Dear Shareholders,
 
 The year 2011 -12 was a challenging year due to the global economic
 uncertainties which adversely affected some of the sectors in which
 your Company operates. However, your Company''s consistent effort to
 diversify and grow in all the three verticals it operates has paid off.
 
 Despite the difficult situation, your Company has been able to scrape
 through the last year sales and the revenue billed was Rs. 3648 Cr with
 net revenue of Rs 2921 Cr (including ED). In fact, it has been a 2%
 growth at the net revenue level including ED with a net profit of Rs.
 66 Cr during 2011-12. Though the manufacturing sector, mining and
 quarrying, construction also are witnessing a pressure on their growth
 rates, the Mining & Construction made an impressive 18% growth in sales
 as compared to previous year sales. The Rail & Metro business
 performance was almost at the same level while the Defence sector
 business performance was lower compared to the previous year. The
 Company has closed the year with a healthy order book position of Rs.
 7066 Cr, with orders in Defence and Rail & Metro above Rs. 2700 Cr each
 and Mining & Construction over Rs. 1300 Cr for delivery during 2012-13
 and beyond. During 2011-12, BEML received two major orders from
 Ministry of Defence for ARV and Jaipur Metro for Metro cars.
 
 The profit during the year is lower mainly on account of reduction in
 other income due to withdrawal of provisions of more than Rs 100 Cr in
 the previous year which is not there in the current year, impact of
 wage revision on other costs like gratuity, leave salary, retirement
 medical benefits and lesser revenue due to postponement of placement of
 orders, non-availability of LC etc. In the recent past, we have sown
 seeds for many a new business lines viz., Dredging equipment
 manufacturing, Aerospace etc. These lines, I hope, will start operating
 in 2012-13 and 2013-14 would be a year of significant business growth
 of your Company. On the Aerospace Manufacturing segment side, I
 anticipate business growth in offset opportunities and we are in
 discussion with many offset partners which are in various stages.
 
 On the Defence side, we are entering into BMP overhauling. On the
 product front specially in Mining & Construction vertical, with
 customers graduating to high capacity-high-end products, we have lined
 up new products matching to the requirements like 150T & 200T Dump
 Trucks with high productivity and in line with the global products,
 which in all probability, will start generating significant revenue in
 the next one or two years, by when the demand for such product scales
 up.
 
 On the Rail & Metro side, while Metro segment will continue to grow, we
 expect to see a sea change in EMUs requirement for which BEML has
 already lined up a product. We have also lined up new products for
 dedicated freight corridor. Further, being a Track Laying equipment
 manufacturer, we have initiated to get into Track Laying Business which
 I hope should also add sizeable business in the year 2012-13. We are
 fully booked for the year and expect an exponential growth in this
 segment of our business.
 
 BEML has always envisioned being a leading market player in all lines
 of its business in the international arena. While enhancing exports is
 a major thrust towards this endeavour, globalization is a major
 strategy which the Company is pursuing. We already have overseas
 offices at 4 places.  Further, we have plans to establish an office in
 South Africa to caterto the growing African market. Being a highly
 diversified successful Company and further diversifying into many
 areas, we are in-fact in discussion with appropriate agencies to
 further globalise and to make your Company a global champion.
 
 Technology, delivery, availability and low cost of ownership, are the
 challenges in terms of marketing. New features, new products through
 in-house R&D and competitive pricing through value engineering are some
 of the approaches we continue to work to meet challenges in respect of
 technology and low cost of ownership. The Company has earmarked over 3%
 of its Revenue bill for R&D every year in the recent past, to bring in
 new products and significant improvements in overall quality, cost
 effectiveness, aesthetic appeal and productivity in existing models. On
 the delivery front, BEMLworks pro-actively and manufacture the products
 in anticipation to meet the customers delivery requirements.
 
 Your Company strongly believes that human resource is the most valuable
 asset of the organization and retaining and nurturing talent is of
 paramount importance for the success and growth of the Company.
 Challenges for HR are in attracting and retaining the talent,
 competency building, enhancement of competency level in the existing
 manpower, creating leadership pipeline I internal leader I next
 generation leaders and performance based work culture. BEML provides a
 highly competitive and congenial environment for its manpower to show
 its talent and excel.
 
 Rising wage bill is a part of any business operation. While, we
 mitigate this through increased business, we also adopt various
 productivity improvement measures to absorb these costs and improve
 profitability. In fact, we are the first PSU in the country to have
 negotiated the wage settlement linking to productivity. Needless to
 mention the increased productivity mitigates much of increased wages.
 
 Thus, BEML has initiated multi-dimensional strategies and put in place
 appropriate action plans in each sphere of its operation to be ahead
 always in terms of market standing and provide high value to all its
 stakeholders, bringing pride to the Company and the nation by achieving
 commendable performance despite being a PSU operating in a highly
 competitive environment.
 
 Today, the Company with Rs. 7066 Cr orders on hand and further
 prospects in each of the vertical it operates, the Company has made all
 its plans to cross the Rs. 5000 Cr revenue billing by end of 2012-13,
 ahead of the target date that was envisaged in the Corporate Plan-I
 which was poised to coincide with the ''Golden Jubilee'' year of BEML.
 Having envisioned this, your Company has worked on Corporate Plan-ll
 with a overall growth plan and efficient use offunds to scale Rs.10,000
 Crrevenue billing by 2018-19. This, lamsure, will create value to all
 our long term shareholders.
 
 I am grateful to the Board of Directors for their strong support and
 guidance. I wish to specially thank investors and shareholders of BEML
 including Ministry of Defence, for the opportunity provided to serve
 the Company better. I gratefully acknowledge the support and
 encouragement extended by our Administrative Ministry i.e. Ministry of
 Defence and in particular, Dept, of Defence Production and unstinted
 cooperation of all our employees and executives.
 
 With best wishes.
 
 Yours sincerely,
 
 P. Dwarakanath
 
 Chairman & Managing Director (l/c)