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Directors Report of Bharat Electronics Ltd.

Mar 31, 2023

Your Directors take pleasure in presenting this Integrated Annual Report and the Audited Financial Statements for the financial year ended 31 March 2023 together with the reports of the Statutory Auditors and the Comptroller and Auditor General of India thereon.

Financial Results and Performance Highlights

Financial results and performance highlights of the Company are summarised below:

(Rs. in Lakhs)

Particulars

2022-23

2021-22

Value of Production

17,73,082

15,32,064

Turnover

17,33,337

15,04,367

Profit Before Depredation, Interest and Tax

4,40,754

3,54,283

Finance Cost

1,479

485

Depreciation & Amortisation

40,787

38,018

Profit Before Tax

3,98,488

3,15,780

Provision for Tax

97,821

80,887

Profit After Tax

3,00,667

2,34,893

Other Comprehensive Income / (Loss)

(16,624)

(14,921)

Total Comprehensive Income

2,84,043

2,19,972

Dividend Paid

1,24,266

1,02,337

Tax on Dividend

-

-

Transfer to General Reserve

40,000

40,000

Other Equity (including Reserves & Surplus)

12,85,101

11,74,060

Net Worth

13,58,199

11,98,426

Earnings Per Share (in '')

4.11

3.21

Book Value Per Share (in '')

18.58

16.39

Distribution of Value of Production for 2022-23 is given below:

('' in Lakhs)

Particulars

Amount

Percentage

Materials

10,20,629

57.56%

Employee Cost

2,29,773 12.96%

Other Expenses (Net)

83,405 4.70%

Depreciation & Amortisation

40,787 2.30%

Provision for Tax

97,821 5.52%

Profit After Tax

3,00,667 16.96%

Total

17,73,082 100.00%

The Company''s turnover for the FY 2022-23 increased to '' 17,33,337 Lakhs from '' 15,04,367 Lakhs in 2021-22, registering a growth of 15.22%. The Profit After Tax (PAT) for the FY is '' 3,00,667 Lakhs as compared to '' 2,34,893 Lakhs in the previous year. Turnover from indigenously developed products was 75%. Contribution for Defence supplies was at 87% of the turnover in 2022-23 as compared to 90% in the previous year.

Dividend

In pursuant to Regulation 43A of the SEBI (LODR) Regulations, 2015, the Board of Directors of the Company formulated a Dividend Distribution Policy keeping in view the provisions of the SEBI (LODR) Regulations, 2015, the Companies Act, 2013, Guidelines issued by the SEBI, DPE, DIPAM, Ministry of Finance and other Guidelines to the extent applicable to the Company. The Policy is placed on the Company''s website at -https://www.bel-india.in/ContentPage.aspx?MId=17&CId=5 27&LId=1&link=527

The Board of Directors has recommended a final dividend of '' 0.60/- per equity share (60%), amounting to '' 43,859 Lakhs for the year 2022-23. The first interim dividend of '' 0.60 per equity share (60%) and the second interim dividend of '' 0.60 per equity share (60%) have been paid to the shareholders for the financial year 2022-23. Thus, the total dividend for the year 2022-23 is '' 1.80/- per equity share (180%), amounting to '' 1,31,576 Lakhs.

Transfer to Reserves

An amount of '' 40,000 Lakhs has been transferred to General Reserves for the financial year 2022-23.

Share Capital

The Company''s paid-up Equity Share Capital as on 31 March 2023 was '' 73,098 Lakhs and its Authorised Share Capital was '' 75,000 Lakhs. During FY 2022-23 the Authorised Share Capital of the Company has been increased from '' 25,000 Lakhs to '' 75,000 Lakhs.

During FY 2022-23, your Company issued bonus shares in the ratio of 2:1 (two fully paid-up equity shares of '' 1/-each for every one fully paid-up equity shares held) to all its shareholders in September 2022. As a consequence, the paid-up share capital of the Company has increased from '' 24,366 Lakhs to '' 73,098 Lakhs.

Major Orders Executed

Long-Range Surface-to-Air Missile (LRSAM) Systems, Akash Missile Systems, SATCOM Network, Command & Control Systems, various Radars, Electronic Warfare Systems, Communication Equipment, Sonars, Coastal Surveillance Systems, Electro-optic Systems, Fire Control Systems, Home Land Security Systems, Smart City Projects etc.

Exports

Your Company has been giving an increased thrust towards harnessing the export potential of Defence electronics products and systems including Homeland Security Solutions, Border Protection Systems and state-of-the-art systems and solution and professional electronics to address the Civilian Market, which represent its core area of business.

BEL has been exporting various products and systems to foreign countries and OEM''s. Having established a healthy relationship with its current and prospective customers and based on their requirements, BEL is regularly interacting with the Ministry of External Affairs (MEA) & Ministry of Defence (MoD) for enabling supply of various products and systems.

BEL is also exploring the civil equipment''s and systems market in developed, developing & third-world countries with products and solutions like Artificial Intelligence-based solutions, Software development for various civilian projects like Smart Cities, Critical Infrastructure Development, Solar Power Generation Projects, Hybrid Power Solutions, etc.

BEL is focussing on the various opportunities in the area of helping OEM''s to meet offset obligations in various RFPs of MoD on account of offset policy incorporated in the Defence Procurement Procedure. To this end, the Company is closely working and partnering with various major foreign Aerospace and Defence Companies. BEL is also offering proven products and systems to meet the specific requirements of customers. BEL has identified contract manufacturing (build-to-print and build-to-spec) and Transfer of Technology of the latest systems and solutions as new areas of emerging export opportunities. Further, efforts are on to establish a long-term supply chain connect with global players.

BEL, with concentrated effort, is focussing on the various ''Make in India'' programmes. BEL has offered its various products and services to major Platform OEM''s and their Tier-I suppliers. This has helped the Company in leveraging partnerships for co-development, co-production and similar arrangements with various OEM''s to get the manufacturing of the products at BEL and utilisation of services of BEL not only for Indian programmes but also for their global requirements.

The Company has achieved an export order acquisition worth US$ 75.66 Million during FY 2022-23, from various customers viz., USA, France, Germany, Israel, Sweden, Mauritius, Armenia, etc. Export order book position on 1 April 2023 was all-time high with US$ 295 Million.

The Company has achieved an export sale of US$ 48.33 Million during FY 2022-23 to various countries, viz., Spain, USA, France, Germany, Israel, Sweden, Russia, Mauritius, Vietnam, Sri Lanka and SEZ''s. Major products/systems exported are Radar Warning Receiver, Missile Approach Warning Systems, T R Modules, Coastal Radar Systems, Sub Systems of Radar and EW Systems, Data Link II, Mechanical Parts, Communication Equipment, EOS, Radar & Sonar Spares, Smart Mail Box, etc.

Persistence efforts have yielded results in establishing new customers from targeted geographical locations such as USA, Israel and SEZ - India. With concentrated efforts and in conjunction with R&D, the proposal for Hybrid Power Solution, C4I, etc. was offered to global customers and Foreign Ministries.

The increase in export sales was mainly due to the concentrated efforts made by the Company and new Export initiatives taken such as continuous and focussed discussion with the Ministry of External Affairs & Ministry of Defence and Customers, proactive approach to the customers with offering new and complete systems and procedures, increase in the customer''s base, taking up customised & critical projects and delivering them on time as per the requirement of customers, more directed efforts in support/services extended to customers to develop solutions based on their requirement and future threats and opportunities.

Initiatives taken to increase exports by development of new markets, for products and services during FY 2022-23.

1. Major Initiatives taken in the FY 2022-23:

• Regular interactions with DRDO for Joint offerings

• MoU for a specific program for a target country on an exclusive basis

• Working with the local Defence Industry

• MoUs with foreign companies for local production

• Readiness of technical offerings to Indian missions

• MoU with foreign shipyards

• Establishing long-term supply chain with Global OEMs

• Focus on big programs (C4I, Gun / Missile Systems, etc.)

• Proactively offering solutions to customers

2. Major leads in pipe-line for the following products and systems offered to foreign countries/customers:

• Coastal Surveillance System

• Weapon Locating Radar

• Battle Field Surveillance Radar

• Upgradation of Naval Radar and Sonars

• Contract Manufacturing

• Communication Equipment''s

• Avionics

• Hybrid Power Solutions

• L-70, Schilka upgrade

3. International Customers:

• Airbus Defence and Space, Spain

• Lockheed Martin, USA

• Thales, France

• Elbit, Systems

• SAAB, Sweden

• GE Medical Systems

• GE Healthcare

MoU with the Government

Your Company has been signing a Memorandum of Understanding (MoU) every year with the Ministry of Defence, Government of India based on guidelines issued by DPE. Performance of the Company for the financial year 2021-22 has been rated as "Very Good". The MoU rating for FY 202223 is under review by the Government.

Order Book Position

The order book of the Company as on 1 April 2023 is around '' 60,690 Crore. The order book comprises major programmes like Long-Range Surface-to-Air Missile (LRSAM) Systems, Missile Systems, Electronic Warfare, Avionics, Anti-Submarine Warfare, Network Centric Systems, Communication Equipment, Radars, Fire Control Systems, Thermal Imagers, Electronic Voting Machines, Kerala Fibre Optic Network (K-FON), Smart City Projects etc.

Finance

Your Company has been prudent in its financial management practices. It has been much disciplined in its Capital allocation Strategy and efficient in managing its operational expenses. During the FY 2022-23, the Company has met all its CAPEX and working capital requirements through internal accruals.

All the above measures have contributed to consistent growth in all parameters. The Company''s PBT has grown to '' 3,98,488 Lakhs in the FY 2022-23 from '' 3,15,780 Lakhs in the FY 2021-22. During the FY 2022-23, EPS (normalized) has increased to '' 4.11 from '' 3.21 in the FY 2021-22. Net worth of BEL has increased to '' 13,58,199 Lakhs in the FY 2022-23 from '' 11,98,426 Lakhs in FY 2021-22 and corresponding Book Value per Share (BVPS) has increased to '' 18.58 in the FY 2022-23 from '' 16.39 in the FY 2021-22.

In spite of increase in Turnover in the FY 2022-23 to '' 17,33,337 Lakhs from '' 15,04,367 Lakhs in the FY 2021-22, Trade Receivable as a number of Days of Turnover has remained same at 148 days in line with the previous year. Similarly, during the FY 2022-23, Inventory as number of days of Value of Production has reduced to 132 days from 133 days in Previous Year.

Our consistent performance and long-term value creation has been reflected in the quantum of Profits/Reserves distributed to Shareholders by the company. During the FY 2022-23, the Company issued 48,732 Lakhs Bonus Shares in the ratio of 2:1 to the shareholders of the Company. Further, during the FY 2022-23, BEL also has disbursed 2 Interim Dividends of 60% each amounting to '' 87,717 Lakhs. The Board of Directors has recommended a final Dividend of ''0.60/- per equity share (60%), amounting to '' 43,859 Lakhs for the FY 2022-23. Thus, the total dividend for the FY 2022-23 is '' 1.80/- per equity share (180%), amounting to ''1,31,576 Lakhs.

Deposits

The Company does not have any Public Deposit Scheme at present. However, the matured Public Deposit amount (collected prior to February 2006) with the Company was '' 36.95 Lakhs as on 31 March 2023. Out of this, 34 deposits amounting to '' 36.50 Lakhs have not been claimed or have not been paid as these accounts were frozen on the advice of the Karnataka Lokayukta. The remaining matured deposits of '' 0.45 Lakhs as on 31 March 2023 is unpaid due to insufficient documents/records produced by the Depositors.

Research & Development

BEL''s Research and Development (R&D) Philosophy is to enhance its pre-eminence in products/services for Defence and Professional Electronics through Research & Development. BEL''s R&D strives for the development of new products built with cutting-edge technology modules. While fully meeting the customer requirements, the products developed by the Company are state-of-the-art, competitive and incorporate the highest levels of quality.

R&D has been one of BEL''s core strengths which is being enhanced through in-house and collaborative R&D modes.

Various divisions of BEL are involved in the development of Strategic Components, Technology Modules, Subsystems, Products, Systems and Systems of Systems.

BEL has a Three-Tier R&D structure, namely Central Research Laboratories (CRLs); Product Development and Innovation Centre (PDIC) & Centres of Excellence (CoEs); and Development and Engineering (D&E) groups attached to Strategic Business Units (SBUs)/Units. All the R&D/D&E centres of BEL, as recognised by the Department of Scientific & Industrial Research (DSIR), function at multiple locations across India. D&Es are located at each of the SBUs and Units namely Bengaluru, Chennai, Ghaziabad, Hyderabad, Kotdwara, Machilipatnam, Navi Mumbai, Panchkula and Pune. PDIC and CoEs are located in Bengaluru while CRLs are located in Bengaluru and Ghaziabad. The D&Es/PDIC/ CoEs/CRLs work in the identified technology and product areas, based on three-year R&D plans and after due approval of budget/time by the competent authority.

Apart from in-house efforts, BEL R&D Engineers collaborate with DRDO, ISRO, CSIR, other Research Laboratories, National and International Academia, Research Institutes, OEMs/Industries, Experts/Consultants, MSMEs and Start-ups in niche technology areas. BEL has created an ecosystem to co-create products/solutions in many business segments.

The D&E groups at SBUs / Units provide Systems and System of Systems solutions to the end users. Towards this, they get necessary technology modules and subsystems developed through CRLs, PDIC, CoEs and collaborative R&D partners. They conduct all evaluations and trials needed in the process of inducting these systems into service. They also extend technical support during the entire product life-cycle, and upgrades and also take care of obsolescence management.

Important R&D Awards/Recognitions Received During the FY 2022-23:

1. Raksha Mantri''s Awards for Excellence in Defence & Aerospace Sector for the FY 2021-22 received for:

a. "VHF Marine Radio Communication System for CSS" under Raksha Srijan Ratn 2021-22 by Naval Systems - Radar and Fire Control Systems SBU, Bangalore Complex

b. "AI-Based Gesture Identification for Integrated Perimeter Security Surveillance" under Raksha Anveshan Ratn 2021-22 by Central Research Laboratory, Bengaluru

2. SODET Awards for Technology Development and Innovation Category for the FY 2020-21 and FY 2021-22 were received for:

a. Technology Development Gold Award (2020-21) to Central Research Laboratory, Ghaziabad

b. Technology Innovation Silver Award (2020-21) to Central Research Laboratory, Bengaluru

c. Technology Development Gold Award (2021-22) to Product Development and Innovation Centre, Bengaluru

d. Technology Innovation Silver Award (2021-22) to Homeland Security & Smartcity SBU, Bangalore Complex

3. SIDM Champion Award 2022 in the category of Technology & Product Innovation among Large Companies.

4. Quantic Technology Excellence Award 2022 in the category of Best Security, Defence or Law Enforcement IT project.

5. Governance Now PSU Award 2022 in the category of Excellence Award for Research & Innovation.

6. I nternational Aerospace and Defence Award 2022 for "Excellence in Innovation, Design and Technology in R&D".

BEL has met the MoU parameter w.r.t R&D expenditure on R&D/ innovations initiatives as % of PBT for FY 2022-23.

BEL R&D Cell at Kochi has realised core technology modules for Sonar applications. Emergency Pinger for AUV/ ROV applications and Ultra Short Base Line (USBL) under water acoustic positioning system. BEL R&D Cell at IIT Madras Research Park has established a node for Quantum Key Distribution.

Future Plan of Action: BEL will enable the scaling of R&D for innovative Products / Services across the organisation to align with the objective of growth and transformation. All the tiers of R&D (D&Es, PD&IC/CoEs and CRLs) will continue to collaborate in identifying new areas of development and complementing each other in addressing the requirements through in-house and collaborative modes of development. BEL plans to continue investing in R&D for meeting the continuously evolving requirements of its customers as well as for diversification. While a major thrust would be given to inhouse development, collaboration with national laboratories, academic institutions, research institutes, industry and MSMEs will also continue to be strengthened.

Focussed technology/product development efforts have been initiated in diversified areas like Arms & Ammunition,

Smart Agriculture and AI-based projects including Predictive Maintenance.

BEL has consistently been investing about 6.28% of its annual revenue every year in R&D and will continue to support R&D initiatives for enabling an Atmanirbhar Bharat, making & delivering high-quality defence & professional electronics products, systems & solutions for India and the world.

New Facilities Established

Infrastructure enhancement is one of the major objectives of the Company in order to stay upgraded for global opportunities and to be the best in business. During the year 2022-23, the Company has spent around '' 54,137 Lakhs as part of CAPEX investment towards modernisation of Plant & Machinery, Test instruments, R&D investments, Infrastructure up-gradation etc.

Information Technology (IT) Initiatives

BEL has adopted Virtual Desktop Infrastructure (VDI) to avoid storing of Data on all PCs and for enhancing Information Security. PCs with Windows OS are inherently vulnerable to malware, viruses, worms, data leakage and other Security vulnerabilities. Due to the Lack of central visibility and control over PCs in BEL Units and Offices, it was not practically possible to implement a uniform security policy. These issues have been overcome by the implementation of centralised VDI and replacing or converting End Point PCs to Thin Clients. The Data Centre facilities of Units have been upgraded for hosting VDI. Separate VDI has been commissioned for Intranet and Internet. All data are now stored only in Data Centres in encrypted form. Centralised security policies and Security patching are now enforced centrally for the entire infrastructure.

Primavera Project Management System has been rolled out for selected projects for planning, managing and execution of projects. The system has scheduling, risk analysis, resource management and control capabilities and is fully integrated with BEL''s SAP ERP It has several features like dashboard for Management, various graphical charts and histograms which enable Management to focus on the projects key performance indicators, and empowers senior management to take informed decisions.

Network Detection and Response (NDR) has been implemented to complement the existing signature-based Detection and Prevention systems in BEL''s Security Operations Center. This solution uses Machine Learning and other analytic techniques to monitor and detect suspicious network traffic on enterprise networks. NDR gives visibility into everything happening on the network, including hackers

lateral movements, giving the opportunity to quickly respond and contain the malware before suffering an actual breach.

Face recognition based attendance system has been implemented which is directly integrated with SAP ERP to ensure contactless attendance. In future it will be integrated with the SAP log-on based on attendance and many more security features can be built on it.

Quality

Quality, Technology, Innovation are three guiding pillars of BEL''s business initiatives. Quality, being the first pillar, has been one of the focus areas for the company. The Company is committed for continual improvement through process approach in line with World-Class Quality Systems. All Units / Strategic Business Units (SBUs) / Common Services Groups (CSGs) are accredited to ISO 9001 Quality Management System (QMS). Nineteen Units / SBUs of the company have upgraded their QMS to Aerospace Standard, AS 9100D. All Units of the Company are committed to Environment Management System through ISO 14001 Certification. Ghaziabad and Kotdwara Units are certified for Combined Certificate of ISO14001 & ISO 45001. Bangalore Complex is certified for first time for ISO 45001 a, standard for Occupational Health and Safety management System. (OHSMS). BEL Ghaziabad Unit is been conferred with CII-EXIM Bank Business Excellence Award and also Role Model Organization Award, in this year 2022.

BEL received 22 Green Channel Certificates covering 12 Units/ SBUs from DGQA for a total of 65 products, in the areas of Radars, Naval Systems, Communications, and Electro Optics Products. Mast, Batteries and Gun Upgrade. BEL is the first PSU to reach this new height on Quality aspects; Ghaziabad SBU DCCS has received the Green Channel Certificate for the first time for CMS Systems in this year. 13 Units/SBUs/ Divisions of the company are certified for Information Security Management System ISMS ISO 27001. During the year Pune Unit is certified for ISMS ISO 27001 for first time, EW&A, Components SBUs of BG CX and Pune Unit are recertified for AS9100D and HLS&SCB SBU, CSGs C-QA, CMS, ES are recertified for ISO 9001 Quality Management System Standard. BEL has a total of 19 AS9100D certificates and 8 ISO 9001 Certificates. Software SBU is certified for CMMi level 5 and also for ITSMS ISO 20000-1. NCS & DCCS SBUs of Ghaziabad, CRL - Ghaziabad, Chennai, and Hyderabad Units are certified for CMMi level 3.

The company has facilitated involvement of Non-executives in the Quality Movement through Quality Control Circles (QCC). During the year 2022-23, 717 QCC Presentations are made by various QCC Teams. Many QCC teams are nominated to

for national competitions and all are adjudged for various categories of Awards. SC & US SBU QCC Team Digma has participated in ICQCC 2022 at Jakarta, Indonesia and won the Platinum Award. Around 4,203 suggestions are awarded in the FY 2022-23. A total savings of '' 80 Crore was achieved through this Suggestion Scheme implementation in various process improvements during this year.

During the year, 15 senior executives from various units have been trained as "Six Sigma Black Belts" by Indian Statistical Institute, Bangalore. One senior executive is trained on "Master Black Belt" by Indian Statistical Institute, Bangalore. Total 474 Six Sigma Projects have been completed during the year 2022-23, resulting in an estimated savings of '' 146.72 crore to the company. 15 BEL Six Sigma teams participated in regional level competitions CCQC-2022 organized by QCFI and all 15 teams won highest award "GOLD" award. 15 BEL Six Sigma teams participated in National level competitions NCQC-2022 organized by QCFI and all 15 teams won highest award "PAR Excellence" award.

The Company is nominated D&E Engineers for Global Certification on Reliability "Certified Reliability Engineer (CRE)" certification by ASQ. During the year, 24 D&E and Testing Engineers are certified as CREs. The Company is also nominated D&E Engineers for Design for Six Sigma Green Belt (DFSS-GB) certification by Indian Statistical Institute. During the year 26 D&E Engineers are certified as "DFSS Green Belts" (DFSS-GB). During the year, 25 mid-level and senior executives are trained on "Business Analytics & Data Management" by Indian Statistical Institute, Bangalore.

The Company is nominated Software Engineers for Global Certification on "Certified Software Quality Engineer" (CSQE) conducted by ASQ, during the year 9 Software Engineers are certified as CSQEs. During the year, 30 operating level Quality Engineers are certified as "Certified Quality Engineers (CQE)" by ASQ. The Company is also nominated Executives working in supply chain fields, like Purchase, Subcontract, Production control for the Global Certification on "Certified Supplier Quality Professional (CSQP)" by ASQ, during the year 8 Executives are certified as CSQPs. Certified Manager for Quality and Organisation Excellence (CMQ&OE) by ASQ for senior level executives is also conducted during the year and 7 senior executives are certified as CMQ-OEs. In order to inculcate a culture of Project Management, training programs for Project Management Professionals (PMP) are conducted. During the year 49 PMPs are certified by Project Management Institute (PMI).

Panchkula Unit won the First Prize, Chennai Unit and EW&A SBU of BG cx and Panchkula Unit won second and third

prizes respectively in internal Quality Recognition Award (QRA) 2022.

This year also the company conducted the Integrated Customer satisfaction survey, and the Satisfaction Index is 87.60 with a net promoter score of 63.20 which very good in comparison with bench mark companies.

Human Resources

Your Company employed 8,832 people as on 31 March 2023 compared to 8,853 people as on 31 March 2022. Out of these employees, 4,839 were engineers/scientists and 1,911 were women employees. A total of 503 employees were inducted during the FY 2022-23. 87 employees belonging to the Scheduled Castes (SC), 34 employees belonging to the Scheduled Tribes (ST), 173 employees from the Other Backward Classes (OBC), 32 employees belonging to the Minority Community and 7 physically challenged employees were inducted during FY 2022-23.

Your Company has been complying with the Government directives on reservations. The particulars of SC/ST and other categories of employees as on 31 March 2023 are as under:

Category of

Executives

Non-Executives

Employees

Group ''A''

Group ''B''

Group ''C''

Group ''D''

Scheduled

Caste

1,061

35

495

20

Scheduled Tribe

381

18

120

14

OBC

1,376

59

778

29

Ex-Servicemen

17

1

23

-

Physically

Challenged

401

14

227

4

Various training programmes were conducted during the year to enhance competencies in Technical, Functional, Managerial and Leadership areas. Structured Executive Development Programmes were conducted regularly with premier institutes to meet the evolving training needs of executives as they progress through various grades. A detailed write-up on HR initiatives during the year is provided separately in the Management Discussion and Analysis Report, which forms a part of this report.

Disclosure Under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company is an equal-opportunity employer and consciously strives to build a work culture that promotes the dignity of all employees. As required under the provisions of the Sexual Harassment of Woman at Workplace (Prevention,

Prohibition and Redressal) Act, 2013 and the rules framed thereunder, the Company has implemented the policy on prevention, prohibition and redressal of sexual harassment at the workplace, which has been uploaded on the Company''s intranet portal. All women, permanent, temporary or contractual, including those of the service providers, are covered under the Policy.

An Internal Complaints Committee has been constituted in each of the nine constituent units, including the corporate office to redress complaints relating to sexual harassment. Awareness programmes were conducted across the Company to sensitise employees and uphold the dignity of their colleagues at the workplace, particularly with respect to the prevention of sexual harassment. The details of the complaints filed, disposed of and pending during the year pertaining to sexual harassment are provided in the Business Responsibility and Sustainability Report, which forms a part of this report.

Awards and Accolades

Your Company strives to achieve the highest level of quality in all its products by considering consumer insights and by reaching out to consumers. During the year, your Company has received the following various Awards and Accolades:

• The Economic Times - Iconic Brand of India Award - 2022.

• International Aerospace & Defence Award for Excellence in Innovation, Design, Technology or R&D.

• Winner of Raksha Mantri''s Export Raksha Niryat Ratna Award 2021-22 among Large Companies.

• SIDM (Society of Indian Defence Manufacturers) Champion Award 2022 for Technology & Product Innovation among Large Companies.

• ICC (Indian Chamber of Commerce) PSE Excellence Awards for the Company of the Year, Inclusivity - Contribution of Women and Differently Abled in PSEs, and Runner Up Award for Operational Performance Excellence.

• Twin honour of CII EXIM Bank Business Excellence Award (2022) and the Jury''s Commendation for Role Model Organisation for BEL''s Ghaziabad Unit.

• Governance Now 9th PSU Awards for Excellence in Research & Innovation, Environment & Sustainability, Geo-Strategic Reach and Communication Leader of the Year.

• Champion of Champions Award (First Prize) and the Vox Populi (Voice of the Audience) Award for outstanding contribution to raising manufacturing productivity, for the Export Manufacturing SBU of BEL''s Bangalore Complex, presented at the National Productivity Summit organised

by the Indian Machine Tool Manufacturers'' Association (IMTMA).

• IPC India Award is a recognition of BEL''s long-term association with IPC for its training and certification needs.

• Certificate of Appreciation from the Ministry of Micro, Small and Medium Enterprises (MSME) for the highest procurement amongst Navratna CPSEs from women entrepreneurs under the MSME category during the financial year 2021-22. The award acknowledges the efforts taken by BEL towards the mandate of implementation of the Public Procurement Policy of the Government of India.

• Quantic Technology Excellence Award 2022 for Best Security, Defence, or Law Enforcement IT Project.

• Best Supporting Organisation - PSU Award from QCFI.

• Public Relations Council of India (PRCI) Excellence Awards including the PRCI Hall of Fame Award.

• Awards for Excellence in OL Implementation from TOLIC, Bengaluru

• Urban Infra Business Leadership Award 2022 in recognition of BEL''s contributions in line with the Government''s Make in India initiative, for the transformation of Metro and Rail commutation in India.

• Innovative CFO Award at the 2nd edition of The Business Leadership Awards for Director (Finance) & CFO.

• Public Sector CFO of the Year Award for CFO.

• Most Iconic Organisation Award for BEL-Panchkula by the World Manufacturing Congress.

• Innovative Digital Smart City Project Award for Chandigarh Smart City to BEL-Panchkula from Indian Institute of Material Management, Chandigarh.

• Elets Aatma Nirbhar Bharat Award for Chandigarh Smart City for BEL-Panchkula

• CII Corporate Women Leadership Award in Technology Category for Mrs Prabha Goyal, GM (PK).

• Raksha Mantri''s Awards - 2nd Runner Up for AI-based gesture identification and Integrated Perimeter Security Solution for Santosh Kumar & 2nd Runner Up for Indigenisation of Coastal Radar System & VHF Marine Radio Communication System for Raghu Mallapuram.

Subsidiaries, Joint Ventures and Associates

BEL Optronic Devices Limited (BELOP) is a whollyowned

subsidiary of BEL, which manufactures Image Intensifier

Tubes. Your Company has made a further investment of

'' 2,199 Lakhs (87,16,850 equity shares of '' 10/- each at a premium of '' 15.23/- per share) during the FY 2022-23 in the equity shares of BELOP, by subscribing to the right issue offered by BELOP. BELOP achieved a turnover of '' 6,098 Lakhs for the year compared to '' 4,586 Lakhs in the previous year. The Profit After Tax (PAT) for the year was '' 676 Lakhs compared to '' 516 Lakhs in the previous year.

BEL-THALES Systems Limited (BTSL) is a subsidiary of BEL. Your Company holds 74% of the equity capital in BTSL. During the year, BTSL recorded a turnover of '' 7,815 Lakhs compared to '' 3,901 Lakhs in the previous year. The Profit After Tax (PAT) for the year was '' 700 Lakhs compared to '' 521 Lakhs in the previous year.

The Associate Company GE BE Private Limited [26% shareholding by BEL] continues to perform well. It manufactures CT Max and other latest version X-Ray Tubes. GE BE Pvt. Ltd. recorded a turnover of '' 1,57,547 Lakhs for the year compared to '' 1,56,267 Lakhs in the previous year. The Profit After Tax (PAT) was '' 17,624 Lakhs for the year compared to '' 17,578 Lakhs in the previous year.

The Defence Innovation Organisation (DIO) is a ''Not for Profit'' Company as per the provisions of Section 8 of the Companies Act, 2013 with an authorised share capital of '' 1 Crore. With an equity participation of 50% from BEL and 50% from HAL, the Company was formed with an objective of funding innovation in the Defence sector.

In pursuant to provisions of Section 129(3) of the Companies Act, read with Rule 5 of Companies (Accounts) Rules, 2014 (as amended), a separate statement containing the salient features of the financial statement of Subsidiaries/ Associate/ Joint Ventures in Form AOC-1 is appended to the Financial Statements.

Further, pursuant to the provisions of Section 136 of the Act, the financial statements of the Company, consolidated financial statements along with relevant documents and separate audited financial statements in respect of subsidiaries, are available on the website of the Company www.bel-india.in.

Consolidated Financial Statements

Consolidated Financial Statements of your Company and its Subsidiaries for the year ended 31 March 2023 have been prepared in accordance with the provisions of Section 129(3) of the Companies Act & applicable Indian Accounting Standards and forms part of this report.

Vigilance

The Company''s Vigilance Organisation is headed by a Chief Vigilance Officer (CVO), an IAS Officer from Haryana Cadre (1991 batch). Permanent Vigilance Officers are posted in each of the Units and SBUs. Vigilance Committees are formed to look after the Vigilance Administration in the Units and SBUs. The Unit/SBU Heads are designated as Chairman of the Vigilance Committee. Apart from this, there exists a Vigilance Committee at the Corporate, where the Chairman cum Managing Director is the Chairman of the Committee and the CVO is the Member Secretary. Preventive Vigilance has been the thrust area of the Vigilance Organisation and the same received focussed attention during the current year. The Vigilance Department examines procurements and processes on a continual basis, conducts regular and surprise inspections and investigates instances of any suspected transactions referred to it. An employee or third parties can refer any suspected transaction to the notice of CVO for investigation which is examined as per the Complaint Handling Policy of the Company. Online Complaint Management System has been made operational and complaints can be filed by accessing the Vigilance Portal on the BEL website.

During the FY 2022-23, 802 high-value Purchase Orders/ Contracts (> '' 1 Crore) have been reviewed. CTE Type Intensive Examination has been restructured with the formation of Five Intensive Examination teams. CTE Type of Intensive Examination of 60 High-value Procurements Contracts has been taken up during the year 2022-23. Regular and Surprise Checks and Inspections have also been conducted by the field Vigilance Officers. During the year, 20 Complaints were received. A total of 12 Complaints were disposed of. Disciplinary action and System/process improvement has been recommended in some cases where lapses were observed.

During the year, 244 Executives and 106 Non-Executives were given a basic awareness programme on Vigilance. 62 Executives & 19 Non-Executives working in sensitive areas for more than 3 years have been job rotated and the percentage coverage is 96.3%.

First surveillance audit was carried-out by M/s. TUVSUD for ISO 9001/2015 Certification for the Vigilance function of BEL and recommended for continuation of certification.

In line with the CVC''s guidelines on Leveraging Technology and to ensure transparency through the effective use of technology, the following functions have been made operational through SAP and the Company''s website:

• E-Procurement.

• Online registration of Vendors.

• Vendor Payment Information System.

• E-Payment/Bank transfer of payment to Vendors.

• Details of awarded Contracts/Purchase Orders valuing more than '' 10 Lakhs in respect of works contracts, service contracts, capital items and non-production items have been posted on the website.

• Details of awarded Contracts/Purchase Orders issued on nomination / single tender basis value exceeding '' 5 Lakhs are posted in the website.

• Corruption Risk Management Policy is framed and implemented across the Company.

• Vendors'' Directory is maintained.

• File Life Cycle Management System (FLM) is fully implemented across the Company.

• On line filing of APRs is facilitated in SAP for all the Executives and the Executives have been filing the APRs in SAP.

• Vigilance Monthly and Quarterly Reports are generated through SAP

• Vigilance clearance is accorded through the dedicated Vigilance portal in SAP.

• Many system improvement projects are implemented across the Company and some of the system improvement projects are documented in CVC newsletter/bulletin.

Vigilance setup in BEL has been continuously endeavouring to bring transparency, fairness and equity in all transactions and processes of the Company through creating a sense of awareness of the System and Procedures through awareness campaigns and training programmes. Some of the key activities that have been carried out during the year are:

a) BEL has observed Vigilance Awareness Week from 31 October to 6 November 2022 with the theme: "Corruption-free India for a Developed Nation" at all its offices across the country. Vigilance Awareness Week-2022 banners were displayed at prominent places at Corporate Office and also at Units / Regional Offices / Marketing Centers / Product Service Centers.

Various awareness programmes and activities were held to keep the spirit of celebrating Vigilance Awareness Week. Lecture Programmes, Competitions at Schools and Colleges, Street Play, Gram Sabhas, Vendors Meet and other activities were held during the Week.

E-Pledge was facilitated in the BEL intranet enabling employees to take E Pledge. Certificate of appreciation and commitment, issued by CVO/BEL was in downloadable option for the employees who have taken the E-Pledge through the BEL Intranet. 8,740 employees have taken e-pledge.

I ntegrity pledge was administered to all employees in their respective workplaces across all the Units.

Apart from this, Employees were provided with a link to CVC Website to take the E-Pledge from the CVC website. E-mail on Vigilance Awareness was sent to all registered Indian vendors of BEL during the week.

b) Various workshops and lecture programmes were conducted during the Week:

• Guest Lecture on "Corruption-Free India for a Developed Nation" by Mr Krishna Murthy A R (Retired GM (F) / BEL) was organised by CO/VIG, through VC on 2 November 2022. All Units Vigilance Officers, Dept. Heads, SBU Heads with nominated Executives participated in the VC.

• Guest Lecture on "Corruption-Free India for a Developed Nation" by Justice N. Kumar, Retd. Judge of Karnataka High Court was organised at Rashtrakavi Kuvempu Kalakshetra on 3 November 2022. Director (BC), SBU Heads and around 500 nominated NonExecutives and Executives attended the programme.

• Director of Technical Education, Smt. C. Naga Rajani, IAS visited Machilipatnam Unit and Vigilance Pledge was administered to all the Trainees. Also, the Vigilance Pledge was administered at Kendriya Vidyalaya, Machilipatnam and Govt. Girls Junior College, Machilipatnam.

• A Workshop / Sensitisation programme was conducted on "Preventive Vigilance and Awareness" by Shri. Yogesh Kumar Sethi, Sr DGM (VO), BEL-GAD, for executives and employees working in sensitive areas, contract engineers and Apprentices in HRD Hall on 28 October 2022 at Kotdwara Unit.

• Workshop at Panchkula Unit on Vigilance/Health awareness was conducted in the HRD auditorium on 2 November 2022 in which more than 60 employees were present.

• Conducted Vigilance Awareness Training to New Recruits and Lecture on Preventive Vigilance through VC by Mr Krishnamurthy was organised at Pune Unit on 8 November 2022.

Procurement from Micro & Small Enterprises (MSEs)

Your Company has been providing increased thrust on enhancing procurement from Micro & Small Enterprises (MSE) and has been implementing Public Procurement Policy for MSEs as per the guidelines / notification issued by the Ministry of MSMEs.

BEL has on-boarded on the TReDS Platform, GeM, MSME Sambandh & MSME Samadhaan Portals complying with Government guidelines.

The Company has conducted and participated in Vendor Development Programs for Indian vendors including MSME/ Start-ups on various occasions throughout the year.

BEL extends provisions as envisaged in Ministry of MSME notifications, released from time to time, to MSME/Start-ups in procurement.

BEL''s procurement from MSEs is 32% of total Domestic procurement during 2022-23 against the mandatory target of 25% as per the Public Procurement Policy for MSEs.

Implementation of Official Language Policy

Your Company is committed to adhering to the Official Language (OL) policy of the Government of India. The Company has achieved the various targets prescribed in the Annual Programme issued by the Dept. of OL, Ministry of Home Affairs (MHA), GoI to transact official work in Hindi.

OL Inspections: Committee of Parliament on Official Language conducted OL inspection of the Chennai Unit on 21 May 2022 and Navi Mumbai Unit on 14 July 2022. Corporate OL Inspection team conducted 05 OL inspections of its subordinate Units/Offices. DDP, and MoD officials conducted an OL inspection of the Hyderabad Unit on 20 September 2022. AD (Implementation), Regional Implementation Office (South), Dept. of OL, Bengaluru conducted an OL inspection of the Corporate Office on 31 March 2023.

Bilingualisation: All Units and Offices of the Company including the Corporate Office are issuing documents in bilingual as per Section 3(3) of the Official Language Act, 1963. Usage of Hindi is being encouraged in correspondence and on computers. Individual orders under OL Rule 8 (4) were issued by CMD to officers/employees who are having proficiency in Hindi to do their complete work in Hindi. Also, a circular on the creation of Check Points under Rule 12(1) of OL Rules was issued.

Computerisation and Website: Updated information pertaining to OL is being communicated through OL Portal

• Vice Chancellor, Krishna University, Machilipatnam Visited and his message was delivered through media about Vigilance participation in Swachh Bharat.

• Lecture by Shri Vijaya Vast ACP Crime Branch Navi Mumbai was given during Valedictory Function on 4 November 2022.

• Guest Lecture by Justice Surrender Tirade, Bombay HC Retd., and presently President, State Consumer Dispute Redressal Commission, Maharashtra was delivered at Navi Mumbai on 12 November 2022.

• Guest Lecture at Pune Unit on Preventive Vigilance by Dy. Commissioner (GST-Pune II).

c) Two-day Induction Level Training is imparted to the newly joined Probationary Engineers in August, September and October 2022.

d) Two-day Annual Vigilance Meet 2022-23 was held at Pune on 24 and 25 February 2023. Two guest lectures on the topic "Procurement Frauds and Case Studies" & "Cyber Crimes and Criminal Investigation" had been organised during the Meet. "Jagriti - Vigilance Bulletin", an internal Newsletter with the theme "Corruption Free India for a Developed Nation" was released by CVO.

Integrity Pact

One of the initiatives of the Central Vigilance Commission (CVC) to eradicate corruption in procurement activity is the introduction of the Integrity Pact in large-value contracts with Government Organisations. In line with the directives from the Ministry of Defence and the Central Vigilance Commission, your Company has adopted Integrity Pact with all vendors/suppliers/contractors/service providers for all Orders/Contracts of value '' 300 Lakhs and above. The Integrity Pact essentially envisages an agreement between the prospective vendors/bidders and the principal (BEL), committing the persons/officials of both sides, not to resort to any corrupt practices in any aspect/stage of the contract. Only those vendors/bidders, who commit themselves to such a Pact with the principal, would be considered competent to participate in the bidding process. Integrity Pact, in respect of a particular contract, would be operative from the stage of invitation of bids till the final completion of the contract. Any violation of the same would entail disqualification of the bidders and exclusion from future business dealings.

As recommended by the CVC, the Company has appointed Dr Joginder Paul Sharma, IAS (Retd.), Mr Sanjay Kumar Srivastava, IAS (Retd.) and Mr Rajiva Ranjan Verma, IPS (Retd.) for monitoring the implementation of the Integrity Pact in the Company.

GARIMA introduced by OL Dept. of Corporate Office. Quarterly progress reports from Units/Offices are being received online in SAP. Hindi notings are being written in File Life-cycle Management (FLM). Company''s website is also available in Hindi.

Training and Reporting: Roster is maintained for Hindi language traning and computer training which is updated from time to time. As per the Roster, employees were nominated for online training. Quarterly/half-yearly reports are sent to OL Dept., MHA, GoI, MoD, Hindi Teaching Scheme and Town Official Language Implementation Committee (TOLIC) as per schedule.

Hindi Month Celebrations: Hindi Month and Hindi Day were observed during September in all the Units and Offices of the Company. 22 officers from BEL took part in the Hindi Day Function and 2nd All India OL Conference organised by the Dept. of OL, MHA on 14 September 2022 at Surat (Gujrat).

Meetings/Workshops: Official Language Implementation Committee (OLIC) meetings, Hindi workshops and technical talks in Hindi were conducted in all Units / Offices.

Incentives and Awards: Company has various lucrative Incentive Schemes for doing original work in Hindi. These schemes are named after the renowned Hindi Litterateur which carries cash awards from '' 2,000 to '' 10,000. Employees have participated in the TOLIC competitions and won prizes. Hindi Magazine NavaPrabha of BEL Corporate Office awarded 1st Prize among Bengaluru-based PSUs by TOLIC. CMDs OL Shield for excellence in OL implementation was awarded to the units situated in A, B and C regions.

Publications: Hindi Magazines were published in the Units / Corporate Office of the Company to propagate the usage of Hindi.

New Initiatives: A dedicated section for OL has been introduced on the Company''s website. Defense Electronics Glossary of BEL is being prepared in coordination with the Commission for Scientific and Technical Terminology (CSTT), Ministry of Education. The first Bharatendu Rajbhasha Kaushal Abhimukheekaran Program was initiated by Corporate Office for OL Officers/Translators of Central Government Offices/ Banks/Undertakings located in Bangalore. World Hindi Day was celebrated on 10 January 2023. BEL Rajbhasha Gyan Kosh (501 Questions/Answers on OL Hindi) was published by Corporate OL. As part of the Krishna Sobti Hindi Lecture

Series, 05 lectures were organised on generic interest and technical topics.

Continuous efforts are in progress to ensure OL Implementation and for increasing the progressive usage of Hindi across the Company.

Implementation of the Right to Information Act, 2005

In consonance with the provisions of the Right to Information Act, 2005 (the Act), your Company has a well-defined mechanism in place to address the provisions of the Act. Your Company has a designated General Manager level officer as a "Nodal Officer" to oversee the implementation. The requests received are processed by 17 senior personnel designated as "Central Public Information Officers (CPIOs)" including one at Corporate Office and each at the Units/ROs. Your Company has a designated General Manager level officer as a "First Appellate Authority" to dispose of the first appeals filed under the Act. In compliance with Government directives, your Company is successfully processing the applications under the Act, online.

The information to be provided as per Section 4(1) (b) of the Right to Information Act, 2005 has been posted on the website of the Company www.bel-india.in

The FAA, CPIOs and other internal stakeholders involved are sensitised about their obligations under the Act through training and workshops.

Your Company received 450 applications (including 77 transferred by other Public Authorities to BEL) during the period from April 2022 to March 2023, and 15 RTI applications were carried forward from the FY 2021-22. A total of 422 applications were responded to including 96 applications that were rejected, out of a total of 465 applications. Your Company received 86 First Appeals during the period, out of which 85 were disposed-off. Quarterly RTI returns for all four (4) quarters have been submitted to the Central Information Commission.

Meetings of Board and Committee(s)

During the year, eight Board meetings were held and the maximum interval between any two meetings was not more than 120 days. The details of meetings of the Board and Committee(s) held during FY 2022-23 are furnished in the Corporate Governance Report, which forms a part of this report.

Change in Directors & Key Managerial Personnel and their Shareholding

The following changes took place in

the Directorate and Key Managerial Personnel of your Company during FY 2022-23:

Sl. No.

Name of the Director

Designation

Date of Appointment

Date of Cessation

1

Mr Bhanu Prakash Srivastava

Director (Other Units)

20.04.2022

Not Applicable

2

Ms Manjula Jillellamudi

Govt. Nominee Director

Not Applicable

01.05.2022

3

Dr Binoy Kumar Das

Govt. Nominee Director

04.07.2022

Not Applicable

4

Mrs Anandi Ramalingam

Chairman & Managing Director - Additional Charge, Director (Marketing)

& Director (HR) - Additional Charge

Not Applicable

31.08.2022

5

Mr Rajasekhar M V

Director (R&D)

Not Applicable

31.08.2022

6

Mr Manoj Jain

Director (R&D)

26.09.2022

Not Applicable

7

Mr Anurag Bajpai

Govt. Nominee Director

Not Applicable

23.12.2022

8

Mr Dinesh Kumar Batra

Chairman & Managing Director - Additional Charge, Director (Finance) & CFO, Director (Marketing) - Additional Charge & Director (HR) - Additional Charge

Not Applicable

31.10.2022

9

Mr T Natarajan

Govt. Nominee Director

02.01.2023

Not Applicable

10

Mr Damodar Bhattad S

Director (Finance)

11.01.2023

Not Applicable

11

Mr Damodar Bhattad S

cfo

28.01.2023

Not Applicable

Sl.

No.

Name

Designation

No. of Equity Shares Held

2

Mr Vinay Kumar Katyal

Director (Bangalore Complex)

3,789

3

Mr Manoj Jain

Director (R&D)

7,590

4

Mr Damodar S Bhattad

Director (Finance) & CFO

3,789

5

Mr Sreenivas S

Company Secretary

3,789

Mr Bhanu Prakash Srivastava, Chairman & Managing Director (Additional Charge), Mr Damodar S Bhattad, Director (Finance) & Chief Financial Officer and Mr S Sreenivas, Company Secretary are the KMPs, as defined under Section 2(51) of the Companies Act, 2013.

Mr Vikraman N was appointed as Additional Director [Director (HR)] w.e.f 01.06.2023 and Mr K V Suresh Kumar was appointed as Additional Director [Director (Marketing)] w.e.f 16.06.2023.

Mr Vinay Kumar Katyal, Director (Bangalore Complex) retired from his services on 31 July 2023 on attaining the age of Superannuation.

Mr T Natarajan, Mr Damodar Bhattad S, Mr Vikraman N and Mr K V Suresh Kumar, Additional Directors are being appointed as Directors on terms as set out in the Notice o1 the 69th Annual General Meeting.

Mr Bhanu Prakash Srivastava, Director (Other Units), retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.

The details of Directors and Key Managerial Personnel (KMPs) who are holding shares in the Company as on 31 March 2023 are given below:

Sl. Name No.

Designation

No. of Equity Shares Held

1 Mr Bhanu

Director (Other Units)

3,789

Prakash

CMD - Additional Charge

Srivastava

Director (Marketing) -

Additional Charge

The Company has not issued any convertible securities during the year.

Directors'' Responsibility Statement

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors, in terms of Sections 134(3)(c) & 134(5) of the Companies Act, 2013 state that:

a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

b) the Directors had selected such accounting policies and applied them consistently and made 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 March 2023 and of the profit of the Company for the year ended 31 March 2023;

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

d) the Directors have prepared the annual accounts on a going concern basis;

e) the Directors ensured proper internal financial controls were in place and such financial controls were adequate and were operating effectively; and

f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws were in place and same were adequate and operating effectively.

Integrated Report

The Company, has voluntarily provided an Integrated Report, which encompasses both financial and non-financial information to enable the Members to take well-informed decisions and have a better understanding of the Company''s short, medium and long term perspective. The Report also touches upon aspects such as the organisation''s strategy, governance framework, performance and prospects of value creation based on the six forms of capital viz. financial capital, manufactured capital, intellectual capital, human capital, social and relationship capital and natural capital.

Significant and Material Orders

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and the Company''s operations in future.

Events Subsequent to the Date of Financial Statements

There are no material changes and commitments affecting the financial position of the Company which occurred between 31 March 2023 and the date of signing of this Report.

Related Party Transactions

There were no materially significant related party transactions with the Company''s Promoters, Directors, Management or their relatives, which could have had a potential conflict with the interests of the Company. Transactions with related parties that were entered into during FY 2022-23 were on an arm''s length basis and were in the ordinary course of business. None of the transactions with related parties fall under the scope of Section 188(1) of the Companies Act, 2013. All Related Party Transactions are placed before the Audit Committee and also to the Board for approval, if required. Members may refer to the notes to the accounts for details of related party transactions. The policy for related party transaction has been uploaded on the Company''s website www.bel-india.in. Information pursuant to Section 134(3)(h) of the Companies Act, 2013 read with rule 8(2) of the Companies (Accounts) Rules, 2014 is attached to this report as Annexure-1.

Corporate Social Responsibility

Your Company has formulated a Corporate Social Responsibility Policy pursuant to the provisions of Section 135 of the Companies Act, 2013 and the Companies (Corporate Social Responsibility) Rules, 2014 read with various clarifications, and amendments issued by the Ministry of Corporate Affairs (MCA). The CSR Projects are taken up in line with Schedule-VII of the Companies Act, 2013, which is duly incorporated in the Corporate Social Responsibility Policy and forms the guiding principle for all our CSR programmes. The Corporate Social Responsibility Policy of BEL is posted on the Company''s website, www.bel-india.in.

The objective is to contribute towards inclusive growth, sustained and equitable development in society through capacity-building measures, empowerment of the marginalised and underprivileged sections/communities. Focussed interventions are undertaken in the sectors of Healthcare, Education, Rural Development, Environmental Sustainability & Vocational Skill Development.

During the FY 2022-23, DPE guidelines for CSR Expenditure stipulate CPSEs to take up focussed CSR interventions on the common theme of Health & Nutrition with preference being given to Aspirational Districts identified by NITI Aayog. Accordingly, the Company has rolled out focussed interventions to augment health infrastructure in Government hospitals, PAN India. Encouraging innovative learning in remote Government schools, promoting Skill India - honing technical skills, providing industry exposure and imparting employability skills to youth from economically weaker sections of society, are high points in the CSR space.

Pursuant to the requirement under the Companies (Corporate Social Responsibility) Rules, 2014 (as amended), a report on CSR activities for the FY 2022-23 is annexed herewith as Annexure-2.

Statutory Auditors

Pursuant to Section 139(5) of the Companies Act 2013, for the FY 2022-23, the Comptroller and Auditor General of India (C&AG) appointed M/s Guru & Jana, Chartered Accountants, Bengaluru, as Statutory Auditors of the Company for audit of accounts of Bangalore Complex, Hyderabad unit, Chennai unit and Corporate Office. M/s V A Dudhedia & Co, Chartered Accountants, Pune were appointed as Branch Auditors of Pune & Navi Mumbai units. M/s Ashwani & Associates, Chartered Accountants, New Delhi, were appointed as Branch Auditors of Ghaziabad, Panchkula and Kotdwara units. M/s P Subbarayudu & Co, Chartered Accountants, Vijayawada were appointed as Branch Auditors for the Machilipatnam unit.

The Statutory Auditors'' Report on financial statements for the FY 2022-23 and ''Nil'' comments of the Comptroller & Auditor General of India (C&AG) under Section 143(6)(b) of the Companies Act, 2013 on the financial statement, including consolidated financial statement, are appended to the Annual Report.

Cost Auditors and Maintenance of Cost Records

Your Company appointed M/s Murthy & Co. LLP, Cost Accountants, Bengaluru, as Cost Auditors of the Company for the FY 2022-23 for the audit of the cost records of the Company. The Company maintains cost records as specified by the Central Government under Section 148(1) of the Companies Act, 2013.

Secretarial Auditors

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (as amended), the Company has appointed M/s Thirupal Gorige & Associates LLP, Practicing Company Secretaries, Bengaluru for the FY 2022-23 to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed to this report as Annexure-3.

Reporting of Frauds by Auditors

During the year, neither the Statutory Auditor nor the Secretarial Auditor have reported to the Audit Committee under Section 143(2) of the Companies Act, 2013, any instance of fraud committed against the Company by its officers or employees, the details of which would need to be mentioned in the Board''s Report.

Annual Return

Pursuant to Section 92(3) read with Section 134(3)(a) of the Act, the Annual Return as on 31 March 2022 is available on the Company''s website:

https://www.bel-india.in/ContentPage.aspx?MId=17&CId=4

27&LId=1&link=427

Risk Management

Pursuant to the Reg.21 of SEBI (LODR) Regulations, 2015, the Board of Directors of the Company has constituted a Risk Management Committee. The details of the Committee and its terms of reference, Risk Management Policy etc. are set out in the Corporate Governance Report and a detailed note on Risk Management is provided in the Management Discussion and Analysis Report, which forms a part of this report.

Company''s Policy on Director''s Appointment, Remuneration and Board Evaluation

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for the selection and appointment of Directors, Senior Management and their remuneration, Board Evaluation etc. The details are set out in the Corporate Governance Report, which forms part of this report.

Vigil Mechanism / Whistle Blower Policy

The Company has a vigil mechanism named the WhistleBlower Policy to deal with instances of fraud, mismanagement and unethical behaviour, if any. The details of the policy are set out in the Corporate Governance Report.

Declaration from Independent Director(s)

The Company has received necessary declaration from Independent Director(s) of the Company under Section 149(7) of the Companies Act, 2013 and Regulation 16(1)(b) of SEBI (LODR) Regulations, 2015 that the Independent Director(s) of the Company meet with the criteria of his Independence laid down in the Companies Act, 2013 and SEBI (LODR) Regulations, 2015.

Management Discussion and Analysis Report

Management Discussion and Analysis Report required under the SEBI (LODR) Regulations, 2015 and also under the Government (DPE) Guidelines on Corporate Governance for Central Public Sector Enterprises (CPSEs), is attached to this Report as Annexure-4.

Particulars of Loans, Guarantees & Investments

In terms of Circular No. GSR 463(E) dated 5 June 2015 issued by the Ministry of Corporate Affairs, Government of India, the Company being a Government Company engaged in Defence production is exempt from Section 186 of the Companies Act, 2013.

Particulars of Employees and Related Disclosures

The provisions of Section 197 of the Companies Act and the relevant Rules regarding particulars of employees drawing remuneration in excess of the limits specified are exempted for Government Company, in view of the Gazette Notification No. GSR 463 (E) dated 5 June 2015 issued by the Ministry of Corporate Affairs, Government of India.

Internal Financial Controls

The Company has in place adequate internal financial controls with reference to financial statements. A detailed note on Internal Financial Controls is provided in the Management Discussion and Analysis Report, which forms part of this report.

Audit Committee

As on 31 March 2023, the Audit Committee comprised of Independent Directors viz., Mr Prafulla Kumar Choudhury, Chairman of the Committee, Dr Shivnath Yadav and Mr Gokulan B as its Members. During the FY 2022-23, all the recommendations made by the Audit Committee were accepted by the Board.

Corporate Governance Report

In terms of Regulation 34 of the SEBI (LODR) Regulations, 2015 and DPE Guidelines, a Report on Corporate Governance along with a Compliance Certificate issued by the Statutory Auditors of the Company is attached with this report as Annexure-5.

Business Responsibility and Sustainability Report (BR&SR)

The SEBI (LODR) Regulations, 2015 mandated the inclusion of the Business Responsibility & Sustainability Report (BR&SR) as part of the Annual Reports for the top 1,000 listed entities based on market capitalisation. In terms of Regulation 34(2)(f) of Listing Regulations, a BR&SR for the FY 2022-23 describing the initiatives taken by the Company from an Environmental, Social and Governance (ESG) perspective, in the format as specified by SEBI from time to time is attached with this report as Annexure-6.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

Your Company, being a Defence PSU, the disclosure of information with respect to conservation of energy, technology absorption, foreign exchange earnings and outgo under the provisions of Section 134(3)(m) read with Rule 8(3) of the Companies (Accounts) Rules, 2014 (as amended) is not required as the Ministry of Corporate Affairs vide Notification GSR No.680 (E) dated 4 September 2015 has granted exemption to Defence Public Sector Undertakings.

Compliance with Secretarial Standards

The Company complies with all applicable mandatory Secretarial Standards issued by the Institute of Company Secretaries of India.

Acknowledgement

Your Directors place on record their deep appreciation and gratitude for the valuable support received from all the customers, particularly the Defence Services and the paramilitary forces and look forward to their continued support and co-operation in future. Your Directors also place on record their gratitude for the support received from the various Ministries of the Government of India, especially the Ministry of Defence, the Department of Defence Production. Your Directors express their gratitude to the Defence Research and Development Organisation (DRDO) and the various Research Laboratories under DRDO, particularly in the joint development programmes and new products. Your Directors express their sincere thanks to the Comptroller and Auditor General of India, Statutory Auditors, Branch Auditors, Cost Auditors, Secretarial Auditors, Company''s Bankers, Collaborators and Vendors. Your Directors appreciate the sincere effort by the employees at all levels, which enabled the Company to achieve a good performance during the year. Your Directors express their appreciation and gratitude to all the shareholders/investors for the trust and confidence reposed in the Company and look forward to their continued support and participation in sustaining the growth of the Company in the coming years.

For and on behalf of the Board

Bhanu Prakash Srivastava

Bengaluru Chairman & Managing Director

1 August 2023 (Additional Charge)



Mar 31, 2022

Your Directors take pleasure in presenting their Report and the Audited Financial Statements for the financial year ended 31 March 2022 together with the reports of the Statutory Auditors and the Comptroller and Auditor General of India thereon.

Financial Results and Performance Highlights

Financial results and performance highlights of the Company are summarised below:

('' in Lakh)

Particulars

2021-22

2020-21

Value of Production

15,32,064

13,94,749

Turnover

15,04,367

13,81,816

Profit Before Depreciation, Interest and Tax

3,54,283

3,30,722

Finance Cost

485

608

Depreciation & Amortisation

38,018

36,633

Profit Before Tax

3,15,780

2,93,481

Provision for Tax

80,887

86,939

Profit After Tax

2,34,893

2,06,542

Other Comprehensive Income/(Loss)

(14,921)

(8,709)

Total Comprehensive Income

2,19,972

1,97,833

Dividend paid

1,02,337

1,02,337

Tax on Dividend

-

-

Transfer to General Reserve

40,000

40,000

Other Equity

(Including Reserves & Surplus)

11,74,060

10,56,423

Net Worth

11,98,426

10,80,789

Earnings Per Share (in '')

9.64

8.48

Book Value Per Share (in '')

49.18

44.36

Distribution of Value of Production for FY 2021-22 is given below:

('' in Lakh)

Particulars

Amount

Percentage

Materials

9,17,947

59.92%

Employee Cost

2,10,939

13.77%

Other Expenses (Net)

49,380

3.22%

Depreciation & Amortisation

38,018

2.48%

Provision for Tax

80,887

5.28%

Profit After Tax

2,34,893

15.33%

Total

15,32,064

100.00%

The Company''s turnover for the year 2021-22 increased to '' 15,04,367 Lakh from '' 13,81,816 Lakh in 2020-21, registering a growth of 8.87%. The Profit After Tax (PAT) for the year is '' 2,34,893 Lakh as compared to '' 2,06,542 Lakh

in the previous year. Turnover from indigenously developed products was 78%. Contribution for Defence supplies was at 90% of the turnover in 2021-22 as compared to 78% in the previous year.

Dividend

In pursuant to Regulation 43A of the SEBI (LODR) Regulations, 2015, the Board of Directors of the Company formulated a Dividend Distribution Policy keeping in view the provisions of the SEBI (LODR) Regulations, 2015, the Companies Act, 2013, Guidelines issued by the SEBI, DPE, DIPAM, Ministry of Finance and other Guidelines to the extent applicable to the Company. The Policy is placed on the Company''s website at https://www.bel-india.in/ContentPage. aspx?MId=17&CId=527&LId=1&link=527

The Board of Directors has recommended a final dividend of '' 1.50/- per equity share (150%), amounting to '' 36,548.89 Lakh for the year 2021-22. The first interim dividend of '' 1.50 per equity share (150%) and the second interim dividend of '' 1.50 per equity share (150%) has been paid to the shareholders for the financial year 2021-22. Thus, the total dividend for the year 2021-22 is '' 4.50/- per equity share (450%), amounting to '' 1,09,646 Lakh.

Transfer to Reserves

An amount of '' 40,000 Lakh has been transferred to General Reserves for the financial year 2021-22.

Share Capital

The Company''s authorised capital was '' 25,000 Lakh (2,50,00,00,000 equity shares of '' 1/- each) and paid-up share capital was '' 24,366 Lakh (2,43,65,92,943 equity shares of '' 1/- each fully paid-up) as on 31 March 2022. There was no change in the authorised/paid-up share capital of the Company during FY 2021-22.

Major Orders Executed

AFNET Performance/Security Enhancement & SATCOM Network, Integrated Perimeter Security System (IPSS), Vehicle based Shelters network (SAMYUKTA), Electronic Warfare Suites, Kerala Fiber Optic Network (K-FON), Advanced/ Integrated Communication System, Artillery Combat Command and Control Systems, Communication Systems, Smart City Projects Energy storage Projects executed including supply and support of Missile, Control & Surveillance systems for the Defence Forces.

Exports

Your Company has been focussing increasingly towards harnessing the export potential of Defence electronics products & systems, including Homeland Security Solutions, Border Protection systems and state-of-the-art systems & solutions and professional electronics to address the civilian market, which represents its core area of business.

BEL has been exporting various products and systems to foreign countries and global OEMs. Having established a healthy relationship with its current & prospective customers and based on their requirements, BEL has been regularly interacting with the Ministry of External Affairs (MEA) & the Ministry of Defence (MoD) for supply of various products and systems.

BEL is also exploring civil and medical equipment market in developed, developing & third world countries, with product and solutions like Artificial Intelligence-based solutions, software development for various civilian projects, IOT Sensors, Sensor Fusion and Management Systems, Unified Data Analytics Platform System, Smart Hub, security package for VVIP areas, Smart Cities, Critical infrastructure development, solar power generation projects etc.

BEL is focussing on opportunities in the area of helping OEMs to meet offset obligations in various RFPs of the MoD on account of the offset policy incorporated in the Defence Procurement Procedure. To this end, the Company is closely working and partnering with various major foreign Aerospace and Defence Companies. BEL is also offering proven products and systems to meet the specific requirements of customers. BEL has identified contract manufacturing (build to print and build to spec) and Transfer of Technology of the latest systems and solution as new areas of emerging export opportunities. Further, efforts are on to establish a long-term supply chain connect with global players.

BEL is focussing primarily on the various ''Make in India'' programmes. It has offered its various products and services to major Platform OEMs and their Tier I suppliers. This has helped BEL in leveraging partnerships for co-development, co-production and similar arrangements with various OEM''s to get the manufacturing of the products at BEL and utilisation of services of BEL not only for Indian programs but also for global requirements.

Despite the COVID-19 pandemic worldwide, the Company achieved the export order acquisition of USD 179.05 Million during 2021-22, from various global customers viz., the US, France, Switzerland, Israel, Sweden, ASEAN countries, Mauritius and Sri Lanka. With this, the export orders as on 1 April 2022 stood at more than USD 269 Million. The major acquisition is order from M/s Airbus DS, Spain & M/s Thales, France for EW/Avionics.

The Company achieved an export sale of USD 33.30 Million during FY 2021-22, to various countries, viz., Switzerland, the US, France, Israel, Sweden, Seychelles, Maldives, Sri Lanka, ASEAN Countries and the various SEZs. Major products/ systems exported were Coastal Surveillance Systems Radar, Sub Systems of Radar and EW Systems, Data Link II, Cable looms, mechanical parts, communication equipment, IFF-Interrogator, Radar Finger Printing System, EOS, Power Source, Radar Spares, etc.

The export sales was achieved with the concerted effort made by the Company and the new export initiatives taken like continuous and focussed discussion with the Ministry of External Affairs & Ministry of Defence and customers, a proactive approach with the customers by offering new and complete systems and procedures, increase in the customer''s base, taking up new, customised & critical projects and delivering them on time as per the requirement of customers. More efforts were directed in support/services extended to customers to develop customised solutions and future threats and opportunities.

Initiatives taken to increase exports by development of new markets, for products & services during the financial year 2021-22:

? Major initiatives taken in 2021-22

• Exim/Buyer''s Credit Project - Pursued market leads for various countries.

• Collaborated with new local partners in Kenya, Chile, Suriname, Malaysia, Nepal, Bangladesh.

• Pursued G2G opportunities in various neighbouring countries.

• Increased contract manufacturing portfolio by increasing empanelment of BEL as global supply chain partner with OEMs.

• Explored businesses in the field of turnkey solutions based on software capabilities and Artificial Intelligence under secure environment.

• Strategic alliance with the Indian platform manufacturers and initiating discussions and processes for signing agreements with major Indian platform manufacturers to create strong support within the country.

• Proposed strategic alliance with foreign OEMs to address global markets by offering the best value proposition.

• Efforts towards increasing participation in Government tenders in foreign countries.

• BEL has taken up efforts for marketing of various products and systems of Defence Industries of India

through BEL''s overseas representative/marketing offices (18 Countries) to quickly expand geospatial reach.

• BEL regularly interacts with the Ministry of External Affairs, the Indian High Commission, the Defence Attache, and MoD, India for supply of products/ systems under the Line of Credit (LoC)/grants to friendly countries to India.

? Major leads in pipeline for following products and systems offered to foreign countries/customers:

• Coastal Radar System

• Radar Systems and Solutions

• Upgradation of Naval Radar and Sonars

• Contract Manufacturing

• Communication Equipment

• Electronic Warfare & Avionics

? The following were the scope for offset business during 2021-22:

• Data Link II

• IFF - Interrogator

• Radar Finger Printing Systems

• EoS CoMPASS

• EW & Radar Sub-Assemblies on built-to-print basis

• Missile Systems and Solutions

MoU with the Government

Your Company has been signing a Memorandum of Understanding (MoU) every year with the Ministry of Defence, Government of India based on guidelines issued from DPE. Performance of the Company for the financial year 2020-21 has been rated as "Very Good". The MoU rating for FY. 202122 is under review by the Government.

Order Book Position

The order book of the Company as on 1 April 2022 is 57,570 Crore. The order book comprises of major programs like Missile Systems, Command and Control Systems, Aircraft upgrades, Electronics Voting Machines, Ship Upgrades, Radar & Fire Control Systems, Software Defined Radios, Thermal Imagers, Kerala Fiber Optic Network (K-FON), AFNET Performance & Security Enhancement & SATCOM Network, Smart City Projects, Naval Systems etc.

Finance

Your Company has been prudent in managing its finances. During FY 2021-22, the Company has met all its CAPEX and Working Capital requirements through Internal Accruals. Your

Company has been productive and efficient in managing its operational expenses. The Company''s PBT has grown from '' 2,93,481 Lakh in FY 2020-21 to '' 3,15,780 Lakh in FY 202122. During the current FY 2021-22, EPS has increased from '' 8.48 (FY 2020-21) to '' 9.64. Net Worth of BEL has increased from '' 10,80,789 Lakh (FY 2020-21) to '' 11,98,426 Lakh and corresponding Book Value Per Share (BVPS) has increased from '' 44.36 (FY 2020-21) to '' 49.18 in FY 2021-22.

In spite of increase in Turnover from '' 13,81,816 Lakh in FY 2020-21 to '' 15,04,367 Lakh in FY 2021-22, Trade Receivable has come down from '' 6,55,154 Lakh to '' 6,10,339 Lakh. Further, Trade Receivable as a number of Days of Turnover has reduced from 173 days of Turnover in FY 202021 to 148 days of Turnover in FY 2021-22. The reduction in the number of days was mainly on account of initiatives taken and restructuring brought in by Management.

Our consistent performance and long-term value creation has been reflected in the quantum of Dividends being distributed by the Company. During FY 2021-22, BEL has disbursed 2 Interim Dividends of 150% each amounting to '' 73,098 Lakh. The Board of Directors has recommended a final Dividend of '' 1.50 per equity share (150%), amounting to '' 36,548.89 Lakh for the year 2021-22. Thus, the total dividend for the year 2021-22 is '' 4.50 per equity share (450%), amounting to '' 1,09,646 Lakh.

Deposits

The Company does not have any Public Deposit Scheme at present. However, the matured Public Deposit amount (collected prior to February 2006) with the Company was '' 36.95 Lakh as on 31 March 2022. Out of this, 34 deposits amounting to '' 36.50 Lakh have not been claimed or have not been paid as these accounts were frozen on the advice of the Karnataka Lokayukta. The remaining matured deposits of '' 0.45 Lakh as on 31 March 2022 is unpaid due to insufficient documents/records produced by the Depositors.

Research & Development

BEL''s R&D philosophy is to enhance its pre-eminence in products/services for Defence and Professional Electronics through Research & Development. BEL''s R&D strives for development of new products built with cutting-edge technology modules. While fully meeting the customer requirements, the products developed by BEL are state-of-the-art, competitive and with highest levels of quality and reliability.

Research and Development (R&D) has been one of BEL''s core strengths which is being enhanced through in-house and collaborative R&D modes. Various divisions of BEL are involved in development of Strategic Components, Technology Modules, Subsystems, Products, Systems and Systems of Systems.

BEL has a Three-Tier R&D structure, namely, Central Research Laboratories (CRLs); Product Development and Innovation Centre (PD&IC) and Centres of Excellence (CoEs); and Development and Engineering (D&E) groups attached to Strategic Business Units (SBUs)/Units. The R&D centres of BEL, registered with Department of Scientific & Industrial Research (DSIR), function at various locations across India: D&Es at each of the SBUs and Units namely Bengaluru, Chennai, Ghaziabad, Hyderabad, Kotdwara, Machilipatnam, Navi Mumbai, Panchkula and Pune; PD&IC at Bengaluru; and CRLs at Bengaluru and Ghaziabad. The R&D Labs (CRLs/ PD&IC/CoEs/D&Es) work in the identified technology and product areas, based on three-year R&D plans and after due approval of funds/time by competent authority.

Apart from in-house efforts, BEL R&D Engineers collaborate with DRDO, ISRO, CSIR, other Research Laboratories, National and International Academia, Research Institutes, OEMs/Industry, experts/consultants, MSMEs and start-ups in niche technologies. BEL has created an ecosystem to develop products/solutions in many business segments.

The D&E groups at SBUs/Units provide Systems and System of Systems solutions to the end users. Towards this, they get necessary technology modules and subsystems developed through CRLs, PD&IC, CoEs and collaborative R&D partners. They conduct all evaluations and trials needed in the process of inducting these systems into service. They also extend technical support during the entire product life-cycle and also take care of obsolescence management.

D&E Projects Initiated During FY 2021-22: Several R&D projects have been initiated during FY 2021-22 both through in-house development and collaborative efforts (mainly with DRDO). Major projects initiated in FY 2021-22 are Day Telescopic Sight-6X for LMG, LYNX U2 systems for the NOPV, Talwar and Teg class of ships, Platform Software Enhancement

of SDR-NC and Long term Support from CDAC, Super SCADA for DMRC, 5G NodeB solution, Sighting and FCS System for BMP Upgrade-811 Systems, Wideband GaN PA, S Band DWR upgrade, 1KW HF SDR for IAF/IA, 1KW Narrow Line Width Laser, Echo sounders, Laser Target Designator, Decoy System for Akash Missile System, D4 System, Armor Piercing Fin Stabilised Discarding Sabot (APFSDS), CBTC Radio System, GAN Based Module for AAAU, 80mm Rocket, Multi Function RADAR-VLSRSAM, Quantum Key Distribution, iATS for DMRC and IFF MK-XII-A.

D&E Projects Realised During FY 2021-22: Some of the major projects realised/completed during FY 2021-22 are Akash-NG System, Record & Replay Operations, Single Combat Vehicle, Compact GFCS (LYNX U3 GFCS), Multi Target Tracking Radar, BMP EO Upgrade, AGMS and CPS for MBT Arjun, Spotterscope, Space Situational Awareness, IAF Order for 7 Sqn of Akash Missile System (AMS), Revathi Stabilized Platform, CMS16A, GaAs based C-band MMICs, Uncooled TI weapon sights for MMG and Assault Rifle, Range Extension Kit for General Purpose Bombs, Command Post for MRSAM-Army, Active Range Gating Camera for long range surveillance application, Development of HHT for BEST Buses, Gunner TI sight for T-90, Laser Dazzler, D4 System, ToT for Fibre Optic Sensor Package and IPSS Pathankot.

Important R&D Awards/Recognitions Received During FY 2021-22

• I ETE-IRSI Young Scientist Award for two BEL Scientists (CRL-BG),

• IETE - Corporate Award for Performance in Development of Software (Large Enterprise) for BEL Software SBU,

• Golden Star - Outstanding R&D Leadership Award individual for D (R&D) BEL.

BEL has met all the MoU parameters w.r.t R&D for FY 2021-22, by timely completion of the following:

Sl No.

Description of the Projects

SBU/Unit/

PDIC/CoE/CRL

Status

1

AI-based Parameters:

a) AI-enabled Fake News Detector as part of Social Media Analytics: Development, Testing and Independent Evaluation

b) AI-based Passive TWS (Track While Scan) System: Development, Testing and Independent Evaluation

a) Software SBU

b) CRL-BG

Completed

2

Design and Development of Network Time Server (NTS) for SDR-TAC project: Completion of internal evaluation and testing

MilCom

Completed

3

Design and Development of Long Wave Infrared (LWIR) continuous Zoom lens: Completion of internal evaluation and testing

BEL-MC

Completed

4

Development of Indigenous Automatic Train Supervision (IATS) system for DMRC and offering to Customer for NC-NC Trial

BEL-KOT

Completed

5

Development of Big data Analytic software for SAGAR-III project: Completion of internal evaluation and testing

CRL-BG

Completed

6

Completing Development of Remote Control Weapon Station (RCWS) for CBRN (TRACKED) MKII for Export: Completion of internal evaluation and testing

CHN

Completed

BEL R&D Cell at Kochi has realised core technology modules for Prototype Side Scan Sonar (electronics and system software) and Emergency Pinger (PoC).

BEL R&D Cell at IIT Madras Research Park has initiated development of core technology modules in the areas of Ammunition, Rockets, Quantum Cryptography, Distributed Sensing in collaboration with IIT-MRP incubated start-ups.

New Products Developed Through In-house Development Efforts During FY 2021-22 are:

i. Laser Fence System.

ii. IR Jammer for Active Tank Protection System.

iii. Gimbal for Tethered UAV.

iv. Drainage Intrusion Detection System.

v. Solid State Power Controller Cards (28V 16 & 32 channel) for Akash NG/QRSAM.

vi. Tactical sever commercial and rugged versions for ADCRS.

vii. X-Band 12W HPA MMIC for UTTAM, D4 and other systems.

viii. C-Band Digital Phase Shifter, SPDT Switch, LNA BELN3019V1P, LNA BELN3012V3P, Driver Amplifier QRSAM.

ix. S-Band 150W Power Amplifier for SBR

x. C-Band PLO form-fit replacement for imported DRO module for Ku band Seekers in ASTRA, AKASH-1S, QRSAM, VLSRSAM.

xi. 24" Panel PC for Radars.

xii. 10.4 inch and 20.1 panel PC computing platform for Mareech.

xiii. Rugged and commercial versions of 26" Display, 19" rack mounted PC, 10.4" Rugged TAB for ADCRS.

xiv. GNSS Receiver.

xv. Managed Ethernet Switch -12 PORT - MH 60R.

xvi. Rugged 16 Port Non POE L2/L3 Switch.

xvii. Wideband synthesiser.

xviii. QSRx PLOs.

xix. IP EPABX System.

xx. RXSP, WGM & TSG, MSG IFDC, Power supply unit, Signal Processor, LNB, Rack Assembly for ASR radar.

xxi. Digitisation of Receive Chain, WGM & TSG, Exciter, Integrated Signal Processor, Power supply unit, IF BITE Module, Exciter Int. SP Cabinet for THD Radar.

xxii. Generic VEXT for Coastal surveillance system.

New Products Developed Through Collaborative Development Efforts During FY 2021-22 are:

i. Navigation Complex System - SAFRAN Engineering & Defence.

ii. Fake news identification - IIIT-H, Hyderabad.

iii. C BAND GaN PA - Microwave IC, Russia.

iv. C BAND GaAs MMICs - Microwave IC, Russia.

v. iATS - DMRC.

vi. Oxygen Concentrator 5 LPM & 10 LPM - BPL Medical Technologies Private Limited.

vii. Dialysis Machine - Renalyx Health Systems Pvt. Ltd.

Future Plan of Action: BEL will enable scaling of R&D for innovative Products/Services across the organisation to align with the objectives of growth, diversification and transformation. All the tiers of R&D (D&Es, PD&IC, CoEs and CRLs) will continue to collaborate in identifying new areas of development and complement each other in addressing customers'' requirements. While a major thrust would be for in-house developments; collaborations with national laboratories, academic institutions, research institutes, industry, MSMEs and start-ups will also continue to be strengthened. BEL plans to continue investing in R&D to offer advanced products/solutions for meeting the continuously evolving requirements of customers. Focussed technology/product development efforts have been initiated towards diversification in the areas of Arms & Ammunition, Medical Electronics, Autonomous Navigation System and Unmanned Systems.

New Facilities Established

Infrastructure enhancement is one of the major objectives of the Company in order to stay upgraded for global opportunities and to be the best in business. During the year 2021-22, the Company has spent around '' 56,558 Lakh as part of CAPEX investment towards modernisation of Plant & Machinery, Test instruments, R&D investments, Infrastructure upgradation etc.

Following are some of the major facilities established during 2021-22:

• Infrastructure & Test facilities for LRSAM.

• Augmentation of Facilities for AKASH Missile Systems.

• Virtual Desktop Infrastructure (VDI).

• Regional Product Support Centres.

Information Technology (IT) Initiatives:

In SAP, various new processes have been introduced for the automation and digitisation. Auto procurement process, R&D Plan automation and Agreement management system are few major additions.

Implementation of Virtual Desktop Infrastructure (VDI) is completed in internet domain to ensure that storage in end user devices are removed and complete data is kept in central server in Bengaluru. It has enhanced cyber security immensely in internet domain. The roll out of VDI is intranet domain is under progress.

Project Management software tool Primavera is being rolled out across BEL to manage turnkey projects. New mail server is commissioned for Trainees and Project Engineers to ensure safe communication with engineers posted on sites.

Unified Communication Division is recommended for ISO 27001 Information Security Management System (ISMS) certification. STQC Division of Ministry of Electronics and Information Technology certified BEL e-procurement solution SRM for Information security. VAPT audit of complete BEL IT infrastructure and application were conducted by CERT-in empanelled vendor.

Quality

Quality, Technology, Innovation are three guiding pillars of BEL''s business initiatives. Quality, being the first pillar, has been one of the focus areas for the Company.

The Company is committed for continual improvement through process approach in line with World-Class Quality Systems. All Units/Strategic Business Units (SBUs)/Common Services Groups (CSGs) are accredited to ISO 9001 Quality Management System (QMS). Nineteen Units/SBUs of the Company have upgraded their QMS to Aerospace Standard, AS 9100D. All Units of the Company are committed to Environment Management System through ISO 14001 Certification. Ghaziabad Unit is upgraded its OHSAS from ISO 18001 to ISO 45001.

BEL received 16 Green Channel Certificates covering 11 Units/SBUs from DGQA for a total of 50 products, in the areas of Radars, Naval Systems, Communications, E-O, Mast, Batteries and Gun Upgrade. BEL is the first PSU to reach this new height on Quality aspects.

Eleven Units/SBUs/Divisions of the Company are certified for Information Security Management System ISMS ISO 27001. During the year, ADSN SBU is certified for AS9100D, for the first time, Machilipatnam Unit is upgraded from ISO 9001 to AS9100D, and Machilipatnam Unit and UC-IS/CO have received the first ISMS ISO 27001 certificates. BEL has a total of 19 AS9100D Certificates.

Test Equipments Calibration and Maintenance departments of Bangalore Complex, Ghaziabad, Panchkula and NAMU Units (Total eleven Labs) are certified by NABL in accordance with ISO/IEC 17025 Standard. Software SBU is certified for CMMi level 5 and also for ITSMS ISO 20000-1. NCS & DCCS SBUs of Ghaziabad, CRL - Ghaziabad, Chennai, Hyderabad Units are certified for CMMi level 3.

Remarkable achievement of the Company in this year is moving from 1 SBU, 1 Product Green Channel Certificate to 50 Products, 16 Certificates covering 11 Units/SBUs.

EFQM (European Foundation of Quality Management) Model for Business Excellence is being followed in BEL since 2002. BEL drew a roadmap for the deep drive of the new EFQM Model 2019, identified Units for challenging the CII Exim Award. BEL Hyderabad & Chennai Units have been conferred with CII-EXIM Bank Business Excellence Award 2021-Platinum category for significant achievement towards Business Excellence.

During the year, 17 senior executives from various units have been trained as "Six Sigma Black Belts" by Indian Statistical Institute, Bangalore. Total 538 Six Sigma Projects have been completed during the year 2021-22, resulting in an estimated savings of '' 127 Crore to the Company. Out of 30 Six Sigma projects nominated for Regional/National level Competitions, 15 projects received par Excellence Award at both regional and National Level Championships Awards and 3 Projects won Par-Excellence Award in International Convention on Quality Control Circles (ICQCC).

Human Resources

Your Company employed 8,853 people as on 31 March 2022 compared to 9,172 people as on 31 March 2021. Out of these employees, 4,704 were engineers/scientists and 1,926 were women employees. A total of 177 employees were inducted during the year. 20 employees belonging to the Scheduled Castes (SC), 9 employees belonging to the Scheduled Tribes (ST), 71 employees from the Other Backward Classes (OBC).

Your Company has been complying with the Government directives on reservation. The particulars of SC/ST and other categories of employees as on 31 March 2022 are as under:

Executives

Non-Executives

Category of Employees

Group

''A''

Group

''B''

Group

''C''

Group

''D''

Scheduled Caste

1,034

38

517

24

Scheduled Tribe

365

17

121

16

OBC

1,318

59

749

35

Ex-Servicemen

78

-

268

44

Physically Challenged

94

5

104

2

Various training programmes were conducted during the year to enhance competencies in Technical, Functional, Managerial and Leadership areas. Structured Executive Development Programmes were conducted regularly with premier institutes to meet the evolving training needs of executives as they progress through various grades. A detailed write-up on HR initiatives during the year is provided separately in the Management Discussion and Analysis Report, which forms a part of this report.


Disclosure Under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company is an equal opportunity employer and consciously strives to build a work culture that promotes dignity of all employees. As required under the provisions of the Sexual Harassment of Woman at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules framed thereunder, the Company has implemented the policy on prevention, prohibition and redressal of sexual harassment at the workplace, which has been uploaded on the Company''s intranet portal. All women, permanent, temporary or contractual, including those of the service providers, are covered under the Policy.

An Internal Complaints Committee has been constituted in each of the nine constituent units, including the corporate office to redress complaints relating to sexual harassment. Awareness programmes were conducted across the Company to sensitise employees and uphold the dignity of their colleagues at the workplace, particularly with respect to prevention of sexual harassment. The details of the complaints filed, disposed of and pending during the year pertaining to sexual harassment are provided in the Business Responsibility Report, which forms a part of this report.

Awards and Accolades

Your Company strives to achieve the highest level of quality in all its products by considering consumer insights and by reaching out to consumers. During the year, your Company has received the following various Awards and Accolades:

• Business Standard Annual Awards for corporate excellence: STAR PSU of the Year 2021.

• CII CFO of the Year Award in the PSU category and Greentech Corporate Governance Professional of the Year Award.

• Rajbhasha Kirti Award for second time and Rajbhasha Gaurav Puraskar.

• IEI Industry Excellence Award.

• IETE Corporate Award for Performance in Development of Software (2021).

• Golden Star Outstanding R&D Leadership Award.

• Governance Now Awards for Nation Building, HR Excellence and Digital Security.

• Greentech Energy Conservation Award 2021.

• ''Manufacturing Company of the Year Award'' and ''Woman Manufacturer of the Year Award'' by Manufacturing Today.

• PSU Excellence Award 2022 from Media Federation of India.

• Swachhata Pakhwada Award 2020.

• Communicators of the Year Award from Media Federation of India.

• ICC PSE Excellence Award for ''Corporate Social Responsibility''

Other Significant Achievements During FY 2021-22:

• BEL has achieved highest ever turnover of around '' 15,000 Crore during FY 2021-22 despite the global supply chain crisis.

• Strategic partnerships with Global players in the international segment to address the new business opportunities.

• Strategic partnership with DMRCL, Airport Authority of India, Research Design Standards Organisation of Indian Railways, Goa Shipyards Ltd, NTRO, Bosch India, Motorola Solutions India and several start-ups in the domestic segment towards development of various technologies/products and to address business opportunities arising out Make in India initiatives of Gol.

Subsidiaries, Joint Ventures and Associates

BEL Optronic Devices Limited (BELOP) is a wholly-owned subsidiary of BEL, which manufactures Image Intensifier Tubes. BELOP achieved a turnover of '' 4,586 Lakh for the year compared to '' 4,075 Lakh in the previous year. The Profit After Tax (PAT) for the year was '' 516 Lakh compared to '' 490 Lakh in the previous year.

BEL-THALES Systems Limited (BTSL), a subsidiary, was formed for design, development, marketing, supply and support of civilian and select Defence radars for Indian and global markets. Your Company holds 74% of the equity capital in BTSL. During the year, BTSL recorded a turnover of '' 3,901 Lakh compared to '' 3,538 Lakh in the previous year. The Profit After Tax (PAT) for the year was '' 521 Lakh compared to '' 315 Lakh in the previous year.

The Associate Company GE BE Private Limited [26% shareholding by BEL] continues to perform well. It manufactures CT Max and other latest version X-Ray Tubes. GE BE Pvt. Ltd. recorded a turnover of '' 1,56,267 Lakh for the year compared to '' 1,22,850 Lakh in the previous year. The Profit After Tax (PAT) was '' 17,578 Lakh for the year compared to '' 11,673 Lakh in the previous year.

The Defence Innovation Organisation (DIO) is a ''Not for Profit'' Company as per the provisions of Section - 8 of the Companies Act, 2013 with an authorised share capital of '' 1 Crore. With an equity participation of 50% from BEL and 50% from HAL, the Company was formed with an objective of funding innovation in the Defence sector.

In pursuant to provisions of Section 129(3) of the Companies Act, read with Rule 5 of Companies (Accounts) Rules, 2014 (as amended), a separate statement containing the salient features of the financial statement of Subsidiaries/ Associate/Joint Ventures in Form AOC-1 is appended to the Financial Statements.

Further, pursuant to the provisions of Section 136 of the Act, the financial statements of the Company, consolidated financial statements along with relevant documents and separate audited financial statements in respect of subsidiaries, are available on the website of the Company www.bel-india.in.

Consolidated Financial Statements

Consolidated Financial Statements of your Company and its Subsidiaries for the year ended 31 March 2022 have been prepared in accordance with the provisions of Section 129(3) of the Companies Act & applicable Indian Accounting Standards and forms part of this report.

Vigilance

The Company''s Vigilance Organisation is headed by a Chief Vigilance Officer (CVO), an IAS Officer from Haryana Cadre (1991 batch). Permanent Vigilance Officers are posted in each of the Units and SBUs. Vigilance Committees are formed to look after the Vigilance Administration in the Units and SBUs. The Unit/SBU Heads are designated as Chairman of the Vigilance Committee. Apart from this, there exists a Vigilance Committee at the Corporate, where Chairman cum Managing Director is the Chairman of the Committee and the CVO is the Member Secretary. Preventive Vigilance has been the thrust area of the Vigilance Organisation and the same received focussed attention during the current year. The Vigilance Department examines procurements and processes on continual basis, conducts regular and surprise inspections and investigates instances of any suspected transactions referred to it. An employee or third parties can refer any suspected transaction to the notice of CVO for investigation which are examined as per the Complaint Handling Policy of the Company. Online Complaint Management System has been made operational and complaints can be filed through accessing the Vigilance Portal in BEL website.

During FY 2021-22, 1,943 high value Purchase Orders/ Contracts have been reviewed. CTE Type Intensive Examination has been restructured with the formation of Eleven Intensive Examination teams. CTE Type of Intensive Examination of 58 High value Procurements Contracts has been taken up during the year 2021-22. Regular and Surprise checks and Inspections have also been conducted by the field Vigilance Officers. During the year, 10 Complaints were received. A total of 14 Complaints were disposed including previous year''s. Disciplinary action and System/Process Improvement has been recommended in some cases where lapses were observed.

During the year, 281 Executives and 63 Non-Executives were given basic awareness program on Vigilance. 132 Executives & 32 Non-Executives working in sensitive areas for more than 3 years have been job rotated and the percentage coverage is 90.1%.

Vigilance Department is continued to be certified for ISO 9001/2015 Certification for the Vigilance function of BEL. In line with the CVC''s guidelines on Leveraging Technology and to ensure transparency through effective use of technology, the following functions have been made operational through SAP and the Company''s website:

• E-Procurement.

• Online registration of Vendors.

• Vendor Payment Information System.

• E Payment/Bank transfer of payment to Vendors.

• Details of awarded Contracts/Purchase Orders valuing more than '' 10 Lakh in respect of works contracts, service contracts, capital items and non-production items have been posted in the website.

• Details of awarded Contracts/Purchase Orders issued on nomination/single tender basis value exceeding '' 5 Lakh are posted on the website.

• Corruption Risk Management Policy is framed and implemented across the Company.

• Vendors'' Directory is maintained.

• File Life Cycle Management System (FLM) is fully implemented across the Company.

• Online filing of APRs is facilitated in SAP for all the Executives and the Executives have been filing the APRs in SAP.

• Vigilance Monthly and Quarterly Reports are generated through SAP.

• Vigilance clearance is accorded through the dedicated Vigilance portal in SAP.

Vigilance setup in BEL has been continuously endeavouring to bring transparency, fairness and equity in all transactions and processes of the Company through creating a sense of awareness on System and Procedures through awareness campaign and training program. Some of the key activities that have been carried out during the year are:

a) Bharat Electronics Limited (BEL) has observed Vigilance Awareness Week 26 October to 1 November 2021 with the theme "Independent India@75: Self Reliance with Integrity" at all its offices across the country by adhering to all the precautionary measures to contain the spread of COVID-19. Vigilance Awareness Week-2021 banners and PIDPI banners were displayed at prominent places at Corporate Office and also at Units/Regional Offices/ Marketing Centres/Product Service Centres.

Various awareness programmes and activities were held to keep the spirit of celebrating the Vigilance Awareness Week. Online lecture programmes, online competitions and other activities through video conferencing.

E-Pledge was facilitated in BEL intranet enabling employees to take E-Pledge. Certificate of appreciation and commitment, issued by CVO of BEL was in downloadable option for the employees who have taken the E-Pledge through the BEL Intranet. 4,193 employees have taken E-Pledge.

Integrity pledge was administered to around 8,000 plus employees in their respective workplaces across all the units. Apart from this, Employees were provided with a link to CVC Website to take the E Pledge from the CVC website. E-mail on Vigilance Awareness was sent to 32,426 Indian vendors of BEL during the week.

b) Various workshops and lecture programmes were conducted through hybrid mode.

0 Workshop on "PIDPI Resolution-2004" by Shri O.V. Nandimath, Professor, National Law School of India Bangalore, on 29.10.2021.

0 Workshop on "Preventive Vigilance Perspective in Procurement" by Shri Suresh Sethi, AGM (Retd.)/ BEL, on 27.10.2021.

0 Workshop on "Preventive Vigilance in India Legal and Institutional Approach " by Smt. Nagaratna, Associate Professor, National Law School of India Bangalore on 28.10.2021.

0 Talk on "PIDPI Resolution-2004" by Shri Ambrose D, DGM, Corporate Vigilance, on 28.10.2021.

c) Two days Induction Level Training is imparted to the newly joined Probationary Engineers on 10 and 11 November 2021.

d) Two Days Workshop on Purchase Procedure 2016 and Vigilance case studies as part of Mid-career specialised training was done on 21 November 2021 and 10 December 2021.

e) Two Days Workshop on Subcontract Procedure 2017 and Vigilance Case Studies as part of Mid-career specialised training was done on 14 December 2021 and 24 December 2021.

Integrity Pact

One of the initiatives of the Central Vigilance Commission (CVC) to eradicate corruption in procurement activity is introduction of the Integrity Pact in large value contracts with Government Organisations. In line with the directives from

Ministry of Defence and the Central Vigilance Commission, your Company has adopted Integrity Pact with all vendors/ suppliers/contractors/service providers for all Orders/ Contracts of value '' 300 Lakh and above. The Integrity Pact essentially envisages an agreement between the prospective vendors/bidders and the principal (BEL), committing the persons/officials of both sides, not to resort to any corrupt practices in any aspect/stage of the contract. Only those vendors/bidders, who commit themselves to such a Pact with the principal, would be considered competent to participate in the bidding process. Integrity Pact, in respect of a particular contract, would be operative from the stage of invitation of bids till the final completion of the contract. Any violation of the same would entail disqualification of the bidders and exclusion from future business dealings.

As recommended by the CVC, the Company has appointed Dr. Parvez Hayat, IAS (Retd.) and Dr. Joginder Paul Sharma, IAS (Retd.) for monitoring implementation of Integrity Pact in the Company.

Procurement from Micro & Small Enterprises (MSEs)

Your Company has been providing increased thrust on enhancing procurement from Micro & Small Enterprises (MSE) and has been implementing Public Procurement Policy for MSEs as per the guidelines / notification issued by the Ministry of MSMEs. BEL has on-boarded on TReDS Platform, GeM, MSME Sambandh & MSME Samadhaan Portals complying with Government guidelines.

The Company has conducted Vendor Development Programs for Indian vendors including MSME/Start-ups on various occasions throughout the year. BEL extends various provisions as envisaged in Ministry of MSME notifications, released from time to time, to MSME/Start-ups in procurement.

BEL''s procurement from MSEs is 31% of total Domestic procurement during 2021-22 against mandatory target of 25% as per Public Procurement Policy for MSEs.

Implementation of Official Language Policy

Your Company is committed to adhere to the Official Language (OL) policy of the Government of India. During 2021-22, despite COVID-19 pandemic challenges, the Company has achieved the various targets prescribed in the Annual Program issued by Dept. of OL, Ministry of Home Affairs (MHA), GoI to transact official work in Hindi. During the year, Mrs. Anandi Ramalingam, CMD received the ''Rajbhasha Kirti'' Award for two consecutive years (2019-20, 2020-21) from Hon''ble Minister of State for Home Affairs on 14 September, 2021, at Vigyan Bhawan, New Delhi. In the same function, Mr. Shrinivas Rao, Officer (OL), Corporate Office was awarded ''Rajbhasha Gaurav'' Award for the year 2018-19.

OL Inspections: Committee of Parliament on Official Language conducted OL inspection of PK Unit on 10.11.2021. Corporate OL Inspection team conducted 05 OL inspections of its subordinate Units/Offices.

Bilingualisation: All Units and Offices of the Company including Corporate Office are issuing documents in bilingual as per the Section 3(3) of Official Language Act, 1963. Usage of Hindi is being encouraged in correspondence and on computers. Individual orders under OL Rule 10 (4) were issued by CMD to officers/employees who are having proficiency in Hindi to do their complete work in Hindi. Also, a circular on creation of Check Points under Rule 12(1) of OL Rules was issued.

Computerisation and Website: Updated information pertaining to OL is being communicated through OL Portal GARIMA introduced by OL Dept. of Corporate Office. Quarterly progress reports from Units/Offices are being received online in SAP. Hindi notings are being written in File Life-cycle Management (FLM). Company''s website is also available in Hindi.

Training and Reporting: Roster is maintained for Hindi language training and computer training which is updated from time to time. As per the Roster, employees were nominated for online training. Quarterly/half yearly reports are sent to OL Dept., MHA, GoI, MoD, Hindi Teaching Scheme and Town Official Language Implementation Committee (TOLIC) as per schedule.

Hindi Month Celebrations: Hindi Month and Hindi Day was observed during September in all the Units and Offices of the Company.

Meetings/Workshops: Official Language Implementation Committee (OLIC) meetings, Hindi workshops and technical talks in Hindi were conducted through online mode in all Units/Offices.

Incentives and Awards: Company has various lucrative Incentive Schemes for doing original work in Hindi. These schemes are named after renowned Hindi Litterateur which carry cash awards from '' 2,000 to '' 10,000. Employees took part in these schemes wholeheartedly. Employees have participated in the TOLIC competitions and won prizes.

Visits: Dr. Sumit Jairath, Secretary (OL) visited our Corporate Office on 30 July 2021 and expressed immense satisfaction over the status of implementation of Official Language in your Company.

Publications: Hindi Magazines were published in Units/ Corporate Office of the Company to propagate usage of Hindi.

New Initiatives: A dedicated section for OL has been introduced in the Company''s website. Defense Electronics Glossary of BEL is being prepared in coordination with the Commission for Scientific and Technical Terminology (CSTT), Ministry of Education. A total of 2,410 terms have been finalised so far. The first Bharatendu Rajbhasha Kaushal Abhimukheekaran Program was initiated by Corporate Office for OL Officers/Translators of Central Government Offices/ Banks/Undertakings located at Bengaluru. The event was a grand success.

Continuous efforts are in progress to ensure OL Implementation and for achieving progressive usage of Hindi across the Company.

Implementation of Right to Information Act, 2005

In consonance with the provisions of the Right to Information Act, 2005 (the Act), your Company has a well-defined mechanism in place to address the provisions of the Act. Your Company has a designated General Manager level officer as a Nodal Officer to oversee the implementation. The requests received are processed by 16 senior personnel, designated as Central Public Information Officers (CPIOs) including the one at the corporate office and one each at the Units/Regional Offices. Your Company has a designated General Manager level officer as a First Appellate Authority to dispose of first appeals filed under the Act. In compliance with Government directives, your Company is successfully processing the applications under the Act, online.

The information to be provided as per Section 4(1) (b) of the Right to Information Act, 2005 has been posted on the Company''s website www.bel-india.in

The FAA, CPIOs and other internal stakeholders involved are sensitised about their obligations under the Act through training and workshops.

Your Company received 246 applications (including 64 transferred by other Public Authorities to BEL) during the period from April 2021 to March 2022, and 33 RTI applications were carried forward from FY 2020-21. A total of 264 applications were responded to, including 41 applications that were rejected, out of a total of 279 applications. Your Company received 43 First Appeals during the period, out of which 41 were disposed of. Quarterly RTI returns for all the four (4) quarters have been submitted to the Central Information Commission.

Meetings of Board and Committee(s)

During the year, eight Board meetings were held and the maximum interval between any two meetings was not more than 120 days. The details of meetings of Board and Committee(s) held during FY 2021-22 are furnished in the Corporate Governance Report, which forms a part of this report.

Change in Directors & Key Managerial Personnel and their Shareholding

The following changes took place in the Directorate and Key Managerial Personnel of your Company during the financial year:

Sl. No.

Name of the Director

Designation

Date of Appointment

Date of Cessation

1

Mrs Shikha Gupta

Director (Other Units)

Not Applicable

07.05.2021

2

Mr M V Gowtama

Chairman & Managing Director

Not Applicable

30.06.2021

3

Mr Shivakumaran K M

Director (HR)

Not Applicable

30.08.2021

4

Dr. Parthasarathi P V

Independent Director

28.12.2021

Not Applicable

5

Mr Mansukhbhai S Khachariya

Independent Director

28.12.2021

Not Applicable

6

Dr. Santhoshkumar N

Independent Director

28.12.2021

Not Applicable

7

Mr Prafulla Kumar Choudhury

Independent Director

28.12.2021

Not Applicable

8

Dr. Shivnath Yadav

Independent Director

28.12.2021

Not Applicable

9

Mr Gokulan B

Independent Director

20.01.2022

Not Applicable

10

Mrs Shyama Singh

Independent Director

07.02.2022

Not Applicable

Mrs Anandi Ramalingam, Chairman & Managing Director (Additional Charge), Mr Dinesh Kumar Batra, Director (Finance) and Chief Financial Officer and Mr S Sreenivas, Company Secretary are the KMPs, as defined under the Section 2(51) of the Companies Act, 2013.

Mr Bhanu Prakash Srivastava was appointed as Additional Director [Director (Other Units)] w.e.f 20.04.2022.

Dr Binoy Kumar Das was appointed as Additional Director w.e.f 4 July 2022 in place of Ms Manjula J, who ceased to be Govt. Nominee Director w.e.f 1 May 2022.

Mr Sunil Kumar Kohli, Independent Director retired on 17 July 2022 upon completion of his tenure in the Company.

Dr. Parthasarathi P V, Mr Mansukhbhai S Khachariya, Dr. Santhoshkumar N, Mr Prafulla Kumar Choudhury, Dr. Shivnath Yadav, Mr Gokulan B, Mrs Shyama Singh, Mr Bhanu Prakash Srivastava and Dr Binoy Kumr Das, Additional Directors are being appointed as Directors on terms as set out in the Notice of the 68th Annual General Meeting.

Mr Rajasekhar M V, Director (R&D), retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.

The details of Directors and Key Managerial Personnel (KMPs) who are holding shares in the Company as on 31 March 2022 are given below:

Sl. No.

Name

Designation

No. of Equity Shares Held

1

Mrs Anandi Ramalingam

Director (Marketing)

CMD - Additional Charge Director (HR) - Additional Charge

1,263

2

Mr Vinay Kumar Katyal

Director (Bangalore Complex)

1,263

3

Mr Dinesh Kumar Batra

Director (Finance) & CFO

1,263

4

Mr Rajasekhar M V

Director (R&D)

1,263

5

Mr Sreenivas S

Company Secretary

1,263

The Company has not issued any convertible securities during the year.

Directors'' Responsibility Statement

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors, in terms of Sections 134(3)(c) & 134(5) of the Companies Act, 2013 state that:

a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

b) the Directors had selected such accounting policies and applied them consistently and made 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 March 2022 and of the profit of the Company for the year ended 31 March 2022;

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

d) the Directors have prepared the annual accounts on a going concern basis;

e) The Directors ensured proper internal financial controls were in place and such financial controls were adequate and were operating effectively; and

f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws were in place and same were adequate and operating effectively.

Integrated Report

The Company, has voluntarily provided Integrated Report, which encompasses both financial and non-financial information to enable the Members to take well informed decisions and have a better understanding of the Company''s short, medium & long term perspective. The Report also touches upon aspects such as organisation''s strategy, governance framework, performance and prospects of value creation based on the six forms of capital viz. financial capital, manufactured capital, intellectual capital, human capital, social and relationship capital and natural capital.

Significant and Material Orders

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and the Company''s operations in future.

Events Subsequent to the Date of Financial Statements

There are no material changes and commitments affecting the financial position of the Company which occurred between 31 March 2022 and date of signing of this Report.

Related Party Transactions

There were no materially significant related party transactions with the Company''s Promoters, Directors, Management or their relatives, which could have had a potential conflict with the interests of the Company. Transactions with related parties that were entered into during the financial year were on an arm''s-length basis and were in the ordinary course of business. None of the transactions with related parties fall under the scope of Section 188(1) of the Companies Act, 2013. All Related Party Transactions are placed before the Audit Committee and also to the Board for approval, if required. Members may refer to the notes to the accounts for details of related party transactions. The policy for related party transaction has been uploaded on the Company''s website www.bel-india.in. Information pursuant to Section 134(3)(h) of the Companies Act, 2013 read with rule 8(2) of the Companies (Accounts) Rules, 2014 is attached to this report as Annexure-1.

Corporate Social Responsibility

Your Company has formulated a Corporate Social Responsibility Policy pursuant to the provisions of Section 135 of the Companies Act, 2013 and the Companies (Corporate Social Responsibility) Rules, 2014 read with various

clarifications, amendments issued by Ministry of Corporate Affairs (MCA). The CSR Projects are taken up in line with the Schedule-VII of the Companies Act, 2013, which is duly incorporated in the Corporate Social Responsibility Policy and forms the guiding principle for all our CSR programs. The Corporate Social Responsibility Policy of BEL is posted on the Company''s website, www.bel-india.in.

The objective is to contribute towards inclusive growth, sustained and equitable development in society through capacity building measures, empowerment of the marginalised and underprivileged sections/communities. Focussed interventions are undertaken in the sectors of Healthcare, Education, Rural Development, Environmental Sustainability & Vocational Skill Development.

During FY 2021-22, DPE guidelines for CSR Expenditure stipulate CPSEs to take up focussed CSR interventions on the common theme of Health & Nutrition with special focus on COVID-related measures and preference being given to Aspirational Districts identified by NITI Aayog. Accordingly, CSR budget has been allocated for thematic CSR programmes - thrust being on initiatives that support the Government''s concerted efforts in dealing with the challenges arising out of the COVID-19 pandemic. The Company hones technical skills, provides industry exposure and imparts employability skills to youth from economically weaker sections of society, under Skill India.

Pursuant to the requirement under the Companies (Corporate Social Responsibility) Rules, 2014 (as amended), a report on CSR activities for the financial year 2021-22 is annexed herewith as Annexure-2.

Statutory Auditors

Pursuant to Section 139(5) of the Companies Act 2013, for the FY 2021 -22, the Comptroller and Auditor General of India (C&AG) appointed M/s Guru & Jana, Chartered Accountants, Bengaluru, as Statutory Auditors of the Company for audit of accounts of Bangalore Complex, Hyderabad unit, Chennai unit and Corporate Office. M/s Tambi & Jaipurkar, Chartered Accountants, Pune were appointed as Branch Auditors of Pune & Navi Mumbai units. M/s J P Kapur & Uberai, Chartered Accountants, New Delhi, were appointed as Branch Auditors of Ghaziabad, Panchkula and Kotdwara units. M/s P I Ramana & Associates, Chartered Accountants, Vijayawada were appointed as Branch Auditors for the Machilipatnam unit.

The Statutory Auditors'' Report on financial statements for FY 2021-22 and ''Nil'' comments of the Comptroller & Auditor General of India (C&AG) under Section 143(6)(b) of the Companies Act, 2013 on the financial statement, including consolidated financial statement, are appended to the Annual Report.

Cost Auditors and Maintenance of Cost Records

Your Company appointed M/s Murthy & Co. LLP, Cost Accountants, Bengaluru, as Cost Auditors of the Company for FY 2021-22 for the audit of the cost records of the Company. The Company maintains cost records as specified by the Central Government under Section 148(1) of the Companies Act, 2013.

Secretarial Auditors

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (as amended), the Company has appointed M/s Thirupal Gorige & Associates LLP, Practicing Company Secretaries, Bengaluru for the FY 2021-22 to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed to this report as Annexure-3.

The Secretarial Auditor in his report observer that the Board did not have requisite number of Independent Directors including woman independent director as required under 17(1)(a) & (b) of the SEBI (LODR) Regulations, 2015 and the non-compliance has been made good on 7th February 2022. Further the composition and quorum of Audit Committee, and the composition of Nomination & Remuneration Committee was not in line with Regulation 18 & 19 respectively of the SEBI (LODR) Regulations, 2015 for first three quarters of reporting period. The gap between two meetings of audit committee held in month of January 2021 and June 2021 was more than 120 days in terms of regulation 18(2).

It is informed that filling up of the vacancies of Independent Directors was pending with the appointing authorities namely Government of India. It is further informed that due to prevailing serious Covid-19 pandemic situation restrictions / lock down in the State and non-availability of Directors, the Audit Committee meeting couldn''t be conducted within 120 days from the date of previous meeting.

Reporting of Frauds by Auditors

During the year, neither the Statutory Auditor nor the Secretarial Auditor have reported to the Audit Committee under Section 143(2) of the Companies Act, 2013, any instance of fraud committed against the Company by its officers or employees, the details of which would need to be mentioned in the Board''s Report.

Annual Return

Pursuant to Section 92(3) read with Section 134(3)(a) of the Act, the Annual Return as on 31 March 2022 is available on the Company''s website: https://www.bel-india.in/ContentPage. aspx?MId=17&CId=427&LId=1&link=427

Risk Management

Pursuant to the Reg. 21 of SEBI (LODR) Regulations, 2015, the Board of Directors of the Company has constituted a Risk Management Committee. The details of Committee and its terms of reference, Risk Management Policy etc. are set out in the Corporate Governance Report and a detailed note on Risk Management is provided in the Management Discussion and Analysis Report, which forms a part of this report.

Company''s Policy on Director''s Appointment, Remuneration and Board Evaluation

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration, Board Evaluation etc. The details are set out in the Corporate Governance Report, which forms part of this report.

Vigil Mechanism/Whistle Blower Policy

The Company has a vigil mechanism named the WhistleBlower Policy to deal with instances of fraud, mismanagement and unethical behaviour, if any. The details of the policy are set out in the Corporate Governance Report.

Declaration from Independent Director(s)

The Company has received necessary declaration from Independent Director(s) of the Company under Section 149(7) of the Companies Act, 2013 and Regulation 16(1)(b) of SEBI (LODR) Regulations, 2015 that the Independent Director(s) of the Company meet with the criteria of his Independence laid down in the Companies Act, 2013 and SEBI (LODR) Regulations, 2015.

Management Discussion and Analysis Report

Management Discussion and Analysis Report required under the SEBI (LODR) Regulations, 2015 and also under the Government (DPE) Guidelines on Corporate Governance for Central Public Sector Enterprises (CPSEs), is attached to this Report as Annexure-4.

Particulars of Loans, Guarantees & Investments

In terms of Circular No. GSR 463(E) dated 5 June 2015 issued by Ministry of Corporate Affairs, Government of India, the Company being a Government Company engaged in Defence production is exempt from Section 186 of Companies Act, 2013.

Particulars of Employees and Related Disclosures

The provisions of Section 197 of the Companies Act and the relevant Rules regarding particulars of employees drawing remuneration in excess of the limits specified are exempted

for Government Company, in view of the Gazette Notification No. GSR 463 (E) dated 5 June 2015 issued by the Ministry of Corporate Affairs, Government of India.

Internal Financial Controls

The Company has in place adequate internal financial controls with reference to financial statements. A detailed note on Internal Financial Controls is provided in the Management Discussion and Analysis Report, which forms part of this report.

Audit Committee

During the year, the Audit Committee comprised of Independent Directors viz., Mr Sunil Kumar Kohli, Chairman of the Committee, Mr Prafulla Kumar Choudhury and Dr. Shivnath Yadav as its Members. During the year, all the recommendations made by the Audit Committee were accepted by the Board.

Corporate Governance Report

In terms of Regulation 34 of the SEBI (LODR) Regulations, 2015 and DPE Guidelines, a Report on Corporate Governance along with Compliance Certificate issued by the Statutory Auditors of the Company is attached with this report as Annexure-5.

Sustainability Report

A Report on your Company''s efforts on ''Sustainable Development'' is attached with this Report as Annexure-6.

Business Responsibility Report

The SEBI (LODR) Regulations, 2015 mandated the inclusion of the Business Responsibility Report (BRR) as part of the Annual Reports for the top 1,000 listed entities based on market capitalisation. In terms of Regulation 34(2)(f) of Listing Regulations, a BRR for FY 2021-22 describing the initiatives taken by the Company on environmental, social and governance perspective, in the format as specified by SEBI from time to time is attached with this report as Annexure-7.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

Your Company, being a Defence PSU, the disclosure of information with respect to conservation of energy,

technology absorption, foreign exchange earnings and outgo under the provisions of Section 134(3)(m) read with Rule 8(3) of the Companies (Accounts) Rules, 2014 (as amended) is not required as the Ministry of Corporate Affairs vide Notification GSR No.680 (E) dated 4 September 2015 has granted exemption to Defence Public Sector Undertakings.

Compliance with Secretarial Standards

The Company complies with all applicable mandatory Secretarial Standards issued by the Institute of Company Secretaries of India.

Acknowledgement

Your Directors place on record their deep appreciation and gratitude for the valuable support received from all the customers, particularly the Defence Services and the paramilitary forces and look forward to their continued support and co-operation in future. Your Directors also place on record their gratitude for the support received from the various Ministries of the Government of India, especially the Ministry of Defence, the Department of Defence Production. Your Directors express their gratitude to the Defence Research and Development Organisation (DRDO) and the various Research Laboratories under DRDO, particularly in the joint development programmes and new products. Your Directors express their sincere thanks to the Comptroller and Auditor General of India, Statutory Auditors, Branch Auditors, Cost Auditors, Secretarial Auditors, Company''s Bankers, Collaborators and Vendors. Your Directors appreciate the sincere effort by the employees at all levels, which enabled the Company to achieve the good performance during the year. Your Directors express their appreciation and gratitude to all the shareholders/investors for the trust and confidence reposed in the Company and look forward to their continued support and participation in sustaining the growth of the Company in the coming years.

For and on behalf of the Board

Anandi Ramalingam

Bengaluru Chairman & Managing Director

28 July 2022 (Additional Charge)


Mar 31, 2021

Your Directors take pleasure in presenting their Report and the Audited Financial Statements for the financial year ended 31 March 2021 together with the reports of the Statutory Auditors and the Comptroller and Auditor General of India thereon.

Financial Results and Performance Highlights

Financial results and performance highlights of the Company are summarised below:

(H in Lakh)

Particulars

2020-21

2019-20

Value of Production

13,94,749

12,34,833

Turnover

13,81,816

12,60,776

Profit Before Depreciation, Interest and Tax

3,30,722

2,83,207

Finance Cost

608

326

Depreciation & Amortisation

36,633

34,964

Profit Before Tax

2,93,481

2,47,917

Provision for Tax

86,939

68,534

Profit After Tax

2,06,542

1,79,383

Other Comprehensive Income / (Loss)

(8,709)

(3,814)

Total Comprehensive

1,97,833

1,75,569

Income

Dividend paid

1,02,337

75,534

Tax on Dividend

-

15,439

Transfer to General Reserve

40,000

40,000

Other Equity (Including Reserves & Surplus)

10,56,423

9,60,928

Net Worth

10,80,789

9,85,294

Earnings Per Share (in H)

8.48

7.36

Book Value Per Share (in H)

44.36

40.44

Distribution of Value of Production for 2020-21 is given below:

(H in Lakh)

Particulars

Amount

Percentage

Materials

7,95,715

57.05%

Employee Cost

1,94,068

13.91%

Other Expenses (Net)

74,852

5.37%

Depreciation &

36,633

2.63%

Amortisation

Provision for Tax

86,939

6.23%

Profit After Tax

2,06,542

14.81%

Total

13,94,749

100.00%

The Company''s turnover for the year 2020-21 increased to H 13,81,816 lakh from H 12,60,776 lakh in 2019-20, registering a growth of 9.6%. The Profit After Tax (PAT) for the year is H 2,06,542 lakh compared to H 1,79,383 lakh in the previous year. Turnover from indigenously developed products was 79%. Contribution for Defence supplies was at 78% of the turnover in 2020-21 compared to 82% in the previous year.

Dividend

In pursuant to Regulation 43A of the SEBI (LODR) Regulations, 2015, the Board of Directors of the Company formulated a Dividend Distribution Policy keeping in view the provisions of the SEBI (LODR) Regulations, 2015, the Companies Act, 2013, Guidelines issued by the SEBI, DPE, DIPAM, Ministry of Finance and other Guidelines to the extent applicable to the Company. The Policy is placed on the Company''s website at https://www.bel-india.in/ ContentPage.aspx?MId=17&CId=527&LId= 1&link=527

The Board of Directors has recommended a final dividend of H 1.20/- per equity share (120%), amounting to H 29,239.12 lakh for the year 2020-21. The first interim dividend of H 1.40 per equity share (140%) and the second interim dividend of H 1.40 per equity share (140%) has been paid to the shareholders for the financial year 2020-21. Thus, the total dividend for the year 2020-21 is H 4.00/-per equity share (400%), amounting to H 97,463.72 lakh.

Transfer to Reserves

An amount of H 40,000 lakh has been transferred to General Reserves for the financial year 2020-21.

Share Capital

The Company''s authorised capital was H 25,000 lakh (250,00,00,000 equity shares of H 1/- each) and paid-up share capital was H 24,366 lakh as on 31 March 2021. There was no change in the authorised/paid-up share capital of the Company during the year.

Major Orders Executed

Major Defence and non-Defence Projects executed during the year are part supply of Long Range Surface-to-Air Missile (LRSAM) System, ICU Ventilators, Integrated Air Command and Control System (IACCS), Akash Missile System, Thermal Imagers for tanks, Vehicle based Shelters network (SAMYUKTA), various Radars, AFNET performance & security enhancement & SATCOM Network, Smart City Projects, Kerala Fibre Optic Network (K-FON), upgrade of the communication system (SHAKTI PH III), Coastal Surveillance System (CSS Phase II) and the Naval Airfield Integrated Security System (NAISS).

Exports

Your Company has been focusing increasingly towards harnessing the export potential of Defence electronics products & systems, including Homeland Security Solutions, Border Protection systems and state-of-the-art systems & solutions and professional electronics to address the civilian market, which represents its core area of business.

BEL has been exporting various products and systems to foreign countries and global OEMs. Having established a healthy relationship with its current & prospective customers and based on their requirements BEL has been regularly interacting with the Ministry of External Affairs (MEA) & the Ministry of Defence (MoD) for supply of various products and systems.

BEL is also exploring civil and medical equipment market in developed, developing & third world countries, with product and solutions like Artificial Intelligence-based solutions, software development for various civilian projects, IOT Sensors, Sensor Fusion and Management Systems, Unified Data Analytics Platform System, Smart Hub, security package for VVIP areas, Smart Cities, Critical infrastructure development, solar power generation projects etc.

BEL is focusing on opportunities in the area of helping OEMs to meet offset obligations in various Request for Proposals (RFPs) of the MoD on account of the offset policy incorporated in the Defence Procurement Procedure. To this end the Company is closely working and partnering with various major foreign Aerospace and Defence Companies. BEL is also offering Proven products and systems to meet the specific requirements of customers. BEL has identified contract manufacturing (build to print and build to spec) and Transfer of Technology of the latest systems and solution as new areas of emerging export opportunities. Further, efforts are on to establish a longterm supply chain connect with global players.

BEL is focusing primarily on the various ''Make in India'' programmes. It has offered its various products and services to major Platform OEMs and their Tier I suppliers. This has helped BEL in leveraging partnerships for codevelopment, co-production and similar arrangements with various OEM''s to get the manufacturing of the products at BEL and utilization of services of BEL not only for Indian programs but also for global requirements.

Despite the Covid-19 pandemic worldwide, the Company achieved the export order acquisition of US $56.61 million during 2020-21, from various global customers viz., the US, France, Switzerland, Israel, Sweden, ASEAN countries, Mauritius and Sri Lanka. With this, the export orders as on 1 April 2021 stood at more than US$ 125 million.

The Company achieved an export sale of US $51.93 million during 2020-21, to various countries, viz., Switzerland, the US, France, Israel, Sweden, Seychelles, Maldives, Sri Lanka, ASEAN countries and the various SEZs. Major products / systems exported were Coastal Surveillance Systems Radar, Sub Systems of Radar and EW Systems, Data Link II, Cable looms, mechanical parts, communication equipment, IFF-Interrogator, Radar Finger Printing System, EOS, Power Source, Radar Spares, etc.

The increase in export sales was mainly due to the concentrated effort made by the Company and the new export initiatives taken like continuous and focused discussion with the Ministry of External Affairs & Ministry of Defence and customers, a proactive approach with the customers by offering new and complete systems and procedures, increase in the customer''s base, taking up new, customised & critical projects and delivering them on time as per the requirement of customers. More efforts were directed in support / services extended to customers to develop customised solutions and future threats and opportunities.

Initiatives taken to increase exports by development of new markets for products & services during the financial year 2020-21:

* Major initiatives taken in 2020-21

• Exim / Buyer''s Credit Project - Pursued market leads for various countries.

• Collaborated with new local partners in Kenya, Chile, Suriname, Malaysia, Nepal, Bangladesh.

• Pursued G2G opportunities in various neighbouring countries.

• Increased contract manufacturing portfolio by increasing empanelment of BEL as global supply chain partner with OEMs.

• Explored businesses in the field of turnkey

solutions based on software capabilities and

Artificial Intelligence under secure environment.

• Strategic alliance with the Indian platform

manufacturers and initiating discussions and

processes for signing agreements with major Indian platform manufacturers to create strong support within the country

• Proposed strategic alliance with foreign OEMs to address global markets by offering the best value proposition

• Efforts towards increasing participation in Government tenders in foreign countries.

BEL regularly interacts with the Ministry of External Affairs, the Indian High Commission, the Defence Attache, and MoD, India for supply of products/systems under the Line of Credit (LoC)/grants to friendly countries to India.

* Major leads in pipe line for following products and

systems offered to foreign countries / customers:

• Coastal Surveillance System

• Naval Systems and Solutions

• Radar Systems and Solutions

• Upgradation of Naval Radar and Sonars

• Contract Manufacturing

• Communication Equipment''s

• Electronic Warfare Avionics

• Solar Power Plants and Equipment''s

• Civilian and Software solutions

* The following were the scope for offset business during 2020-21:

• Data Link II

• IFF - Interrogator

• Radar Finger Printing Systems

• EoS CoMPASS

• EW & Radar Sub-Assemblies for Thales, France

• Missile Systems and Solutions

• Cable Looms

MoU with the Government

Your Company has been signing a Memorandum of Understanding (MoU) every year with the Ministry of Defence, Government of India. The MoU rating for 2019-20 and 2020-21 is under review by the Government.

Order Book Position

The order book of the Company as on 1 April 2021 is at around H 53,434 crore. The order book comprises major programmes like Long Range Surface-to-Air Missile System (LRSAM), the Akash Missile Systems, Command & Control System, Battle Field Surveillance Systems, Fire Control Systems, Software Defined Radios, Coastal Surveillance Systems, Advance Composite Communication System, Naval Systems, Electronic Warfare Suite etc.

Finance

During this year, your Company has declared a dividend of 400% compared to 280% in the previous year. Apart from the final dividend of H 34,112 lakh (140%) for the year 2019-20 which was paid out in 2020-21, the interim dividend(s) amounting to H 68,225 lakh (280%) has been paid during the year 2020-21.

To achieve the projected growth in the coming years, a focused initiative is taken up by your company in taking up some major projects, which are progressing well and the outcome from these projects should enable the Company to achieve the planned higher trajectory of turnover and growth. Despite some amount of budgetary constraints faced by customers, your Company has been able to meet all the incremental working capital requirements through internal accruals. It has retained highest rating by ICRA for both short term and long term borrowings.

The inventory position (net) of the Company as on 31 March 2021 was H 4,95,467 lakh compared to H 3,96,275

lakh as on 31 March 2020. This works out to 130 days of value of production as on 31 March 2021 against 117 days in the previous years.

The position of trade receivables (net) as on 31 March 2021 was H 6,55,154 lakh compared to H 6,73,291 lakh as on 31 March 2020. This works out to 173 days of turnover as on 31 March 2021 against 195 days of turnover achieved during the previous year. The decrease in trade receivables was mainly on account of the special efforts put in for collection of debtors during the year.

Deposits

The Company does not have any Public Deposit Scheme at present. However, the matured Public Deposit amount (collected prior to February 2006) with the Company was H 36.95 lakh as on 31 March 2021. Out of this, 34 deposits amounting to H 36.50 lakh have not been claimed or have not been paid as these accounts were frozen on the advice of the Karnataka Lokayukta. The remaining matured deposits of H 0.45 lakh as on 31 March, 2021 is unpaid due to insufficient documents/records produced by the Depositors.

Research & Development

The Company''s R&D Philosophy is to enhance its preeminence in products / services for Defence and for professional electronics through Research & Development (R&D). The Company''s R&D wing strives for development of new products built with cutting-edge technology modules. While meeting customer requirements, the products developed by the Company are state-of-the-art and competitive with the highest levels quality.

Research and Development (R&D) has been the core strength of BEL, while enhancing the efficiency and relevance of R&D through in-house and collaborative R&D modes are top priorities. Various divisions of BEL are involved in the development of Strategic Components, Technology Modules, Subsystems, Products, Systems and Systems of Systems.

BEL has a three-tier R&D structure, namely, the Central Research Laboratory (CRL), the Product Development and Innovation Centre (PD&IC) and the Development and Engineering (D&E) groups attached to the Strategic Business Units (SBUs) / Units. All the R&D centres of BEL, as certified by the Department of Scientific & Industrial Research (DSIR) are located across India; D&Es at each of the SBUs and Units are at Bengaluru, Chennai, Ghaziabad, Hyderabad, Kotdwara, Machilipatnam, Navi Mumbai, Panchkula and Pune, the PD&IC at Bengaluru

and the CRLs at Bengaluru and Ghaziabad. The R&D Labs (CRL/PD&IC/D&E) work in the identified technology and product areas, based on three-year R&D plans and after due approval of budget/time by competent authorities.

Apart from the in-house efforts, BEL R&D engineers are collaborating with DRDO, ISRO, CSIR, other research laboratories, national and international academia, research institutes, OEMs/industry, experts/consultants, MSMEs and start-ups through collaborative R&D in niche technologies. BEL has created an ecosystem to co-create products / solutions in many business segments.

The D&E groups at SBUs / Units provide Systems and System of Systems solutions to the end users. Towards this, they get necessary technology modules and subsystems developed through CRLs, PD&IC and collaborative R&D partners. They conduct all evaluations and trials needed in the process of inducting these systems into the service. They also extend technical support during the entire product life-cycle and also take care of obsolescence management.

D&E Projects Initiated During 2020-21: Several R&D projects have been initiated during the year 2020-21 both through in-house developments and collaborative efforts (mainly with the DRDO). Major projects initiated in 2020-21 are Communication ESM for Project Himasravan, Entities for Project Shatrughat and Samaghat (S&S), MultiFunction Radar for Vertical Launch Short Range Surface to Air Missile (VLSRSAM), Software Defined Radio (SDR-D, V/UHF manpack), SSPA based X-Band Doppler Weather Radar, Weapon Systems and Airborne Fire Control System for firing of Light weight Torpedoes from Helicopter.

D&E Projects Realised During 2020-21: Some of the major projects realised / completed during the year 2020-21 are Systems for Akash-NG, Compact Tracking Radar for Lynx U2 Gun Fire Control System, technology modules for Multi Target Tracking Radar, Integrated Air Command and Control System (IACCS) Batch 2, Variants of Software Defined Radios, Low profile Ku Band Satellite communication on the move (SOTM) mobile terminal, Combat Management System for P-15B class of ships, Electronic Counter Measure (ECM) Jammer MK-III and Digital Beam Former for 3D E/F Band Airport Surveillance Radar (ASR).

Important R&D awards /recognitions received during year are: the SODET Awards for the years 2018-19 and 2019-20 in the categories of Technology Innovation and Technology Development and the ''SKOCH Award 2020'' for Excellence in Digital India/Use of ICT for ''BEL e-Sammelan Tool (BEST)''.

BEL has met all the MoU parameters w.r.t R&D by timely

completion of the following:

1. Compact Tracking Radar for Lynx U2 Fire Control System

2. Train Simulator for Mumbai Monorail

3. Un-cooled Thermal Imager (UTI) for Sniper Rifle

4. Four AI enabled projects:

a. AI enabled gesture recognition for surveillance applications

b. AI enabled automatic information extraction & synthesis

c. AI based Traffic Analytics Module

d. AI enabled activity inference for enemy target using templating for air operations (C4I)

BEL R&D Cell at Kochi has realised core technology modules for sonar and simulators. BEL R&D Cell at IIT Madras Research Park is developing core technology modules for 5G communication systems.

New products developed through in-house / collaborative development efforts during the year 2020-21 are as follows:

1. Low profile Ku Band SOTM: Satellite communication on the move is a mobile terminal capable of providing satellite-based communication that supports tracking on the move to maintain the link and offers uninterrupted communication.

2. Instant Fire Detection and Suppression System (IFDSS): IFDSS is a digital system for Armoured Fighting Vehicles (AFV) to detect hydrocarbon fuel fire in the crew compartment using IR detectors, Engine compartment using linear thermal detector and automated suppression of fire, jointly developed with the DRDO.

3. Indigenous ASR-MSSR: Airport Surveillance Radar (ASR) is co-mounted with Mono-pulse Secondary Surveillance Radar (MSSR) which provides surveillance data for seamless Air Traffic Control application with location of targets and weather of interest detected within surveillance region.

4. Battle Field Surveillance Radar (Upgrade):

BFSR is lightweight, man-portable and effective against detection and tracking of crawling man, single man, group of men and small, medium

and large vehicles, upgraded for extended range, Thermal Imaging Camera integration and Artificial Intelligence based automatic classification of targets.

5. Compact Tracking Radar (CTR) for Lynx U2 GFCS: CTR is the indigenous tracking X-Band Radar with autonomous search and surface target tracking for LYNX U2 Gun Fire Control System.

6. Combat Management System for P-15B class of ships: The CMS system has enhanced features and capabilities for connecting sensors and weapon systems onboard ship (P15B class) to provide common operational and tactical picture with Navigation and Surveillance, Surface Warfare, Aircraft/Helicopter Control, AntiSubmarine Warfare, Anti Air Warfare, Electronics Warfare and Data Link Functions.

7. Anti-Submarine Warfare (ASW) Fleet functionalities for CMS-17: Anti-Submarine Warfare (ASW) fleet functionalities for CMS-17 Combat Management System developed jointly with Weapons and Electronics Systems Engineering Establishment (WESEE) and interoperable with other Ships with CMS ASW fleet.

8. Advanced Composite Communication System (ACCS) for P-17A: ACCS is an IP based highly flexible integrated communication system to provide quick and reliable communication over VLF/MF/HF/V/UHF and Satcom bands onboard ship (P17A class) for facilitating ship-to-ship, ship-to-shore and ship-to-air communications.

9. Composite Communication System (CCS) MK-

II: CCS MK-II system for submarine provides control and monitoring subsystem and associated equipment for meeting primary external communication needs on board submarines, with respect to communicating strategic commands, operation of tactical circuits, supervisory, diagnostic and other miscellaneous services.

10. Electronic Counter Measure (ECM) Jammer MK-III: Counter Radio Controlled Improvised Explosive Devices (RCIED) equipment has smart cell phone jamming techniques to protect VIP / Army convoys.

11. Digital Beam Former for 3D ASR: Programmable digital beam former for 3D Airport Surveillance Radar (E/F Band) has multi-channel processing to detect targets in elevation.

12. Variants of Software Defined Radios: Software Defined Radios supporting both voice and data operations to cater communication needs of network-centric warfare operations with different variants like SDR-Naval Combat, SDR-Manpack, SDR-Hand Held, Airborne SDR-AR, HF/VHF 100W Radio for Low Intensity Conflict Electronic Warfare system, intended for ship, shore and airborne deployments, jointly developed with DRDO.

13. Samyukta Electronic Warfare Non-Communication entities: Mobile integrated Electronic Warfare system to carry out Search, Monitoring, Analysis, Direction Finding, Location Fixing and Jamming functional operations jointly developed with the DRDO.

14. Re-engineered RAWL-02-MK-II-A Radar: The reengineered systems are RF digital hybrid receiver, compact data and processing unit, profile based Radar operation, with a compact chiller and an improved Radar Controller for RAWL-02-MK-IIA Radar.

15. IFF MK-XII(S) Interrogator: Interrogator for Identification Friend or Foe MK-XII(S) is realised for Weapon System.

16. Integrated Air Command and Control System

(IACCS): Integrated Air Command and Control System (IACCS) Batch 2 provides additional level of redundancy from Standby Node to Sub-Node in case of failure of Main Node, war gaming like functionality and simulators.

17. Panoramic Night Vision Goggles (NVG):

Light weight Aviation Goggles for surveillance application designed to enable full view of the scenario without moving head and to provide an exceptional depth perception.

18. Artillery Combat Command and Control System (Shakti) Phase III: ACCCS system automates and integrates all Artillery operational functions and provides Decision Support at all levels of artillery command, from Command down to battery/guns in a networked environment with inbuilt graded secrecy for communication.

19. Coastal Surveillance System (CSS) Phase 2: CSS

subsystems for radar stations, mobile stations and data centres, including features like decision support and record-replay are realised for the Indian Coast Guard (ICG).

20. Encryptors: Link Encryptor for Versatile Environment (LIVE) MK-II and Secure Multi Interface Link Encryptor (SMILE) MK-II are developed to secure sensitive data transmitted over high-speed Links.

21. Adaptive Traffic Control System (ATCS): System developed to monitor real time traffic conditions to improve signal timing, using Adaptive Traffic Control in smart cities, installed across the city, depending on the real time traffic condition from a central location, provides green corridor synchronisation, ambulance/VIP for free flow movement.

22. Electric Gun and Turret Drive System: The

Electric Gun and Turret drive system for Armoured Fighting Vehicles (AFV) in traverse axis and elevation axis based on brushless drive and gun stabilisation is developed to replace the hydraulic drive system.

23. Containerised Mobile Water Purification System:

Transportable containerised system to purify water having high turbidity, total dissolved solids, bacteria, virus and iron content, into product water in conformance to the BIS standards.

24. Batteries: Li-ion batteries are realised for twowheeler electric vehicles (EV), three-wheeler electric vehicles (EV) and e-Bicycles.

25. Simulator for Weapon System: Operator training system with classroom-based simulator to train Weapon System operators.

26. Train Simulator for Mumbai Monorail: Train Driving Simulator for Mumbai Monorail with complete mock-up of driver compartment with visual display system for 3D Terrain, 3D Visualisation and dashboard with real controls and indicators, Instructor Station, data for performance evaluation of trainees and record replay of exercises.

27. Motion-based Vehicle (bus) Driving Simulator:

Bus Driving Simulator with Motion Platform for Bangalore Metropolitan Transport Corporation (BMTC) with complete mock-up of bus driver cabin with controls mounted on a 6 DOF motion platform, supporting 3D Terrain and 3D Visualisation, Instructor Station, data for performance evaluation of trainees and record replay of exercises.

Future Plan of Action: Plan to scale up R&D for innovative products / services across the organisation to align with the objective of growth and transformation. All the tiers of R&D, D&Es, PD&IC and CRLs will continue to collaborate in identifying new areas of development and complementing each other in addressing the requirements through in-house developments. BEL plans to continue investing in R&D to meet the continuously emerging requirements of its customers as well as for diversification. While a major thrust would be on in-house developments, collaborations with national laboratories, academic institutions, research institutes, industry and the MSMEs will also continue to be strengthened. Focussed technology/product development efforts have been initiated in diversified areas of arms and ammunition, unmanned systems, medical electronics, metro railways, GaN devices, etc. Special emphasis is being laid on AI with targets for specific projects being set and completed every year.

New Facilities Established

Infrastructure enhancement is one of the major objectives of the Company to stay upgraded for global opportunities and to be the best in the business. During the year 2020-21, the Company spent around H 48,000 lakh as part of its capex investment towards modernisation of plant & machinery, test instruments, R&D investments, infrastructure upgradation etc.

Following are some of the major facilities established during 2020-21:

• Advance Torpedo Decoy System (ATDS) Maareech Integration Facility, Bangalore

• Upgradation of Product Development & Innovation Centre (PDIC), Bangalore.

Information Technology (IT) Initiatives:

In SAP various new processes have been introduced for the automation and digitisation. SAP FLM access was not available in all remote offices. CRM file management system is a simplified system to create and approve the files using internet system. For remote offices access is provided for Employee Self Service (ESS).

Asset tracking through the Radio Frequency Identification (RFID) technology has been introduced for tracking existing assets as well as new assets. The process has been integrated with SAP. RFID Tags are generated and affixed physically on all the assets.

Various Cyber Security initiatives are taken like Two-factor authentication using randomly generated Grid Pin has been introduced for internet emails for users logging in from outside BEL premises. This offers protection against hacking of passwords and data leakage while in transit. VAPT for both intranet and internet data centres have been completed. Far-DR for SRM has been setup for e-procurement systems.

Annual Financial statement is being generated from SAP directly from the financial year 2019-20 onwards.

Quality

Quality, technology, innovation are the three guiding pillars of BEL''s business initiatives. The Company is committed to the continual improvement through a process approach in line with World-Class Quality Systems. All Units / Strategic Business Units (SBUs) / Common Services Groups (CSGs) are accredited to the ISO 9001 Quality Management System (QMS). Sixteen Units / SBUs of the company have upgraded their QMS to Aerospace Standard, AS 9100D. All units of the Company are committed to the Environment Management System through ISO 14001 Certification. The Ghaziabad unit has upgraded its OHSAS from ISO 18001 to ISO 45001.

Nine units/SBUs/divisions of the Company are certified for Information Security Management System ISMS ISO 27001. Product Development and Innovation Centre (PD&IC) is certified for AS9100D, and Center for Learning and Development (CLD) is certified for ISO 9001:2015 for the first time. During the year SC & US SBU was upgraded from ISO 9001 to AS9100D, and PD&IC received the first ISMS ISO 27001 certificate. Export Manufacturing (EM) SBU received the ISO 13485 Medical Devices QMS certificate for ICU Ventilators and the Ghaziabad unit has upgraded its OHSAS certificate from ISO 18001 to ISO 45001. Test Equipment Calibration and Maintenance departments of Bangalore Complex, Ghaziabad, Panchkula and Navi Mumbai units are certified by NABL in accordance with the ISO / IEC 17025 Standards. Software SBU is certified for CMMi level 5 and also for ITSMS ISO 20000-1. NCS & DCCS SBUs of Ghaziabad, CRL - Ghaziabad, Chennai, Hyderabad units are certified for the CMMi level 3.

Remarkable achievement of the company in this year is moving from 1 SBU, 1 Product Green Channel Certificate to 41 Products, 12 Certificates covering 10 units/SBUs. The European Foundation of Quality Management (EFQM) Model for Business Excellence is being followed in BEL since 2002. BEL has drawn up a roadmap for the deep drive of the new EFQM Model 2019 and identified units for the challenging CII Exim Award.

During the year, 20 senior executives from various units have been trained as ''Six Sigma Black Belts'' by the Indian Statistical Institute, Bangalore. Total 535 Six Sigma Projects have been completed during the year 2020-21, resulting in an estimated savings of H176 crore to the company. Out of the 30 Six Sigma projects nominated for Regional/National level competitions, 15 received regional level awards and 15 projects received National Level Championships Awards.

The Company has facilitated the involvement of Nonexecutives in the Quality Movement through Quality Control Circles (QCC). During the year 2020-21,781 QCC Presentations are made by various QCC teams. Many QCC teams are nominated for national competitions and all are adjudged for various categories of awards. One QCC Team KARANJA from Milcom SBU of Bangalore Complex represented BEL in the International Convention ICQCC 2020, held at Dhaka, Bangladesh virtually, and won the ''Platinum Award''. Around 4464 suggestions have been are awarded in the financial year 2020-21. Selected employees participated in the 31st National Convention conducted by the Indian National Suggestion Schemes'' Association (INSSAN).

During the year, Bangalore Complex received the 1st Prize under the Engineering Industry Category in ''Excellence in Suggestion Scheme contest 2019-20'' organised by INSSAN.

The Company has been nominated D&E Engineers for Global Certification on Reliability ''Certified Reliability Engineer (CRE)'' certification by the American Society for Quality (ASQ). During the year, 45 D&E and Testing Engineers have been certified as CREs. The Company is also nominated D&E Engineers for Design for Six Sigma Green Belt (DFSS-GB) certification by the Indian Statistical Institute. During the year 69 D&E Engineers were certified as ''DFSS Green Belts''. During the year, 24 mid-level and senior executives were trained on ''Business Analytics & Data Management'' by the Indian Statistical Institute, Bengaluru.

The Company has been nominated Software Engineers for Global Certification on ''Certified Software Quality Engineer (CSQE)'' conducted by the ASQ, and during the year, 18 engineers were certified as CSQEs. During the year, 39 operating level Quality Engineers were certified as ''Certified Quality Engineers (CQE)'' by the ASQ.

The Company has also nominated Executives working in supply chain fields, like Purchase, Subcontract, Production control for the Global Certification on "Certified Supplier Quality Professional (CSQP)" by ASQ, and during the year, 8 Executives are certified as CSQP. Certified Manager for

Quality and Organisation Excellence (CMQ&OE) by ASQ for senior level executives, is also conducted during the year and 13 Senior executives are certified as CMQ-OE.

MR-SBU of Bangalore Complex won the First Prize, Kotdwara and Panchkula units won the second and the third prizes respectively in the Internal Quality Recognition Award (QRA) 2020.

In order to inculcate a culture of Project Management, training programmes for Project Management Professionals (PMP) are conducted. During the year 99 PMPs are certified by the Project Management Institute (PMI).

This year the Company has conducted the Integrated Customer Satisfaction Survey and captured the holistic perceptions of external customers, right from the ordering phase through execution and the end-user phase with PDCA approach. Questionnaires for the three phases are developed and distributed and customer feedback are received and analysed by external surveying agency, using various analytical techniques. The Company received the Excellence Customer Satisfaction Index of 82.66% with a net promoter score of 51.98, which is commendable in comparison to benchmark companies.

Human Resources

Your Company employed 9,172 people as on 31 March 2021 compared to 9,279 people as on 31 March 2020. Out of these employees, 4,841 were engineers / scientists and 2,001 were women employees. A total of 245 employees were inducted during the year. 38 employees belonging to the Scheduled Caste (SC), 22 employees belonging to the Scheduled Tribes (ST), 67 employees from the Other Backward Classes (OBC) and 21 employees from the minority community were recruited during the year.

Your Company has been complying with the Government directives on reservation. The particulars of SC/ST and other categories of employees as on 31 March 2021 are as under:

Category of Employees

Executives

Non- Executives

Group

''A''

Group

''B''

Group

''C''

Group

''D''

Scheduled Caste

1,060

30

538

25

Scheduled Tribe

368

11

130

17

OBC

1343

39

765

30

Ex-Servicemen

84

-

271

26

Physically

Challenged

93

5

110

2

Various training programmes were conducted during the year to enhance competencies in Technical, Functional, Managerial and Leadership areas. Structured Executive Development Programmes were conducted regularly with premier institutes to meet the evolving training needs of executives as they progress through various grades. A detailed write-up on HR initiatives during the year is provided separately in the Management Discussion and Analysis Report, which forms a part of this report.

Disclosure under Sexual harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company is an equal opportunity employer and consciously strives to build a work culture that promotes dignity of all employees. As required under the provisions of the Sexual Harassment of Woman at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules framed there-under, the Company has implemented the policy on prevention, prohibition and redressal of sexual harassment at the workplace, which has been uploaded on the Company''s intranet portal. All women, permanent, temporary or contractual, including those of the service providers, are covered under the Policy.

An Internal Complaints Committee has been constituted in each of the nine constituent units, including the corporate office to redress complaints relating to sexual harassment. Awareness programmes were conducted across the Company to sensitise employees and uphold the dignity of their colleagues at the workplace, particularly with respect to prevention of sexual harassment. The details of the complaints filed, disposed of and pending during the year pertaining to sexual harassment are provided in the Business Responsibility Report, which forms a part of this report.

Awards and Accolades

Your Company strives to achieve the highest level of quality in all its products by considering consumer insights and by reaching out to consumers. During the year, your Company has received the following various Awards and Accolades:

• Times Ascent''s CEO with HR Orientation Award

• International Aerospace Award

• PSE Excellence Award

• The Policy Times'' appreciation Award

• SKOCH Award for e-Sammelan Tool

• SKOCH Award for Indigenisation

Other Significant Achievements During the Year:

• BEL has achieved the highest ever turnover in excess of H13,500 crore during the financial year 2020-21 despite the ongoing crisis due to Covid-19 pandemic.

• BEL registered a growth of 9.6% over the previous year''s turnover.

• BEL has achieved an export turnover of US$ 51.93 million (Major items: Coastal Surveillance System, Communication Equipments, Data Link, IFF-Interrogator, Radar Finger Printing System, TR Modules, Low Band Receiver LRUs etc.)

• H1 5,000 crore worth orders received (major orders include AFNET Performance & Security Enhancement & SATCOM Network, Ventilators including Services, Naval Fire Control System, Software Defined Radio, Advance Torpedo Defence Systems, Digital Mobile Radio Relay etc.)

• Strategic partnerships signed with global players like Beretta Italy, Atlantis South Africa, Rosonboron Export, Russia and Okaya Powertec in the international segment to address the new business opportunities.

• Strategic partnerships with DMRCL, the Airports Authority of India, Texmaco, BPL, IIT Dharwad, the Tamil Nadu Industrial Explosives Ltd (TEL), and several start-ups in the domestic segment towards development of various technologies/products to address business opportunities arising out of the ''Make in India'' initiatives of GoI.

• BEL Hall of Electronics was set up at Visvesvaraya Industrial and Technological Museum, Kasturba Road, Bangalore. Exhibits were created as a part of enhancing awareness amongst the student community and the society on Basic Electronics, Digital Electronics and Communications, Electronics in Defence, Imaging Technology and Telemedicine, Virtual Reality, Internet and Milestones in Electronics. The existing infrastructure at the museum is being upgraded as a CSR activity for exhibits showcasing the emerging sciences, technologies and engineering.

Subsidiaries, Joint Ventures and Associates

BEL Optronic Devices Limited (BELOP) is a wholly owned subsidiary of BEL, which manufactures Image Intensifier Tubes. Your Company has made further investment of H 156.58 lakh (64,438 equity shares of H 100/- each at a premium of H 143/- per share) during the year in the equity shares of BELOP, by subscribing to right issue offered by BELOP. BELOP achieved a turnover of H 4,075 lakh for the

year compared to H 3,721 lakh in the previous year. The Profit After Tax (PAT) for the year was H 490 lakh compared to H 301 lakh in the previous year.

BEL-THALES Systems Limited (BTSL), a subsidiary, was formed for design, development, marketing, supply and support of civilian and select Defence radars for Indian and global markets. Your Company holds 74% of the equity capital in BTSL. During the year BTSL recorded a turnover of H 3,538 lakh compared to H 4,056 lakh in the previous year. The Profit After Tax (PAT) for the year was H 315 lakh compared to H 334 lakh in the previous year.

The Associate Company GE BE Private Limited [26% shareholding by BEL] continues to perform well. It manufactures CT Max and other latest version X-Ray Tubes. GE BE Pvt. Ltd. recorded a turnover of H 1,22,850 lakh for the year compared to H 1,17,685 lakh in the previous year. The Profit After Tax (PAT) was H 11,673 lakh for the year compared to H 12,369 lakh in the previous year.

The Defence Innovation Organisation (DIO) is a ''Not for Profit'' Company as per the provisions of Section - 8 of the Companies Act, 2013 with an authorised share capital of H 1 crore. With an equity participation of 50% from BEL and 50% from HAL, the Company was formed with an objective of funding innovation in the Defence sector.

In pursuant to provisions of Section 1 29(3) of the Companies Act, read with Rule 5 of Companies (Accounts) Rules, 2014 (as amended), a separate statement containing the salient features of the financial statement of Subsidiaries/ Associate/ Joint Ventures in Form AOC-1 is appended to the Financial Statements.

Further, pursuant to the provisions of Section 136 of the Act, the financial statements of the Company, consolidated financial statements along with relevant documents and separate audited financial statements in respect of subsidiaries, are available on the website of the Company www.bel-india.in.

Consolidated Financial Statements

Consolidated Financial Statements of your Company and its Subsidiaries for the year ended 31 March 2021 have been prepared in accordance with the provisions of Section 129(3) of the Companies Act & applicable Indian Accounting Standards and forms part of this report.

Vigilance

The Company''s Vigilance Organisation is headed by a Chief Vigilance Officer (CVO), an IAS Officer from the Haryana Cadre (1991 batch). Permanent Vigilance Officers

are posted in each of the units and SBUs. Vigilance Committees are formed to look after the Vigilance Administration in the units and SBUs. The unit/SBU Heads are designated as Chairman of the Vigilance Committee. Apart from this, there is also a Vigilance Committee at the Corporate, where Chairman and Managing Director is the Chairman of the Committee and the CVO is the Member Secretary. Preventive Vigilance has been the thrust area of the Vigilance department and the same received focused attention during the current year. The Vigilance Department examines procurements and processes on a continual basis, conducts regular and surprise inspections and investigates instances of any suspected transactions referred to it. An employee or third party can refer any suspected transaction to the CVO for investigation, which are examined as per the Complaint Handling Policy of the Company. An online Complaint Management System has been made operational and complaints can be filed through the Vigilance Portal on the BEL website.

During the year, 1779 high value purchase orders/ contracts have been reviewed. A CTE Type Intensive Examination has been restructured with the formation of Eleven Intensive Examination teams. The CTE Type of Intensive Examination of 61 high value procurement contracts has been taken up during the year 2020-21. Regular and surprise checks and inspections have also been conducted by the field Vigilance Officers. During the year, 26 complaints, including complaints referred by the CVC/MOD/CBI were received. A total of 35 complaints, including 5 complaints referred by CVC/MOD/CBI were disposed of. Disciplinary action and system/process improvement has been recommended in some cases where lapses were observed. One complaint, which was referred earlier, has been pending with the CBI, Bangalore for detailed investigation.

During the year, 850 Executives and 82 Non-executives were given basic awareness program on Vigilance. 166 Executives and 37 Non-executives working in sensitive areas for more than 3 years have undergone job rotation and the percentage coverage is 92.3%.

The Vigilance Department continues to be certified for ISO 9001/2015 Certification for the vigilance function of BEL. In line with the CVC''s guidelines on leveraging technology and to ensure transparency through effective use of technology, the following functions have been made operational through SAP and the Company''s website:

• E-Procurement - about 96.06% of the procurements, excluding the ToT procurement, long term rate contracts and repeat orders are covered under the e-procurement mode.

• Online registration of Vendors.

• Vendor Payment Information System.

• E-Payment/bank transfer of payment to vendors.

• Details of awarded contracts / purchase orders valuing more than H 10 lakh in respect of works contracts, service contracts, capital items and non-production items are posted on the website.

• Details of awarded Contracts/Purchase Orders issued on nomination / single tender basis value exceeding H5 lakh are posted on the website.

• Purchase and Works Contract Manuals are revised and posted on the BEL website.

• The Complaint Handling Policy and the Whistle Blower Policy are posted on the website.

• Corruption Risk Management Policy is framed and implemented across the Company. The same is posted on the web site.

• Vendors'' Directory is posted on the Company''s website.

• File Life Cycle Management System (FLM) is fully implemented across the company.

• On line filing of APRs is facilitated in SAP for all the Executives and the Executives have been filing the APRs in SAP.

• Vigilance Monthly and Quarterly Reports are generated through SAP

• Vigilance clearance is accorded through the dedicated Vigilance portal in SAP.

Vigilance setup in BEL has been continuously endeavoring to bring in transparency, fairness and equality in all transactions and processes of the Company by creating a sense of awareness on the system and procedures through awareness campaigns and training programmes. Some of the key activities that have been carried out during the year are:

a) Bharat Electronics Limited (BEL) has observed Vigilance Awareness Week with the theme ''Vigilant India, Prosperous India'' from 27 October 2020 to 2 November 2020 at all its offices across the country by adhering to all the precautionary measures to contain the spread of Covid-19. In the given current situation various awareness programmes and activities were held to keep the spirit of celebrating the Vigilance Awareness Week.

Due to the pandemic, online lecture programmes, online competitions and other activities were held through video conferencing.

E-Pledge was facilitated through the BEL intranet, enabling employees to take the E-Pledge. Certificate of appreciation and commitment, issued by CVO/ BEL was downloadable by the employees who have taken the E-Pledge through the BEL intranet. 1940 employees have taken e-pledge.

Integrity pledge was administered to around 8000 employees in their respective workplaces across all the units.

Apart from this, employees were provided with a link to the CVC website to take the E-Pledge from the CVC website. SMS on Vigilance Awareness was sent to 14367 active vendors of BEL during the week.

b) Programme on Preventive Vigilance as part of the Mid-Career Training programme was organised at the BEL BAE Academy for Excellence on 22.12.2020. Shri Sanjay Sahay, IPS gave lecture on ''Preventive Vigilance'' and 63 officers from different units/SBUs participated.

Integrity Pact

One of the initiatives of the Central Vigilance Commission (CVC), to eradicate corruption in procurement activity, is introduction of the Integrity Pact in large value contracts with Government Organisations. In line with the directives from the Ministry of Defence and the Central Vigilance Commission, your Company has adopted the Integrity Pact with all vendors / suppliers / contractors / service providers for all orders / contracts of value H 300 lakh and above. The Integrity Pact essentially envisages an agreement between the prospective vendors / bidders and the principal (BEL), committing the persons / officials of both sides, not to resort to any corrupt practices in any aspect / stage of the contract. Only those vendors/ bidders, who commit themselves to such a Pact with the principal, would be considered competent to participate in the bidding process. The Integrity Pact, in respect of a particular contract, would be operative from the stage of invitation of bids till the final completion of the contract. Any violation of the same would entail disqualification of the bidders and exclusion from future business dealings.

As recommended by the CVC, the Company has appointed Mr Girish Chandra Chaturvedi, IAS (Retd.) and Dr Parvez Hayat, IAS (Retd.) for monitoring and implementation of the Integrity Pact in the Company. During the financial year 2020-21 the Independent External Monitors (IEMs) reviewed 199 contracts and held three structured meetings with the Chairman & Managing Director.

Procurement from Micro & Small Enterprises (MSEs)

Your Company has been providing an increased thrust on enhancing procurement from Micro & Small Enterprises (MSE) and is implementing the Public Procurement Policy for MSEs as per the guidelines / notification issued by the Ministry of MSMEs. During 2020-21, BEL complied with the mandate of the Government''s Public Procurement Policy for MSEs.

BEL has on-boarded on the TReDS Platform, GeM, MSME Sambandh & MSME Samadhaan Portals complying with the Government guidelines. The Company actively participated in various Vendor Development Programmes held across the country. BEL has showcased various items for indigenisation for domestic vendors, including the MSEs on the MoD''s Srijan Portal.

BEL''s procurement from MSEs is 35% of total domestic procurement during 2020-21 against a mandatory target of 25% as per the Public Procurement Policy for MSEs.

Implementation of Official Language Policy

Your Company is committed to adhere to the Official Language (OL) policy of the Government of India. During 2020-21, despite COVID pandemic challenges, the Company achieved various targets prescribed in the Annual Programme issued by the Dept. of OL, Ministry of Home Affairs (MHA), GoI to transact on official work in Hindi. The efforts made towards implementation of the Official Languages include:

OL Inspections: Committee of Parliament on Official Language conducted OL inspection of RO Delhi on 04.09.2020 and CRL-Ghaziabad on 14.10.2020. Corporate OL audit team conducted 05 OL inspections of its subordinate Units/Offices.

Bilingualisation: All units and offices of the Company including the Corporate Office, are issuing documents in bilingual as per the Section 3(3) of the Official Languages Act, 1963. Usage of Hindi is being encouraged for correspondence and on computers. Individual orders under OL Rule 10 (4) were issued by the CMD to officers/ employees who are proficient in Hindi to do their complete work in Hindi. Also, a circular on creation of Check Points under Rule 12(1) of OL Rules was issued.

Computerisation and Website: Updated information pertaining to OL is being communicated through the OL Portal GARIMA introduced by the OL Dept. of Corporate Office. Quarterly progress reports from units/offices are being received online in SAP. Hindi notings are being written in File Life-cycle Management (FLM). The Company''s website is also available in Hindi.

Training and Reporting: A roster is maintained for Hindi language training and computer training, which is updated from time to time. As per the roster, employees were nominated for online training. Quarterly / half yearly reports are sent to the OL Dept., MHA, GoI, MoD, Hindi Teaching Scheme and Town Official Language Implementation Committee (TOLIC) as per schedule.

Hindi Month Celebrations: Hindi Month and Hindi Day were observed during September in all the units and offices of the Company through the online mode.

Meetings/Workshops: Official Language Implementation Committee (OLIC) meetings, Hindi workshops and technical talks in Hindi were conducted through online mode in all units / offices.

Incentives and Awards: Incentive schemes are propagated among all employees and those who took part in these schemes were awarded with a cash prize. Employees have participated in the TOLIC competitions and won prizes.

The Company won the ''Rajshabha Kirti'' (2nd) Award for 2019-20 and the ''Rajbhasha Gaurav'' (2nd) Award for 201819 by the Dept. of OL, MHA. The Secretary (OL) bestowed a commendation letter for participation in the All-India Online Translation Competition ''Kanthasth''.

Publications: e-Maganizes were published in units / corporate office of the Company to propagate the usage of Hindi.

New Initiatives: A dedicated section for OL has been introduced in the Company''s website.

Efforts are in progress to ensure OL implementation and the usage of Hindi across the Company.

Implementation of Right to Information Act, 2005

In consonance with the provisions of the Right to Information Act, 2005 (the Act), Your Company has a well-defined mechanism in place to address the provisions of the Act. Your Company has a designated General Manager level officer as a Nodal Officer to oversee the implementation. The requests received are processed by 15 senior personnel, designated as Central Public Information Officers (CPIOs) including the one at the corporate office and one each at the units/ROs. Your Company has a designated General Manager level officer as a First Appellate Authority to dispose of first appeals filed under the Act. In compliance with Government directives, Your Company is successfully processing the applications under the Act, online.

The information to be provided as per Section 4(1) (b) of the Right to Information Act, 2005 has been posted on the Company''s website www.bel-india.in

The FAA, CPIOs and other internal stakeholders involved are sensitised about their obligations under the Act through training and workshops.

Your Company received 313 applications (including 71 transferred by other Public Authorities to BEL) during the period from April 2020 to March 2021, and 10 RTI applications were carried forward from year 2019-20. A total of 290 applications were responded to, including 41 applications that were rejected, out of a total of 323

applications. Your Company received 92 First Appeals during the period, out of which 88 were disposed-off. Quarterly RTI returns for all the four (4) quarters have been submitted to the Central Information Commission.

Meetings of Board and Committee(s)

During the year, nine Board meetings were held and the maximum interval between any two meetings was not more than 120 days. The details of meetings of Board and Committee(s) held during 2020-21 are furnished in the Corporate Governance Report, which forms a part of this report.

Directors & Key Managerial Personnel and their Shareholding

The following changes took place in the Directorate and Key Managerial Personnel of your Company during the financial year:

Sl.

No.

Name of the Director

Designation

Date of Appointment

Date of Cessation

1

Mr Koshy Alexander

Director (Finance) & CFO

Not Applicable

31.07.2020

2

Mr Dinesh Kumar Batra

Director (Finance) & CFO

01.08.2020

Not Applicable

3

Mr Mahesh V

Director (R&D)

Not Applicable

31.08.2020

4

Mr Rajasekhar M V

Director (R&D)

01.09.2020

Not Applicable

5

Mr Mukha Harish Babu

Independent Director

Not Applicable

10.09.2020

6

Mr Surendra S Sirohi

Independent Director

Not Applicable

10.09.2020

7

Dr Vijay S Madan

Independent Director

Not Applicable

10.09.2020

8

Dr Amit Sahai

Govt. Nominee Director

Not Applicable

29.10.2020

9

Mr Anurag Baipai

Govt. Nominee Director

29.10.2020

Not Applicable

Mr M V Gowtama, Chairman & Managing Director, Mr Dinesh Kumar Batra, Director (Finance) and Chief Financial Officer and Mr S Sreenivas, Company Secretary are the KMPs as on 31 March 2021, as defined under the Section 2(51) of the Companies Act, 2013.

Mr Anurag Bajpai, Govt. Nominee Director was appointed as Additional Director w.e.f 29 October 2020 in place of Dr Amit Sahai, who ceased to be Govt. Nominee Director on 29 October 2020. Mr Anurag Bajpai, Additional Director is being appointed as Director on terms as set out in the Notice of the 67th Annual General Meeting.

Mr. Vinay Kumar Katyal, Director (Bangalore Complex), retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.

Mrs Shikha Gupta, Director (Other Units) ceased to be Director w.e.f 7 May 2021. Mr M V Gowtama, Chairman & Managing Director superannuated on 30 June 2021.

The Govt. of India vide its letter no.DDP-E0032/2/2020-D (BEL) dated 9 June 2021 and letter no.DDP-E0032/4/2020-D (BEL) dated 11 June 2021 assigned the additional charge for the post of Chairman and Managing Director and the post of Director (Other Units) respectively to Mrs Anandi Ramalingam, Director (Marketing) w.e.f 1 July 2021.

The details of Directors and Key Managerial Personnel (KMPs) who are holding shares in the Company as on 31 March 2021 are given below:

Sl. No.

Name

Designation

No. of Equity Shares Held

3

Mr Vinay Kumar Katyal

Director ( Bangalore Complex)

1,263

4

Mr Shivakumaran K M

Director (HR)

1,263

5

Mr Dinesh Kumar Batra

Director (Finance) & CFO

1,263

6

Mr M V Rajasekhar

Director (R&D)

1,263

7

Mr S Sreenivas

Company Secretary

1,263

The Com

pany has not issued any convertible securities during the year.

Directors'' Responsibility Statement

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors, in terms of Sections 134(3)(c) & 134(5) of the Companies Act, 2013 state that:

a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

b) the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as at 31 March 2021 and of the profit of the Company for the year ended 31 March 2021;

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

d) the Directors have prepared the annual accounts on a going concern basis;

e) proper internal financial controls were in place and such financial controls were adequate and were operating effectively; and

f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws were in place and same were adequate and operating effectively.

Significant and Material Orders

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and the Company''s operations in future.

Events Subsequent to the Date of Financial Statements

There are no material changes and commitments affecting the financial position of the Company which occurred between 31 March 2021 and date of signing of this Report.

Related Party Transactions

There were no materially significant related party transactions with the Company''s Promoters, Directors, Management or their relatives, which could have had a potential conflict with the interests of the Company. Transactions with related parties that were entered into during the financial year were on an arm''s length basis and were in the ordinary course of business. None of the transactions with related parties fall under the scope of Section 188(1) of the Companies Act, 2013. All Related Party Transactions are placed before the Audit Committee and also to the Board for approval, if required. Members may refer to the notes to the accounts for details of related party transactions. The policy for related party transaction has been uploaded on the Company''s website www.bel-india.in. Information pursuant to Section 134(3) (h) of the Companies Act, 2013 read with rule 8(2) of the Companies (Accounts) Rules, 2014 is attached to this report as Annexure-1.

Corporate Social Responsibility

Your Company has formulated a Corporate Social Responsibility Policy pursuant to the provisions of Section 135 of the Companies Act, 2013 and the Companies (Corporate Social Responsibility) Rules, 2014 read with various clarifications, amendments issued by the Ministry of Corporate Affairs (MCA). The CSR Programmes / Initiatives / Projects are taken up in line with the Schedule-VII of the Companies Act, 2013, which is duly incorporated in the Corporate Social Responsibility Policy and forms the guiding principle for all our programmes. The Corporate Social Responsibility Policy of BEL is

posted on the Company''s website, www.bel-india.in. For other details regarding the CSR Committee, including its composition, please refer to the Corporate Governance Report, which is a part of this report.

The objective of CSR is to contribute towards inclusive growth, sustained and equitable development in society through capacity building measures, empowerment of the marginalised and underprivileged sections/communities. Focused interventions are undertaken in the sectors of healthcare, education, rural development, environmental sustainability & vocational skill development.

During the financial year 2020-21, the DPE guidelines for CSR Expenditure stipulate CPSEs to take up focused CSR interventions on the common theme of Health and Nutrition, with preference to Aspirational Districts identified by the NITI Aayog. Accordingly, the CSR budget has been allocated for thematic CSR programmes - thrust being on initiatives that support the Government''s concerted efforts in dealing with the challenges arising out of the Covid-19 pandemic. Further, CSR projects that impart technical & employability skill training to the rural youth from economically weaker sections of society are being implemented under Skill India.

Pursuant to the requirement under the Companies (Corporate Social Responsibility) Rules, 2014 (as amended), a report on CSR activities for the financial year 2020-21 is annexed herewith as Annexure-2.

Statutory Auditors

Pursuant to Section 139(5) of the Companies Act 2013, for the financial year 2020-21, the Comptroller and Auditor General of India (C&AG) appointed M/s SURI & CO., Chartered Accountants, Bengaluru, as Statutory Auditors of the Company for audit of accounts of Bangalore Complex, Hyderabad unit, Chennai unit and Corporate Office. M/s Tambi & Jaipurkar, Chartered Accountants, Pune were appointed as Branch Auditors of Pune & Navi Mumbai units. M/s J P Kapur & Uberai, Chartered Accountants, New Delhi, were appointed as Branch Auditors of Ghaziabad, Panchkula and Kotdwara units. M/s Piramana & Associates, Chartered Accountants, Vijayawada were appointed as Branch Auditors for the Machilipatnam unit.

The Statutory Auditors'' Report on financial statements for the financial year 2020-21 and ''Nil'' comments of the Comptroller & Auditor General of India (C&AG) under Section 143(6)(b) of the Companies Act, 2013 on the financial statement, including consolidated financial statement, are appended to the Annual Report.

Cost Auditors and Maintenance of Cost Records

Your Company appointed M/s Murthy & Co. LLP, Cost Accountants, Bengaluru, as Cost Auditors of the Company for the financial year 2020-21 for the audit of the cost records of the Company. The Company maintains cost records as specified by the Central Government under Section 148(1) of the Companies Act, 2013, in respect of its manufacturing activities.

Secretarial Auditors

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (as amended), the Company has appointed M/s Thirupal Gorige & Associates LLP, Practicing Company Secretaries, Bengaluru for the financial year 2020-21 to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed to this report as Annexure-3.

The Secretarial Auditor in his Report observed that the Company is yet to appoint the adequate number of Independent Directors, including one Woman Independent Director as per the requirements of the SEBI (LODR) Regulations, 2015 and the composition of the Audit Committee, Nomination & Remuneration Committee & Stakeholders Relationship Committee is not in line with Regulation 18, 19 & 20 respectively of the SEBI (LODR) Regulations, 2015 (the Stakeholder Relationship Committee was reconstituted on 31 March 2021 in line with Reg.20 of the SEBI (LODR) Regulations, 2015). It is informed that the appointment of Directors is done by the Govt. of India and filling up of vacancies of the said Independent Directors is also pending with the appointing authority, namely the Government of India.

Reporting of Frauds by Auditors

During the year, neither the Statutory Auditor nor the Secretarial Auditor have reported to the Audit Committee under Section 143(2) of the Companies Act, 2013, any instance of fraud committed against the Company by its officers or employees, the details of which would need to be mentioned in the Board''s Report.

Annual Return

Pursuant to Section 92(3) read with Section 134(3)(a) of the Act, the Annual Return as on March 31, 2021 is available on the Company''s website https://www.bel-india.in/ ContentPage.aspx?MId=17&CId=427&LId=1&link=427.

Risk Management

Pursuant to the Reg.21 of SEBI (LODR) Regulations, 2015, the Board of Directors of the Company has constituted a Risk Management Committee. The details of Committee and its terms of reference, Risk Management Policy etc. are set out in the Corporate Governance Report and a detailed note on Risk Management is provided in the Management Discussion and Analysis Report, which forms a part of this report.

Company''s Policy on Director''s Appointment, Remuneration and Board Evaluation

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration, Board Evaluation etc. The details are set out in the Corporate Governance Report, which forms part of this report.

Vigil Mechanism / Whistle Blower Policy

The Company has a vigil mechanism named as Whistle-Blower Policy to deal with instances of fraud, mismanagement and unethical behaviour, if any. The details of the policy are set out in the Corporate Governance Report.

Declaration from Independent Director(s)

The Company has received necessary declaration from Independent Director(s) of the Company under Section 149(7) of the Companies Act, 2013 and Regulation 16(1) (b) of SEBI (LODR) Regulations, 2015 that the Independent Director(s) of the Company meet with the criteria of his Independence laid down in the Companies Act, 2013 and SEBI (LODR) Regulations, 2015.

Management Discussion and Analysis Report

Management Discussion and Analysis Report required under the SEBI (LODR) Regulations, 2015 and also under the Government (DPE) Guidelines on Corporate Governance for Central Public Sector Enterprises (CPSEs), is attached to this Report as Annexure-4.

Particulars of Loans, Guarantees & Investments

In terms of Circular No. GSR 463(E) dated 5 June 2015 issued by Ministry of Corporate Affairs, Government of India, the Company being a Government Company engaged in Defence production is exempt from Section 186 of Companies Act, 2013.

Particulars of Employees and Related Disclosures

The provisions of Section 197 of the Companies Act and the relevant Rules regarding particulars of employees drawing remuneration in excess of the limits specified are exempted for Government Company, in view of the Gazette Notification No. GSR 463 (E) dated 5 June 2015 issued by the Ministry of Corporate Affairs, Government of India.

Internal Financial Controls

The Company has in place adequate internal financial controls with reference to financial statements. A detailed note on Internal Financial Controls is provided in the Management Discussion and Analysis Report, which forms part of this report.

Audit Committee

As on 31 March 2021, the Audit Committee comprises of Mr Sunil Kumar Kohli, Independent Director as Chairman of the Committee, Ms Manjula J and Mr Anurag Bajpai as members. During the year, all the recommendations made by the Audit Committee were accepted by the Board.

Corporate Governance Report

In terms of Regulation 34 of the SEBI (LODR) Regulations, 2015 and DPE Guidelines, a Report on Corporate Governance along with Compliance Certificate issued by the Statutory Auditors of the Company is attached with this report as Annexure-5.

Sustainability Report

A Report on your Company''s efforts on ''Sustainable Development'' is attached with this Report as Annexure-6.

Business Responsibility Report

The SEBI (LODR) Regulations, 2015 mandated the inclusion of the Business Responsibility Report (BRR) as part of the Annual Reports for the top 1000 listed entities based on market capitalisation. In terms of Regulation 34(2)(f) of Listing Regulations, a BRR for the year 202021 describing the initiatives taken by the Company on environmental, social and governance perspective, in the format as specified by SEBI from time to time is attached with this report as Annexure-7.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

Your Company, being a Defence PSU, the disclosure of information with respect to conservation of energy, technology absorption, foreign exchange earnings and outgo under the provisions of Section 134(3)(m) read with Rule 8(3) of the Companies (Accounts) Rules, 2014 (as amended) is not required as the Ministry of Corporate Affairs vide Notification GSR No.680 (E) dated 4 September 2015 has granted exemption to Defence Public Sector Undertakings.

Compliance with Secretarial Standards

The Company complies with all applicable mandatory Secretarial Standards issued by the Institute of Company Secretaries of India.

Acknowledgement

Your Directors place on record their deep appreciation and gratitude for the valuable support received from all

the customers, particularly the Defence Services and the paramilitary forces and look forward to their continued support and co-operation in future. Your Directors also place on record their gratitude for the support received from the various Ministries of the Government of India, especially the Ministry of Defence, the Department of Defence Production. Your Directors express their gratitude to the Defence Research and Development Organisation (DRDO) and the various Research Laboratories under DRDO, particularly in the joint development programmes and new products. Your Directors express their sincere thanks to the Comptroller and Auditor General of India, Statutory Auditors, Branch Auditors, Cost Auditors, Secretarial Auditors, Company''s Bankers, Collaborators and Vendors. Your Directors appreciate the sincere effort by the employees at all levels, which enabled the Company to achieve the good performance during the year. Your Directors express their appreciation and gratitude to all the shareholders/investors for the trust and confidence reposed in the Company and look forward to their continued support and participation in sustaining the growth of the Company in the coming years.

For and on behalf of the Board

Bengaluru Anandi Ramalingam

31 August 2021 Chairman & Managing Director

(Additional Charge)


Mar 31, 2019

Board's Report

To the Members,

Your Directors take pleasure in presenting their Report and the Audited Financial Statements for the financial year ended 31 March 2019 together with the reports of the Statutory Auditors and the Comptroller and Auditor General of India thereon.

Financial Results and Performance Highlights

A summary of the Company's financial results is given below:

 

 

(Rs. in Lakhs)

Particulars

2018-19

2017-18

Value of Production

11,92,142

9,66,956

Turnover (Gross)

11,78,922

10,08,484

Profit Before Depreciation, Interest and Tax

3,03,162

2,20,011

Finance Cost

1,221

127

Depreciation & Amortisation

31,622

25,100

Profit Before Tax

2,70,319

1,94,784

Provision for Tax

77,590

54,855

Profit After Tax

1,92,729

1,39,929

Other Comprehensive Income /(Loss)

(4,021)

145

Total Comprehensive Income

1,88,708

1,40,074

Dividend paid

51,168

62,765

Tax on Dividend

10,518

12,777

Transfer to General Reserve

40,000

40,000

Other Equity (Including Reserves & Surplus)

8,77,525

7,51,735

Net Worth

9,01,891

7,76,101

Earnings Per Share (in Rs.)

7.91

5.70

Book Value Per Share (in Rs.)

37.01

31.85

Distribution of Value of Production for 2018-19 is given below:

Particulars

Amount (Rs. in Lakhs)

Percentage

Materials

6,07,993

51%

Employee Cost

1,87,905

16%

Other Expenses (Net)

94,303

8%

Depreciation & Amortisation

31,622

3%

Provision for Tax

77,590

6%

Profit After Tax

1,92,729

16%

Total

11,92,142

100%

Company's Turnover (Gross) for the year 2018-19 has increased to Rs. 11,78,922 Lakhs from Rs. 10,08,484 Lakhs in 2017-18, registering a growth of 16.90%. Profit After Tax for the year is Rs. 1,92,729 Lakhs as against Rs. 1,39,929 Lakhs in the previous year. Turnover from indigenously developed products is 96%. Supplies to the defence contributed to 68% of turnover in 2018-19 as compare to 85% in the previous year.

Dividend

As required under Regulation 43A of the SEBI (LODR) Regulations, 2015, the Board of Directors of the Company has formulated a Dividend Distribution Policy keeping in view the provisions of SEBI (LODR) Regulations, 2015, the Companies Act, 2013, Guidelines issued by SEBI, DPE, DIPAM, Ministry of Finance and other Guidelines to the extent applicable to the Company. The Policy is placed on the Company's website at http://bel-india.in/ContentPage. aspx?Mld=17&Cld=527&Lid =1 &link=527

The Board of Directors has recommended a Final Dividend of Rs. 1.70 per equity share (170%), amounting to Rs. 41,422 Lakhs for the year 2018-19. Earlier Interim Dividend of Rs. 1.70 per equity share has been paid to the shareholdersduring2018-19.Thus,the total dividend for the year 2018-19 is Rs. 3.40 per equity share (340%), amounting to Rs. 82,844 Lakhs (excluding dividend distribution tax).

Amount Transferred to Reserves

An amount of Rs. 40,000 Lakhs is transferred to General Reserves for the financial year 2018-19.

Share Capital

The Company's paid-up share capital as on 31 March 2019 was Rs. 24,366 Lakhs and there was no change in the paid-up share capital during the year.

The details of Directors and Key Managerial Personnel's shareholding in the Company as on 31 March 2019 are given below:

SI. No.

Name

Designation

No. of equity shares held

1

Mr M V Gowtama

Chairman and Managing Director

1,263

2

Mr Nataraj Krishnappa

Director (Other Units)

1,263

3

Mrs Anandi Ramalingam

Director (Marketing)

1,263

4

Mr R N Bagdalkar*

Director (Human Resources)

1,263

5

Mr Koshy Alexander

Director (Finance)

1,265

6

Mr Mahesh V

Director (Research & Development)

1,265

7

Mr Vinay Kumar Katyal

Director (Bangalore Complex)

1,263

8

Mr Shivakumaran K M*

Director (Human Resources)

1,263

9

Mr S Sreenivas

Company Secretary

1,263

 

* Mr R N Bagdalkar superannuated as Director (HR) w.e.f 31.05.2019 and Mr Shivakumaran K M was appointed as Director (HR) w.e.f 11.06.2019.

The Company has not issued any convertible securities during the year.

Major Orders Executed

Major orders executed during the year for tri services and non-defence customers include: Integrated Air Command & Control System (IACCS), Weapon Locating Radar (WLR), Cdr TI Sights, Schilka Upgrade, Tropo Upgrade, Integrated Communication System (ICS), Ground Based Mobile Elint System, Low Intensity Conflict Electronic Warfare System (LIC EWS), L-70 Gun Upgrade, Electronic Voting Machines (EVM), Voter Verifiable Paper Audit Trail (WPAT) etc.

Exports

Your Company has been giving an increased thrust towards harnessing the export potential of Defence Electronics Products& Systems including Homeland Security Solutions, Border Protections Systems and State of the Art Systems & Solution which represent its core area of business. BEL has been exporting various products and systems to various friendly Countries. Having established a Coastal Surveillance System (CSS) for few neighbouring Countries, BEL is interacting with Ministry of External Affairs on a regular basis for supply of CSS to other friendly Countries of India. BEL is also exploring civil market in developing& third world Countries with product like smart cities, solar power generation, etc.

BEL is focusing on the various opportunities in the area of helping OEM's to meet offset obligations in various RFPs of MoD on account of offset policy incorporated in the Defence Procurement Procedure. In this regard BEL is closely working and partnering with various major Foreign Aerospace and Defence Companies. BEL is also offering Proven Products and Systems to meet the specific requirements of customers. BEL has identified contract manufacturing (build to print and build to spec) to foreign OEM's and Partnership in form of Transfer of Technology of the latest systems and solution as few areas of emerging export opportunities. Further efforts are being made to establish long term supply chain relationship with global players.

Company has achieved an export sale of US$ 21.6 Million during 2018-19, to various countries, viz., Switzerland, USA, France, Germany, Israel, Sweden, Finland, Vietnam, Seychelles, Mauritius and SEZ's. Major Products/Systems exported are Sub Systems of Radar & EW Systems, Data Link II, Cable looms. Mechanical Parts, Communication Equipments, Acoustic Test facility. Surveillance Systems, Coastal Surveillance Systems Radar, Passive Night Sight, Shelters, Sleevi, Transmitting tubes, Vacuum Interrupters and Radar Spares.

The decline in export sale is mainly due to the non-establishment of Letter of Credit by customer for various Naval Systems and Land Based Systems and Solutions. The transformation in political and economic scenarios in various countries such as Myanmar, Sri Lanka, and Indian SEZ's Defense establishments was another factor contributing to reduced exports in the current year.

Initiative taken to increase exports by development of new markets, for products & services during the financial year 2018-19:

* Marketing Offices Abroad

• BEL has put in efforts for increasing the business opportunities in South East Asia and Middle East by incessant engagement with customers.

• A Marketing office in Sri Lanka and Myanmar was established during 2018-19.

• During 2019-20, the Marketing Office in Oman is proposed to be established.

* Strategic Alliance with the Foreign OEMs

Proposed strategic alliance with foreign OEMs to address Global Markets by offering the best value proposition:

• Thales - EW& Radar Modules

• Elbit Systems Electro Optics, Israel - Electro optics

• SAAB - Marketing Agreement for Radar

• Elisra Systems - Self Protection suite

• Major leads in pipe line for following Products and Systems offered to foreign Countries/Customers:

• Coastal Surveillance System

• Gun Upgrade

• Weapon Locating Radars

• BEL COMNET system

• Solar Power Projects

BEL has explored huge export business opportunities in the field of Solar Power Projects in few of the sunshine nations. The business discussion with various foreign Ministries of the sunshine nations has been slow but steady and now the solar leads are in final stage of contract signature.

These leads were proactively proposed with working on Buyer's Credit for Solar Powered Projects Model. With huge expertise within BEL, these programs are proposed to be delivered in very short time and will cover more than 80 cities in one of the sunshine African Nations.

The following were the scope for offset business during 2018-19:

• Data Link II for Boeing USA

• Cable Harness for Pilatus Switzerland

• EoS CoMPASS for Elop Israel

• G4 A Technical platform (Shelters) for SAAB Sweden

• EW & radar Sub Assemblies for Thales, France

• Communication Radios for Boomeranger Boats, Finland.

• New Initiatives Proposed for enhancing the Export Business in 2019-20 are:

• Proactive interaction with o Foreign mission in India o Foreign DA

 • Indian DA (abroad)

• Proactive approach to the solution offered to customers

• Increasing customer interaction by BEL in various countries

• Expand customer base o Open new offices

• Appointment of multiple agents (segment wise) in a territory

• Participate in exhibition & seminars

• Adopt various model for increase in exports (CKD,

SKD, Modules, Sub-systems & Systems) o Interaction with export houses. o Dealership of proven products for foreign OEM's in other countries.

• Partnership with local Companies to create value to customers

• Multinational Indian OEMs o Supply Chain o Joint Bidding

• Exploration of civil market in third world countries with product like smart cities, solar power generation etc.,

• Develop customized solution to meet the specific requirements of customers.

• Inclusion of BEL products in the list of customer for LoC.

• Identification of alternate fund management model to suit customer financial constraints.

• Buyer's Credit

• Credit by other banks.

MoU with Government

Your Company has been signing a Memorandum of Understanding (MoU) every year with the Government of India, Ministry of Defence. Performance of BEL for the year 2017-18 has been rated as "Excellent" in terms of the MoU with the Government. The MoU rating for 2018-19 is under review by the Government.

Order Book Position

The Order Book of the Company as on 1 April, 2019 is around Rs. 51,798 Crores. The order book comprises of mainly major programs like Long Range Surface-to-Air Missile System (LRSAM), Weapon Repair Facility for Naval Ships, Kerala-Fibre Optics Network (K-FON), Smart City Projects, Integrated Perimeter Security Solution (IPSS), Naval Airfield Integrated Security System (NAISS).

Finance

During this year, your Company has declared a higher dividend of 340% as compared to 200% in the previous year. Apart from the final dividend of rs. 9,746 Lakhs (40%) for the year 2017-18 which was paid out in 2018-19, interim dividend amounting to Rs. 41,422 lakhs (170%) has been paid during the year 2018-19.

In order to achieve the projected growth in the coming years, a focused initiative is taken up by your Company in taking up some major projects, which are progressing well and the outcome from these projects should enable the Company to achieve the planned higher trajectory of turnover and growth. Despite some amount of budgetary constraints faced by customers, your Company has been able to meet all the incremental working capital requirements through internal accruals. Out of the term loan of Rs. 10,000 lakhs availed in previous years to fund the CAPEX requirement an amount of Rs. 3,334 lakhs is outstanding as on 31 March 2019. Your Company has retained highest rating by ICRA for both short term and long term borrowing.

The inventory position (net) of the Company as on 31 March 2019 was Rs. 445,479 Lakhs as against Rs. 473,912 Lakhs as on 31 March 2018. This works out to 136 days of value of production as on 31 March 2019 as against 180 days in the previous year. This reduction has been possible due to better inventory control.

The position of trade receivables (net) as on 31 March 2019 was Rs. 536,921 Lakhs as compared to Rs. 504,950 Lakhs in 31 March 2018. This works out to 166 days of turnover as on 31 March 2019 as against 183 days of turnover achieved during the previous year. The reduction in trade receivables has been possible due to higher collections against opening debtors and from Election Commission on sale of EVM and WPAT.

Deposits

The Company does not have any Public Deposit Scheme at present. However, the matured Public Deposit amount (collected prior to February 2006) with the Company was Rs. 36.95 Lakhs as on 31 March 2019. Out of these 34 deposits amounting to Rs. 36.50 Lakhs are not claimed or not paid as these accounts are frozen on advice by Karnataka Lokayukta. The remaining matured deposits of Rs. 0.45 Lakh as on 31 March 2019 is unpaid due to in-sufficient documents / records produced by Depositors.

Research & Development

Your Company has three Tier R&D Structure namely CRL, Products Design& Innovation Centre (PD&IC) and D&Es attached to SBUs/Unit. Two Central Research Laboratories (CRLs) at Bengaluru and Ghaziabad are involved in conducting futuristic R&D in core technology areas of BEL and develop enabling technology modules for use by SBUs/Units. PD&IC at Bengaluru develops common technology modules, subsystems and products as required by SBUs/units like Radar Signal Procession Unit, Microwave Components, Power Amplifier, Electro-optics and Lasers Encryption Modules, Power Electrons, MMICs, Displays etc.

SBUs/Units D&E groups provide System and System of Systems solution having the required domain expertise, technical support during the complete product life cycle from concept design to post sale obsolescence management of products/system and develop subsystems and processes as necessary from CRLs, PD&IC and Collaborative R&D.

As a Philosophy and Policy, these R&D labs work in the identified technologies and product areas, with well documented three year R&D plans based on RoP/marketing forecast/TPCR and due approval of budget / time by the competent authority.

BEL R&D policy addresses the role of R&D, Business requirements, Products/Technology requirements and market scenario prevailing at that time. Since then Defence business scenario has changed considerably in terms of Globalisation and Liberalisation due to changes in Government Policies.

In line with the new business environment, BEL has already Undergone changes with respect to the organization structure, creation of new SBUs/Units, CRL, PD&IC etc and expanded into new business areas over the period of time.

In view of these changes, R&D policy is being revised and modified in line with the current business requirements. The main areas of focus of R&D policy includes technology forecast & roadmap, R&D plans, process for initiation, execution, evaluation and reviews of projects, R&D infrastructure management, R&D manpower management and recognition and rewards.

D&E Projects Initiated in 2018-19: The major developments initiated in 2018-19 are Weapon Locating Radar (Mountain Version), Active Antenna Array for Ship Borne Radar Program, Submarine Navigation Radar, Digital Radar Warning Receiver, Indigenous Common Aerial Working (CAW) System for Navy, Ship to Shore Communication System (NTRO), Public Key Infrastructure Solution, SOTM for Ku Band, Alternate Gyro, Sight and Gimbal for BMP II, Track pedestal with lifting mechanism for Weapon System, Electric Gun and Turret Drive System for M BT, Development of Quad Copter UAV and Mini UAV for police, EW Suite for

MLH Upgrade, R118 System for HAWK MK 132 Aircraft, EO Solution for Drone Guard System, Multi Spectral Fog Vision System, Development of Uncooled Engine and Tethered UAV based EO Surveillance System, Laser Proximity Fuse for Weapon System.

D&E Projects Realised in 2018-19: Some of the major projects completed in 2018-19 are the design and development of Air Defence Fire Control Radar, Unmanned Battle Field Surveillance Radar for Border Surveillance, Combat Management System, Jammer Subsystem for Drone Guard System, UAV Data Link System (Panchi), Integrated Communication System for Navy, V/UHF Communication Network for export, CDMA based Wireless Communication Link, IAC MOD C, Costal Security Database Software, EOFCS Upgrade II, Optical Director System Upgrade II, 3D Air Surveillance Radar for Navy (Proto), Element Management System for Multi-Channel Encryptor Unit (MCEU), Secure Mil Wireless LAN for Army, Commanders Display Unit for Radars,1KW HF Transmit/Receive Radio, SATCOM Terminal for Ground Based Mobile ELINT System, Samyukta up-gradation. Fire Control System for Kavach Mod-ll, Indigenisation of Rate Gyro in T-90 Gun Project, Fire Control System for reconfigured NAMICA, Electro Optic System for Radars, for Home Land Security and for Drone Guard System, Target Acquisition System for MPTGM.

The Important R&D awards/recognitions received during 2018-19 are "PSE Excellence Awards 2017", 'Company of the Year' award and 3 more awards in the Maharatna & Navratna category for 'Human Resource Management Excellence', 'R&D Technology Development & Innovation', and 'Operational Performance Excellence'.

New Products developed through in-house development efforts and collaborative development efforts in 2018-19 are as follows:

1. Real Time Information System for Indian Railways:

This is being introduced by the Center for Railway Information System (CRIS), Indian Railways for real time tracking of train information. Some of the main constituents are the locomotive devices, transponders on G SAT-6 satellite, 4G/3G mobile services, the loco device monitoring and configuration management server.

2. Auto Fare Collection Gate (SWAGAT): Indigenous Auto Fare Collection System for Metro is India's first indigenously developed payment ecosystem for transport consisting of National Common Mobility Card (NCMC), SWEEKAR (Swachalit Kriya: Auto Fare Collection) and SWAGAT (Swachalit Gate). The validation terminals and gates have been co-designed and developed by BEL and C-DAC.

3. Drone Guard System: The rapidly increasing popularity of drones have brought a whole assortment of new security threats to Government entities and public safety, with potential hazards of drones carrying weapons, or drones used for self destructive missions. EO System and Jamming Signal Generator for Drone Guard System (DGS) has been developed. Electro Optic System of Drone Guard is used for tracking the Drones. The jamming signal generator is used in Drone Guard System (DGS) for neutralisation of the intruding Drones.

4. EO System for Home Land Security: This is a mid-wave cooled detector thermal imager channel for night vision and camera channel for day vision. It offers very long range detection in all weather conditions.

5. Integrated Communication System for Indian Navy: It comprises of the Advanced (IP based) Composite Communication System (ACCS), Hello Deck Communication System (HDCS) and Versatile Communication System (VCS). The ACCS provides quick and reliable communication over VLF, HF,V/ UHF and STCOM onboard ships, HDCS enables the control crew in handling, supervisory & logistic support during take-off, landing and docking of helicopters on the ship and the VCS which facilitates internal communication on board ships.

6. Coastal Surveillance System for Seychelles: This is a Coastal Surveillance System supplied by BEL in 2015 consists of six radar stations and two control stations. This is now augmented with three additional radar stations and sensors like Electro Optics, VHF Radios, X Band Radar, meteorological sensors along with microwave link and networking units. The system software has been upgraded to integrate these additional elements.

7. Fire Control System (FCS) Kavach: The Kavach Fire Control System creates a false target by launching a chaff rocket during enemy's surveillance and attack and this chaff will be misinterpreted as a target and hence will protect the ship.

8. Image Intensifier based Passive Night Vision Devices: Panoramic Night Vision/Aviation goggles is a modern binocular with wide Field of View (FoV) of 295°, effective handling, increased depth penetration and simple maintenance. It can be mounted on a bullet proof helmet for ground operations or a helicopter/ plane for night surveillance.

9. Indigenous Electronic Upgrade for 52 Calibre Gun:

Indigenous Electronic upgrade for 155mm DHANUSH Gun is the replacement of existing ELBIT electronic suite. Electronics suite consists of Gun Electronic Unit (GEU), Loader display, power distribution unit. Emergency switch unit. Encoder, MVR, and Joystick.

10. Maintenance and Training Support Device for Indian Navy: This has been designed and developed for the Indian Navy for training of Naval Personal by using Moodle and MDM server, MTSDs will be loaded with course materials for the trainees.

11. Uncooled Thermal Imager: This has been designed and developed for weapon sights for various applications like Rocket Launchers, Assault Rifles etc.

12. Commander Thermal Imager Sight for BMP: It has been designed to replace the existing (obsolete) night vision device in the BMP 1 /1 /2K tanks to enhance the range performance and reliability.

13. IFF System for MRSAM Phase II: This system is used for identification of targets located by the primary radar, while operating basically on the principle of secondary radar as per Annex 10 of ICAO and STANAG 4193 standard of NATO.

14. Virtual Reality Simulator: This is a simulator which integrates VR devices and motion platform. It is used for development of Dynamics and Panther vehicle and B vehicles used in Aerodrome and integration of firefighting procedures.

15. Class Room Jammer: This is a portable jammer designed for deployment at the various examination centers. It is used as a cell phone jammer for jamming signals GSM, CDMA, 3G and 4G bands within the classroom/examination centre.

16. Corner Shot Weapon System: These have been developed for 9mm pistol and 40mm UBGL for usage

in hostile and counter insurgency operations. It allows operator to see and attack an armed target without exposing himself for a counter attack.

17. Battery Multi-Function Radar vehicle and Battery Surveillance Radar Vehicle for Missile

System: These are constituents of the Quick Reaction Surface to Air Missile System. They are vehicles equipped with radar and shelterised electronics subsystems.

18. Target Acquisition System for Man Portable Anti-Tank Guided Missile (MPATGM): This is a multifunction compact system capable of surveillance, ranging, target acquisition and a provision to fire missile. It provides high quality video during day and night even under adverse weather conditions.

19. Ku Band RF Seeker: RF Seekers have been developed jointly with DRDO for the various missile systems including Astra Missile, QRSAM Missile and Akash-1S Missile. These operate in Ku Band.

20. Air Defence Fire Control Radar-ATULYA: It is a new Gen ADFCR to replace all existing FCRs like Flycatcher and USFM.

21. CMS for MRSAM (IAF): It is the Combat Management System for the MRSAM for the Indian Air Force.

Future Plan: BEL has taken Initiatives to form CoE (Centre of Excellence) in (a) Radar & Weapon Systems, (b) Communication and (c) Electro Optics and Laser for added focus in these areas.

To focus on Innovation, BEL has established 8 Innovation Cells in Product Innovation and Development Centre. The Broad areas of Innovation in these cells are finalised and are being progressed with.

Al and deep learning, Cloud and data analytics, cognitive concepts and super-computing are identified as areas for future focus. Competence building, infrastructure planning, technology acquisition, manpower planning and funding for projects in this area are being pursued. Around 20 projects in Al have been initiated.

To enhance technical competence, BEL is planning to enroll engineers for PhD programs. BEL has taken initiatives to further strengthen R&D by collaboration with Academia and start-ups and other industrial partners as well as consultants.

New Facilities Established During the Year

Company has been continuously modernizing its infrastructure to be in tune with the changing needs of the technology/products. Specific groups in all the units scan the technology changes that are taking place and identify new processes in the world market for acquisition. This enables the Company to maintain its infrastructure on par with international standards. During the year 2018-19, Company has spent Rs. 67,359 Lakhs as part of CAPEX investment towards Modernization of Plant & Machinery, Test Instruments, R&D investments, infrastructure up-gradation etc.

Following are some of the major facilities established during the year.

• A shock Test Facility.

• High Temperature Test facility.

• Surface Mount Technology (SMT) Assembly Line.

SAP Implementation in BEL and other IT Initiatives

BEL has adopted a centralized approach to manage critical IT infrastructure on which all business processes are dependent. It includes ERP infrastructure, mail servers, WAN, LAN, network security components, Antivirus and Patch management.

During year 2018-19, RFID implementation was done in SAP for real-time tracking of capital asset management. The RFID system is integrated with SAP.

IS/CO has received the ISO 27001 certificates for Information Security Management Systems. To enable organization to manage regulations & Compliances, Governance, Risk & Compliance (GRC) is implemented. Estimation of Civil contract is automated in SAP for generating SOQR. SMS alerts is activated for various business transactions. Pay revision for non-executive is implemented through SAP. Online Inventory Monitoring System is developed for COD (Agra) and Coast Guard. Lead Management System is implemented for marketing in CRM. Customer service maintenance portal is developed for MAG1 and Indian Air Force. Simplified process for Depot based sales and material management is implemented.

BEL has well defined organizational structure for Cyber Security Management. Director(R&D) is nominated as CISO for BEL at Corporate Level. At each unit / SBU, Information Security Officers are nominated. Following major activities are done in cyber security front:

• Five Divisions dealing with IT related projects or handling internal IT infrastructure and ERP were certified with ISO27001.

• BEL conducted VAPT on the entire ISCO infrastructure and all the vulnerabilities have been fixed.

Quality

Quality, Technology and Innovation are three guiding pillars of BEL's business initiatives. Quality, being the first pillar, has been one of the focus areas for the Company. Quality initiatives have been taken up for improvement in performance related to Product Design, On-time-Delivery, Process Cycle Times, SPC, Quality Control, Customer Service etc.

The Company is committed for improvement of its activities through process approach in line with World-Class Quality Systems. All Units are accredited to ISO 9001 Quality Management System (QMS) since early nineties. 11 Units/ SBUs, viz. Ghaziabad, Panchkula, Kotdwara, Hyderabad, Chennai, Military Radars, Military Communications, Electronics Warfare & Avionics, Naval System (S&CS), Missile System and Export Manufacturing have upgraded their QMS to Aerospace Standard, AS 9100D.

Units of the Company are committed to Environment Management System through ISO 14001 Certification. Ghaziabad Unit is accredited to OHSAS (Occupational Health Safety and Assessment Series) 18001 Certification. Five Units and SBUs are accredited for Information Security Management System, ISO-27001.

Test Equipments Calibration departments of Bangalore Complex, Ghaziabad and Panchkula Units are certified by NABL in accordance with ISO / IEC 17025 Standard. Pune Unit manufacturing X-ray tubes is certified for ISO 13485 Standard for Medical Devices. Bharat Electronics Software Technology Centre (BSTC) at Bangalore Complex is CMMi level 5 certified. D&E - NCS and CRL - Ghaziabad are certified for CMMi level 3.

EFQM (European Foundation of Quality Management) Model for Business Excellence is being followed in BEL since 2002 as an another approach for overall strategic and operational excellence to meet and exceed the needs & expectations of stakeholders and enhancement in competitiveness. During 2018-19, Bangalore Complex received the prestigious Award from CII-EXIM Bank Award for Business Excellence 2018 and highest recognition of Role model organisation status. BEL is the first PSU to receive such a recognition. Ghaziabad, Machilipatnam and Chennai Units received Platinum Award showcasing their maturity in the Business Excellence journey.

To bring in a culture of improvement through analytical approach, selected senior executives were periodically trained as 'Black Belt' by Indian Statistical Institute, Bangalore. These Black Belts guide other executives (Green Belts) in their Six Sigma Projects. Out of 495 Projects completed in 2018-19, 33 Six Sigma Projects were nominated for Regional / National level competitions. BEL has received 15 regional and 18 National Level Championships awards.

The organization has facilitated involvement of Non-executives in the Quality Movement through Quality Control Circles (QCC). In the year 2018-19, 717 QCC Presentations for improvement in products and processes were made by various QCCs. Many QCC circles were nominated to participate in national competitions / conventions and all were adjudged for various categories of Awards. One of the QCCs, which won CMD's Rolling Shield in the Inter Unit QCC Competition, represented BEL in the International Convention, ICQCC 2018, held at Singapore and won the "Gold award".

Another approach for Quality Improvement is through Suggestion Scheme, wherein employees from Non executives up to Managers provide suggestions for which they are suitably rewarded on implementation of their suggestions. Around 4124 suggestions were given by employees this year. Selected BEL employees participated at 29th National Level Convention conducted by Indian National Suggestion Schemes' Association during Jan 2019 at Pune and won 10 individual awards under various categories. Ghaziabad Unit and Bangalore Complex were awarded first and Second Prize for "Excellence in Implementation of Suggestion Scheme 2018" under Engineering Industry Category at the National Level respectively.

37 D&E engineers were trained for ASQ Certified Reliability Engineers (CRE) during the year, taking cumulative CREs in the Company to 266. 43 operating level Quality engineers were certified for Certified Quality Engineers (CQE) program resulting cumulative CQEs in the Company to 219. Similarly, company has 81 senior level executives certified to next higher level program Certified Manager for Quality and Organisation Excellence (CMQ&OE).

A revised Quality Recognition Award (QRA) was introduced in 2017 to award best performing Unit/SBU in 7 key business processes namely. Design, Procurement, Quality Management, Material Management, People Management, Manufacturing and Customer Service. Panchkula Unit, MR SBU, EW&A SBU, Hyderabad Unit, Ghaziabad Radar SBU, Antenna and NCS SBUs and Chennai Unit awarded QRA 2018.

Project Management training programs for Project Management Professionals (PMP) were conducted. Post training, 35 PMPs (Cumulative 489 from the year 2007-08 onwards) was certified by Project Management Institute (PMI) in year 2018-19.

An independent Customer Satisfaction Survey (CSS) was done through an external agency to capture the Customers' Perceptions on BEL's Products and Services. Results for the same is awaited. Customer Satisfaction Index for the previous year 2017-18 was 82%.

Human Resources

Your Company employed 9,612 persons as on 31 March 2019 as compared to 9,726 persons as on 31 March 2018. Out of these employees, 5,021 were engineers/scientists and 2,049 were women employees as on 31 March 2019. A total of 235 executives and 16 non-executives were inducted during the year. 35 employees belonging to SC, 14 employees belonging to ST, 79 employees belonging to OBC and 10 employees belonging to the minority community were recruited during the year.

Your Company has been implementing the Government Directives on Reservation. The particulars of SC/ST and other categories of employees as on 31 March 2019 are as under:

Category of Employees

Executives

Non-Executives

Group 'A'

Group 'B'

Group C

Group 'D'

Scheduled Caste

1043

31

618

40

Scheduled Tribe

351

11

137

22

OBC

1302

38

819

44

Ex-Servicemen

86

5

261

72

Physically Challenged

97

4

123

3

Various Training programs were conducted during the year to enhance competencies in Technical, Functional, Managerial and Leadership areas. Structured Executive Development Programs were conducted regularly with premier institutes to meet the evolving training needs of executives as they progress through various grades.

The training programs are designed to enhance competencies in various areas like Technical, Functional and Managerial/Leadership.

A detailed write up on Company's HR philosophy and specific HR initiatives during the year is provided separately in the Management Discussion and Analysis Report which forms part of this report.

Disclosure under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company is an equal opportunity employer and consciously strives to build a work culture that promotes dignity of all employees. As required under the provisions of Sexual Harassment of Women at Workplace (Prevention, prohibition and Redressal) Act, 2013 and Rules framed there under, the Company has implemented the policy on prevention, prohibition and redressal of sexual harassment at the workplace, which has been uploaded on the Company's intranet portal. All women, permanent, temporary or contractual including those of the service providers are covered under the Policy.

An Internal Complaints Committee has been constituted in each of the nine constituent units including Corporate Office to redress complaints relating to sexual harassment. Awareness programs were conducted across the Company to sensitize the employees and uphold dignity of their colleagues at workplace, particularly with respect to prevention of sexual harassment. The details of complaints filed, disposed of and pending during the year pertaining to sexual harassment is provided in the Business Responsibility Report Annexed to Boards' Report.

Awards and Recognitions

Your Company continues to be a highly trusted for the quality of its products, innovation and renovation of its products based on strong consumer insights and the ability to engage with consumers across the country. During the year your Company has received various Awards and Recognitions. Some of the important accolades received during the year include:

• AIMA Outstanding PSU Award

• SCOPE Award for Excellence for Digitalization

• PSE Excellence Award 2017

• 'Business Leader of the Year' Award (Aerospace & Defence) 2019

• BEL Bengaluru Unit won the twin honour of CII EXIM Bank Business Excellence Award (2018) & Commendation for Role Model Organization.

• BEL Ghaziabad, Chennai & Machilipatnam Units received the Platinum level recognition for Business Excellence from CII.

• BEL Chennai Unit secured the CII Total Cost Management (TCM) Level 3 award.

• Raksha Mantri Award for Excellence in Performance, Export, Import substitution and Design effort.

• Vigilance Excellence Award -2017 for" Best Institutional Practice to fight Corruption".

Other significant achievements during the year:

• Company registered a growth of 16.90%.

• Company has achieved an Export turnover of 21.60 million USD.

• Set up new Marketing offices at Vietnam, Myanmar, Sri Lanka and Oman.

• BEL acquired Rs. 23,431 Crores of Order during the year 2018-19.

• Receipt of LRSAM order worth Rs. 9,236 Crores.

• BEL Inaugurated 16 MW Solar Power Plant at HVF, Avadi near Chennai.

• India's first indigenously developed Metro Gate SWAGAT - an Automatic Fare Collection Gating System jointly developed by BEL & C-DAC inaugurated.

• Flycatcher Radar Spares got DGQA Green Channel Status certification.

• Strategic partnership with Global OEMs like SAAB (Sweden), Elettronica SpA (Italy), Elbit Systems (Israel) etc., and Mahindras in domestic segment.

• Launched the New Product-Atmospheric Water Generator, an innovative solution to meet the ever-increasing need for drinking water.

• BEL received ISO 27001 Information Security Management System Certification.

Subsidiaries, Joint Ventures and Associates

BEL Optronic Devices Limited (BELOP), engaged in the business of manufacturing of Image Intensifier Tubes, is a wholly owned subsidiary of BEL. Your Company has made further investment to the tune of Rs. 1,449.37 Lakhs (589,176 equity shares of Rs. 100/- each at a premium of Rs. 146/- per share) during the year in the equity shares of BELOP by subscribing to right issue made by BELOP.

BELOP achieved a turnover of Rs. 10,325 Lakhs for the year as against Rs. 12,164 Lakhs in the previous year. The profit after tax (PAT) for the year was Rs. 1,418 Lakhs as compared to Rs. 1,155 Lakhs in the previous year. BELOP has proposed a dividend of Rs. 5.89 per share for financial year 2018-19.

The Associate Company GE BE Private Limited [26% shareholding by BEL] continues to perform well. This Company manufactures CT Max and other latest version X-Ray Tubes. BEL supplies some parts required for the products manufactured by this Company. GE BE Pvt. Ltd. recorded a turnover of Rs. 105,851 Lakhs for the year as compared to ? 80,691 Lakhs in the previous year. The profit after tax (PAT) was ? 14,862 Lakhs for the year as compared to Rs. 9,146 Lakhs in the previous year. BEL has received a dividend of Rs. 9,100 Lakhs for the financial year 2018-19.

BEL-THALES Systems Limited (BTSL), a subsidiary, was formed for design, development, marketing, supply and support of civilian and select defence radars for Indian and Global markets. Your Company holds 74% of the equity capital in BTSL. During the year BTSL has recorded a turnover of Rs. 672 Lakhs as compared to ? 312 Lakhs in the previous year. The profit after tax (PAT) was Rs. 104 Lakhs as aginst a loss of Rs. 259 Lakhs in previous year.

Defence Innovation Organization (DIO), was incorporated on 10 April 2017 as a 'Not for Profit' Company as per the provisions of Section - 8 of the Companies Act, 2013 with an authorised share capital of Rs. 1 Crore. The equity participation is 50% from BEL and 50% from HAL. The Company has been formed with an objective of funding innovation in defence sector.

In pursuant to provisions of section 129(3) of the Companies Act, read with Rule 5 of Companies (Accounts) Rules, 2014, the statement containing salient features of the financial statements of Subsidiaries/Associate/Joint Ventures is attached to the Financial Statements.

Consolidated Financial Statements

Consolidated Financial Statements of your Company and its Subsidiaries and Associate Companies are attached to this Report.

Vigilance

At present. Company's Vigilance Organisation is headed by a Chief Vigilance Officer (CVO), an IAS Officer from Haryana cadre (1991 batch). During 2018-19, an IAS Officer from Bihar cadre was heading the vigilance setup. Permanent

Vigilance Officers were posted in each of the Units and in the SBUs. Vigilance Committees were formed in the each of the Units to look after the Vigilance Administration in the Units and SBUs and the Unit/SBU heads are also designated as Chairman of the Vigilance Committee. Apart from this, there exists a Vigilance Committee at the Corporate, where Chairman cum Managing Director is the Chairman of the Committee and the CVO is the Member secretary. Preventive Vigilance has been the thrust area of the Vigilance Organisation and the same received focused attention during the current year. The Vigilance Department examines procurement/sub-contracts and processes on continual basis, conducts regular and surprise inspections and investigates instances of any suspected transactions referred to it. Employees or third parties can refer any suspected transaction to the notice of CVO for investigation which are examined as per the Complaint Handling Policy of the Company. Online complaint management system has been made operational and online complaints can be filed through accessing the Vigilance Portal in BEL website.

During the year 1603 Purchase Orders/Contracts have been reviewed. CTE Type intensive examination has been restructured with the formation of five IE teams. CTE Type of Intensive Examination of 60 High value Procurement Contracts has been taken up during the year. Regular and Surprise checks and Inspections have also been conducted by the field Vigilance Officers. During the year, 44 Complaints including Complaints referred by CVC/MOD/CBI were received. A total of 41 Complaints including 5 Complaints referred by CVC/MOD/CBI were disposed. Disciplinary action and System / process Improvement has been recommended in some cases where lapses were observed. Two Complaints are pending with CBI, Ghaziabad and one complaint is pending with CBI, Bangalore for detailed investigation.

During the year, 110 Probationary Engineers at the induction level, 1029 Executives and 378 Non Executives were given basic awareness program on Vigilance. 31 Executives & 17 Non-executives working in sensitive areas for more than 3 years have been job rotated and the percentage coverage is 86%.

Vigilance Department is continued to be certified for ISO 9001 / 2015 Certification for the Vigilance function of BEL.

In line with the CVCs guidelines on Leveraging Technology and to ensure transparency through effective use of technology the following functions have been made operational through SAP and in the Company's website:

• E Procurement - about 92% of the procurements excluding the ToT procurement. Long term Rate Contracts and Repeat Orders, were covered under e-procurement mode.

• Online registration of Vendors.

• Vendor Payment Information System.

• E-payment / Bank transfer of payment to Vendors.

• Details of awarded contracts / Purchase Orders valuing more than Rs. 10 lakhs in respect of works contracts, service contracts, capital items and non-production items have been posted in the website.

• Details of awarded Contracts / Purchase Orders issued on nomination/single tender basis value exceeding Rs. 5 Lakhs have been posted in the website.

• Purchase Procedures, and Works Contract Manual have been revised and were posted in the BEL website.

• Complaint Handling Policy and Whistle Blower Policy are posted in the website.

• Corruption Risk Management Policy is framed and implemented across the Company for implementation. The same is posted in the web site.

• Vendors' Directory, after flagging removing defunct vendors, have been posted in the website.

• File Life Cycle Management System (FLM) has been implemented across the company and the coverage is about 95% of the total files generated in the Company.

• On-line filing of APRs is facilitated in SAP for all the Executives and the Executives have been filing the APRs in SAP.

• Vigilance Monthly and Quarterly Reports are generated through SAP.

• Vigilance clearance is accorded through the dedicated Vigilance portal in SAP.

Vigilance setup in BEL has been continuously endeavoring to bring transparency, fairness and equity in all transactions and processes of the company through creating a sense of awareness on System and Procedures through awareness campaign and training program. Some of the key activities that have been carried out during the year are:

i) Vigilance awareness week 2018 was observed during October/November 2018. The observance of the week was marked with special address by eminent personalities. Gram Sabhas were organized as part of the outreach activities in Yentaganahalli Village in Bengaluru District and at Mandhana near Panchkula. Skit plays and Video films portraying national integration and anti-corruption messages were shown to School and College Students located near the BEL Factories. Similar anti corruption awareness program in the form of skit plays and inspirational video films were arranged for the School students of BEL Educational institutions. Integrity Pledge was administered to School and College students during the occasion. Walkathon and Cycle rally by BEL School Children, Human chain by BEL employees, Vigilance Walk by employees of Bangalore based PSUs and PSBs, Tree plantations and distribution of saplings, unveiling of Vigilance Slogan Boards and series of lecture by distinguished personalities and Competitions were organized as part of the observance of the Vigilance Awareness Week.

ii) E- pledge, an initiative of the Commission was facilitated in BEL- Intranet, apart from the facility of taking the e-pledge in the CVC website.

Integrity Pact

One of the initiatives of the Central Vigilance Commission (CVC) to eradicate corruption in procurement activity is introduction of the Integrity Pact in large value contracts in Government Organizations. In line with the directives from Ministry of Defence and the Central Vigilance Commission, your Company has adopted Integrity Pact with all vendors/suppliers/contractors/service providers for all Orders/Contracts of value Rs. 300 Lakhs.

The Pact essentially envisages an agreement between the prospective vendors/bidders and the Principal (BEL), committing the Persons/officials of both sides, not to resort to any corrupt practices in any aspect/stage of the contract. Only those vendors/bidders, who commit themselves to such a Pact with the Principal, would be considered competent to participate in the bidding process. Integrity Pact, in respect of a particular contract, would be operative from the stage of invitation of bids till the final completion of the contract. Any violation of the same would entail disqualification of the bidders and exclusion from future business dealings.

As recommended by the CVC, the Company has appointed Mr Girish Chandra Chaturvedi, IAS (Retd.) and Mr Suresh N Patel for monitoring implementation of Integrity Pact in the Company. During the financial year 2018-19 the lEMs reviewed 278 contracts and held structured meetings with the Chairman & Managing Director.

Procurement from MSEs

Your Company has been providing increased thrust on enhancing procurement from Micro & Small Enterprises (MSE) and is implementing Public Procurement Policy for MSEs as per the guidelines/notification issued by the Ministry of MSMEs. During 2018-19, BEL has complied with the mandate of Government's Public Procurement Policy for MSEs.

BEL has on-boarded on TReDS Platform and MSME Sambandh & MSME Samadhaan Portals complying with Government guidelines.

The Company actively participated in various Vendor Development Programs held across the country including National MSME Defence Conclave at Belagavi (Karnataka), Exhibition-cum-Vendor Development Program-SUBCON 2018 at CODISSIA (Coimbatore, Tamil Nadu), Seminar-cum-Workshop on Skills for Indigenization (BSDU, Jaipur, Rajasthan), Defence Industrial Corridor Meets held at various locations in Uttar Pradesh and Tamil Nadu. BEL showcased various items for indigenization for domestic vendors including MSEs.

It is pertinent to mention here that BEL has been awarded Second Runner-up (Navratna Category) for the Exemplary Work done under Public Procurement Policy for Promotion of SC / ST Entrepreneurs.

Implementation of Official Language Policy

Your company is committed to adhere to the OL policy of the Government of India. During 2018-19, company has achieved the various targets prescribed in the Annual Program 2018-19 issued by Dept. of OL, MHA, Gol to transact official work in Hindi. The efforts made towards implementation of Official Languages include:

OL Inspections: Committee of Parliament on Official Language conducted OL inspection of Chennai Unit on 08.10.2018. MoD officials conducted OL inspections of RO Delhi, Kotdwara, Corporate Office, Hyderabad Unit and RO Kolkata. Corporate OL Audit team conducted OL audits at Ghaziabad Unit, CRL-Ghaziabad, RO Delhi, Pune, Navi Mumbai, RO Vizag, RO Mumbai and Milcom SBUof BC.

Bilingualisation: All Units and Offices including Corporate Office of the Company are issuing Section 3(3) documents in bilingual, usage of Hindi is being encouraged in correspondence. Rule 11 items (stationary, codes and manuals, procedural literature), on computers and registers in accordance with OL rules.

OL in SAP and Website: OL Portal GARIMA is in place to facilitate OL implementation across the company and to provide latest inputs pertaining to OL and is regularly updated. QPR reports from Units/Offices are being received online in SAP. Hindi notings are being written in File Lifecycle Management (FLM).Company's website is also available in Hindi and being updated simultaneously.

Hindi Month Celebrations: During September, Hindi Month and Hindi Day was observed in all the Units and Offices of the Company. During the month, employees and officers participated enthusiastically in various programs/ competitions. Employees of various Units/Offices and Corporate Office bagged prizes in the Inter Organization TOLIC Competitions. Hindi workshops for those having working knowledge in Hindi were conducted during the year. Various Incentive Schemes are propagated among all employees and number of Executives / Employees took part in these schemes.

Awards and Recognitions: During the year, our Ghaziabad Unit, CRL-Ghaziabad, RO New Delhi and Bengaluru Complex were awarded by the respective TOLICs. Higher officials participated in TOLIC meetings and officers/employees were awarded in TOLIC competitions.

At Corporate level, various OL activities were conducted during FY 2018-19 which include: Initiation of Defence Electronic Terminology - in coordination with CSTT, New Delhi; 665 Bilingual Standard Email phrases prepared; Initiation of tracking percentage of work done in Hindi and bilingual standard notings in SAP; Initiated to prepare Standard Bilingual Correspondence across CO Depts.; Vishwa Hindi Diwas on 10th January 2019: Hindi books donated to Govt. School; Hindi site of BAE portal was introduced; In order to make the OL Audit Questionnaire more meaningful and factual, the questionnaire was revisited and revised; TOLIC: Sr. Officials participated in meetings and staff members were awarded in inter PSU Competitions; Incentive Schemes: 63 Ex. / NEs of CO (incl. ROs) awarded for FY 2018-19; Two issues of Corporate Hindi Magazine 'NavaPrabha' were published and 4 Hindi Workshops and 2 Technical Talks were organized.

Efforts are in progress to ensure OL implementation and achieving progressive usage of Hindi across BEL.

Implementation of RTI Act

The information required to be provided as per Section 4 (1)(b) of the Right to Information Act, 2005 has been posted on the website of the Company www.bel-india.in. The Information posted on the website contains general information about the Company, powers and duties of employees, decision making process, rules, regulations, manuals and records held by BEL, a directory of the Company's officers, pay scales, procedure for requesting additional information about the Company by citizens and associated request formats.

During the year 2018-19 the Company had received and attended to 308 requests for information under RTI Act. Most of the requests were for information related to recruitment, service, policy(ies) and commercial matters.

Board Meetings/Change in Directors and Key Managerial Personnel

During the year seven Board meetings were held, the details of which form part of the Corporate Governance Report.

Following changes took place in the Directorate and Key Managerial Personnel of your Company during the financial year:

SI. No.

Name of the Director

Designation

Date of Appointment

Date of Cessation

1

Ms J Manjula

Govt. Nominee Director

23.04.2018

Not Applicable

2

Dr Ajit T Kalghatgi

Director (Research & Development)

-

31.05.2018

3

Mr Mahesh V

Director (Research & Development)

01.06.2018

Not Applicable

4

Mr Vinay Kumar Katyal

Director (Bangalore Complex)

27.11.2018

Not Applicable

During the year there was no change in the Key Managerial Personnel (KMP) of the Company.

Mr M V Gowtama, Chairman& Managing Director, Mr Koshy Alexander, Director (Finance) and Chief Financial Officer and Mr S Sreenivas, Company Secretary are the KMPs, as defined under the Section 2(51) of the Companies Act, 2013.

Mr Vinay Kumar Katyal, Director (Bangalore Complex) was appointed as Additional Director w.e.f 27 November 2018 and Mr Shivakumaran K M, Director (HR) was appointed as Additional Director w.e.f 11 June 2019 in place of Mr R N Bagdalkar who retired from his services on 31 May 2019 on attaining the age of superannuation. Mr Sunil Kumar Kohli was appointed as Additional Director w.e.f. 18 July 2019.

Mr Vinay Kumar Katyal, Mr Shivakumaran KM and Mr Sunil Kumar Kohli, Additional Directors are being appointed as Directors on terms as set-out in the Notice of the 65th Annual General Meeting:

Mr Nataraj Krishnappa, Director (Other Units), retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.

Directors' Responsibility Statement

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors in terms of Sections 134(3)(c) & 134(5) of the Companies Act, 2013 state that:

a) in the preparation of the annual accounts, the applicable Accounting Standards had been followed along with proper explanation relating to material departures;

b) the Directors had selected such Accounting Policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31 March 2019 and of the profit of the Company for the year ended on that date;

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

d) the Directors have prepared the annual accounts on a going concern basis;

e) proper internal financial controls were in place and such financial controls were adequate and were operating effectively; and

f) systems to ensure compliance with the provisions of all applicable laws were in place and same were adequate and operating effectively.

Significant and Material Orders

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company's operations in future.

Events Subsequent to the Date of Financial Statements

There are no material changes and commitments affecting the financial position of the company which have occurred between 31 March 2019 and date of signing of this Report.

Related Party Transactions

There were no materially significant related party transactions with the Company's Promoters, Directors, Management or their relatives, which could have had a potential conflict with the interests of the Company. Transactions with related parties that were entered into during the financial year were on an arm's length basis and were in the ordinary course of business. All Related Party Transactions are placed before the Audit Committee and also to the Board for approval, if required. Members may refer to the notes to the accounts for details of related party transactions. The policy for related party transaction has been uploaded on the Company's website www.bel-india.in. Information pursuant to section 134(3) (h) of the Companies Act, 2013 read with rule 8(2) of the Companies (Accounts) Rules, 2014 is attached to this report as "Annexure 1".

Corporate Social Responsibility

Your Company has formulated a CSR & Sustainability Policy pursuant to the provisions of Section 135 of the Companies Act, 2013 and the Companies (Corporate Social Responsibility) Rules, 2014 read with various clarifications, amendments issued by Ministry of Corporate Affairs (MCA) & Department of Public Enterprises (DPE). The CSR Programmes / Initiatives / Projects are taken up in line with the Schedule-VII of the Companies Act, 2013, which is duly incorporated in the CSR & Sustainability Policy and forms the guiding principle for all our programmes. The CSR & Sustainability Policy of BEL is posted on the Company's website, www.bel-india.in.

The objective of CSR is to contribute towards inclusive growth, sustained and equitable development in society through capacity building measures, empowerment of the marginalised and underprivileged sections/communities. Focused interventions are undertaken in the sectors of Education, Healthcare & Sanitation, Rural Development, Vocational Skill Development, Environmental Sustainability, Contribution to Technology Incubators and Promotion of Nationally recognised Sports.

During the FY 2018-19, DPE guidelines for CSR Expenditure stipulate CPSEs to take up focussed CSR interventions on the common theme of School Education and Healthcare with preference being given to Aspirational Districts identified by NITI Aayog. Accordingly, the Company has undertaken thematic CSR programmes in the Aspirational districts of Yadgir & Raichur in Karnataka. Further, CSR Projects that support skilling of youth are being implemented under Skill India.

Pursuant to the requirement under the Companies (Corporate Social Responsibility) Rules, 2014, as amended, a report on CSR activities for FY 2018-19 is annexed herewith as "Annexure 2".

Auditors Statutory Auditors

Pursuant to Section 139(5) of the Companies Act 2013, the Comptroller and Auditor General of India appointed M/s SURI & CO., Chartered Accountants, Bengaluru, as Statutory Auditors for the financial year 2018-19 for audit of accounts of Bangalore Complex, Hyderabad Unit, Chennai Unit and Corporate Office. M/s Tambi & Jaipurkar, Chartered Accountants, Pune were appointed as Branch Auditors of Pune & Navi Mumbai Units for the financial year 2018-19. M/s J P Kapur & Uberai, Chartered Accountants, New Delhi, were appointed as Branch Auditors of Ghaziabad, Panchkula and Kotdwara Units for the financial year 2018-19. M/s Tungala & Co., Chartered Accountants, Machilipatnam were appointed as Branch Auditors for Machilipatnam Unit for financial year 2018-19.

Cost Auditors

Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014 (as amended), the cost audit records maintained by the Company in respect of its Manufacturing activities are required to be audited by the Cost Auditor. Your Directors had, on the recommendation of the Audit Committee, appointed M/s GNV & Associates, Cost Accountants, Bengaluru, as Cost Auditors of the Company for the financial year 2018-19 for conducting the audit of cost records of the Company.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (as amended), the Company has appointed M/s Thirupal Gorige & Associates LLP, Practicing Company Secretaries for the financial year 2018-19 to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed to this report as "Annexure 3".

The Secretarial Auditor in his Report observed that the Company is yet to appoint the adequate number of Independent Directors as per the requirements of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. It is informed that the appointment of Directors is done by Govt. of India and filling up of vacancies of the said Independent Directors is also pending with the appointing authority namely Government of India.

Auditors' Report

Auditors' Report on the Annual Accounts for the financial year 2018-19 and "Nil" Comments of the Comptroller & Auditor General of India under Section 143(6)(b) of the Companies Act, 2013 on the Annual Accounts are appended to this report.

Reporting of Frauds by Auditors

During the year under review, neither the Statutory Auditor nor Secretarial Auditor has reported to the Audit committee under Section 143(2) of the Companies Act, 2013, any instance of fraud committed against the Company by its officer or employees, the details of which need to be mentioned in the Board's Report.

Extract of Annual Return

In accordance with Section 134(3)(a) of the Companies Act, 2013 an extract of the annual return in the form MGT-9 is annexed to this report as "Annexure 4".

Business Risk Management

Pursuant to the Reg. 21 of SEBI (LODR) Regulations, 2015, the Company has constituted a Risk Management

Committee. The details of Committee and its terms of reference. Risk Management Policy etc. are set out in the Corporate Governance Report and a detailed note on Risk Management is provided in the Management Discussion and Analysis Report.

Remuneration Policy & Board Evaluation

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. Board Evaluation etc. The details are set out in the Corporate Governance Report.

Vigil Mechanism/Whistle Blower Policy

The Company has a vigil mechanism named Whistle Blower Policy to deal with instance of fraud and mismanagement, if any. The details of the policy are set out in the Corporate Governance Report.

Declaration from Independent Directors

The Company has received necessary declaration from each Independent Director of the Company under Section 149(7) of the Companies Act, 2013 that the Independent Directors of the Company meet with the criteria of their Independence laid down in Section 149(6) of the Companies Act, 2013.

Management Discussion and Analysis Report

Management Discussion and Analysis Report required under the SEBI (LODR) Regulations, 2015 and also under the Government (DPE) Guidelines on Corporate Governance for Central Public Sector Enterprises (CPSEs), is attached to this Report as "Annexure 5".

Particulars of Loans, Guarantees& Investments

Details of loans, guarantees and investments covered under the provision of Section 186 of the Companies Act, 2013, are given in the notes to the financial statements.

Internal Financial Controls

The Company has in place adequate internal financial controls with reference to financial statements. A detailed note on Internal Financial controls is provided in the Management Discussion and Analysis Report.

Composition of Audit Committee

The Audit Committee comprises of Independent Directors viz., Mr Mukka Harish Babu, Chairman of the Committee,

Mrs Usha Mathur, Dr R K Shevgaonkar and Mr Surendra Singh Sirohi as its members and all the recommendations made by the Audit Committee were accepted by the Board, during the year.

Corporate Governance Report

DPE guidelines on Corporate Governance for CPSEs provide that CPSEs would be graded on the basis of their compliance with the guidelines. DPE has graded BEL as "Excellent" for 2017-18. In terms of Regulation 34 of the Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and DPE Guidelines, a Report on Corporate Governance along with Compliance Certificate issued by Statutory Auditors of the Company is attached to this report as "Annexure 6".

Sustainability Report

The DPE guidelines on Sustainable Development for CPSEs mandate CPSEs to disclose their Sustainable Development efforts in a 'Standalone Report' or as a separate chapter in the Annual Report. Pursuant to this requirement, a Report on your Company's efforts on "Sustainable Development" is attached to this Report as "Annexure 7".

Business Responsibility Report

The Securities and Exchange Board of India (SEBI) has mandated inclusion of Business Responsibility Report ("BR Report") as part of the Annual Reports for the top 500 listed entities based on market capitalization. This SEBI mandate is also inserted as Regulation 34(2)(f) of SEBI (LODR) Regulations, 2015. The SEBI (LODR) Regulations, 2015 provide a format for BR reports. It also contains a list of nine Key Principles and various core elements under each principle to assess compliance with Environmental, Social and Governance norms. Listed Companies are required to prepare policies based on these nine Key principles and core elements, put in place a framework to integrate and embed the policies into business activities and a mechanism to measure and report the achievements as Business Responsibility Report.

Your Company has prepared a comprehensive policy framework for Business Responsibility Report, after studying the SEBI (LODR) Regulations, 2015 requirements and keeping in view the business and governance environment in which BEL as a Defence PSU operates. Highlights of this policy are posted on the Company's website www.bel-india.in. The Company's Business Responsibility Report for the year is attached to this Report as "Annexure 8".

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

Your Company being a defence PSU, the disclosure of information with respect to conservation of energy, technology absorption, foreign exchange earnings and outgo under the provisions of Section 134(3)(m) read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is not required as the Ministry of Corporate Affairs vide Notification GSR No.680 (E) dated 4 September 2015 has granted exemption to Defence Public Sector Undertakings.

Acknowledgement

Your Directors place on record their deep appreciation and gratitude for the valuable support received from all the customers, particularly the Defence Services and the para-military forces and look forward to their continued support and co-operation in future. Your Directors also place on record their gratitude for the support received from various Ministries of the Government of India, especially the Ministry of Defence, Department of Defence Production. Your Directors express their gratitude to the Defence Research & Development Organisation and the various Research Laboratories under DRDO for the support received by the Company, particularly in the joint development programmes and new products brought out with the help of them. Your Directors express their sincere thanks to the Comptroller and Auditor General of India, Statutory Auditors, Branch Auditors, Cost Auditors, Secretarial Auditors, Company's Bankers, Collaborators and Vendors. Your Directors appreciate the sincere efforts put in by the employees at all levels, which enabled the Company to achieve the good performance during the year. Your Directors express their appreciation and gratitude to all the shareholders/investors for the trust and confidence reposed in the Company and look forward to their continued support and participation in sustaining the growth of the Company in the coming years.

 

For and on behalf of the Board

Bengaluru

M V Gowtama

7 August 2019

Chairman & Managing Director

Annexure 1 Form AOC-II

(Pursuant to clause (h) of sub-section (3) of section 134 of the Companies Act, 2013 and Rule 8(2) of the Companies (Accounts) Rules, 2014)

Form for disclosure of particulars of contracts/agreements entered into by the Company with related parties referred to in sub-section (1) of section 188 of the Companies Act, 2013 including certain arms length transactions under third proviso thereto:

1. Details of contracts or arrangements or transactions not at arm's length basis

(a) Name(s) of the related party and nature of relationship: Not Applicable

(b) Nature of contracts/arrangements/transactions: Not Applicable

(c) Duration of the contracts/arrangements/transactions: Not Applicable

(d) Salient terms of the contracts or arrangements or transactions including the value, if any: Not Applicable

(e) Justification for entering into such contracts or arrangements or transactions: Not Applicable

(f) Date(s) of approval by the Board: Not Applicable

(g) Amount paid as advances, if any: Not Applicable

(h) Date on which the special resolution was passed in general meeting as required under first proviso to section 188: Not Applicable

2. Details of material contracts or arrangements or transactions at arm's length basis

(a) Name(s) of the related party and nature of relationship: Not Applicable

(b) Nature of contracts/arrangements/transactions: Not Applicable

(c) Duration of the contracts/arrangements/transactions: Not Applicable

d) Salient terms of the contracts or arrangements or transactions including the value, if any: Not Applicable

(e) Date(s) of approval by the Board: Not Applicable

(f) Amount paid as advances, if any: None

 

For and on behalf of the Board

Bengaluru

M V Gowtama

7 August 2019

Chairman & Managing Director

Annexure 2

REPORT ON CSR ACTIVITIES

1. A brief outline of the Company's CSR policy, including overview of projects or programs proposed to be undertaken and a reference to the web-link to the CSR Policy and projects or programs.

The Company's CSR policy has been uploaded in the website of the Company under the web-link: Weblink: http://www.bel-india.in/ContentPage.aspx?Mld=17&Cld=527&Lld=1&link=527

2. The Composition of the CSR Committee as on 31 March 2019:

Mr M V Gowtama (Chairman& Managing Director), Chairman Mr Nataraj Krishnappa (Director, Other Units), Member Mr R N Bagdalkar (Director, Human Resources), Member Mr Koshy Alexander (Director, Finance), Member Mr Surendra S Sirohi (Independent Director), Member Mrs Usha Mathur (Independent Director), Member

3. Average net profit of the Company for last three financial years: Rs. 177,137.37 Lakhs.

4. Prescribed CSR Expenditure (two percent of the amount as in item 3 above): Rs. 3,542.75 Lakhs.

5. Details of CSR spent during the financial year 2018-19:

(a) Total amount spent for the financial year: Rs. 2,416.48 Lakhs.

(b) Amount unspent, if any: Rs. 1,324.83 Lakhs (carried forward)*.

(c) Manner in which the amount spent in respect of projects taken up during the financial year 2018-19 is detailed below:

* In line with DPE guidelines. Project-wise provision has been made in the books for amount yet to be spent against the respective project.

 

 

 

 

 

 

 

(Rs. in Lakhs)

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

SI. No.

CSR Project or Activity identified

Sector in which the project is covered

Project or Programs (1) Local area or other (2) Specify the State in which projects or programs was undertaken

Amount outlay (budget) Project or programs wise

Amount Spent on the projects or programs Sub-heads : (1) Direct expenditure on projects or programs (2) Overheads

Cumulative expenditure upto the reporting period.

Amount spent: Director through implementing agency

1

(i) Providing Solar Power Plant, Solar Street Lights,

School Education

(i) Other: Kuppam, AP

437.40

366.92

366.92

Direct

 

Electronic Equipments and Solar Modules to Educational Institutions

 

(ii) Local: Bengaluru, Karnataka

 

 

 

 

 

(ii) Augmentation of Infrastructure & Facility Maintenance in Educational Institutions

 

 

 

 

 

 

 

Status: Ongoing

 

 

 

 

 

 

2

Providing aids and assistive devices to Persons With Disabilities in collaboration with ALIMCO

Healthcare

Other: Chikkamagalur, Bellary, Koppal districts of Karnataka

59.40

54.45

54.45

Direct

 

Status: Completed

 

 

 

 

 

 

3

Upgradation of Anganwadis in Aspirational district Raichur, Karnataka

School Education and

Other: Raichur, Karnataka

556.58

0.00

0.00

Direct

 

Status: Ongoing

Healthcare

 

 

 

 

 

4

Providing Solar based Digital Classrooms in 122 Govt High Schools & Handwash platforms in 100 Govt Primary Schools of Aspirational district Yadgir, Karnataka

School Education and Healthcare

Other: Yadgir, Karnataka

560.00

0.00

0.00

Direct

 

Status: Ongoing

 

 

 

 

 

 

5

(i) Upgradation of infrastructure in adopted Govt. ITI, Kollegal

Skill India

(i) Other: Chamarajanagar Karnataka

1721.67

1720.29

1720.29

Direct

 

(ii) Training of Apprentices

 

(ii) Local: Pune & Navi Mumbai,

 

 

 

 

 

Status: Ongoing

 

Maharashtra; Machilipatnam, AP; Bengaluru, Karnataka;

 

 

 

 

 

 

 

Chennai, TN;

 

 

 

 

 

 

 

Hyderabad,

 

 

 

 

 

 

 

Telangana;

 

 

 

 

 

 

 

Ghaziabad;

 

 

 

 

 

 

 

UP; Kotdwara,

 

 

 

 

 

 

 

Uttarakhand;

 

 

 

 

 

 

 

Panchkula,

 

 

 

 

 

 

 

Haryana.

 

 

 

 

6

Vocational Skill Development Training at BEL-BG in collaboration with Electronic Sector Skill Council of India (ESSCI)

Skill India

Local: Bangalore, Karnataka

39.00

0.00

0.00

Direct

 

Status: Ongoing

 

 

 

 

 

 

7

CSR Administrative Overheads

-

-

168.70

168.70

168.70

-

8

Contribution to National Sports Development Fund (NSDF) Status: Completed

Promote Nationally recognized Sports

Other: New Delhi

50.00

50.00

50.00

Direct

9

Segregation of Household Waste for Waste Management & Fabrication of Agroshade Net Greenhouse Nursery at INS Valsura

Environmental Sustain-ability

Other: Jamnagar, Gujarat.

19.38

0.00

0.00

Direct

 

Status: Ongoing

 

 

 

 

 

 

10

Construction of community halls in 5 Villages of Dhule Status: Ongoing

Rural Development

Others: Dhule district, Maharashtra

60.00

56.12

56.12

Direct

11

Contribution to IITM Incubation Cell, Chennai Status: Ongoing

Contribution to Technology Incubator

Other: Chennai

40.00

0.00

0.00

Direct

12

Inclusive & Sustainable Development of Puching Village Status: Ongoing

Rural Development

Others: Tamenglong district, Manipur

29.18

0.00

0.00

Direct

 

TOTAL

 

 

3741.31*

2416.48

2416.48#

 

 

* Includes Rs. 198.56 Lakhs earned as interest on CSR funds.

# Rs. 106.12 Lakhs has been adjusted against opening provision.

6. In case the Company has failed to spend the two percent of the average net profit of the last three financial years or any part thereof, the Company shall provide the reasons for not spending the amount in its Board's Report.

In order to have a long term social impact through CSR, the Company has taken up several initiatives with project duration of more than one year with milestone based payments spread across more than one fiscal year. This is also in line with DPE guidelines on CSR which mandates CPSE's to carry out CSR programs on a project mode across more than one financial year.

Against carried forward amount of Rs. 4,161.48 lakhs of earlier financial years upto 2017-18 (earmarked against specific CSR projects), an amount of Rs. 1,269.35 lakhs has been spent in FY 2018-19. The balance amount is expected to be spent over the next two to three years.

7. The implementation and monitoring of CSR Policy, is in compliance with CSR objectives and Policy of the Company.

 

For and on behalf of the Board

Bengaluru

M V Gowtama

7 August 2019

Chairman & Managing Director

Annexure 3

SECRETARIAL AUDIT REPORT FOR THE FINANCIAL YEAR ENDED 31 MARCH 2019

[Pursuant to section 204(1) of the Companies Act, 2013 and Rule No.9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014]

To

The Members

BHARAT ELECTRONICS LIMITED

OUTER RING ROAD

NAGAVARA, BANGALORE- 560045, KARNATAKA

We have conducted the Secretarial Audit of the compliance of applicable statutory provisions and the adherence to good corporate practices by Bharat Electronics Limited (hereinafter called the Company). Secretarial Audit was conducted in a manner that provided us a reasonable basis for evaluating the corporate conducts/statutory compliances and expressing our opinion thereon.

Based on our verification of the Company's books, papers, minute books, forms and returns filed and other records maintained by the Company and also the information provided by the Company, its officers, agents and authorized representatives during the conduct of Secretarial Audit, We hereby report that in our opinion, the Company has, during the audit period covering the financial year ended on 31 March 2019, complied with the statutory provisions listed hereunder and also that the Company has proper Board-processes and compliance-mechanism in place to the extent, in the manner and subject to the reporting made hereinafter.

We have examined the books, papers, minute books, forms and returns filed and other records maintained by the Company for the financial year ended on 31 March 2019 according to the provisions of:

(i) The Companies Act, 2013 (the Act) and the Rules made there under and the relevant provisions of the Companies Act, 1956;

(ii) The Securities Contracts (Regulation) Act, 1956 ('SCRA') and the Rules made thereunder; (iii) The Depositories Act, 1996 and the Regulations and Bye-laws framed thereunder; (iv) Foreign Exchange Management Act, 1999 and the Rules and Regulations made thereunder to the extent of Foreign

Direct Investment, Overseas Direct Investment and External Commercial Borrowings; (v) The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 ('SEBI Act'):-

(a) The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011;

(b) The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015;

(c) The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 / 2018;

(d) The Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines,1999 / Securities and Exchange Board of India (Shares Based Employee Benefits) Regulations, 2014; (Not applicable during the audit period);

(e) The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008; (Not applicable during the audit period);

(f) The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 regarding the Companies Act and dealing with client;

(g) The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009; (Not applicable during the audit period) and

(h) The Securities and Exchange Board of India (Buy-back of Securities) Regulations, 1998.

We have also examined compliance with the applicable clauses of the following:

(i) Secretarial Standards issued by The Institute of Company Secretaries of India.

(ii) The Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulation, 2015.

During the period under review the Company has complied with the provisions of the Act, Rules, Regulations, Guidelines and Standards etc. as mentioned above.

We further report that, having regard to the compliance system prevailing in the Company and on examination of the relevant documents and records in pursuance thereof, on test-check basis, the Company has complied with the following laws/guidelines/rules applicable specifically to the Company:

(i) Guidelines issued by Department of Public Enterprises;

(ii) Guidelines issued by Ministry of Defence;

(iii) Order/Regulations issued by the Govt. of India from time to time;

(iv) E-Waste (Management & Handling) Rules, 2016;

We further report that:

The Board of Directors of the Company is duly constituted with proper balance of Executive Directors, Non-Executive Directors and Independent Directors. However as per the Regulation 17(1 )(b) of SEBI (LODR) Regulations, 2015, as the Chairman of Board of the Company is not a regular Non- executive Director, at least half of the Board of Directors shall comprise of Independent Directors. As there are two vacancies of Independent Directors, the Company does not comply with the same. For this non-compliance Stock Exchanges have imposed fine on the Company from time to time. No fine has been paid by the Company to Stock Exchanges. It is informed that the filling up of vacancies of the said Independent Directors is pending with the appointing authority namely Government of India. The changes in the composition of the Board of Directors that took place during the period under review were carried out in compliance with the provisions of the Act.

Adequate notice is given to all Directors to schedule the Board Meetings, agenda and detailed notes on agenda were sent at least seven days in advance, and a system exists for seeking and obtaining further information and clarifications on the agenda items before the meeting and for meaningful participation at the meeting.

Majority decision is carried through while the dissenting members' views, if any are captured and recorded as part of the minutes.

We further report that there are adequate systems and processes in the Company commensurate with the size and operations of the Company to monitor and ensure compliance with applicable laws, rules, regulations and guidelines.

We further report that during the audit period there are following events/actions having a major bearing on the Company's affairs in pursuance of the above referred laws, rules, regulations, guidelines, standards taken place: Nil.

 

For Thirupal Gorige & Associates LLP

 

Practising Company Secretaries

 

CS Thirupal Gorige

Bengaluru

Designated Partner

22 May 2019

FCS No. 6680; CP No. 6424

Note: This report is to be read with our letter of even date which is annexed as Annexure A and forms an integral part of this report.

Annexure A

To

The Members

BHARAT ELECTRONICS LIMITED

Outer Ring Road

Nagavara, Bengaluru - 560 045, Karnataka.

Our report of even date is to be read along with this letter.

(1) Maintenance of secretarial record is the responsibility of the management of the company. My responsibility is to express an opinion on these secretarial records based on our audit.

(2) We have followed the audit practices and processes as were appropriate to obtain reasonable assurance about the correctness of the contents of the Secretarial records. The verification was done on test basis to ensure that correct facts are reflected in secretarial records. We believe that the processes and practices we followed provide a reasonable basis for our opinion.

(3) We have not verified the correctness and appropriateness of financial records and Books of Accounts of the Company.

(4) Wherever required, we have obtained the Management representation about the compliance of laws, rules and regulations and happening of events etc.

(5) The compliance of the provisions of Corporate and other applicable laws, rules, regulations, standards is the responsibility of management. Our examination was limited to the verification of procedures on test basis.

(6) The Secretarial Audit report is neither an assurance as to the future viability of the company nor of the efficacy or effectiveness with which the management as conducted the affairs of the Company.

 

For Thirupal Gorige & Associates LLP

 

Practising Company Secretaries

 

CS Thirupal Gorige

Bengaluru

Designated Partner

22 May 2019

FCS No. 6680; CP No. 6424

Annexure 4

EXTRACT OF ANNUAL RETURN

As on the financial year ended 31 March 2019

[Pursuant to Section 92(3) of the Companies Act, 2013, and Rule 12(1) of the Companies (Management and Administration) Rules, 2014]

Form No. MGT-9

I. REGISTRATION AND OTHER DETAILS

CIN

L32309KA1954GOI000787

Registration Date

21 April 1954

Name of the Company

Bharat Electronics Limited

Category /Sub-Category of the Company

Company having Share Capital

Address of the Registered Office and contact details

Outer Ring Road, Nagavara, Bengaluru -560045 Tel. No. 080 25039300

Whether listed Company

Yes

Name, address and contact details of Registrar and Transfer Agent, if any

Integrated Registry Management Services Pvt. Ltd. #30, Ramana Residency, 4th Cross, Sampige Road, Malleswaram, Bengaluru - 560 003 Tel. No. 080 2346081 5 to 818

II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY

All the business activities contributing 10% or more of the total turnover of the Company shall be stated:

SI. No.

Name and Description of main products /services

NIC Code of the Product /service

% to total turnover of the company

1

Communication & C4I systems

26303

(Supplies to the Defence for 2018-19 contributed to 68% of turnover)

2

Radar

26515

3

Electro Optics

26700

III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES

SI. No.

Name and Address of the Company

CIN/GLN

Holding / Subsidiary/ Associate

% of Shares Held

Applicable Section

1

GE BE Private Limited

No. 60, Export promotion industrial park, Whitefield, Bengaluru - 560 066.

U31909KA1996PTC020482

Associate

26

2(6)

2

BEL Optronic Devices Limited

EL 30 J Block MIDC, Bhosari, Pune-411 026

U32100PN1 990GOI058096

Subsidiary (wholly owned)

100

2(87)

3

BEL-Thales Systems Limited

CNP Area, BEL Industrial Estate, Jalahalli, Bengaluru-5600013

U32106KA2014GOI076102

Subsidiary

74

2(87)

4

Defence Innovation Organisation

Centre for Learning and Development Bharat Electronics Limited, Jalahalli, Bengaluru - 560013.

U73100KA2017NPL102118

Associate

50

2(6)

IV. SHAREHOLDING PATTERN (EQUITY SHARE CAPITAL BREAKUP AS PERCENTAGE OF TOTAL EQUITY)

i) Category-wise Shareholding

Category of Shareholders

No. of Shares held at the beginning of the year

No. of Shares held at the end of the year

% Change during the year

Demat

Physical

Total

% of Total Shares

Demat

Physical

Total

% of Total Shares

A. Promoters

(1) Indian

a) Individual / HUF

 

 

-

 

-

 

-

-

 

b) Central Govt.

1627374928

-

1627374928

66.79

1433326432

-

1433326432

58.83

(7.96)

c) State Govt.(s)

 

 

-

 

-

 

-

-

 

d) Bodies Corporate

 

 

-

 

-

 

-

-

 

e) Banks / Fl

 

 

-

 

-

 

-

-

 

f) Any Other....

 

 

-

 

-

 

-

-

 

Sub-Total (A)(1):

1627374928

-

1627374928

66.79

1433326432

-

1433326432

58.83

(7.96)

(2) Foreign

a) NRIs- Individuals

 

 

-

 

-

 

-

-

 

b) Other -Individuals

 

 

-

 

-

 

-

-

 

c) Bodies Corporate

 

 

-

 

-

 

-

-

 

d) Banks / Fl

 

 

-

 

-

 

-

-

 

e) Any Other. .

 

 

-

 

-

 

-

-

 

Sub-Total (A)(2):

 

 

-

 

-

 

-

-

 

Total Shareholding of Promoters (A)=(A)(1)+(A)(2)

1627374928

-

1627374928

66.79

1433326432

-

1433326432

58.83

(7.96)

B. Public Shareholding

(1) Institutions

a) Mutual Funds / UTI

317854095

69,600

317923695

13.05

446737355

69,600

446806955

18.34

5.29

b) Banks / Fl

8336028

 

8336028

0.34

10106655

 

10106655

0.41

0.07

c) Central Govt.

 

 

-

 

-

 

-

-

 

d) State Govt.(s)

 

 

-

 

-

 

-

-

 

e) Venture Capital Funds

 

 

-

 

-

 

-

-

 

f) Alternate Investment Funds

1114563

 

1114563

0.05

117604

 

117604

0.00

(0.05)

g) Insurance Companies

107590489

 

107590489

4.42

100357764

 

100357764

4.12

(0.30)

h) FIIs

156860836

 

156860836

6.44

182605873

 

182605873

7.49

1.05

i) Foreign Venture Capital Funds

 

 

-

 

-

 

-

-

-

j) Others (specify)

 

 

-

 

-

 

-

-

 

Sub-Total (B)(1):

591756011

69600

591825611

24.29

739925251

69600

739994851

30.37

6.08

(2) Non-Institutions

 

 

 

 

 

 

 

 

 

a) Bodies Corporate

82114665

9933

82124598

3.37

66879812

9900

66889712

2.75

(0.62)

b) Individuals

 

 

-

 

-

 

-

-

-

i) Individual Shareholders holding nominal share capital upto Rs. 1 lakh

102203653

280314

102483967

4.21

151000430

241407

151241837

6.21

2.00

ii) Individual Shareholders holding nominal share capital in excess of Rs. 1 lakh

10753884

 

10753884

0.44

13167054

 

13167054

0.54

0.10

c) Others (specify)

 

 

 

 

 

 

 

 

 

i) Trusts

10999957

-

10999957

0.45

6230817

-

6230817

0.26

(0.19)

ii) NRI

7668544

-

7668544

0.31

14130290

225

14130515

0.58

0.27

iii) Clearing Members

3352811

-

3352811

0.14

11601892

-

11601892

0.48

0.34

iv) LLP

927

-

927

0.00

7

-

7

0.00

0.00

v) IEPF Account

7210

-

7210

0.00

9320

-

9320

0.00

0.00

vi) Foreign National

506

-

506

0.00

506

-

506

0.00

0.00

Sub-Total (B)(2):

217102157

290247

217392404

8.92

263020128

251532

263271660

10.80

1.88

Total Public Shareholding (B)=(B)(1)+(B)(2)

808858168

359847

809218015

33.21

1002945379

321132

1003266511

41.17

7.96

C. Shares held by Custodian for GDRs & ADRs

-

-

-

-

-

-

-

-

-

Grand Total (A+B+C)

2436233096

359847

2436592943

100.00

2436271811

321132

2436592943

100.00

 

 

 

ii) Shareholding of Promoters

 

Shareholding at the beginning of the year

Shareholding at the end of the year

% change in shareholding during the year

Shareholders Name

No. of Shares

% of total shares of the Company

% of shares Pledged / encumbered to total shares

No. of Shares

% of total shares of the Company

% of shares Pledged / encumbered to total shares

President of India

1627371628

66.79

0.00

1433323132

58.82

0.00

(7.97)

Prem Kumar Kataria

3300

0.00

0.00

3300

0.00

0.00

0.00

Total

1627374928

66.79

0.00

1433326432

58.83

0.00

(7.96)

 

iii) Change in Promoters' Shareholding (Please specify, if there is no change)

SL No.

Shareholders Name

Shareholding at the beginning of the year

Cumulative Shareholding during the year

No. of Shares

% of total shares of the company

Date

Increase / decrease in Share holding

Reason

No. of Shares

% of total shares of the Company

1

President of India

1627371628

66.79

01.04.2018

-

-

1627371628

66.79

15.06.2018

(13994485)

TRANSFER

1613377143

66.21

22.06.2018

(4939231)

TRANSFER

1608437912

66.01

06.07.2018

(1963921)

TRANSFER

1610401833

66.09

30.11.2018

(321630268)

TRANSFER

1288771565

52.89

14.12.2018

220285392

TRANSFER

1509056957

61.93

22.02.2019

(28841057)

TRANSFER

1480215900

60.75

22.03.2019

(55152188)

TRANSFER

1425063712

58.49

31.03.2019

8259420

TRANSFER

1433323132

58.82

2

Prem Kumar Kataria

3300

0.00

01.04.2018

-

-

3300

0.00

31.03.2019

-

-

3300

0.00

 

iv) Shareholding Pattern of Top Ten Shareholders (Other than Directors, Promoters and Holders of GDRs and ADRs)

SL. No.

Name of the Shareholders

Shareholding at the Beginning of the Year -01.04.2018

Cumulative Shareholding During the Year -31.03.2019

No. of Shares

% of Total Shares of the Company

No. of Shares

% of Total Shares of the Company

1

Life Insurance Corporation Of India

At the beginning of the Year

87,916,268

3.61

87,916,268

3.61

Transfer/Sale / Buyback / Bonus issue of shares during the year

-

-

-

-

At the end of the Year

-

-

87,916,268

3.61

2

Birla Sun Life Trustee Company Private Limited

At the beginning of the Year

52,975,802

2.17

52,975,802

2.17

Transfer /Sale/ Buyback/ Bonus issue of shares during the year

16,341,753

0.67

69,317,555

2.84

At the end of the Year

-

-

69,317,555

2.84

3

ICICI Prudential Value Discovery Fund

At the beginning of the Year

42,218,811

1.73

42,218,811

1.73

Transfer /Sale/ Buyback/ Bonus issue of shares during the year

452,906

0.02

4,2671,717

1.75

At the end of the Year

-

-

42,671,717

1.75

4

HDFC Trustee Co Ltd A/C HDFC Focused Equity Fund

At the beginning of the Year

41,174,788

1.69

41,174,788

1.69

Transfer /Sale/ Buyback/ Bonus issue of shares during the year

16,672,370

0.68

57,847,158

2.37

At the end of the Year

-

-

57,847,158

2.37

5

Reliance Capital Trustee Co. Ltd A/c Reliance Capital

At the beginning of the Year

32,175,308

1.32

32,175,308

1.32

Transfer /Sale/ Buyback/ Bonus issue of shares during the year

72,992,335

3.00

105,167,643

4.32

At the end of the Year

-

-

105,167,643

4.32

6

SBI Arbitrage Opportunities Fund

At the beginning of the Year

30,362,776

1.25

30,362,776

1.25

Transfer /Sale/ Buyback/ Bonus issue of shares during the year

1,497,790

0.06

31,860,566

1.31

At the end of the Year

-

-

31,860,566

1.31

7

L&T Mutual Fund Trustee Limited-L&T Business Cycle

At the beginning of the Year

21,443,174

0.88

21,443,174

0.88

Transfer /Sale/ Buyback/ Bonus issue of shares during the year

8,344,991

0.34

29,788,165

1.22

At the end of the Year

-

-

29,788,165

1.22

8

Kotak Infrastructure & Economic Reform Fund

At the beginning of the Year

21,141,526

0.87

21,141,526

0.87

Transfer /Sale/ Buyback/ Bonus issue of shares during the year

26,819,920

1.10

47,961,446

1.97

At the end of the Year

-

-

47,961,446

1.97

9

DSP Blackrock Equity Savings Fund

At the beginning of the Year

20,533,509

0.84

20,533,509

0.84

Transfer /Sale/ Buyback/ Bonus issue of shares during the year

(19,655,809)

(0.80)

877,700

0.04

At the end of the Year

-

-

877,700

0.04

10

HDFCSL Shareholders Solvency Margin Account

At the beginning of the Year

15,060,878

0.62

15,060,878

0.62

Transfer /Sale/ Buyback/ Bonus issue of shares during the year

(251,479)

(0.01)

14,809,399

0.61

At the end of the Year

-

-

14,809,399

0.61

V. SHAREHOLDING OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

For Each of Directors and Key Managerial Personnel

Shareholding at the beginning of the year

Cumulative Shareholding during the year

No. of Shares

% of total shares of the Company

No. of Shares

% of total shares of the Company

Mr M V Gowtama

 

 

 

 

At the beginning of the year

1,263

0.00

1,263

0.00

Date wise Increase / Decrease in shareholding during the year specifying the reasons for increase / decrease:

-

-

-

-

At the end of the year

-

-

1263

0.00

Mr Nataraj Krishnappa

 

 

 

 

At the beginning of the year

1,263

0.00

1,263

0.00

Date wise Increase / Decrease in shareholding during the year specifying the reasons for increase / decrease:

-

-

-

-

At the end of the year

-

-

1,263

0.00

Mrs Anandi Ramalingam

 

 

 

 

At the beginning of the year

1,263

0.00

1,263

0.00

Date wise Increase / Decrease in shareholding during the year specifying the reasons for increase / decrease:

-

-

-

-

At the end of the year

-

-

1,263

0.00

MrRN Bagdalkar

 

 

 

 

At the beginning of the year

1,263

0.00

1,263

0.00

Date wise Increase / Decrease in shareholding during the year specifying the reasons for increase / decrease:

-

-

-

-

At the end of the year

-

-

1,263

0.00

Mr Koshy Alexander

 

 

 

 

At the beginning of the year

1265

0.00

1265

0.00

Date wise Increase / Decrease in shareholding during the year specifying the reasons for increase / decrease:

-

-

-

-

At the end of the year

-

-

1265

0.00

Mr Mahesh V

 

 

 

 

At the beginning of the year

1,265

0.00

1,265

0.00

Date wise Increase / Decrease in shareholding during the year specifying the reasons for increase / decrease:

-

-

-

-

At the end of the year

-

-

1,265

0.00

Mr Vinay Kumar Katyal

 

 

 

 

At the beginning of the year

1,263

0.00

1,263

0.00

Date wise Increase / Decrease in shareholding during the year specifying the reasons for increase / decrease:

"

"

"

"

At the end of the year

-

-

1,263

0.00

Mr S Sreenivas

 

 

 

 

At the beginning of the year

1,263

0.00

1,263

0.00

Date wise Increase / Decrease in shareholding during the year specifying the reasons for increase / decrease:

-

-

-

-

At the end of the year

-

-

1,263

0.00

VI. INDEBTEDNESS

(Rs. In Lakhs)

 

Secured Loans excluding deposits

Unsecured Loans

Deposits

Total Indebtedness

Indebtedness at the beginning of the financial year

 

 

 

 

i) Principal Amount

6,667

-

37

6,704

ii) Interest due but not paid

Nil

-

2

2

iii) Interest accrued but not due

Nil

-

-

0

Total (i+ii+iii)

6,667

-

39

6,706

Change in Indebtedness during the financial year

 

 

 

 

Addition

-

-

-

-

Reduction

(3,333)

-

-

(3,333)

Net Change

3,333

-

-

3,333

Indebtedness at the end of the financial year

 

 

 

 

i) Principal Amount

3,334

-

37

3,371

ii) Interest due but not paid

29

-

2

31

iii) Interest accrued but not due

-

-

-

-

Total (i+ii+iii)

3,363

-

39

3,402

VII. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

 A. Remuneration of MD, WTD and / or Manager

(Amount in

SI. No.

Particulars of Remuneration

MV Gowtama

Ajit T Kalghatgi (upto 31.05.2018)

R N Bagdalkar

Nataraj Krishnappa

Anandi Ramalingam

Koshy Alexander*

1.

Gross Salary

 

(a) Salary as per provisions contained in Section 17(1) of the Income Tax Act, 1961

55,01,871

18,79,297

41,06,119

44,45,536

43,93,061

50,73,915

(b) Value of perquisites under Section 17(2) Income Tax Act, 1961

39,600

1,15,875

4,79,231

5,06,748

5,09,068

32,400

(c) Profit in lieu of salary under Section 17(3) Income Tax Act, 1961

Nil

Nil

Nil

Nil

Nil

Nil

2.

Stock Options

Nil

Nil

Nil

Nil

Nil

Nil

3.

Sweat Equity

Nil

Nil

Nil

Nil

Nil

Nil

4.

Commission

 

 

 

 

 

 

- as % of profit

Nil

Nil

Nil

Nil

Nil

Nil

- others

Nil

Nil

Nil

Nil

Nil

Nil

5.

Lease accommodation, retirement & other benefits

10,86,335

1,58,030

11,74,407

12,30,685

12,73,200

3,99,550

 

Total

66,27,806

21,53,202

57,59,757

61,82,969

61,75,329

55,05,865

 

SI. No.

Particulars of Remuneration

Mahesh V (w.e.f. 01.06.2018)

Vinay Kumar Katyal (w.e.f. 27.11.2018)

Total

1.

Gross Salary

(a) Salary as per provisions contained in Section 17(1) of the Income Tax Act, 1961

33,95,994

13,37,994

3,01,33,787

(b) Value of perquisites under Section 17(2) Income Tax Act, 1961

9,550

2,09,955

19,02,427

(c) Profit in lieu of salary under Section 17(3) Income Tax Act, 1961

Nil

Nil

Nil

2.

Stock Options

Nil

Nil

Nil

3.

Sweat Equity

Nil

Nil

Nil

4.

Commission

 

 

 

- as % of profit

Nil

Nil

Nil

- others, specify....

Nil

Nil

Nil

5.

Lease accommodation, retirement & other benefits

10,80,279

11,30,770

75,33,256

 

Total

44,85,823

26,78,719

3,95,69,470

* Mr Koshy Alexander is Director (Finance) and CFO.

B. Remuneration to other Directors

(Amount in

1. Independent Directors

SI. No.

Particulars of Remuneration

Name of Directors

Total Amount

Dr Bhaskar Ramamurthi

Dr R K Shevgaonkar

Mrs Usha Mathur

Mr Sharad Shyam Sanghi

Mr Surendra S Sirohi

Mr Mukka Harishbabu

Dr Vijay S Madan

1.

- Fee for attending Board / Committee Meetings

2,00,000

2,80,000

2,80,000

1,20,000

2,40,000

2,60,000

1,20,000

15,00,000

2.

- Commission

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

3.

- Others, please specify

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

 

Total (B)(1)

2,00,000

2,80,000

2,80,000

1,20,000

2,40,000

2,60,000

1,20,000

15,00,000

 

2. Other Non Executive Directors

SI. No.

Particulars of Remuneration

Name of Directors

Total Amount

Dr Amit Sahai

Ms J Manjula

1.

- Fee for attending Board / Committee Meetings

Nil

Nil

Nil

2.

- Commission

Nil

Nil

Nil

3.

- Others, please specify

Nil

Nil

Nil

 

Total (B)(2)

Nil

Nil

Nil

 

Total (B)=(B)(1)+(B)(2)

Nil

Nil

15,00,000

C. Remuneration to Key Managerial Personnel other than MD/WTD/Manager

SI. No.

Particulars of Remuneration

Key Managerial Personnel

CEO

CFO**

Company Secretary

Total

1.

Gross Salary

 

 

 

 

(a) Salary as per provisions contained in Section 17(1) of the Income Tax Act, 1961

-

-

16,65,902

16,65,902

(b) Value of perquisites under Section 17(2) Income Tax Act, 1961

-

-

2,21,925

2,21,925

(c) Profit in lieu of salary under Section 17(3) Income Tax Act, 1961

-

-

Nil

Nil

2.

Stock Options

-

-

Nil

Nil

3.

Sweat Equity

-

-

Nil

Nil

4.

Commission

 

 

 

 

- as % of profit

-

-

Nil

Nil

- others

-

-

Nil

Nil

5.

Lease accommodation, retirement & other benefits

-

-

7,62,656

7,62,656

 

Total

-

-

26,50,483

26,50,483

** Included in Part A. VIM. PENALTIES/ PUNISHMENTS / COMPOUNDING OF OFFENCES

Type

Section of the Companies Act

Brief Description

Details of Penalty/ Punishment / Compounding fees imposed

Authority

Appeal made if any (give Details)

A. COMPANY

 

 

 

 

 

Penalty

Nil

Nil

Nil

Nil

Nil

Punishment

Nil

Nil

Nil

Nil

Nil

Compounding

Nil

Nil

Nil

Nil

Nil

B. DIRECTORS

 

 

 

 

 

Penalty

Nil

Nil

Nil

Nil

Nil

Punishment

Nil

Nil

Nil

Nil

Nil

Compounding

Nil

Nil

Nil

Nil

Nil

C. OTHER OFFICERS IN DEFAULT

 

 

 

 

Penalty

Nil

Nil

Nil

Nil

Nil

Punishment

Nil

Nil

Nil

Nil

Nil

Compounding

Nil

Nil

Nil

Nil

Nil

 


For and on behalf of the Board

Bengaluru

M V Gowtama

7 August 2019

Chairman & Managing Director

 


Mar 31, 2018

To the Members,

The Directors take pleasure in presenting their Report and the Audited Financial Statements for the financial year ended 31 March 2018 together with the reports of the Statutory Auditors and the Comptroller and Auditor General of India thereon.

Financial Results and Performance Highlights

A summary of the Company’s financial results is given below :

(Rs. in Lakhs)

Particulars

2017-18

2016-17

Value of Production

970,595

924,383

Turnover (Gross)

1,008,484

882,470

Profit Before Depreciation, interest and Tax

220,011

223,272

Finance Cost

127

1,178

Depreciation & Amortisation

25,100

19,152

Profit Before Tax

1,94,784

202,942

Provision for Tax

54,855

48,180

Profit After Tax

139,929

154,762

Other Comprehensive Income / (Loss)

145

(9,185)

Total Comprehensive Income

140,074

145,577

Dividend paid

62,765

61,604

Tax on Dividend

12,777

12,541

Transfer to General Reserve

40,000

40,000

Other equity (Including Reserves & Surplus)

751,735

728,518

Net Worth

776,101

750,854

Earnings Per Share (in Rs.)

5.70

6.03*

Book Value Per Share (in Rs.)

31.85

33.62

* adjusted due to issue of bonus shares in 2017-18.

Distribution of Value of Production for 2017-18 is given below :

Particulars

Amount (Rs. in Lakhs)

Percentage

Materials

513,626

53%

Employee Cost

177,233

18%

Other Expenses (Net)

59,852

6%

Depreciation & Amortisation

25,100

3%

Provision for Tax

54,855

6%

Profit After Tax

139,929

14%

Total

970,595

100%

Company’s turnover (Gross) for the year 2017-18 has increased to Rs.1,008,484 Lakhs from Rs.882,470 Lakhs in 2016-17, registering a growth of 14.28%. Profit after Tax for the year is Rs.139,929 Lakhs as against Rs.154,762 Lakhs in the previous year. Turnover from indigenously developed products is 89%. Supplies to the defence contributed to 85% of turnover as against 88% in 2016-17.

Dividend

The Board of Directors of the Company has formulated a Dividend Distribution Policy keeping in view the provisions of SEBI (LODR) Regulations, 2015, the Companies Act 2013 and also taking into consideration the guidelines issued by SEBI, DPE, DIPAM, Ministry of Finance and also other guidelines to the extent applicable to the Company. The Policy is annexed to this Report as “Annexure 1” and also placed on the Company’s website at http://bel-india. in / ContentPage.aspx?MId=17&CId=527&Lid =1&link=527

The Board of Directors has recommended a Final Dividend of Rs.0.40/- per equity share (40%), Rs.9,746 Lakhs for the year 2017-18. An interim dividend of Rs.1.60 per equity share (160%), Rs.39,312 Lakhs was paid for the year 2017-18 in February 2018. Thus, the total dividend for the year 2017-18 is Rs.2/- per equity share (200%), Rs.49,058 Lakhs (excluding dividend distribution tax).

Amount Transferred to Reserves

An amount of Rs.40,000 Lakhs is transferred to General Reserves for the financial year 2017-18.

Share Capital

The Company’s paid-up Equity Share Capital as on 31 March 2018 was Rs.24,366 Lakhs.

During the year 2017-18, your Company issued bonus shares in the ratio of 1:10 (one fully paid-up equity shares of Rs.1/each for every ten fully paid-up equity shares held) to all its shareholders in the month of October 2017. As a consequence, the paid-up share capital of the Company increased from Rs.22,336 Lakhs to Rs.24,570 Lakhs.

Subsequently, your Company bought back 20,397,780 equity shares of Rs.1/- each fully paid-up at price of Rs.182.50 per equity share in the month of March 2018 consequent to which the paid-up equity share capital of the Company stands reduced to Rs.24,366 Lakhs as on 31 March 2018.

The details of Directors and Key Managerial Personnel’s shareholdings in the Company as on 31 March 2018 is given below :

Sl. No.

Name

Designation

No. of equity shares held

1

Mr M V Gowtama

Chairman and Managing Director

1,263

2

Dr Ajit T Kalghatgi

Director (Research & Development)

1,263

3

Mr Nataraj Krishnappa

Director (Other Units)

1,263

4

Mrs Anandi Ramalingam

Director (Marketing)

1,263

5

Mr R N Bagdalkar

Director (Human Resources)

1,263

6

Mr Koshy Alexander

Director (Finance)

1,265

7

Mr S Sreenivas

Company Secretary

1,263

The Company has not issued any convertible security during the year.

Major Orders Executed

Major Projects executed during the year for tri services and non-defence customers include : Integrated Air Command and Control System to Airforce, Weapon Locating Radar to Army, Hand Held Thermal Imager to Army, Akash Weapon System to Army, Fire Control System to Navy, Integrated Communication Systems to Navy, 3-D Tactical Control Radar to Army, Electronic Warfare Systems to Navy, Integrated Submarine Sonar Suite to Navy, Home Land Security to ONGC, L70 Gun Upgrade to Army, Electronic Voting Machine (EVM) & Voter Verifiable Paper Audit Trail (VVPAT) to ECI, Schilka Gun Tank upgrade to Army, Intelligence Gathering Systems to Airforce.

Exports

Your Company has been giving an increased thrust towards harnessing the export potential of defence electronics products and systems which represent its core area of business. BEL has been exporting various products and systems to various friendly countries. Apart from this BEL is interacting with electoral commissioners of various democratic countries to market Electronic Voting Machines. Having established a Coastal Surveillance System (CSS) for few neighboring countries, BEL is interacting with Ministry of External Affairs on a regular basis for supply of CSS to other friendly countries of India.

BEL is focusing on the various opportunities in the area of helping OEM’s to meet offset obligations in various RFPs of MoD on account of offset policy incorporated in the Defence Procurement Procedure. In this regard BEL is closely working with various major foreign Aerospace and Defence Companies. BEL has identified contract manufacturing (build to print and build to spec) to foreign OEM’s as one of the areas of emerging export opportunities. Further efforts are being made to establish long term supply chain relationship with global players.

Company has achieved an export sale of US$ 26.3 Million during 2017-18, to various countries, viz., Sri Lanka, Myanmar, Maldives, Mauritius, Vietnam, Indonesia, Israel, Switzerland, Germany, Sweden and USA. Major Products / Systems exported are Advanced Composite Communication System (ACCS), Compact Airborne Surveillance System (CoMPASS), Bharti Radio, Cable Looms Mechanical Parts, Coastal Surveillance System, Spares for TRS 2215 Radar & V/UHF Radio.

The decline in export sale is mainly due to the nonestablishment of Letter of Credit by customer for various Naval Systems contracted for Project 21, Offshore Patrol Vessels. The transformation in political and economic scenarios in the Myanmar, Sri Lanka, and Maldives was another factor contributing to reduced exports in the current year.

Initiative taken to increase exports by development of new markets, for products & services during the financial year 2017-18 :

- Marketing Offices Abroad

- BEL has put in efforts for increasing the business opportunities in South East Asia and Middle East by incessant engagement with customers.

- A Marketing office in Vietnam was established during 2017-18.

- During 2018-19, the following Marketing Offices are proposed to be established in : Muscat - Oman; Colombo - Sri Lanka; Yangon - Myanmar.

- Strategic Alliance with the Indian Platform Manufacturers

BEL has initiated discussions and process for signing agreements with the following major Indian Platform manufacturers :

- Goa Shipyard Limited, Goa

- Mazagaon Dockyard Limited, Mumbai

- Larsen & Toubro Limited, Mumbai

- Mahindra Defence Systems Limited, Mumbai

* Strategic Alliance with the Foreign OEMs

Proposed strategic alliance with foreign OEMs to address global markets by offering the best value proposition

- SAAB, Sweden - Marketing agreement for various equipments.

- ELOP, Israel - Electro-optics.

- Elbit, Israel - Airborne EW, TIFCS, SAR, HMDS.

- Controp, Israel - Night Vision and Laser Equipment.

- Meprolight, Israel - Co-production agreement for LRFs, GLS, Day Sights for small Arms.

- Beretta, Italy - MoU for supplying of Reflex Sight and NVDs for Assault / Sniper Rifle for Global requirement.

- Thales - Radar for Rafale, EW Suite and Search Master Radar.

- Coastal Surveillance Systems to countries of Indian

Ocean Region :

- Submitted proposal for establishment of Coastal Surveillance System for Sultanate of Oman in response to a tender.

* Export Version of EVM and VVPAT

- BEL earlier exported EVMs and accessories to Namibia and now they have indicated the requirement of VVPAT. Botswana also has shown keen interest in obtaining EVMs and VVPATs.

- As per directives of the Election Commission of India, Export Versions of both the EVM and VVPAT are presently under development, qualification and certification.

The following were the scope for offset business during 2017-18 :

- F18 Flight Control Panel for Boing USA

- Cable Harness for Pilatus Switzerland

- EoSCoMPASS for Elop Israel

- G4 A Technical platform (Shelters) for SAAB Sweden

* An MoU has been signed with Thales, France for

Integration of the Air Borne Radar EW Suite for Rafale aircraft contracted by Dassault Aviation to Indian Air Force. Six modules have been ordered by Thales for necessary qualification. This is expected to be ramped up quickly in the coming years.

MoU with Government

Your Company has been signing a Memorandum of Understanding (MoU) every year with the Government of India, Ministry of Defence. Performance of BEL for the year 2016-17 has been rated as “Excellent” in terms of the MoU with the Government. The MoU rating for 2017-18 is under review by the Government.

Order Book Position

The order book of Company as on 01 April 2018 was around Rs.40,115 Crores. The order book comprises mainly major programs like Long Range Surface to Air Missile, Integrated Air Command Control System, Battlefield Surveillance System, Advanced Composite Communication System, Command Information Decision Support System, Commander Thermal Imaging Sights, Electronic Voting Machine (EVM) & Voter Verifiable Paper Audit Trail (VVPAT), Intelligence Gathering Systems, Weapon Locating Radar, Sonars etc.

Finance

During this year, your Company has enhanced shareholders value through Buyback of shares and higher dividend payout. The Company returned 5% of share capital and free reserves amounting to Rs.37,226 Lakhs to the shareholders. Apart from the final dividend of Rs.23,453 Lakhs (105%) for 2016-17 which was paid out in 2017-18, an interim dividend amounting to Rs.39,312 Lakhs (160%) was paid out in the month of February 2018 in respect of 2017-18.

The initiatives taken by your Company in taking up some major capital projects is progressing well and the outcome should strengthen the Company’s journey to a higher trajectory of turnover and growth. During the year, your Company has been able to meet all the incremental working capital requirements and most of the capital requirements through its internal accruals. Company has availed a term loan of Rs.10,000 Lakhs to fund its CAPEX requirements, out of which Rs.6,666 Lakhs is outstanding as on 31 March 2018. Your Company has retained the highest rating by ICRA for both short term and long term borrowing.

The Inventory position (net) of the Company as on 31 March 2018 was Rs.477,552 Lakhs as against Rs.490,501 Lakhs as on 31 March 2017. This works out to 181 days of value of production as on 31 March 2018 as against 206 days achieved as on 31 March 2017. This has been possible due to close monitoring of the inventory levels.

The position of trade receivables (net) as on 31 March 2018 was Rs.570,458 Lakhs as against Rs.435,488 Lakhs as on 31 March 2017. This works out to 206 days of turnover as against 180 days of turnover achieved during the previous year. The increase in trade receivables is mainly due to deferment of payments by the customers due to budget constraint.

Deposits

The Company does not have any Public Deposit Scheme at present. However, the matured Public Deposit amount (collected prior to February 2006) with the Company was Rs.36.95 Lakhs as on 31 March 2018. Out of these 34 deposits amounting to Rs.36.50 Lakhs are not claimed or not paid as these accounts are frozen on advice by Karnataka Lokayukta, remaining mature deposits of Rs.0.45 lakh as on 31 March 2018 is unpaid due to in-sufficient documents / records produced by Depositors.

Research & Development

Research and Development (R&D) has been the core strength of BEL. Various Divisions of BEL are involved in developments of Strategic Components, Technology Modules, Subsystems, Products, Systems and System of Systems Apart from in-house efforts, BEL R&D Engineers are working with DRDO, ISRO, CSIR, other national Research Laboratories and Academic Institutes for Joint development. During 2017-18, R&D activities have been carried out in all the business segments namely, Missile Systems, Radars, Electronic Warfare, Avionics, Military Communication, Naval Systems, C4I systems, Electro-optics, Tank Electronics, GUN Upgrades, Civilian Equipments, Systems and components.

BEL has three-Tier R&D structure namely CRL, Central D&E and PD&IC and D&Es attached to SBUs / Units. As a Philosophy and Policy, these R&D Labs work in the identified technology and product area, with well documented three year R&D plans based on ROP / marketing forecast / TPCR and after due approval of budget / time by the competent authority.

In R&D, BEL has many challenges to overcome. Size, weight, power and quality requirements always push the R&D to the edge. At component level, R&D needs to work on the newer requirements of MMICs, highly integrated processor ICs, microwave super-components, etc. At product level, R&D needs to create configurable, multifunction and fault tolerant products. The System of Systems needs expertise in Project management along with system integration expertise. With short life of components, obsolescence is the issue to be on alert on all the time. All these challenges are addressed with well planned R&D initiatives, system driven obsolescence alert, training of R&D Manpower and in collaboration with external agencies.

The major development initiated in 2017-18 are next generation Weapon Systems, Smart elements of HLS, IIR Seekers, Indigenous CSS software, On-the -move Satcom with low profile Antenna, Satcom Man pack terminal, Electronic Sub-Systems for Twin Barrel 30 mm AD Gun, Advanced system for Identification of Friend & Foe for Weapon Systems, Upgraded Voice Control and Communication systems, Coastal Situation Awareness Radar, Ultra light-weight shelter and modular High Altitude Shelters.

Some of the major projects completed in 2017-18 are 3D Airport Radars, Electronic upgrade of gun systems, EOTS for a new Weapon System program, Weapon System Software Upgrade, Medium Power Radar, OPS shelter for Radar and Electronic Warfare System for Tethered Buoy.

During 2017-18, the R&D revenue expenditure was Rs.883 Crores and Capital expenditure was Rs.105 Crores, totaling to Rs.988 Crores, amounting to 9.79% of turnover. The turnover due to indigenous development efforts in 2017-18 is 89% of turnover.

The Important R&D Awards /recognitions received during 2017-18 are the Raksha Mantri Awards for Excellence for the year 2014-15 and 2015-16 in the categories of Indigenization, Design Effort, Institutional Award and Best Performing division of DPSUs and SODET awards for the years 2013-14, 2014-15 and 2015-16 in the categories of Technology Innovations and Technology Developments.

New Products developed :

1. Intelligence gathering System

It consists of one Control and three Receiver stations in Master-Slave mode to search, detect, monitor, record and process hostile emissions and locate the emitter

2. Gun Fire Control System (FCS) for ships

It is a gun FCS with up mast mountable compact Radar with Auto search - Works in auto / Control (controlled by CIAO) modes.

3. Advanced Communication network for ship

It is an advanced communication network providing quick & reliable ship-ship, ship-shore, ship-Air communication.

4. High Data Rate Ship Data Network

It is a Ship Data Network, providing a broadband network for VVD comm. It is a Backbone NW to connect ship combat systems, other ship systems, Gateway and Access switches.

5. Compact Airborne Transmitter

It is based n Coherent Master Oscillator Power Amplifier, with medium peak power and moderate duty cycle. The transmitter is designed for operation under Air borne conditions reliably.

6. Pedestal for AESA Radar

It is a Subsystem of a Fire Control System which detects, tracks target & positions gun at exact angle for engagement.

7. Radio with Communication on the Move capability for Weapon system

It is a radio which is capable of working in partial mesh network, supports medium speed mobility and also supports simultaneous operation in two different Bands simultaneously.

8. Multi Purpose Reflex Weapon Sight (MRWS)

It is a parallax free, compact, light-weight and rugged weapon sight for instant target acquisition.

9. Light Weight Portable Laser Target Designator (LWPLD)

It is a Target Designator with dual magnificent sight and night operation capability through TI (Thermal Imager). It is light weight and portable.

10. Vehicle mounted X Ray Baggage Inspection System

It is a Low bed 60X40 baggage machine (XBIS) mountable on vehicle, capable of scanning metal up to 30mm with high resolutions.

11. Electro Optic System - SCGC Topaz

It is an Electro Optic system installed on the patrol vehicles for surveillance at the sea.

12. Cdr TI Sight for T-72

State of the Art high resolution large format thermal imager based sights have replaced the obsolete Image intensifier tube based Commander Sights.

13. HHTI Bi Ocular

It is a Hand Held TI camera with night vision capability, working with Li-ion battery.

It has a multiple FoV lens with focus adjustments for better range capability.

14. Gunner TI Sight for T-90

It has continuous zoon lens, with improved detection capabilities.

15. EO system for Air Defence Radar

It is an Electro Optic system with zoom lens, Optical extender for TI sight, long range CCD and LAN compatibility.

16. Observation Unit for BoSS

It is a Day and Night camera and LRF with target localization capability for BSS.

17. Mine Field Recording System (MFRS)

MFRS is used to plot and record coordinates of any desired point on a mine field (ground) at which the MFRS is taken, with higher accuracy.

18. Radio Relay Upgrade (Low Band)

It is an upgrade to BEL’s existing Radio Relay which had limited data rate capability.

19. Secure Phone

In-house developed secure phone caters for secure voice, SMS, data and video. It has higher internal storage capacity.

20. Handheld Digital Compass

It provides stable heading info for the Infantry soldier of Indian Army by giving accurate bearing information of targets, storing and recalling of target angels. Facility is provided for map reading during night navigation. It is light weight and compact.

21. Multi Channel Encryptor Unit (MCEU)

It is a versatile encryptor with - Bulk encryption capabilities at different data rates.

22. Electronic Voting Machine-M3 (EVM-M3)

This is an upgrade to the Electronic Voting Machine developed by BEL, with enhanced security and tamper proof features, reduced size and self diagnostics features.

23. VVPAT-M3

This is an upgrade to the VVPAT machine with enhanced security and tamper proof features, built-in-display unit and code readout facility.

New Facilities Established During the Year

Company has been continuously modernizing its infrastructure to be in tune with the changing needs of the technology / products. Specific groups in all the units scan the technology changes that are taking place and identify new processes in the world market for acquisition. This enables the Company to maintain its infrastructure on par with international standards. During the year 2017-18, Company has spent Rs.634 Crores as part of CAPEX investment towards Modernization of Plant & Machinery, Test Instruments, R&D investments, infrastructure up-gradation etc.

Following are some of the major facilities established during the year :

- Solar PV Power Plant at Ordnance Factory, Medak (OFMK).

- BEL Academy to address the training needs of BEL employees, as well as of its customers and vendors / partners.

- Advanced EMC Testing Facilities having Anechoic Chamber. It can be used to carry out system level EMC testing for many projects of national importance.

- Near Field Antenna Test Range (NFTR) facility at BEL, Bengaluru for calibration and testing of Radars and communication antennas. The NFTR facility at Bengaluru is the third such set-up in BEL.

- High level Shock Testing Facility established at BEL, Bengaluru.

- Secured Manufacturing Test facility established in BEL, Bengaluru and Panchkula units for production of EVMs and VVPATs.

- State of the art Electronic Artillery Fuze manufacturing at BEL Pune.

SAP Implementation in BEL and other IT Initiatives

ERP- SAP was implemented in BEL in 2006-07 and all Business Processes in BEL are mapped in SAP. Over a period of time, BEL has matured in the core Modules of SAP like PP, MM, SD, QM, HR, FICO, PLM, PS etc, and many additional Modules like Supplier Relationship Management (SRM), Customer Relationship Management (CRM), Business Intelligence (BI), File Life Cycle Management (FLM), Employee Self Service (ESS), Knowledge Management (KM), etc have been implemented successfully. BEL has implemented many of the processes in SAP which are not in the standard ERP modules like Standardization, Contract Management System for Engineering Services, Online Spares Order Management

System for Navy, Factory Complaint Management System, Township Management System, BEL Guest Management System, Employee Grievance System, Lead Management System, Vigilance Process, Visitors Management System etc. BEL has implemented Governance Risk and Compliance (GRC) module on a pilot scale in one of the SBUs and this will be implemented company wide from 2018-19.

The migration to GST tax system is totally integrated with SAP system. All requirements in form of returns like 3B, 1, etc are taken from the system directly without any manual activities outside system. The migration was zero step movement to new system without a single day discontinuity of business.

BEL implemented Real Time Information system in the form of e-mail and SMS to Stakeholders like Vendors, Customers, Management, Employees and Visitors. BEL implemented GST and Pay Revision of Executives in SAP completely by the inhouse IT team.

BEL SAP team has won the prestigious award of “Excellent Contribution” in the category of “Best Institutional Practice to Fight Corruption”.

BEL implemented Company wide, State of the Art, Multi Party Video Conferencing facility covering various locations across India. This has improved the efficiency and ease of Communication and Reviews.

BEL has implemented Air Gap concept between Internet and Intranet. Hence the Risk due to external cyber attacks on Information system which is on the intranet is avoided. BEL has released the upgraded Information Security Manual and Procedure in 2017-18. BEL complies with all Cyber Security guidelines issued by Ministry. Various initiatives have been undertaken to improve the Information Security.

Quality

Quality, Technology and Innovation are three guiding pillars of BEL’s business initiatives. Quality, being the first pillar, has been one of the focus areas for the Company. Quality initiatives have been taken up for improvement in performance related to Product Design, On-time-Delivery, Process Cycle Times, SPC, Quality Control etc. in order to enhance Quality of Products and Services rendered to customers.

The Company is committed for improvement of its activities through process approach in line with World-Class Quality Systems. All Units / Strategic Business Units (SBUs) / Common Services Groups (CSGs) are accredited to ISO 9001 Quality Management System (QMS) since early nineties. Seven Units / SBUs, viz. Ghaziabad, Panchkula, Kotdwara, Hyderabad, Military Communications, Electronics Warfare & Avionics and Export Manufacturing have upgraded their QMS to Aerospace Standard, AS 9100.

Units of the Company are committed to Environment Management System through ISO 14001 Certification. Ghaziabad Unit is accredited to OHSAS (Occupational Health Safety and Assessment Series) 18001.

The ISO 9001:2008 version for QMS and ISO 14001:2004 version for EMS have been revised to 2015 versions in September 2015. Similarly, AS 9001 Rev ‘C’ has been upgraded to Rev ‘D’ in October 2016. In order to upgrade these certifications in BEL, Awareness Training programmes, Lead Auditor Training programmes and Conversion Programme for Lead Auditors of older versions of Standards to newer versions of the Standards have been conducted for personnel from various SBUs / Units. During the year 2017-18, 9 Units / SBUs got upgraded to 2015 version of ISO 9001 and 4 Units / SBUs to Revision D of AS 9100.

Test Equipments Calibration and Maintenance departments of Bangalore Complex, Ghaziabad and Panchkula Units are certified by National Accreditation Board for Testing and Calibration Laboratories (NABL) in accordance with ISO / IEC 17025 Standard. Pune Unit manufacturing X-ray tubes is certified for ISO 13485 Standard for Medical Devices. Bharat Electronics Software Technology Centre (BSTC) at Bangalore Complex is CMMi level 5 certified. D&E - NCS and CRL -Ghaziabad are certified for CMMi level 3.

EFQM (European Foundation of Quality Management) Model for Business Excellence is being followed in BEL since 2002 as another approach for overall strategic and operational excellence to meet and exceed the needs & expectations of stakeholders and enhancement in competitiveness. Its deployment status was assessed in the Company through participation in ‘CII-EXIM Bank Award for Business Excellence’ in a phased manner. All Units / SBUs of BEL have achieved ‘Commendation for Strong Commitment to Excel’ status. Bengaluru, Ghaziabad and Kotdwara Units achieved next higher level i.e. ‘Commendation for Significant Achievement’.

Continual improvements in products and processes are being brought out through various approaches. One such approach is ‘Six Sigma methodology’. Junior and Middle level executives select Sig Sigma projects from different areas of concern related to products and processes to bring about improvements. In order to effectively implement Six-Sigma methodology and to bring in a culture of improvement through analytical approach, selected senior executives (16 persons) from the Units are periodically trained as ‘Black Belt’ by Indian Statistical Institute, Bengaluru. These Black Belts guide other executives (Green Belts) in their Six Sigma projects. 519 Six Sigma projects were completed in financial year 2017-18. Out of 35 Six Sigma projects nominated for Regional / National level Competitions, 21 projects received regional level awards and the balance 14 projects received National Level Championships awards.

The organization has facilitated involvement of Nonexecutives in the Quality Movement through Quality Control Circles (QCC). In the year 2017-18, 656 QCC Presentations for improvement in products and processes were made by various QCCs. Many QCC circles were nominated to participate in national competitions / conventions and all were adjudged for various categories of Awards. One of the QCCs, which won CMD’s Rolling Shield in the Inter Unit QCC Competition, represented BEL in the International Convention, ICQCC 2017, held at Okada, Philippines and won the “Gold award”.

Another approach for Quality Improvement is through Suggestion Scheme, wherein employees from Non executives up to Managers provide suggestions for which they are suitably rewarded on implementation of their suggestions. Around 2549 suggestions were given by employees this year. Selected BEL employees participated at 28th National Level Convention conducted by Indian National Suggestion Schemes’ Association during January 2018 at Aurangabad and won 10 Awards under various categories. Bangalore Complex was awarded the First Prize for “Excellence in Implementation of Suggestion Scheme 2017” under Engineering Industry Category at the National Level.

The Company has nominated D&E engineers for Certified Reliability Engineer (CRE) program conducted by American Society for Quality (ASQ). 39 D&E engineers were professionally certified for CRE in year 2017-18 taking the number of CREs in the Company to 223.

35 operating level Quality Engineers in various SBUs / Units were certified during the year under Certified Quality Engineers (CQE) program by the American Society for Quality (ASQ) taking the number of CQEs in the Company to 141. Next higher level program, viz. Certified Manager for Quality and Organisation Excellence (CMQ&OE) for Senior level executives, was also conducted by ASQ and 13 senior executives were certified during the year taking cumulative total to 62.

Revised BEL Quality Manual (Revision 4) in line with the latest versions of the Quality Management Systems. Standards including Business Excellence was released during the year.

A ‘Quality Recognition Award’ scheme was introduced this year. Units / SBUs were evaluated for a number of Quality related parameters and best performing Units viz. Antenna & Radar SBUs of GAD, PK Unit and CHN Unit & MR SBU of BG-Cx were awarded prizes.

In order to inculcate a culture of Project Management, training programs for Project Management Professionals (PMP) were conducted. Post training, 146 PMPs (Cumulative 453 from the year 2007-08 onwards) was certified by Project Management Institute (PMI) in year 2017-18. Besides this, customised training programs, viz. Project Management Implementation Programme (PMIP) were conducted for lower level executives to enable them to use Project Management concepts in their work.

An independent Customer Satisfaction Survey (CSS) was done through an external agency, viz. M/s BPMBC Marketing Research(India) Pvt Ltd, Pune, to capture the Customers’ Perceptions on Quality of BEL’s Products and Services. Twenty products from 19 Units / SBUs were included in 2017-18 Customer Satisfaction Survey. Result for the same is awaited. Customer Satisfaction Index for the previous year 2016-17 was 83.8% (average).

New Transaction Codes are introduced in SAP ERP system based on user requirements for better management and analysis of the processes thereby helping in their overall improvement. Customer Relationship Management Module (CRM) and Supplier Relationship Management Module (SRM) in SAP are enabling improvements in Customer Services and Procurement Efficiencies.

Human Resources

Your Company employed 9,726 persons as on 31 March 2018 as against 9,716 persons as on 31 March 2017. Of these employees, 4,863 were engineers / scientists and 2,054 were women employees as on 31 March 2018. A total of 361 executives and 98 non-executives were inducted during the year. 82 employees belonging to SC, 31 employees belonging to ST, 133 employees belonging to OBC and 22 employees belonging to the minority community were recruited during the year.

Your Company has been implementing the Government Directives on Reservation. The particulars of SC/ST and other categories of employees as on 31 March 2018 are as under :

Category of Employees

Executives

Non-Executives

Group ‘A’

P O to 1- -G

Group ‘C’

Group ‘D’

Scheduled Caste

1019

29

670

42

Scheduled Tribe

344

8

142

24

OBC

1241

36

853

43

Ex-Servicemen

92

6

270

75

Physically Challenged

97

3

125

4

Various Training programs were conducted during the year to enhance competencies in Technical, Functional, Managerial and Leadership areas. Structured Executive Development Programs were conducted regularly with premier Institutes to meet the evolving training needs of executives as they progress through various grades.

The training programs are designed to enhance competencies in various areas like Technical, Functional and Managerial / Leadership.

A detailed write up on Company’s HR philosophy and specific HR initiatives during the year is provided separately in the Management Discussion and Analysis Report which forms part of this report.

Disclosure under Sexual harassment of Women at Workplace Prevention, (Prohibition and Redressal) Act, 2013

The Company is an equal opportunity employer and consciously strives to build a work culture that promotes dignity of all employees. As required under the provisions of Sexual Harassment of Woman at Workplace (Prevention, prohibition and Redressal) Act and Rules framed there under, the Company has implemented the policy on prevention, prohibition and redressal of sexual harassment at the workplace, which has been uploaded on the Company’s intranet portal. All women, permanent, temporary or contractual including those of the service providers are covered under the policy.

An Internal Complaints Committee has been constituted in each of the nine constituent units including Corporate Office to redress complaints relating to sexual harassment. During the year, the Company received one complaint on sexual harassment and no complaint is pending as at the end of the financial year.

Awareness programs were conducted across the Company to sensitize the employees and uphold dignity of their colleagues at workplace, particularly with respect to prevention of sexual harassment.

Awards and Recognitions

Your Company continues to be a highly trusted for the quality of its products, innovation and renovation of its products based on strong consumer insights and the ability to engage with consumers across the country. During the year your Company has received various Awards and Recognitions. Some of the important accolades received during the year by your Company include :

- Raksha Mantri’s Awards (2014-15)

a) Indigenization Award :

- Doppler Weather Radar

b) Design Effort :

- LYNX U2 Naval Gun Fire Control System

- Raksha Mantri’s Awards (2015-16)

a) Institutional Award :

- Best Performance in Export

b) Division / Factory/Shipyard Award :

- Best Performing Division of DPSUs : Naval Systems (Radar & Fire Control System)

c) Indigenization Award :

- Light Weight Portable Laser Target Designator.

d) Design Effort :

- Test Bed of Automated Air Defence Control and Reporting System.

- Prime Minister’s Shram Awards to BEL Employees for the year 2013-14 & 2014-15.

- Scope Award for Excellence and Outstanding Contribution in the special Institutional category of Digitalization for the year 2016-17.

- All India Management Association (AIMA) Managing India Award for the ‘Outstanding PSU of the Year’.

- Governance Now Awards : for Business Diversification, Adoption of Technological Innovations, HR Excellence, Environmental Sustainability and Research & Development.

- Dun & Bradstreet India’s Top PSU Award 2017 in the Manufacturing Category under Medium & Light Engineering Sector.

- Amity Leadership Award for Business Excellence, for outstanding contributions to the field of Surveillance and Defence industry.

- Vigilance Excellence Award-2017 for ‘Excellent Contribution’ in the category of “Best Institutional Practice to Fight Corruption” for the successful implementation of company wide e-filing system called “File Lifecycle Management (FLM)”.

- INSSAN Award for Excellence in Suggestion Scheme : BEL Bengaluru Unit has been awarded 1st prize for Excellence in Performance of the Suggestion Scheme for the year 2016-17 in Engineering Industry Group.

- First prize in the PSU category for “Responsible Organization Excellence Award” for the year 2016-17 from Associated Chambers of Commerce & Industry of India (ASSOCHAM).

- ELCINA -EFY Award for Excellence in Export for the year 2016-17 from Electronic Industries Association of India.

Other significant achievements during the year : - Handing over of Intelligence Gathering System :

This was handed over to Air Vice Marshal B R Krishna, AVSM, SC, Assistant Chief of Air Staff (Plans), Indian Air Force, in the presence of Dr S Christopher, Chairman DRDO and Secretary Department of Defence R&D and Ms J Manjula, DS & DG (ECS) at BEL Hyderabad Unit on 18 March 2018.

- Foundation stone laid for Sewage Treatment Plant at Doddabommasandra Lake, Bengaluru :

BEL is setting up a 10 MLD (Million Litres per Day) Sewage Treatment Plant to rejuvenate the Doddabommasandra Lake, Bengaluru at a cost of Rs.13.5 Crores as part of its Corporate Social Responsibility activities, in collaboration with the Karnataka Lake Conservation and Development Authority (KLCDA), Bruhat Bengaluru Mahanagara Palike (BBMP) and the Revenue Department of Karnataka.

The foundation stone for the installing and commissioning of the proposed Sewage Treatment Plant was laid on 17 February 2018 by the Chief Guest Mr D V Sadananda Gowda, Hon’ble Union Minister for Statistics and Programme Implementation. Mr Krishna Byre Gowda, Hon’ble Minister for Agriculture, presided over the function. The Sewage Treatment Plant will be designed on the latest ‘Sequential Batch Reactor Technology’ (SBR). This is an advanced version of the well-established ‘Activated Sludge Process’ of the Central Public Health and Environment Engineering Organisation (CPHEEO).

- Contribution to Test flight of MALE UAV :

Test flight of Medium Altitude Long Endurance Unmanned Aerial Vehicle (MALE UAV) was successfully carried out in 25 February 2018.

BEL has contributed in the development of Ground Control Station (GCS), Ground Data Terminal (GDT), various payloads for UAV program and actively participated in the various phases of field evaluation & development trials. BEL has also funded Rs.90 Crores for the development program and deployed team of engineers at Aeronautical Development Establishment (ADE) for the development activities.

- Inauguration of Service Support Centre at Jammu :

The Service Support Centre at IAF Station, Kalu Chak, Jammu was inaugurated by Air Vice Marshal, Rajiv Gandotra, AVSM, Senior Maintenance Staff Officer, on 29 August 2017. This service support centre will support BEL products deployed by Indian Air Force & Indian Army in forward bases.

- Contribution to Firing Trials of Weapon Systems :

Indigenous Surface to Air Weapon Systems, was successfully test fired with BEL manufactured Radio Frequency Seeker on 15 December 2017.

- BEL Flagged off Advanced C4I System :

Advanced C4I System was flagged off on 7 December 2017 from BEL Ghaziabad unit by Major General R K Choudhary, ADG IS(A), Brig R S Mehta ADGQA(L), Brig Ajay Sethi DDG, Senior Officers from DGQA, CQAL and PMO-BSS, attended the Flagging off ceremony.

- BEL flagged off 100th upgrade Electro Optic gun from Chennai unit for use by Indian defence forces.

- Online Inventory Management System (OIMS) :

BEL inaugurated Online Inventory Management System for Indian Navy on 24 November 2017. OIMS system is developed in BEL and is expected to provide smooth post sales support of BEL supplied equipment to Indian Navy.

- Contribution to Test Firing of Indigenous Quick Reaction Missile : Indigenously developed Quick

Reaction Surface-to-Air Missiles (QR-SAM) was test fired on 4 June 2017 from Chandrapur in Odisha. The Quick Reaction Surface to Air Missile (QR-SAM) was jointly developed by the Defence Research and Development Organisation (DRDO) and Bharat Electronics Limited. The on board missile unit of Two-Way-Data-Link (TWDL) system developed by BEL, performed well during firing trial.

Subsidiaries, Joint Ventures and Associates

BEL Optronic Devices Limited (BELOP), engaged in the business of manufacturing of Image Intensifier Tubes, is a wholly owned subsidiary of BEL. Your Company has made further investment to the tune of Rs.1,744 Lakhs (708,732 equity shares of Rs.100/- each at a premium of Rs.146/- per share) during the year in the equity shares of BELOP by subscribing to right issue made by BELOP.

BELOP achieved a turnover of Rs.12,164 Lakhs for the year as against Rs.12,388 Lakhs in the previous year. The profit after tax (PAT) for the year was Rs.1,155 Lakhs as against Rs.484 Lakhs in the previous year. BELOP has proposed a dividend of Rs.5.22 per share for financial year 2017-18.

The Associate Company GE BE Private Limited continues to perform well. This Company manufactures CT Max and other latest version X-Ray Tubes. BEL supplies some parts required for the products manufactured by this Company. GE BE Pvt. Ltd. recorded a turnover of Rs.80,691 Lakhs for the year as against Rs.79,985 Lakhs in the previous year. The profit after tax (PAT) was Rs.9,146 Lakhs for the year as against Rs.10,130 Lakhs in the previous year. The Company has proposed 100% dividend for the financial year 2017-18.

M/s BEL-THALES Systems Limited (BTSL), a subsidiary, was formed for design, development, marketing, supply and support of civilian and select defence radars for Indian and Global markets. Your Company holds 74% of the equity capital in BTSL. During the year of its operation, it incurred a loss of Rs.259 Lakhs.

Defence Innovation Organization (DIO), was incorporated on 10 April 2017 as a ‘Not for Profit’ Company as per the provisions of Section - 8 of the Companies Act 2013 with an authorised share capital of Rs.1 Crore (BEL: 50%; HAL: 50%). The registered office of the company is situated at Centre for Learning and Development, Bharat Electronics Limited, Jalahalli, Bengaluru - 560 013. The Company has been formed with an objective of funding innovation in defence sector. The company has not yet commenced its operations.

In pursuant to provisions of section 129(3) of the Companies Act, read with Rule 5 of Companies (Accounts) Rules, 2014, the statement containing salient features of the financials statement of Subsidiaries / Associate / Joint Ventures is attached to the financial Statements.

Consolidated Financial Statements

Consolidated Financial Statements of your Company and its Subsidiaries and Associate Companies are attached to this Report.

Vigilance

The Company’s Vigilance Organization is headed by Chief Vigilance Officer (CVO), an IAS Officer from Bihar cadre (1987 batch). Permanent Vigilance Officers were posted in each of the Units and in the SBUs. Vigilance Committees were formed in the each of the Units to look after the Vigilance Administration in the Units and SBUs and the Unit/SBU heads are also designated as Chairman of the Vigilance Committee. Apart from this, there exists a Vigilance Committee at the Corporate Office; where Chairman cum Managing Director is the Chairman of the Committee and the CVO is the Member Secretary. Preventive Vigilance has been the thrust area of the Vigilance Organisation and the same received focused attention during the current year. The Vigilance Department examines procurement/sub-contract Contracts and processes on continual basis, conducts regular and surprise inspections and investigates instances of any suspected transactions referred to it. Any employee or third parties can refer any suspected transaction to the notice of CVO for investigation which are examined as per the Complaint Handling Policy of the Company. Online Complaint Management System has been made operational and online complaints can be filed through accessing the Vigilance Portal in BEL web site.

During the year 1158 Purchase Orders / Contracts have been reviewed. CTE Type intensive examination has been restructured with the formation of 5 IE teams. CTE Type of Intensive Examination of 66 High value Procurements Contracts has been taken up during the year. Regular and Surprise checks and Inspections have also been conducted by the field Vigilance Officers. During the year, 54 Complaints, including the Complaints referred by CVC/MOD/CBI were received. A total of 56 Complaints and 5 Complaints referred by CVC/MOD/CBI were disposed. Disciplinary action and System / Process Improvement has been recommended in some cases where lapses were observed. Two Complaints each are pending with CBI, Ghaziabad and Bengaluru for detailed investigation.

During the year, 115 Probationary Engineers at the induction level, 1582 Executives and 629 Non Executives were given basic awareness program on Vigilance. Apart from this, 76 Senior Executives were given Customised Training Program on Vigilance, Cyber Crimes and Preventive Vigilance measures. 77 Executives & 54 Non Executives working in sensitive areas for more than 3 years have been job rotated and the percentage coverage is 100%.

Vigilance Department received the ISO 9001/2015 Certification for the Vigilance function of BEL in June 2016. The Second Surveillance audit has been completed during March 2018.

In line with the CVC’s guidelines on Leveraging Technology and to ensure transparency through effective use of technology, the following functions have been made operational through SAP and the Company’s website :

- E-Procurement - about 90% of the procurements excluding the ToT procurement, Long term Rate Contracts and Repeat Orders, were covered under e-procurement mode.

- Online registration of Vendors.

- Vendor Payment Information System.

- E-Payment / Bank transfer of payment to Vendors.

- Details of awarded contracts / Purchase Orders valuing more than Rs.10 Lakhs in respect of works contracts, service contracts, capital items and non-production items have been posted in the website.

- Details of awarded Contracts / Purchase Orders issued on nomination / single tender basis value exceeding Rs.5 Lakhs have been posted in the website.

- Purchase Procedures, sub contract procedures and Works Contract Manual have been revised and were posted in the BEL website.

- Complaint Handling Policy and Whistle Blower Policy are posted in the website.

- Corruption Risk Management Policy is framed and implemented across the Company for implementation. The same is posted in the website.

- Vendors’ Directory, after flagging removing defunct vendors, have been posted in the Company’s website.

- File Life Cycle Management System (FLM) has been implemented across the company and the coverage is about 95% of the total files generated in the Company.

- On-line filing of APRs is facilitated in SAP for all the Executives and the Executives have been filing the APRs in SAP.

- Vigilance Monthly Reports are generated through SAP.

- Vigilance clearance is accorded through the dedicated Vigilance portal in SAP.

Vigilance setup in BEL has been continuously endeavoring to bring transparency, fairness and equity in all transactions and processes of the company through creating a sense of awareness on System and Procedures through awareness campaign and training program. Some of the key activities that have been carried out during the year are :

i) Vigilance awareness week 2017 was observed during October/November 2017. The observance of the Week was marked with special address by eminent personalities. Gram Sabhas were organized as part of the outreach activities in Nelamangala and Dabaspet in Bangalore District, Rajpura and Mahmoodpur villages near Ghaziabad, Nimmaluru Village in Andhra Pradesh and in Vellanky Village of Bhongir District in Telegana State. Skit plays and Video films portraying national integration and anti Corruption messages were shown to School and College Students located near the location of BEL Factories. Similar anti corruption awareness program in the form of skit plays and inspirational video films were arranged for the School students of BEL Educational institutions covering about 750 students. Integrity Pledge was administered to School and College students during the occasion. Walkathon and Cycle rally by BEL School Children, Human chain by BEL employees, Vigilance Walk by employees of Bengaluru based PSUs and PSBs, Tree plantations and distribution of saplings, unveiling of Vigilance Slogan Boards and series of lecture by distinguished personalities and Competitions were organized as part of the observance of the Vigilance Awareness Week.

ii) E-pledge, an initiative of the Commission was facilitated in BEL-Intranet, apart from the facility of taking the e-pledge in the CVC website.

iii) About 3041 BEL employees have successfully completed the Online Certified Program on Public Procurement organized by World Bank. About 60 Executives who have successfully completed the CPPP with distinction have taken the next level course of “Professional Diploma in Public Procurement” conducted by Indian Institute of Materials Management (IIMM). Apart from this, 173 employees have successfully completed the CPCM (Certificate Program in Contract Management) conducted by World Bank.

iv) Training Programs and Works shop on subjects like “Disciplinary Proceedings and framing of Charge Sheet”, “Probity in Public Procurement, Integrity Pact & Cyber Security”, “Cyber Security for the Corporate”, “Arbitration and Alternate dispute resolution” were organized to increase the competency levels of executives who are performing these functions across the Company.

Integrity Pact

One of the initiatives of the Central Vigilance Commission (CVC) to eradicate corruption in procurement activity is introduction of the Integrity Pact in large value contracts in Government Organizations. In line with the directives from Ministry of Defence and the Central Vigilance Commission, your Company has adopted Integrity Pact with all vendors / suppliers / contractors / service providers for all Orders / Contracts of value Rs.2,000 Lakhs and above, initially. This threshold value was reduced to Rs.1,000 Lakhs from March 2013 and further reduced to Rs.500 Lakhs from May 2014 and further reduced to Rs.400 Lakhs from September 2016, subsequently it was further reduced to Rs.300 Lakhs from September 2017.

The Pact essentially envisages an agreement between the prospective vendors / bidders and the Principal (BEL), committing the Persons / officials of both sides, not to resort to any corrupt practices in any aspect / stage of the contract. Only those vendors / bidders, who commit themselves to such a Pact with the Principal, would be considered competent to participate in the bidding process. Integrity Pact, in respect of a particular contract, would be operative from the stage of invitation of bids till the final completion of the contract. Any violation of the same would entail disqualification of the bidders and exclusion from future business dealings.

As recommended by the CVC, the Company has appointed Mr M D Paliath, IDAS (Retd) and Mr Shankar Narayan, Dy CAG (Retd) for monitoring implementation of Integrity Pact in the Company. During the financial year 2017-18 the IEMs reviewed 294 contracts and held structured meetings with the Chairman & Managing Director.

Procurement from MSEs

Your Company has been providing increased thrust on enhancing procurement from MSEs and is implementing Public Procurement Policy for Micro & Small Enterprises (MSEs) as per the guidelines / notification issued by the Ministry of MSEs. Out of the total procurement during 2017-18, Procurement from MSE vendors in line with Public Procurement Policy requirements.

In order to facilitate MSEs, the company is deploying all efforts to classify the existing vendors into Micro & Small Enterprises in the Company’s procurement system through web-based real time centralized ERP System (SAP). Online Vendor registration forms are available in the Company’s official website (www.bel-india.in). Nodal Officers are nominated to assist vendors regarding Procedure for Registration, understanding the requirements of BEL, report grievances, if any, etc. Some of the other initiatives include uploading of company’s procurement plan for MSEs based on the production plan, with periodic update and details of Unit / SBU specific Nodal Officers in the Company’s official website, participation in various vendor development programmes like exhibitions, workshops, establishment of industrial estate to give maximum encouragement to ancillaries etc.

BEL participated in the State Level MSME Vendor development meet organised by MSME Development Institute at BEL, Chennai on 9 January 2018 and showcased various items for indigenization for MSMEs vendors.

BEL Participated in the Defence Industry Development Meet, which was inaugurated by Smt Nirmala Sitharaman, Hon’ble Raksha Mantri, at Chennai on 18 January 2018 and showcased various items for indigenization for domestic vendors including MSEs.

BEL participated in the Defence Indigenization exhibition organized by Coimbatore District Small Industries Association (CODISSIA) during 5th to 6th March 2018 and showcased various items for indigenization for domestic vendors including MSEs.

Implementation of Official Language Policy

Your Company is committed to adhere to the OL policy of the Government of India. During 2017-18, company has achieved the various targets prescribed in the Annual Program 2017-18 issued by Dept. of OL, MHA, GoI to transact official work in Hindi. The efforts made towards implementation of Official Languages include :

OL Inspections : Committee of Parliament on Official Language conducted OL inspection of Central Research Laboratory, Bengaluru on 16 February 2018. MoD officials conducted OL inspections of Machilipatnam Unit on 8 January 2018 and R.O. Vizag on 9 January 2018. Corporate OL Audit team conducted OL audits at Panchkula, Chennai, Kotdwar Units, CRL-Bengaluru, R.O. Kolkata, EW & A and Components SBU’s of BC.

Bilingualisation : A comprehensive document of bilingual standard correspondence (Pre recruitment to post retirement) of HR Department was prepared and issued by OL Dept. for usage in all Units / Offices of the Company. Section 3(3) documents, replies to the letters received in Hindi, correspondence, Rule 11 items (stationary, codes and manuals, procedural literature) are being issued in bilingual in all Units and offices of company in accordance with OL rules.

Hindi Month Celebrations : During September Hindi Month and Hindi Day was observed in all the Units and Offices of the Company. During the month, employees and officers participated enthusiastically in various programs / competitions. Employees of various Units / Offices and Corporate Office bagged prizes in the Inter Organization TOLIC Competitions. Hindi workshops for those having working knowledge in Hindi were conducted during the year. Various Incentive Schemes were propagated among all employees and number of Executives / Employees took part in these schemes.

OL in SAP and Website : OL Portal GARIMA is in place to facilitate OL implementation across the Company and to provide latest inputs pertaining to OL and is regularly updated. QPR reports from Units / Offices are being received online in SAP. Hindi notings are being written in File Lifecycle Management (FLM). Company’s website is also available in Hindi and being updated simultaneously.

At Corporate level, initiative has been taken to prepare a compilation of bilingual Electronic Terminology (Defence & Non Defence) of BEL. Two issues (half yearly) of Corporate Hindi Journal “Nava Prabha” were published during the current FY. Efforts are in progress to ensure OL Implementation and achieving progressive usage of Hindi across BEL.

Implementation of RTI Act

The information required to be provided as per Section 4(1)(b) of the Right to Information Act, 2005 has been posted on the website of the Company www.bel-india.in. The Information posted on the website contains general information about the Company, powers and duties of employees, decision making process, rules, regulations, manuals and records held by BEL, a directory of the Company’s officers, pay scales, procedure for requesting additional information about the Company by citizens and associated request formats.

During the year 2017-18 the Company received and attended 444 requests for information under RTI Act. Most of the requests were for information related to recruitment, service related matters, third party and commercial secrets information.

Board Meetings / Change in Directors and Key Managerial Personnel

During the year, nine Board meetings were held, the details of which form part of the Corporate Governance Report.

Following changes took place in the Directorate and Key Managerial Personnel (KMP) of your Company during the financial year :

Sl. No.

Name of the Director

Designation

Date of Appointment

Date of Cessation

1

Mr Mukka Harish Babu

Independent Director

11.09.2017

Not Applicable

2

Dr Vijay S Madan

Independent Director

11.09.2017

Not Applicable

3

Mr Surendra S Sirohi

Independent Director

11.09.2017

Not Applicable

4

Mr Koshy Alexander

Director (Finance)

25.09.2017

Not Applicable

5

Mrs Kusum Singh

Govt. Nominee Director

NotApplicable

19.09.2017

6

Mr Chandraker Bharti

Govt. Nominee Director

19.09.2017

30.10.2017

7

Dr Amit Sahai

Govt. Nominee Director

30.10.2017

Not Applicable

8

Mr Girish Kumar

Director (Bangalore Complex)

NA

20.02.2018

During the year there was no change in the Key Managerial Personnel of the Company.

Mr M V Gowtama, Chairman & Managing Director, Mr Koshy Alexander, Director (Finance) and Chief Financial Officer and Mr S Sreenivas, Company Secretary are the KMPs, as defined under the Section 2(51) of the Companies Act, 2013.

Mrs J Manjula, Govt. Nominee Director was appointed on 23 April 2018 and Mr Mahesh V, Director (Research & Development) was appointed on 1 June 2018 in place of Dr Ajit T Kalghatgi who retired from his services on 31 May 2018 on attaining the age of superannuation.

The following Additional Directors are being appointed as Directors on terms as set-out in the Notice of the 64th Annual General Meeting :

Mr Harish Babu Mukka, Dr Vijay S Madan, Mr Surendra S Sirohi, Mr Koshy Alexander, Dr Amit Sahai, Ms J Manjula and Mr Mahesh V.

Mrs Anandi Ramalingam, Director (Marketing), retires by rotation at the ensuing Annual General Meeting and being eligible, offers herself for reappointment.

Directors’ Responsibility Statement

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors in terms of Sections 134(3)(c) & 134(5) of the Companies Act, 2013 state that :

a) in the preparation of the annual accounts, the applicable Accounting Standards had been followed along with proper explanation relating to material departures;

b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as at 31 March 2018 and of the profit of the Company for the year ended on that date;

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

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

e) proper internal financial controls were in place and such financial controls were adequate and were operating effectively; and

f) systems to ensure compliance with the provisions of all applicable laws were in place and same were adequate and operating effectively.

Significant and Material Orders

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company’s operations in future.

Events Subsequent to the Date of Financial Statements

Material changes and commitments affecting the financial position of the company which have occurred between 31 March 2018 and date of signing of this Report are - Nil.

Related Party Transactions

There were no materially significant related party transactions with the Company’s Promoters, Directors, Management or their relatives, which could have had a potential conflict with the interests of the Company. Transactions with related parties that were entered into during the financial year were on an arm’s length basis and were in the ordinary course of business. All Related Party Transactions were placed before the Audit Committee and also to the Board for approval, if required. Members may refer to the notes to the accounts for details of related party transactions. The policy for related party transaction has been uploaded on the Company’s website www.bel-india.in. Information pursuant to section 134(3)(h) of the Companies Act, 2013 read with rule 8(2) of the Companies (Accounts) Rules, 2014 is attached to this report as “Annexure 2”.

Corporate Social Responsibility

Pursuant to the provisions of Section 135 of the Companies Act, 2013 and the Companies (Corporate Social Responsibility) Rules, 2014 read with various clarifications, amendments issued by Ministry of Corporate Affairs & DPE guidelines, the Company has undertaken various activities as per the CSR and Sustainability Policy. The programmes / initiatives / projects are taken up in line with the Schedule-VII of the Companies Act, 2013, which are duly incorporated in CSR and Sustainability Policy and forms the guiding principle for all our programmes.

The Corporate Social Responsibility and sustainability policy of the Company is posted on the Company’s website, www.bel-india.in.

Pursuant to the requirement under the Companies (Corporate Social Responsibility) Rules, 2014, as amended, a report on CSR activities for financial year 2017-18 is annexed herewith as “Annexure 3”.

Maintenance of cost records

As per the provisions of section 148 (1) of the Companies Act, 2013, the Company is required to maintain cost records. Accordingly the prescribed cost accounts and records are made and maintained by the Company.

Auditors

Statutory Auditors

Pursuant to Section 139(5) of the Companies Act 2013, the Comptroller and Auditor General of India appointed M/s SURI & CO., Chartered Accountants, Bengaluru, as Statutory Auditors for the financial year 2017-18 for audit of accounts of Bangalore Complex, Hyderabad and Chennai Units and Corporate Office. M/s Ved & Company, Chartered Accountants, Ghaziabad were appointed as Branch Auditors of Ghaziabad, Panchkula and Kotdwara Units for the financial year 2017-18. M/s Malani Somani Chandak & Associates, Chartered Accountants, Pune were appointed as Branch Auditors for Pune and Navi Mumbai Units for the financial year 2017-18. M/s Tungala & Co., Chartered Accountants, Machilipatnam were appointed as Branch Auditors for Machilipatnam Unit for the financial year 2017-18.

Cost Auditors

Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014 (as amended), the cost audit records maintained by the Company in respect of its Manufacturing activities are required to be audited by the Cost Auditor. Your Directors had, on the recommendation of the Audit Committee, appointed M/s GNV & Associates, Cost Accountants, Bengaluru, as Cost Auditors of the Company for the financial year 2017-18 for conducting the audit of cost records of the Company.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr Thirupal G, Practicing Company Secretary (PCS Registration No. 6424) for the financial year 2017-18 to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed to this report as “Annexure 4”.

The Secretarial Auditor in his Report observed that the Company is yet to appoint the adequate number of Independent Directors as per the requirements of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. It is informed that the appointment of Directors is done by Govt. of India and filling up of vacancies of the said Independent Directors is also pending with the appointing authority namely Government of India.

Auditors’ Report

Auditors’ Report on the Annual Accounts for the financial year 2017-18 and “Nil” Comments certificate of the Comptroller & Auditor General of India under Section 143(6)(b) of the Companies Act, 2013 on the Annual Accounts are appended to this report.

Extract of Annual Return

In accordance with Section 134(3)(a) of the Companies Act, 2013 an extract of the annual return in the form MGT-9 is annexed to this report as “Annexure 5”.

Business Risk Management

Pursuant to the Reg. 21 of SEBI (LODR) Regulations, 2015, the Company has constituted a Risk Management Committee. The details of Committee and its terms of reference, Risk Management Policy etc. are set out in the Corporate Governance Report and a detailed note on Risk Management is provided in the Management Discussion and Analysis Report.

Remuneration Policy & Board Evaluation

The Board has, on the recommendations of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration, Board Evaluation etc. The details are set out in the Corporate Governance Report.

Vigil Mechanism / Whistle Blower Policy

The Company has a vigil mechanism named Whistle Blower Policy to deal with instance of fraud and mismanagement, if any. The details of the policy are set out in the Corporate Governance Report.

Declaration from Independent Directors

The Company has received necessary declaration from each Independent Director of the Company under Section 149(7) of the Companies Act, 2013 that the Independent Directors of the Company meet with the criteria of their Independence laid down in Section 149(6) of the Companies Act 2013.

Management Discussion and Analysis Report

Management Discussion and Analysis Report required under the SEBI (LODR) Regulations, 2015 and also under the Government (DPE) Guidelines on Corporate Governance for Central Public Sector Enterprises (CPSEs), is attached to this Report as “Annexure 6”.

Particulars of Loans, Guarantees & Investments

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

Internal Financial Controls

The Company has in place adequate internal financial controls with reference to financial statements. A detailed note on Internal Financial controls is provided in the Management Discussion and Analysis Report.

Composition of Audit Committee

The Audit Committee comprises of Independent Directors viz., Mrs Usha Mathur, Chairman of the Committee, Dr R K Shevgaonkar, Mr Mukka Harish Babu and Government Nominee Director, Dr Amit Sahai, as its members and all the recommendations made by the Audit Committee were accepted by the Board, during the year.

Corporate Governance Report

DPE guidelines on Corporate Governance for CPSEs provide that CPSEs would be graded on the basis of their compliance with the guidelines. DPE has graded BEL as “Excellent” for 2016-17. In terms of Regulation 34 of the Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and DPE Guidelines, a Report on Corporate Governance along with Compliance Certificate issued by Statutory Auditors of the Company is attached to this report as “Annexure 7”.

Sustainability Report

The DPE guidelines on Sustainable Development for CPSEs mandate CPSEs to disclose their Sustainable Development efforts in a ‘Standalone Report’ or as a separate chapter in the Annual Report. Pursuant to this requirement, a Report on your Company’s efforts on “Sustainable Development” is attached to this Report as “Annexure 8”.

Business Responsibility Report

The Securities and Exchange Board of India (SEBI) has mandated inclusion of Business Responsibility Report (“BR Report”) as part of the Annual Reports for the top 500 listed entities based on market capitalization. This SEBI mandate is also inserted as Regulation 34(2)(f) of SEBI (LODR) Regulations, 2015. The SEBI (LODR) Regulations, 2015 provide a format for BR reports. It also contains a list of nine Key Principles and various core elements under each principle to assess compliance with Environmental, Social and Governance norms. Listed Companies are required to prepare policies based on these nine Key principles and core elements, put in place a framework to integrate and embed the policies into business activities and a mechanism to measure and report the achievements as Business Responsibility Report.

Your Company has prepared a comprehensive policy framework for Business Responsibility Report, after studying the SEBI (LODR) Regulations, 2015 requirements and keeping in view the business and governance environment in which BEL as a Defence PSU operates. Highlights of this policy are posted on the Company’s website www.bel-india. in. The Company’s Business Responsibility Report for the year is attached to this Report as “Annexure 9”.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

Your Company being a defence PSU, the disclosure of information with respect to conservation of energy, technology absorption, foreign exchange earnings and outgo under the provisions of Section 134(3)(m) read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is not required as the Ministry of Corporate Affairs vide Notification GSR No.680 (E) dated 4 September 2015 has granted exemption to Defence Public Sector Undertakings.

Acknowledgement

Your Directors place on record their deep appreciation and gratitude for the valuable support received from all the customers, particularly the Defence Services and the para-military forces and look forward to their continued support and co-operation in future. Your Directors also place on record their gratitude for the support received from various Ministries of the Government of India, especially the Ministry of Defence, Department of Defence Production. Your Directors express their gratitude to the Defence Research and Development Organisation and the various Research Laboratories under DRDO for the support it received, particularly in the joint development programmes and new products brought out with the help of them. Your Directors express their sincere thanks to the Comptroller and Auditor General of India, Chairman, Members and employees of the Audit Board, Statutory Auditors, Branch Auditors, Cost Auditors, Secretarial Auditors, Company’s Bankers, Collaborators and Vendors. Your Directors appreciate the sincere efforts put in by the employees at all levels, which enabled the Company to achieve the good performance during the year. Your Directors express their appreciation and gratitude to all the shareholders / investors for the trust and confidence reposed in the Company and look forward to their continued support and participation in sustaining the growth of the Company in the coming years.

For and on behalf of the Board

Bengaluru M V Gowtama

16 August 2018 Chairman & Managing Director


Mar 31, 2017

To the Members,

The Directors take pleasure in presenting their Report and the Audited Financial Statements for the financial year ended 31 March 2017 together with the reports of the Statutory Auditors and the comments of Comptroller and Auditor General of India thereon.

Financial Results and Performance Highlights

A summary of the Company’s financial results is given below :

(Rs. in Lakhs)

Particulars

2016-17

2015-16

Value of Production

924,383

777,537

Turnover (Gross)

882,470

754,117

Profit Before Depreciation, Finance Cost and Tax

223,272

190,884

Finance Cost

1,178

451

Depreciation

19,152

17,221

Provision for Tax

48,180

42,476

Profit After Tax

154,762

130,736

Other Comprehensive Income

(9,185)

(2,236)

Total Comprehensive Income

145,577

128,500

Dividend paid

61,604

24,560

Tax on Dividend

12,541

4,999

Transfer to General Reserve

40,000

40,000

Transfer to Capital Reserve

-

2

Other Equity (including Reserves and Surplus)

728,518

874,360

Net Worth

750,854

898,360

Earnings Per Share (in Rs.)*

6.64

5.45

Book Value Per Share (in Rs.)*

33.62

37.43

* Consequent to sub division of equity shares (in March, 2017), the earnings per share (EPS) has been adjusted for previous year in accordance with Indian Accounting Standard (Ind AS) 33 Earnings Per Share (EPS). Accordingly, the book value per share for the previous year has also been adjusted.

Distribution of Value of Production for 2016-17 is given below :

Particulars

Amount (Rs. in Lakhs)

Percentage

Materials

483,222

52%

Employee Cost

154,831

17%

Other Expenses (Net)

64,236

7%

Depreciation & Amortization

19,152

2%

Provision for Tax

48,180

5%

Profit After Tax

154,762

17%

Total

924,383

100%

Company’s turnover for the year 2016-17 has increased to Rs.882,470 lakhs from Rs.754,117 lakhs in 2015-16, registering a growth of 17.02%. Profit after Tax for the year is Rs.154,762 lakhs as against Rs.130,736 lakhs in the previous year. Turnover from indigenously developed products is 87%. Supplies to the defence contributed to 88% of turnover as against 82% in 2015-16.

During the year 2016-17, your Company had bought back 16,637,207 equity shares of Rs.10/- each fully paid-up at price of Rs.1,305/- per share subsequent to which the paid-up share capital of the Company stands reduced to Rs.22,336 lakhs.

During the year the Company had completed sub-division of one equity share of Rs.10/- each fully paid-up into 10 equity shares of Rs.1/- each fully paid-up w.e.f. 16 March 2017.

Dividend

The Board has recommended a Final Dividend of Rs.1.05/- per equity share of Rs.1 each (105%), Rs.23,453 lakhs for the year 2016-17. A first interim dividend of Rs.3.00/- per equity share of Rs.10 each (30%), Rs.6,701 lakhs and second interim dividend of 90 paisa per equity share of Rs.1 each (after sub-division of equity shares) (90%), Rs.20,103 lakhs was paid for the year 2016-17. Thus, the total dividend for the year 2016-17 is Rs.2.25/- per equity share calculated at Rs.1 per equity share (225%), Rs.50,257 lakhs (excluding dividend distribution tax).

Amount Transferred to Reserves

An amount of Rs.40,000 lakhs is proposed to be transferred to General Reserves for the year 2016-17.

Major Orders Executed

Major Projects executed during the year for tri services and non-defence customers include : Akash Weapon System (Army & Airforce), Hand Held Thermal Imager with Laser Range Finder to Army, 3 Dimensional Tactical Control Radar to Army, Weapon Locating Radar to Army, Fire control Systems to Navy, Integrated Air Command and Control System to Air Force, L 70 Gun Upgrade to Army, Low Level Light Weight Radar to Airforce, Ship Borne EW System to Navy and New Generation Sonars to Navy.

Exports

Your Company achieved an export sale of US$ 65.5 Million over the previous year’s export turnover of US$ 85.07 million. BEL has an export order book of US$ 85 million as on 1 April 2017 which includes offset order book of US$ 17 million. The targeted export sales for the year 2017-18 is US$ 72 million. The long term export plan of BEL is to reach sustained export sales to total sales turnover ratio of 10% from the current level of 4.9%.

During this year, major range of products exported includes, CSS, CoMPASS, VHF Radio Bharti, ACCS, SANKET, EO FCS, Electro Mechanical parts etc.

During the year few major naval projects planned for execution did not materialise as the customer was not ready to receive the system integration and consequentially there was a decline in export. The transforming political scenario, change in the leadership and global financial crunch has resulted in not realizing the contracts, even though BEL has submitted proposals for various products/systems to countries like Myanmar, Vietnam, Sri Lanka, Malaysia, Egypt. The African and Latin American countries are carefully prioritizing their procurements to meet their social needs ahead of defence procurements. Many of the MoUs signed with OEMs for discharging offset have not progressed to contract stage as per MoD acquisition plan. In view of the revised DPP for discharge of offsets, offset business has not been, as anticipated earlier. However, BEL continues its efforts to enhance export business.

BEL is the only organization in the country which is fully geared up to meet the expectations of “Make in India” program in the field of Professional defence electronics equipment development and manufacturing with a focus on exports.

BEL has a dedicated International Marketing Division for providing an increased thrust for harnessing the export potential of defence electronics products and systems, which represent its core area of business. BEL has been exporting various products and systems to friendly countries of India. Apart from this, BEL is interacting with electoral commissions of various democratic countries to market Electronic Voting Machines. Having established a Coastal Surveillance Radar System for few neighboring countries, BEL is interacting with Ministry of External Affairs on a regular basis for supply of the system to other friendly countries of India.

BEL has identified the market segments and has a structured market plan for its products and systems. BEL has been visiting customers on a periodic basis to understand their requirements, acquisition process and to establish long term customer relationship for enhancing export business.

BEL is focusing on the opportunities in the areas of helping OEMs to meet their offset obligations in various RFPs of MOD, on account of the “Offset” policy incorporated in Defence Procurement Procedure (DPP). In this regard BEL is closely working with various major foreign Aerospace and Defence companies. BEL has also identified contract manufacturing (both build to print and build to spec) as one of the areas to address the emerging opportunities with OEMs. Further, efforts are being made to establish long-term supply chain relationships with global players.

BEL has participated in three International Exhibitions to showcase its products & capabilities and for creating brand awareness among global supply chain partners. BEL publishes periodic advertisements in international/defence magazines / periodicals/journals to enhance the visibility of BEL. BEL participated in Aero India 2017, Bengaluru with a focus on exports.

BEL has been receiving awards for Excellence in Exports under the category “Electronics & Communication (excluding IT/ BT) - Medium and Large” from the Government of Karnataka during the last six consecutive years.

MoU with Government

Your Company has been signing a Memorandum of Understanding (MoU) every year with the Government of India, Ministry of Defence. Performance of BEL for the year 2015-16 has been rated as “Excellent” in terms of the MoU with the Government. The MoU rating for 2016-17 is under review by the Government.

Order Book Position

The order book of Company as on 01 April 2017 is around Rs.40,242 Crores. The order book comprises mainly major programs like Integrated Air Command Control System, Long Range Surface to Air Missile, Battlefield Surveillance System, Weapon Locating Radar, EW Suite, Hand Held Thermal Imager with Laser Range Finder, Advance Composite Communication System, Ground Based Mobile ELNIT, Command Information Decision Support System, Electronic Voting machine, Fire Control System, Gun/Tank Upgrades Communication Sets, New Generation Radars and Sonars etc.

Finance

During this year, your company has been able to enhance shareholders value through Buyback of shares and higher dividend payout. The Company returned 25% of share capital and free reserves amounting to Rs.217,116 lakhs to the shareholders which was completed in November 2016. Apart from the final dividend of Rs.34,800 lakhs (145%) of 2015-16 which was paid out in 2016-17, two interim dividends amounting to Rs.26,804 lakhs were paid out before the closure of the financial year 2016-17. Further, the face value of equity shares of Rs.10 each was sub divided into 10 equity shares of Rs.1 each in order to enhance the retail participation in the shares of the Company. The initiatives taken by your Company in taking up some major projects is progressing well and the outcome should strengthen the Company’s journey to a higher trajectory of turnover and growth. During the year your Company has been able to meet all the incremental working capital requirements and most of the capital requirements. Company has availed a term loan of Rs.5,000 lakhs to fund its CAPEX requirements as on 31 March 2017. Your Company has retained the highest rating by ICRA for both short term and long term.

The Inventory position (net) of the company as on 31 March 2017 was Rs.490,501 lakhs as against Rs.417,747 lakhs as on 31 March 2016. This works out to 206 days of value of production (DPE) as on 31 March 2017 thus maintaining the 206 days achieved as on 31 March 2016.

The position of Trade Receivables (net) as on 31 March 2017 was Rs.435,488 lakhs as against Rs.371,193 lakhs as on 31 March 2016. This works out to 180 days of turnover thus maintaining the 180 days of turnover achieved during the previous year. This has been possible due to better performance in collection of receivables.

Indian Accounting Standards

As required under Companies (Indian Accounting Standard) Rules, 2015 (notification no. 111 (E) dated 16.02.2015 issued by Ministry of Corporate Affairs) the company has prepared its financial statements in accordance with Indian Accounting Standards (Ind AS) with effect from financial year 2016-17 along with comparatives for the previous financial year 201516. As required, the company has also prepared an Ind AS compliant opening Balance Sheet as on the date of transition to Ind AS, i.e., 1st April 2015.

The newly notified “Indian Accounting Standards” (Ind AS) has replaced the existing Indian GAAP prescribed under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014.

An explanation of how the transition from previous GAAP (IGAAP) to Ind AS has affected the reported Balance Sheet, financial performance and cash flows has been provided at Note 37 of the Standalone and Consolidated financial statements.

Deposits

The Company does not have any Public Deposit Scheme at present. However, matured (collected in the past) Public Deposit amount with the Company was Rs.36.95 lakhs as on 31 March 2017. Out of these 34 deposits amounting to Rs.36.50 lakhs are not claimed or not paid as these accounts are frozen on advice by Karnataka Lokayukta, remaining mature deposits of Rs.0.45 lakh as on 31 March 2017 is unpaid due to in-sufficient documents/records produced by Depositors. The entire amount of Public Deposit outstanding as on 31 March 2017 is included in the Other Financial Liabilities Note of the Balance Sheet.

Research & Development

Research and Development (R&D) has been the core strength of BEL. Various R&D Divisions of BEL are involved in developments of Strategic components, Technology Modules, Subsystems, Products, Systems and System of Systems. Apart from in-house efforts, BEL R&D Engineers are working with DRDO, Other National Research Laboratories and Academic Institutes for Joint development. During 2016-17, R&D activities have been carried out in all the business segments namely Radars, Military Communication, Naval Systems, Missile Systems, Electronic Warfare, Avionics, C4I systems, Electro-optics, Tank Electronics, Gun up-grades, Civilian Equipments & Systems and Components.

BEL has Three-Tier R&D Structure namely CRL, Central D&E and PD&IC (Product Design & Innovation Centre) and D&Es attached to SBUs/Units.

Two Central Research Laboratories (CRLs) at Bengaluru and Ghaziabad are involved in conducting futuristic R&D in core technology areas of BEL and develop enabling technology modules for use by SBUs/Units.

Central D&E and PD&IC at Bengaluru develop common technology modules as required by SBUs/Units like Radar Signal Processing Units, Encryption modules, Microwave components, Computing elements, Power Amplifiers, Power supplies, MMICs, Displays etc.

SBU/Unit D&E groups provide System and System of Systems solutions having the required domain expertise, technical support during the complete product life cycle : from concept design to post sale obsolescence management of Product/System and develop sub-systems and processes as necessary from CRLs, C-D&E, PD&IC and Collaborative R&D.

The analysis of turnover of the company for the year 2016-17 indicates that 87% of the Turnover is from products developed through in-house effort and jointly with DRDO and remaining 13% of Turnover is from Products/System for which technologies were acquired through Foreign/Indian Collaborators.

During 2016-17, the R&D Divisions of BEL have completed development of several new Products/Systems/Technology modules.

The following are some New Products/Systems for which development has been completed and some of them were introduced during the year.

Weapon Locating Radar (First-off Production Model)

Weapon Locating Radar is developed for identifying the launch points of weapons accurately. It acts as a forced multiplier in the war field.

BFSR - XR Radar

Battle Field Surveillance Radar is a man portable, battery operated, tripod mounted Pulse Doppler Radar. It is capable of detecting moving targets in the operating band. The Radar can be operated using remote Control and Display Unit .

IFF MKII Radar for ADFCR

Identification of Friend or Foe Radar Mark II is designed to work with Air Defence Fire Control Radar in interrogation modes.

HUMSA NG - P15B

HUMSA NG for P15B class of ships is a Bow mounted Active cum Passive Sonar used for surveillance and tracking of surface & subsurface targets in both active & passive modes with enhanced fault tolerance and interfacing capabilities.

USHUS-2

USHUS-2, an Integrated Submarine Sonar Suite, designed to effectively challenge the underwater threats in a comprehensive way. It consists of multi sensors for Active, Passive, Under Water Communication, Intercept and Obstacle Avoidance operations.

Coastal surveillance System - Maldives

Coastal Surveillance system is a Maritime Rescue Co-ordination Centre built by networking 10 Radar Sensors connected to a Control Centre. The Radar Stations are built with sensor equipment such as Radar, Automatic Identification System and Electro-optic System for generating the data related to air and sea surface targets.

ACCS for Indigenous Aircraft Carrier

The Advanced Composite Communication System (ACCS) is an IP based Integrated communication system provides quick and reliable communication over VLF, MF, HF, V/UHF and Satcom bands facilitating Ship to Ship, Ship to Shore and Ship to Air communications. The System is installed in Indigenous Air Craft Carrier.

Ship Data Network for P15B

The Gigabit Ethernet based Ship Data Network (GBE SDN) for P15B provides a single broadband network for voice traffic, real time data and video for external communication, Combat Management System and Ship System Equipment. SDN also provides a Network Health Monitoring system to monitor and manage the health of its elements.

RRF Upgrade to 8 Mbps (High Band)

Existing Radio Relays supplied to customer support 2 Mbps data rate. The equipment have been upgraded to 8 Mbps and additionally ECCM feature has been added. It gives reliable communication in terminal mode and in repeater mode.

Bharati Radio (Export)

VHF Tactical Radio (Bharati) is software configurable indigenously designed frequency hopping Radio in the frequency band of 30 MHz to 88 MHz. It is a lightweight, compact design, high performance Voice and Data communication equipment for Manpack and Mobile role.

Data Link for Missiles

Missile Data link provides secure two way communication between Ground station and Missile. The design is based on CDMA-Direct Sequence Spread Spectrum (DSSS) technology.

BEACON MKIII

BEACON MKIII is a compact crypto device providing high grade of secrecy for data communication on PSTN Lines using V.34 modem and LAN/WAN Network (10/100 Mbps). It supports both “ON Line & OFF Line’’ modes of operation.

Ship borne EW system

Ship borne EW system is a modern ESM system operating from B-J Band with high Direction of Arrival accuracy (DoA). The system is designed with wide band and narrow band receivers with inbuilt finger printing capability. The system is compact and can be configured for different class of ships.

Hand held Thermal Imager with Laser Range Finder (HHTI with LRF)

HHTI with LRF is an integrated multifunction sight consisting of Thermal Imager, Laser Range Finder, CCD Colour Day Camera, Global Positioning System and Digital Magnetic Compass with inbuilt Clinometer. The equipment is capable of providing day and night viewing capability, target range measurement, Self Position of Observer and target co-ordinates during day/night.

Border Surveillance System (BoSS)

Border Surveillance System (BoSS) uses sensors like Day Camera, Thermal Imager and Battle Field Surveillance Radar (BFSR) to acquire target information and transmit these information to Control station through Optical Fiber Cable (OFC)/Wireless Link.

Uncooled TI Binocular

Uncooled TI binocular is a state-of-the-art long range hand held dual field of view thermal imaging camera used for surveillance purpose.

VVPAT (Voter Verifiable Paper Audit Trail)-MK2

VVPAT system is designed with a Thermal printer that interfaces with the Control Unit and Ballot Unit in the conventional Electronic Voting Machine (EVM). The VVPAT system prints the voter’s franchise on a thermal Paper slip and gives visual indication to the voter.

POS for FPS Automation

The Point of Sale (POS) device is used for automation of Ration distribution process including online Aadhar Authentication of beneficiaries, distribution to genuine beneficiaries and inventory reporting at the Fair Price Shop.

Dual Frequency IP Modem

Dual Frequency IP Modem is a Ethernet coherent modem with Dual frequency outputs to mitigate multipath effects and supports voice/video/data for Tropo Communication.

2 KW SSPA (Tropo)

2KW L/S Band Amplifier is a broadband high frequency Power amplifier with modular construction to achieve graceful degradation of power and network management support.

New Facilities Established During the Year

Company has been continuously modernizing its infrastructure to be in tune with the changing needs of the technology/ products. Specific groups in all the units scan the technology changes that are taking place and identify new processes in the world market for acquisition. This enables the company to maintain its infrastructure on par with international standards. During the year 2016-17, Company has spent Rs.612 Crores as part of CAPEX investments. The expenditure is fully met through internal accruals. Following are some of the major facilities established during the year.

- Inauguration of New Radar Assembly Hangar at Ghaziabad unit for Assembly, Testing and Integration of Radar & Antenna Systems.

- ”Blowing Sand & Dust Test Facility” at Bengaluru Unit established for testing of Abrasion resistance of subsystems mounted externally on Aircrafts as part of augmenting the quality related infrastructure.

- Electro Magnetic Compatibility (EMC) Chamber for system level testing facility at Bengaluru Unit.

- Pulse Current Injection Test Facility (PCI) for High Altitude Electro Magnetic Pulse/Nuclear Electro Magnetic Pulse (HEMP)/(NEMP) test of various system level projects at Bengaluru Unit.

- New Electronics Manufacturing Services (EMS) assembly line with state-of-the-Art Surface Mount Technology (SMT) machine, wave soldering machine and Automated Optical Inspection (AOI) at Bengaluru Unit.

- The Low Pressure Chemical Vapor Deposition (LPCVD) equipment of the IC Wafer Fab Facility upgraded to handle wafers from 4” dia. to 6” diameter at Bengaluru Unit.

- New Photovoltaic Module Line and up-gradation of the existing Solar Cell Plant with auto wet etching & automated printing lines at Bengaluru Unit.

- Automated Transmit/Receive Module Assembly Line consisting of die-attach & wire-bonding lines to increase the X-Band TR Modules production capacity.

Quality

Quality, Technology and Innovation are three guiding pillars of BEL’s business initiatives. Quality, being the first pillar, has been one of the focus areas for the company. Quality initiatives have been taken up for improvement in performance related to Product Design, On-time-Delivery, Process Cycle Times, SPC, Quality Control etc. in order to enhance Quality of Products and Services rendered to customers. Improvement of Customer Satisfaction Index to 84% during 2016-17 is an important outcome of the efforts.

The Company is committed for improvement of its activities through process approach in line with World-Class Quality Systems. All Units/Strategic Business Units (SBUs)/Central Services Groups (CSGs) are accredited to ISO 9001 Quality Management System (QMS) since early nineties. Seven Units / SBUs, viz. Ghaziabad, Panchkula, Kotdwara, Hyderabad, Military Communications, Electronics Warfare & Avionics and Export Manufacturing have upgraded their QMS to Aerospace Standard, AS 9100.

Units of Company are committed to Environment Management System through ISO 14001 Certification. Ghaziabad Unit and Engineering Services of Bengaluru Unit are accredited to OHSAS (Occupational Health Safety and Assessment Series) 18001.

The ISO 9001:2008 version for QMS and ISO 14001:2004 version for EMS have been revised to 2015 versions in September 2015. Similarly, AS 9001 Ver ‘C’ has been upgraded to Ver ‘D’ in Oct 2016. In order to upgrade these certifications in BEL, Awareness Training programmes, Lead Auditor Training programmes and Conversion Programme for Lead Auditors of older versions of Standards to newer versions of the Standards have been conducted for personnel from various SBUs/Units. Some of the SBUs/CSGs viz. Common Manufacturing Services, Engineering Services, Central Quality Assurance of BG-CX, Pune Unit, Machilipatnam Unit have upgraded to the latest 2015 Version of ISO 9001 Certification.

Test Equipments Calibration and Maintenance departments of Bangalore Complex, Ghaziabad and Panchkula Units are certified by National Accreditation Board for Testing and Calibration Laboratories (NABL) in accordance with ISO/IEC 17025 Standard. Pune Unit manufacturing X-ray tubes is certified for ISO 13485 Standard for Medical Devices. Bharat Electronics Software Technology Centre (BSTC) at Bangalore Complex is CMMi level 5 certified. D&E - NCS and CRL -Ghaziabad are certified for CMMi level 3.

EFQM (European Foundation of Quality Management) Model for Business Excellence is being followed in BEL since 2002 in BEL as another approach for overall strategic and operational excellence to meet and exceed the needs & expectations of stakeholders and enhancement in competitiveness. Its deployment status was assessed in the company through participation in ‘CII-EXIM Bank Award for Business Excellence’ in a phased manner. All Units/SBUs of BEL have achieved ‘Commendation for Strong Commitment to Excel’ status. Bengaluru, Ghaziabad and Kotdwara Units achieved next higher level i.e. ‘Commendation for Significant Achievement’.

Continual improvements in products and processes are being brought about through various approaches. One such approach is ‘Six Sigma methodology’. Junior and Middle level executives select Sig Sigma projects from different areas of concern related to products and processes to bring about improvements. In order to effectively implement Six-Sigma methodology and to bring in a culture of improvement through analytical approach, select senior executives (16 persons) from the Units are periodically trained as ‘Black Belt’ by Indian Statistical Institute, Bengaluru. These Black Belts guide other executives (Green Belts) in their Six Sigma projects. 452 Six Sigma projects were completed in financial year 2016-17. Thirty Seven Six Sigma projects were nominated for National level Competitions/Seminars and all have won various categories of awards. Two BEL Projects won National Level Championships in February 2017 in DFSS and LEAN streams.

The organization has facilitated involvement of Nonexecutives in the Quality Movement through Quality Control Circles (QCC). In the year 2016-17, 753 QCC Presentations for improvement in products and processes were made by various QCCs. Many QCC circles were nominated to participate in national competitions/conventions and all were adjudged for various categories of Awards. One of the QCCs, which won CMD’s Rolling Shield in Inter Unit QCC Competition, represented BEL in International Convention, ICQCC 2016, held at Bangkok, Thailand and won the “Gold award”.

Another approach for Quality Improvement is through Suggestion Scheme, wherein employees from Non executives up to Managers provide suggestions for which they are suitably rewarded on implementation of their suggestions. Around 3400 suggestions were given by employees this year. Selected BEL employees participated at 27th National Level Convention conducted by Indian National Suggestion Schemes’ Association during January 2017 at Jamshedpur and won 6 Awards under various categories. Bangalore Complex was awarded the First Prize for “Excellence in Suggestion Scheme 2016” under Engineering Industry Category at the National Level.

The Company has nominated D&E engineers for Certified Reliability Engineer (CRE) program conducted by American Society for Quality (ASQ). 39 D&E engineers were professionally certified for CRE in year 2016-17 taking the number of CREs in the Company to 191.

37 operating level Quality engineers in various SBUs/ Units were certified during the year under Certified Quality Engineers (CQE) program by the American Society for Quality (ASQ) taking the number of CQEs in the Company to 141. Next higher level program, viz. Certified Manager for Quality and Organisation Excellence (CMQ&OE) for senior level executives, was also conducted by ASQ and 14 senior executives were certified during the year.

Revision of existing BEL Quality Manual in line with the latest versions of the Quality Management Systems Standard including Business Excellence was taken up during the year.

A ‘Quality Recognition Award’ scheme was introduced this year. Units/SBUs were evaluated for a number of Quality related parameters and best three Units viz. EW&A SBU of BG-CX, PK Unit and RAD SBU of Ghaziabad Unit were awarded prizes.

In order to inculcate a culture of Project Management, training programs for Project Management Professionals (PMP) were conducted. Post training, 75 PMPs was certified by Project Management Institute (PMI) in year 2016-17. Besides this, customised training programs, viz. Project Management Implementation Programme (PMIP) were conducted for lower level executives to enable them to use Project Management concepts in their work.

An independent Customer Satisfaction Survey (CSS) was done through an external agency, viz. M/s Market Insight Consultants (MIC) NOIDA, to capture the Customers’ Perceptions on Quality of BEL’s Products and Services. Fourteen products from various Units/SBUs were included in the Survey. Customer Satisfaction Index of 84% (average) was the outcome of the Survey which is marginally higher than 83% achieved in 2015-16 and with an increasing trend over the years.

New Transaction Codes are introduced in SAP ERP system based on user requirements for better management and analysis of the processes thereby helping in their overall improvement. Customer Relationship Management Module (CRM) and Supplier Relationship Management Module (SRM) in SAP are enabling improvements in Customer Services and Procurement Efficiencies.

Human Resources

Your Company employed 9,716 persons as on 31 March 2017 as against 9,848 persons as on 31 March 2016. Of these employees, 4,676 were engineers/scientists and 2,028 were women employees as on 31 March 2017. A total of 192 executives and 152 non-executives were inducted during the year. 58 employees belonging to SC, 22 employees belonging to ST, 119 employees belonging to OBC and 19 employees belonging to the minority community were recruited during the year.

Your Company has been implementing the Government Directives on Reservation. The particulars of SC/ST and other categories of employees as on 31 March 2017 are as under:

Category of Employees

Executives

Non - Executives

Group ‘A’

Group ‘B’

Group ‘C’

Group ‘D’

Scheduled Caste

975

32

702

42

Scheduled Tribe

327

5

142

23

OBC

1166

36

871

33

Ex-Servicemen

98

6

281

65

Physically Challenged

98

3

123

13

Various Training programs were conducted during the year to enhance competencies in Technical, Functional, Managerial and Leadership areas. Structured Executive Development Programs were conducted regularly with premier Institutes to meet the evolving training needs of executives as they progress through various grades.

The training programs are designed to enhance competencies in various areas like Technical, Functional and Managerial / Leadership.

A detailed write up on Company’s HR philosophy and specific HR initiatives during the year is provided separately in the Management Discussion and Analysis Report which forms part of this report.

Disclosure under Sexual harassment of Women at Workplace Prevention, (Prohibition and Redressal) Act, 2013

The Company is an equal opportunity employer and consciously strives to build a work culture that promotes dignity of all employees. As required under the provisions of Sexual Harassment of Woman at Workplace (Prevention, prohibition and Redressal) Act and Rules framed there under, the Company has implemented the policy on prevention, prohibition and redressal of sexual harassment at the workplace, which has been uploaded on the Company’s intranet portal. All women, permanent, temporary or contractual including those of the service providers are covered under the policy.

An Internal Complaints Committee has been constituted in each of the nine constituent units including Corporate Office to redress complaints relating to sexual harassment. During the year, the Company received 2 complaints on sexual harassment and one complaint is pending as at the end of the financial year.

Awareness programs were conducted across the Company to sensitize the employees and uphold dignity of their colleagues at workplace, particularly with respect to prevention of sexual harassment.

Awards and Recognitions

Your Company continues to be a highly trusted for the quality of its products, innovation and renovation of its products based on strong consumer insights and the ability to engage with consumers across the country. During the year your Company has received various Awards and Recognitions. Some of the important accolades received during the year by your Company include:

- BEL has won Dun & Bradstreet Corporate Award 2016 in Electrical & Electronics Category.

- BEL won four “PSE Excellence Awards 2015”, instituted by the Indian Chamber of Commerce, Kolkata under the Navratna category.

Details of Award received :

- Second prize in “Operational Performance Excellence”

- Second prize in “R&D, Technology Development and Innovation”

- Third prize in “Corporate Governance”

- Third prize in “HR Management Excellence”

- India Skill Award -2016: BEL won India Skill Award 2016 in recognition of augmenting skill development process for the country by engaging maximum apprentices in the category of Central Public Sector from Ministry of Skill Development & Entrepreneurship.

- Most Enterprising CEO in Electronics Sector : The Indo Global Business Council (IGBC), a policy think tank based in New Delhi has awarded the Chairman and Managing Director as “Most Enterprising CEO in Electronics Sector”.

- BEL has won the “State Export Excellence Award 2014-15” in the product category of Electronics and Communication from Govt. of Karnataka under medium/large Enterprise category.

- India Pride Awards 2016-17: BEL has won the “Dainik Bhaskar India Pride Award” for the year 2016-17 in the ‘Defence’ category.

- Panchkula Unit has won Gold Prize in the International Convention of Quality Circle (QCC) held at Bangkok.

- BEL has won 4 Gold, 6 Silver and 1 Bronze Award in the Quality Circle Forum of India (QCFI) Six Sigma Competition held on 22 May 2016 in Mysuru, Karnataka.

- INSSAN Award for Excellence in Suggestion Scheme : BEL Bengaluru and Ghaziabad Units were awarded the 1st and 3rd prizes respectively for excellence in suggestion schemes for the year 2015-16 in Engineering Industry Group, during the 27thNational Convention organized by Indian National Suggestion Schemes’ Association (INSSAN) on 20 & 21 January 2017 at Jamshedpur.

Environment Management

The philosophy of Bharat Electronics is to bring sustainability initiatives in all aspects of its operations by systematically integrating best practices to bring in cleaner technologies and greening the environment through recycle, reuse and reduce approach. All the units of Bharat Electronics are continuously introducing environment friendly processes to build in sustainability in their products and services bringing forth environmental sustainability results. The company is guided by DPE guidelines and other directives from the Ministry of Defence to achieve sustainability targets for enhancing environmental performance of products and services by adopting breakthrough technologies to minimise environmental impacts from design to disposal at end of life. The practices of conserving natural resources, energy conservation, water conservation and reduction in waste generation are inculcated in the fabric of the organisation across all units of the company. The company looks at opportunities beyond legal requirements to meet environmental commitments through improvised performance.

The Sustainability Report annexed to this report contains further details on environment management and sustainable development initiatives.

Subsidiaries, Joint Ventures and Associates

BEL Optronic Devices Limited (BELOP), engaged in the business of manufacturing of Image Intensifier Tubes, is a wholly owned subsidiary of BEL. Your Company has made further investment to the tune of Rs.4,919.60 lakhs (21,38,957 equity shares of Rs.100/- each at a premium of Rs.130/- per share) in the equity shares of BELOP by subscribing to right issue made by BELOP.

BELOP achieved a turnover of Rs.12,388 lakhs for the year as against Rs.10,928 lakhs in the previous year. The profit after tax (PAT) for the year was Rs.482 lakhs as against Rs.279 lakhs in the previous year. BELOP has proposed a dividend of Rs.2.44 per share for FY 2016-17.

The associate Company GE-BE Private Limited continues to perform well. This Company manufactures CT Max and other latest version X-Ray Tubes. BEL supplies some parts required for the products manufactured by this Company. GE-BE Pvt. Ltd. recorded a turnover of Rs.79,985 lakhs for the year as against Rs.79,523 lakhs in the previous year. The profit after tax (PAT) was Rs.10,130 lakhs for the year as against Rs.12,750 lakhs in the previous year. The Company has declared 100% dividend for the year 2016-17 and BEL will receive Rs.260 lakhs as dividend from this Company on BEL’s share of investment.

M/s BEL-THALES Systems Limited (BTSL), a subsidiary, was formed for design, development, marketing, supply and support of civilian and select defence radars for Indian and Global markets. Your Company holds 74% of the equity capital of BTSL. Your Company has made further investment to the tune of Rs.2,606 lakhs by subscribing to 26,05,938 equity shares of Rs.100/- each during the year. During the third year of its operation, it incurred a loss of Rs.82 Lakhs as against a loss of Rs.245 lakhs incurred during the previous year.

In pursuant to provisions of section 129(3) of the Companies Act, read with Rule 5 of Companies (Accounts) Rules, 2014, the statement containing salient features of the financial statement of Subsidiaries/Associate/Joint Ventures is attached to the financial Statements.

Consolidated Financial Statements

Consolidated Financial Statements of your Company and its Subsidiaries and associate Companies are attached to this Report.

Vigilance

The Company’s Vigilance Department is headed by the Chief Vigilance Officer (CVO), an IAS Officer. Permanent Vigilance Officers were posted in each of the Units and in the SBUs. Vigilance Committees were formed in the each of the Units to look after the Vigilance Administration in the Units and SBUs and the Unit/SBU heads are also designated as Chairman of the Vigilance Committee. Apart from this, there exists a Vigilance Committee at the Corporate, where the Chairman cum Managing Director is the Chairman of the Committee and the CVO is the Member secretary. Preventive Vigilance has been the thrust area of the Vigilance Department and the same received focused attention during the current year. The Vigilance Department examines procurement/subcontract Contracts and processes on continual basis, conducts regular and surprise inspections and investigates instances of any suspected transactions referred to it. Any employee or third parties can refer any suspected transaction to the notice of CVO for investigation which are examined as per the Complaint Handling Policy of the Company. Online complaint management system has been made operational and online complaints can be filed through accessing the Vigilance Portal in BEL website.

During the year 2422 Purchase Orders/Contracts have been reviewed. CTE Type intensive examination has been restructured with the formation 5 IE teams. CTE Type of Intensive Examination of 34 High value Procurements Contracts has been taken during the year. Regular and surprise checks/inspection has also been conducted by the field Vigilance Officers. During the year, 70 Complaints, including the 6 Complaints referred by CVC/MOD/CBI were received. Out of this, 43 Complaints including 6 Complaints referred by CVC/MOD/CBI were disposed. Disciplinary action and System/Process improvement has been recommended in some cases where lapses were observed. Three Complaints are pending with CBI for investigation.

During the year 105 Probationary Engineers at the induction level, 629 Executives and 266 Non-executives were given Basic Awareness Program on Vigilance. Apart from this, 474 Senior Executives were given Customised Training Program on Vigilance, Cyber Crimes and Preventive Vigilance measures. 37 Executives & 34 Non Executives working in sensitive areas for more than 3 years have been job rotated and the percentage coverage is 99%.

Vigilance Department received the ISO 9001/2015 Certification for the Vigilance function of BEL in June 2016. The Surveillance Audit has been completed during February 2017.

In line with the CVC’s guidelines on Leveraging Technology, to ensure transparency through effective use of website, the following information has been made available on BEL website :

- E Procurement - about 85% of the procurements excluding the ToT procurement, Long term Rate Contracts and Repeat Orders, were covered under e-procurement mode.

- Online registration of Vendors.

- Vendor Payment Information System.

- E Payment to Vendors.

- Details of Awarded Contracts/Purchase Orders valuing more than Rs.10 lakhs in respect of works contracts, service contracts, capital items and non-production items have been posted in the website.

- Details of Awarded Contracts/Purchase Orders issued on nomination/single tender basis value exceeding Rs.5 Lakhs have been posted in the website.

- Purchase Procedure, and Works Contract Manual have been revised and were posted in the BEL website.

- Complaint Handling Policy and Whistle Blower Policy is posted in the website.

- Corruption Risk Management Policy is framed and issued for implementation. The same is posted in the web site.

- Vendors’ Directory, after flagging removing defunct vendors, have been posted in the Company’s website.

- File Lifecycle Management System has been implemented across the company and the coverage is about 79% of the total files generated in the Company.

- On-line filing of Annual Property Returns (APRs) is implemented for all the Executives and the Executives have filed their Annual declaration of Assets and Liabilities (APR) in SAP for the year 2014, 2015 and 2016.

Vigilance setup in BEL has been continuously endeavouring to bring transparency, fairness and equity in all transactions and processes of the company through creating a sense of awareness on System and Procedures through awareness campaign and training program. Some of the key activities that have been carried out during the year are :

1) Vigilance awareness week 2016 was observed during October/November 2016. The observance of the Week was marked with special address by eminent personalities. About 2000 students from Government Schools and Colleges in and around Bengaluru were brought to BEL campus and were shown Skit plays and Video films portraying National Integration and Anti Corruption messages. Similar Anti Corruption Awareness Program in the form of skit plays and inspirational video films were arranged for the School students of BEL Educational institutions covering about 750 students. Anti Corruption Awareness Program through 5th Pillar, an NGO on Anti Corruption movement, was also organized during the observance of the VAW 2016, covering about 750 students from BEL Schools and College. During the week, Walkathon and Cycle rally by BEL School Children, Tree plantations and distribution of saplings, unveiling of Vigilance Slogan Boards and series of lecture by distinguished personalities and Competitions were organized.

2) E Pledge, an initiative of the Commission was facilitated in BEL-Intranet apart from taking the pledge in the CVC website.

3) Training programs were organised for Vigilance Officers through Guest lectures by faculties from CBI, Bengaluru, Deloitte, Data Security Council of India.

4) Nine Vigilance Officers underwent the training course on ISO 9001/2015 and certified as Qualified Internal Auditors on ISO 9001:2015 Standards.

5) Information booklet on “Guidelines for Contract Workers and useful information (Edition 2) was issued by BEL-GAD Unit for the benefit of the Contract Workers engaged in BEL-GAD Unit.

6) Information booklet on “Do’s and Dont’s in Procurement and Works Contract was also issued for the benefit of Executives who are working in Contracts and Purchase Departments.

7) About 3041 BEL employees have successfully completed the Online Certified Program on Public Procurement organized by World Bank. About 60 Executives who have successfully completed the CPPP with distinction have taken the next level course of “Professional Diploma in Public Procurement” conducted by Indian Institute of Materials Management (IIMM). Apart from this, 173 employees have successfully completed the CPCM (Certificate Program in Contract Management) conducted by World Bank.

Integrity Pact

One of the recent initiatives of the Central Vigilance Commission (CVC) to eradicate corruption in procurement activity is introduction of the Integrity Pact in large value contracts in Government Organizations. In line with the directives from Ministry of Defence and the Central Vigilance Commission, your Company has adopted Integrity Pact with all vendors/suppliers/contractors/service providers for all Orders/Contracts of value Rs.2,000 lakhs and above, initially. This threshold value was reduced to Rs.1,000 lakhs from March 2013 and further reduced to Rs.500 lakhs from May 2014 subsequently it was further reduced to Rs.400 lakhs from September 2016. The Pact essentially envisages an agreement between the prospective vendors/bidders and the Principal (BEL), committing the Persons/officials of both sides, not to resort to any corrupt practices in any aspect/stage of the contract. Only those vendors/bidders, who commit themselves to such a pact with the Principal, would be considered competent to participate in the bidding process. Integrity Pact, in respect of a particular contract, would be operative from the stage of invitation of bids till the final completion of the contract. Any violation of the same would entail disqualification of the bidders and exclusion from future business dealings.

As recommended by the CVC, the Company has appointed Mr M D Paliath, IDAS (Retd) and Mr Shankar Narayan, Dy. CAG (Retd) for monitoring implementation of Integrity Pact in the Company. During the financial year 2016-17 the IEMs reviewed 260 contracts and held structured meetings with the Chairman & Managing Director.

Procurement from MSEs

Your Company has been providing increased thrust on enhancing procurement from MSEs and is implementing Public Procurement Policy for Micro & Small Enterprises (MSEs) as per the guidelines/notification issued by the Ministry of MSEs. Out of the total procurement during 2016-17, Procurement from MSE vendors is more than 20%.

In order to facilitate MSEs, the company is deploying all efforts to classify the existing vendors into Micro & Small Enterprises in the company’s procurement system through web-based real time centralized ERP System (SAP). Online Vendor registration forms are available in the Company’s official website (www.bel-india.com). Nodal Officers are nominated to assist vendors regarding Procedure for Registration, understanding the requirements of BEL, report grievances, if any, etc. Some of the other initiatives include uploading of company’s procurement plan for MSEs based on the production plan, with periodic update and details of Unit/ SBU specific Nodal Officers in the Company’s official website, participation in various vendor development programmes like exhibitions, workshops, establishment of industrial estate to give maximum encouragement to ancillaries etc.

BEL and MSME Development Institute, Bengaluru jointly organized National Vendor Development Program - 2016 and Industrial Exhibition on 2 & 3 December 2016 at Bengaluru. The objective of the event was to bring all the stakeholders at one platform and provide them an opportunity to interact with each other. In addition to vendors from across India, including large numbers from MSE sector, the program was attended by Government officials, Financial Institutions, Vendor Associations, BEL officials from Procurement, R&D and Vigilance areas. The program also provided opportunity to MSE vendors for showcasing their capabilities in the Industrial Exhibition.

Implementation of Official Language Policy

Your company is committed to adhere to the OL policies of the Government of India. During 2016-17, efforts made towards implementation of Official Languages include :

OL Inspections :

Committee of Parliament on Official Language conducted OL inspections of Panchkula 07 June 2016 and Corporate Office on 14 July 2016. MoD officials conducted OL inspections of Hyderabad Unit on 24 October 2016. DD/OL - RIO conducted OL inspections of CO on 28 September 2016 and CRL/BG on 04 November 2016. Corporate OL Audit team conducted OL inspections at Ghaziabad, Hyderabad and Navi Mumbai Units, CRL-Ghaziabad and Regional Office at Delhi.

Annual Programme & Hindi Month Celebrations :

Company has achieved the targets prescribed in the Annual Program 2016-17 issued by Dept. of OL, MHA, GoI to transact official work in Hindi. Hindi Month was observed in all the Units and Offices of the Company. During Hindi month, employees and officers participated enthusiastically in various programs/competitions. Employees of various Units/Offices and Corporate Office bagged prizes in the Inter Organization TOLIC Competitions. Hindi workshops for those having working knowledge in Hindi were conducted during the year. Training on Unicode is being imparted for all Executives and Employees. Various Incentive Schemes are propagated among all employees and maximum number of Executives / Employees took part in the scheme.

OL in Website & SAP :

OL Portal is in place to facilitate OL implementation across the company and to provide latest inputs pertaining to OL and is being updated. Hindi language has been enabled in SAP. Most of the Units have uploaded data pertaining to OL Training Roster on SAP. Company’s website is available in Hindi and English and updated simultaneously.

New initiatives :

- Organising of maiden All India OL Conference on 10 January 2017 at CO Auditorium in which all units/Offices of BEL and TOLIC members were participated.

- Facility for On-line submission of OL Reports across BEL

- Publishing of CO-OL Magazine “Nava Prabha”

- Introducing Desk-to-Desk Workshop “RAJBHASHA AAP TAK”

Efforts are in progress to ensure OL Implementation and achieving progressive usage of Hindi across BEL.

Implementation of RTI Act

The information required to be provided as per Section 4(1)(b) of the Right to Information Act, 2005 has been posted on the website of the Company www.bel-india.com. The Information posted on the website contains general information about the Company, powers and duties of employees, decision making process, rules, regulations, manuals and records held by BEL, a directory of the Company’s officers, pay scales, procedure for requesting additional information about the Company by citizens and associated request formats.

During the year 2016-17 the Company received and attended 489 requests for information under RTI Act. Most of the requests were for information related to recruitment, service related matters, third party and commercial secrets information.

Board Meetings/Change in Directors and Key Managerial Personnel

During the year 6 Board meetings were held, the details of which form part of the Corporate Governance Report.

Following changes took place in the Directorate and Key Managerial Personnel (KMP) of your Company during the financial year:

Sl.No.

Name of the Director

Designation

Date of Appointment

Date of Cessation

1

Mr Amol L Newaskar

Director (OU)

NA

30.04.2016

2

Mr Manmohan Handa

Director (BG)

NA

30.04.2016

3

Mr Girish Kumar

Director (BG)

01.05.2016

NA

4

Mr Nataraj Krishnappa

Director (OU)

01.05.2016

NA

5

Mr P C Jain

Director (Marketing)

NA

31.07.2016

6

Mr P R Acharya

Director (Finance) & CFO

NA

19.08.2016

7

Mr S K Sharma

Chairman & Managing Director

NA

30.09.2016

8

Mrs Anandi Ramalingam

Director (Marketing)

16.09.2016

NA

9

Mr Koshy Alexander

CFO

24.10.2016

NA

10

Mr M L Shanmukh

Director (HR)

NA

31.10.2016

11

Mr M V Gowtama

Chairman & Managing Director

08.11.2016

NA

12

Mr R N Bagdalkar

Director (HR)

23.01.2017

NA

During the year there was change in the Key Managerial Personnel of the Company i.e. Mr M V Gowtama was appointed as Chairman & Managing Director in place of Mr S K Sharma who retired on 30 September 2016 and Mr Koshy Alexander, GM (Finance) was appointed as Chief Financial Officer in place of Mr P R Acharya, Director (Finance) who was relieved from his services on 19 August 2016.

Mr M V Gowtama, Chairman & Managing Director, Mr Koshy Alexander, Chief Financial Officer and Mr S Sreenivas, Company Secretary are the KMP’s as defined under the Section 2(51) of the Companies Act, 2013.

The following Additional Directors are being appointed as Directors on terms as set-out in the Notice of the 63rd Annual General Meeting;

Mr M V Gowtama, Mrs Anandi Ramalingam and Mr R N Bagdalkar.

Mr Nataraj Krishnappa, Director (Other Units) retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for reappointment.

Directors’ Responsibility Statement :

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors in terms of Sections 134(3)(c) & 134(5) of the Companies Act, 2013 state that :

a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as at 31 March 2017 and of the profit of the Company for the year ended on that date;

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

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

e) proper internal financial controls were in place and such financial controls were adequate and were operating effectively; and

f) systems to ensure compliance with the provisions of all applicable laws were in place and same were adequate and operating effectively.

Significant and material orders

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company’s operations in future.

Events Subsequent to the Date of Financial Statements :

Material changes and commitments affecting the financial position of the company which have occurred between 31 March 2017 and date of signing of this Report are - Nil.

Bonus Issue :

The Board of the Company has in its meeting held on 10th August 2017 approved the proposal for issue of one bonus equity share for every 10 equity shares held by the existing shareholders of the Company and the proposal is subject to approval of members at the ensuing Annual General Meeting.

Related Party Transactions

There were no materially significant related party transactions with the Company’s Promoters, Directors, Management or their relatives, which could have had a potential conflict with the interests of the Company. Transactions with related parties that were entered into during the financial year were on an arm’s length basis and were in the ordinary course of business. All Related Party Transactions are placed before the Audit Committee as also the Board for approval, if required. Members may refer to the notes to the accounts for details of related party transactions. The policy for related party transaction has been uploaded on the Company’s website www.bel-india.com. Information pursuant to section 134(3)(h) of the Companies Act, 2013 read with rule 8(2) of the Companies (Accounts) Rules, 2014 is attached to this report as ”Annexure 1”.

Corporate Social Responsibility

Pursuant to the provisions of Section 135 of the Companies Act, 2013 and the Companies (Corporate Social Responsibility) Rules, 2014 read with various clarifications, amendments issued by Ministry of Corporate Affairs & DPE guidelines, the Company has undertaken various activities as per the CSR Policy. The programmes/initiatives/projects are taken up in line with the Schedule-VII of the Companies Act, 2013, which are duly incorporated in CSR policy and forms the guiding principle for all our programmes.

The Corporate Social Responsibility and sustainability policy of the Company is posted on the Company’s website, www.bel-india.com.

Pursuant to the requirement under the Companies (Corporate Social Responsibility) Rules, 2014, as amended, a report on CSR activities for financial year 2016-17 is annexed herewith as ”Annexure 2”.

Dividend Distribution Policy

Pursuant to Regulation 43A of the SEBI (LODR) Regulations, 2015, the top 500 listed Companies, based on market capitalization shall formulate a Dividend Distribution Policy. Accordingly, the Board of Directors at their meeting held on 26 April 2017 has approved the Dividend Distribution Policy to set out the parameters and circumstances that will be taken into account by the Board in determining the distribution of dividend to its shareholders and/or retaining profits earned by the Company. The Dividend Distribution Policy has been posted on the Company’s website, www.bel-india.com.

Auditors

Statutory Auditors

Pursuant to Section 139(5) of the Companies Act 2013, the Comptroller and Auditor General of India appointed M/s. Badari, Madhusudhan & Srinivasan, Chartered Accountants, Bengaluru, as Statutory Auditors for the financial year 2016-17 for audit of accounts of Bengaluru, Hyderabad and Chennai Units and Corporate Office. M/s Ved & Company, Chartered Accountants, Ghaziabad were appointed as Branch Auditors of Ghaziabad, Panchkula and Kotdwara Units for the financial year 2016-17. M/s Malani Somani Chandak & Associates, Chartered Accountants, Pune were appointed as Branch Auditors for Pune and Navi Mumbai Units for the financial year 2016-17. M/s Tungala & Co., Chartered Accountants, Machilipatnam were appointed as Branch Auditors for Machilipatnam Unit for financial year 2016-17.

Cost Auditors

Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014 (as amended), the cost audit records maintained by the Company in respect of its Manufacturing activities are required to be audited by the Cost Auditor. Your Directors had, on the recommendation of the Audit Committee, appointed M/s GNV & Associates, Cost Accountants, Bengaluru as Cost Auditors of the Company for the financial year 2016-17 for conducting the audit of cost records of the Company.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr Thirupal G, Practicing Company Secretary (PCS Registration No. 6424) for the financial year 2016-17 to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed to this report as “Annexure 3”.

The Secretarial Auditor in his Report observed that the Company is yet to appoint the adequate number of Independent Directors as per the requirements of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. It is informed that the appointment of Directors is done by Govt. of India and filling up of vacancies of the said Independent Directors is also pending with the appointing authority namely Government of India.

Auditors’ Report

Auditors’ Report on the financial statements for the financial year 2016-17 and “Nil” Comments of the Comptroller & Auditor General of India under Section 143(6)(b) of the Companies Act, 2013 on the financial statements are appended to this report.

Extract of Annual Return

In accordance with Section 134(3)(a) of the Companies Act, 2013 an extract of the annual return in the form MGT-9 is annexed to this report as “Annexure 4”.

Business Risk Management

Pursuant to the Reg. 21 of SEBI (LODR) Regulations, 2015, the Company has constituted a Risk Management Committee. The details of Committee and its terms of reference, Risk Management Policy etc. are set out in the Corporate Governance Report and a detailed note on Risk Management is provided in the Management Discussion and Analysis Report.

Remuneration Policy and Board Evaluation

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration, Board Evaluation etc. The details are set out in the corporate governance report.

Vigil Mechanism /Whistle Blower Policy

The Company has a vigil mechanism named Whistle Blower Policy to deal with instance of fraud and mismanagement, if any. The details of the policy are set out in the corporate governance report.

Declaration from Independent Directors

The Company has received necessary declaration from each Independent Director of the Company under Section 149(7) of the Companies Act, 2013 stating that the Independent Directors of the Company meet with the criteria of their Independence laid down in Section 149(6) of the Companies Act, 2013.

Management Discussion and Analysis Report

Management Discussion and Analysis Report required under the SEBI (LODR) Regulations, 2015 and also under the Government (DPE) Guidelines on Corporate Governance for Central Public Sector Enterprises (CPSEs), is attached to this Report as ”Annexure 5”.

Particulars of Loans, Guarantees & Investments

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

Internal Financial Controls

The Company has in place adequate internal financial controls with reference to financial statements. A detailed note on Internal Financial controls is provided in the Management Discussion and Analysis Report.

Composition of Audit Committee

The Audit Committee comprises of Independent Directors viz., Mrs Usha Mathur, Chairman of the Committee, Dr R K Shevgaonkar, Dr Bhaskar Ramamurthi and Government Director Mrs Kusum Singh as its members. All the recommendations made by the Audit Committee were accepted by the Board.

Corporate Governance Report

DPE guidelines on Corporate Governance for CPSEs provide that CPSEs would be graded on the basis of their compliance with the guidelines. DPE has graded BEL as “Excellent” for 2015-16. In terms of Regulation 34 of the Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and DPE Guidelines, a Report on Corporate Governance along with Compliance Certificate issued by Statutory Auditors of the Company is attached to this report as ”Annexure 6”.

Sustainability Report

The DPE guidelines on Sustainable Development for CPSEs mandate CPSEs to disclose their Sustainable Development efforts in a ‘Standalone Report’ or as a separate chapter in the Annual Report. Pursuant to this requirement, a Report on your Company’s efforts on “Sustainable Development” is attached to this Report as ”Annexure 7”.

Business Responsibility Report

The Securities and Exchange Board of India (SEBI) has mandated inclusion of Business Responsibility Report (“BR report”) as part of the Annual Report for 500 listed entities based on market capitalization. This SEBI mandate is also inserted as Regulation 34(2)(f) of SEBI (LODR) regulations 2015. The SEBI (LODR) Regulations, 2015 provide a format for BR reports. It also contains a list of nine Key Principles and various core elements under each principle to assess compliance with Environmental, Social and Governance norms. Listed companies are required to prepare policies based on these nine Key principles and core elements, put in place a framework to integrate and embed the policies into business activities and a mechanism to measure and report the achievements as BR report.

Your Company has prepared a comprehensive policy framework for BR report, after studying the SEBI (LODR) Regulations, 2015 requirements and keeping in view the business and governance environment in which BEL as a Defence PSU operates. Highlights of this policy are posted on the Company’s website www.bel-india.com. The Company’s BR report for the year is attached to this Report as ”Annexure 8”.

Other Disclosures

Information required to be disclosed in accordance with Section 134(3)(m) of the Companies Act 2013 read with the Companies (Accounts) Rules, 2014 regarding conservation of energy, technology absorption and foreign exchange earnings and outgo, is given at ”Annexure 9”.

Acknowledgement

Your Directors place on record their deep appreciation and gratitude for the valuable support received from all the customers, particularly the Defence Services and the paramilitary forces and look forward to their continued support and co-operation in future. Your Directors also place on record their gratitude for the support received from various Ministries of the Government of India, especially the Ministry of Defence, Department of Defence Production. Your Directors express their gratitude to the Defence Research and Development Organisation and the various Research Laboratories under DRDO for the support it received, particularly in the joint development programmes and new products brought out with the help of them. Your Directors express their sincere thanks to the Comptroller and Auditor General of India, Chairman, Members and employees of the Audit Board, Statutory Auditors, Branch Auditors, Cost Auditors, Secretarial Auditor, Company’s Bankers, Collaborators and Vendors. Your Directors appreciate the sincere efforts put in by the employees at all levels, which enabled the Company to achieve the good performance during the year. Your Directors express their appreciation and gratitude to all the shareholders/investors for the trust and confidence reposed in the Company and look forward to their continued support and participation in sustaining the growth of the Company in the coming years.

For and on behalf of the Board

Bengaluru M V Gowtama

11 August 2017 Chairman & Managing Director


Mar 31, 2016

The Directors take pleasure in presenting their Report and the Audited Financial Statements for the financial year ended 31 March, 2016 together with the reports of the Statutory Auditors and the Comptroller and Auditor General of India thereon.

Financial Results and Performance Highlights

A summary of the Company''s financial results is given below :

(Rs. in Lakhs)

Particulars 2015-16 2014-15

Value of Production 778,209.47 665,854.35

Turnover (Gross) 752,164.14 669,456.53

Profit before tax 180,914.47 146,668.67

Profit Before Depreciation, 198,257.29 162,203.54 Finance Cost and Tax

Finance Cost 450.08 138.38

Depreciation 16,892.74 15,396.49

Profit Before Tax 180,914.47 146,668.67

Provision for Tax 45,147.88 29,944.58

Profit After Tax 135,766.59 116,724.09

Add : Balance brought forward from previous year 343,461.64 296,682.52

Balance available for Appropriation 479,228.23 413,406.61

Interim Dividend paid 6,000.00 4,800.00

Proposed Final Dividend 34,800.00 18,560.00

Tax on Dividend 8,305.92 4,738.10

Transfer to General Reserve 40,000.00 40,000.00

Transfer to Capital Reserve 2.17 -

Other appropriation 1780.22 1846,87

Reserves & Surplus 849,383.34 780,502.89

Net Worth 873,383.34 788,502.89

Earnings Per Share (in Rs.)* 56.57 48.64

Book Value Per Share (in Rs.)* 363.91 328.54

* EPS & Book Value normalised for the previous periods due to issue of Bonus Shares

Distribution of Value of Production for 2015-16 is given below :

Amount Particulars Percentage (Rs. in Lakhs)

Materials 405,120.63 52.06

Employee Cost 130,184.94 16.73

Other Expenses (Net) 45,096.69 5.79

Depreciation & Amortization 16,892.74 2.17

Provision for Tax 45,147.88 5.80

Profit After Tax 135,766.59 17.45

Total 778,209.47 100.00

Company''s turnover for the year 2015-16 has increased to Rs. 752,164.14 lakhs from Rs. 669,456.53 lakhs in 2014-15, registering a growth of 12.35%. Profit after Tax for the year is Rs. 135,766.59 lakhs as against Rs. 116,724.09 lakhs in the previous year. Turnover from indigenously developed products is 86%. Supplies to the defence contributed to 82% of turnover as against 87% in 2014-15.

During the year 2015-16, your Company had issued bonus shares in the ratio of 2:1 (two fully paid up equity shares of Rs. 10/- each for every equity share held) to all its shareholders. As a consequence the paid up share capital of the company increased from Rs. 8,000 Lakhs to Rs. 24,000 Lakhs.

Dividend

The Board has recommended a Final Dividend of Rs. 14.50 per equity share (145%), Rs. 34,800 lakhs for the year 2015-16. An interim dividend of Rs. 2.5 per equity share (25%), Rs. 6000 lakhs has already been paid for the year 2015-16. Thus, the total dividend for the year 2015-16 is Rs. 17 per equity share (170%), Rs. 40,800 lakhs (excluding corporate dividend tax) on the enhanced paid up capital after bonus issue during the year as against 292% (Rs. 29.20 per share), Rs. 23,360 lakhs paid in the previous year.

Provision of Rs. 7,084.46 lakhs has been made for corporate dividend tax on the final dividend proposed. Corporate dividend tax ofRs. 1,221.46 lakhs has already been paid on the interim dividend paid for the year 2015-16.

Amount Transferred to Reserves

An amount of Rs. 40,000 lakhs is proposed to be transferred to General Reserves for the financial year 2015-16.

Major Orders Executed

Major Projects executed during the year for tri services and non-defence customers include : Akash Weapon System (Army & Airforce), 3 Dimensional Tactical Control Radar to Army, Fire control Systems to Navy, Low Level Light Weight Radar (Aslesha) to Airforce, Integrated Sonar Suite to Navy, L Band Surveillance Radar for Export (Myanmar), Passive Night Vision Devices (PNVD) to Army, V/UHF Search Receiver to Pipavav and GRSE, Electronic Voting machines (EVMs) to ECI and Export (Namibia), Thermal Imaging Fire Control System (TIFCS) to Elbit, Schilka Gun Tank Upgrade to Army, Ship Data Network and New Generation Sonars to Navy.

Some of the significant achievements during the year :

- BEL is setting up a Defence Systems Integration Complex in Anantapur District of Andhra Pradesh. It will be the largest such facility in the country once it is commissioned, covering an area of over 900 acres. This facility will enable BEL to expand its Missile systems business and will carry out manufacturing & integration for the ongoing and upcoming projects. It will have state-of-the- art infrastructure such as Assembly Hangars and Hard Stands for Radars and Weapon integration, RF radiation sources for target simulation, Automatic Test Equipment, Clean Rooms for electronic assembly, Non-Explosive & Explosive Integration Buildings, Missile Storage buildings, Environmental Test Chambers, Fire Stations, Solar Power Plant, Estate and Admin buildings.

- Indigenously developed Surface-to-Air ''Akash'' Missiles of Airforce version successfully test-fired from Integrated Test Range on 28 January 2016 as part of User trial. The missile can fly at supersonic speed ranging from Mach 2.8 to 3.5 and can engage aerial targets upto a range of approximately 25 km. The Missile System was formally inducted into the Indian Air Force in July 2015.

- BEL has successfully completed supply of all systems of Akash Missiles to Indian Airforce.

- Supply for project L-70 Gun Upgrade program commenced. The activity involves Up-gradation of Gun for improved firing performance in local mode for Air Defence application.

- The e-File Management (FLM) for procurement files has been successful at 5 Units in addition to 4 Units implemented earlier.

Exports

BEL achieved an all time high export sales of US$ 85.07 Million registering a growth of 47% over the previous year''s export turnover of US$ 57.85 million. BEL has an export order book of US$ 120 million as on 1 April 2016 which includes offset order book of US$ 24 million. The targeted export sales for the year 2016-17 is US$ 112 million. The long term export plan of BEL is to reach sustained export sales to total sales turnover ratio of 10% from the current level of 7.3%.

During this year, indigenously developed Naval Surveillance Radars RAWL 02 MK-IIA based on SSPA was exported for the first time. Other major range of products exported includes TI based Electro Optical Fire Control Systems, CoMPASS, Electronic Voting Machines, Communication equipment, Radar Warning Receiver, Casings, Stators, Electro Mechanical parts etc.

BEL is fully geared up to meet the expectations of "Make in India" program in the field of Professional defence electronics equipment development and manufacturing with a focus on exports.

BEL has a dedicated International Marketing Division for providing an increased thrust for harnessing the export potential of defence electronics products and systems, which represent its core area of business. BEL has been exporting various products and systems to friendly countries of India. Apart from this, BEL is interacting with electoral commissions of various democratic countries to market Electronic Voting Machines. Having established a coastal surveillance radar system for few neighboring countries, BEL is interacting with Ministry of External Affairs on a regular basis for supply of these systems to other friendly countries of India.

BEL has identified the market segments and has a structured market plan for its products and systems. BEL has been visiting customers on a periodic basis to understand their requirements, acquisition process and to establish long term customer relationship for enhancing export business.

BEL is focusing on the opportunities in the areas of helping OEMs to meet their offset obligations in various RFPs of MOD, on account of the "Offset" policy incorporated in Defence Procurement Procedure (DPP). In this regard BEL is closely working with various major foreign Aerospace and Defence companies. BEL has also identified contract manufacturing (both build to print and build to spec) as one of the areas to address the emerging opportunities with OEMs. Further, efforts are being made to establish long-term supply chain relationships with global players.

BEL has participated in three International Exhibitions to showcase its products & capabilities and for creating brand awareness among global supply chain partners. BEL publishes periodic advertisements in international/defense magazines / periodicals / journals to enhance the visibility of BEL. BEL participated in the International Fleet Review IFR 2016 conducted by Indian Navy, the Make in India Week 2016, Mumbai and Defexpo 2016, Goa with a focus on exports.

BEL has been receiving awards for Excellence in Exports under the category "Electronics & Communication (excluding IT/ BT) - Medium and Large" from the Government of Karnataka during the last 5 consecutive years.

MoU with Government

Your Company has been signing a Memorandum of Understanding (MoU) every year with the Government of India, Ministry of Defence. Performance of BEL for the year 2014-15 has been rated as "Excellent" in terms of the MoU with the Government. The MoU rating for 2015-16 is under review by the Government.

Order Book Position

The order book of Company as on 01 April 2016 is around Rs. 3,202,182 Lakhs. The order book comprises mainly major programs like Integrated Air Command Control System, Battlefield Surveillance System, Akash Weapon System, Weapon Locating Radar, Hand Held Thermal Imager with Laser Range Finder, Ground Based ELINT, Command Information Decision Support System, Fire Control System, Gun / Tank Upgrades Communication Sets, New Generation Radars and Sonars etc.

Finance

Your company has embarked on several investment proposals which should help in maintaining a healthy growth rate in the top line. During this financial year, the company has been able to meet the incremental working capital requirements and additional funds required for capital investments entirely from internal resources without resorting to borrowing. Effective cash management and a healthy Balance Sheet has helped the company to retain the highest rating by ICRA in both short term and long term. As a measure of good corporate governance initiative, during the year, the company has transferred the amount set aside for leave encashment liability to a separate policy managed by Life Insurance Corporation of India with a view to delineate the amount from the operations of the Company.

The Inventory position (net) of the company as on 31 March 2016 was Rs. 421,324 lakhs as against Rs. 342,688 lakhs as on 31 March 2015. This works out to 208 days of value of production (DPE) as on 31 March 2016 as against 188 days as on 31 March 2015. The increase in inventory in the year end will help to meet the sales of 1st two quarters of the current financial year.

The position of Trade Receivables (net) as on 31 March 2016 was Rs. 371,190 lakhs as against Rs. 378,614 lakhs as on 31 March 2015. This works out to 180 days as against 206 days of turnover for the previous year. This has been possible due to better performance in collection of receivables.

Deposits

The Company does not have any Public Deposit Scheme at present. However, the matured past Public Deposit amount with the Company was Rs. 36.95 lakhs as on 31 March 2016. Out of these 34 deposits amounting to Rs. 36.50 lakhs are not claimed or not paid as these accounts are frozen on advice by Karnataka Lokayukta, remaining mature deposits of Rs. 0.45 Lakhs as on 31 March 2016 is unpaid due to in-sufficient documents/records produced by Depositors. The entire amount of Public Deposit outstanding as on 31 March 2016 is included in the Current Liability Note of the Balance Sheet.

Research & Development

Research and Development has been the core strength of BEL. Focused attention was given for Development of Technology modules and Products during the year 2015-16 by Planning and Review Mechanism. Apart from in-house efforts, BEL has close co-operation with DRDO, other National Research and development agencies and Academic institutions. The R&D activities have been carried out in all the business segments namely; Radars, Military Communication, Naval Systems, Missile Systems, Electronic Warfare, Avionics, C4I systems, Electro-optics, Tank Electronics, Gun up-grades, Civilian equipments & Systems and Components during this period.

Development & Engineering (D&E) Divisions attached to all the Strategic Business Units (SBUs) of BEL concentrated on the development of Products and Systems in their respective areas of business segments. Central-D&E and two Central Research Laboratories (CRLs) of the company supported all the D&E Divisions by way of developing core technology modules and software required for the development of Products and Systems. Product Development & Innovation Centre (PD&IC) has started functioning within Bangalore Complex with focus on development of certain new products.

The turnover analysis of the Company for the year 2015-16 indicates that 39% of the turnover is from in-house developed products, 47% of the turnover is from products developed in association with DRDO and other National Labs and remaining 14% is from products of foreign ToTs.

Development of New Products

R&D Divisions of BEL have completed development of several new products /system/ technology modules during 2015-16. The following are some of the new Products and System developed and introduced during 2015-16 :

- 3D Surveillance Radar operates in S-band for deployment in diverse terrains like Plains, Deserts, Mountain tops and High Altitude regions. This Radar is used by Indian air force.

- L-band 2D Air Surveillance Radar for Navy has been developed and supplied to Myanmar. The Radar is used for deployment in Large and Medium size Naval Ships and onshore establishments which provides video signals for display purposes and tracks for target track generation.

- Coastal Surveillance Radar is developed for Coastal Surveillance Phase 2 projects with a completely solid state, coherent Radar which operates in both X and S-bands.

- Man-pack Satcom Terminal is developed to support Voice/Data, SMS services to Defence Services through GSAT6 Satellite.

- Software Defined Radio- (Naval Version - NC) is a Multimode, Multiband Ship borne two channel V/UHF radios supporting secure voice/ data services, having networking capability.

- Tactical Access Switch provides support to Local / Trunk switching IP/MPLS based for Voice, Video, Data as well as aggregation and switching facility for traditional TDM Voice Switches.

- Advanced Composite Communication System (ACCS) is an IP based Voice and Data Integrated Communication System to facilitate Ship-to-Ship, Ship-to- Shore and Ship-to-Air Communications using VLF/MF/HF, V/UHF bands Radios.

- Versatile Media Secrecy Device is unified single encryption device for Voice, Data, & Super G3 Fax over IP network.

- Citizen Verification Device is a handheld device designed for Data collection and Survey by Registrar General of India. This is used for Sample Survey Registration System.

- Integrated Sonar Suite for S3/S4 Platform consists of Passive Sonar, Active Sonar, Intercept Sonar, Obstacle Avoidance Sonar, Own noise measurement system and Underwater Communication System. The system is mounted on submarine for underwater surveillance purpose.

- IAC MOD O/C Reference System is a common reference developed for testing older version as well as new IAC MOD C. It has interfaces with sensors like Sonar, Radar, GPS. This system carries out Contact Motion Analysis and generates fire control solutions for designated targets.

- Integrated EW System for Mountainous Terrain has COM and Non-COM segments as well as satellite interception, is configured with man portable units for ease of deployment on mountainous terrain.

- Laser Warning System can detect incoming laser threat and calculate angle of arrival to enable the protection counter measure.

- Gunner Sight for T90 is an independent surveillance Sight with Enhanced Range capability to facilitate tank gunner to detect, acquire, and its destruction during day and night.

- Driver Sight for MBT Arjun/Arjun Cataput Driver Sight is a State-of-the-art real time Thermal imaging Camera using uncooled IR detector to give Stereoscopic Vision with depth perception for driver comfort. It provides clear vision and all weather driving capability.

Scientists from Central Research Laboratories and other R&D divisions of BEL have contributed 98 Technical Papers in the national and international journals during the year.

Following awards have been received by R&D teams during the year :

- SODET (Gold, Silver, Bronze) Awards for Technology Development and SODET (Gold) for Technology innovation for the year 2014-15.

- Young Scientist Award from IETE for CRL Scientist and D&E Engineer of MR SBU for the year 2015.

- RM Awards (2012-13)

a) Indigenization :

- Design & Development of Retrofit Security Solution for SHAKTI

- Indigenization of AK 630 GUN Drive

b) Design Effort :

- L-70 Gun Up gradation

- Systems of IACCS Networks

- RM Awards (2013-14)

a) Indigenization :

- Configuration, Development and Engineering Weapon Control Modules (WCM 176) for AK 176 Gun Mount

- Bharani Radar

b) Design Effort :

- EO FCS-U1 for Control and Medium Caliber 76 mm Gun Mount and High Rate of Fire AK 630 Gun mounts

New facilities established during the year

Company has been continuously modernizing its infrastructure to be in tune with the changing needs of the technology / products. Specific groups in all the units scan the technology changes that are taking place and identify new processes in the world market for acquisition. This enables the company to maintain its infrastructure on par with international standards. During the year 2015-16, company has spent Rs. 525 Crores on investments (including Rs. 362 as part of CAPEX investment towards Modernization of Plant & Machinery, Test Instruments, R&D investments, infrastructure up-gradation etc). The expenditure is fully met through internal accruals. Following are some of the major facilities established during the year.

- Additional Integrated Test Bed Facility at Bengaluru Unit for Missile & Weapon System Integration.

- Near Field Test Range and EMI/EMC Test Facilities for High Tech Radars at Ghaziabad Unit.

- State-of-the-art Additive Manufacturing Facility set up at Bengaluru Unit for product development with reduced cycle time.

- X-Ray Inspection facility at Chennai Unit for Testing/ Troubleshooting of high-end/complex Printed Circuit Boards (PCBs).

- Environmental Stress Screening (ESS) Chamber at Chennai Unit used for Testing High/Low Temperature, Damp Heat for various projects.

Quality

Your Company is focussing on its fundamental principles of enhancement in Quality, Technology and Innovation. The Quality, being first and foremost principle of business, plays a vital role in all areas of operations. Quality initiatives are being taken for improvement in operational and business performance parameters related to product design, on-time-delivery, process cycle time etc. The control on these factors result in enhancement in product quality and services rendered to the customer.

The regular customisation of SAP ERP system for programming new transaction codes to use data as per the requirements of stakeholders is playing an important role in managing process parameters resulting in growth of the company. The dedicated Customer Relation Module (CRM) and Supplier Relation Module (SRM) in SAP are enabling to enhance customer services and procurement efficiencies.

The Company is committed for improvement through process approach in line with world-class Quality Systems. All Units / Strategic Business Units / Common Services Groups are certified to ISO9001 Quality Management System (QMS) since early nineties. Seven Units/SBUs are certified for Aerospace standard, AS 9100.

All Units of Company are committed to Environment Management System through ISO 14001 Certification. The Ghaziabad Unit and Engineering Services of Bengaluru Unit are accredited to OHSAS (Occupational Health Safety and Assessment Series) 18001.

The ISO 9001:2008 version for QMS and ISO 14001:2004 version for EMS have been revised to 2015 versions in September 2015. In order to upgrade these certifications in BEL, the awareness training programmes, conversion programme, and Lead Auditor training programmes are being conducted for various SBUs/Units personnel.

The calibration and maintenance departments of Bangalore Complex, Ghaziabad and Panchkula Units are certified by National Accreditation Board for Testing and Calibration Laboratories (NABL) in accordance with the standard ISO/IEC 17025 standards. The Pune unit manufacturing X-ray tubes is certified for ISO 13485 standard for medical devices. The Bharat Electronics Software Technology Centre (BSTC) at Bangalore Complex is CMMI level 5 certified. The ''D&E NCS and CRL'' of BEL Ghaziabad are certified for CMMI level 3.

The EFQM (European Foundation of Quality Management) model for Business Excellence is being followed since year 2002 in BEL as another process approach for overall strategic and operational excellence leading to enhancement in competitiveness in meeting and exceeding needs & expectations of stakeholders. Its deployment status was assessed in the company through participation in ''CII-EXIM Bank Award for Business Excellence''. All Unit/SBU of BEL have ''Commendation for Strong Commitment to Excel'' status. The Bengaluru and Ghaziabad Unit are at next higher level of Award i.e. ''Commendation for Significant Achievement''.

The continual improvements in product and processes are brought out through various approaches. One of such approaches is through Six Sigma methodology. Middle and senior level executives select Six Sigma projects from different areas of concern related to product and processes and bring about breakthrough improvements. In order to effectively implement Six Sigma methodology and to bring culture of improvement through analytical approach, selected senior executives (14 numbers this year) from each Unit are regularly trained as ''Black Belt'' by Indian Standard Institute, Bengaluru. These Black Belts guide other executive (Green Belts) in their Six Sigma projects. Around 380 Six Sigma projects were completed in financial year 2015-16. Forty two Six Sigma projects were nominated for national level competitions/seminars and have won various categories of awards. One of the Six Sigma case studies represented BEL at the International Conference for Quality Control Circle (ICQCC) 2015, held at South Korea and was conferred with "Gold Award Certificate".

The organization creates impetus towards involvement of non-executives in the quality movement through Quality Control Circles (QCC). In the year 2015-16, 738 presentations for improvement in product and processes were made by various QCCs. Twenty Five QC circles were nominated to participate in national competitions/conventions and all were adjudged for higher category awards. One of the QCC, who is CMD''s Rolling Shield Winner in Inter Unit QCC competition, represented BEL in international convention, ICQCC 2015, held at South Korea and bagged "Gold award".

Another approach for Quality Improvement is through Suggestion Scheme, wherein employees from non executive to executive level (up to manager) are eligible to apply for suggestion and are suitably awarded on implementation of suggestion. Around 3000 suggestions were given by employee this year. Selected BEL employees participated in national contest, "Excellence in Suggestion Scheme Contest 2015", conducted by Indian National Suggestion Schemes'' Association (INSSAN) and bagged Second Place, also won prizes in "Slogan contest in Hindi, English" and "Poster Contest". The Awards were distributed during 26 Annual National Convention of INSAAN held on 8 & 9 January 2016, at Pune.

BEL has put in special programs for enhancement of competency of its executives in professional fields. BEL had nominated its engineers for programs like Certified Reliability Engineer (CRE) (11 Nos.), Certified Quality Engineers (CQE) (39 Nos.) and Certified Manager for Quality and Organisation Excellence (CMQ-OE) (17 Nos.). These programs were conducted by American Society for Quality (ASQ). Similarly training on Project Management Programs (PMP) (84Nos.) was also conducted by the Project Management Institute (PMI). Besides this, customised training programs on Quality were also conducted during the year.

During the year Company has adopted "Components Conditional Process for Laser Applications" and "Soldering Process for Advanced Radar Application" in order to meet the International Standards.

To assess the customer satisfaction an independent Customer Satisfaction Survey was organised through an external agency, M/s. Market Insight Consultants (MIC) NOIDA, to capture the customers'' perception on quality of BEL product. Sixteen products from various Units/SBUs were offered for survey. The customer satisfaction index of 83% has come out in survey.

Human Resources

Your Company employed 9,848 persons as on 31 March 2016 as against 9,703 persons as on 31 March 2015. Of these employees, 4,594 were engineers / scientists and 2,019 were women employees as on 31 March 2016. A total of 492 executives and 173 non-executives were inducted during the year. 117 employees belonging to SC, 30 employees belonging to ST, 220 employees belonging to OBC and 23 employees belonging to the minority community were recruited during the year.

Your Company has been implementing the Government Directives on Reservation. The particulars of SC/ST and other categories of employees as on 31 March 2016 are as under :

Executives Non-Executives

Category of Employees Group A Group B Group C Group D

Scheduled Caste 972 25 745 50

Scheduled Tribe 320 1 147 21

OBC 1142 34 833 44

Ex-Servicemen 96 7 283 72

Physically Challenged 95 3 126 14

Various Training programs were conducted during the year to enhance competencies in Technical, Functional, Managerial and leadership areas. Structured Executive Development Programs were conducted regularly with premier Institutes to meet the evolving training needs of executives as they progress through various grades.

The training programs are designed to enhance competencies in various areas like Technical, Functional and Managerial/ Leadership.

A detailed write up on Company''s HR philosophy and specific HR initiatives during the year is provided separately in the Management Discussion and Analysis Report attached.

Disclosure under Sexual harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company is an equal opportunity employer and consciously strives to build a work culture that promotes dignity of all employees. As required under the provisions of Sexual Harassment of Woman at Workplace (Prevention, prohibition and Redressal) Act and Rules framed thereunder, the Company has implemented the policy on prevention, prohibition and redressal of sexual harassment at the workplace, which has been uploaded on the Company''s intranet portal. All women, permanent, temporary or contractual including those of the service providers are covered under the policy.

An internal Complaints committee has been constituted in each of the nine constituent units including Corporate Office to redress complaints relating to sexual harassment. During the year, the Company received 2 complaints on sexual harassment. The complaint has been investigated and appropriate action has been taken. There were no complaints pending for more than 90 days.

Awareness programs were conducted across the Company to sensitize the employees and uphold dignity of their colleagues at workplace, particularly with respect to prevention of sexual harassment.

Awards and Recognitions

Your Company continues to be a highly trusted for the quality of its products, innovation and renovation of its products based on strong consumer insights and the ability to engage with consumers across the country. During the year your Company has received various Awards and Recognitions. Some of the important accolades received during the year by your Company include :

- Raksha Mantri Award in the category of institutional, best performing division, indigenization, design effort for the years 2012-13 and 2013-14.

- ELCINA-EFY award for excellence in Electronic hardware manufacturing and services in Quality and Exports category.

- "Leadership Award - Embedded/VLSI Industry" for the year 2015 under the category of Best Electronic System Design & Manufacturing (ESDM) in the Government Sector. The award was conferred by "Mentor Graphics and Silicon India" on 6 November 2015 at Bengaluru.

- "Gold Award" in the ICQCC (International Convention of Quality Control Circle) held at Changwon, Korea for the case study on "Testing of Tx/Rx Sub-Modules".

- BEL won Four Awards instituted by Society of Defence Technologists (SODET) for the year 2014-15 in the categories of Technology Development and Technology Innovation.

- BEL had been conferred with the ''Dun & Bradstreet India''s Top PSUs Award 2015'' in the Electrical & Electronics Sector by Dun & Bradstreet (D&B), the world''s leading provider of global business information, knowledge and insight.

Environment Management

Your Company has long been integrating sustainability in its operations systematically with best practices. On the lookout for sustainable development, sets in clean and green surroundings. All the Units of the Company have committed for maintaining an environmental friendly work processes and strongly believes that environmental sustainability results in designing economically viable and reliable products. BEL sets objectives in compliance to DPE guidelines, further approaches towards adopting breakthrough technology for enhancing environmental performances of the products right from design to disposal. BEL looks beyond its boundary for compliance to environmental impacts. In all the Units of BEL, practicing of conservation of natural resources like energy conservation, water conservation and reduction in waste generation is inculcated as a routine approach. BEL looks beyond obvious opportunities available for improvising the performance against environmental commitments.

The Sustainability Report annexed to this report contains further details on environment management and sustainable development initiatives.

Subsidiaries and Joint Ventures

BEL Optronic Devices Ltd (BELOP), engaged in the business of manufacturing of Image Intensifier Tubes, has become wholly owned subsidiary of BEL during the year on acquisition of the remaining shares from M/s. Specified Undertaking of the Unit Trust of India (SUUTI). Your Company has made further investment to the tune of Rs. 44.88 Crores (19,51,385 equity shares of Rs. 100/- each at a premium of Rs. 130/- per share) in the equity shares of BELOP by subscribing to rights issue made by BELOP.

During the year BELOP acquired the upgraded XR-5 technology under ToT agreement to upgrade the technology for manufacturing Image Intensifier Tubes. BELOP achieved a turnover of Rs. 10,663.55 lakhs for the year as against Rs. 10,264.93 lakhs in the previous year. The profit after tax (PAT) for the year was Rs. 242.77 lakhs as against Rs. 366.69 lakhs in the previous year.

The Joint Venture Company (JVC) with General Electric, USA, viz., GE BE Pvt Ltd., continues to perform well. This JVC manufactures CT Max and other latest version X-Ray Tubes. BEL supplies some parts required for the products manufactured by this JVC. GE BE Pvt Ltd recorded a turnover of Rs. 79523 lakhs for the year as against Rs. 72,564 lakhs in the previous year. The profit after tax (PAT) was Rs. 12669 lakhs for the year as against Rs. 11,752 lakhs in the previous year. The JVC declared 200 % dividend for the year 2015-16 and BEL will receive Rs. 5,200 lakhs as dividend from this JVC on BEL''s share of investment for the financial year 2015-16.

M/s. BEL-THALES Systems Limited (BTSL), a subsidiary, was formed for design, development, marketing, supply and support of civilian and select defence radars for Indian and global markets. Your Company holds 74% of the equity capital of BTSL. Your Company has made further investment to the tune of Rs. 9.47 Crores by subscribing to 9,47,200 equity shares of Rs. 100/- each during the year. During the second year of its operation, it incurred a loss of Rs. 247.16 Lakhs.

In pursuant to provisions of section 129(3) of the Companies Act, read with Rule 5 of Companies (Accounts) Rules, 2014, the statement containing salient features of the financials statement of Subsidiaries / Associate / Joint Ventures is attached to the financial statements.

Consolidated Financial Statements

Consolidated Financial Statements of your Company and its Subsidiaries and Joint Venture Companies are attached to this Report.

Vigilance

The Company''s Vigilance Organization is headed by a Chief Vigilance Officer (CVO), an IAS Officer. Permanent Vigilance Officers were posted in each of the Units and in the SBUs. Vigilance Committees were formed in each of the Units to look after the Vigilance Administration in the Units and SBUs and the Unit/SBU heads are also designated as Chairman of the Vigilance Committee. Apart from this, there exists a Vigilance Committee at the Corporate, where Chairman & Managing Director is the Chairman the Committee and the CVO is the Member secretary. Preventive Vigilance has been the thrust area of the Vigilance Organisation and the same received focused attention during the current year. The Vigilance Department examines procurement contracts/ sub-contracts and processes on continual basis, conducts regular and surprise inspections and investigates instances of any suspected transactions referred to it. Any employee or third parties can refer any suspected transaction to the notice of CVO for investigation which are examined as per the Complaint Handling Policy of the Company. Online complaint management system has been made operational and online complaints can be filed through accessing the Vigilance Portal in BEL web site.

During the year 2,663 Purchase Orders/ Contracts have been reviewed. CTE Type intensive examination has been restructured with the formation 5 IE teams. Intensive Examination of 17 High value Procurements and 20 Works Contracts has been taken up during the year. Regular and surprise checks/inspection has also been conducted by the field Vigilance Officers. During the year, 82 Complaints, including the 11 Complaints referred by CVC/MOD/CBI were received and 69 Complaints including 8 Complains referred by CVC/MOD/CBI were disposed. Disciplinary action and System/ process Improvement has been recommended in some cases where lapses were observed. Two Complaints are pending with CBI for investigation.

During the year 322 Probationary Engineers at the induction level, 307 Executives and 662 Non Executives were given Basic awareness program on Vigilance. Apart from this, 360 Senior Executives were given Customised Training Program on Vigilance, Cyber Crimes and Preventive Vigilance measures. 64 Executives & 29 Non Executives working in sensitive areas for more than 3 years have been job rotated and the percentage coverage is 95%.

In lines with the CVC''s guidelines on Leveraging Technology, to ensure transparency through effective use of website, the following information has been made available on Company''s website :

- E-Procurement-about 92% of the procurements excluding the ToT procurement, long term rate contract and repeat orders, were procured under e-procurement mode.

- Online registration of Vendors.

- Vendor Payment Information System.

- E Payment to Vendors.

- Details of awarded contracts / Purchase Orders valuing more than Rs. 10 lakhs in respect of works contracts, service contracts, capital items and non-production items.

- Details of awarded Contracts/Purchase Orders issued on nomination / single tender basis value exceeding Rs. 5 lakhs.

- Purchase procedures, sub contract procedures and works manual.

- Complaint handling policy and Whistle Blower Policy.

- Corruption Risk Management Policy is framed and issued for implementation.

- Vendors'' Directory, after removing defunct vendors.

- File Life cycle Management System has been implemented across the company and the coverage is about 52% of the total files generated in the Company.

- On line filing APRs is implemented for all the Executives and the Executives have filed their Annual declaration of Assets and Liabilities (APR) in SAP for the year 2014 and 2015.

Vigilance setup in BEL has been continuously endeavoring to bring transparency, fairness and equity in all transactions and processes of the company through creating sense of awareness on System and Procedures through awareness campaign and training program. Some of the key activities that have been carried out during the year are :

1) Vigilance Awareness Week 2015 was marked with special address by eminent personalities including Justice M N Venkatachalaiah, former Chief Justice of India and Shri A S Kiran Kumar, Chairman, ISRO.

2) Vigilance awareness week 2015 was observed during October 2015. The observance of the Week was marked with Walkathon and Cycle rally by BEL School Children, Tree plantations and distribution of saplings, unveiling of Vigilance Slogan Boards, Screening of Inspirational flms for the School Children and series of lecture by distinguished personalities and Competitions.

3) Training programs were organised for Vigilance Officers through Guest lectures by faculties from CBI, Bengaluru, Cyber Security Council of India, Data Security Council of India.

4) Two days training program on "Promoting Transparency in Public Procurement and Integrity Pact" was organized by Vigilance in association with Transparency International India which was inaugurated by CMD of BEL and the key note address was delivered by R Srikumar, former Vigilance Commissioner, Vigilance Commission.

5) About 2600 BEL employees have successfully completed the Online Certified Program on Public Procurement organized by World Bank.

6) The Vigilance News letter "JAGRITI" was revived with the fourth volume released on 30-06-2015. The Improvised 9 Volume of "JAGRITI" was released on 31 March 2016.

Integrity Pact

One of the recent initiatives of the Central Vigilance Commission (CVC) to eradicate corruption in procurement activity is introduction of the Integrity Pact in large value contracts in Government Organizations. In line with the directives from Ministry of Defence and the Central Vigilance Commission, your Company has adopted Integrity Pact with all vendors / suppliers / contractors / service providers for all Orders / Contracts of value Rs. 2,000 lakhs and above, initially. This threshold value was reduced to Rs. 1,000 lakhs from March 2013 and further reduced to Rs. 500 lakhs from May 2014. The Pact essentially envisages an agreement between the prospective vendors / bidders and the Principal (BEL), committing the Persons / officials of both sides, not to resort to any corrupt practices in any aspect / stage of the contract. Only those vendors/bidders, who commit themselves to such a Pact with the Principal, would be considered competent to participate in the bidding process. Integrity Pact, in respect of a particular contract, would be operative from the stage of invitation of bids till the final completion of the contract. Any violation of the same would entail disqualification of the bidders and exclusion from future business dealings.

The tenure of Mr N K Sinha, IAS (Retd), former Secretary, Planning Commission and former Chairman, PESB as an Independent External Monitor (IEM) expired on 12.04.2015. As recommended by the CVC, the Company has appointed Mr M D Paliath, IDAS (Retd) and Mr Shankar Narayan, Dy CAG (Retd) for monitoring implementation of Integrity Pact in the Company. During the financial year 2015-16 the IEMs reviewed 98 contracts and held structured meetings with the Chairman & Managing Director.

Procurement from MSMEs

Your Company has been providing increased thrust on enhancing procurement from MSMEs and is implementing Public Procurement Policy for Micro, Small & Medium Enterprises (MSMEs) as per the guidelines / notification issued by the Ministry of MSMEs. Out of the total procurement during 2015-16, 20.17% was sourced from MSME vendors.

In order to facilitate MSMEs, the company is deploying all efforts to classify the existing vendors into Micro, Small & Medium Enterprises in the company''s procurement system through web-based real time centralized ERP System (SAP). Online Vendor registration forms are available in the Company''s official website (www.bel-india.com). Industry Promotion and Nodal Officers are nominated to assist vendors regarding Procedure for Registration, understanding the requirements of BEL, report grievances, if any, etc. Some of the other initiatives include uploading of company''s procurement plan for MSMEs based on the production plan, with periodic update and details of Unit / SBU specific Industry Promotion Officers in the company''s official website, participation in various vendor development programmes like exhibitions, workshops, establishment of industrial estate to give maximum encouragement to ancillaries etc. During the year, Five Training programmes were conducted for MSME and 782 new indigenous vendors were added.

Implementation of Official Language Policy

Your company is committed to adhere to the OL policies of the Government of India. During 2015-16, efforts made towards implementation of Official Languages include :

Committee of Parliament on Official Language conducted OL inspections of CRL/GAD (20.05.2015) and Bangalore Complex (20.01.2016). MoD officials conducted OL inspections of Chennai Unit (20.11.2015) and CRL/BG (14.03.2016). Corporate OL Audit team conducted OL inspections at Panchkula, Chennai, Machilipatnam, Pune Units and Regional Offices at Vizag and Mumbai. CMD attended Hindi Salahkar Samiti Meeting of Dept. of Defence Production, MoD under the chairmanship of Raksha Mantri held on 17.02.2016.

Company has achieved the targets prescribed in the Annual Program 2015-16 issued by Dept. of OL, MHA, GoI to transact official work in Hindi. Hindi Month was observed in all the Units and Offices of the Company. During Hindi month, employees and officers participated enthusiastically in various programs / competitions. Employees of various Units / Offices and Corporate Office bagged prizes in the Inter Organization TOLIC Competitions. Hindi workshops for those having working knowledge in Hindi were conducted during the year. Training on Unicode is being imparted for all Executives and Employees. A program on Professional Papar Presentation in Hindi was organized by BEL/CO under the agies of TOLIC (Undertakings) Bengaluru on 25.02.2016.

During the year, CRL/BG was notified by GoI under rule 10(4) of OL rules indicating that 80% or more staff have working knowledge in Hindi and individual orders were issued under rule 8(4) of OL Rules for those having proficiency in Hindi to do their Official work in Hindi. Thus, number of notified Units/Offices of company reaches to 14. OL Portal is in place to facilitate OL implementation across the company and to provide latest inputs pertaining to OL and is being updated. Hindi language has been enabled in SAP. Most of the Units have uploaded data pertaining to OL Training Roster on SAP. Company''s website is available in Hindi and English and efforts are on to progressively have the entire website in bilingual. Efforts are on to ensure the progressive use of Hindi in all spheres of activities of the Company.

Implementation of RTI Act

The information required to be provided as per Section 4(1)(b) of the Right to Information Act, 2005 has been posted on the website of the Company www.bel-india.com. The Information posted on the website contains general information about the Company, powers and duties of employees, decision making process, rules, regulations, manuals and records held by BEL, a directory of the Company''s officers, pay scales, procedure for requesting additional information about the Company by citizens and associated request formats.

During the year 2015-16 the Company received and attended 1070 requests for information under RTI Act. Most of the requests were for information related to recruitment, service related matters, third party and commercial secrets information.

Board Meetings / Change in Directors and Key Managerial Personnel

During the year 5 Board meetings were held, the details of which form part of the Corporate Governance Report.

Following are the details with regard to the Directorate and Key Managerial Personnel of your Company during the financial year :

Sl. Desig- Date of Date of Name of the Director No. nation appointment cessation

1 Mr J Rama Krishna Rao Director 03.11.2014 26.08.2015

2 Mrs Kusum Singh Director 26.08.2015 NA

3 Dr Bhaskar Ramamurthi Director 02.12.2015 NA

4 Dr R K Shevgaonkar Director 02.12.2015 NA

5 Mrs Usha Mathur Director 23.12.2015 NA

6 Mr Sharad Sanghi Director 07.01.2016 NA

7 Mr S M Acharya Director NA 25.03.2016

8 Lt Gen V K Mehta (Retd) Director NA 25.03.2016

9 Mr Vikram Srivastava Director NA 25.03.2016

There was no change in the Key managerial Personnel of the Company viz., Mr S K Sharma, Chairman & Managing Director, Mr P R Acharya, Director (Finance) & Chief Financial Officer and Mr S Sreenivas, Company Secretary.

The following Additional Directors are being appointed as Directors on terms as set-out in the Notice of the 62 Annual General Meeting ;

Mrs Kusum Singh, Dr Bhaskar Ramamurthi, Dr R K Shevgaonkar, Mrs Usha Mathur, Mr Sharad Sanghi, Mr Girish Kumar and Mr Nataraj Krishnappa.

Mr M L Shanmukh, Director (HR) retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for reappointment.

Directors'' Responsibility Statement :

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors in terms of Sections 134(3)(c) & 134(5) of the Companies Act, 2013 state that :

a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as at 31 March 2016 and of the profit of the Company for the year ended on that date;

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

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

e) proper internal financial controls were in place and such financial controls were adequate and were operating effectively

f) systems to ensure compliance with the provisions of all applicable laws were in place and same were adequate and operating effectively.

Significant and material orders

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company''s operations in future.

Events Subsequent to the Date of Financial Statements :

Material changes and commitments affecting the financial position of the company which have occurred between 31 March, 2016 and date of signing of this Report are NIL.

Related Party Transactions

There were no materially significant related party transactions with the Company''s Promoters, Directors, Management or their relatives, which could have had a potential conflict with the interests of the Company. Transactions with related parties that were entered into during the financial year were on an arm''s length basis and were in the ordinary course of business. All Related Party Transactions are placed before the Audit Committee as also the Board for approval, if required. Members may refer to the notes to the accounts for details of related party transactions. The policy for related party transaction has been uploaded on the Company''s website www.bel-india.com. Information pursuant to Section 134(3) (h) of the Companies Act, 2013 read with rule 8(2) of the Companies (Accounts) rules, 2014 is attached to this report as Annexure 1.

Corporate Social Responsibility

Pursuant to the provisions of Section 135 of the Companies Act, 2013 and The Companies (Corporate Social Responsibility) Rules, 2014 read with various clarifications / amendments issued by Ministry of Corporate Affairs & DPE guidelines, the Company has undertaken various activities as per the CSR Policy. The programmes / initiatives / projects are taken up in line with the Schedule-VII of the Companies Act-2013, which are duly incorporated in CSR policy and forms the guiding principle for all our programmes.

The Corporate Social Responsibility policy of the Company is posted on the Company''s website, www.bel-india.com

Pursuant to the requirement under the Companies (Corporate Social Responsibility) Rules, 2014, as amended, a report on CSR activities for financial year 2015-16 is annexed to this report as "Annexure 2".

Auditors

Statutory Auditors

Pursuant to Section 139(5) of the Companies Act 2013, the Comptroller and Auditor General of India appointed M/s. Badari, Madhusudhan & Srinivasan, Chartered Accountants, Bengaluru, as Statutory Auditors for the financial year 2015-16 for audit of accounts of Bengaluru, Hyderabad, Chennai Units and Corporate Office. M/s. Ved & Company, Chartered Accountants, Ghaziabad were appointed as Branch Auditors of Ghaziabad, Panchkula and Kotdwara Units for the financial year 2015-16. M/s. Malani Somani Chandak & Associates, Chartered Accountants, Pune were appointed as Branch Auditors for Pune and Navi Mumbai Units for the financial year 2015-16. M/s. Rao & Narayan, Chartered Accountants, Vijayawada were appointed as Branch Auditors for Machilipatnam Unit for financial year 2015-16.

Cost Auditors

Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014 (as amended), the cost records maintained by the Company in respect of its Manufacturing activities are required to be audited by the Cost Auditor. Your Directors had, on the recommendation of the Audit Committee, appointed M/s. PSV & Associates, Cost Accountants, Bengaluru, as Cost Auditors of the Company for the financial year 2015-16 for conducting the audit of cost records of the Company.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr Thirupal G, Practicing Company Secretary (PCS Registration No. 6424) for the financial year 2015-16 to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed to this report as "Annexure 3".

The Secretarial Auditor in his Report observed that the Company is yet to appoint the adequate number of Independent Directors as per the requirements of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. During the Audit period, the Company was required to appoint a women Director on the Board w.e.f 1 April 2015. However, the said appointment was made w.e.f 26 August 2015. It is informed that the appointment of Directors is done by Govt. of India and filling up of vacancies of the said Independent Directors is also pending with the appointing authority namely Government of India.

Auditors'' Report

Auditors'' Report on the Annual Accounts for the financial year 2015-16 and "Nil" Comments of the Comptroller & Auditor General of India under Section 143(6)(b) of the Companies Act, 2013 on the Annual Accounts are appended to this report.

Extract of Annual Return

In accordance with Section 134(3)(a) of the Companies Act, 2013 an extract of the annual return in the form MGT-9 is annexed to this report as "Annexure 4".

Risk Management

Pursuant to the Reg. 21 of SEBI (LODR) Regulations, 2015, the Company has constituted a Business Risk Management Committee. The details of Committee and its terms of reference, risk management policy etc. are set out in the Corporate Governance Report and a detailed note on Risk Management is provided in the Management Discussion and Analysis Report.

Remuneration Policy and Board Evaluation

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration, Board Evaluation etc. The details are set out in the Corporate Governance Report.

Vigil Mechanism / Whistle Blower Policy

The Company has a vigil mechanism named Whistle Blower Policy to deal with instance of fraud and mismanagement, if any. The details of the policy are set out in the Corporate Governance Report.

Declaration from Independent Directors

The Company has received necessary declaration from each Independent Director of the Company under Section 149(7) of the Companies Act, 2013 that the Independent Directors of the Company meet with the criteria of their Independence laid down in Section 149(6) of the Companies Act 2013.

Management Discussion and Analysis Report

Management Discussion and Analysis Report required under SEBI (LODR) Regulations, 2015 as also under the Government (DPE) Guidelines on Corporate Governance for Central Public Sector Enterprises (CPSEs), is attached to this Report as "Annexure 5".

Particulars of Loans, Guarantees & Investments

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

Internal Financial Controls

The Company has in place adequate internal financial controls with reference to financial statements. A detailed note on Internal Financial controls is provided in the Management Discussion Analysis Report.

Composition of Audit Committee

The Audit Committee comprises of Independent Directors viz., Mrs Usha Mathur, Chairman of the Committee, Dr R K Shevgaonkar, Dr Bhaskar Ramamurthi and Government Director Mrs Kusum Singh as its members. All the recommendations made by the Audit Committee were accepted by the Board.

Corporate Governance Report

DPE guidelines on Corporate Governance for CPSEs provide that CPSEs would be graded on the basis of their compliance with the guidelines. DPE has graded BEL as "Excellent" for 2014-15. In terms of Regulation 34 of the Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and DPE Guidelines, a Report on Corporate Governance along with Compliance Certificate issued by Statutory Auditors of the Company is attached to this report as "Annexure 6".

Sustainability Report

The DPE guidelines on Sustainable Development for CPSEs mandate CPSEs to disclose their Sustainable Development efforts in a ''Standalone Report'' or as a separate chapter in the Annual Report. Pursuant to this requirement, a Report on your Company''s efforts on "Sustainable Development" is attached to this Report as "Annexure 7".

Business Responsibility Report

The Securities and Exchange Board of India (SEBI) has mandated inclusion of Business Responsibility Report ("BR report") as part of the Annual Report for top 500 listed entities based on market capitalization. This SEBI mandate is also inserted as Regulation 34(2)(f) of SEBI (LODR) regulation 2015. The SEBI (LODR) Regulations 2015 provide a format for BR reports. It also contains a list of nine Key Principles and various core elements under each principle to assess compliance with Environmental, Social and Governance norms. Listed companies are required to prepare policies based on these nine Key principles and core elements, put in place a framework to integrate and embed the policies into business activities and a mechanism to measure and report the achievements as BR report.

Your Company has prepared a comprehensive policy framework for BR report, after studying the SEBI (LODR) Regulations 2015 requirements and keeping in view the business and governance environment in which BEL as a Defence PSU operates. Highlights of this policy are posted on the Company''s website www.bel-india.com. The Company''s BR report for the year is attached to this Report as "Annexure 8".

Other Disclosures

Information required to be disclosed in accordance with Section 134(3)(m) of the Companies Act 2013 read with the Companies (Accounts) rules, 2014 regarding conservation of energy, technology absorption and foreign exchange earnings and outgo, is given at "Annexure 9".

Acknowledgement

Your Directors place on record their deep appreciation and gratitude for the valuable support received from all the customers, particularly the Defence Services and the para- military forces and look forward to their continued support and co-operation in future. Your Directors also place on record their gratitude for the support received from various Ministries of the Government of India, especially the Ministry of Defence, Department of Defence Production. Your Directors express their gratitude to the Defence Research and Development Organisation and the various Research Laboratories under DRDO for the support it received, particularly in the joint development programmes and new products brought out with the help of them. Your Directors express their sincere thanks to the Comptroller and Auditor General of India, Chairman, Members and employees of the Audit Board, Statutory Auditors, Branch Auditors, Cost Auditors, Secretarial Auditor, Company''s Bankers, collaborators and vendors. Your Directors appreciate the sincere efforts put in by the employees at all levels, which enabled the Company to achieve the good performance during the year. Your Directors express their appreciation and gratitude to all the shareholders/investors for the trust and confidence reposed in the Company and look forward to their continued support and participation in sustaining the growth of the Company in the coming years.

For and on behalf of the Board

Bengaluru Sunil Kumar Sharma

28 July 2016 Chairman & Managing Director


Mar 31, 2015

Dear Members,

I have great pleasure in presenting to you, on behalf of the Board of Directors, the 61st Annual Report of Bharat Electronics Limited and the Audited Accounts for the financial year ended 31 March 2015 together with the reports of the Statutory Auditors and the Comptroller and Auditor General of India thereon.

Financial Results and Performance Highlights

A summary of the Company's financial results is given below :

(Rs. in Lakhs)

Particulars 2014-15 2013-14

Value of Production 665,854.35 612,689.97

Turnover (Gross) 669,456.53 617,423.25

Profit Before Depreciation, Finance Cost and Tax 162,203.54 132,024.01

Finance Cost 138.38 339.61

Depreciation & Amortisation 15,396.49 14,210.45

Profit before tax 146,668.67 117,473.95

Provision for Tax 29,944.58 24,311.77

Profit After Tax 116,724.09 93,162.18

Add : Balance brought forward from previous year 296,682.52 265,778.32

Balance available for Appropriation 413,406.61 358,940.50

Interim Dividend paid 4,800.00 4,800.00

Proposed Final Dividend 18,560.00 13,840.00

Tax on Dividend 4,738.10 3,167.87

Transfer to General Reserve 40,000.00 40,000.00

Transfer to Capital Reserve - 450.11

Other appropriation(s) 1,846.87 -

Reserves & Surplus 780,502.89 693,723.77

Net Worth 788,502.89 701,723.77

Earnings Per Share (in Rs.) 145.91 116.45

Book Value Per Share (in Rs.) 985.63 877.15

Distribution of Value of Production for 2014-15 is given below :

Particulars (Rs. In lakhs) Percentage

Materials 374,453.15 56.24

Employee Cost 126,345.08 18.97

Other Expenses (Net) 2,990.96 0.45

Depreciation & Amortisation 15,396.49 2.31

Provision for Tax 29,944.58 4.50

Profit After Tax 116,724.09 17.53

Total 665,854.35 100.00

Company's turnover for the year 2014-15 has increased to Rs. 669,456.53 Lakhs from Rs. 617,423.25 Lakhs in 2013-14, registering a growth of 8.43%. Profit after Tax for the year is Rs. 116,724.09 Lakhs as against Rs.93,162.18 Lakhs in the previous year. Turnover from indigenously developed products is 80%. Supplies to the defence contributed to 87% of turnover as against 83% in 2013-14.

Dividend

The Board has recommended a Final Dividend of 232% (Rs. 23.20 per share), Rs. 18,560 Lakhs for the year 2014-15. An interim dividend of 60% (Rs. 6 per share), Rs. 4,800 Lakhs has already been paid for the year 2014-15. Thus, the total dividend for the year 2014-15 is 292% (Rs. 29.20 per share), Rs. 23,360 Lakhs (excluding corporate dividend tax) as against 233% (Rs. 23.30 per share), Rs. 18,640 Lakhs paid in the previous year.

Provision of Rs. 3,778.38 Lakhs has been made for corporate dividend tax on the final dividend proposed. Corporate dividend tax of Rs. 959.72 Lakhs has already been paid on the interim dividend paid for the year 2014-15.

Amount Transferred to Reserves

An amount of Rs. 40,000 Lakhs is transferred to General Reserves for the financial year 2014-15.

Major Orders Executed

Major projects executed during the year for tri services & non - defence customers include : Akash Missile Systems (Army, Airforce), Schilka Gun Tank Upgrade to Army, Passive Night Vision Devices (PNVD) to Army, 3 Dimensional Tactical Control Radar to Army, Communication sets, Combat Management System to Navy, Stabilized Optronic Pedestal to OFB, Mobile Communication Terminal to NTRO, Missile Warning System to Army, Laser Range Finder to Army, New generation Sonars to Navy & exports, Shipborne EW systems - Sanket variants to Navy / Shipyards, Advanced Composite Communication Systems to Navy, Radar for Air Warning in L-band, Fire Control Systems to Navy, Central Acquisition Radar to Airforce, Low Level Light Weight Radar (Bharani / Aslesha) to Army / Airforce, Electronic Voting machines (EVMs) to ECI, Simulators to Army, RAWL 02 MK II, Lynx U1 MOD, HUMSA X etc.

Some of the significant achievements during the year :

* Successful test firing of Akash Missile System, an Air-Defence Weapon System to defend Vulnerable Area / Vulnerable Point against medium range targets penetrating from low, medium and high altitudes.

* Handing over of Schilka Air Defence Weapon System with an upgraded Display system, engine automotive & air conditioning, NBC protection, Integrated Fire Suppression System & totally electronically modernised drives, etc.

* Commissioning of NC3I an independent network which would interlink the Coastal Stations of Indian Navy & Coast Guard with the Joint Maritime Operation Centres and the Headquarters.

* Inauguration of Chain of Static Sensors (CSS) at Seychelles by Hon'ble Prime Minister of India.

* Installation of 1st L Band Radar and new generation sonar for Myanmar Navy completed.

* Incorporation of JV with Thales for Civilian Radars & select Defence Radars.

* Inauguration of newly built Software Development Center by Hon'ble Vice President of India.

* Akash Simulator successfully developed & supplied.

Exports

Your Company has been giving an increased thrust towards harnessing the export potential of defence electronics products and systems, which represent its core area of business. BEL has been exporting various products and systems to potential friendly countries of India. Apart from this, BEL is interacting with electoral commissions of various democratic countries to market Electronic Voting Machines.

BEL achieved an all time high export sales of US$ 57.85 Million registering a growth of 37.7% over the previous year's export turnover of US$ 42.0 million. BEL has an export order book of US$ 200 million as on 1 April 2015 which includes offset order book of US$ 45 million. The targeted export sales for the year 2015-16 is US$ 65 million. The long term export plan of BEL is to reach sustained export sales to total sales turnover ratio of 10% from the current level of 5.3%.

BEL for the first time exported indigenously developed Unit Level Switch Board ULSB MK-III. Customised EVMs supplied by BEL were successfully used in presidential and national Assembly elections in Namibia. Indigenously developed Directing Gear and Dome, which are part of Sonar system were exported and were successfully installed. Other major range of products exported during the year includes Ship Sonar, Surveillance Radar, Radar Warning Systems, Radar Finger Printing Systems, Communication equipment, Casings, Stators, Electro Mechanical parts etc.

BEL is also anticipating sizable export orders on account of the "Offset" policy in Defence Procurements. In this regard BEL is interacting with all the major foreign companies for possible offset business arising out of various RFPs issued by MoD India. BEL has already signed MoUs with these companies.

BEL participated in four International Exhibitions in the year 2014-15 to showcase its products & capabilities. Having established a coastal surveillance radar system for a couple of countries, BEL is interacting with Ministry of External affairs on a regular basis for supply of these systems to other friendly countries of India. BEL has been receiving awards for Excellence in Exports under the category "Electronics & Communication (excluding IT / BT) - Medium and Large" from the Government of Karnataka during the last 5 consecutive years.

MoU with Government

Your Company has been signing a Memorandum of Understanding (MoU) every year with the Government of India, Ministry of Defence. Performance of BEL for the year 2013-14 has been rated as "Excellent" in terms of the MoU with the Government. The MoU rating for 2014-15 is under review by the Government.

Order Book Position

The order book of Company as on 01 April 2015 is around Rs. 2,161,699 Lakhs. The order book comprises mainly major programs like Weapon Systems for Air Force & Army, Battlefield Surveillance System, Command Information Decision Support System, Fire Control System, Gun/Tank Upgrades Communication Sets, New Generation Radars, Electronic Warfare Systems, etc.

Finance

During the Financial Year 2014-15, your Company has been able to meet the incremental working capital requirements and additional investments on Capital equipments out of internal resources. Borrowing has been avoided scrupulously through close monitoring of cash flows. The effective and efficient cash management and healthy cash balances has helped your Company to retain the highest rating by ICRA for both short term and long term sanctioned bank limits. This rating will help in retaining the best rates for the various services availed from the Consortium Banks.

The Inventory position (net) of the Company as on 31 March 2015 was Rs. 342,687.83 Lakhs as against Rs. 337,014.08 Lakhs as on 31 March 2014, this works out to 188 days of the value of production (DPE) as on 31 March 2015 as against to 202 days as on 31 March 2014.

The position of Trade Receivables (net) as on 31 March 2015 was Rs. 378,614.33 Lakhs as against Rs. 412,853.69 Lakhs as on 31 March 2014, this works out to 206 days of turnover for the year 2014-15 with the corresponding position at 244 days as at the end of the previous year. This has been possible due to meticulous follow up of collection and receivables throughout the year.

Deposits

The Company does not have any Public Deposit Scheme at present. However, the matured past Public Deposit amount with the Company was Rs. 36.95 Lakhs as on 31 March 2015. Out of these 34 deposits amounting to Rs. 36.50 Lakhs are not claimed or not paid as these accounts are frozen on advice by Karnataka Lokayukta, remaining mature deposits of Rs. 0.45 lakh as on 31 March 2015 is unpaid due to in-sufficient documents / records produced by Depositors. The entire amount of Public Deposit outstanding as on 31 March 2015 is included in the Current Liability Note of the Balance Sheet.

Research & Development

Research and Development has been the core strength of BEL and continued to receive focused attention during the year for planning and reviewing of development of Technology modules and products. Apart from in-house efforts, BEL R&D engineers had close co-operation with DRDO, other National Research and Development agencies and academic institutes. The R&D activities have been carried out in all the business segments namely Radars, Military Communication, Naval Systems, Missile Systems, Electronic Warfare, Avionics, C4I systems, Electro-optics, Tank Electronics, Gun up-grades, Civilian Equipments & Systems and Components during the year 2014-15.

Development & Engineering (D&E) Divisions attached to all the Strategic Business Units (SBUs) of Bengaluru and Other Units, located outside Bengaluru concentrated on the development of Products and Systems in their respective areas of business segments. Central-D&E and two Central Research Laboratories (CRLs) of the company supported the D&E Divisions of all the units by way of developing core technology modules and software required for the development of Products and Systems.

The analysis of turnover of the company for the year 2014-15 indicates that 38% of the turnover is from BEL developed products, 42% of the turnover is from products, developed in association with DRDO and other National Labs and remaining 20% is from products for which technologies were acquired through foreign ToTs.

Development of New Products

During 2014-15, the R&D Divisions of BEL have completed development of several new products / systems / technology modules. Some of such new products / systems introduced during the year include the following :

* Surface Surveillance Radar

Surface Surveillance Radar is a Surveillance Radar for detection and tracking of sea surface targets. This radar provides target Designation data to Surface to Surface Missile (SSM) System.

* Lynx U1-MOD

It is a Naval Fire Control System designed to acquire, track and engage low flying high speed targets. It is capable of tracking accurately air / surface targets. The system has been configured to meet requirement of P16A, P1241 RE and P25 class of ships. It controls SRGM & AK630 gun mounts.

* Export Version of ULSB MKIII

Unit Level Switch Board MKIII is an Automatic Telephone Exchange designed to meet the communication requirements of Army at unit level. It employs TDM Switching concept and it is of non-blocking type.

* SMARTPLUS

SMARTPLUS is a secure data communication terminal used for data over voice links of HF, VHF, UHF / analogue telephone lines.

* ACCS for Submarine

Advanced Composite Communication System (ACCS) is fourth generation voice and data integrated system for fulfilling external communication needs of Modern submarine in VLF / HF / V / UHF frequency bands.

* Test bed for ADC & RS

Test Bed for Air Defence Control and Reporting System integrates various components viz sensors, Fire control Radars and Tactical control Radars to detect and provide all aerial activity as Air Situation Pictures (ASP) to Control Centre.

* Ground Control Station

Ground Control Station is a Shelter based System that facilitate the control and monitoring of the UAV and the exploitation of the information provided by the RUSTOM UAV.

* X band TR module

A Transreceive module in this band is designed for use in high power Active Electronically steered array Radars.

* Simulator for Akash Missile System

This simulator is developed for training Army personnel on the usage of operational sequence of Akash Weapon System. Two Versions viz., 1) Vehicle Version and 2) Class Room Version have been developed.

* Secure Phone

Secure Phone without camera is designed as per Army requirement for making secure calls and SMS.

* Hand held Digital Compass

Compass provides stable heading information for infantry soldier. It gives the user an accurate bearing information of the targets, storing and recalling of target angles.

* Commander TI Sights for AFV

Commander TI Sights for AFV for T72 & T90. It is also provided with LRF for accurate ballistic estimation.

* EO system for Integrated Coastal Surveillance System

EO System is developed with indigenous TI and CCD mounted on Pan and Tilt for effective surveillance in azimuth and elevation for Coastal Surveillance System.

* Under Vehicle Scanning System

Under Vehicle Scanning System scans / inspects and digitally records the underside image of any four wheelers in real time.

Scientists from Central Research Laboratories and other R&D divisions of BEL have contributed 52 Technical Papers in the National and International journals during the year. 64 papers have been published in in-house journals.

Following awards have been received by R&D teams during the year :

* SODET GOLD Award for R&D in Innovation category for the project 'Radar VEXT (Video Extractor and Tracker) for the year 2013-14.

* Young Scientist Award for one CRL Scientist from IETE for the year 2014.

* Two Young Engineers Awards for two engineers from Institute of Engineers, India (IEI) for the year 2014.

* Best contributor Awards in EW from Indian public sector units for Two Senior executives have been awarded by AoC India Chapter.

* Award for Indigenisation of Aeronautical Equipment from Aeronautical society of India for EW&A SBU for the year 2014-15.

* Two projects, EVM and Table PC were shortlisted for Common wealth Association of Public Administration and Management (CAPAM) international awards.

New facilities established during the year

Company has been continuously modernizing its infrastructure to be in tune with the changing needs of the technology / products. Specific groups in all the units scan the technology changes that are taking place and identify new processes in the world market for acquisition. This enables the company to maintain its infrastructure on par with international standards. During the year 2014-15, company has spent Rs. 282.26 Crores as part of CAPEX investment towards Modernisation of Plant & Machinery, Test Instruments, R&D investments, infrastructure up-gradation etc. The expenditure is fully met through internal accruals. Following are some of the major facilities established during the year.

* State-of-the-art production Infrastructure for Airborne Applications at Bengaluru Unit. The facility has SMT line designed to suit the Airborne applications which is established by replacing the Manual / Semi-Automatic SMT facility with Automatic SMT facility.

* Optical Transmission Measurement System at Machilipatnam Unit used in production of Electro Optic systems such as Passive Night Vision Devices (PNVD), Hand Held Thermal Imagers (HHTI) etc. Transmittance Measurement is one of the prime requirement to test the transmission parameters of Optical elements & Optical assemblies.

* EMI receiver for EMI / EMC Applications at Bengaluru Unit for testing of Electronic Equipments as per MIL- STD-461 C, D, E & F.

* Implemented Cyber Security components viz., IPS (Intrusion Prevention Systems) and SIEM (Security Incident Event Management) tool etc., at Intranet Gateways of all Units of the Company to improve the Wide Area Network (WAN) gateway security.

* Civil Works for Transducer Manufacturing Facility at Bengaluru Unit, an Integrated facility for Transducer Production and Calibration to Enhance the Production of various types of Ship and Submarine transducer items.

* EMI / EMC Chamber for Electronic Warfare applications at Hyderabad Unit to Test / Evaluate various types of subsystems / LRUs / Equipment of Electronic Warfare (EW) applications.

* Communication Chip evaluation facility at Kotdwara unit used for achieving telephony functionality like transcoding, packetisation / depacketisation, echo cancellation, noise suppression etc.

* Compact Environmental Stress Screening Test Station installed at Chennai Unit to carry out vibration and thermal cycling tests for CoMPASS project.

* New Transit Accommodation consisting of 12 Rooms (Eight rooms in Ground floor & Four rooms in first floor), Dining Hall & Recreation Hall facility established at Chennai Unit.

Quality

The Company's Vision of becoming a "World-class Company in Professional Electronics" is being achieved by giving thrust on three attributes - Quality, Technology and Innovation. Corporate Quality takes initiatives which encompass control and monitoring of all critical operational and business performance parameters like On Time Delivery, Process Cycle Time, Manufacturing Yield, Statistical Process Control, Complaint Resolution, Reliability -resulting in enhancement of product quality and in exceeding customer needs and expectations. These factors are monitored through well established 'SAP' enterprise resource planning system across all Strategic Business Units, regional, marketing and purchase offices of the company in India and abroad. The dedicated CRM (Customer Relation Module) and SRM (Supplier Relation Module) in SAP are able to enhance customer services and improvement in procurement efficiency of the company respectively.

The Company is committed to establish internationally recognised systems through process approach. All Units / Strategic Business Units / Common Services Groups are accredited to ISO 9001 to its latest versions of Quality Management System (QMS) since early nineties. Seven Units / SBUs - Ghaziabad, Panchkula, Kotdwara, Hyderabad, Military Communication, Electronics Warfare & Avionics, Export Manufacturing, have upgraded their QMS to Aerospace standard, AS 9100. Calibration and maintenance departments of Bengaluru Complex, Ghaziabad and Panchkula Units are accredited by NABL to ISO 17025 standards. The Pune unit manufacturing X-ray tubes is certified for ISO 13485 standard for medical devices. The Central Software Department Group at Bengaluru is CMMi level 5 certified.

All Units of Company are committed to Environment Management System through ISO 14001 Certification.

The Ghaziabad Unit and Engineering Services of Bengaluru Unit are accredited to Occupational Health Safety and Assessment Series, OHSAS 18001.

The EFQM (European Foundation of Quality Management) model for Business Excellence is being followed since year 2002 in BEL as another process approach for overall strategic and operational excellence leading to enhancement in competitiveness in meeting and exceeding needs & expectations of stakeholders. Its deployment status is assessed through participation in 'CII-EXIM Bank Award for Business Excellence'. Every year BEL Units are participating for this award in phased manner. In year 2014, Ghaziabad Unit participated for this award and were conferred for 'Commendation for Significant Achievement' (Level - II). In year 2015, Ghaziabad unit again participated for CII-EXIM Bank Award for Business Excellence and were conferred with next higher level i.e. "Significant Achievement". At present all Units / SBU are at 'Commendation for strong commitment to Excel' (Level - I) except Bengaluru Unit and Ghaziabad, which is at next higher level of Award i.e. 'Commendation for Significant Achievement' (Level - II).

The continual improvements in product and processes are brought out through various approaches. Middle and senior level executives select Six Sigma projects from different areas of concern related to product and processes and bring about breakthrough improvements. In order to effectively implement six-sigma methodology and to bring culture of improvement through analytical approach, 10 Black Belts were trained and certified by ISI, Bengaluru during the year. A total of 311 Six Sigma projects have been completed. 17 six sigma projects were nominated for national level competitions. One of the case studies represented the organisation at the international competition, ICQCC 2014, held at Sri Lanka. All Six sigma case studies were adjudged either in Excellence or in Par Excellence in their respective categories.

Through another approach employees (all non-executives and executives up to the level of managers) bring about improvement through Suggestion Scheme. A total of 1,571 suggestions have been implemented by respective individuals under the suggestion scheme and have been suitably recognised for their contribution.

The organisation creates impetus towards involvement of non-executives in the quality movement through Quality Control Circles. In year 2014-15, 745 presentations for improvement in product and processes were made by various Quality Control Circles. Twenty Five QC circles were nominated to participate in national competition / conventions and all were adjudged for higher category awards. One circle represented the organisation in international convention, ICQCC 2014, held at Sri Lanka and bagged excellence award in its category.

BEL has nominated its D&E engineers for Certified Reliability Engineer (CRE) program conducted by American Society for Quality (ASQ). The CRE certification is a training program followed by stringent exam to ensure proper grasping of the subject. 41 D&E engineers were professionally certified for CRE in year 2014-15.

The operating level Quality engineers in respective SBUs / Units were certified for "Certified Quality Engineers" (CQE) programs by the American Society for Quality (ASQ). 29 CQE have been certified. Awareness program on Reliability and Maintainability by developing in-house faculty was also conducted. 107 D&E engineers were covered under this program. Revision of existing BEL Quality Manual to latest quality standard including Business Excellence and also covering topics like Evaluation of Vendors, Corporate Quality Audit of all Units / SBUs, and determination of Quality Index were also taken up during the year 2014-15.

A Customer Satisfaction Survey was organised by BEL through external agency, Indian Market Research Bureau (IMRB), to capture the customers' perception on quality of BEL product. Sixteen products from various Units / SBUs were offered for survey.

Human Resources

Your Company employed 9,703 persons as on 31 March 2015 as against 9,952 persons as on 31 March 2014. Of these employees, 4,045 were engineers / scientists and 1,997 were women employees on 31 March 2015. A total of 212 engineers, scientists and other professionals were inducted during the year. 55 employees belonging to SC, 15 employees belonging to ST, 114 employees belonging to OBC and 12 employees belonging to the minority community were recruited during the year.

The Company has been implementing the Government Directives on Reservation. The particulars of SC / ST and other categories of employees as on 31 March 2015 are as under :

Executives Non - Executives Category of Employees Group Group 'B' Group Group 'D' 'A' 'C'

Scheduled Caste 917 28 777 54

Scheduled Tribe 300 1 141 22

OBC 1007 35 827 50

Ex-Servicemen 101 2 274 81

Physically Challenged 87 4 129 14

Various Training programs were conducted during the year to enhance competencies in Technical, Functional, Managerial and leadership areas. Structured Executive Development Programs were conducted regularly with premier Institutes to meet the evolving training needs of executives as they progress through various grades.

Apart from this, 360-degree feedback and leadership Development programs were conducted to equip our senior managers with Leadership competencies. Four batches of senior executives underwent the program during the year. "Strategy Building and Competitive Intelligence" program was organised through the faculty of premier Management Institute and forty four senior executives attended the program.

The training programs are designed to enhance competencies in various areas like Technical, Functional and Managerial / Leadership.

A detailed write up on Company's HR philosophy and specific HR initiatives during the year is provided separately in the Management Discussion and Analysis Report.

Awards and Recognitions

Your Company continues to be a highly trusted for the quality and innovation of its products based on strong consumer insights and the ability to engage with consumers across the country. During the year your Company and its employees have received various Awards and Recognitions. Some of the important accolades received during the year by your Company and its employees include :

* SCOPE Meritorious Award for the year 2012-13 for Best Practices in Human Resources Management from Hon'ble President of India.

* Prime Minister Shram Shree Award for BEL employee for the year 2013.

* India Today Group PSU Awards contest for the 'Most Eco-Friendly Company' and 'Best in R&D Innovation'.

* Mentor Graphics Silicon India Leadership Award 2014 for Best VLSI / Embedded Design in Defence / Aerospace Sector.

* BEL Ghaziabad Unit was accredited with the 2nd Level of recognition in CII-EXIM Award for Business Excellence - "Commendation for Significant Achievement".

* SODET Gold Award for the year 2013-14 in 'Technology Innovation' category for the project 'VEXT for Coastal Surveillance Application'.

* 'IETE - IRSI Young Scientist' Award for two BEL Engineers for the year 2014 and 'IEI Young Engineers' Award for the year 2014-15 in Electronics and Telecommunication Engineering.

Environment Management

Bharat Electronics Ltd has long been integrating sustainability in its operations systematically with best practices. On the lookout for sustainable development, sets in clean and green surroundings. All the Units of BEL have committed for maintaining an environmental friendly work processes and strongly believes that environmental sustainability results in designing economically viable and reliable products. BEL sets objectives in compliance to DPE guidelines, further approaches towards adopting breakthrough technology for enhancing environmental performances of the products right from design to disposal. Looks beyond its boundary for compliance to environmental impacts. In all the Units of BEL, practicing of conservation of natural resources like energy conservation, water conservation and reduction in waste generation is inculcated as a routine approach. BEL looks beyond obvious opportunities available for improvising the performance against environmental commitments.

The Sustainability Report annexed to this report contains further details on environment management and sustainable development initiatives.

Subsidiaries and Joint Ventures

Your Company's subsidiary at Pune, BEL Optronic Devices Ltd. (BELOP) manufactures Image Intensifier Tubes (I.I. Tubes). These Tubes are supplied to the Defence customers and also used in the Night Vision Devices manufactured by BEL. BELOP achieved a turnover of Rs. 10,264.93 Lakhs as against Rs. 17,147.34 Lakhs in the previous year. The Profit After Tax for the year was Rs. 366.69 Lakhs as against Rs. 496.19 Lakhs in the previous year.

The Joint Venture Company (JVC) with General Electric, USA, viz., GE BE Pvt Ltd., continues to perform well. This JVC manufactures CT Max and other latest version X-Ray Tubes. BEL supplies some parts required for the products manufactured by this JVC. GE BE Pvt Ltd recorded a turnover of Rs. 72,564 Lakhs as against Rs. 60,685 Lakhs in the previous year. The Profit After Tax was Rs. 11,752 Lakhs as against Rs. 6,268 Lakhs in the previous year. The JVC declared 150% dividend for the year 2014-15 and BEL received Rs. 390 Lakhs as dividend from this JVC on BEL's share of investment for the financial year 2014-15.

The other JVC, viz., BEL Multitone Pvt Ltd., jointly promoted by BEL and Multitone Electronics plc, UK was set up to supply, install and service Private Paging Systems and Pagers. As this JVC was not performing well, it was decided to wind up this company. The JVC Board and the shareholders passed the voluntary winding up resolutions and appointed a Liquidator. As on 31 March 2015, all the assets of the Company have been disposed of and all dues settled. Approval for closure of winding up procedure has been accorded by its Members at General Meeting held on 31 March 2015. The liquidator has sent the report to Registrar of Companies & Official Liquidator for issuance of winding up order.

BEL formed a Joint Venture Company (JVC) with Thales Air Systems SAS, France and Thales India Pvt Ltd (TIPL) for design, development, marketing, supply and support of civilian and select defence radars for Indian and global markets. The JVC has been incorporated on 28 August 2014 with the name BEL-THALES Systems Limited (BTSL), with an authorised capital of Rs. 8,000 Lakhs and with a subscribed capital of Rs. 960 Lakhs. The Company has been operating from Bengaluru and has its registered office at CNP Area, BEL Industrial Estate, Jalahalli, Bengaluru - 560013 (premises on lease from BEL). Since BEL is holding 74% of the equity capital in the JVC, it becomes a subsidiary company of BEL and is a Government Company as defined in the Companies Act, 2013. During the first year of its operation, it incurred a loss of Rs. 162.45 Lakhs.

In pursuant to provisions of section 129(3) of the Companies Act, read with Rule 5 of Companies (Accounts) Rules, 2014, the statement containing salient features of the financials statement of Subsidiaries / Associate / Joint Ventures is attached to the financial statements.

Consolidated Financial Statements

Consolidated Financial Statements of your Company and its Subsidiary and Joint Venture Companies are attached to this Report.

Vigilance

Your Company's vigilance Organisation is headed by an Independent Chief Vigilance Officer (CVO). During the year, separate preventive, inspection and technical wing were established in Corporate Vigilance with posting of Vigilance Officers, who assists the CVO in Preventive Vigilance and the technical aspects in the investigation process. Permanent Vigilance Officers are posted in each of the Units and in the SBUs. Vigilance Committees are formed in the each of the Units and SBUs and the Unit / SBU heads are also designated as Chairman of the vigilance Committee. Apart from this, there exists a Vigilance Committee at the Corporate, where Chairman and Managing Director is the Chairman of the Committee and the CVO is the Member Secretary. Preventive Vigilance has been the thrust area of the Vigilance Organisation and the same received focused attention during the year.

The Vigilance Department examines procurements, contracts and processes on continual basis, conducts regular and surprise inspections and investigates instances of any suspected transactions referred to it. Any employee or third parties can refer any suspected transaction to the notice of CVO for investigation. Online complaint management system has been made operational. Online complaints can be filed by logging on to BEL web site.

Important activities of Vigilance Department during the year includes : 1,700 Purchase Orders / Contracts and 648 high value Orders / Contracts have been reviewed. CTE Type intensive examination has been restructured with the formation of 5 IE teams. 47 High value procurement and works contracts has been taken up for Intensive examination. Regular and surprise checks / inspection has also been conducted by the field Vigilance Officers. During the year, 40 Complaints, including the complaints referred by CVC / MOD / CBI were disposed. Disciplinary action and System/process Improvement has been recommended in some cases where lapses were observed. One case is pending with CBI for investigation. 22 Executives have been trained on the Principles of Natural Justice & Domestic Enquiry Training Programme (for Dy. Mgrs. & above). 291 Executives and 329 Non-Executives have taken part in Vigilance Awareness Training Programme. 74 Executives & 54 Non Executives working in sensitive areas for more than 3 years have been job rotated and the percentage coverage is 95.5%.

In terms of CVC's guidelines on Leveraging Technology to ensure transparency through effective use of website, the following information has been made available on BEL website :

* E-Procurement percentage improved to 95%.

* Online registration of Sub-contractors / Vendors.

* Details of awarded contracts / Purchase Orders valuing more than Rs. 10 Lakhs in respect of works contracts, service contracts, capital items and non-production items.

* Details of awarded Contracts / Purchase Orders issued on nomination / single tender basis value exceeding Rs. 5 Lakhs.

* Vendor Payments Information System.

* Purchase Procedures, Sub Contract Procedures and Works Manual.

* Complaint Handling Policy and Whistle Blower Policy.

* Corruption Risk Management Policy.

* Vendors' Directory, after removing defunct vendors.

* File Life cycle Management System has been implemented across the company and about 8,000 files has been created in the System as on 31 March 2015.

* On-line filing APRs has been developed and demonstrated to the users and planned to be implemented from 01 April 2015.

Vigilance setup is continuously endeavouring to bring transparency, fairness and equity in all transactions and processes of the company. Some of the key activities that has been carried out during the year are :

1) Vigilance Awareness Week was marked with special address by former Justice N. Santhosh Hegde on 30 October 2014.

2) Vigilance awareness week were observed during November 2014, with Cycle rally by BEL School Students, Tree plantations, Friendly Cricket Match between the Senior Executives of BEL and series of lecture programs.

3) Training programs were organised for Vigilance Officers through Guest lectures by faculties from CBI, Acadamy. Director (Vigilance) / MoD / DDP and CVO and Senior executives from other PSUs and organisations.

4) Bharat Electronics Limited, Bengaluru in association with MSME Development Institute, Bengaluru organised National Vendor Development Programme - 2014 (MSME Sector) and Industrial Exhibition on 27 & 28, December 2014 at BEL Kalakshetra, Bengaluru. Shri B. H. Anil Kumar, IAS, Joint Secretary, Ministry of MSME, New Delhi was the Chief Guest for Inauguration Function.

5) Vigilance training programs were organised for two batches of Probationary Engineers and one batch of newly joined Accounts Officers.

6) Manual for Intensive examination of Contracts has been drafted and released for the benefit of the Intensive Examination teams which has been carrying out the intensive examination of high value contracts.

Diversification

In August 2014 BEL established a Joint Venture Company with Thales, France to address business of Civilian and select defence Radars.

BEL entered into selective IT and Networking businesses in the Non-Defence sector and successfully implemented projects like Wide Area Network for Cabinet Secretariat and LAN-WAN Project for BSF (multiple phases).

Though supplies to Defence constitute a majority share in BEL's turnover, company realizes that, to grow in the years to come, it has to diversify into other areas. Some of the major areas of diversification are Homeland Security, Telecommunication, Smart cards, etc.

Integrity Pact

One of the recent initiatives of the Central Vigilance Commission (CVC) to eradicate corruption in procurement activity is introduction of the Integrity Pact in large value contracts in Government Organisations. In line with the directives from Ministry of Defence and the Central Vigilance Commission, your Company has adopted Integrity Pact with all vendors / suppliers / contractors / service providers for all Orders / Contracts of value Rs. 2,000 Lakhs and above, initially. This threshold value was reduced to Rs. 1,000 Lakhs from March 2013 and further reduced to Rs. 500 Lakhs from May, 2014. The Pact essentially envisages an agreement between the prospective vendors / bidders and the Principal (BEL), committing the Persons / officials of both sides, not to resort to any corrupt practices in any aspect / stage of the contract. Only those vendors / bidders, who commit themselves to such a Pact with the Principal, would be considered competent to participate in the bidding process. Integrity Pact, in respect of a particular contract, would be operative from the stage of invitation of bids till the final completion of the contract. Any violation of the same would entail disqualification of the bidders and exclusion from future business dealings.

As recommended by the CVC, the Company has appointed Mr N K Sinha, IAS (Retd), former Secretary, Planning Commission and former Chairman, PESB as an Independent External Monitor (IEM) for monitoring implementation of Integrity Pact in the Company. During the financial year 2014-15 the IEM reviewed 25 contracts and held structured meetings with the Chairman & Managing Director.

Procurement from MSMEs

Your Company has been providing increased thrust on enhancing procurement from MSMEs and is implementing Public Procurement Policy for Micro, Small & Medium Enterprises (MSMEs) as per the guidelines / notification issued by the Ministry of MSMEs. Company is in the process of broadening the vendor base. In order to facilitate MSMEs, the company is deploying all efforts to classify the existing vendors into Micro, Small & Medium Enterprises in the company's procurement system through web-based real-time centralised ERP System (SAP). Vendor registration forms are available in the Company's official website (www.bel-india.com). Industry Promotion Officer is nominated to assist vendors regarding Procedure for Registration, understanding the requirements of BEL, report grievances,

if any, etc. Some of the other initiatives include uploading of company's procurement plan for MSMEs based on the production plan, with periodic update and details of Unit / SBU specific Industry Promotion Officers in the company's official website, participation in various vendor development programmes like exhibitions, workshops, establishment of industrial estate to give maximum encouragement to ancillaries etc.

BEL participated in the National Vendor Development Programs organised by Ministry of MSME at Bengaluru on 12th and 24 March 2015. BEL also showcased some of the input materials viz., Electronic, Electro-mechanical, Mechanical parts for procurement from MSMEs.

Implementation of Official Language Policy

Your Company is committed to adhere to the OL policies of the Government of India. During 2014-15, efforts made towards implementation of Official Languages include :

OL inspection of Ghaziabad Unit was conducted on 9 May 2014 by the officials of Dept. of OL, MHA. During the year under review, Corporate OL Audit team conducted OL inspections at Ghaziabad, Kotdwara Units, CRL-Ghaziabad and RO Delhi.

Incentive Schemes for working in Hindi has been extended to the children of employees and to the society as a whole. These attractive and innovative schemes have been named after famous authors of Hindi Literature. Corporate Panel for English to Hindi translation has been extended. Hindi Month was observed in all the Units and Offices of the Company. During Hindi month, employees and officers participated enthusiastically in various programs / competitions. Employees of various Units / Offices and Corporate Office bagged prizes in the Inter Organisation TOLIC Competitions. Hindi workshops for those having working knowledge in Hindi were conducted during the year. Training on Unicode is being imparted for all Executives and Employees.

13 Units / Offices have been notified under rule 10(4) of OL rules indicating that 80% or more staff have working knowledge in Hindi in these Units / Offices and orders have been issued under rule 8(4) of OL Rules for those having proficiency in Hindi to do their Official work in Hindi. Govt. of India notified CRL-Ghaziabad under Rule 10(4) of OL rules during the year.

OL Portal is in place to facilitate OL implementation across the company and to provide latest inputs pertaining to OL and is being updated. Hindi language has been enabled in SAP. Most of the Units have uploaded data pertaining to OL Training Roster on SAP. Company's website is available in Hindi and English and efforts are on to progressively have the entire website in bilingual.

Efforts are on to ensure the progressive use of Hindi in all spheres of activities of the Company.

Implementation of RTI Act

The information required to be provided as per Section 4(1) (b) of the Right to Information Act, 2005 has been posted on the website of the Company www.bel-india.com. The Information posted on the website contains general information about the Company, powers and duties of employees, decision making process, rules, regulations, manuals and records held by BEL, a directory of the Company's officers, pay scales, procedure for requesting additional information about the Company by citizens and associated request formats.

During the year 2014-15 the Company received and attended 874 requests for information under RTI Act. Most of the requests were for information related to recruitment, service related matters, third party and commercial secrets information.

Board Meetings/ Change in Directors and Key Managerial Personnel

During the year 5 Board meetings were held, the details of which form part of the Corporate Governance Report.

Following changes took place in the Directorate and Key Managerial Personnel of your Company during the financial year :

Sl. Name of the Desig- Date of Date of No. Director(s)/KMP nation appointment cessation

1 Lt Gen Narendra Singh Director 01.10.2013 30.04.2014

2 Lt Gen C A Krishnan Director 01.05.2014 Not Applicable

3 Mr Manmohan Handa Director 24.06.2014 Not Applicable

4 Mr P K Mishra Director 01.01.2013 19.09.2014

5 Mr J Rama krishna Rao Director 03.11.2014 Not Applicable

6 Mr S Sreenivas Company 01.04.2014 Not Applicable Secretary

Mr P R Acharya, Director (Finance) & Lt Gen C A Krishnan, Government Director, retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

Mr J Rama Krishna Rao, Additional Director is being appointed as Director on the terms as set-out in the Notice of the Annual General Meeting.

Directors' Responsibility Statement :

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors in terms of Section 134(3)(c) of the Companies Act, 2013 state that :

a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as at 31 March 2015 and of the profit of the Company for the year ended on that date;

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

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

e) proper internal financial controls were in place and such financial controls were adequate and were operating effectively;

f) systems to ensure compliance with the provisions of all applicable laws were in place and same were adequate and operating effectively.

Significant and material orders

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company's operations in future.

Events Subsequent to the Date of Financial Statements :

Material changes and commitments affecting the financial position of the Company which have occurred between 31 March 2015 and date of signing of this report are nil.

Changes to Authorised Share Capital and Bonus Issue

The Board of the Company has in its meeting held on 24 July 2015, approved the proposal for :

a) increase in the authorised share capital from Rs. 100 Crores to Rs. 250 Crores.

b) Issue of 2 bonus shares for every share held by the existing shareholders of the Company.

The said proposals are subject to approval of the Members at the ensuing Annual General Meeting of the Company.

Corporate Social Responsibility

Pursuant to the provisions of Section 135 of the Companies Act, 2013 and The Companies (Corporate Social Responsibility) Rules, 2014 read with various clarifications issued by Ministry of Corporate Affairs & DPE Guidelines the Company has undertaken various activities as per the CSR Policy. The programmes / initiatives / projects are taken up in line with the Schedule-VII of the Companies Act, 2013, which are duly incorporated in our revised CSR policy and forms the guiding principle for all our programmes.

The Corporate Social Responsibility policy of the Company is posted on the Company's website, www.bel-india.com.

Pursuant to the Rule 8 of The Companies (Corporate Social Responsibility) Rules, 2014 a report on CSR activities for financial year 2014-15 is annexed herewith as "Annexure 1".

Auditors

Statutory Auditors

Pursuant to Section 139(5) of the Companies Act, 2013, the Comptroller and Auditor General of India appointed M/s Badari, Madhusudhan & Srinivasan, Chartered Accountants, Bengaluru, as Statutory Auditors for the financial year 2014-15 for audit of accounts of Bengaluru, Hyderabad, Chennai Units and Corporate Office. M/s Ved & Company, Chartered Accountants, Ghaziabad, were appointed as Branch Auditors of Ghaziabad, Panchkula and Kotdwara Units for the financial year 2014-15. M/s Malani Somani Chandak & Associates, Chartered Accountants, Pune were appointed as Branch Auditors for Pune and Navi Mumbai Units for the financial year 2014-15. M/s Rao & Narayan, Chartered Accountants, Vijayawada were re-appointed as Branch Auditors for Machilipatnam Unit for financial year 2014-15.

Cost Auditors

Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014 (as amended), the cost records maintained by the Company in respect of its manufacturing activities are required to be audited by the Cost Auditor. Your Directors had, on the recommendation of the Audit Committee, appointed M/s PSV & Associates, Bengaluru, as Cost Auditors of the Company for the financial year 2014-15 for conducting the audit of cost records of the Company.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr Thirupal Gorige, Practicing Company Secretary (PCS Registration No. 6424) for the financial year 2014-15 to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed herewith as "Annexure 2".

The Secretarial Auditor in his Report observed that Company is yet to appoint adequate number of Independent Directors and Woman Director on the Board. Your Directors state that the Company being a Government Company, the appointment of the Directors on the Board of the Company is made by the Government of India and same is under consideration of the Government.

Auditors' Report

Auditors' Report on the Annual Accounts for the financial year 2014-15 and "Nil" Comments of the Comptroller & Auditor General of India under Section 143(5) of the Companies Act, 2013 on the Annual Accounts are appended to this report.

Extract of Annual Return

In accordance with Section 134(3)(a) of the Companies Act, 2013, an extract of the annual return in the form MGT-9 is annexed herewith as "Annexure 3".

Risk Management

Pursuant to the requirement of Clause 49 of the Listing Agreement, the Company has constituted a Risk Management Committee. The details of Committee and its terms of reference, risk management policy etc. are set out in the Corporate Governance Report.

Remuneration Policy and Board Evaluation

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration, Board Evaluation etc. The details are set out in the Corporate Governance Report.

Vigil Mechanism / Whistle Blower Policy

The Company has a vigil mechanism named Whistle Blower Policy to deal with instance of fraud and mismanagement, if any. The details of the policy are set out in the Corporate Governance Report.

Declaration from Independent Directors

The Company has received necessary declaration from each Independent Director of the Company under Section 149(7) of the Companies Act, 2013 that the Independent Directors of the Company meet with the criteria of their Independence laid down in Section 149(6) of the Companies Act, 2013.

Management Discussion and Analysis Report

Management Discussion and Analysis Report required under the Listing Agreements with the Stock Exchanges on which BEL's shares are listed as also under the Government (DPE) Guidelines on Corporate Governance for Central Public Sector Enterprises (CPSEs), is attached to this Report as "Annexure 4".

Related Party Transactions

There were no materially significant related party transactions with the Company's Promoters, Directors, Management or their relatives, which could have had a potential conflict with the interests of the Company. Transactions with related parties that were entered into during the financial year were on an arm's length basis and were in the ordinary course of business. All Related Party Transactions are placed before the Audit Committee as also the Board for approval, if required. Members may refer to the notes to the accounts for details of related party transactions.

The Board of Directors of the Company has, on the recommendation of the Audit Committee, adopted a policy to regulate transactions between the Company and its Related Parties, in compliance with the applicable provisions of the Companies Act 2013, the Rules thereunder and the Listing Agreement.

This Policy was considered and approved by the Board at its Meeting held on 23 January 2015. The policy has also been uploaded on the Company's website www.bel-india.com.

Particulars of Employees

During the financial year there were no employees in the Company who were employed throughout the financial year and were in receipt of the remuneration, in aggregate of more than Rs. 60 Lakhs per annum or employed for part of the financial year and were in receipt of the remuneration, in aggregate of more than Rs. 5 Lakhs per month.

Information required pursuant to Section 197 read with Rule, 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, is attached to this Report as "Annexure 5".

Loans / Guarantees / Investments

Particulars of loans, guarantees and investments under section 186 of the Companies Act, 2013 are nil.

Internal Financial Controls

The Company has in place adequate internal financial controls with reference to financial statements.

Composition of Audit Committee

The Audit Committee comprises of Independent Directors viz., Mr S M Acharya, Chairman of the Committee, Mr Vikram Shrivastava, Mr V K Mehta and Government Director Mr J Ramakrishna Rao as its members. All the recommendations made by the Audit Committee were accepted by the Board.

Corporate Governance Report

DPE guidelines on Corporate Governance for CPSEs provide that CPSEs would be graded on the basis of their compliance with the guidelines. DPE has graded BEL as "Excellent" for 2013-14. A report on Corporate Governance along with a Compliance Certificate from the Auditors as prescribed under the Listing Agreements with the Stock Exchanges as well as the DPE Guidelines is attached to this Report as "Annexure 6".

Sustainability Report

The DPE guidelines on Sustainable Development for CPSEs mandates CPSEs to disclose their Sustainable Development efforts in a 'Stand Alone Report' or as a separate chapter in the Annual Report. Pursuant to this requirement, a Report on your Company's efforts on "Sustainable Development" is attached to this Report as "Annexure 7".

Business Responsibility Report

The Securities and Exchange Board of India (SEBI) has mandated inclusion of Business Responsibility Report ("BR report") as part of the Annual Report for listed entities. This SEBI mandate is also inserted as Clause 55 in the Stock Exchange Listing Agreement. The SEBI guidelines / Clause 55 of Listing Agreement provide a format for BR report. It also contains a list of nine Key Principles and various core elements under each principle to assess compliance with Environmental, Social and Governance norms. Listed Companies are required to prepare policies based on these nine Key principles and core elements, put in place a framework to integrate and embed the policies into business activities and a mechanism to measure and report the achievements as BR report.

Your Company has prepared a comprehensive policy framework for BR report, after studying the SEBI guidelines and keeping in view the business and governance environment in which BEL as a Defence PSU operates.

Highlights of this policy are posted on the Company's website www.bel-india.com. The Company's BR report for the year is attached to this Report as "Annexure 8".

Other Disclosures

Information required to be disclosed in accordance with Section 134(3)(m) of the Companies Act 2013 read with Rule 8(3) of the Companies (Accounts) rules, 2014 regarding conservation of energy, technology absorption and foreign exchange earnings and outgo, is given at "Annexure 9".

Acknowledgement

Your Directors place on record their deep appreciation and gratitude for the valuable support received from all the customers, particularly the Defence Services and the para-military forces and look forward to their continued support and co-operation in future. Your Directors also place on record their gratitude for the support received from various Ministries of the Government of India, especially the Ministry of Defence, Department of Defence Production. Your Directors express their gratitude to the Defence Research and Development Organisation and the various Research Laboratories under DRDO for the support it received, particularly in the joint development programmes and new products brought out with the help of them. Your Directors express their sincere thanks to the Comptroller and Auditor General of India, Chairman, Members and employees of the Audit Board, Statutory Auditors, Branch Auditors, Cost Auditors, Secretarial Auditor, Company's Bankers, collaborators and vendors. Your Directors appreciate the sincere efforts put in by the employees at all levels, which enabled the Company to achieve the good performance during the year. Your Directors express their appreciation and gratitude to all the shareholders / investors for the trust and confidence reposed in the Company and look forward to their continued support and participation in sustaining the growth of the Company in the coming years.

For and on behalf of the Board

Bengaluru Sunil Kumar Sharma 24 July 2015 Chairman & Managing Director


Mar 31, 2014

To the Members,

I have great pleasure in presenting to you, on behalf of the Board of Directors, the 60th Annual Report of Bharat Electronics Limited and the Audited Accounts for the financial year ended 31 March 2014 together with the reports of the Statutory Auditors and the Comptroller and Auditor General of India thereon.

Performance Highlights

A summary of the Company''s financial results is given below :

(Rs. in lakhs)

2013 - 14 2012 - 13

Value of Production 612,689.97 628,990.56

Turnover (Gross) 617,423.25 601,189.93

Profit Before Depreciation, Finance 132,024.01 124,608.42 Cost and Tax

Finance Cost 339.61 78.17

Depreciation and Amortization 14,210.45 13,071.04

Provision for Tax 24,311.77 22,475.93

Profit After Tax 93,162.18 88,983.28

Add : Balance brought forward 265,778.32 240,900.14 from previous year

Balance available for Appropriation 358,940.50 329,883.42

Interim Dividend paid 4,800.00 4,800.00

Proposed Final Dividend 13,840.00 13,040.00

Tax on Dividend 3,167.87 2,994.83

Transfer to General Reserve 40,000.00 40,000.00

Transfer to Capital Reserve 450.11 3,270.27

Reserves & Surplus 693,723.77 622,369.46

Net Worth 701,723.77 630,369.46

Earnings Per Share (in Rs.) 116.45 111.23

Book Value Per Share (in Rs.) 877.15 787.96

Distribution of Value of Production for 2013-14 is given below :

Amount Percentage (Rs.in lakhs)

Materials 358,355.91 58.49%

Employee Cost 103,042.56 16.82%

Other Expenses (Net) 19,607.10 3.20%

Depreciation and Amortization 14,210.45 2.32%

Provision for Tax 24,311.77 3.97%

Profit After Tax 93,162.18 15.21%

Total 612,689.97 100.00%

Company''s sales turnover for the year 2013-14 has increased to Rs. 617,423.25 lakhs from Rs. 601,189.93 lakhs in 2012-13, registering a growth of 2.70%. Profit after Tax for the year is Rs. 93,162.18 lakhs as against Rs. 88,983.28 lakhs in the previous year. Turnover from indigenously developed products is 85%. Supplies to the defence contributed to 83% of turnover as against 85% in 2012-13.

Dividend

The Board has recommended a Final Dividend of 173 % (Rs. 17.30 per share), Rs. 13,840 lakhs for the year 2013-14. An interim dividend of 60% (Rs. 6 per share), Rs. 4,800 lakhs has already been paid for the year 2013-14. Thus, the total dividend for the year 2013-14 is 233 % (Rs. 23.30 per share), Rs. 18,640 lakhs (excluding corporate dividend tax) as against 223% (Rs. 22.30 per share), Rs. 17,840 lakhs paid in the previous year.

Provision of Rs. 2,352.11 lakhs has been made for corporate dividend tax on the final dividend proposed. Corporate dividend tax of Rs. 815.76 lakhs has already been paid on the interim dividend paid for the year 2013-14.

Major Orders Executed

Major projects executed during the year for the Army, Navy, Air Force, Coast Guard and non - defence customers include : Akash Missile Systems (Army & Air Force), Passive Night Vision Devices (PNVDs), Low Level Light Weight Radar, Missile Warning System (MWS), Hull mounted Sonar, Shipborne EW system, Central Acquisition Radar, Low Level Transportable Radar (LLTR), Coastal Surveillance System, Electronic Voting machines (EVMs), National Population Register (NPR), etc.

New Products

Some of the important new products introduced during the year include :

- Bharani - a Low Level Light weight Radar (LLLR). It is a battery powered Compact Sensor providing two Dimensional Surveillance solution to alert Air defence Weapon System against hostile targets at low and medium altitudes.

- Hull Mounted Sonar - for detecting, localizing and tracking surface & sub-surface targets in both active and passive modes. The sonar is designed to meet the naval requirements.

- Electronic Voting Machine - with new specification including digital certification and tamper evidence feature.

- Voter Verifiable Paper Audit Trail (VVPAT) - a Printing attachment to the Electronic Voting Machine (EVM) to facilitate comparison of votes in the event of a dispute.

- Radio for LIC EW system - Radio system for providing reliable back bone data communication.

Other significant developments / achievements during the year 2013-14

- Successful test firing of indigenously developed ''Akash'' Missiles from the Integrated Test Range (ITR) at Chandipur, off the Odisha coast.

- Ministry of Defence approval and FIPB approval received for BEL -Thales Joint Venture. This JVC is being established for Design, Development, Marketing, Supply & Support of Civilian and select Defence Radars.

- "Futuring Work Shop" by American Society for Quality (ASQ) Inc., USA to company''s senior management. The workshop is focused on Scenario Planning and evolving strategies to face future challenges.

- The turnover from Indigenous technology is around 85% for the year 2013-14 as against 78% of 2012-13.

- Around 1.23 lakh Electronic Voting Machines (EVMs) supplied in record time, during the year 2013-14.

Exports

Your Company achieved an all time high export sales of US$ 42 million registering a growth of 28% over the previous year''s export turnover of US$ 32.78 million. The Company has an export order book of US$ 194 million as on 01 April 2014 which includes offset order book of US$ 28.45 million. The targeted export sales for the year 2014-15 are US$ 59.75 million. The long term export plan of BEL is to reach export sales to total sales turnover ratio of 7% from the current ratio of 4% by 2018-19.

BEL for the first time exported state-of-the-art Sonar systems. Other major range of products exported during the year includes Automatic Identification System, Radar Warning Systems, Radar Finger Printing System, Casings, Stators, Electro Mechanical parts etc. BEL has successfully established itself as a supply chain partner of global players like Boeing & Hamilton Sunstrand. During the year, BEL has successfully commenced manufacturing of aircraft cable looms for M/s Pilatus of Switzerland.

BEL participated in three International Exhibitions in the year 2013-14 to showcase its products & capabilities. Having established a coastal surveillance radar system for a couple of countries, BEL is interacting with Ministry of External Affairs on a regular basis for supply of these systems to other friendly countries of India.

BEL is also anticipating sizable export orders on account of the "Offset" policy in Defence Procurements. In this regard BEL is interacting with many foreign companies, like Elbit Systems, Boeing, Lockheed Martin, Raytheon, Northrop Grumman, BAE Systems, SAAB, Thales, IAI for possible offset business arising out of various RFPs issued by MoD India. BEL has already signed MoUs with these companies.

MoU with Government

Your Company has been signing a Memorandum of Understanding (MoU) every year with the Government of India, Ministry of Defence. Performance of BEL for the year 2012-13 has been rated as "Very Good" in terms of the MoU with the Government. The MoU rating for 2013-14 is under finalisation by the Government.

Order Book Position

The order book of Company as on 01 April 2014 is Rs. 2,345,200 lakhs. The order book comprises mainly major programs like Weapon Systems for Air Force & Army, Battlefield Surveillance System, Command Information Decision Support System, Fire Control System, Passive Night Vision Devices and some of the new generation Radars, Sonars, Electronic Warfare Systems, etc. However, taking into account the delivery schedule, customer requirements, site / platform readiness, etc., the orders available for execution during 2014- 15 is Rs. 590,000 lakhs.

Finance

During the financial year 2013-14, your Company has been able to meet out of internal resources, the fund requirements towards incremental working capital and additional investments on Capital equipments. Borrowing has been avoided through close monitoring of cash flows and efficient cash management. Your company has retained the highest rating by ICRA for both short term and long term sanctioned bank limits. This rating will help in securing the best rates for the various services availed from the consortium banks. Based on the user requirements, several changes have been carried out in the online ERP to help in better information flow and control.

The inventory position of your Company as on 31 March 2014 was Rs. 337,014 lakhs (Net), as against Rs. 327,108 lakhs (Net) as on 31 March 2013. The inventory as on 31 March 2014 works out to 202 days of the Value of Production (DPE) for the year 2013-14 as against the corresponding position at 191 days as on 31 March 2013. During the year, several committees were formed to examine inventory management and based on the feedback comprehensive guidelines have been issued to streamline inventory management.

The position of Trade Receivables as on 31 March 2014 was Rs. 412,854 lakhs (Net) as against Rs. 333,467 lakhs (Net) as on 31 March 2013. This works out to 244 days of turnover for the year 2013-14 with the corresponding position at 202 days in the previous year. The increase in Trade Receivables as at the end of the financial year is mainly due to the following reasons :

(a) Higher proportion of sales in the last quarter, particularly in March 2014;

(b) Non realization of bills due to budgetary constraints of the Customers which had started as early as Nov 2013 during the current financial year;

(c) Payment terms in the sale contracts where the release of money is linked to certain specific milestones, even after delivery of the items like Harbor Acceptance Trials / Sea Acceptance Trials, etc.

The Realization of Trade Receivables will be closely monitored to ensure speedy collection during the current financial year which should improve the position by the end of the year 2014-15.

The Company does not have any public deposit scheme at present. However, the matured past public deposits amount with the company was Rs. 36.95 lakhs as on 31 March 2014. Of these, 34 deposits amounting to Rs. 36.50 lakhs are claimed but not paid as these accounts are frozen on advice by Karnataka Lokayukta. Remaining matured deposits of Rs. 0.45 lakhs as on 31 March 2014 is unpaid. The entire amount of public deposits outstanding as on 31 March 2014 is included in the current liabilities, Note No. 8 of the Balance sheet.

Research & Development

Research and Development continued to be a focus area of BEL during the year 2013-14. In-house R&D efforts during the year encompassed all the business segments of the Company, viz. Radars, Military Communication, Naval Systems, Missile Systems, Electronic Warfare, Avionics, CI systems, Electro-optics, Tank Electronics, Gun up-grades, Civilian equipments & systems and Components.

BEL R&D engineers had close co-operation with DRDO, other national research and development agencies and academic Institutes.

Development & Engineering (D&E) Divisions attached to all the Strategic Business Units (SBUs) of Bangalore and Other Units concentrated on the development of Products and Systems in their respective areas of Business Segments. Central-D&E and two Central Research Laboratories (CRLs) of the company supported the D&E Divisions of all the units through development of core technology modules and software required for the development of Products and Systems.

The analysis of turnover of the company for the year 2013-14 indicates that 41% of the turnover is from BEL developed products, 44% of the turnover is from products developed in association with DRDO & other National Labs and remaining 15% is from products for which technologies were acquired through foreign ToT.

Development of New Products

During the year 2013-14, different R&D Divisions completed several development projects leading to new products, systems and technology modules. The Company was also able to bring out many new products through joint development efforts with Defence Research and Development Organisation (DRDO).

New Products developed jointly with DRDO

Bharani - a Low Level Light Weight, Compact, Surveillance Radar (LLLR), powered by a battery for use in Army Air Defence Weapon System against hostile targets like UAV RPV, hovering Helicopters and fixed wing Aircrafts at low and medium altitudes. This product was developed jointly with LRDE.

EO System for Integrated Coastal surveillance system - Developed jointly with IRDE as an indigenous EO solution for integrated Coastal Surveillance System.

EW system - Developed jointly with DLRL.

HMS-X - Developed jointly with NPOL, HMS-X is a Sonar which is capable of performing operation in both active and passive modes.

New Products developed by BEL through in-house R&D effort

Radio for LIC EW system - is a back bone data communication system for Short Distance Direction Finding (SDFS) sub system of LIC EW.

VCCS - The Voice Communication Switching System (VCCS) which is based on IP architecture signaling within own network when interfaced with Legacy Networks and other interfaces available.

Electronic Voting Machine with Voter Verifiable Paper Audit Trail - Electronic Voting Machine is designed as per new specification of Election Commission with additional features like digital certification, tamper evidence on opening of cover and improved diagnostic features. Voter Verifiable Paper Audit Trail is an attachment to the existing Electronic Voting Machine. It is capable of providing a printed paper after each vote is casted by the voter to confirm that printed record matches the electronic ballot.

Scientists from Central Research Laboratories and other R&D divisions of BEL have contributed 86 Technical Papers in the national and international journals during the year. The Company filed 9 new applications for Patents during the year 2013-14, for Patents and related Intellectual Property Rights.

Quality

Your Company''s Vision of becoming a ''World-class company in Professional Electronics'' is being achieved by giving thrust on three attributes - Quality, Technology and Innovation. Corporate Quality Division takes initiatives which encompass control and monitoring of all critical operational and business performance parameters like On Time Delivery, Process Cycle Time, Manufacturing Yield, Statistical Process Control, Complaint Resolution, Reliability - resulting in enhancement of product quality and in exceeding customer needs and expectations. These factors are monitored through well established ''SAP'' enterprise resource planning system across all Strategic Business Units, regional, marketing and purchase offices of the company in India and abroad. The dedicated CRM (Customer Relation Module) and SRM (Supplier Relation Module) in SAP are able to enhance customer services and improvement in procurement efficiency of the company respectively.

The company is committed to establish internationally recognised systems through process approach. All Units / Strategic Business Units / Common Services Groups are accredited to ISO 9001 to its latest versions of Quality Management System (QMS) since early nineties. Seven Units / SBUs - Ghaziabad, Panchkula, Kotdwara, Hyderabad, Military Communication, Electronic Warfare & Avionics, Export Manufacturing, have upgraded their QMS to Aerospace standard AS 9100. Calibration and maintenance departments of Bangalore Complex, Ghaziabad and Panchkula units are accredited by NABL to ISO 17025 standards. The Pune unit manufacturing X-ray tubes is certified for ISO 13485 standard for medical devices. The Central Software Development Group at Bangalore is certified to CMMi level 5.

All Units of the Company are committed to Environment Management System through ISO 14001 accreditation. The Ghaziabad Unit and Engineering Services of Bangalore Unit are accredited to OHSAS (Occupational Health Safety and Assessment Series) 18001.

The EFQM (European Foundation of Quality Management) model for Business Excellence is being followed since year 2002 in BEL as another process approach for overall strategic and operational excellence leading to enhancement in competitiveness, in meeting and exceeding needs & expectations of stakeholders (Government, shareholders, customers, employees, partners and society). During the year 2013-14, four Units - Ghaziabad, Hyderabad, Machilipatnam and Navi-Mumbai participated for this award and were conferred for ''Commendation for Strong Commitment to Excel''. At present all Units / SBU are at this level except Bangalore Unit, which is at next higher level of Award i.e. ''Commendation for Significant Achievement''.

The continual improvements in product and processes are brought out through various approaches. Middle and senior level executives select Six Sigma projects from different areas of concern related to product and processes and bring about breakthrough improvements. In order to effectively implement six-sigma methodology and to bring culture of improvement through analytical approach, 10 Black Belts were trained and certified by ISI, Bangalore during the year. A total of 621 six sigma projects have been completed so far, of which 200 projects were completed during the year 2013-14. 17 six sigma projects were nominated for national level competitions. One of the case studies represented the organization at the international competition, ICQCC 2013, held at Taipei, Taiwan. All Six sigma case studies were adjudged either in Excellence or in Par Excellence in their respective categories.

The organization creates impetus towards involvement of non-executives in the quality movement through Quality Circles. In the year 2013-14, 545 presentations for improvement in product and processes were made by various Quality Circles. Twenty Five QC circles were nominated to participate in national competition / conventions and all were adjudged for higher category awards. One circle represented the organization in international convention, ICQCC 2013, held at Taipei, Taiwan and bagged excellence award in its category.

BEL has nominated its D&E engineers for Certified Reliability Engineer (CRE) program conducted by American Society for Quality (ASQ). The CRE certification is a training program followed by stringent exam to ensure proper grasping of the subject. 64 D&E engineers were professionally certified for CRE in year 2013-14.

The year 2013-14 was declared as "Year of Quality" by Ministry of Defence. A twelve point comprehensive program on Quality with defined target was initiated during the year. Under this program, 73% of lower and middle level engineers were exposed on Fundamentals of Quality. The Heads of Quality and the operating level Quality engineers in respective SBUs / Units were certified for Certified Manager on Quality / Organisational Excellence (CMQ/OE) and Certified Quality Engineers (CQE) programs by the American Society for Quality (ASQ). A total of 18 CMQ/OE and 36 CQE have been certified. Awareness program on Reliability and Maintainability by developing in-house faculty was also conducted. 1156 D&E engineers were covered under this program. Revision of existing BEL Quality Manual to latest quality standard including Business Excellence and also covering topics like Evaluation of Vendors, Corporate Quality Audit of all Units / SBUs, determination of Quality Index were also taken up during Year of Quality.

During the year 2013-14, BEL engineers have won 36 Quality Awards in external competitions, including National and International conventions.

A Customer Satisfaction Survey was organised by BEL through external agency, Indian Market Research Bureau (IMRB), to capture the customers'' perception on quality of BEL product. Fourteen products from various Units / SBUs were offered for survey. The average Customer Satisfaction Index was found as 81%.

ERP Implementation

Your Company has implemented SAP as a centralized system for all BEL-units and offices in 22 locations. Initially, the core ERP system was implemented first in Bengaluru Complex in 2005. Later on it was rolled out to all other units and offices by 2008. Subsequently, new dimension modules. (eProcurement using Supplier Relationship Management, Customer Relationship Management, Business Intelligence, Business Objects, Knowledge Management using Cfolders and Enterprise Portal) were implemented.

In 2013-14 BEL has upgraded its ERP hardware with Enterprise Class servers which use blade server technology and virtualization for high availability, SAN storage with solid state drives and mission critical support. This was followed by SAP technical upgrade to the latest versions of SAP and Oracle RDBMS. The latest version of SAP has support for the Official language Hindi. The hardware infrastructure at the Disaster Recovery site in Chennai has also been replaced.

SAP Functional upgrade which is directed towards business benefits, with focus on implementing the most valuable functions of the latest SAP software, is planned during FY 14 - 15. WAN up gradation for the entire network is planned during 2014-15. File Life cycle Management (FLM) from SAP, which enables all processes related to files in a digitized manner, is also planned for 2014 -15. FLM encompasses processes such as file creation, movement tracking, noting, review and approval as well as Daak management. It further leverages technology for ensuring better transparency in business processes and administration.

Human Resources

Your Company employed 9,952 persons as on 31 March 2014 as against 10,305 persons as on 31 March 2013. Of these employees, 3,991 were engineers / scientists and 2,080 were women employees on 31 March 2014. A total of 243 engineers, scientists and other professionals were inducted during the year. 57 employees belonging to SC, 39 employees belonging to ST, 83 employees belonging to OBC and

9 employees belonging to the minority community were recruited during the year.

The Company has been implementing the Government Directives on Reservation. The particulars of SC / ST and other categories of employees as on 31 March 2014 are as under :

Executives Non - Executives

Category of Employees Group ''A'' Group ''B'' Group ''C'' Group ''D''

Scheduled Caste 889 28 833 65

Scheduled Tribe 290 2 142 24

OBC 956 42 832 45

Ex - Servicemen 98 4 299 63

Physically Challenged 88 6 141 14

Various training programs were conducted during the year to enhance competencies in Technical, Functional and Managerial / Leadership areas. Structured Executive Development Programs were conducted regularly with premier Institutes to meet the evolving training needs of executives as they progress through various grades.

Employee relation continued to be smooth and harmonious across the Company. Regular interactions took place among the management, executives and the workmen through the apex forums, viz. the Joint Standing Committee consisting of Negotiating Trade Unions and Apex Joint Council consisting of Officers Associations and TC Cadre Associations and also separately with respective Trade Unions and Officers Associations.

Various welfare programmes were organized for the benefit of employees and their families, which included programmes addressing specific needs of sections of employees, such as, SC / ST employees, differently abled employees and women employees. Various cultural programmes were organized by the Fine Arts Clubs in the Units for recreation of employees and their families. Various summer camps / sports programmes were organized for the employees'' children.

A detailed write up on Company''s HR philosophy and specific HR initiatives during the year is provided separately in the Management Discussion and Analysis Report attached.

Accolades

Important accolades received during the year by your Company and its employees include :

- BEL received prestigious Raksha Mantri Awards for "Excellence 2011-12" in the category of Best Performance in Exports, Indigenization, Innovation and Design Efforts.

- BEL has won the SCOPE Meritorious Award for the year 2012-13 for Best Practices in Human Resource Management.

- BEL secured Society of Defence Technologists (SODET) Awards for outstanding contributions by way of technology development and innovation in the area of defence applications for the year 2011-12 & 2012-13.

- Four Units of BEL — Ghaziabad, Hyderabad, Machilipatnam and Navi Mumbai — have won the ''Strong Commitment to Excel'' recognition this year in the CII-EXIM Bank Award for Business Excellence (2013).

- BEL bagged 12 Gold Medals for Six Sigma Projects in the Competition conducted by Quality Circle Forum of India (QCFI)

- BEL has been conferred "Karnataka State Export Excellence" Award in the product category Electronics and Communication - Medium and Large Enterprise, for the years 2011-12 and 2012-13.

Environment Management

Your Company has long been integrating environmental sustainability in its operations systematically, for which it has earned a name. Set in clean and green surroundings, all the units of BEL maintain an environment-friendly work process and strongly believe that environmental sustainability is economically viable. Setting up objectives as per the sustainable development guidelines issued by DPE, BEL further enhances its performance-levels towards building a clean future. Even as well-established process controls keep pollution in check for all manufacturing operations, the Company strives continually to look for impacts beyond the boundary and reduce them by conservation of resources, mainly in the use of energy, water and hazardous materials in an organised way. This goes a long way in creating a sustainable future.

Our pristine environment is home to many species of birds that are at the top end of the eco-chain fostering bio-diversity in flora and fauna supporting the insects and other life forms. This picture of harmony has been built on the foundation of strong environmental management practices that are deep rooted and based on International Standards such as ISO14001(2004), pollution prevention measures, energy and water conservation, use of eco-friendly materials and processes, reduction, reuse and recycling of waste, reduction of hazardous waste and sustenance of zero discharge. The company has now measured its carbon footprint and is planning to move towards a Carbon Neutral status by use of green renewable energy for its operations. Several capacity building programmes have been conducted to increase environmental awareness among the workforce and promote a pollution-free environment.

The Sustainability Report annexed to this Report contains further details on environment management and sustainable development initiatives.

Subsidiary / Joint Ventures

Your Company''s subsidiary at Pune, BEL Optronic Devices Ltd (BELOP) performed well during the year. BELOP manufactures Image Intensifier Tubes (I.I. Tubes). These Tubes are supplied to the Defence customers and also used in the Night Vision Devices manufactured by BEL. BELOP achieved a turnover of Rs. 17,147.34 lakhs as against Rs. 14,700.87 lakhs in the previous year. The Profit After Tax for the year was Rs. 496.19 lakhs as against Rs. 575.83 lakhs in the previous year.

The Company has availed the general exemption under Section 212(8) of the Companies Act 1956 granted vide Ministry of Corporate Affairs Circular No. 5 / 12 / 2007-CL-III dtd. 8 February 2011. Hence, Annual Accounts of BELOP are not attached to the Balance Sheet of BEL. BELOP Annual Accounts and the related information will be made available upon request by any member of BEL or BELOP. The Annual Accounts of BELOP are kept for inspection by investors at the registered office of BEL and BELOP. Any investor interested to inspect the same may please contact the Company Secretary of BEL or BELOP. A statement as per Section 212 of the Act, together with the information required to be disclosed as per the directions contained in the MCA Circular No. 5 / 12 / 2007-CL-III dtd. 8 February 2011, is annexed to this report.

The Joint Venture Company (JVC) with General Electric, USA, viz., GE BE Pvt Ltd., continues to perform well. This JVC manufactures CT Max and other latest version X-Ray Tubes. BEL supplies some parts required for the products manufactured by this JVC. GE BE Pvt Ltd recorded a turnover of Rs. 60,685.00 lakhs as against Rs. 51,996.00 lakhs in the previous year. The Profit After Tax was Rs. 6,268 lakhs as against Rs. 7,117.00 lakhs in the previous year. The JVC declared 100 % dividend for the year 2013-14 and BEL received Rs. 260 lakhs as dividend from this JVC on BEL''s share of investment.

The other JVC, viz., BEL Multitone Pvt Ltd., jointly promoted by BEL and Multitone Electronics plc, UK was set up to supply, install and service Private Paging Systems and Pagers. As this JVC was not performing well, it was decided to wind up this company. The JVC Board and the shareholders passed the voluntary winding up resolutions and appointed a Liquidator. Liquidation process is on.

Consolidated Financial Statements

Consolidated Financial Statements of your Company and its Subsidiary and Joint Venture Companies are attached to this Report.

Vigilance

Your Company''s Vigilance Organization is headed by an Independent Chief Vigilance Officer (CVO). Each Unit of the Company has a Vigilance set up headed by a Senior Vigilance Executive, reporting to the CVO. Preventive Vigilance has been the thrust area of the Vigilance Organisation and the same received focussed attention during the year. The Vigilance Organisation peruses procurement / sub-contract processes and contracts, conducts surprise inspections and investigates instances of any suspicious transactions referred to it. Any employee or third parties can refer any suspected transaction to the notice of CVO for investigation.

Important activities of the Vigilance Department during the year included : 1653 Purchase Orders / Contracts and 625 high value Orders / Contracts reviewed / scrutinised and found to be in order. 2 teams for Inspection of Works Contracts and 2 teams for Inspection of Purchase Orders have been constituted. 9 Works Contracts and 16 high value POs were inspected by in- house inspection teams. 3207 Regular / Surprise inspections were conducted. 9 Vigilance cases were handled during the year. There is no CBI case. 213 Executives have been trained in the Principles of Natural Justice & Domestic Enquiry Training Programme (for Dy. Mgrs. & above). 373 Executives and 121 Non-executives have taken part in Vigilance Awareness Training Programme. 92 Executives & 72 Non Executives working in sensitive areas for 3 years and above have been moved to different posts. 82% of Job Rotation completed for the Year 2013 - 14.

In terms of CVC''s guidelines for Leveraging Technology to ensure transparency through effective use of website, the following information has been made available on BEL website :

- Application forms for online registration of Subcontractors / Vendors.

- Applications for recruitment.

- Details of awarded Contracts / Purchase Orders valuing more than Rs. 10 lakhs in respect of works contracts, service contracts, capital items and non-production items.

- Details of awarded Contracts / Purchase Orders issued on nomination / single tender basis value exceeding Rs. 5 lakhs.

- Details of awarded Purchase Orders / Sub Contract Orders for production items with a threshold value of Rs. 100 lakhs and above.

- Vendor Payments Information System.

- CVC circulars and guidelines.

E - Procurement

E-procurement at BEL has been implemented on SAP SRM 7.0 platform having Public Sector procurement features. It has been implemented at all 9 Units of BEL for both Purchase and Sub-contract. The system is integrated with ERP system with the latest security such as Web Access Firewall, Reverse proxy and encryption of data from the client side upto the Server in place. Second level authentication through Digital Signature for both publishing the bid and submission of response from the Vendor has been enabled. Six types of procurement have been configured in the system. As per CVC circular No. 010 / VGL / 035 dt. 12.01.2012, action has been taken for certification of e-procurement system.

Integrity Pact

One of the recent initiatives of the Central Vigilance Commission (CVC) to eradicate corruption in procurement activity is introduction of the Integrity Pact in large value contracts in Government Organizations. In line with the directives from Ministry of Defence and the Central Vigilance Commission, your Company has adopted Integrity Pact with all vendors / suppliers / contractors / service providers for all Orders / Contracts of value Rs. 2,000 lakhs and above, initially. This threshold value was reduced to Rs. 1,000 lakhs from March 2013 and further reduced to Rs. 500 lakhs from May, 2014. The Pact essentially envisages an agreement between the prospective vendors / bidders and the Principal (BEL), committing the Persons / officials of both sides, not to resort to any corrupt practices in any aspect / stage of the contract. Only those vendors/bidders, who commit themselves to such a Pact with the Principal, would be considered competent to participate in the bidding process. Integrity Pact, in respect of a particular contract, would be operative from the stage of invitation of bids till the final completion of the contract. Any violation of the same would entail disqualification of the bidders and exclusion from future business dealings.

As recommended by the CVC, the Company has appointed Mr N K Sinha, IAS (Retd), former Secretary, Planning Commission and former Chairman, PESB as the Independent External Monitor (IEM) for monitoring implementation of Integrity Pact in the Company. The IEM would review independently and objectively, whether and to what extent parties have complied with their obligations under the Pact. IEM will take stock of the ongoing tendering processes on quarterly basis. The IEM conducts this review once in every quarter. In case of a complaint arising out of tendering process, the matter shall be examined by the IEM, who would look into the records, conduct an investigation, and submit recommendations to the management. During his visits to the Corporate Office every quarter, the IEM holds structured meetings with the Chairman & Managing Director. So far, 78 Orders / Contracts are covered under Integrity Pact.

Procurement from MSMEs

Your Company has been providing thrust on enhancing procurement from MSMEs and has implemented the Public Procurement Policy for Micro, Small & Medium Enterprises (MSMEs) as per the guidelines/notification issued by the Ministry of MSMEs. In order to facilitate MSMEs, the company is classifying the existing vendors in Small Scale Industries (SSI) segment into Micro, Small & Medium Enterprises in the company''s procurement system through web-based real-time centralized ERP System (SAP). Vendor registration forms are available in the company''s official website (bel-india.com). Industry Promotion Officer is nominated to assist vendors regarding Procedure for Registration, understanding the requirements of BEL, report grievances, if any, etc. Some of the other initiatives include uploading of company''s procurement plan for MSMEs based on the production plan, with periodic update and details of Unit/SBU specific Industry Promotion Officers in the company''s official website, participation in various vendor development programmes like exhibitions, workshops, establishment of industrial estate to give maximum encouragement to ancillaries etc.

With enhanced focus & emphasis on MSMEs the company is confident of achieving the objectives of the Public Procurement Policy in the coming years. Company has been increasing its procurement from MSMEs year on year.

Implementation of Official Language Policy

Your company is committed to adhere to the OL policies of the Government of India. During 2013-14, efforts made towards implementation of Official Language include :

OL Vision and Mission of the company have been adopted. OL Portal was brought out to facilitate OL implementation across the company and to provide latest inputs pertaining to OL. Incentive Schemes for working in Hindi has been extended to the children of employees. These attractive and innovative schemes have been named after famous authors of Hindi Literature. The Premchand, Jayashankar Prasad Yojana for working in Hindi, the Kabir Puraskar for Divisional Heads as motivators and Tulsidas Puraskar for doing entire work in Hindi. Apart from this, there are social awards and awards for children of employees. Hindi language has been enabled in SAP. Company''s website is available in Hindi and English and efforts are on to progressively to have the entire website in bilingual. Work on OL training roster is under progress on SAP. Employees of various Units / Offices and Corporate Office bagged prizes in the Inter Organization TOLIC Competitions. Corporate panel for English to Hindi translation has been extended. Hindi Month was observed in all the Units and Offices of the Company. During Hindi month, employees and officers participated enthusiastically in various programs / competitions. Hindi workshops for those having working knowledge in Hindi were conducted during the year. Training on Unicode is being imparted for all Executives and Employees. 12 Units / Offices have been notified under rule 10(4) of OL rules indicating that 80% or more staff have working knowledge in Hindi in these Units / Offices and orders have been issued under rule 8(4) of OL Rules for those having proficiency in Hindi to do their Official work in Hindi. Efforts are on to ensure the progressive use of Hindi in all spheres of activities of the Company.

Implementation of RTI Act

The information required to be provided to citizens under Section 4(1) (b) of the RTI Act 2005 has been posted on the website of your Company, viz. www.bel-india.com. It contains general information about the Company, the powers and duties of employees, information about decision making process, rules, regulations, manuals and records held by BEL, a directory of the Company''s officers, pay scales, procedure for requesting additional information about the Company by citizens and associated request formats. During the year 2013-14 the Company received and attended to 295 requests for information under RTI Act. Most of the requests were for information related to Human Resources, particularly recruitment and service related matters.

Directorate

Following changes took place in the Directorate of your Company since the last report. Mr P C Jain was appointed as Director (Marketing) with effect from 01 September 2013 in place of Mr H N Ramakrishna, who retired on attaining the age of superannuation on 31 August 2013. Mr P R Acharya assumed charge as Director (Finance) on 2 September 2013. Government appointed Lt Gen Narendra Singh, AVSM, SM, VSM, ADC, Deputy Chief of Army Staff (P&S) as one of the Government Directors w.e.f. 01 October 2013, in place of Lt Gen S P Kochar. Government appointed Lt Gen C A Krishnan, UYSM, AVSM, Deputy Chief of Army Staff (P&S) as one of the Government Directors w.e.f. 01 May 2014 in place of Lt Gen Narendra Singh, who retired on 30 April 2014. Three part-time Independent Directors, viz. Mr N Sitaram, Prof Anurag Kumar and Prof (Dr) R Venkata Rao exited BEL Board on completion of their three year tenure of appointment on 20 December 2013. Mr Sunil Kumar Sharma assumed charge as Chairman & Managing Director on 01 January 2014 in place of Mr Anil Kumar, who retired on attaining the age of superannuation on 31 December 2013. Mr Manmohan Handa has assumed charge as Director (Bangalore Complex) on 24 June 2014. Government nominated Vice Admiral K R Nair AVSM, VSM, Chief of Material, Indian Navy as Permanent Special Invitee to all the Board Meetings, w.e.f. 01 April 2014 in place of Vice Admiral N N Kumar. Government on 12 June 2014 nominated Mr S S Sundaram, Director General Electronics & Communication Systems, DRDO as special invitee to all the Board Meetings. Government on 25 July 2014 nominated Air Marshal R K Sharma, PVSM, AVSM, VM, ADC, Vice Chief of the Air Staff as special invitee to all the Board Meetings.

Directors'' Responsibility Statement

Pursuant to the provisions under Section 217(2AA) of the Companies Act, 1956 your Directors state :

(i) that in the preparation of the annual accounts, the applicable Accounting Standards have been followed and in respect of Accounting Standard 17, necessary explanation for departure has been given in Note No. 30(13) of the Notes to Accounts;

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

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

(iv) that the directors have prepared the annual accounts on a going concern basis.

Auditors

Pursuant to Section 619(2) of the Companies Act 1956, the Comptroller and Auditor General of India appointed M/s Badari Madhusudhan & Srinivasan, Chartered Accountants, Bangalore, as Statutory Auditors for the year 2013-14 for audit of accounts of Bangalore, Hyderabad and Chennai Units and Corporate Office. M/s. Mittal Gupta & Co., Chartered Accountants, Lucknow, were re-appointed as Branch Auditors of Ghaziabad, Panchkula and Kotdwara Units for 2013-14. M/s M B Bafna & Co., Chartered Accountants, Pune were re-appointed as Branch Auditors for Pune and Navi Mumbai Units for 2013-14. M/s Rao & Narayan, Chartered Accountants, Vijayawada were re-appointed as Branch Auditors for Machilipatnam Unit for 2013-14.

The Central Government vide order No GSR No 430 (E) dated 3 June 2011 notified The Companies (Cost Audit) Rules 2011. These Rules are applicable to BEL from financial year 2012-13. As per these Rules, the Cost Audit report duly signed by the Cost Auditor (s) has to be submitted to the Central Government within 180 days from the end of the Financial Year. Accordingly the Cost Audit report for the year 2013-14 will be submitted on or before 27 September 2014. Pursuant to Section 233B(2) of the Act, BEL Board of Directors appointed M/s PSV & Associates, Bangalore, as Cost Auditors of the Company for the financial year 2013-14 after due approval of the Central Government.

Auditors'' Report

Auditors'' Report on the Annual Accounts for the financial year 2013-14 and ''Nil'' Comments of the Comptroller & Auditor General of India under Section 619(4) of the Companies Act, 1956 on the Annual Accounts are appended to this report.

Management Discussion and Analysis Report

Management Discussion and Analysis Report required under the Listing Agreements with the Stock Exchanges on which BEL''s shares are listed as also under the Government (DPE) Guidelines on Corporate Governance for Central Public Sector Enterprises (CPSEs), is attached to this Report as

Annexure 1.

Corporate Governance Report

DPE guidelines on Corporate Governance for CPSEs provide that CPSEs would be graded on the basis of their compliance with the guidelines. DPE has graded BEL as "Excellent" for 2012-13. A report on Corporate Governance along with a Compliance Certificate from the Auditors as prescribed under the Listing Agreements with the Stock Exchanges as well as the DPE Guidelines, is attached to this Report as

Annexure 2.

Sustainability Report

The DPE guidelines on Sustainable Development for CPSEs mandates CPSEs to disclose their Sustainable Development efforts in a ''Stand Alone Report'' or as a separate chapter in the Annual Report. Pursuant to this requirement, a Report on your Company''s efforts on "Sustainable Development" is attached to this Report as Annexure 3.

Business Responsibility Report

The Securities and Exchange Board of India (SEBI) has mandated inclusion of Business Responsibility Reports ("BR reports") as part of the Annual Reports for listed entities. This SEBI mandate is also inserted as Clause 55 in the Stock Exchange Listing Agreement. The SEBI guidelines / Cl 55 of Listing Agreement provide a format for BR reports. It also contains a list of nine Key Principles and various core elements under each principle to assess compliance with Environmental, Social and Governance norms. Listed companies are required to prepare policies based on these nine Key principles and core elements, put in place a framework to integrate and embed the policies into business activities and a mechanism to measure and report the achievements as BR reports.

Your Company has prepared a comprehensive policy framework for BR report, after studying the SEBI guidelines and keeping in view the business and governance environment in which BEL as a Defence PSU operates. Highlights of this policy are posted on the Company''s website www.bel-india.com. The Company''s BR report for the year is attached to this Report as Annexure 4.

Other Disclosures

Information required to be disclosed in accordance with Section 217 (1)(e) of the Companies Act 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules 1988 regarding conservation of energy, technology absorption and foreign exchange earnings and outgo, is given at Annexure 5.

Statement pursuant to Section 212 of the Companies Act, 1956, relating to the Subsidiary Company is given at

Annexure 6.

As per Notification No. GSR 289(E) dated 31 March 2011, issued by the Ministry of Corporate Affairs, amending the provisions of the Companies (Particulars of Employees) Rules, 1975, issued in terms of Section 217(2A) of the Companies Act, 1956, it is not necessary for Government Companies to include the particulars of employees drawing salaries of Rs. 60 lakhs or more per annum, if employed throughout the financial year or Rs. 5 lakhs or more per month, if employed for part of the financial year. As your Company is a Government company, the information has not been included as part of the Directors'' Report.

Acknowledgement

Your Directors place on record their deep appreciation and gratitude for the valuable support received from all the customers, particularly the Defence Services and the para- military forces and look forward to their continued support and co-operation in future. Your Directors also place on record their gratitude for the support received from various Ministries of the Government of India, especially the Ministry of Defence, Department of Defence Production. Your Directors express their gratitude to the Defence Research and Development Organisation and the various Research Laboratories under DRDO for the support it received, particularly in the joint development programmes and new products brought out with the help of them. Your Directors express their sincere thanks to the Comptroller and Auditor General of India, Chairman, Members and employees of the Audit Board, Statutory Auditors, Branch Auditors, Cost Auditors, Company''s Bankers, collaborators and vendors. Your Directors appreciate the sincere efforts put in by the employees at all levels, which enabled the Company to achieve the good performance during the year. Your Directors express their appreciation and gratitude to all the shareholders/investors for the trust and confidence reposed in the Company and look forward to their continued support and participation in sustaining the growth of the Company in the coming years.

For and on behalf of the Board

Bangalore Sunil Kumar Sharma

05 August 2014 Chairman & Managing Director


Mar 31, 2013

To the Members,

The behalf of the Board of Directors, I have great pleasure in presenting to you the 59th Annual Report of Bharat Electronics Limited and the Audited Accounts for the financial year ended 31 March 2013 together with the reports of the Statutory Auditors and the Comptroller and Auditor General of India thereon.

Performance Highlights

A summary of the Company''s financial results is given below :

(Rs. in lakhs)

2012-13 2011-12

Valueof Production 629,018.73 579,358.25

Turnover (Gross) 601,218.61 570,363.36

Profit Before Depreciation, 125,245.87 120,010.31 Finance Cost and Tax

Finance Cost 78.17 60.01

Depreciation 13,071.04 12,079.89

Provision for Tax 22,475.93 24,495.03

Profit After Tax 88,983.28 82,989.78

Add : Balance brought forward from 240,900.14 217,306.59 previous year

Balance available for Appropriation 329,883.42 300,296.37

Interim Dividend paid 4,800.00 8,000.00

Proposed Final Dividend 13,040.00 8,640.00

Tax on Dividend 2,994.83 2,699.42

Transfer to General Reserve 40,000.00 40,000.00

Transfer to Capital Reserve 3,270.27 56.81

Reserves "&" Surplus 622,369.46 554,221.01

Net Worth 630,369.46 562,221.01

Earnings Per Share (in Rs.) 111.23 103.74

Book Value" Per"share"(in"Rs.) 787.96 702.78

Distribution of Value of Production for 2012 - 13 is given below :

Amount (Rs. in lakhs) Percentage

Materials 408,493.18 64.94%

Employee Cost 111,078.87 17.66%

Other Income (15,083.57) (2.40%) (Net of other Expenses)

Depreciation 13,071.04 2.08%

Provision for Tax 22,475.93 3.57%

Profit After Tax 88,983.28 14.15%

Total 629,018.73 100%

Company''s sales turnover for the year 2012 - 13 has increased to Rs. 601,218.61 lakhs from Rs. 570,363.36 lakhs in 2011- 12, registering a growth of 5%. Profit after Tax for the year is Rs. 88,983.28 lakhs as against Rs. 82,989.78 lakhs in the previous year. Turnover from indigenously developed products is 78%. Supplies to the defence contributed to 85% of turnover as against 73% in 2011 - 12.

Dividend

The Board has recommended a Final Dividend of 163% (Rs. 16.30 per share), Rs. 13,040.00 lakhs for the year 2012 - 13. An interim dividend of 60% (Rs. 6 per share), Rs. 4800 lakhs has already been paid for the year 2012 - 13. Thus, the total dividend (excluding corporate dividend tax) for the year 2012 - 13 is 223% (Rs. 22.30 per share), Rs. 17,840.00 lakhs as against 208% (Rs. 20.80 per share), Rs. 16,640 lakhs paid in the previous year.

Provision of Rs. 2,216.15 lakhs has been made for corporate dividend tax on the final dividend proposed. Corporate dividend tax of Rs. 778.68 lakhs has already been paid on the interim dividend paid for the year 2012 - 13.

Major Orders Executed

Major products supplied / projects executed during the year for the Army, Navy, Air Force, Coast Guard and non - defence customers include : Mobile Cellular Communication System (under execution); Mobile Ground Based Electronic Intelligence System; Passive Night Vision Devices; Drivers for AK630, Stabilizer, Automatic Loading Gear & Mounting items for T - 90 Tanks; Digital Radio Trunking System; Crypto Products; Battlefield Surveillance Radar - Medium Range; Board Lorros Mast; National Command Control Communication and Intelligence Network; Weapon System for Armed Forces; Upgradation of Satcom Air Defence Ground Environment System (under execution); Integrated Communication Network System for Naval Ships; Sub - Systems for Mirage Upgrade; Central Acquisition Radar Systems; Fire Control System; Coastal Surveillance System; National Population Register; Electronic Voting Machine and Tablet PC.

New Products

Some of the important new products introduced during the year include :

National Command Control Communication and Intelligence Network (NC3I) - NC3I is an independent network which would interlink the Coastal stations with the Joint Maritime Operation Centers and the Headquarters of the customers. The system comprises of Networks, VSAT system, Decision Support Software, Information Management & Analysis Centre.

Mobile Cellular Communication System (MCCS) - The MCCS Network provides voice and high data communication facilities using CDMA technology. The system comprises of Mobile Switching Centre, Base Trans - receiver Station and Repeaters.

Integrated Mobile System (IMS) - The IMS is a multilayer communication system for voice and data connectivity with integrated Launch Control Facility. The mobile system is self contained with built - in Power System and the system is Biological Chemical protected including EMP protection.

Passive Night Vision Devices (PNVD) with XD4 technology - The PNVD is a lightweight, durable, water - proof and compact Night Vision Device for performing surveillance, patrolling and reconnaissance operations during night. It can be attached to flip - up type face mask enabling hands free and convenient operation during driving, weapon firing, etc.

Exports

Your Company achieved export sales of US $ 32.78 million during the year as against US $ 38.45 million in the previous year. The decline in export sales during the year was mainly due to LLTR energy system planned under offset programme later becoming domestic sales and some of the products and systems planned for order acquisition and dispatch not materializing during the year. Export sales during the year included offset business to the extent of US $ 7.65 million. The Company has an export order book of US $ 94.08 million as on 01 April 201 3, including offset order book of US $ 13 million. The targeted export sales for the year 2013 - 14 is US $ 38 million.

The range of products exported during the year include Electronic Voting Machines, Coastal Surveillance Radar System, Radar Warning Receiver, RL Mount, Fitted up Shelters and bare shelters, Cable Harness, PCB Assembly, Electronic Assembly, Casing, Stators, Electromechanical parts and components.

During the year, the Company participated in 3 international exhibitions to show case its products and systems capabilities. Countries in Africa, Latin America, Southeast Asia, SAARC, Middle East and CIS continue to be the markets for export of BEL Products and systems. BEL has also identified contract manufacturing (both build to print and build to specs) as one of the new areas to address the emerging opportunities with OEMs. BEL is closely working with various major foreign Aerospace and Defence companies to secure business under the mandatory Offset Clause in the RFPs for Indian Defence Procurement. Further, efforts are being made to establish long - term supply chain relationships with global players.

MoU with Government

Your Company has been signing a Memorandum of Understanding (MoU) every year with the Government of India, Ministry of Defence. Performance of BEL for the year 201 1-12 has been rated as "Very Good" in terms of the MoU with the Government. The MoU rating for 2012-13 is under finalisation by the Government.

Order Book Position

The order book of your Company as on 01 April 201 3 is around Rs. 2,494,900 lakhs. The order book comprises mainly major programs like Weapon Systems for Air Force & Army, Battlefield Surveillance System, Command Information Decision Support System, Fire Control System, Passive Night Vision Devices and some of the new generation Radars, Sonars, Electronic Warfare Systems, etc. However, taking into account the delivery schedule, customer requirements etc., the orders available for execution during 2013 - 14 is around Rs. 545,000 lakhs.

Finance

During the financial year 2012 - 13, your Company has met all its fund requirements towards additional investments on Capital equipments and incremental working capital needs without any borrowing. This has been achieved through efficient cash management thereby ensuring that the Company continues to be debt free. The Company has been able to retain the highest rating by ICRA for both short term and long term sanctioned bank limits, which will help in continuing to secure the best rates for any of the services, availed from the consortium banks. Based on the user requirements many changes have been incorporated in the online ERP system which should help in better information flow to all concerned.

The inventory position of the Company as on 31 March 201 3 was Rs. 327,108.32 lakhs (Net), as against Rs. 279,181.81 lakhs (Net) as on 31 March 2012. The inventory as on 31 March 2013 works out to 191 days of the Value of Production (DPE) for the year 2012 - 13 as against the corresponding position at 178 days as on 31 Mach 2012. The increase in inventory is because of certain projects like BSS, CIDSS where further progress of the projects has been kept in abeyance by the customer due to technical reasons. Further, there is an element of inventory build up by way of accretion to work - in - progress and finished goods to increase the sales during the 1st half of the current financial year 2013 - 14. Efforts will be made during the current year to reduce the inventory levels without compromising the production plan for the year.

The position of Trade Receivables as on 31 March 2013 was Rs. 333,467.08 lakhs (Net) as against Rs. 268,686.29 lakhs (Net) as on 31 March 2012. This works out to 202 days of the Sales for the year 2012 - 13 with the corresponding position at 172 days as on 31 March 2012. The increase in Trade Receivables as at the end of the financial year is mainly due to the following reasons :

(a) Higher sales in the last quarter, particularly in March 201 3;

(b) Non realization of bills due to budgetary constraints of the Customers;

(c) Payment terms in the sale contracts where the release of money is linked to certain specific milestones, even after delivery of the products due to activities like Harbor Acceptance Trials / Sea Acceptance Trials, etc.

Realization of Trade Receivables continues to be monitored to ensure speedy collection and this will be pursued to achieve a reduction in Trade Receivables in number of days of sales by the end of 2013 - 14.

The Company does not have any public deposit scheme at present. However, the matured past public deposits with the Company was Rs. 36.95 lakhs as on 31 March 201 3. Of these, 34 deposits amounting to Rs. 36.50 lakhs are claimed but not paid as these accounts are frozen on advice by Karnataka Lokayukta. Remaining matured deposits of Rs. 0.45 lakhs as on 31 March 201 3 is unpaid. The entire amount of public deposits outstanding as on 31 March 2013 is included in the current liabilities, Note No. 8 of the Balance Sheet.

Research & Development

Research and Development has been the core strength of your Company and R&D received focused attention during the year. R&D activities were carried out with special attention for planning and reviewing of development of technology modules and products in all the business segments, viz. Radars,

Military Communication, Naval Systems, Missile Systems, Electronic Warfare, Avionics, C4I Systems, Electro - optics, Tank Electronics, Gun up - grades, Civilian Equipments & Systems and Components. Apart from in - house efforts, BEL R&D engineers had close co - operation with DRDO, other national research and development agencies and academic institutions.

Development & Engineering (D&E) Divisions attached to all the Units / Strategic Business Units (SBUs) concentrated on the development of products and systems in their respective areas of business segments. Central - D&E and the two Central Research Laboratories (CRLs) of the Company supported the D&E Divisions of the Units through development of core technology modules and software required for the development of products and systems.

The analysis of turnover of the Company for the year 2012 - 13 indicates that 78% of the turnover came from BEL developed products and products developed in association with DRDO & other National Labs and remaining 22% is from products for which technologies were acquired through foreign ToT.

Scientists from Central Research Laboratories and other R&D divisions of BEL have contributed 60 Technical Papers in the national and international journals during the year. BEL has filed 12 new applications for Patents and related Intellectual Property Rights during the year 2012 - 13.

Significant achievements of BEL R&D during the year 2012 - 13 include :

- Completion of Internal evaluation of Rugged Laptop used for processing, storage and computation of tactical data in various Tactical Communication Systems.

- RCI, Hyderabad accepted the first off model of Identification of Friend or Foe (IFF) for Medium Range Surface to Air Missile (MR - SAM) project.

New Product Development

During the year 2012 - 13, different R&D Divisions completed several projects leading to new products / systems / technology modules, including the following :

Identification of Friend or Foe (IFF) for Medium Range Surface - to -Air Missile (MRSAM) -The IFF is a secondary Surveillance Radar used for identification of targets fitted with compatible transponder. The IFF Mk XII comprises of interrogator decoder, transponder & crypto unit. The new version Mark XII also has the addition of secure positive friendly identification.

Gunners Main Sight Mk II -This is one of the four sub systems of the Integrated Fire Control System. The system provides day and night surveillance and night fighting capability. The system has capability to fire Laser Guided Missile.

Point to Multipoint Radio-This Radio is an intra - communication system providing communication between the Command Post and the Firing Unit (FU). The Point to Multi Point Radio or the intra FU wireless communication system enables data and voice communication between Field Vehicle - mounted shelters in terrestrial deployment. The Intra Firing Unit Communication (IFUC) systems are installed at the Command Post and Mobile Launcher Systems enabling point to point and point to multi point communication.

Mast for LORROS-The hydraulically operated Telescopic Mast is designed to support Long Range Reconnaissance and Observation System (LORROS) which can be elevated to get better range and good Line Of Sight (LOS).

All Electric Drive (AED) for AK630- It will replace the existing Electro - Hydraulic drive in Azimuth and Elevation by a Brushless Electric Drive System. AED offers a completely indigenous and state - of - the - art drives based on brushless motors with superior dynamics and reliability. It also offers an improved maintainability, low acoustic noise with easy installation and tuning.

AGCS for NISHANT UAV-Advanced Ground Control Station (AGCS) for NISHANT UAV facilitates operation of UAV from Ground Station. The functional requirements of AGCS include Communication, Mission Planning, Air Vehicle Control, Payload Management, Payload Video Processing and Recording, Flight Data Recording, Post Flight Analysis and Replay.

Quality

All the manufacturing Units / SBUs / Divisions of your Company are certified for ISO 9001 Quality Management System and ISO 14001 Environment Management System. Seven Units / SBUs (Ghaziabad, Panchkula, Kotdwara, Hyderabad, Military Communication, Electronics Warfare & Avionics and Export Manufacturing) are certified for AS 9100 Aerospace Standards. The Central Software Development group of the Company is certified to CMMi Level 5.

BEL adopted the Total Quality Management (TQM) philosophy in the year 1990 under the acronym "TORQUE" which stands for Total Organizational Quality Enhancement. TORQUE is based on the premise that the quality of products and services is not only the responsibility of the production / shop floor personnel, but other support services also who have a role to play in meeting and exceeding customers'' expectations through supply of quality products and services. Some of the critical operational performance indicators like first time pass, on time delivery, process cycle time, manufacturing yield, customer complaints, quality cost, mean time between failure, etc are monitored on monthly basis through SAP and corrective actions are initiated for continual improvement.

The Company adopted EFQM Excellence Model since 2002 to improve its overall strategic and operational excellence. Adoption of this Model has helped the Company in understanding the expectations of various stakeholders and in enhancing their satisfaction level. All the Units of the Company, except one, have achieved ''Commendation for Strong Commitment to Excel'' under the CII - EXIM Bank Business Excellence Award scheme. Bangalore Unit has reached the next higher level in the Award i.e. ''Commendation for Significant Achievement''. The Company has also built a large pool of trained Business Excellence Assessors to drive excellence in the organization.

During the year 2012 - 13, five Units applied for the ''CII - EXIM Bank Award for Business Excellence''. Bangalore Unit achieved Level - II recognition i.e. ''Commendation Certificate for Significant Achievement''. Remaining four i.e. Ghaziabad, Panchkula, Hyderabad and Machilipatnam Units received ''Commendation Certificate for Strong Commitment to Excel'' under this Award scheme. This is the second time in succession that Bangalore Unit has received the ''Commendation Certificate for Significant Achievement''.

The Company adopted the ''Six Sigma'' methodology about a decade back for achieving breakthrough improvements. During the year 2012 - 13, 160 Six Sigma projects were completed, resulting in cost reduction, process improvement and customer satisfaction. BEL has also won laurels by winning 30 awards in all India Six Sigma competitions conducted by CII, Indian Statistical Institute, QCFI & Symbiosis Institute of Management. Quality Institute of Bharat Electronics has been imparting training on ''Six Sigma'' since July 1999 and has trained 2322 officers so far. At present there are 38 certified Six Sigma black belts in the Company.

Reliability & Maintainability are essential features of a well designed product. Application of the principles of R&M at design stage can ensure robustness of the product during its entire life cycle. Keeping this in mind the Company embarked on getting its key design engineers certified as reliability engineers from reputed institutions. 62 BEL engineers have received the ''Certified Reliability Engineer'' certification after undergoing the examinations conducted by these institutions.

During the year, a total of 1051 QCC projects were completed. In order to provide encouragement to the QCC movement, the team members of the best QCC project of last year were sponsored to the International Convention on Quality Circles held in Kuala Lumpur in Oct 2012. The team won the 3 Star (highest category) award at the International Convention.

As a part of its efforts to enhance customer satisfaction level, the Company has been conducting customer satisfaction survey through an independent external agency. During the year customer satisfaction survey was conducted for 8 products, covering full spectrum of our customers. The overall customer satisfaction level was found to be 75%.

ERP Implementation

Your Company has implemented SAP Business Suite across all Units and Offices. Implementation of core SAP R / 3 including Payroll, Product Lifecycle Management module was completed in a phased manner by July 2008. New dimension modules like Supplier Relationship Management with e - Procurement, Customer Relationship Management, Knowledge Management System have also been implemented. SAP system has been further improved by incorporating checks and validations in the processes in line with the Company''s business requirement.

During the year 2012 - 13, the Company has rolled out the following modules : Employee Self Service with e Performance Management System, Travel Management and Provident Fund Module. In addition, C - Project for Project Management has also been taken up for implementation. This will be rolled out in 2013 - 14.

As part of its plans to upgrade its IT hardware and software to tap the potential of latest advancements in these technologies, the Company has undertaken an initiative to do a partial refresh of its IT infrastructure and upgrade SAP from version 5.0 to 6.0, which will be completed in 2013 - 14.

Growth in volume of SAP transactions has necessitated the augmentation of WAN bandwidth. The Company has augmented WAN bandwidth for three of the Units which have improved the system response. In addition, redundant leased lines have also been set up with two of the Units with alternate service providers to improve the reliability and system response.

The Company has also undertaken an initiative to get ISO 27001 certification for some of its SBUs in 2012 - 13. In this direction, preparation and internal audit has been completed and audit by external agencies shall be conducted in 2013 - 14.

Human Resources

Your Company employed 10,305 persons as on 31 March 2013 as against 10,791 persons as on 31 March 2012. Of these employees, 3,869 were engineers / scientists and 2,156 were women employees on 3 1 March 2013. A total of 295 engineers, scientists and other professionals were inducted during the year. 23 candidates belonging to the minority community were recruited during the year.

The Company has been implementing the Government Directives on Reservation. The particulars of SC / ST and other categories of employees as on 31 March 2013 are as under :

Executives Non - Executives Category of Employees Group ''A'' Group ''B'' Group ''C'' Group ''D''

Scheduled Caste 849 45 947 73

Scheduled Tribe 259 4 139 23

OBC 908 48 888 45

Ex - Servicemen 100 5 320 63

Physically Handicapped 84 6 152 15

Various training programs were conducted during the year to enhance competencies in Technical, Functional and Managerial / Leadership areas. Structured Executive Development Programs were conducted regularly with premier Institutes to meet the evolving training needs of executives as they progress through various grades.

Employee relation continued to be smooth and harmonious across the Company. Regular interactions took place among the management, executives and the workmen through the apex forums, viz. the Joint Standing Committee consisting of Negotiating Trade Unions and Apex Joint Council consisting of Officers Associations and TC Cadre Associations and also separately with respective Trade Unions and Officers Associations.

Various welfare programmes were organized for the benefit of employees and their families, which included programmes addressing specific needs of sections of employees, such as, SC / ST employees, differently abled employees and women employees. Various cultural programmes were organized by the Fine Arts Clubs in the Units for recreation of employees and their families. Various summer camps / sports programmes were organized for the employees'' children.

A detailed write up on Company''s HR philosophy and specific HR initiatives during the year is provided separately in the Management Discussion and Analysis Report attached.

Accolades

Important accolades received during the year by your Company and its employees include :

- Raksha Mantri''s Awards 2010 - 1 1 - BEL won seven of the Raksha Mantri''s Awards across all categories : (a) ''Excellence in Performance'' in the ''Institutional Category'', (b) ''Best Performance in Export'', (c) ''Best Performing Division of DPSUs'' by Military Radar Strategic Business Unit (SBU) of Bangalore Unit, (d) ''Import Substitution'' for the development of Low Power Jammer Antennae System by Hyderabad Unit, (e) ''Import Substitution'' for the indigenous development of Weapon Locating Radar (Swathi) as a substitute for ANTPQ 37 Radars by Military Radar SBU of Bangalore Unit, (f) ''Design Effort'' for Combat Management System - SNF by Network Centric Systems SBU of - Ghaziabad Unit, and (g) ''Innovation'' for the capability enhancement of Tarang Display Unit to NVG compatibility by Electronic Warfare & Avionics SBU of Bangalore Unit.

- HR Leadership Award at the India Human Capital Awards Summit 2012.

- International Aerospace Awards - ''Most Influential Company of the Year'' and ''Excellence in Exports'' at the second International Aerospace Awards organized by International Aerospace magazine.

- India Pride Award - Gold prize in the Heavy Industries category of the DNA - Dainik Bhaskar India Pride Awards 2010 for ''''Excellence in PSUs''''.

- Business World International Business Award in the Electricals, Electronics & Machinery Category.

- Corporate Governance Award - Institute of Public Enterprises (IPE)''s CSR Corporate Governance Award for 2012. The award is endorsed by the World CSR Congress, CMO Asia and Asian Confederation of Business.

- Dun & Bradstreet - Rolta Corporate Award 2011 on being the top Indian Company in the Electrical & Electronic Equipment sector.

- ELCINA - EFY Awards for ''Excellence in Electronics Hardware Manufacturing & Services (2011- 12)'' in two categories : ''Research & Development'' and ''Environment Management''.

Environment Management

Your Company has long been integrating environmental sustainability systematically in its operations through which it has gained a reputation of its own. Set in clean and green surroundings, all the manufacturing Units of BEL effectively maintain environmental friendly work processes. The Company strongly believes that environmental sustainability brings in economic viability as well. By setting up objectives as per the sustainable development guidelines issued by the Government of India, Department of Public Enterprises, BEL further enhances its performance level towards building a clean future. Even as well - established process controls keep pollution in check for all manufacturing operations, the Company continues to put in sustained efforts to look for impacts beyond the boundary and reduce them by conservation of resources, mainly in use of energy, water and hazardous materials in an organized way that goes a long way in creating a sustainable future. BEL''s commitment to clean environment is reflected in the awards and accolades it received during the year including the prestigious CII award for best practices in water management and first prize for Excellence in Environment Management by ELCINA - EFY 201 1 - 12.

The Sustainability Report annexed to this Report contains further details on environment management and sustainable development initiatives.

Subsidiary / Joint Ventures

Your Company''s subsidiary at Pune, BEL Optronic Devices Ltd (BELOP) performed well during the year. BELOP manufactures Image Intensifier Tubes (I.I. Tubes). These Tubes are supplied to the Defence customers and also used in the Night Vision Devices manufactured by BEL. BELOP achieved a turnover of Rs. 14,700.87 lakhs as against Rs. 6,273.92 lakhs in the previous year. The Profit After Tax for the year was Rs. 575.83 lakhs as against Rs. 81 5.69 lakhs in the previous year.

The Company has availed the general exemption under Section 212(8) of the Companies Act 1956 granted vide Ministry of Corporate Affairs Circular No. 5 / 12 / 2007 - CL - III dtd. 8 February 2011. Hence, Annual Accounts of BELOP are not attached to the Balance Sheet of BEL. BELOP Annual Accounts and the related information will be made available upon request by any member of BEL or BELOP. The Annual Accounts of BELOP are kept for inspection by investors at the registered office of BEL and BELOP. Any investor interested to inspect the same may please contact the Company Secretary of BEL or BELOP. A statement as per Section 212 of the Act, together with the information required to be disclosed as per the directions contained in the MCA Circular No. 5 / 12 / 2007 - CL - III dtd. 8 February 2011, is annexed to this report.

The Joint Venture Company (JVC) with General Electric, USA, viz., GE BE Pvt Ltd., continues to perform well. This JVC manufactures CT Max and other latest version X - Ray Tubes. BEL supplies some parts required for the products manufactured by this JVC. GE BE Pvt Ltd recorded a turnover of Rs. 51,996.00 lakhs as against Rs. 42,931.00 lakhs in the previous year. The Profit After Tax was Rs. 7,117.00 lakhs as against Rs. 5,034.00 lakhs in the previous year. The JVC declared 100% dividend for the year 2012 - 13 and BEL received Rs. 260 lakhs as dividend from this JVC on BEL''s share of investment.

The other JVC, viz., BEL Multitone Pvt Ltd., jointly promoted by BEL and Multitone Electronics plc, UK was set up to supply, install and service Private Paging Systems and Pagers. The JVC is presently in shell stage and it had no business transaction during the year. It has been decided to close down this Company as there are no business prospects for paging systems in the country.

Consolidated Financial Statements

Consolidated Financial Statements of your Company and its Subsidiary and Joint Venture Companies are attached to this Report.

Vigilance

Your Company''s Vigilance Organization is headed by an Independent Chief Vigilance Officer (CVO). Each Unit of the Company has a Vigilance set up headed by a Senior Vigilance Executive, reporting to the CVO. Preventive Vigilance has been the thrust area of the Vigilance Organization and the same received focussed attention during the year. The Vigilance Organization peruses procurement / sub - contract processes and contracts, conducts surprise inspections and investigates instances of any suspicious transactions referred to it. Any employee or third parties can refer any suspected transaction to the notice of CVO for investigation.

Important activities of the Vigilance Department during the year included : 1 139 Purchase Orders / Contracts and 538 high value Orders / Contracts reviewed / scrutinized and found to be in order. As per the CVC / CTE Guidelines, 2 teams for Inspection of Works Contracts and 2 teams for Inspection of Purchase Orders were constituted. 9 Works Contracts and 19 high value POs were inspected by the inspection teams. 2359 Regular / Surprise inspections were conducted. 72 Executives were trained in the Principles of Natural Justice & Domestic Enquiry. 248 Executives and 242 Non - executives took part in Vigilance Awareness Training Programme. 56 Executives & 33 Non Executives working in sensitive are as for 3 years and above were moved to different posts. 17 Vigilance cases were handled by the Vigilance Department during the year.

In terms of CVC guidelines for Leveraging Technology to ensure transparency through effective use of website, the following information is made available on BEL website :

- Application forms for online Registration of Sub - contractors / Vendors

- Applications for recruitment

- Details of awarded Contracts / Purchase Orders valuing more than Rs. 10 lakhs in respect of works contracts, service contracts, capital items and non - production items

- Details of awarded Contracts / Purchase Orders issued on nomination / single tender basis value exceeding Rs. 5 lakhs

- Details of awarded Purchase Orders / Sub Contract Orders for production items with a threshold value of Rs. One Crore and above

- Vendor Payments Information System.

E - Procurement

E - procurement at BEL has been implemented on SAP SRM 7.0 platform having Public Sector procurement features. It has been implemented at all 9 Units of BEL for both Purchase and Sub - contract. The system is integrated with ERP system with the latest security such as Web Access Firewall, Reverse proxy and encryption of data from the client side upto the Server in place. Second level authentication through Digital Signature for both publishing the bid and submission of response from the Vendor has been enabled. Six types of procurement have been configured in the system. As per CVC circular No. 010 / VGL / 035 dt. 12.01.2012, action has been taken for certification of e - procurement system.

Integrity Pact

One of the recent initiatives of the Central Vigilance Commission (CVC) to eradicate corruption in procurement activity is introduction of the Integrity Pact in large value contracts in Government Organizations. In line with the directives from Ministry of Defence and the Central Vigilance Commission, your Company has adopted Integrity Pact with all vendors / suppliers / contractors / service providers for all Orders / Contracts of value Rs. 2,000 lakhs and above. This threshold value is further reduced to Rs. 1,000 lakhs from March 201 3. The Pact essentially envisages an agreement between the prospective vendors / bidders and the Principal (BEL), committing the Persons / officials of both sides, not to resort to any corrupt practices in any aspect / stage of the contract. Only those vendors / bidders, who commit themselves to such a Pact with the Principal, would be considered competent to participate in the bidding process. Integrity Pact, in respect of a particular contract, would be operative from the stage of invitation of bids till the final completion of the contract. Any violation of the same would entail disqualification of the bidders and exclusion from future business dealings.

As recommended by the CVC, the Company has appointed Mr N K Sinha, IAS (Retd), former Secretary, Planning Commission and former Chairman, PESB as the Independent External Monitor (IEM) for monitoring implementation of Integrity Pact in the Company. The IEM would review independently and objectively, whether and to what extent parties have complied with their obligations under the Pact. IEM will take stock of the ongoing tendering processes on quarterly basis. The IEM conducts this review once in every quarter. In case of a complaint arising out of tendering process, the matter shall be examined by the IEM, who would look into the records, conduct an investigation, and submit recommendations to the management. During his visits to the Corporate Office every quarter, the IEM holds structured meetings with the Chairman & Managing Director. So far, 62 Orders / Contracts are covered under Integrity Pact.

Procurement from MSMEs

Your Company has been providing increased thrust on enhancing procurement from Micro, Small & Medium Enterprises (MSMEs) and has implemented the Public Procurement Policy for MSMEs issued by the Ministry of MSMEs. All Units / SBUs of the Company are advised to explore every possibility for proper identification of MSMEs among the vendors / suppliers of BEL. Efforts are on to classify the existing vendors into Micro, Small & Medium Enterprises through SAP. With enhanced focus & emphasis on MSMEs the Company is confident of achieving the objectives of the Public Procurement Policy in the coming years. During the year 2012 - 13, the Company has reached the set targets for MSME procurement.

Implementation of Official Language Policy

Your Company undertook a series of initiatives during the year to promote and propagate Rajbhasha in official communication. "Monitoring of Implementation of OL Policies" has been included as one of the KPAs of Heads of Units and Offices. 12 Units / Offices have been notified under rule 10(4) of OL rules indicating that 80% or more staff have working knowledge in Hindi in these Units / Offices and orders have been issued under rule 8(4) of OL Rules for those having proficiency in Hindi to do their Official work in Hindi. Standards were issued for giving Hindi / Indian names for all the BEL Products and to have the names and descriptions in "Devnagari " Training on Unicode is being imparted for all Executives and Employees. Hindi workshops were conducted for those having working knowledge in Hindi. Efforts are on to ensure progressive use of Hindi in all spheres of activities of the Company.

Implementation of RTI Act

The information required to be provided to citizens under Section 4(1) (b) of the RTI Act 2005 has been posted on the website of your Company, viz. www.bel-india.com. It contains general information about the Company, the powers and duties of employees, information about decision making process, rules, regulations, manuals and records held by BEL, a directory of the Company''s officers, pay scales, procedure for requesting additional information about the Company by citizens and associated request formats. During the year 2012 - 13 the Company received and attended to 282 requests for information under RTI Act.

Directorate

Following changes took place in the Directorate of your Company since the last report. Dr Ajit T Kalghatgi was appointed as Director (R&D) with effect from 01 September 2012 in place of Mr I V Sarma, who retired on attaining the age of superannuation on 3 1 August 2012. Government on 11 October 2012 appointed Mr Manoj Saunik, Joint Secretary (ES), Ministry of Defence as one of the part - time Government Directors in place of Mr Satyajeet Rajan, ex - Joint Secretary (ES). Subsequently, on 01 January 2013, Mr P K Mishra, Joint Secretary (ES), Ministry of Defence was appointed as part - time Government Director in place of Mr Manoj Saunik. Dr S N Dash, part - time Independent Director resigned and exited the Board on 01 October, 2012. Three part - time Independent Directors, viz. Mr M S Ramachandran, Prof V K Bhalla and Mr Anil Razdan exited the Board on completion of their three year tenure of appointment on 22 November 2012. Government on 26 March 2013 appointed : (i) Mr S M Acharya, IAS (Retd), ex - Secretary to Government of India, (ii) Lt Gen (Retd) Vinod Kumar Mehta, ex - Director General Quality Assurance, Ministry of Defence, (iii) Rear Adm (Retd) K C Sekhar, AVSM, VSM, ex - CMD, GRSE Ltd, and (iv) Mr Vikram Srivastava, IPS (Retd), ex - DG CRPF & ITBP as part - time Independent Directors filling up four out of the six vacancies of Independent Directors which arose during the year. Rear Adm (Retd) K C Sekhar resigned and exited BEL Board on 30 July 2013. Government nominated Vice Admiral N N Kumar AVSM, VSM, Chief of Material, Indian Navy as Permanent Special Invitee to all the Board Meetings, with effect from 30 October 2012 in place of Vice Admiral B Kannan.

Directors'' Responsibility Statement

Pursuant to the provisions under Section 2I7(2AA) of the Companies Act, 1956 your Directors state :

(i) that in the preparation of the annual accounts, the applicable Accounting Standards have been followed and in respect of Accounting Standard I7, necessary explanation for departure has been given in Note No. 3I.I2 of the Notes to Accounts;

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

(iii) that the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act I956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) that the directors have prepared the annual accounts on a going concern basis.

Auditors

Pursuant to Section 619(2) of the Companies Act 1956, the Comptroller and Auditor General of India re - appointed M/s R G N Price & Co., Chartered Accountants, Bangalore, as Statutory Auditors for the year 2012 - 13 for audit of accounts of Bangalore, Hyderabad and Chennai Units and Corporate Office. M/s Mittal Gupta & Co., Chartered Accountants, Lucknow, were re - appointed as Branch Auditors of Ghaziabad, Panchkula and Kotdwara Units for 2012 - 13. M/s M B Bafna & Co., Chartered Accountants, Pune were appointed as Branch Auditors for Pune and Navi Mumbai Units for 2012 - 13. M/s Rao & Narayan, Chartered Accountants, Vijayawada were appointed as Branch Auditors for Machilipatnam Unit for 2012 - 13.

The Central Government vide order No GSR No 430 (E) dated 3 June 201 I notified The Companies (Cost Audit) Rules 2011. These Rules are applicable to BEL from financial year 2012 - 13. As per these Rules, the Cost Audit report duly signed by the Cost Auditor(s) has to be submitted to the Central Government within I80 days from the end of the Financial Year. Accordingly the Cost Audit report for the year 2012 - 13 will be submitted on or before 27 September 2013. Pursuant to Section 233B(2) of the Act, Board of Directors appointed M/s PSV & Associates, Bangalore, as Cost Auditors of the Company for the financial year 2012 - 13 after due approval of the Central Government.

Auditors'' Report

Auditors'' Report on the Annual Accounts for the financial year 2012 - 13 and ''Nil'' Comments Certificate of the Comptroller & Auditor General of India under Section 619(4) of the Companies Act, I956 on the Annual Accounts are appended to this report.

Management Discussion and Analysis Report

Management Discussion and Analysis Report required under the Listing Agreements with the Stock Exchanges on which BEL''s shares are listed as also under the Government (DPE) Guidelines on Corporate Governance for Central Public Sector Enterprises (CPSEs), is attached to this Report as Annexure 1.

Corporate Governance Report

DPE guidelines on Corporate Governance for CPSEs provide that CPSEs would be graded on the basis of their compliance with the guidelines. DPE has graded BEL as "Excellent" for 2012 - 13. A report on Corporate Governance along with a Compliance Certificate from the Auditors as prescribed under the Listing Agreements with the Stock Exchanges as well as the DPE Guidelines, is attached to this Report as Annexure 2.

Sustainability Report

The DPE guidelines on Sustainable Development for CPSEs mandates CPSEs to disclose their Sustainable Development efforts in a ''Stand Alone Report'' or as a separate chapter in the Annual Report. Pursuant to this requirement, a Report on your Company''s efforts on "Sustainable Development" is attached to this Report as Annexure 3.

Business Responsibility Report

The Securities and Exchange Board of India (SEBI) has mandated inclusion of Business Responsibility Reports ("BR reports") as part of the Annual Reports for listed entities. This SEBI mandate is also inserted as Clause 55 in the Stock Exchange Listing Agreement. The SEBI guidelines / Cl 55 of Listing Agreement provide a format for BR reports. It also contains a list of nine Key Principles and various core elements under each principle to assess compliance with Environmental, Social and Governance norms. Listed companies are required to prepare policies based on these nine Key principles and core elements, put in place a framework to integrate and embed the policies into business activities and a mechanism to measure and report the achievements as BR reports.

Your Company has prepared a comprehensive policy framework for BR report, after studying the SEBI guidelines and keeping in view the business and governance environment in which BEL as a Defence PSU operates. Highlights of this policy are posted on the Company''s website www.bel-india. com. The Company''s BR report for the year is attached to this Report as Annexure 4.

Other Disclosures

Information required to be disclosed in accordance with Section 217 (l)(e) of the Companies Act 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules l988 regarding conservation of energy, technology absorption and foreign exchange earnings and outgo, is given at Annexure 5.

None of the Company employees drew remuneration in excess of the limits prescribed under Section 2l7(2A) of the Companies Act l956, read with the Companies (Particulars of Employees) Rules, 1975, during the year 2012 - 13.

Statement pursuant to Section 2l2 of the Companies Act, l956, relating to the Subsidiary Company is given at Annexure 6.

Acknowledgement

Your Directors place on record their deep appreciation and gratitude for the valuable support received from all the customers, particularly the Defence Services and the para - military forces and look forward to their continued support and co - operation in future. Your Directors also place on record their gratitude for the support received from various Ministries of the Government of India, especially the Ministry of Defence, Department of Defence Production. Your Directors express their sincere thanks to the Comptroller and Auditor General of India, Chairman, Members and employees of the Audit Board, Statutory Auditors, Branch Auditors, Cost Auditors, Company''s Bankers, collaborators and vendors. Your Directors appreciate the sincere efforts put in by the employees at all levels, which enabled the Company to achieve the good performance during the year. Your Directors express their appreciation and gratitude to all the shareholders / investors for the trust and confidence reposed in the Company and look forward to their continued support and participation in sustaining the growth of the Company in the coming years.

For and on behalf of the Board

Bangalore Anil Kumar

01 August 2013 Chairman & Managing Director


Mar 31, 2012

The Directors are pleased to present the 58 Annual Report of the Company, together with the Audited Accounts for the financial year ended 31 March 2012.

Performance Highlights

A summary of the Company's financial results is given below :

(Rs. in lakhs)

2011-12 2010-11

Value of Production 579,358.25 552,080.34

Turnover (Gross) 570,363.36 552,969.32

Profit Before Depreciation, 119,624.71 128,392.23

Finance Cost and Tax

Finance Cost 60.01 73.37

Depreciation 12,079.89 12,204.23

Provision for Tax 24,495.03 29,967.78

Profit After Tax 82,989.78 86,146.85

Add : Balance brought forward 217,306.59 191,303.51 from previous year

Balance available for Appropriation 300,296.37 277,450.36

Interim Dividend paid 8,000.00 4,800.00

Proposed Final Dividend 8,640.00 12,480.00

Tax on Dividend 2,699.42 2,821.79

Transfer to General Reserve 40,000.00 40,000.00

Transfer to Capital Reserve 56.81 41.98

Reserves & Surplus 554,221.01 490,570.65

Net Worth 562,221.01 498,570.65

Earnings Per Share ( in Rs.) 103.74 107.68

Book Value Per Share ( in Rs.) 702.78 623.21

Distribution of Value of Production for 2011-12 is given below :

Amount (Rs.in lakhs) Percentage

Materials 366,903.48 63.33%

Employee Cost 108,123.05 18.66%

Finance Cost 60.01 0.01%

Depreciation / Amortisation 12,079.89 2.09%

Other Income -15,292.99 -2.64% (Net of other expenses)

Provision for Tax 24,495.03 4.23%

Profit After Tax 82,989.78 14.32%

Total 579,358.25 100%

Company's sales turnover for the year 2011 - 12 has increased to Rs. 570,363.36 lakhs from Rs. 552,969.32 lakhs in 2010 -11, registering a growth of 3.15 %. The growth in sales turn over is marginal due to the inability of the Company to execute a few orders for reasons such as delay in Bulk Production Clearance of new products, partial receipt of items from Consortium Partners, delay in customer trials and evaluation of certain products, etc. Profit After Tax for the year was Rs. 82,989.78 lakhs as against Rs. 86,146.85 lakhs, lower by Rs. 3,157.07 (3.66%) over previous year. The main reasons for lower profits are : Lower value addition - Rs. 32,928.00 lakhs and Increase in Employee cost - Rs. 3,936.87 lakhs. These are, however, compensated partly by increase in other income - Rs. 39,051.00 lakhs. The lower value addition is mainly on account of high material content in some major products supplied / projects executed during the year, such as, Radio Trunking System, AKASH Missile System, Coastal Surveillance System, TABLET PC, National Population Register and Socio Economic Caste Census, Passive Night Vision System, etc.

Dividend

Your Company paid 216% dividend (Rs. 21.60 per share) for 2010 - 11. For the year 2011 - 12, the Company paid 100% interim dividend (Rs. 10 per share) in February 2012. Subject to approval by the Shareholders in the ensuing Annual General Meeting, it is proposed to pay 108% (Rs. 10.80 per share) as final dividend, which would mean a total dividend of 208 % (Rs. 20.80 per share) for the year 2011 - 12.

Other Highlights

- Turnover from indigenously developed products is 81 percent.

- Supplies to the defence contributed to 73 percent of turnover as against 80 percent in 2010 - 11.

- User trials of Weapon Locating Radar (WLR) were successfully completed.

- On Board Acceptance Test successfully completed for Combat Management System.

- 6 lakhs Tablet PCs were developed and supplied in record time to the Ministry of Rural Development. This is used for conducting Socio Economic Caste Census to identify Below Poverty Line families.

- The Prime Minister of Mauritius inaugurated the Coastal Surveillance Radar System in Mauritius during April 2011.

- Major progress in Socio Economic Caste Census and National Population Register.

- Customer Co - ordination Cell was inaugurated at Bangalore. This facility will serve as single point window for complaint registration on wide range of BEL products and maintain status of complaints online.

- E - procurement was implemented during the year.

Major Orders Executed

Some of the significant supplies made against major orders during the year 2011- 12 include : Akash Weapon System, Central Acquisition Radar, Digital Radio Trunking System, Mobile Communication Terminal, Coastal Surveillance System, Mobile Ground Based Elint, Sonar Systems, Ship borne EW Systems, Passive Night Vision Devices, Strategic Communication Network, Navy Net, T90 Stabilizer Items, Instant Fire Detection Suppression System, Communication Radio Sets - Combat Net Radio, Radio Relay F (Low Band), UHF Hand - held Radio, HF Radio Set, V / UHF Transceiver, Tablet PC, Socio Economic Caste Census and National Population Register.

These have been supplied to a wide range of customers like the Army, Navy, Air Force, Coast Guard, Defence PSUs, Paramilitary, Ministry of Home Affairs, Ministry of Rural Development and others.

Among the many projects executed during the year, the following merit needs special attention :

Akash Weapon System - It is a medium - range, surface - to - air missile system, which provides air defence against a variety of multiple air threats. It employs command guidance, real - time multi - sensor data processing and threat evaluation and relies on phased array radar to guide the missile.

Central Acquisition Radar (Rohini) - It is a 3 - D surveillance radar in S band. It has an integrated IFF (Identification of Friend or Foe) with co - mounted antenna and has been developed jointly with LRDE.

Digital Radio Trunking System - I t is a TETRA (Terrestrial Trunked Radio) based 4 channel Radio, operating in the UHF band, supporting secure voice, data and message communication. Each channel can be trunked into 4 slots, thereby totally 16 slots can be supported.

Socio Economic Caste Census - A consortium of Central Public Sector Undertakings led by BEL and including Electronics Corporation of India Limited and ITI Limited, has been awarded the work of conducting the Socio Economic Caste Census by the Ministry of Rural Development, using the Tablet PC manufactured by BEL. The Census will cover the entire population of approximately 122 crore people.

National Population Register - As part of the National Population Register Project of the Registrar General of India, Ministry of Home Affairs, Government of India, bilingual data entry of the demographic details of each individual across 9 coastal States, 4 coastal Union Territories, Manipur and Nagaland is being undertaken. The population covered will be around 57.62 Crores. BEL has completed data digitisation of 21 Crore records and 50 lakh biometric enrolments for this project.

Exports

Your Company's export turnover during the year 2011- 12 was US $ 38.45 million as against the previous year export of US $ 41.53 million.

The range of products exported include Coastal Surveillance Radar System, Radar Finger Printing System, HF communication sets, Radar Warning Receiver, Fitted - up Shelters, Electronic Voting Machines, X - Ray tubes, electro - mechanical parts (like Stators, Casing, etc.) and electronic assemblies.

During the year, the Company participated in 5 international exhibitions to show case its products and systems capabilities. Countries in Africa, Latin America, Southeast Asia, SAARC, Middle East & CIS countries are the markets for export of BEL products and systems. BEL has also been interacting with the Ministry of External Affairs on a regular basis to supply Coastal Surveillance Radar System to Indian friendly countries under the Government of India one time aid.

Apart from the export of products and services, BEL is focusing on the opportunities in the areas of offset obligations of vendors in the various RFPs of Ministry of Defence. BEL has also identified contract manufacturing (both build to print and build to specs) as one of the new areas to address the emerging opportunities with OEMs. BEL is closely working with various major foreign Aerospace and Defence companies to secure business under the mandatory Offset Clause in the RFPs for Indian Defence Procurement. Further, efforts are being made to establish long - term supply chain relationships with global players. BEL has successfully completed supply of first off sample for flight panel for Boeing, USA. This is expected to result in a business of about US $ 2 Million every year.

The Company received the following Exports Awards during the year:

(i) Award for Outstanding Achievement in Export of Electronic Products from ELCINA - EFY for the year 2010 - 11; and

(ii) Award for Excellence in Export (Gold) from Karnataka State for the year 2009 - 10 and 2010 - 11.

Order Book Position

Order book of the Company as on 01.4.2012 is Rs. 2,574,800 lakhs. The order book mainly comprises of major programs like Akash Weapon Systems for Airforce & Army, Battle Field Surveillance System, Command Information Decision Support System, Tactical Control Radar, Passive Night Vision Devices etc., for which the delivery dates are spread across next 2 to 4 years. Taking this in view, the orders available for dispatch plan of 2012 - 1 3 is around Rs. 565,000 lakhs.

Your Company has an export order book of US $ 40.5 million as on April 1 2012. This includes an offset order book of US $ 9.9 million.

Finance

During the financial year 2011- 12, your Company has met its fund requirements towards incremental working capital and additional investments on Capital equipments from internal resources. Borrowing has been avoided through close monitoring of cash flows and efficient cash management. Your Company has retained the highest rating by ICRA for both short term and long term sanctioned bank limits. During the year, your Company inducted three more banks in the consortium of banks, which will help in securing the best rates for the various services availed from the consortium banks. Based on the user requirements, changes continue to be carried out in the online ERP system which should help in better information flow to all concerned. The accounts for the year 2011- 12 have been prepared in accordance with requirements of the Revised Schedule VI notified by the Ministry of Corporate Affairs.

The inventory position of your Company as on 31 March 2012 was Rs. 279,181.82 lakhs (Net), as against Rs. 246,031.74 lakhs (Net) as on 31 March 201 1. The inventory as on 31 March 2012 works out to 178 days of the Value of Production (DPE) for the year 201 1- 12 as against the corresponding position at 164 days as on 31 March 2011. The increase in inventory levels at the year end is to meet the higher sales targets of the year 2012 - 1 3.

The position of Trade Receivables as on 31 March 2012 was Rs. 268,723.27 lakhs (Net) as against Rs. 289,680.69 lakhs (Net) as on 31 March 2011. This works out to 172 days of Turnover for the year 2011- 12 with the corresponding position at 191 days in the previous year. The realisation of Trade Receivables will continue to be closely monitored to ensure speedy collection which should result in further reduction in Trade Receivables in number of days of Turnover by the end of 2012 - 13.

Your Company does not have any public deposit scheme at present. However, the matured past public deposits with the Company was Rs. 38.55 lakhs as on 31 March 2012. Of these, 34 deposits amounting to Rs. 36.50 lakhs are claimed but not paid as these accounts are frozen on advice by Karnataka Lok Ayukta. Remaining past deposits of Rs. 2.05 lakhs as on 31 March 2012 are claimed and pending settlement for want of valid documentation.

Research & Development

Research and Development is the core strength of BEL and focused attention was given during the year for planning and reviewing of development of technology modules and products. Apart from in - house efforts, BEL R & D engineers had close co - operation with DRDO, other national research and development agencies and academic institutes. R & D activities were carried out during the year 2011 - 12 in all the business segments, namely Radars, Military Communication, Naval Systems, Weapon Systems, Electronic Warfare, Avionics, C I Systems, Electro - optics, Tank Electronics, Gun up - grades, Civilian Equipments & Systems and Components.

Development & Engineering Divisions attached to all the Strategic Business Units of Bangalore and Other Units concentrated on the development of products and systems in their respective areas of business segments. Central - D&E and two Central Research Laboratories of the Company supported the D & E Divisions of all the units by way of developing core technology modules and software required for the development of products and systems.

The analysis of turnover of the Company for the year 2011- 12 indicates that 54% of the turnover is from BEL developed products, 27% of the turnover is from products developed in association with DRDO and other National Labs and remaining 19% is from products for which technologies were acquired through foreign ToTs.

New Product Development

During 2011- 12, different R&D Divisions of BEL have completed development of varieties of new products / systems / technology modules. Some of the new products / systems introduced during the year include the following :

Coastal Surveillance System - It is a major system under supply to the Indian Coast Guard. It is a chain of static sensors (Radar, Electro - optics and Meteorological) located along the Indian coast for monitoring the movement of ships, vessels and small boats. The images, captured through Radar and Electro - optic sensors are transmitted to the Control Centre through a hierarchical reporting system.

Tablet PC - BEL designed and manufactured Tablet PC for the Ministry of Rural Development for use in enumeration for the Socio Economic Caste Census. The Tablet PC was designed and developed in a record time of four months. It is a hand - held, low cost computing device. It has a 7" TFT LCD with touch screen, Internet connectivity through Ethernet, USB, Mini SD Card Slot, Headphone Jack and 2 GB Memory card. The next model with enhanced features is under development.

Integrated Anti Submarine Warfare Complex - It is a ship - based Fire Control System for control of launch of rockets and torpedoes to engage surface and sub - surface targets. The system interfaces with sonar systems and other ship borne systems like COTS radar, ship data network, ship house - hold data and computes the target's motion parameters and controls the launch of rockets and torpedoes suitably. The system has consoles for interfacing with ASW Sonar Systems and

External System Interfaces and two Fire Distribution Units for rocket launching and torpedo launching. This is done in collaboration with Naval Science and Technological Laboratory, Vishakhapatnam.

Advanced Torpedo Defence System - It is a ship - based system capable of passive detection of surface and submarine targets and torpedoes and active deception of torpedoes through decoys. The system consists of Sonar sub - system with towed transducer array and on - board electronics for target detection and a fire control sub - system with decoy launchers for expendable decoys. This is done in collaboration with Naval Physical and Oceanographic Laboratory, Kochi and Naval Science and Technological Laboratory, Vishakhapatnam.

Digital Radio Trunking System - It is a TETRA based 4 channel Radio, operating in the UHF band of 380 to 400MHz, supporting secure voice, data and message communication.

Upgraded Indigenous Forward Observer Simulator - It is used to train Forward Observers for indirect firing, using guns of various range capabilities. This is a computer - based system with projection displays for presentation of various images. This is interfaced with models of Integrated Observation Equipment and Laser Designator and Range Finder.

Electro Optic Fire Control System - It is used for surveillance, tracking and engagement of sea / air targets. The system is interfaced with the existing gun of NOPV for engagement of targets.

Integrated Radio Line Modem - It is a frequency hopping Radio modem, operating in UHF band and integrated with Line modem, as standby for providing redundant data communication. This system is used for providing highly reliable data communication between elements of the weapon system.

Remotely Operated Vehicle - This is used for detection of Improvised Explosive Device and diffusion by remote control. The product is engineered based on DRDO technology. This features multiple cameras on - board with pan, tilt and zoom, Six axis Manipulator Arm with versatile geometry, changeable 3 finger and parallel jaw grippers, touch screen and joystick control and stair climbing capability.

Thermal Imaging Camera for Flycatcher Radar - This provides thermal image of targets, which supplements the radar picture of the Flycatcher. It is co - mounted with the antenna for simultaneous viewing of thermal image along with the radar image. The Thermal Imager is a cooled, 3rd Gen Camera, operating in 3 - 5m band and has been completely developed in - house at BEL.

Scientists from Central Research Laboratories and other R & D divisions of BEL have contributed 55 Technical Papers in the national and international journals during the year.

Quality

Your Company adopted the Total Quality Management (TQM) philosophy in the year 1990 under the acronym "TORQUE" which stands for "Total Organisational Quality Enhancement". TORQUE is based on the premise that the quality of products and services is not only the responsibility of the production / shop floor personnel, but other support services also who have a role to play in meeting and exceeding customer's expectations through supply of quality products and services. Some of the critical operational performance indicators like first time pass, OTD (On Time Delivery), process cycle time, manufacturing yield, customer complaints, quality cost, etc., are monitored on monthly basis through SAP and corrective actions are initiated for continual improvement.

From early nineties, all Units / SBUs / Divisions of the Company have been certified for ISO 9001 Quality Management System and ISO 14001 Environment Management System. Seven Units / SBUs (Ghaziabad, Panchkula, Kotdwara, Hyderabad, Military Communication, Electronics Warfare & Avionics and Export Manufacturing) are also certified for AS 9100 Aerospace Standards. Company's Pune Unit manufacturing X - Ray tubes is also certified to ISO 13485 standard for medical devices. The Central Software Development group of the Company is certified to CMMi Level 5.

The Company adopted the CII - EXIM Bank Business Excellence Model to improve its overall strategic and operational excellence. Adoption of this Model since 2002 has helped the Company in understanding the expectations of various stakeholders and enhancing their satisfaction level. Most of the Units / SBUs of the Company have achieved 'Commendation for Strong Commitment to Excel' under the CII - EXIM Bank

Business Excellence Model and two Units have climbed to 'Commendation for Significant Achievement'. The Company has also built a large pool of trained Business Excellence Assessors to drive excellence in the organisation.

During the year 2011 - 12, five BEL Units participated in the 'CII - EXIM Bank Award for Business Excellence'. Bangalore Unit achieved Level - II recognition i.e. 'Commendation Certificate for Significant Achievement'. Remaining four Units namely Kotdwara, Ghaziabad, Chennai and Panchkula received 'Commendation Certificate for Strong Commitment to Excel' under this Award scheme.

'Six Sigma' methodology was adopted by the Company about a decade back for achieving breakthrough improvements. Bharat Electronics Quality Institute has been imparting training on 'Six Sigma' since July 1999 and has trained 1467 officers so far. At present there are 37 Certified Six Sigma Black Belts in the Company.

155 Six Sigma projects were completed during the year, resulting in cost reduction, process improvement and customer satisfaction. All the seven Six Sigma case studies, which were presented at the National Convention organised by QCFI - Hyderabad, bagged "Par - Excellence Award", the highest ever achieved by any Company in Six Sigma.

BEL Executives won two Prizes, one in Manufacturing Category and one in LEAN & DFSS Category, in the Six Sigma case study competitions organised by Indian Statistical Institute, Bangalore.

All the key and special manufacturing processes in the Company are being brought under SPC which is an on - line process monitoring, control and improvement technique. During the year, 25 processes were identified and brought under SPC. Process capability studies and control charts of these processes have been implemented.

Reliability & Maintainability are essential features of a well designed product. Application of the principles of R & M at design stage can ensure robustness of the product during its entire life cycle. Keeping this in mind the Company has embarked on getting its design engineers certified as reliability professional from Centre for Reliability, STQC Directorate, Chennai. During the year, a total of 38 engineers were certified as Reliability Professionals by the Centre for Reliability.

Customer satisfaction survey was conducted during the year for six products from different Units / SBUs. In the survey, overall customer satisfaction was found to be 81.33%. As part of the customer satisfaction initiatives during the year, the Company organised a Technology Seminar for the Naval customers.

Information Systems

SAP implementation - BEL has undertaken SAP Business Suite implementation across all the Units and Offices. Implementation of SAP R/3 including Payroll, Product Lifecycle Management module at all Units and Offices of BEL was completed in a phased manner by July 2008. Most of the SAP modules have now been implemented and stabilised. Further improvements in the system have been made based on users feedback by incorporating checks and validations in the processes mapped in SAP. BEL has won SAP ACE Award for Public Services 2012 for BEST RUN PUBLIC SECTOR UNDERTAKING category.

During the year 2011-12, BEL has rolled out the following modules :

- Supplier Relationship Management 7.0 with Procurement for Public Sector

- Customer Relationship Management

- Strategic Enterprise Management

- Business Objects Reporting Tool

- Knowledge Management System (Collaboration Folders)

In order to tap the potential of the advancements in the hardware and software technology environment, BEL has planned to upgrade its hardware platform and SAP ECC version from 5.0 to 6.0. The hardware upgradation and SAP version change work shall be carried out in 2012 - 13 and 2013 - 14.

Network Security - Measures such as Firewall and Intrusion Prevention Systems have been implemented to secure Data Centre and Disaster Recovery Site which are in BEL's Intranet. Similarly, security measures, such as Web Application Firewall, Reverse Proxy Firewall, Intrusion Prevention System and SSL (Secured Socket Layer) security during transmission are implemented for securing internet hosted applications like

SRM (Supplier Relationship Module) and CRM (Customer Relationship Module), which are accessed by vendors and customers. Setting up of SRM / CRM Disaster Recovery Site and its security is under progress.

Database Security - Database servers are on Unix OS, which is less vulnerable to virus attacks. Database is accessed only through SAP application. Roles and Authorisations in SAP restrict access to data. In SAP everything that is not explicitly allowed is forbidden. Except designated database administrators, direct access to OS and Database to all others is restricted at network security.

Human Resources

Your Company's employee strength as on 31 March 2012 is 10,791 persons as against 11,180 as on 31 March 2011. Of this, 3,696 were engineers / scientists. Women employees were 2,254 as on 31 March 2012. A total of 322 executives consisting of engineers, scientists and other professionals were inducted during the year. During the year 2011- 12, 5.57% of the candidates recruited belonged to the minority community.

Your Company has been implementing the Government Directives on Reservation. The particulars of SC / ST and other categories of employees as on 31 March 2012 are as under :

Executives Non - Executives Category of Employees Group 'A' Group 'B' Group 'C' Group 'D'

Scheduled Caste 820 56 1048 92

Scheduled Tribe 250 5 141 25

OBC 854 73 944 54

Ex - Servicemen 103 77 328 80

Physically Handicapped 79 11 146 17

In order to address the learning and organisation development needs, various management development programmes as well as technology programmes were organised during 2011 - 12 through premier training institutions for all grades of executives. The Company - wide per capita training man - days for the year 2011 - 12 was 3.52 as against 3.37 in 2010 - 11. The MoU score for HRD for the year was "Excellent" at 1.28. The composite score is arrived at based on per capita training mandays, percentage of people trained and feed back index. The e - PMS module in SAP has been implemented from the year 2011- 12 onwards. The PMS process will be done online in respect of executives upto the grade of E - VIA. A detailed write up on Company's HR philosophy and specific HR initiatives during the year is provided separately in the Management Discussion and Analysis Report attached.

BEL has been conferred with "Organisation with Innovative Practices, 2012" Award by Institute of Public Enterprises, Hyderabad. The IPE HR Leadership Awards are given to companies which have an outstanding performance record and foster innovation in HR Practices with exemplary learning and development initiatives in place.

Employee Relations & Welfare

Employee relations in all Units continued to be smooth and harmonious throughout the year. Regular interactions took place among the management, executives and the workmen through the apex forums, viz., the Joint Standing Committee consisting of Negotiating Trade Unions and Apex Joint Council consisting of Officers Associations and TC Cadre Associations and also separately with respective Trade Unions and Officers Associations.

Various welfare programmes were organised for the benefit of employees and their families, which included programmes addressing specific needs of sections of employees, such as, SC / ST employees, differently abled employees and women employees. Differently abled employees are provided free transport facility for commuting to the factory and back to residence, provided grace time for registering attendance, ramps at ATM counter etc. BEL Bangalore complex received the National Award for "Empowerment of Persons with Disabilities" under the "Best Employer" category. Programmes conducted in the Units included health and safety awareness / improvement, vigilance awareness, etc. Various cultural programmes were organised by the Fine Arts Clubs in the Units for recreation of employees and their families. Various summer camps / sports programmes were organised for the employees' children.

Your Company's comprehensive medical scheme covers all employees, their spouses, dependent family members as well as retired employees and their spouses. BEL Hospital at Bangalore extends outpatient medical treatment to the residents of neighbouring villages and employees of BEL associate institutions / societies in addition to its own employees, their dependents and retired employees / their spouses.

Educational institutions run by the Company for education of children of employees and also of neighboring villages, performed well during the year.

Awards & Recognition

Important awards and recognitions received during the year by your Company and its employees include :

- Standing Conference of Public Enterprises (SCOPE) Award for R&D, Technology Development and Innovation for the year 2010 - 1 1, from the Hon'ble President of India.

- Raksha Mantri's Awards for 2009 - 10 in the categories of Best Performance in Exports, Best Performing Division, Import Substitution and Design Effort & Innovation.

- Best Employer of Persons with Disabilities National Award for 2011.

- PSE Excellence Award 2011 for R&D, Technology, Development & Innovation by the Department of Public Enterprises, Government of India, and Indian Chamber of Commerce in the Navratna category.

- Gold Prize in the Defence sector category of the DNA - Dainik Bhaskar India Pride Awards (2011) for Excellence in PSUs.

- Mr I V Sarma, Director (R & D), received the Association of Old Crows (AOC)'s Award for the 'Best Contributor in Electronic Warfare (EW) from Indian PSUs.'

- Two of our employees have received the prestigious Prime Minister's Shram Ratna and Shram Devi Awards for 2008 and 2009, respectively.

Environment Management

Your Company has been maintaining a clean and green environment at all its nine manufacturing Units, which are all ISO 14001 certified. Clean surroundings, green environment, clean technology, stringent pollution control measures, waste water treatment, zero effluent discharge, rainwater harvesting, energy conservation, water conservation, systematic management and disposal of hazardous and other forms of wastes and several other endeavors have become a part of the well - established Environmental Management System. Bangalore Complex and Ghaziabad Unit are certified for OHSAS 18001 : 2007. Disposal of scrapped and hazardous material is done through e - auction. Municipal solid waste is sent for scientific disposal.

BEL has received the Certificate of Merit for Excellent Energy Conservation from the Union Ministry of Power for 2010 - 11 and the Certificate of Merit for Energy Conservation from KREDL, Government of Karnataka, for 2009 - 10.

The Sustainability Report separately attached to the Directors' Report contains further details on Environment Management.

Subsidiary / Joint Ventures

Your Company's subsidiary at Pune, BEL Optronic Devices Ltd (BELOP) recorded a turnover of Rs. 6,273.92 lakhs as against the turnover of Rs. 5,236.06 lakhs in the previous year. BELOP achieved Profit After Tax of Rs.815.69 lakhs as against Rs. 445.23 lakhs in the previous year. BELOP manufactures mainly Image Intensifier Tubes (I.I. Tubes). These Tubes are supplied to the Defence customers and also used in the Night Vision Devices manufactured by BEL.

The Company has availed the general exemption under Section 212(8) of the Companies Act 1956 granted vide Ministry of Corporate Affairs Circular No. 5/12/2007 - CL - I II dated 8 February 2011. Hence, Annual Accounts of the Subsidiary Company, BEL Optronic Devices Ltd., are not attached to the Balance Sheet of BEL. A copy of the Annual Accounts of BELOP and the related information will be made available upon request by any member of BEL or BELOP. The Annual Accounts of BELOP are kept for inspection by investors at the registered office of BEL and BELOP. Any investor interested to inspect the same may please contact the Company Secretary of BEL or BELOP. A statement as per Section 212 of the Act relating to the Subsidiary Company, BELOP, is annexed to this report. Further, the information required to be disclosed as per the directions contained in the MCA Circular No. 5/12/2007 - CL - III dated 8 February 2011 is also provided in this Annual Report.

The Joint Venture Company (JVC) with General Electric, USA, viz., GE BE Pvt Ltd., manufacturing CT Max and other latest version X - Ray Tubes continues to perform well. BEL supplies some parts required for the products manufactured by this JVC. GE BE Pvt. Ltd. achieved a turnover of Rs. 42,931 lakhs as against Rs. 44,240 lakhs in the previous year. The Profit After Tax was Rs. 5,034 lakhs as against Rs. 5,755 lakhs in the previous year. The JVC declared 100 % dividend for the year 2011- 12 and accordingly BEL received Rs. 260 lakhs as dividend from this JVC on BEL's share of investment.

The other JVC, viz., BEL Multitone Pvt. Ltd., jointly promoted by BEL and Multitone plc, UK was set up to supply, install and service Private Paging Systems and Pagers. The JVC is presently in shell stage and it had no business transaction during the year. It has been decided to close down this Company as there are no business prospects for paging systems in the country.

Consolidated Accounts

Consolidated Financial Statements of your Company and its Subsidiary and Joint Venture Companies are attached to this Report.

Vigilance

Performance of the Vigilance Department during the year has been satisfactory. 99.6% of the executives of the Company have filed their Annual Property Returns. 1 188 Purchase Orders / Contracts and 623 high value Orders / Contracts have been reviewed / scrutinised during the year and found to be in order. As per the CVC / CTE Guidelines, 2 teams for Inspection of Works Contracts and 2 teams for Inspection of Purchase Orders have been constituted. During the year, 8 Works Contracts and 10 high value POs have been inspected by in - house inspection teams. 2570 Regular / Surprise inspections were conducted. During the year, there were totally 2 Vigilance cases, both carried over from the previous year. At the end of the year, there are no cases pending under investigation.

150 executives have been trained in the Principles of Natural Justice & Domestic Enquiry Training Programme (for Dy. Mgrs. & above). 702 Executives and 284 Non - executives have taken part in Vigilance Awareness Training Programme. 45 Executives & 34 Non - executives working in sensitive areas for 3 years and above have been moved to different posts.

In terms of CVC's guidelines for leveraging technology to ensure transparency through effective use of website, the following information has been made available in the BEL website :

- Application forms for Registration of Subcontractors / Vendors online for being included in the Approved Vendors List and applications for recruitment.

- Details of awarded Contracts / Purchase Orders valuing more than Rs. 10 lakhs in respect of works contracts, service contracts, capital items and non - production items.

- Details of awarded Contracts / Purchase Orders issued on nomination / single tender basis value exceeding Rs. 5 lakhs.

- Details of awarded Purchase Orders / Sub Contract Orders for production items with a threshold value of Rs. 100 lakhs and above.

- Vendor Payments Information System.

E - Procurement

E - procurement at BEL has been implemented on SAP SRM

7.0 platform having Public Sector procurement features. It has been implemented at all 9 Units of BEL for both Purchase and Sub - contract. The system is integrated with ERP system with the latest security such as Web Access Firewall, Reverse proxy and encryption of data from the client side upto the server in place. Second level authentication through Digital Signature for both publishing the bid and submission of response from the Vendor has been enabled. Six types of procurement have been configured in the system. As per CVC circular No. 010 / VGL / 035 dated 12.01.2012, action has been taken for certification of e - procurement system.

Integrity Pact

One of the latest initiatives of the Central Vigilance Commission to eradicate corruption in procurement activity is introduction of the Integrity Pact in large value contracts in all Government Organisations. In line with the directives from Ministry of Defence and the Central Vigilance Commission, BEL has adopted Integrity Pact with all vendors / suppliers / contractors / service providers for all Orders / Contracts of value Rs. 2,000 lakhs and above. The pact essentially envisages an agreement between the prospective vendors / bidders and the Principal (BEL), committing the Persons / officials of both sides, not to resort to any corrupt practices in any aspect / stage of the contract. Only those vendors / bidders, who commit themselves to such a Pact with the Principal, would be considered competent to participate in the bidding process. In other words, entering into this Pact is a preliminary qualification. Integrity Pact, in respect of a particular contract, would be operative from the stage of invitation of bids till the final completion of the contract. Any violation of the same would entail disqualification of the bidders and exclusion from future business dealings.

As per recommendation by the Central Vigilance Commissioner, BEL has appointed Shri N K Sinha, IAS (Retd.), former Secretary, Planning Commission and former Chairman, PESB as the Independent External Monitor (IEM) for monitoring implementation of Integrity Pact in BEL. The IEM would review independently and objectively, whether and to what extent parties have complied with their obligations under the Pact. IEM will take stock of the ongoing tendering processes on quarterly basis. The IEM conducts this review once in every quarter. In case of a complaint arising out of tendering process, the matter shall be examined by the IEM, who would look into the records, conduct an investigation, and submit recommendations to the management. During his visits to the Corporate Office every quarter, the IEM holds structured meetings with the Chairman & Managing Director. So far, 52 Orders / Contracts are covered under Integrity Pact.

Implementation of Official Language

Your Company is committed to adhere with the Official Language policies of the Government of India. During the year, the Committee of Parliament on Official Language visited the Company's Corporate Office on 06.05.2011 and Panchkula Unit on 08.02.2012. Ministry of Home Affairs officials inspected the Corporate Office on 12.05.2011. Hindi workshops for those having working knowledge in Hindi were conducted. Action is in progress for Unicode activation on all the PCs Company-wide and training on Unicode covering all Executives and Employees. Company's website is available in Hindi and English and efforts are on to progressively have the entire website in bilingual.

12 Units / Offices have been notified under rule 10(4) of OL rules indicating that 80% or more staff have working knowledge in Hindi in these Units/Offices and orders have been issued under rule 8(4) of OL Rules for those having proficiency in Hindi to do their Official work in Hindi. Standards have been issued for giving Hindi / Indian names for all the BEL Products and to have the names and descriptions in Devanagari. Corporate Office bagged the Second Prize for excellent performance in OL implementation by TOLIC (Undertakings), Bangalore. Efforts are on to ensure the progressive use of Hindi in all spheres of activities of the Company.

Implementation of RTI Act

The information required to be provided to citizens under Section 4(l)(b) of the RTI Act 2005 has been posted on the website of Company, www.bel - india.com. The information posted on the website contains general information about the Company, powers and duties of employees, information about decision - making, rules, regulations, manuals and records held by BEL, directory of the Company's officers, pay scales, procedure for requesting additional information about the Company by citizens and associated request formats. During the year 2011- 12 the Company received and attended to 331 requests for information under RTIA. Most of the requests were information related to Human Resources, specifically recruitment and service related matters.

Directorate

Following changes took place in the Directorate of your Company since the last report. Mr Anil Kumar was appointed as Chairman & Managing Director with effect from 1 October 201 1 in place of Mr Ashwani Kumar Datt, who retired on attaining the age of superannuation on 30 September 2011. Mr Sunil Kumar Sharma was appointed as Director (Bangalore Complex) with effect from 1 September 201 1 in place of Mr H S Bhadoria, who retired on attaining the age of superannuation on 31 August 2011. Government appointed Lt Gen S P Kochhar, Bar to AVSM, SM, VSM, ADC, Signal Officer - in - Chief and Senior Colonel Commandant, Corps of Signals, Army HQs as one of the part - time Government Directors with effect from September, 2011 in place of Lt Gen (Retd) P Mohapatra, PVSM, AVSM, ADC. Government terminated the Board Membership of Mr G Madhavan Nair with effect from 16 April 2012. Lt Gen (Retd) G Sridharan, Part - time Independent Director exited the Board on completion of his three year tenure of appointment on 17 May 2012. Mr M G Raghuveer, Director (Finance) retired on attaining the age of superannuation on 31 May 2012.

Mr Amol Newaskar was appointed as Director (Other Units) w.e.f. 24 May 2012. Government nominated Air Marshal K K Nohwar, PVSM, VM, ADC, Vice Chief of Air Staff, as Permanent Special Invitee to BEL Board Meetings, with effect from 27th September, 2011 in place of Air Marshal N A K Browne, PVSM, AVSM, VM, ADC. Government nominated Vice Admiral B Kannan, AVSM, VSM, Chief of Material, Indian Navy as Special Invitee to all BEL

Board Meetings in place of Vice Admiral Ganesh Mahadevan, PVSM, AVSM, VSM. Government nominated Air Marshal D C Kumaria, PVSM, AVSM, VM, VSM, ADC, Vice Chief of Air Staff as Special Invitee to all BEL Board Meetings in place of Air Marshal K K Nohwar.

Directors' Responsibility Statement

Pursuant to the provisions under Section 2l7(2AA) of the Companies Act, 1956 your Directors state :

(i) that in the preparation of the annual accounts, the applicable Accounting Standards have been followed and in respect of Accounting Standard 17, necessary explanation for departure has been given in Note No. 31.12 of the Notes to Accounts;

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

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

(iv) that the directors have prepared the annual accounts on a going concern basis.

Auditors

Pursuant to Section 619(2) of the Companies Act 1956, the Comptroller and Auditor General of India re - appointed M/s R G N Price & Co., Chartered Accountants, Chennai as Statutory Auditors for the year 2011 - 12 for audit of accounts of Bangalore Complex, Hyderabad and Chennai Units and Corporate Office. M/s Mittal Gupta & Co, Chartered Accountants, New Delhi, were re - appointed as Branch Auditors of Ghaziabad, Panchkula and Kotdwara Units for 2011- 12. M/s G D Apte and Co., Chartered Accountants, Pune were appointed as Branch Auditors for Pune and Navi Mumbai Units for 2011- 12. M/s N Koteswara Rao & Co., Chartered Accountants, Guntur were reappointed as Branch Auditors for Machilipatnam Unit for 2011 - 12.

Auditors' Report

Auditors' Report on the Annual Accounts for the financial year 2011 - 12 and 'Nil' Comments of the Comptroller & Auditor General of India under Section 619(4) of the Companies Act, 1956 on the Annual Accounts are appended to this report.

Management Discussion and Analysis Report

Management Discussion and Analysis Report required under the Listing Agreements with the Stock Exchanges on which BEL's shares are listed is annexed to this Report.

Corporate Governance

A report on Corporate Governance along with a Compliance Certificate from the Auditors as prescribed under the Listing Agreements with the Stock Exchanges on which BEL's shares are listed as well as Government Guidelines on Corporate Governance for Central Public Enterprises, is annexed to this Report.

Sustainability Report

As required under the Guidelines on "Sustainable Development" issued by the Dept of Public Enterprises, Govt of India, a separate chapter on the Company's efforts on "Sustainable Development" is annexed to this Report.

Other Disclosures

Information required to be disclosed in accordance with Section 217(1)(e) of the Companies Act 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules 1988 regarding conservation of energy, technology absorption and foreign exchange earnings and outgo, is attached to this Report.

The particulars of employees to be given as per Section 2l7(2A) of the Companies Act 1956, read with the Companies (Particulars of Employees) Rules, as amended, are "Nil" for the year 2011 - 12.

Acknowledgement

Your Directors place on record their deep appreciation and gratitude for the valuable support received from all the customers, particularly the Defence Services and the Department of Defence Production and look forward to their continued support and co - operation in future. Your Directors also place on record their gratitude for the support received from various Ministries of the Government of India, especially the Ministry of Defence. Your Directors express their sincere thanks to the Comptroller and Auditor General of India, Chairman, Members and Employees of the Audit Board, Statutory Auditors and Branch Auditors, Company's Bankers, Collaborators and Vendors. Your Directors appreciate the sincere efforts put in by all the employees at all levels, which enabled the Company to achieve the good performance during the year. Your Directors express their appreciation and gratitude to all the shareholders / investors for the trust and confidence reposed in the Company and look forward to their continued support and participation in sustaining the growth of the Company in the coming years.

For and on behalf of the Board

Bangalore Anil Kumar

1 August 2012 Chairman & Managing Director


Mar 31, 2011

To the Members,

The Directors are pleased to present the 57th Annual Report of the Company, together with the Audited Accounts for the financial year ended 31st March 2011.

Performance Highlights

A summary of the Company's financial results is given below :

(Rs. in lakhs)

2010-11 2009-10

Value of Production 552,080.34 524,788.20

Turnover (Gross) 552,969.32 521,977.40

Profit Before Depreciation, Interest and Tax 128,362.22 116,150.06

Interest 43.36 53.48

Depreciation 12,204.23 11,594.23

Provision for Tax 29,967.78 32,415.25

Profit After Tax 86,146.85 72,087.10

Add : Balance brought forward from previous 191,303.51 177,236.84 year

Less : Amount transferred to Capital Reserve 41.98 90.77

Balance available for Appropriation 277,408.38 249,233.17

Interim Dividend @ Rs. 6 per share on paid up 4,800.00 4,800.00 Capital of Rs. 8,000 lakhs

Proposed Final Dividend @ Rs. 15.60 per share 12,480.00 10,560.00 on paid up Capital of Rs. 8,000 lakhs

Tax on Dividend 2,821.79 2,569.66

Transfer to General Reserve 40,000.00 40,000.00

Transfer to Capital Reserve 41.98 90.77

Reserves & Surplus 490,570.65 424,525.59

Net Worth 498,570.65 432,525.59

Earnings Per Share (in Rs.) 107.68 90.11

Book Value Per Share (in Rs.) 623.21 540.66

Distribution of Value of Production for 2010-11 is given below :

Amount Percentage < Rs. in lakhs)

Materials 313,576.95 56.80

Employee Cost 104,186.17 18.87

Other Expenses (Net) 5,955.00 1.08

Depreciation 12,204.23 2.21

Interest 43.36 0.01

Provision for Tax 29,967.78 5.43

Profit After Tax 86,146.85 15.60

Total 552,080.34 100.00

Company's sales turnover during the year 2010-11 has increased to Rs. 552,969.32 lakhs from Rs. 521,977.40 lakhs in 2009-10, registering a growth of 5.94 %. Profit after Tax for the year was Rs. 86,146.85 lakhs as against Rs. 72,087.10 lakhs, an increase of 19.50 % in spite of additional burden due to revision of wages for workmen. Exports turnover has registered a growth of 75.45% from US $ 23.67 million in the previous year to US $ 41.53 million during 2010-11. Supplies to the Defence Services contributed to 80% of the turnover. The turnover from indigenously developed products is 78%. All the nine manufacturing Units of your Company performed well and earned profits during the year.

Other Highlights

Union Defence Minister, Mr A K Antony, inaugurated BEL's Product Support Centre at Kalamassery in Kochi, Kerala, on February 8, 2011. The Centre has been set up to provide waterfront support for the Southern Naval Command and to support outsourcing of Naval system projects to BEL's outsourcing partner, KELTRON. It is also envisaged to co-ordinate equipment supply and support to the Air Defence Ship Project at Cochin Shipyard Limited and to support Sonar development projects at the National Physical & Oceanographic Laboratory (NPOL), Kochi, a DRDO lab.

Dr V K Saraswat, Scientific Advisor to Defence Minister, inaugurated a modern D&E facility at BEL's Hyderabad Unit on December 24, 2010. The facility is equipped with Embedded Systems Lab, Software Development Lab, Communication Systems and Integration Labs, Video Conferencing, etc.

Four numbers of India's first wholly indigenous Nuclear, Biological and Chemical (NBC) Recce Vehicles, designed and developed by DRDO and integrated with NBC instruments at BEL's Pune Unit, were handed over to the Indian Army on December 21, 2010. The NBC Recce Vehicle surveys, detects, identifies and marks areas of radiological and chemical contamination.

Major Orders Executed

Some of the important equipment / systems supplied to customers by your Company during the year include : 3-D Central Acquisition Radar (Rohini), Surveillance Radar Element, Artillery Combat Command Control System, Battle Field Surveillance Radar, L-Band Surveillance Radar, Fire Control Systems, Shipborne Electronic Warfare System, Integrated Communication Network System for ships, Mobile Radar band Electronic Intelligence System, Mobile Communication Terminal, Handheld UHF Radios, Secure Communication Network, Passive Night Vision Weapon Sight and Doppler Weather Radar.

Among the many projects executed during the year, the following merit special attention :

Artillery Combat Command Control System - The system automates artillery functions with the use of latest technologies such as Tactical Computers integrated with communication capabilities, Geographical Information System (GIS) and Global Positioning System (GPS) to achieve quick and accurate fire. The system has been developed by BEL with indigenous technology and security solution from DRDO.

Surveillance Radar Element - It is an S band Air Traffic Control Radar suited for Terminal Control applications with a range of 130 km. It is a fully solid state modular transmitter with integrated IFF. It detects and automatically tracks a large number of aircraft within Local Flying Area under all weather conditions and is configured for high availability.

3-D Central Acquisition Radar (Rohini) -

It is a 3- D surveillance radar in S band. It has an integrated IFF (Identify Friend or Foe) with co-mounted antenna and has been developed jointly with LRDE for the Indian Air Force.

Combat Net Radio - It is a VHF Frequency Hopping Communication Radio, fitted in Armored vehicle. It has been developed with indigenous technology by DRDO and engineered by BEL.

VPS Mk III - It is a UHF Handheld Radio, compact and light - weight, with built-in High Grade Digital Secrecy. Interface is provided for handset / headgear and Crypto key loading. The operator interface is user-friendly with minimum number of controls. The radio set is provided with various types of antenna for use in different types of terrains, ranges and roles.

Battle Field Surveillance Radar - Medium Range (BFSR- MR) with Mast - It is a ground surveillance and acquisition radar capable of automatically detecting and displaying diverse moving targets such as pedestrians, vehicles, tanks, low - flying helicopters, etc.

RAWL 02 Mk III - It is a long-range surveillance radar. It is designed for use onboard large and medium Naval ships and for shore establishments and provides long - range air warning and target detection. It has stabilised hydraulic-driven antenna platforms.

Ground Based Mobile ELINT - An Electronic Intelligence Gathering System (Radar band) used during peacetime. The system has location-fixing and Radar Finger Printing capability.

Composite Communication System - CCS Mk III - This system enables internal and external communication for Naval ships. It has been developed by BEL with indigenous technology.

Naval Heliborne ESM System - It is a lightweight ESM system for helicopters of the Navy. It has higher threat-handling capability and improved DF accuracy. It has been developed by BEL with indigenous technology.

Air Defence Control & Reporting System - ADC&RS is a Command & Control System for integration of various Radars and other Army Systems for Air Defence. It has been developed by DRDO and engineered by BEL with indigenous technology.

Advanced Naval Gun Fire Control System (LYNX U-1) -

This state - of - the - art system has been developed by BEL to be installed onboard IN ships for short / medium range Gun Fire Control using high accuracy tracking radar and electro optic tracking system.

Doppler Weather Radar - It is an S-band Radar, meant for long-range weather surveillance (up to 500 km). It can forecast storms, cyclones and other severe weather conditions. It uses Pulse Doppler techniques for accuracy and has been developed as a national initiative involving IMD, ISRO and BEL.

Business Initiatives

Business initiatives during the year include :

- BEL is in the process of signing a Technology Collaboration Agreement (TCA) with Optelian International Corporation for establishing a long-term partnership between the two Companies for the manufacture and design of optical networking systems in India. BEL expects to address a business of about Rs. 60,000 lakhs in the next five years from this initiative.

- As a proactive step for addressing the Offset business for defence programmes like the Medium Multi-Role Combat Aircraft (MMRCA), Very Short Range Air Defence (VSHORAD) and the Mine Counter Measures Vessel (MCMV) program, BEL has discussed and signed MoUs with OEMs participating in these programs. From these MoUs, an Offset business of approx. US $ 300 million is expected in the next 5-7 years from now.

- BEL is in discussions with a reputed foreign OEM for forming an Indian Joint Venture in the area of civilian radars & select defence radars.

- The business plan for setting up a JVC with BHEL for manufacture of Solar PV wafers, cells and modules has been finalised.

- BEL is working on establishing a Company for the design, development and manufacture of RF and Microwave components and subsystems.

From these JVCs, BEL expects a turnover of about Rs. 200,000 lakhs per year in four to five years from the starting of these companies.

Exports

Your Company's export turnover during the year was US $ 41.53 Million, registering an impressive growth of 75.45% over previous year export of US $ 23.67 million.

The range of products and sub-assemblies exported includes - Lynx II, Radar Warning Receivers, Composite Communication System, Night Vision Devices, Versatile Communication System (VCS), IFF Interrogator, LRF, X - Ray tube, Radar Finger Printing system, ESM system, V / UHF search receivers, Shelters, PCB assembly, Cable Harness, Components, Mechanical assemblies, etc. Countries to which the products were exported include Italy, USA, Sri Lanka, Switzerland, Zimbabwe, Philippines, UK, Malaysia, Canada, Germany, France, Israel, Namibia, Indonesia, etc.

A very significant portion of the export is related to offset. The Company executed large offset contracts for companies such as M/s Fincantieri, Italy, Boeing, USA and Northrop Grumman, USA.

BEL has over the years taken a number of initiatives to increase exports. The Company plans to increase its exports through direct exports and offsets. It has identified African and South East Asian countries for special focus on product exports. It has a very significant opportunity in the offset business related to various platforms such as :

- Air platform

- Naval platform

- Radar and Missile platforms

- Gun platforms

Your Company is closely working with various major foreign Aerospace and Defence companies to secure business under the mandatory Offset clause in the RFPs for Indian Defence Procurement. BEL has signed MoU / NDAs with various OEMs for offsets in respect of RFPs issued by Indian MoD. With the above initiatives the Company expects to achieve significant increase in export turnover in the coming years.

Order Book Position

The order book position of your Company as on 1 April 2011 was Rs. 2,360,000 lakhs, out of which orders worth Rs. 560,000 lakhs are executable during 2011-12. The balance will get executed in 2012 - 13 and beyond.

Finance

During the financial year 2010-11, your Company has met all its fund requirements towards additional investments on Capital equipments and incremental working capital needs without any borrowing. This has been possible through efficient cash management which has ensured that the Company continues to be debt free. The Company has been able to retain the highest rating by ICRA for both short term and long term sanctioned bank limits, which will help in continuing to secure the best rates for any of the services, availed from the consortium banks. Based on the user requirements many changes have been incorporated in the online ERP system which should help in better information fow to all concerned.

The inventory position of the Company as on 31st March 2011 was Rs. 246,077 lakhs (Net), as against Rs. 244,871 lakhs (Net) as on 31st March 2010. The inventory as on 31st March 2011 works out to 164 days of the Value of Production (DPE) for the year 2010-11 as against the corresponding position at 172 days as on 31st March 2010. Efforts will be made during the current year to reduce the inventory levels further without compromising the production plan for the forthcoming year.

The position of sundry debtors as on 31st March 2011 was Rs. 290,325 lakhs (Net) as against Rs. 216,836 lakhs (Net) as on 31st March 2010. The debtors as on 31st March 2011 works out to 192 days of the Sales for the year 2010-11 with the corresponding position at 152 days as on 31st March 2010. The increase in sundry debtors as at the end of the financial year is mainly due to the following reasons :

(a) Higher sales in the last quarter, particularly in March as compared to the corresponding period of the previous year;

(b) Non-realisation of bills due to budgetary constraints of the Customers;

(c) Payment terms in the sale contracts where the release of money is linked to certain specific milestones, even after delivery of the items like Harbor Acceptance Trials / Sea Acceptance Trials, etc.

The debtors realisation will continue to be closely monitored to ensure speedy collection which should result in a reduction in debtors in number of days of sales by the end of this financial year.

The Company does not have any public deposit scheme at present. However, the matured past public deposits with the Company was Rs. 38.55 lakhs as on 31st March 2011. Of these, 34 deposits amounting to Rs. 36.50 lakhs are claimed but not paid as these accounts are frozen on advice by Karnataka Lok Ayukta. Remaining past deposits of Rs. 2.05 lakhs as on 31st March 2011 is unclaimed. The entire amount of public deposits outstanding as on 31st March 2011 is included in the current liabilities, Schedule No. 12 of the Balance sheet.

Research & Development

Research and Development is the core strength of BEL and focused attention was given during the year for planning and reviewing of development of technology modules and products. Apart from in-house efforts, BEL's association with DRDO, other national research and development agencies and academic institutes has been further strengthened. Research & Product development has been carried out in all the business segments, namely, Radars, Naval Systems, Missile Systems, Communication, Encryption, Electronic Warfare, Command Control Systems, Opto- electronics, Tank & Weapon electronics, Fire Control Systems, Avionics, Civilian equipment & systems and Components during the year 2010-11. Development & Engineering (D&E) Divisions attached to the Strategic Business Units of Bangalore and Other Units outside Bangalore concentrated on the development of products and associated technologies in their respective areas of business segments. Central-D&E and two Central Research Laboratories of the Company supported the D&E Divisions of all the units by way of developing core technology modules and software required for the development of products and systems.

The analysis of turn over of the Company for the year 2010-11 indicates that 57% of the turn over is due to BEL designed products, 21% of the turn over due to DRDO and other indigenous agencies developed products and remaining 22% is due to products for which technologies were acquired through foreign ToTs.

During 2010 - 11, the R&D Divisions of BEL have completed development of more than 35 new products. Some of the new products / systems introduced during the year include Akash Weapon System, New Generation HUMSA Sonar, Mobile Communication Terminal, ATM based Integrated Shipboard Data Network, Semi Ruggedised Automatic Exchange MK-II, Low Power Jammer, Combat Management System, Integrated Fire Detection and Suppression System for BMP-2 / 2K, IRLM Radio etc. Brief information about some of the introduced products is given below :

(a) Akash Weapon System : This is a surface-to-air medium range air defence missile system which provides air defence against multifarious air threats to mobile, semi-mobile and static vulnerable forces and areas. The system is capable of simultaneous engagement of many targets with multiple missiles. The system has been developed with technology transfer from DRDO.

(b) New Generation Advanced Hull Mounted Sonar : This is an advanced version of the existing HUMSA sonar for fitment in naval ships. The system is capable of detecting, localizing, classifying and tracking under water targets in both active and passive modes. The system is capable of automatic tracking of multiple targets simultaneously and provides long range detection of threats. The system has been developed with technology transfer from DRDO.

(c) ATM based Integrated Shipboard Data Network : This is a multi-services shipboard network designed to cover all voice traffic, real time video and traditional data communications onto a single broadband infrastructure. The system integrates all weapons, sensors and communication services on board the naval ship onto the single broadband network and provides integrated and simultaneous transmission of voice, video and data.

(d) Semi Ruggedised Automatic Exchange MK-II : This semi-ruggedised Automatic Exchange is an Automatic Telephone Exchange designed to meet communication requirements of an Army unit or formation. The system is portable as well as designed for vehicle mounting. The system provides communication services to Auto Subscribers and ISDN subscribers and can be interfaced to other exchanges.

(e) Low Power Jammer : This is a light vehicle based communication Electronic Warfare System capable of doing rapid search, detection, monitoring, recording, replay, analysis and jamming of hostile transmissions in V / UHF, GSM and extended GSM bands.

(f) Combat Management System : This system facilitates automatic handling of tactical data from ship's various sensors including helicopters / aircrafts in the fleet through data link to collate, process, integrate and present a comprehensive tactical picture of the area of operation to provide the decision support to the Command.

(g) Integrated Fire Detection and Suppression System : This is a micro controller based fire detection and suppression system for armored vehicles and tanks. IR Sensors of the detector unit detects the fire in the crew compartment and the control logic sends the confirmation of fire to Master Control Unit, which activates the audiovisual alarm and actuates the squib of the fire extinguishers to extinguish the fire.

Scientists from Central Research Laboratories and other R&D divisions of BEL have contributed 49 technical papers in the national and international journals during the year. Following Awards have been received by R&D teams during the year :

-ELCINA-EFY Award (Certificate of Merit) for Outstanding achievements in R&D for 2009-10

-SODET Award (Gold) for Technology Innovation (2009-10)

-Raksha Mantri's Awards for Import Substitution, Design Effort and Innovation (2008-09)

-Indian Semiconductor Association's Technovation Award for the development of Best Electronic Product of the year 2011 in the Aerospace sector for developing High Voltage Relay Driver ASIC.

New Product Development : Considering the need for developing new technologies and products to meet the requirements of customers, BEL has initiated a number of actions for providing the necessary thrust. Technology roadmap and a three year R&D plan have been prepared to set goals for all R&D divisions. Resources have been augmented and enhanced budgets have been sanctioned for R & D to realise the plans. A number of joint development programs with DRDO labs also have been initiated. Software Defined Radio, a futuristic communication equipment, Radio Relays for Military backbone networks, Military Wimax, Battle field Surveillance System, Combat Management System for different class of ships, Medium power Radar, Surface Surveillance Radar, and Tablet PCs are some of the important projects whose development will be completed in the next one to two years.

Quality

The Company adopted the Total Quality Management (TQM) philosophy in the year 1990 under the acronym "TORQUE" which stands for Total Organisational Quality Enhancement. TORQUE is based on the premise that the quality of products and services is not only the responsibility of the production / shop foor personnel, but other support services also have a role to play in meeting and exceeding customer's expectations through supply of quality products and services. Following are the thrust areas of TORQUE in BEL to improve operational excellence :

-Deployment of Reliability & Maintainability concepts during design stage of product development.

-Improvement in Quality of design through DFSS projects.

-Continual improvement of products and processes through deployment of six sigma methodology.

-Key processes stabilisation and capability improvement through Statistical Process Control (SPC) techniques.

- Reduction in cycle time of key business processes.

- Introduction of lean manufacturing concepts to achieve on-time delivery.

- Employee motivation and empowerment through introduction of QCC and Suggestion Schemes.

- Customer satisfaction surveys to measure and improve satisfaction level of customers.

Company has adopted CII-EXIM Bank Business Excellence Model to improve its overall Business and strategic excellence. Adoption of this Model since 2002 has helped the Company in understanding the expectations of various stakeholders and in enhancing their satisfaction level. During the year 2010-11, five of the BEL Units / SBUs participated in the ‘CII-EXIM Bank Award for Business Excellence'. MILCOM SBU and Kotdwara Unit achieved Level-II recognition i.e. ‘Commendation Certificate for Significant Achievement'. Components SBU, Export Manufacturing SBU and Panchkula Unit received ‘Commendation Certificate for Strong Commitment to Excel' under this Award scheme.

BEL Quality Institute has been imparting training on Six Sigma since July 1999 and has trained 1,264 officers so far. During the year 2010-11, 134 Six Sigma projects were completed, resulting in cost reduction, process improvement and customer satisfaction.

Reliability & Maintainability are essential features of a well-designed product. Application of the principles of R&M at design stage can ensure robustness of the product during its entire life cycle. Keeping this in mind the Company has embarked on getting its design engineers certified as reliability professional from Centre for Reliability, STQC Directorate, Chennai. During the year 2010-11, a total of 28 engineers were certified as Reliability Professionals by the Centre for Reliability.

All the key and special manufacturing processes in the Company are being brought under Statistical Process Control (SPC) which is an on-line process monitoring, control and improvement technique. During the year 2010-11, 18 processes were identified and brought under SPC. Control Charts and Process Capability studies of these processes have been put into practice.

In order to monitor the quality performance of various Units and SBUs of the Company, a Quality Index metric has been developed during the year 2010-11. The main attributes of this Index are procurement efficiency, manufacturing efficiency, employee involvement, customer related measurement and external audit / assessment scores.

As a part of Company's endeavor to enhance the customer satisfaction level, the Company has been conducting customer satisfaction surveys every year. This survey is being conducted through a third party to bring in objectivity. Based on the feedback obtained from the survey, corrective actions are taken to improve our processes so as to enhance the satisfaction level of customers. During the year 2010 - 11 the customer satisfaction survey was conducted for five products, each belonging to different Unit / SBU. Overall customer satisfaction index was found to be 80.52 %.

BEL won the ELCINA-EFY Award for Excellence in Quality (first prize) for the year 2010-11.

Another award won by the Company during the year is ‘QCI-DL Shah National Award on Economics of Quality' under the Category ‘Projects submitted by Public Sector & Government Enterprises'. The award has been instituted with a view to establish that bottom line benefits are achieved through quality initiatives.

SAP Implementation

BEL has undertaken implementation of SAP across all the Units / Offices. Implementation of SAP R / 3 including Payroll Product Lifecycle Management module at all Units and Offices of BEL were completed in a phased manner by July 2008. A number of improvements, checks and validations have been incorporated in the system based on user feedback.

Pilot implementation of the following new dimension modules of SAP was done in 2010-11.

- Supplier Relationship Management (SRM)

- Knowledge Management (C Folders)

- Employee Self Service (ESS)

- Strategic Enterprise Management (SEM) Consolidation

- Business Objects Reporting Tool

- Procurement for Public Sector (PPS) module

SRM version 5.0 was upgraded to SRM version 7.0 to implement Procurement for Public Sector (PPS) module. This module facilitates e-procurement with 2 Part Bidding, Accounting of Earnest Money Deposit, opening of Bids by Tender Opening Committee etc. Customer Relationship Management (CRM), and Supply Chain Management (SCM) are in final stages of implementation and testing. Standard SAP package does not cater to several requirements such as Consignment Receipt Report, Export Documentation etc. These features have been developed in SAP platform. A number of process improvements such as automation of accounting of inter unit transactions, bar code for issue and accounting of materials from stores etc.

Security measures, such as, Firewall and Intrusion Prevention Systems have been implemented to secure Data Centre and DR site which are in BEL's Intranet. Similarly, security measures, such as, Web Application Firewall, Reverse Proxy, Firewall, Intrusion Prevention System are under implementation for secure Internet access by customers and vendors to SRM and CRM servers.

Human Resources

Your Company employed 11,180 persons as on 31st March 2011 as against 11,545 as on 31st March 2010. Of this, 3,670 were engineers / scientists. Women employees were 2,366 as on 31st March 2011. A total of 353 executives consisting of engineers, scientists and other professionals were inducted during the year.

The particulars of SC / ST and other categories of employees as on 31st March 2011 are as under :

Executives Non-Executives Category of Employees Group ‘A' Group ‘B' Group ‘C' Group ‘D'

Scheduled Caste 796 64 1172 115

Scheduled Tribe 235 8 125 29

OBC 782 67 934 66

Ex-Servicemen 91 149 309 113

Physically Handicapped 79 7 164 18

In order to address the learning and organisation development needs, various management development programmes as well as technology programmes were organised during 2010-11 through premier training institutions for all grades of executives. The Company-wide per capita training man-days for the year 2010-11 was 3.37 as against 3 in 2009-10. A detailed write up on Company's HR philosophy and specific HR initiatives during the year is provided separately in the Management Discussion and Analysis Report attached.

Employee Relation & Welfare

Employee relations continued to be conducive marked by industrial harmony and mutual trust. Regular interactions take place among the management, executives and the workmen through the apex forums, viz. the Joint Standing Committee consisting of Negotiating Trade Unions and Apex Joint Council consisting of Officers Associations and TC Cadre and also separately with respective Trade Unions and Officers Associations. Revised wage scales, allowances and perquisites for workmen were discussed and settled during the year for a period of 10 years w.e.f. 1.1.2007.

Various programmes were organised for the benefit of all sections of employees and their families, some of which were

exclusively for women employees, SC / ST employees and differently abled employees to improve their awareness in legal issues, safety matters, etc., and to address matters specific to these sections of employees. Various cultural programmes were organised by the Fine Arts Clubs in the Units for recreation of employees and their families. Various summer camps / sports programmes were organised for the employees' children.

Your Company's comprehensive medical scheme covers all employees, their dependent family members as well as retired employees and their spouses. BEL Hospital at Bangalore extends outpatient medical treatment to the residents of neighbouring villages and employees of BEL associate institutions / societies in addition to its own employees, their dependents and retired employees / their spouses. Welfare programmes organised by BEL Hospital during the year includes : Pulse Polio Immunisation programme, Uro - Gynaecology camp, screening programmes for Respiratory diseases, Eye camps for employees, their dependants and retired employees covered under BERECHS, etc. BEL Hospital also conducted Growth and Development medical camp for the kids between 9 to 11 years of age and prizes were awarded to the healthy children.

Educational institutions run by the Company for education of children of employees and also of neighboring villages, performed well during the year.

Awards & Recognition

Important Awards and recognitions received during the year by your Company and its employees include :

-Standing Conference of Public Enterprises (SCOPE) Meritorious Award for Corporate Governance for the year 2009-10.

-SCOPE Award for R&D, Technology Development & Innovation for the year 2007-08.

-Raksha Mantri's Awards in the categories of Best Performing Division, Import Substitution, Design Effort and Innovation for the year 2008-09.

-Selected as the top Indian Company under the Electrical & Electronic Equipment, Technology Development sector for the Dun & Bradstreet-Rolta Corporate Awards 2010.

-International Aerospace Awards 2011 under the categories of ‘Most Influential Company of the Year' and ‘Excellence in Innovation'.

-Gold prize in the Heavy Industries category of DNA-Dainik Bhaskar India Pride Award (2010) for ‘Excellence in PSUs'.

-BEL employees received the prestigious Prime Minister's Shram Awards for the year 2005, 2006 and 2007 in the categories of Shram Bhushan, Shram Devi, Shram Vir / Veerangana and Shram Shree, respectively. A Senior Technical Assistant of Bangalore Complex has been selected for the Prime Minister's Shram Ratna for the year 2008.

Environment Management

Over the years, commitment to maintaining clean and green environment has taken deep roots in the organisation as evidenced by improved results in prevention of pollution, energy conservation, water conservation, use of renewable energy and hazardous waste reduction, besides introduction of eco - friendly processes and materials. Sustenance of Zero discharge, Legal compliance, measurement and monitoring, verdant surroundings and afforestation are a way of life in BEL. The Company, with its ISO 14001 (2004) certified Environmental Management System, addresses environmental issues in a wider perspective with a firm resolve to reduce all forms of pollution. The workforce, aware of the consequences of environmental degradation, passionately participates in our environmental endeavours to promote an environment free of pollution. Some of the initiatives taken are presented below :

Cleaner Technology

Relentless effort to introduce cleaner technologies in manufacturing processes has reduced the generation of pollutants to a large extent. BEL has recognised that a more effective contribution to clean environment begins at design stage itself. Our Research and Development Departments search and introduce environment - friendly components. Further our Corporate Standards published guidelines connected to environment - friendly materials, components and manufacturing process to be used across the Company. Corporate standards have already commenced standardisation and introduction of many RoHS (Restriction of Certain Hazardous Substance) items complaint to European and other International directives. Based on the above guidelines, many of the RoHS compliant processes have been introduced in PCB manufacturing and metal finishing process. Low smoke halogen cables have been introduced in manufacturing of Naval based electronic equipments. Low VOC metal finishing operation (Poly urethane) and anti IR coating system are adopted in the process to contain pollution. Eco - friendly Chorine - free copier paper for photocopying and laser printing has been standardised for lower environmental impact.

Emission To Air

Emission to air from processes is much below the pollution control norms. Even this low level of emission is checked through stack monitoring and with appropriate air pollution control equipments.

The results are substantiated with ambient air quality measured at different locations within the factory. Not to leave out any possible improvement opportunity, Lead fume extraction systems have been introduced at soldering stations to prevent release of fumes containing lead and flux vapour to atmosphere.

Water Pollution

Waste water generated in the processes are treated to meet reusable standards and recycled for production purpose. We have an in-built capacity to treat about 900 Kilo Litres of process wastewater per day (KLPD). In the same way domestic wastewater generated in the factory and colony is treated and recycled for horticulture purpose. We have an in-built capacity to treat about 1800 Kilo Litres of domestic waste water per day (KLPD) at Bangalore Complex.

Hazardous Waste Management System

By introduction of appropriate chemicals that generate less hazardous sludge in detoxification of wastewater and by adaption of cleaner technology, hazardous waste generation has been reduced at the process level itself. Besides introduction of Cyanide-free Zinc and Copper plating processes, use of sodium hydrides, sodium hypochlorite and sodium Meta bisulphate in place of lime, bleaching powder and ferrous sulphate, help in reduction of large volume of hazardous sludge. Hazardous wastes generated are disposed of scientifically as per the direction of the State Pollution Control Board. There is a drastic reduction in sludge-generation as a result of several process improvements carried out.

Biomedical Waste

Biomedical wastes generated in BEL hospital and medical centres are collected and disposed of scientifically as per regulatory guidelines.

Solid Waste Management

BEL is taking utmost care by disposing of Municipal Solid Waste in a scientific manner. BEL was quick enough to understand the issues posed by unscientific methods of disposal of municipal and other solid waste. Presently such waste is sent for processing at a well-established solid waste treatment facility in Bangalore.

On Site Emergency Plan and Systems

In our effort to reduce the impact of storage of hazardous materials, a significant move was made in eliminating the hazards in storing inflammable gas by changing over from LPG bullet system to LPG manifold system.

Water Management

There is a consistent reduction of water consumption every year in the past ten years, which is mainly due to implementation of number of water conservation projects. Our consumption of potable water stood at 888 ML in 2010 - 11 against 906 ML in 2009 - 10. Rainwater harvesting and innovative recharging of bore wells enable us to collect the runoff water and recharge the ground water table. The large-scale rainwater-harvesting reservoir at Bangalore unit has a capacity of 170 million litres with expected annual yield of around 234 million litres. By rainwater harvesting and recharging of bore wells ground water yield has improved.

BEL has been awarded ‘Excellent Water Management Industry' under ‘Within the Fence' competition and ‘Efficient Water Management Industry' under ‘Beyond the Fence' by CII - Godrej in 2010-11.

OHSAS 18001(2007)

In addition to caring for the environment, BEL equally respects the well being of its workforce through OHSAS 18001(2007) implementation.

Subsidiary / Joint Ventures

Your Company's subsidiary at Pune, BEL Optronic Devices Ltd (BELOP) recorded a turnover of Rs. 5,236.06 lakhs as against the turnover of Rs. 5,874.48 lakhs in the previous year. BELOP achieved Profit After Tax of Rs. 445.23 lakhs as against Rs. 227.43 lakhs in the previous year. BELOP manufactures mainly Image Intensifier Tubes (I.I. Tubes). These Tubes are supplied to the Defence customers and also used in the Night Vision Devices manufactured by BEL.

The Company has availed the general exemption under Section 212(8) of the Companies Act 1956 granted vide Ministry of Corporate Affairs Circular No. 5/12/2007-CL-III dated 8th February 2011. Hence, Annual Accounts of the Subsidiary Company, BEL Optronic Devices Ltd, are not attached to the Balance Sheet of BEL. A copy of the Annual Accounts of BELOP and the related information will be made available upon request by any member of BEL or BELOP. The Annual Accounts of BELOP are kept for inspection by investors at the registered office of BEL and BELOP. Any investor interested to inspect the same may please contact the Company Secretary of BEL or BELOP. A statement as per Section 212 of the Act relating to the Subsidiary Company, BELOP, is annexed to this report. Further, the information required to be disclosed as per the directions contained in the MCA Circular No. 5/12/2007-CL-III dated 8th February 2011 is also provided in this Annual Report.

The Joint Venture Company (JVC) with General Electric, USA, viz., GE BE Pvt Ltd., manufacturing CT Max and other latest version X-Ray Tubes continues to perform well. BEL supplies some parts required for the products manufactured by this JVC. GE BE Pvt Ltd achieved a turnover ofRs. 44,239.20 lakhs as against Rs. 50,928.95 lakhs in the previous year. The Profit After Tax was Rs. 5,754.79 lakhs as against Rs. 6,608.33 lakhs in the previous year. The JVC declared 100% dividend for the year 2010-11 and accordingly BEL received Rs. 260 lakhs as dividend from this JVC on BEL's share of investment.

The other JVC, viz., BEL Multitone Pvt. Ltd., jointly promoted by BEL and Multitone plc, UK was set up to supply, install and service Private Paging Systems and Pagers. The JVC is presently in shell stage with no business transactions being effected, and action is in progress to close down this Company, as there are no business prospects for paging systems in the Country.

Consolidated Accounts

Consolidated Financial Statements of your Company and its Subsidiary and Joint Venture Companies are attached to this Report.

Vigilance

The performance of Vigilance Department during 2010-11 has been satisfactory. 99.8% of the Executives of the Company have fled their Annual Property Returns. 1400 Purchase

Orders / Contracts and 451 high value Orders / Contracts were reviewed / scrutinised during the year and found to be in order. As per the CVC / CTE Guidelines, 2 teams for Inspection of Works Contracts and 2 teams for Inspection of Purchase Orders have been constituted. During 2010-11, 11 Works Contracts and 16 high value POs have been inspected by in-house inspection teams. During the year, 2630 regular / surprise inspections were conducted.

During the year 219 Executives and 15 Non-executives have taken part in Vigilance Awareness Training Programme. 2 Executives have been trained in the Principles of Natural Justice & Domestic Enquiry Training Programme (for Dy. Mgrs. & above). 39 Executives & 32 Non Executives working in sensitive areas for 3 years and above have been moved to different posts.

In terms of CVC's guidelines for Leveraging Technology to ensure transparency through effective use of website, the following information has been made available in the BEL website :

- Application forms for Registration of Subcontractors / Vendors online for being included in the Approved Vendors List and applications for recruitment have also been facilitated online.

- Details of awarded Contracts / Purchase Orders valuing more than Rs. 10 lakhs in respect of works contracts, service contracts, capital items and non-production items are being published on BEL website.

- Details of awarded Contracts / Purchase Orders issued on nomination / single tender basis value exceeding Rs. 5 lakhs are being published on BEL website.

- Details of awarded Purchase Orders / Sub Contract Orders for production items with a threshold value of Rs. One Crore and above are being published on BEL website.

- Vendor Payments Information System is made available on BEL website.

In addition to the above, a new Vigilance page has been put on BEL website (www.bel-india.com). E-procurement is under development and it is expected to be implemented shortly.

In addition to revised Purchase Procedure Manual released during December 2009, BEL has revised the Sub Contract Procedure and issued an Office Order on 01.07.2010 for adoption by all Units of BEL. The Company has also revised its Works Contract Manual and issued an Office Order on 09.07.2010 for adoption by all Units of BEL.

BEL has adopted Integrity Pact on 31.07.2010 for all Orders / Contracts of value Rs. 20 Crores and above. As per CVC's recommendation, BEL has appointed Mr N K Sinha, IAS (Retd.), former Secretary, Planning Commission and former Chairman, PESB as one of the IEM for BEL.

Implementation of Official Language

The Committee of Parliament on Official Language visited BEL, Ghaziabad Unit on 31st May 2010 and BEL Regional Office, Mumbai on 25th June 2010. Your Company is committed to adhere with the OL policies of the Government of India. Official Language Implementation is a continuous process in the Company. During the year, two more Units, viz. Bangalore Complex and Hyderabad Unit were notified under rule 10 (4) of OL rules. With this, total 11 Units / Offices have been notified under rule 10 (4) of OL rules. Orders have been issued under rule 8 (4) of OL Rules for those having proficiency in Hindi to do their Official work in Hindi. Hindi workshops for those having working knowledge in Hindi were conducted. Action plan has been made for Unicode activation on all the PCs Company wide and training sessions covering Executives and Employees. Process is on for giving Indian names for all BEL Products.

Implementation of RTI Act

The information required to be provided to citizens under Section 4(1)(b) of the RTI Act 2005 has been posted on the website of Company, www.bel-india.com. The information posted on the website contains general information about the Company, powers and duties of employees, information about decision- making, rules, regulations, manuals and records held by BEL, directory of the Company's officers, pay scales, procedure for requesting additional information about the Company by citizens and associated request formats. During the year 2010-11 the Company received and attended to 184 requests for information under RTIA.

Directorate

Following changes took place in the Directorate of your Company since the last report. Five Independent Directors, viz. (i) Prof Anurag Kumar, Professor, IISc, Bangalore, (ii) Dr S N Dash, former Secretary to Government of India, (iii) Prof G Madhavan Nair, former Chairman, ISRO, (iv) Mr N Sitaram, former Chief Controller (R&D), DRDO and (v) Prof R Venkata Rao, Vice - Chancellor, National Law School of India University, Bangalore, have been appointed w.e.f. 20th Dec 2010. Air Marshal P K Barbora, PVSM, VM, ADC, Vice Chief of Air Staff and Permanent Special Invitee to BEL Board Meetings exited the Board on his retirement from Service on 31st Dec 2010. Subsequently, Government has nominated Air Marshal N A K Browne, PVSM, AVSM, VM, ADC, Vice Chief of Air Staff as Permanent Special Invitee to BEL Board Meetings. Government has nominated Mr P K Kataria, Addl. Financial Adviser & Joint Secretary, Ministry of Defence also as one more Permanent Special Invitee to BEL Board Meetings.

Directors' Responsibility Statement

Pursuant to the provisions under Section 217(2AA) of the Companies Act, 1956 your Directors state :

(i) that in the preparation of the annual accounts, the applicable Accounting Standards have been followed and in respect of Accounting Standard 17, necessary explanation for departure has been given in Note No. 18 of the Notes to Accounts (Schedule 21) ;

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

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

(iv) that the directors have prepared the annual accounts on a going concern basis.

Auditors

Pursuant to Section 619(2) of the Companies Act 1956, the Comptroller and Auditor General of India re-appointed M/s R G N Price & Co., Chartered Accountants, Chennai as Statutory Auditors for the year 2010 - 11 for audit of accounts of Bangalore Complex, Hyderabad and Chennai Units and Corporate Office. M/s Mittal Gupta & Co., Chartered Accountants, New Delhi, were appointed as Branch Auditors of Ghaziabad, Panchkula and Kotdwara Units for 2010 - 11. M/s Argade Shyam & Co, Chartered Accountants, Pune were reappointed as Branch Auditors for Pune and Taloja Units for 2010-11. M/s N Koteswara Rao & Co, Chartered Accountants, Guntur were reappointed as Branch Auditors for Machilipatnam Unit for 2010 - 11.

Auditors' Report

Auditors' Report on the Annual Accounts for the financial year 2010 - 11 and Comments of the Comptroller & Auditor General of India under section 619(4) of the Companies Act, 1956 on the Annual Accounts are appended to this report.

Corporate Governance

Your Directors are happy to inform you that your Company has won the Standing Conference of Public Enterprises (SCOPE) Award for Corporate Governance 2009 - 10. The SCOPE Awards 2009 - 10 were decided by an Independent panel of Judges under the Chairmanship of Justice P N Bhagwati, former Chief Justice of India and included Dr Abid Hussain, former Ambassador to USA, Dr M B Athreya, a well known Management Consultant, Mr M A Pathan, former Chairman, IOC, Mr C P Jain, former CMD, NTPC, Dr U D Choubey, DG, SCOPE and Prof B K Srivastava and his team of professors from International Management Institute.

A report on Corporate Governance along with a Compliance Certificate from the Auditors as prescribed under the Listing Agreements with the Stock Exchanges on which BEL's shares are listed as well as Govt. Guidelines on Corporate Governance for Central Public Enterprises, is annexed to this Report.

Management Discussion and Analysis Report

Management Discussion and Analysis Report required under the Listing Agreements with the Stock Exchanges on which BEL's shares are listed as well as Government Guidelines on Corporate Governance for Central Public Enterprises, is annexed to this Report.

Other Disclosures

Information required to be disclosed in accordance with Section 217 (1) (e) of the Companies Act 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules 1988 regarding conservation of energy, technology absorption and foreign exchange earnings and outgo, is attached to this report.

The particulars of employees to be furnished as per Section 217 (2A) of the Companies Act 1956, read with the Companies (Particulars of Employees) Rules 1975, as amended, are ‘NIL' for 2010-11.

Acknowledgement

Your Directors acknowledge with a deep sense of appreciation the support and co-operation received from the Government of India, Ministry of Defence, Departments of Defence

Production, Defence Acquisition, Defence Finance and Defence Research & Development Organisation. The Board also gratefully acknowledges the patronage extended to the Company by its esteemed customers, particularly the Indian Army, the Indian Navy, the Indian Air Force, the para-military forces and others. We thank the Comptroller and Auditor General of India, Chairman, Members and employees of the Audit Board, Statutory Auditors and Branch Auditors, Company's Bankers, collaborators and vendors. The Board appreciates the untiring efforts and contribution by the employees at all levels, which enabled your Company to achieve the significant performance during the year. The Board of Directors also wishes to place on record its appreciation and gratitude to all the shareholders / investors for the trust and confidence reposed in the Company and look forward to their continued support and participation in sustaining the growth of your Company in the coming years.

For and on behalf of the Board

Place : Bangalore Ashwani Kumar Datt

Date : 12th August 2011 Chairman & Managing Director


Mar 31, 2010

On behalf of the Board of Directors of your Company, I am delighted to present the Annual Report on the performance and achievements of your Company for the year ended 31st March 2010 along with the Audited Statement of Accounts, Auditors Report and the Report on the Accounts by the Comptroller and Auditor General of India.

During the year 2009-10 your Company achieved a major milestone by surpassing, for the frst tme, Rs. 500,000 lakhs mark in turnover. By logging-in Rs. 521,977.40 lakhs turnover, BEL achieved excellent ratng in turnover parameter for the year, as per the MoU with the Government of India. This is against Rs. 462,368.89 lakhs turnover in the previous year, registering a growth of 12.89 % over the previous year. The Value of Producton during the year was Rs. 524,788.20 lakhs as against Rs. 527,327.27 lakhs in the previous year, marginally lesser by 0.48 % over previous year. The Profit Afer Tax for the year was Rs. 72,087.10 lakhs as against Rs. 74,575.97 lakhs in the previous year. Value added per employee for the year was Rs. 18.69 lakhs, as against previous years fgure of Rs. 18.11 lakhs. Supplies to the Defence Sector consttuted 83.44 % of the sales, balance 16.56 % being supplies to the civilian sector.

All the nine manufacturing Units of your Company performed well and earned profits during the year.

Operatng Results

The summarised operatng results for the years 2009-10 and 2008-09 are given below:

(Rs. in lakhs)

2009-10 2008-09

Value of Producton 524,788.20 527,327.27

Turnover (Gross) 521,977.40 462,368.89

Profit Before Depreciaton, 116,150.06 121,320.21 Interest and Tax

Interest 53.48 1,076.85

Depreciaton 11,594.23 10,559.77

Provision for Tax 32,415.25 35,107.62

Profit Afer Tax 72,087.10 74,575.97

Distributon of Value of Producton for 2009-10 is given below:

Amount Percentage (Rs. in lakhs)

Materials 302,453.65 57.63

Employee Cost 100,958.47 19.24

Other Expenses (Net) 5,226.02 1.00

Depreciaton 11,594.23 2.21

Interest 53.48 0.01

Provision for Tax 32,415.25 6.18

Profit Afer Tax 72,087.10 13.73

Total 524,788.20 100.00

Appropriatons & Dividend

Your Directors recommend the following appropriatons from the disposable surplus:

(Rs. in lakhs)

Capital Reserve 90.77

Interim Dividend on paid up Capital of Rs. 8,000 4,800.00 lakhs @ Rs. 6 per share

Proposed Final Dividend on paid up Capital of 10,560.00 Rs. 8,000 lakhs @ Rs. 13.20 per share

Dividend Tax 2,569.66

Transfer to General Reserve 40,000.00

Balance retained in Profit & Loss Account 191,303.51

Your Company declared and paid during 2009-10 an interim dividend @ Rs. 6 per share.

Signifcant Achievements

Major Orders Executed

Some of the important orders executed during the year include supply of High Power HF Communication Sets, Frequency Hopping VHF Transreceivers, UHF Handheld Radio, UHF Radio Relays, Upgraded Fire Control Systems, Surveillance Radar Element, Thermal Imager based Integrated Observaton Equipment, 3D Central Acquisiton Radar (Rohini), Shipborne and Airborne Electronic Warfare Systems, Night Vision Binoculars, Low Flying Detecton Radars (Indra II), L Band Surveillance Radar (Mk III), Ship-based 3D Surveillance Radar, Doppler Weather Radar, Digital Mobile Radio Relay and Upgraded EVMs. These equipment have been supplied to a wide range of customers from the Army, Navy, Air Force, Defence PSUs, Paramilitary and others.

Among the many orders executed during the year, the following merit special atenton:

Air Trafic Control Radar 33S Surveillance Radar Element (SRE) Phase II: It is an S band Air Trafc Control Radar suited for Terminal Control applicatons. It detects and automatcally tracks a large number of aircraf within LFA (Local Flying Area) under all weather conditons and is confgured for high availability.

Radio Relay F - Low Band: It is a digital Communication equipment that provides fast, reliable and secure Communication. It can operate in a fxed frequency mode or in two diferent hopping modes - conventonal and adaptve. The transmission security in the network is increased considerably by the use of frequency hopping techniques.

Central Acquisiton Radar, Rohini: It is a 3D surveillance Radar in S band. Stacked beam recepton gives 3D informaton of height apart from range and bearing. It is developed jointly with LRDE.

Indra II: L-band 2D low level Surveillance Radar caters to the vital gap-flling role in air defence environment.

Frequency Hopping VHF Transceivers: A frequency hopping, sofware confgurable ECCM radio (5W & 25W) in the VHF band. It has in-built data Communication features to enable transfer of any type of fles / free text and has GPS functonality.

Thermal Imager Based Integrated Observaton Equipment: It consists of a Digital Goniometer, Artllery Mounted Long Range Thermal Imager and Laser Range Finder. Hand Held GPS is interfaced to it through a cable. It is mounted on a Tripod stand and used by Forward Observers of Artllery. Targets at a distance of 10 km and beyond can be located and their co-ordinates computed.

Intelligent CCTV Surveillance System for Indian Parliament: BEL won the prestgious order for the supply and Installation of this system for Parliament. It involves integration of large numbers of cameras on an IP platorm with an integrated Command & Control Centre. The intelligent features of the system include video and audio content analysis, redundant recording, reportng and response matrix and integration with 3D modeling of Parliament House and Tetra Communication System.

New Products

Some of the new products / systems introduced during the year include Integrated Air Command and Control System, Advanced Naval Gun Fire Control System for IN Ships, Gap Measuring Device Mk III, Perimeter Security Jammer, Frequency Hopping HF Transreceivers for paramilitary forces, Data Facility Kit for VHF radios and V / UHF Protocol Analyzer.

A closer look at some of the new products:

- IACCS: Integrated Air Command and Control System (IACCS) is an automated Air Defence Command and Control Center for controlling and monitoring of air operations. It receives data from diferent types of homogeneous / heterogeneous Radars (2-D or 3-D), mobile observaton posts and various other Air Force or civilian agencies to create real tme, comprehensive recognised air situaton picture (RASP) at the ADCC, which is an IACCS Command & Control Centre (C&C Centre).

- Advanced Naval Gun Fire Control System: This state-of- the-art system, developed by BEL to be installed on board

IN Ships is a quick reacton, mult-sensor, mult-weapon, short / medium / long-range defence system against air / surface / shore targets on board naval ships. It consists of 5 functonal sub-systems: Tracker, Weapon Control, Sight Control, Combat Management System and Support Systems, each of which can be used as an independent system.

- Gap Measuring Device Mk III: It is an electro-optcal system developed for accurate range fnding during day and night. Its inbuilt computer calculates the height diference between the two banks of same water body. It can measure a minimum distance of 10 m and a maximum distance of 1.5 km.

Business Initatives

New business Initiatives during the year include:

- For the last few years, the Indian Defence Forces are in the process of modernising their infrastructure and their areas of operations. BEL has been proactvely partcipatng in their modernisaton actvites. Development & Engineering teams have been set up to work in the areas of Tactcal Communication Systems, Batlefeld Management System, Command Informaton Decision Support System, Future Infantry Soldier System and High Data Rate Mult-band Sofware Defined Radio.

- BEL is discussing with technology leaders for forming joint ventures in the areas of defence electronics, namely, Missile Electronics & Guidance Systems, Airborne Electronic Warfare products, civilian & select defence Radars. Some of these proposals are in the advanced stage of discussions.

- BEL is also discussing with BHEL for setng up a joint venture Company (JVC) for Solar Photovoltaic manufacturing.

- MoU signed with M/s Indus Teqsite, Chennai, for exploring the setng up of JVC for development of digital subsystems & test systems for Radars, Avionics, Electronic Warfare, etc.

- MoU signed with M/s Thales Internatonal, France, for exploring possibility of setng up of a JVC for civilian and select defence Radars.

- A medium term perspectve plan of your Company has been drawn up for the period 2009-2014. The plan lists the challenges, opportunites and strategies for the Company to face the current defence business scenario due to increased partcipaton by private companies. Also, an actvity has been launched to study the preparedness of BEL to meet futuristc customer requirements and achieve accelerated growth in the next decade. The present capability of your Company in technology, products and solutons vis-à-vis business growth along with capability enhancements is being assessed.

Manufacturing Initiatives

- State-of-the-art Digital Flight Control Computer (DFCC) manufacturing facility.

During the year your Company has set up a state-of-the-art integrated manufacturing facility for assembly, inspecton and testng of Digital Flight Control Computer (DFCC), all under one roof. DFCC is a state-of-the-art, multple redundant (improving its reliability, one channel will take over if another fails) Digital Fly-By-Wire Flight Control System of the Light Combat Aircraf (LCA), Tejas, which basically controls the maneuvering (pitch, yaw and roll) of the aircraf. The facility includes Thermal Cycling Chamber, Vibration Machine, Dehumidifying Chambers for storing PCBs, high- resoluton inspecton tools for identfying process errors, Automated Test Equipment for rigorous performance testng and Engineering Test Staton for testng the DFCC unit. The facility has ESD safe fooring and ESD safeguards for assembly, inspecton and testng. Reflow and wave soldering facilites have been set up to enhance reliability. With this unique facility, your Company has acquired the capability to meet the requirements of the LCA programme.

- Walk-in Thermal Chambers have been commissioned which can test the performance of the products within a temperature range of - 40°C to +70°C.

- Spark 400 Machine has been commissioned for SMT Assemblies.

- Vibration Machine has been installed to carry out vibration test of large subsystem / Test Rack of various projects like Combat Management System and Central Acquisiton Radar.

- Rapid Thermal Cycling Chamber (Capacity 270 Ltr), an Environmental Stress Screening chamber with very fast temperature change rate, has been installed.

- Electro-Platng Facility for Ferrous and Non-ferrous and Magnesium metals has been established in the platng shop at Machilipatnam Unit.

Exports

During the year, your Companys exports turnover registered an impressive growth of 33 per cent from US $ 177.7 lakhs in 2008-09 to US $ 236.7 lakhs during 2009-10. The range of products exported includes Composite Communication System, Versatle Communication System, Fire-Control System, Radar Warning Receiver, Enhanced Tactcal Computer, Night Vision Devices, Data Link II, FM Transmiters, Crypt-fax, LED based trafc signaling system, Secure Telephone, Non-Eye Safe & Eye Safe Laser

Range Finders, Vacuum Interrupter for Switchgears, Solar Cells, Magnetrons, X-Ray Tube parts like Casings, Stators, Magnetc and Electro-mechanical assemblies. These exports were made to various countries including USA, UK, Israel, Suriname, Malaysia, Indonesia, Singapore, Philippines, Czech Republic, Sri Lanka, Russia, Zimbabwe, UAE, Switzerland, Belgium, Turkey, Bangladesh and Germany.

Over the years, BEL has established its presence in many countries, supplying number of equipment and components covering various types of Radios, Radar and spares, Communication System, Solar Products and Vacuum Interrupters. Export is a thrust area for BEL. Your Company has been making eforts for contnuous growth in this area and has also put-in specifc eforts and investments to address the emerging ofset business opportunites due to implementaton of ofset policy by the Government of India.

During the last financial year, newer markets and ofset opportunites have been addressed and orders worth US $ 583.3 lakhs have been obtained including US $ 480 lakhs pertaining to ofset business segment. The orders obtained during the year, include Naval systems such as Composite Communication System, Versatle Communication System, ESM System, Electro-Optc Fire Control System & their integration onboard the Fleet Tanker in Italy, airborne equipment such as Data Link II, IFF and Radar Finger Printng system and Radar sub-systems. As on 1.4.2010, your Company has an export order book of US $ 738.9 lakhs.

Finance

During the year, your Company has been able to meet its entre fund requirement towards Capital investments and additonal working capital needs without resortng to borrowings, through efcient management of funds. Your Company has been able to retain the highest ratng by ICRA, for both short term and long term sanctoned bank limits, which will contnue to help in securing the best rates for the services availed from the consortum banks. During the year, many of the actvites related to Accounting of transactons have been suitably changed to take advantage of the online ERP platorm, thereby reducing the transacton tme of Accounting. With passage of tme the availability of centralised data on a real tme basis is expected to result in the desired improvement in the informaton flow, thereby improving the decision making process further.

The inventory positon of your Company has marginally increased from 169 days of value of producton as on 31st March 2009 to 172 days as on 31st March 2010. Eforts are on to rationalise the procurement process further with a view to achieving further reducton in the inventory levels. The level of debtors to sales has improved from 180 days as on 31st March 2009 to 152 days as on 31.03.2010. This reducton in debtors has been brought about by an increase in the collecton of both opening debtors and the current year debtors, which could be achieved due to beter even flow of sales throughout the year, aided by constant follow up and regular reviews.

The working capital positon will be closely monitored to ensure that the improvement seen in the positon of debtors and inventory is sustained. During the coming year, it is planned to take up the job of IFRS implementaton and your Company will be able to prepare the accounts in line with the IFRS requirement within the scheduled dead line, as stpulated by the Accounting Standards Board.

Your Company does not have any public deposit scheme at present. However, the matured past public deposits is Rs. 38.55 lakhs as on 31.3.2010. Of these, 34 deposits amountng to Rs. 36.50 lakhs are claimed but not paid as these accounts are frozen on advice of Karnataka Lok Ayukta. Remaining past deposits of Rs. 2.05 lakhs as on 31.3.2010 is unclaimed. The entre amount of public deposits outstanding as on 31.3.2010 is included in the Current Liabilites, Schedule No. 12 of the Balance Sheet.

Performance against MoU

Your Company has been signing a Memorandum of Understanding with its Administratve Ministry, Ministry of Defence (MoD) every year. The performance of your Company against the MoU for 2009-10 is ‘Excellent. The MoU between the MoD and BEL for the year 2010-11 was signed on 4 March 2010. Sales target set in the MoU for 2010-11 is Rs. 535,000 lakhs for achieving ‘Very Good performance ratng and Rs. 561,750 lakhs for achieving ‘Excellent performance ratng.

Order Book Positon

The order book positon of your Company as on 1 April 2010 was Rs. 1,135,000 lakhs, out of which orders worth Rs. 447,800 lakhs are executable during 2010-11. The balance will get executed in 2011-12 and beyond.

Research & Development

Research and Development is the core strength of BEL and focused atenton was given during the year for nurturing and monitoring of R&D for the development of new technologies and products for business generation. Other than in-house eforts, BEL R&D engineers had actve interactons with DRDO and other natonal research and development agencies and academic insttutes and also with foreign partners for joint development eforts.

Your Company contnued its R&D actvites in all the areas of its business segments, namely: Radars, Naval Systems, Communication, Encrypton, Electronic Warfare, Command Control Systems, Opto-electronics, Tank & Weapon electronics, Fire Control Systems, Avionics, Civilian equipment & systems and Components during the year. Development & Engineering Divisions atached to all the Strategic Business Units of Bangalore and Other Units concentrated on product development in the respectve areas of allocated business segments. Central D&E and the two Central Research Laboratiories of the Company supported the D&E Divisions by way of developing specialised core modules and other technology and sofware modules for the product development.

The analysis of turnover of your Company for the year 2009- 10 indicates that 57% of the turnover is due to BEL designed products, 18% of the turnover due to DRDO and other indigenous agencies developed products and remaining 25% is due to products for which technologies were acquired through foreign ToTs.

During the year, R&D Divisions of BEL have completed more than 30 projects each in the areas of equipment / systems and components. Some of the new products / systems introduced during the year include Integrated Air Command and Control System (IACCS), Advanced Naval Gun Fire Control System for IN Ships, Gap Measuring Device MK-III, Statc Jammers, Frequency Hopping HF Transreceiver for Paramilitary forces, Data Facility Kit for VHF radios, V / UHF Protocol Analyzer etc. Brief informaton about some of the introduced products are given below:

(a) Advanced Naval Gun Fire Control System: This is a quick reacton mult-sensor and mult-weapon based defence system mounted on board naval ships for short / medium / long range defence system against air / surface / shore targets.

(b) Statc Jammers: Statc Jammers is a counter RCIED system meant for protecton of high risk and high value targets viz. Ship Building Centre etc. The system is installed in shelters, which are located at pre-Defined positons in order to provide protecton to the entre Security Threat area. This is a statc broad band transmitng equipment used to mute the receivers likely to be operated remotely by hostle transmiters in V / UHF, GSM & CDMA bands.

(c) Frequency Hopping HF Transreceiver: This is a DSP based light weight 20W High Frequency man pack radio providing complete soluton to the short-range Communication requirements in the HF band. The radio provides Voice, Data, Telegraphy and Flash Message Communication. Communication reliability has been enhanced with the introducton of Automatc Link Enhancement (Best Call) feature. Frequency Hopping feature of the radio provides secure transmission and ant-jamming protecton.

(d) V / UHF Protocol Analyzer: This equipment is used for analysis and decoding of wide range of signals. The equipment facilitates search and monitoring of signals, demultplexing of both Frequency Division and Time Division Multplexing structures and reconstructon of voice, fax, Vfit (Voice Frequency Telegraph) and modem data.

Scientsts from Central Research Laboratiories and other R&D divisions of BEL have contributed 38 technical papers in the natonal and internatonal journals during the year. R&D Engineers of BEL have submited 2 Patent applicatons during the year.

Quality

The Company has adopted the ‘Six Sigma methodology about a decade back for achieving breakthrough improvements. Quality Insttute of Bharat Electronics has been impartng training on ‘Six Sigma since July 1999 and has trained 1,078 ofcers so far. During the year, 265 six-sigma projects were completed, resultng in cost reducton, process improvement and customer satsfacton.

BEL has adopted the ‘CII-EXIM Bank Business Excellence Model since 2002 and select Units / SBUs have been partcipatng in the Award scheme of this Model every year since then. This Model depicts that Excellent Organisatons achieve and sustain superior levels of performance that meet or exceed the expectatons of all their stakeholders.

During the year, four of our Units / SBUs applied for the ‘CII- EXIM Bank Award for Business Excellence. While MILCOM SBU became the frst BEL Unit to receive higher level ‘Commendaton Certfcate for Signifcant Achievement, other three, viz. Ghaziabad Unit, Panchkula Unit and Components SBU received ‘Commendaton Certfcate for Strong Commitment to Excel under this Award scheme.

With a view to insttutonalise the ‘business excellence in the Company, an internal ‘BEL Business Excellence Award scheme has been introduced from the year 2009-10. Under this, all Units / SBUs of the Company will partcipate in this award scheme every year and best four Units / SBUs will be identfed and rewarded. Introducton of this scheme is likely to bring a healthy competton among the Units / SBUs to achieve higher levels of excellence.

As a part of our endeavor to enhance the customer satsfacton level, we have been conductng customer satsfacton surveys every year. This survey is being conducted through a third party to bring in objectvity. Based on the feedback obtained from the survey, correctve actons are taken to improve our processes so as to enhance the satsfacton level of customers. During the year 2009-10 the customer satsfacton survey was conducted for six products, each belonging to a diferent Unit / SBU. Overall customer satsfacton index was found to be 82%.

SAP Implementaton

Based on the study and recommendaton by Tata Consultancy Services, your Company undertook implementaton of SAP across all Units / Ofces of the Company. Implementaton of SAP R / 3 including Payroll, Product Lifecycle Management module at all Units and Ofces of BEL was completed in a phased manner by July, 2008. A number of improvements, checks and validatons have since been incorporated in the system based on user feedback. Standard SAP package does not cater to several requirements such as Material Gate Pass, Visitors Pass etc. The following add on modules have been developed and released to users during 2009-10: Material Gate Pass System, Visitors Gate Pass System, Vendor Payment Informaton System, Quality Control Circles Monitoring System, Six Sigma Projects Monitoring System and Contract Monitoring System

Implementaton of the following new dimension modules is in progress: supplier Relatonship Management (SRM) and Knowledge Management (C Folders) modules have been confgured and tested. Employee Self Service (ESS) module has been confgured and testng is in progress. Customer Relatonship Management (CRM), Strategic Enterprise Management (SEM) and Supply Chain Management (SCM) modules are under confguration. All the above modules are planned to be implemented during 2010-11.

Following new tools / modules have been licensed from SAP. These tools / modules are planned to be implemented during 2010-11.

Test Data Migration Server (TDMS): This facilitates migration of select test data for testng of new developments.

Adobe Forms: This facilitates users to generate informaton in an of line mode and upload the data to SAP directly.

Business Objects: This module facilitates presentaton of reports to Senior Management to see reports in a fexible and dynamic manner.

Procurement for Public Sector (PPS) Module: This module facilitates e-procurement with provision for online bidding by vendors, 2 Part Bidding, Accounting of Earnest Money Deposit, opening of Bids by Tender Opening Commitee etc.

Human Resources

The employee strength of your Company was 11,545 as on 31.3.2010 as against 11,961 as on 31.3.2009. The Company employed 2447 women employees as on 31.3.2010. As a refecton of the Company operatng in high tech area, it employed 3420 engineers and scientsts as on 31.3.2010

The partculars of SC / ST and other categories of employees as on 31.3.2010 are as under:

Executives Non-Executives

Category of Employees Group ‘A Group ‘B Group ‘C Group ‘D

Scheduled Caste 763 78 1,295 117

Scheduled Tribe 222 06 129 30

OBC 712 67 999 60

Ex-Servicemen 83 48 328 86

Physically Handicapped 72 09 168 18

To address the learning and organisaton development needs, various HRD training programmes were organised in Companys Learning & Development Divisions. These included in-house developed modules as well as modules developed and imparted with the assistance of various outside HR specialists. In additon, various management development programmes as well as technology programmes were organised during the year through premier training insttutons for all grades of executves. The Company-wide per capita training days for the year was 3.0. Some of the specifc HR Initiatives during the year are discussed separately as part of the Management Discussion and Analysis Report atached.

Industrial Relatons & Welfare

Industrial relatons contnued to be harmonious throughout your Company. During the year pay revision, due from 1.1.2007, was implemented for Board level and below Board level executves. Wage setlement with non-executve employees, also due from 1.1.2007, was concluded in May, 2010. Various programmes were organised for the benefit of all Sections of employees and their families, some which were exclusively for women employees and SC / ST employees to improve their awareness in legal issues, safety maters, etc. Special programmes were organised for diferently-abled employees on the topics of Team Building, Interpersonal Skills, Habits for Excellence & Improving Quality of Life. Besides various statutory and voluntary welfare measures, the Company encourages various cultural and sports events for its employees.

Your Companys comprehensive medical scheme covers all employees, their dependent family members as well as retred employees and their spouses. BEL Hospital at Bangalore extends outpatent medical treatment to the residents of neighbouring villages and employees of BEL associate insttutons / societes in additon to its own employees, their dependents and retred employees / their spouses. Welfare programmes organised by BEL Hospital during the year includes: Pulse Polio Immunisaton programme, administering of Vitamin A soluton to children between 9 months and 5 years as measure of preventon of blindness and to increase resistance to infecton, Screening program, counselling and preventve measures for respiratiory diseases, Eye camp for screening Retnal diseases, Medical camp for Heart check-up was conducted for retred employees, programme for employees, family members for detecton and preventon of cancer, etc.

Educatonal insttutons run by the Company for educaton of children of employees and also of neighboring villages, performed well during the year.

Awards & Recogniton

Important awards and recognitons received during the year by your Company and its employees include:

- Raksha Mantris Awards for Import Substtuton, Design Eforts, Innovaton and Best Performing Division among DPSUs. (2007-08)

- Commendaton Certfcate of “SCOPE Meritorious Award for R&D, Technology Development & Innovaton” (2007-08)

- SODET Award 2008-09 for two of BELs engineers in the Gold and Bronze category for Technology Innovaton and Development, respectvely.

- Dun & Bradstreet Corporate Award 2009 in the category of Electrical and Electronic Equipment sector.

- Indian Semiconductor Associaton Technovaton Award for the Best Electronic Product of the Year 2010 for the Pre-shower 32 Channel Silicon Strip Detector supplied to CERN, Geneva, for the Big Bang Experiment.

- Concern Age Care Award in recogniton of BELs contributon towards elderly care.

- Ghaziabad Units Six Sigma project, Productvity Improvement in Assembly of STARS - V Accessory Cables, was adjudged frst in the Lean Manufacturing Category by the Symbiosis Center for Management & Human Resource Development, Pune.

- Ghaziabad Unit won the Internatonal Safety Award for the 18th tme from the Britsh Safety Council, UK.

Environment Management

Your Company is commited to clean and healthy environment and has been maintaining the surroundings free from polluton. As an organisaton accredited to ISO 14001:2004 standard, the Company has great regard to environment and puts in every efort to prevent polluton of any kind in all its actvites. BEL adopts cleaner technology, zero efuent discharge, rain water harvestng techniques, conservaton of natural resources, use of renewable energy etc., to name a few, in its endeavour towards maintaining a cleaner environment. The signifcant features of the Initiatives are illustrated below.

Cleaner Technology: Eforts have been made to prevent polluton through introducton of cleaner technology. Changing over to Cyanide-free Zinc and Copper platng in electroplatng process has resulted in eliminaton of use of hazardous Cyanide. Alternatve electronic components have been introduced in many of the designs to exclude the hazardous efects of materials such as Polybrominated compounds, Hexavalent Chromium, Mercury, Beryllium Oxide, PVC and Lead. Use of Energy efcient devices introduced in the equipment designs results in resource conservaton in additon to reducing the operatng cost. Other measures undertaken include minimising signifcant environmental impacts by replacement / change of Hazardous operation / process / chemicals with Non-Hazardous processes like replacement of Ozone depletng substance like Trichloroethylene with Ozone friendly Non-chlorinated solvent, replacement of Asbestos sheet roof with Aluminum sheets, improvement in Elctro-Platng processes and operation by modernisaton of Electro-Platng and ETP, provision of Acoustc Enclosures for Noise generatng systems, etc.

Water Management: Rainwater harvestng and innovatve recharging of bore wells enable the Company to collect the runof water and recharge the ground water table. The large-scale rainwater-harvestng reservoir at Bangalore unit has a capacity of 1,700 lakhs litres with expected annual yield of around 2,340 lakhs litres. Rainwater harvestng reservoirs are set up in other Units also. During the year two more rain water harvestng sites were installed at Ghaziabad Unit covering a very wide catchment area of rain water. By Rainwater harvestng and recharging of bore wells ground water yield has improved. Water sofening plant of 1.00 lakh litres per day is in operation at Hyderabad Unit for sofening the ground water to reduce the scaling etc.

Waste water generated in the manufacturing process is treated to meet reusable standards and recycled for producton purpose. In the same way domestc waste water generated in the factory and colony is treated and recycled for hortculture purpose.

Emission To Air: Emission to air is checked through stack monitoring and with appropriate air polluton control equipments. Emissions passing through chimneys are treated to bring down the level of pollutants much below the stpulatons of State Polluton Control Boards (SPCBs).

Hazardous Waste Management System: The problem associated with generation of hazardous waste is addressed at root cause level itself. By utlising appropriate chemicals in the waste water treatment, less sludge is generated in the process of chemical detoxifcaton. BEL has ted up with the State Polluton Control Boards “Treatment, Storage & Disposal Facility” operatiors for disposal of landfllable solid hazardous waste. The hazardous wastes are disposed in a scientfc manner as per the guidelines of State Polluton Control Boards.

Biomedical Waste: Biomedical wastes generated in hospital and medical centers are collected and disposed of scientfcally as per the regulatory guidelines.

OHSAS 18001(2007) - In additon to caring for the environment, BEL equally respects the well being of its workforce through OHSAS 18001(2007) implementaton. Bangalore Complex and Ghaziabad Unit are certfed for OHSAS 18001: 2007.

Other Initiatives: Your Company has taken acton to mitgate climate change as per the Natonal Policy by establishing two Wind Energy power plants, one 2.5 MW plant near Davanagere during 2006-07 and another 3 MW plant near Hassan during 2007-08. The two Wind Energy power plants together have generated 106.5 lakhs units of energy during 2009-10 and has resulted in reducton in CO2 emission to the tune of 9934 tons. The Company has taken up replacement of two old centrifugal chillers, which were running with ozone depletng CFC 11 with new energy efcient screw chillers using eco-friendly refrigerant R134a. The replacement has resulted in energy savings to the tune of 1.5 lakhs KWhr per year. Old air compressors, blowers & Air Handling Units have been replaced with energy efcient ones leading to energy conservaton of around 75,000 KWhr per year. In order to keep the environment of the factory and township green, 1,35,000 trees and 3,60,000 Sq Mtrs of lawn are being maintained at Bangalore Complex. A herbal park has been developed inside the Ghaziabad factory premises. During the year 1000 Jatropha Plants (Bio diesel crops) were planted in Bangalore Complex. A green belt has been developed around Test Platorms at Hyderabad Unit.

Subsidiary / Joint Ventures

Your Companys subsidiary at Pune, BEL Optronic Devices Ltd,. (BELOP) recorded a turnover of Rs. 5,874.48 lakhs as against the turnover of Rs. 3,114.67 lakhs in the previous year, an increase of 89 % over the previous year. BELOP achieved Profit Afer Tax of Rs. 227.42 lakhs as against a net loss of Rs. 358.05 lakhs in the previous year. BELOP manufactures mainly Image Intensifer Tubes (I.I. Tubes). These Tubes are supplied to the Defence customers and also used in the Night Vision Devices manufactured by BEL. Though the subsidiary has performed well during the year as compared with its performance in the previous year, it stll has problems on the technology front. Indian Army, has shifed its requirement from II Generation I.I. tubes to higher specifcaton I.I. Tubes for which technology does not exist with BELOP. Eforts are on to source technology for the higher specifcaton tubes from available sources in the world market. Meanwhile, BELOP is importng kits in SKD / CKD form to manufacture higher specifcaton Tubes to take care of the immediate requirements of the customers. Due to this, the contributon is low and profitability is afected.

In accordance with Section 212(8) of the Companies Act 1956 (the Act) your Company has obtained exempton from the Govt. from ataching the Balance Sheet, Profit & Loss Account, Auditors Report, Directors Report, etc., of the subsidiary Company to the Balance Sheet of BEL. Hence, Annual Accounts of the subsidiary Company, BEL Optronic Devices Ltd., are not atached to the Balance Sheet of BEL. A copy of the Annual Accounts of BELOP and the related informaton will be made available upon request by any member of BEL or BELOP. The Annual Accounts of BELOP are kept for inspecton by investors at the registered ofce of BEL and BELOP. Any investor interested to inspect the same may please contact the Company Secretary of BEL or BELOP. A statement as per Section 212 of the Act relating to the subsidiary Company, BELOP, is annexed to this report. Further, the informaton required to be disclosed as per the directons while grantng exempton under Section 212(8) of the Companies Act 1956 is provided in this Annual Report.

The Joint Venture Company (JVC) with General Electric, USA, viz., GE BE Pvt Ltd., manufacturing CT Max and other latest version X-Ray Tubes contnues to perform well. BEL supplies some parts required for the products manufactured by this JVC. GE BE Pvt Ltd., achieved a turnover of Rs. 50,928.95 lakhs as against Rs. 52,820.49 lakhs in the previous year. The Profit Afer Tax was Rs. 6,608.33 lakhs as against Rs. 5,249.55 lakhs in the previous year. The JVC declared and paid 100% dividend for the year 2009-10 and BEL received Rs. 260 lakhs as dividend from the JVC on BELs share of investment.

The other JVC, viz., BEL Multtone Pvt Ltd., jointly promoted by BEL and Multtone plc, UK was set up to supply, install and service Private Paging Systems and Pagers. The JVC is presently in shell stage with no business transactons being efected, and acton is in progress to close down this Company, as there are no business prospects for paging systems in the country.

Consolidated Accounts

Consolidated Financial Statements of your Company and its Subsidiary and Joint Venture Companies are atached to this Report.

Vigilance

The performance of Vigilance Department during 2009-10 has been satsfactory. 99.6% of the Executves of the Company have fled their Annual Property Returns. 1189 Purchase Orders / Contracts including 536 high value Orders / Contracts have been reviewed / scrutnised during the year and found to be in order. As per the CVC / CTE Guidelines, 2 teams for Inspecton of Works Contracts and 2 teams for Inspecton of Purchase Orders have been consttuted. During 2009-10, 12 Works Contracts and 8 high value POs have been inspected by in-house inspecton teams and 2,341 Regular / Surprise inspectons were conducted.

During the year 225 Executves and 10 Non-executves have taken part in Vigilance Awareness Training Programme. 35 Executves & 50 Non Executves working in sensitve areas for 3 years and above have been transferred to diferent posts.

In terms of CVCs guidelines for Leveraging Technology to ensure transparency through efectve use of website, the following informaton has been made available in the BEL website:

- Applicaton forms for Registration of Subcontractors / Vendors online for being included in the Approved Vendors List and applicatons for recruitment have also been facilitated online.

- Details of awarded Contracts / Purchase Orders valuing more than Rs. 10 lakhs in respect of works contracts, service contracts, capital items and non-producton items are being published on BEL website.

- Details of awarded Contracts / Purchase Orders issued on nominaton / single tender basis value exceeding Rs. 5 lakhs are being published on BEL website.

- Details of awarded Purchase Orders / Sub Contract Orders for producton items with a threshold value of Rs. 100 lakhs and above are being published on BEL website.

- Vendor Payments Informaton System is made available on BEL website.

In additon to the above, a new Vigilance page has been put on BEL website (www.bel-india.com). E-procurement is under development and it is expected to be implemented shortly.

Integrity Pact

The Central Vigilance Commission (CVC) has advised Government organisatons to adopt Integrity Pact (IP) voluntarily in their major procurement actvites. IP essentally envisages an agreement between the prospectve vendors / bidders and the buyer, commitng the persons / ofcials of both sides not to resort to any corrupt practces in any aspect / stage of the contract. Only those vendors / bidders, who commit themselves to such a pact with the buyer, would be considered competent to partcipate in the bidding process. The CVC guidelines further advises CPSUs to appoint Independent External Monitors as approved by the CVC to oversee the compliance of obligatons under the IP. BEL is pursuing the adopton of IP in compliance with CVC guidelines.

Implementaton of Ofcial Language

Being a Government Company, BEL is commited to complying with the Ofcial Language policies of the Government of India. Nine Units / Ofces have been notfed under rule 10(4) of OL rules and orders have been issued under rule 8(4) of OL Rules for those having profciency in Hindi to do their Ofcial work in Hindi. Eforts are on to ensure the progressive use of Hindi in all spheres of actvites of the Company. Hindi workshops for those having working knowledge in Hindi were conducted during the year. Companys website is available in both Hindi and English version and eforts are on to progressively have the entre website in bilingual.

During the year the Commitee of Parliament on Ofcial Language has visited the Companys Regional Ofce at Kolkata and ofcials of the Ministry of Defence inspected the Pune Unit and CRL, Bangalore. The Drafing and Evidence Sub commitee of Parliament inspected the Ghaziabad Unit. Ministry of Home Afairs (MHA) ofcials also inspected the Regional Ofce at Kolkata.

Implementaton of RTI Act

The informaton required to be provided to citzens under Section 4(1)(b) of the RTI Act 2005 has been posted on the website of Company, www.bel-india.com. The informaton posted on the website contains general informaton about the Company, powers and dutes of employees, informaton about decision-making, rules, regulatons, manuals and records held by BEL, directory of the Companys ofcers, pay scales, procedure for requestng additonal informaton about the Company by citzens and associated request formats. During the year 2009-10 the Company received and atended to 91 requests for informaton under RTIA.

Directorate

Following changes took place in the Directorate of your Company since the last report. Three Independent Directors, viz. Mr Anil Razdan, ex-Secretary to Government of India, Prof. VK Bhalla, Professor, FMS, University of Delhi and Mr MS Ramachandran, ex-Chairman, Indian Oil Corporation Ltd., have been appointed w.e.f. 27 November 2009. Mr Satyajeet Rajan, Joint Secretary (Electronics), Ministry of Defence has been appointed as part-tme Ofcial Director w.e.f. 27th January, 2010 in place of Mr Gyanesh Kumar, Joint Secretary (Shipyards), Ministry of Defence. Mr Anil Kumar has been appointed as Director (Other Units) w.e.f. 3rd February, 2010.

Directors Responsibility Statement

Pursuant to the provisions under Section 217(2AA) of the Companies Act, 1956 your Directors state:

(i) that in the preparation of the annual accounts, the applicable Accounting Standards have been followed and in respect of Accounting Standard 17, necessary explanaton for departure has been given in Note No. 19 of the Notes to Accounts (Schedule 21);

(ii) that the directors have selected such Accounting policies and applied them consistently and made judgments and estmates that are reasonable and prudent so as to give a true and a fair view of the state of afairs of the Company at the end of the financial year and of the profit of the Company for the year;

(iii) that the directors have taken proper and sufcient care for the maintenance of adequate Accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventng and detectng fraud and other irregularites;

(iv) that the directors have prepared the annual accounts on a going concern basis.

Auditors

Pursuant to Section 619(2) of the Companies Act 1956, the Comptroller and Auditor General of India appointed M/s R G N Price & Co., Chartered Accountants, Chennai as Statutory Auditors for the year 2009-10 for audit of accounts of Bangalore Complex, Hyderabad and Chennai Units and Corporate Ofce. M/s B R Maheswari & Co, Chartered Accountants, New Delhi, were reappointed as Branch Auditors of Ghaziabad, Panchkula and Kotdwara Units for 2009-10. M/s Argade Shyam & Co, Chartered Accountants, Pune were reappointed as Branch Auditors for Pune and Taloja Units for 2009-10. M/s N Koteswara Rao & Co, Chartered Accountants, Guntur were reappointed as Branch Auditors for Machilipatnam Unit for 2009-10.

Auditors Report

Auditors Report on the Annual Accounts for the financial year 2009-10 and Comments of the Comptroller & Auditor General of India under Section 619(4) of the Companies Act, 1956 are appended to this report.

Corporate Governance

A report on Corporate Governance along with a Compliance Certfcate from the Auditors as prescribed under the Listng Agreements with the Stock Exchanges on which BELs shares are listed as well as Government Guidelines on Corporate Governance for Central Public Enterprises, is annexed to this Report.

Management Discussion and Analysis Report

Management Discussion and Analysis Report required under the Listng Agreements with the Stock Exchanges on which BELs shares are listed as well as Government Guidelines on Corporate Governance for Central Public Enterprises, is annexed to this Report.

Other Disclosures

Informaton required to be disclosed in accordance with Section 217 (1)(e) of the Companies Act, 1956 read with Companies (Disclosure of Partculars in the Report of Board of Directors) Rules 1988 regarding conservaton of energy, technology absorpton and foreign exchange earnings and outgo, is atached to this report.

The partculars of employees to be given as per Section 217(2A) of the Companies Act 1956, read with the Companies (Partculars of Employees) Rules 1975 are appended to this report.

Acknowledgement

Your Directors take this opportunity to acknowledge with a deep sense of appreciaton the support and co-operation received from the Government of India, Ministry of Defence, Departments of Defence Producton, Defence Acquisiton, Defence Finance and Defence Research & Development Organisaton. The Board also gratefully acknowledges the patronage extended to the Company by its esteemed customers, partcularly the Indian Army, Indian Navy, Indian Air Force, para-military forces and others. We thank the Comptroller and Auditor General of India, Chairman, Members and employees of the Audit Board, Statutory Auditors and Branch Auditors, Companys Bankers, collaboratiors and vendors. The Board appreciates the untring eforts and contributon by the employees at all levels, which enabled your Company to achieve the signifcant performance during the year. The Board of Directors also wishes to place on record its appreciaton and grattude to all the shareholders / investors for the trust and confdence reposed in the Company and look forward to their contnued support and partcipaton in sustaining the growth of your Company in the coming years.

For and on behalf of the Board

Place : Bangalore Ashwani Kumar Dat

Date : 20th August 2010 Chairman & Managing Director

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