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Directors Report of BEML Ltd.

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





 
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