorporated on 18th April, 2007 at Hyderabad with BEML having 45% share, M/s Midwest Granite Pvt. Ltd., and P T Sumber Mitra Jaya of Indonesia as partners with 55% share. The Company has been established to capitalize the growing business opportunities in the mining segment. However, due to certain unauthorized transactions and the oppression and mismanagement by the nominees of Midwest Granite Pvt. Limited, BEML has filed a petition u/s 397 and 398 of the Companies Act, 1956 seeking suitable relief, and the matter is pending before the Hon'ble Company Law Board.

MICRO, SMALL AND MEDIUM ENTERPRISES

The Micro, Small and Medium Enterprises continue to get support and preference from BEML wherever there is shortage of in-house capacity. The company extends technical guidance and requisite support to these industries wherever required. Our quality control personnel visit the industries to assist and ensure that the quality of the products meet the requisite standards.

During 2010-11, the Company procured items worth Rs. 363.24 crores from the said category of units.

RAJBHASHA

- Your Company ensured compliance of the Official Languages Act, 1963 and the Rules made thereunder and administrative instructions regarding use of Hindi received from the Department of Official Language and Ministry of Defence from time to time.

- Hindi training for all the three courses viz., Prabodh, Praveen and Pragya under Hindi Teaching Scheme of Ministry of Home Affairs, Department of Official Language were arranged at Corporate office, all Complex offices and few Regional/District offices. A total of 271 employees have been trained during the year.

- Five officials of the Company have been trained in Computer Training programme in Hindi organised by National Informatics Centre in collaboration with Central Hindi Training Institute, Ministry of Home Affairs.

- To inculcate interest and efficiency among the staff, 13 Hindi workshops were organized for 192 employees at Corporate Office and Business Complex Offices during the year.

- Hindi Month was observed with great zeal in the Corporate Office, all the Business Complex Offices and Regional offices of Hyderabad, Mumbai and Chennai from 1st to 30th September, 2010. During this period, to motivate the employees, competitions viz. Hindi Antakshari, Hindi Quiz, Hindi Crossword and Noting & Drafting, were organized and the winners of these competitions were awarded. Further, Hindi Day i.e. 14th September, 2010 was observed in accordance with the guidelines issued by the Ministry of Defence and Department of Official Language, Ministry of Home Affairs Further, Hindi Month was observed with tw> days Hindi Conference held at Mumbai on 29-30,h September, 2010 in which 23 participants from Western Regional offices/District offices participated in the Conference.

- During the period, all translation work and Hindi typing work relating to Annual Reports, Technical Reports, MoUs, Reports on SC/ST, RTI, Reservation policy, Standing orders, Product Profiles, Advertisement Materials and Standard Forms was attended to with full efficiency and dedication.

- All the sign boards outside the premises of the Company displayed tri-lingually i.e. Kannada (Regional Language), Hindi and English and the name plates which are displayed within the premises of the Company are also in tri-lingual form.

- A session on "Official Language Policy" is included in all in-house training programmes.

- Hindi Library is functioning in Corporate Office with good number of Hindi Books and Hindi periodicals. Hindi Dictionaries, Administrative Glossaries, Help-literatures are supplied to the staff to encourage them to do official work in Hindi.

- Website ofBEML is made available in Hindi also.

AWARDS

- Public Relations Council of India (PRCI), a premier body of the Public Relations and Communication Professionals has bestowed the prestigious 'Chanakya Award1 on CMD, Shri V RS Natarajan, on 03.04.2010, for having steered the Company to unprecedented levels of success both in business operations as well as territorial expansions.

- The Second Dalai Street Investment Journal (DSIJ) PSU Award-2010 held at New Delhi on 6"' pril 2010, BEML has been bestowed with "Wealth Builder-Miniratna-Manufacturing" Award under percentage surge in Market Cap category.

- The Heavy Fabrication Unit (HFU) of BEML at KGF Complex has been adjudged as 'Winner' in the National Safety Awards (performance year 2008) under Scheme-V (Lowest Average Frequency Rate) and Scheme-VI (Accident Free Year) and received the award on 27.10.2010 from Ministry of Labour & Employment, Government of India.

- BEML has won the prestigious Raksha Mantri's Institutional Award for Excellence in Performance (FY 2008-09) and Group award for Design Efforts for design and development of Intermediate Cars for Delhi Metro RS4 Project, on 10.11.2010.

- BEML was conferred with the prestigious SCOPE Award - Medium PSE Category for the year 2008-09 on 15.12.2010 by Ministry of Heavy Industries & Public Enterprises for Excellence and Outstanding Contribution to Public Sector Management.

- BEML was bestowed with EEPC INDIA Award for outstanding contribution to engineering exports (FY 2008-09) by Engineering Export Promotion Council on 22.12.2010.

- BEML was bestowed with the Aerospace & Defence Award* under the category 'Excellence in Technology Awards' for the snow cutter. This was instituted by SAP Media Publications, an internationally renowned business magazine in the field of Aerospace on 08.02.2011.

- BEML had received the Public Relations Council of India Award for "Best Wall Calendars*' at the Global PR Conclave-2011 on 17-18* March, 2011 at Chandigarh.

- BEML was bestowed with two awards, one is 'Game changes for diversification' and the other "R&D and enhanced global presence1 instituted by Dalai Street Investment Journal in its 'India's best Public Sector Enteprises- 201 l'on21.04.20HatNew Delhi.

- As per the survey, commissioned by the Economic Times, Corporate Dossier magazine and conducted by IMRB International, Shri V RS Natarajan, Chairman and Managing Director of the Company, has been ranked at 77"1 position in the list of'India INC's most powerful CEOs-2011', published in the Economic Times on 29.04.2011.

MANPOWER

The manpower strength as on 31st March, 2011 stood at 11,798 as against 12,052 of the previous year.

Representation of SC/ST and Ex-Servicemen category-wise as on 01.01.2011 and recruitment made are as under:

Representation of SC/ST/Ex-Servicemen as on 01.01.2011

Category/ Total No. of SC/ST and Ex-servicemen Group Strength As on Scheduled Scheduled Ex-Service Caste Tribe Men 1.1.10 1.1.11 1.1.10 l.l.ll 1.1.10 1.1.11 l.l.lO l.l.ll

Group-A 1443 1383 213 207 41 41 9 8

Group-B 1223 1405 208 245 62 72 9 11

Group-C 8983 9049 1943 1919 356 344 313 343

Grdup-D 94 67 43 29 4 3 - -

Total 11743 11904 2407 24001 4631 4601 331 362

Recruitment during 2010

Griiip General OBC SC ST EXS TOTAL

A 21 2 2 1 1 26

B 123 89 35 11 - 258

Total 144 91 37 12 1 284

HUMAN RESOURCES DEVELOPMENT & INDUSTRIAL RELATIONS

The HR Department identified several thrust areas for continuously updating technical/professional knowledge and skills of employees and bring about attitudinal changes in fostering a performance driven work culture in all areas of operations particularly at shop floors. During the year, the Company organized several in-house and external training programs for 13,402 employees covering 30,691 man-days.

The overall industrial relations situation in the Company was cordial during the year.

CORPORATE SOCIAL RESPONSIBILITY / SOCIAL WELFARE

- BEML Limited provides opportunity to such of the unskilled Contract Labourers who are literates, by extending on-Job skilled training to consider them for regular employment.

- Extension of out-patient medical facilities to ex-BGML employees and their families by deputing a doctor and 2 para-medical staff to the areas of Marikuppam, Champion Reef and Oorgaum and medicines are dispensed free of cost for general illness.

- Provided medical treatment through Company's medical centres and dispensaries to the common public dwelling in the adopted village of Dasarahosahalli at KGE

- BEML runs one Junior College, and Nursery School at KGF and one Nursery School at Bangalore. These Institutions not only meant for BEML employees children, it also caters to a large extent to the local population. In addition, BEML runs a Kendriya Vidyalaya Project School at KGF by providing school building with infra-structure facilities, mid-day meal programme andother facilities.

- BEML has extended facilities viz., school building, furniture and other infrastructure and one attender for mid-day meal programme and night watchman to Government English Higher Primary School atKGF.

- The Company has extended all help and support to the Labour Welfare Fund (LWF) functioning in the production units for the benefits of Employees, their dependants and local population. The LWF had conducted training programmes in Tailoring, Computer, Typing / Shorthand course, Diploma course in Laboratory Technology, Job Oriented Courses, Music/Dance classes, spoken English Course, Summer camps for art/painting and sports and various entertainment activities during the year.

- Company has sponsored a scheme for award of Scholarship to the SC/ST students pursuing full time undergraduate Engineering course in Engineering Institutions all over the country. The scheme also aims at providing employment to students who successfully complete the Engineering programme.

- Your Company has adopted four children from the United Physically Handicapped School of Coimbatore and decided to continue the adoption till the children can be employed suitably under PH quota / services to orphans and unsupported.

- Your Company has taken up Development of Parks in BEML Housing Co-operative Society layout at Mysore. Company has also proposed to develop parks in BEML Housing Co-operative Society layouts Stage-I and Stage-II at Mysore. In pursuance of this, Company will share 60% and the balance 40% of the total cost will be borne by BEML Housing Co-operative Society Ltd, Mysore.

- Your Company has taken up planting of avenue trees from Hootagalli to Paper Mills Circle (KRS Road in front of BEML premises) and from Engine Division Corner to Infosys Circle, Mysore.

PARTICULARS OFEMPLOYEES

There were no employees of the Company who received remuneration in excess of the limits prescribed under Section 217(2A) of the Companies Act, read with the Companies (Particulars of Employees) Rules, 1975.

ENVIRONMENT AND POLLUTION CONTROL

In order to protect the environment in and around the factory premises/township, tree plantation were undertaken. Saplings of various types of avenue tree/flower bearing trees were planted in the vacant lands belonging to the Company for maintaining ecological balance in the surrounding areas. Further, measures have also been taken to protect the existing flora and fauna from any basic interference.

Effluent treatment plants have been constructed inside the factory premises of the Production Units for treatment of domestic/industrial effluents. Further, treatment plants/oxidation ponds for treatment of natural process of treating effluents have been installed in various locations inside the factory and township. Treated effluent water is being utilized by the Landscaping Department in the production units. Artificial tanks have been constructed in Manufacturing Complexes to harvest rain water, restrict soil erosion and to raise ground water level. Storage yard facility for Hazardous waste at salvage stores in the Divisions is constructed as per ISO 14001 requirements.

In a bid to harness renewable energy, the Company commissioned a 5 MW Wind Mill during the year 2007-08 in Gadag District of Karnataka. The energy generated by the plant is fed into the KPTCL grid and sold to Hubli Electricity Supply Co. Ltd., (HESCOM) and as of 30.06.2011, 332.28 lakh Kwh power has been generated enabling green house gas, reduction. Further, your Company is contemplating to setup an additional 18 MW Wind Mill Farm to develop green energy towards being self sufficient on power requirements.

ENERGY CONSERVATION

The. Company continues to give emphasis on conservation of energy. The efficiency of energy Utilization is closely monitored to attain a higher level of effective conservation. Some of the measures adopted during the year for energy conservation are:

1. One portable air compressor of 4 KW in place of 55 KW capacity motor has been replaced to meet the requirement of heat treatment shop furnaces.

2. Introduction of 2 Nos. 5000 litres capacity solar water heating system in Workers Canteen for pre-heating of water at 60° centigrade.

3. Replacement of Inverter welding sets (18KW) in place of old type Kirloskar make Motor Generator welding set of 30KW.

4. Introduction of 150W metal halide high bay fitting for street lights in place of 800W HPMV lamp at various places in the unit premises.

5. Reduction of HSD generation by optimizing utilization of grid power.

6. Usage of CFL lamps in the production area and in office building.

The particulars as prescribed under sub-section (l)(e) of Section 217 of the Companies Act, 1956, read with the Companies (Disclosure of particulars in the Report of the Board of Directors) Rules 1988, are annexed to this report.

STATUTORYAUDITORS

M/s. Padmanabhan Ramani & Ramanujam, Chartered Accountants, Chennai, were appointed by Comptroller & Auditor General of India as Statutory Auditors for the year 2010-11.

Reply of the Board of Directors to the observations made in the report of the Auditors on the Accounts are given in the addendum to this report.

COSTAUDITORS

Your Company has appointed the following firms as Cost Auditors with the approval of Central Government:

(i) M/s Rao, Murthy & Associates for 'Heavy Earth Equipments', and

(ii) M/s AGI & Associates for 'IC Engines'.

DIRECTORS

- The President of India has appointed Smt. Rashmi Verma, Joint Secretary (Land Systems), Ministry of Defence on 09.11.2010 as Government Nominee Director on the Board of the Company in place of Shri V Somasundaran. The President of India has also appointed Dr. S C Pandey, Addl. Financial Adviser & Joint Secretary, Ministry of Defence with effect from 07.06.2011 as Government Nominee Director in place of ShriPKMishra.

- Dr. (Smt.) Rekha Bhargava, Lt. Gen. (Retd.) Noble Thamburaj, Shri Kanwal Nath, Shri Ramesh Bhat, Prof. S Sadagopan were appointed as Independent Directors of the Company with effect from 09.11.2010.

- Shri M Poongavanam, Director (Mining & Construction Business) relinquished the office of Director on 28.02.2011 consequent upon his superannuation and Shri C N Durgesh has been appointed as Director (Mining & Construction Business) with effect from 18.03.2011. Further, Shri V Mohan, Director (Defence Business) relinquished the office of Director on 30.06.2011 consequent upon his superani oiation and Shri P R Naik has been appointed as Director (Defence Business) with effect from 01. 7.2011.

- The Board placed on record its deep appreciation of the valuable services rendered by S/Shri V Somasundaran, MPoongavanam,Pfc l,f
DIRECTORS' RESPONSIBILITY STATEMENT

The Board of Directors of the Compary confirm:

i) that in the preparation of the annur 1 accounts, the applicable accounting standards have been followed and there has been o material departure;

ii) that the selected accounting policies were applied consistently and the Directors 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 as at 31st March, 2011 and of the profit of the Company for the year ended on that date;

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

iv) that the annual accounts have been prepared on a going concern basis.

ACKNOWLEDGEMENTS

Your Directors express their hearty thanks to the Company's valued customers, in particular Defence Services, M/s Coal India Limited and its Subsidiaries, M/s Singareni Collieries Company Limited, Railway Board, M/s Steel Authority of India Limited, M/s Delhi Metro Rail Corporation and M/s Bangalore Metro Rail Corporation for their patronage and confidence in the Company. The Directors also express their gratitude to our Collaborators, M/s Rotem, South Korea, M/s Tatra Sipox Limited, UK, M/s Pearson Engineering Limited, UK, M/s Terex Corporation, USA, M/s Bumar, Poland and others for their valuable assistance to the Company.

The Directors express their appreciation to the State Bank of India and other members of Consortium of Banks and Financial Institutions for their continued support to the Company's operation. The Directors also thank all the shareholders/investors for reposing continued confidence in the Company.

The Directors wish to thank the Comptroller & Auditor General of India, the Principal Director of Commercial Audit & Ex-officio Member, Audit Board, Statutory Auditors, Suppliers and Vendors for their valued co-operation.

The Directors also gratefully acknowledge the valuable support and assistance received from various Ministries of Government, in particular Ministry of Defence, Ministry of Coal, Ministry of Mines, Ministry of Steel, Ministry of Railways and the Ministry of External Affairs. The Directors are also grateful to the Government of Karnataka for the support and co-operation extended.

Your Directors take this opportunity to place on record their deep appreciation for the invaluable contribution made and excellent co-operation rendered by the employees and executives at all levels for the progress and prosperity of the Company.

For and on behalf of the Board of Directors

V RS Natarajan

Chairman & Managing Director


Mar 31, 2010

The Directors have pleasure in presenting the 46th Annual Report and Audited Accounts for the year ended 31.03.2010.

FINANCIAL RESULTS (Rs. in lakhs) Particulars 2009-10 2008-09

Sales (Gross) 3,55,767 3,01,347

Value of Production 3,70,866 3,29,419

Profit (Before Depreciation

Interest and Tax) 40,070 44,846

Interest 4,893 3,368

Depreciation 3,222 2,731

Profit Before Tax 31,955 38,747

Provision for Taxation 9,670 11,863

Profit After Tax 22,285 26,884

Profit available for

appropriations 32,064 33,126

APPROPRIATIONS :

Proposed Dividend 4,164 4,997

Dividend tax 708 849

General Reserve 2,228 17,500

Profit & Loss Account 24,964 9,780

Net Worth 2,03,639 1,90,708

TURNOVERAND PROFITABILITY

Your company has achieved an all time high turnover of Rs.3557.67 crores during the financial year 2009-10, an increase of Rs.544.20 crores registering a growth of 18% over the previous year. The value of production was Rs.3708.66 crores recording an increase of about 13% over the previous year. Despite the notable increase in sales volume, the profit before tax was Rs.319.55 crores as against Rs.387.47 crores recorded in the previous financial year. The reduction in profit was mainly on account of product mix including metro car sales, lesser quantum of sales of spares, and lesser turnover of exports coupled with severe competition that had pressure on margins. However, Company has initiated steps to maximize the profits.

DIVIDEND

The Directors recommend a dividend of 100% on the Paid-up Equity Share Capital of the Company for the year 2009-10 meeting the aspirations of the shareholders and foreseeing better performance during the current year.

EXPORTS

The International Business Division achieved a turnover of Rs. 156.25 crores (including Trading) as against Rs.304.34 crores in the previous year. The drop in international business was mainly due to global recession and as also many orders could not be converted into sales for want of LC because of funds constraints with the customers. However, the international presence of the company has increased to about 56 countries including Brazil to which entry was made during the year.

QUALITY

Diversifying and Globalizing being the main strategy of the company and Quality Assurance being the motto of the department, action plans are designed and implemented to complement & supplement the Companys ambitious Vision of becoming global market leader. Initiatives taken up during the year, to ensure Quality at all levels, are appended below :

a. Quality Management System:

ISO standards which provide guidance for good Quality Management System have been effectively implemented and followed. All manufacturing divisions have achieved the revised ISO 9001-2008 accreditation from the existing 2000 version. Quality Policy & Objectives have been reviewed and modified in line with the Companys Vision, Mission and to meet the requirements of ISO 9001-2008 version. Having diversified into Aerospace Engineering, Engine Division, Mysore Complex is in the final stage of

obtaining AS 9100 accreditation. Mysore and KGF Complexes have been accredited with ISO 14001-2004 EMS certification, thus proving BEMLs commitment to protect and safeguard the environment. At Bangalore Complex, implementation of Integrated Management System Certification covering ISO 14001-2004 & OHSAS 18001-2007 is under process. Laboratories at R&D, KGF and Engine Division, Mysore continue to hold NABL accreditations.

b. Quality Improvement:

Quality Circle / Six Sigma / Kaizen / 5S teams are active throughout the company with many ongoing projects to bring in continual improvements in product and process quality. Company-wide competitions are being conducted and the teams are deputed for regional / national / international level competitions. Our QC teams have brought laurels by winning the competitions at Regional / National level and also have bagged "Silver Medal" in the international competition, ICQCC 2009 held at Sebu, Phillipines. To motivate the activity, management has renamed the existing "NONIMARA Award Competition" to "BEML-NONIMARA Award Competition", with effect from 2010-11, and has contributed an equivalent amount of $10000 to the existing award fund, thus enhancing the prize amount awarded to the participants.

c. Vendor Development:

With the increased outsourcing activity, vendor development plays a vital role to improve quality of vendors supplies. Necessary inputs and expert guidance in respect of process / system improvements are given to the vendors right from development . stage to ensure quality in their supplies. To motivate vendors and t6 make vendors self- reliable, dedicated vendors whose

performance are good are encouraged by awarding "Self Certification" status for their supplies. "Cluster Vendor" concept - an idea to handhold and transform the vendor as "Zero Defect" supplier is practiced with few identified vendors by giving inputs with regard to the non-conformances observed in the supplies made, and necessary guidance in the areas covering technological aspects, skill improvement and quality initiatives like 5S, Kaizen etc.

d. Customer Satisfaction:

A satisfied and delighted customer is an asset to the company who will bring in repeat business to the company and quality is the route to this which is achieved through Cross functional teams/Quality improvement teams, which are active throughout the company across the global network, to address customer grievances / field failure issues and provide necessary feedback useful for enhancing product quality.

e. Qualitative Process Improvements:

Technology is the need of hour to have an edge over our competitors. Professional expertises are being sought for guidance to analyse the bottleneck areas and to assure quality in critical areas like welding, fabrication, painting, oil testing etc. Quality Engineering personnel at all levels are deputed to various training / seminar programmes covering topics in areas of technological updates and data analysis tools that are essential for taking up quality improvement projects.

RESEARCH & DEVELOPMENT

A well established Research & Development Centre of the company continues to play a vital role in the design & development of products, critical aggregates, indigenization activity etc. During the year, R&D has developed Snow cutter, 125 Ton Excavator, upgraded version of BD 65 with

joystick controls for work attachment, Arm chair steering control and hexagon ROPs cabin, transmission and torque converter for BH 50M.

The information on R&D, Technology Absorption, Adaptation and Innovation is at Annexure-I.

FINANCE

The working capital requirements were met from the internal resources and credit facilities from banks. There was no overdue installment of principal and interest.

The companys contribution to exchequer was of the order of Rs.688.25 crores during the year by way of Excise Duty, Customs Duty, Sales Tax, Income Tax, Wealth Tax, Service Tax and Cess.

FOREIGN EXCHANGE EARNINGS AND OUTGO

During the year, the Companys export earning stood at Rs.133.91 crores. The total foreign exchange utilized during the year was Rs.670.19 crores.

A sum of Rs. 1.17 crores was incurred towards deputation of personnel abroad for business/ export promotion, after-sales-services and training.

FIXED DEPOSITS

The company has not accepted / renewed any fixed deposits during the year.

VIGILANCE

- Fairness, accountability and transparency are the driving forces in the operations of the public sector enterprises, which are ensured by adopting well laid down systems and procedures and the Vigilance Department is aligned very much to work on this premise.

- Towards this direction, the Vigilance Department also ensures that the Company adheres to the guidelines issued by Central Vigilance Commission (CVC) from time to time in different aspects of its activities such as, materials management, quality control, construction, maintenance, recruitment, etc.

- The Vigilance Department periodically carries out inspections of civil works contract of value more than Rs. 1 Crore on the lines of Chief Technical Examiners (CTE) on CVC. The Department also examines Purchase Orders (POs) each valued more than Rs. 2 Crores. In addition, the Department scrutinizes on random basis, POs of different values released by the Purchase Department. A number of surprise checks and inspections were also conducted in all the Divisions as well as Regional and District offices of Marketing Division, covering all over the country.

- The Vigilance Department also carries out system audit in all the Divisions to ensure that there are no loopholes in the systems and procedures and they are adequate to achieve the obj ective. 10 systems were audited during the year2009-10.

- Realizing the importance of creating awareness, the Vigilance Department has been organizing vigilance sensitization programs and workshop to executives and employees in order to create awareness. This awareness programs organized are in addition to the observance of Vigilance Awareness Week every year as per the direction of CVC.

- Further, in order to make the Department easily accessible to all those concerned with the Company, a window has been created in the Company website, through which complaints could be lodged. Complaints are being received through this window as well.

- In all the Divisions of the Company, including Corporate Office and Marketing Division as well as the Subsidiary Unit, M/s Vignyan Industries Limited at Tarikere, medical claims, TA/DA claims of executives and

non-executives are scrutinized. Annual property returns submitted by the executives were verified covering 20% of the cadre. Complaints received from various sources are judiciously verified and reports timely submitted with recommendations and suggestion for improvement.

- In a nutshell, the Vigilance Department is thriving towards corporate growth in every possible ways.

CORPORATE GOVERNANCE

A report on Corporate Governance including Management Discussion and Analysis Report along with a Compliance Certificate from the Auditors as required under the Listing Agreement entered into with the Stock Exchanges is annexed to this report.

GREENFIELD PROJECT

Your Company had laid foundation stone for the Greenfield Project at Kanjikode, Palakkad on 19th January, 2009. Subsequently, the construction process was taken and an infrastructure with 2 hangers spread over 2 lakh sq.ft. has been built and inaugurated on 16th May, 2010 and the Unit has become operational rolling out Defence products and Rail parts.

SUBSIDIARY COMPANY

M/s Vignyan Industries Limited (VIL) recorded a turnover of Rs. 35.91 crores with profit before tax of Rs. 2.92 crores recording a growth of over 41% in profit. The value of production of the company stood at Rs. 37.46 crores and profit after tax stood at Rs. 1.71 crores.

M/s VIL has installed the Fast Loop Continuous System during the year and the production is set to increase around 550 tons per month in the current year. To diversify the production, M/s VIL is planning to install Forging Plant. Government of Karnataka has come forward to allot 38 acres of land to the company to meet the future expansion

plans and the proposal is under process.

The statement and particulars relating to VIL, pursuant to Section 212 of the Companies Act, 1956 is attached.

In accordance with Section 212(8) of the Companies Act, 1956, your company has been exempted from attaching the Balance Sheet, Profit & Loss Account, Auditors Report, Directors Report, etc., of the subsidiary company to the Balance Sheet of BEML Limited as per Government of India order No.47/22/2010-CL-III, dated 22.03.2010. However, the company will make available these documents upon request by any member of the company.

JOINT VENTURE COMPANY

A JV Company, M/s BEML Midwest Limited incorporated on 18th April, 2007 at Hyderabad with BEML having 45% share, M/s Midwest Granite Pvt. Ltd., and P T Sumber Mitra Jaya of Indonesia as partners with 55% share. The company has been established to capitalize the growing business opportunities in the mining segment. However, due to certain unauthorized transactions and the oppression and mismanagement by the nominees of Midwest Granite Pvt. Limited, BEML has filed a petition u/s 397 and 398 of the Companies Act, 1956 seeking suitable relief, and the matter is pending before the Honble Company Law Board.

MICRO, SMALL AND MEDIUM ENTERPRISES

The Micro, Small and Medium Units continue to get support and preference from BEML wherever there is shortage of in-house capacity. The company extends technical guidance and requisite support to these industries wherever required. Our quality control personnel visit the industries to assist and ensure that the quality of the products meet the requisite standards.

During 2009-10, the company procured items worth Rs.517.38 crores from these units.

RAJBHASHA

- Your company ensured compliance of the Official Languages Act, 1963, and the Rules made thereunder and administrative instructions regarding use of Hindi received from the Department of Official Language and Ministry of Defence from time to time.

- In-house Hindi training for all the three courses viz., Prabodh, Praveen and Pragya under Hindi Teaching Scheme of Ministry of Home Affairs, Department of Official Language were arranged at Corporate office and all the complex offices. A total of 127 employees have been trained during the year.

- Seven officials of our Company have been trained in Computer Training programme in Hindi organised by National Informatics Centre in collaboration with Central Hindi Training Institute, Ministry of Home Affairs.

- To inculcate interest and efficiency among the staff, about 6 Hindi workshops were organized for 143 employees at Corporate Office and Business Complex Offices during the year.

- Hindi Fortnight was observed with great zeal in the Corporate Office and all the Business Complex Offices from 14th to 3 0th September, 2009. During this period, to motivate the employees competitions viz. Hindi Antakshari, Hindi Quiz, Hindi Crossword and Noting & Drafting, were organized and the winners of these competitions were awarded. Further, Hindi Day i.e. on 14th September, 2009 was observed in accordance with the guidelines issued by the Ministry of Defence and Department of Official Language, Ministry of Home Affairs.

- During the Valedictory day function of Hindi Fortnight 2009, the inaugural issue of Hindi house magazine of the Company "Kshitij" was released.

- During the period, all translation work and Hindi typing work relating to Annual Reports, Technical Reports, MoUs, Reports on SC/ST, RTI, Reservation Policy, Standing Orders, Product Profiles, Advertisement Materials and Standard Forms were attended to with full efficiency and dedication.

- All the sign boards outside the premises of the Company displayed tri-lingually i.e. Kannada (Regional Language), Hindi and English and the name plates which are displayed within the premises of the Company are also in trilingual form.

- A session on "Official Language Policy" is included in all in-house training programmes.

- Hindi Library is functioning in Corporate Office with good number of Hindi Books and Hindi periodicals. Hindi Dictionaries, Administrative Glossaries, Help-literatures are supplied to the staff to encourage them to do official works in Hindi.

- Website of BEML is made available in Hindi also.

AWARDS

- SCOPE Award received from Honble Prime Minister for Excellence and Outstanding Contribution to the Public Sector Management Medium PSE Category for the year 2006-07 on October 15,2009.

- Raksha Mantris Award for Excellence, Institutional Award for Best Performance in Exports for the year 2007-08 was received from Honble Raksha Mantri on November 6, 2009 at New Delhi.

- Construction World Award 2009 for the fastest growing construction equipment company by Union Minister for Roads Transport and Highways on 8th October, 2009 at Mumbai.

- Golden Peacock Award (Innovative management category) on 16th January, 2010 at Bangalore.

- Your company has been awarded with the prestigious "National Safety award" for having registered Lowest Average Frequency Rate of Accidents under Scheme-I for the year 2007.

MANPOWER

The manpower strength as on 31st March, 2010 stood at 12,052 as against 12,600 of the previous year.

Representation of SC/ST and Ex-Servicemen category-wise as on 01.01.2010 and recruitment made are as under:

Representation of SC/ST/Ex-Servicemen as on 01.01.2010

Category/ Total No. of SC/ST and Ex-servicemen Group Strength As on Scheduled Scheduled Ex-Service Caste Tribe Men 1.1.09 1.1.10 1.1.09 1.1.10 1.1.09 1.1.10 1.1.09 1.1.10

Group-A 1517 1443 221 213 45 41 10 9 Group-B 1234 1223 198 208 61 62 7 9 Group-C 9656 8983 2080 1943 375 356 375 313 Group-D 130 94 47 43 5 4 - - Total 12537 117431 25461 24071 4861 463 3921 331

Recruitment during 2009

Group General SC ST EX-S OBC TOTAL A 18 10 9 — 26 63 B 65 19 4 — 13 101 C 40 32 0 19 26 117

HUMAN RESOURCES DEVELOPMENT & INDUSTRIAL RELATIONS

The HR Department identified several thrust areas for continuously updating technical / professional knowledge and skills of employees and bring about attitudinal changes in fostering a performance driven work culture in all areas of operations particularly at shop floors. During the year, the company organized several in-house and external

training programs for 12,755 employees covering 28,649 man-days.

The overall industrial relation situation in the company was cordial during the year.

CORPORATE SOCIAL RESPONSIBILITY / SOCIAL WELFARE

BEML has contributed Rs. 2 Crs to Chief Ministers Relief Fund during the year which includes one day wages of all employees to mitigate the misery caused on account of flood havoc in Northern part of Karnataka. In addition to this, the company has decided to construct 500 dwelling units at the cost not exceeding Rs. 5 Crs and adopt and maintain for a period of 5 years through service provider.

Sponsoring of four severely disabled orphan children of the United Physically Handicapped School for the third consecutive year by providing food, clothing and education.

Your company has expressed solidarity towards the cause of helpless children in Prayasam, a Kolkata based NGO which look after social welfare of poor and destitute children in various places of West Bengal by issuing an advertisement of half page in the annual report of Prayasam.

Extension of out-patient medical facilities to ex- BGML employees and their families by deputing a doctor and 2 para-medical staff to the areas of Marikuppam, Champion Reef and Oorgaum and medicines are dispensed free of cost for general illness.

Provided medical treatment through companys medical centres and dispensaries to the common public dwelling in the adopted village of Dasarahosahalli at KGF.

BEML runs one Junior College and one Nursery School at KGF and one Nursery School at Bangalore. These Institutions not only meant for BEML employees children it also caters to a large extent to the local population. In addition to this, BEML runs a Kendriya Vidyalaya Project School at KGF by providing school building with infra- structure facilities, mid-day meal programme and other facilities.

Your Company has setup a Park (with entertainment equipment to children) spread over 2600 sq. mtrs. at a cost of Rs.25.50 lakhs open to public in KGF campus.

PARTICULARS OF EMPLOYEES

There was no employee of the Company who received remuneration in excess of the limits prescribed under Section 217(2A) of the Companies Act, read with the Companies (Particulars of Employees) Rules, 1975.

ENVIRONMENT AND POLLUTION CONTROL

In order to protect the environment, tree plantation were undertaken in and around the factory premises, township at KGF, Bangalore and Mysore. Saplings of various types of avenue trees / flower bearing trees were planted in the vacant lands belonging to the company for maintaining ecological balance in the surrounding areas. Further measures have also been taken to protect the existing flora and fauna.

Effluent treatment plants have been constructed inside the factory premises of the production units for treatment of domestic / industrial effluents. Further, treatment plants / oxidation ponds for treatment of natural process of treating effluents

have been installed in various locations inside the factory and township. The landscaping department in the production units are utilizing treated effluent water. Test certificates are being sent to the State Pollution Control Board every month. Artificial tanks have been constructed in Bangalore Complex to harvest rain water, restrict soil erosion and to raise ground water level.

In a bid to harness renewable energy, the company commissioned a 5 MW Wind Mill during the year 2007-08 in Gadag District of Karnataka. The energy generated by the plant is fed into the KPTCL grid and sold to Hubli Electricity Supply Co. Ltd., (HESCOM) and as of 30.06.2010, 245.87 lakh kWh power has been generated enabling green house gas reduction. Further, your company is contemplating to setup an additional 18 MW Wind Mill Farm to develop green energy towards being self sufficient on power requirements.

ENERGY CONSERVATION

The Company continues to give emphasis on conservation of energy. The efficiency of energy utilization is closely monitored to attain a higher level of effective conservation. Some of the measures adopted during the year for energy conservation are :-

1. The centralized compressed air system was decentralized by providing two new compressors and also air leak was arrested permanently.

2. Provided one float switch to control hot water pumps to operate at high and low level in the engine testing water cooling tower.

3. Introduction of 2 Nos. 5000 litres capacity solar water heating system in Workers Canteen

for pre-heating of water at 60 degrees centigrade.

4. Replacement of Inverter welding sets (18KW) in place of old type Kirloskar make Motor Generator welding set of 3 OKW.

5. Introduction of 150W metal halide high bay fitting for street lights in place of 800W HPMV lamp at various places in the Unit premises.

6. Introduction of LED type DSL power supply indication lamps for EOT cranes and panel indication lamp in place of incandescent lamp.

The particulars as prescribed under sub-section (l)(e) of Section 217 of the Companies Act, 1956, read with the Companies (Disclosure of particulars in the Report of the Board of Directors) Rules 1988, are annexed to this report.

AUDITORS

M/s. Rao Associates, Chartered Accountants, Bangalore, were appointed by Comptroller & Auditor General of India as Statutory Auditors for the year2009-10.

In pursuance of the directives received from the Department of Company Affairs, Cost Audit was conducted for Heavy Earthmoving Equipment and IC Engines.

Reply of the Board of Directors to the observations made in the report of the Auditors on the Accounts are given in the addendum to this report.

DIRECTORS

The President of India appointed Smt. Anuradha Mitra, Additional Financial Adviser and Joint Secretary on 15.10.2009 as Director on the Board of the company in place of Shri Dilip Biswas. However, she was replaced by

Shri P.K. Mishra, Additional Financial Adivser & Joint Secretary with effect from 19.11.2009. The President of India later appointed Shri V. Somasundaran, Additional Secretary (Land Systems) as Director on the Board with effect from 27.01.2010 in place of Shri Satyajeet Rajan. The Board placed on record its deep appreciation of the valuable services rendered by Shri Dilip Biswas, Smt. Anuradha Mitra and Shri Satyajeet Rajan.

DIRECTORS RESPONSIBILITY STATEMENT

The Board of Directors of the Company confirm:

i) that in the preparation of the annual accounts, the applicable accounting standards have been followed and there has been no material departure;

ii) that the selected accounting policies were applied consistently and the Directors 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 as at 31s March, 2010 and of the profit of the Company for the year ended on that date;

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

iv) that the annual accounts have been prepared on a going concern basis.

ACKNOWLEDGMENTS

Your Directors express their hearty thanks to the Companys valued customers, in particular Defence Services, M/s Coal India Limited and its

Subsidiaries, M/s Singareni Collieries Company Limited, Railway Board, M/s Steel Authority of India Limited, M/s Delhi Metro Rail Corporation and M/s Bangalore Metro Rail Corporation for their patronage and confidence in the Company. The Directors also express their gratitude to our Collaborators, M/s. Rotem, South Korea, M/s. Tatra Sipox Limited, UK, M/s Pearson Engineering Limited, UK, M/s Terex Corporation, USA, M/s. Bumar, Poland and others for their valuable assistance to the Company.

The Directors express their appreciation to the State Bank of India and other members of Consortium of Banks and Financial Institutions for their continued support to the Companys operation. The Directors also thank all the shareholders / investors for reposing continued confidence in the Company.

The Directors wish to thank the Comptroller & Auditor General of India, the Principal Director of Commercial Audit & Ex-officio Member, Audit Board, Statutory Auditors, Suppliers and Vendors for their valued co-operation.

The Directors also gratefully acknowledge the valuable support and assistance received from various Ministries of Government, in particular Ministry of Defence, Ministry of Coal, Ministry of Mines, Ministry of Steel, Ministry of Railways and the Ministry of External Affairs. The Directors are also grateful to the Government of Karnataka for the support and co-operation extended.

Your Directors take this opportunity to place on record their deep appreciation for the invaluable contribution made and excellent co-operation rendered by the employees and executives at all levels for the progress and prosperity of the Company.

For and on behalf of the Board of Directors V.RS. Natarajan Chairman & Managing Director

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