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Company Information

Home » Market » Company Information

Bharat Electronics Ltd.

Sep 21
80.15 -2.45 ( -2.97 %)
 
VOLUME : 1211682
Prev. Close 82.60
Open Price 83.20
TODAY'S LOW / HIGH
75.00
 
 
 
83.55
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52 WK LOW / HIGH
75.00
 
 
 
192.95
Sep 21
80.15 -2.45 ( -2.97 %)
 
VOLUME : 12343708
Prev. Close 82.60
Open Price 83.30
TODAY'S LOW / HIGH
74.50
 
 
 
83.65
Bid PRICE (QTY.) 0.00 (0)
Offer PRICE (Qty.) 0.00 (0)
52 WK LOW / HIGH
74.50
 
 
 
193.40
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Market Cap. ( ₹ ) 19692.78 Cr. P/BV 2.46 Book Value ( ₹ ) 32.63
52 Week High/Low ( ₹ ) 193/75 FV/ML 1/1 P/E(X) 13.75
Bookclosure 24/08/2018 TTM EPS ( ₹ ) 0.00 Div Yield (%) 2.55
DIRECTOR'S REPORT
You can view full text of the latest Director's Report for the company.
Year End :2017-03 

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