To the Members of
 
 BGR ENERGY SYSTEMS LIMITED
 
 The Directors have pleasure in presenting the Twenty Fifth Annual
 Report together with the audited financial statements for the year ended
 March 31, 2011.
 
 FINANCIAL RESULTS – “BILLION DOLLAR” REVENUE
 
 During FY 2010-11, the total income of the Company crossed Rs. 4700
 Crore, thus becoming a Billion Dollar company in revenues.
 
 The highlights of the financial performance of the Company during the
 financial year ended March 31, 2011 as compared with the previous
 financial year ended March 31, 2010 are summarized below:
 
                                                 (Rs. in Crore)
 
 Description                           2010-11         2009-10
 
 Sales                                    4747            3069
 
 Other income                               22              25
 
 Total Income                             4769            3094
 
 Expenditure                              4210            2726
 
 Profit before depreciation, Interest       559             368 
 and Tax
 
 Interest                                   60              54
 
 Depreciation                               17              10
 
 Profit before tax                          482             305
 
 Provision for tax and FBT                 158             104
 
 Profit after tax                           324             201
 
 Amount available for appropriation        324             201 
 
 Less:
 
 a) Dividend                                72              50
 
 b) Tax on dividend                         12               9
 
 c) Transfer to general reserve             32              20 
 
 Balance carried to Balance Sheet          208             122
 
 The sales registered a growth of 55% and stood at Rs. 4747.49 Crore as
 compared to Rs. 3069.25 Crore in the previous year.  The Company’s Profits
 from Operations for the year ended 31st March, 2011 increased by 52% to
 Rs. 559.28 Crore as compared to Rs. 368.22 Crore in the previous year. The
 consolidated financial statements are attached to this report.
 
 DIVIDEND
 
 The Board of Directors recommended a dividend of Rs. 10 per equity share
 of Rs. 10 each subject to the approval of the Members at the forthcoming
 25th Annual General Meeting. The dividend will be paid to members whose
 name appear in the Register of Members as on September 22, 2011. Your
 directors wish to carry an amount of Rs. 207.55 Crore to the Balance
 Sheet after appropriation towards dividend, corporate dividend tax and
 transfer to general reserve.
 
 BUSINESS PERFORMANCE
 
 The progress in growth achieved by your Company during the last three
 years has been well recognized and the leading financial dailies and
 magazines have consistently categorized your Company as a “Fast Growing
 Company.” Your Company achieved quantum growth over the previous year
 in income, Profitability and other key performance parameters.
 
 A brief overview and major milestones of operations are as follows:
 
 a) The Power Projects Division secured a contract for Balance of Plant
 (“BoP”) for 2 x 660 MW coal based supercritical thermal power project
 at Krishnapatnam, Andhra Pradesh from Thermal Powertech Corporation
 India Limited, promoted by Gayathri projects, and Semcorp, Singapore.
 The value of the order is Rs. 2168 Crore.
 
 b) Your Board takes pride to inform that the 500 MW Vijayawada Thermal
 Power Station project was completed and after successful performance
 test handed over to APGENCO during the year. The 500 MW Kakatiya
 Thermal Power Project of APGENCO has achieved commercial operation
 during September, 2010. The 500 MW Kothagudam Thermal Power project of
 APGENCO achieved plant synchronization in March, 2011. The 500 MW
 Khaperkheda Thermal Power project of MAHAGENCO achieved plant
 synchronization in March, 2011. Your Directors wish to state that your
 Company is the only private sector EPC Company in India to have
 completed three BoP contracts for 500 MW units and successfully
 commissioned and synchronized the plants.
 
 c) The 600 MW Mettur Thermal power project of TNEB achieved boiler
 hydro test during December, 2010 and the unit is gearing up for
 commencement of power generation in September, 2011. The boiler hydro
 test for 2 x 600 MW Kalisindh project of RRVUNL was completed during
 April, 2011. Your Company is executing the Mettur and Kalisindh
 projects on EPC basis including supply of Boiler, Steam Turbine and
 Generator.
 
 d) Electrical Projects Division has secured a contract for Rs. 17.02
 Crore from Nuclear Power Corporation of India Limited for Bharatiya
 Nabikiya Vidyut Nigam Limited at Kalpakkam for supply of cabling
 systems and other electrical works for Power island area in the 500 MW
 Prototype Fast Breeder Reactor and a turnkey contract for Rs. 36.61 Crore
 from Power Grid Corporation of India Limited for fiber optic cable based
 communication solutions over powerlines in Southern region, which is
 being implemented in lieu of the existing Unified Load Despatch Centre.
 
 e) Environmental Engineering Division has achieved a breakthrough
 during the year in Condensate Polishing Unit business by bagging two
 orders for Super Critical power projects of 2 x 660 MW Tiroda
 (Maharashtra) and 2 x 660 MW Kawai (Rajasthan) of Adani Power Limited.
 The division also commissioned Mannari and Karaipudur common effuent
 treatment plants using Reverse Osmosis Technology during the year.
 
 f) Air Fin Cooler division has registered sales of Rs. 130 Crore and
 closed the year with a healthy order book of Rs. 155 Crore. The division
 has expanded its production facilities during the year.
 
 g) During the year, Oil & Gas Equipment division has successfully
 executed contracts for SCOP, Iraq, Akash & Al-Mansuriya and Southern
 Refnery Company. The division has bagged orders from Cairn Energy, GEO
 Enpro Petroleum, GPEC, Bharuch, IOCL and other reputed customers in
 India. The new 100% Export Oriented Unit is now servicing international
 markets.
 
 STRATEGIC INITIATIVES
 
 During the year under review, your Company’s strategic alliance with
 Hitachi for Super Critical Steam Turbine and Generators and Steam
 Generators have been successfully consummated into joint ventures.
 These joint ventures have brought to life two special purpose companies
 with equity participation from Hitachi as explained below.
 
 Hitachi Power Europe GmbH, Germany – BGR Boilers Private Limited
 
 Your Company has signed a Joint Venture agreement with Hitachi Power
 Europe GmbH, Germany for the business of design, engineering and
 manufacture of Super Critical Steam Generator of 600 MW, 800 MW, 1000
 MW and 1100 MW rating and the new JV Company “BGR Boilers Private
 Limited” will establish manufacturing facilities as a Special Purpose
 Vehicle. Hitachi Power Europe will contribute 30% of the equity share
 capital of the new JV Company. During FY 2010-11, your Company invested
 Rs. 36.05 Crore in the share capital of JV Company and holds 70% of the
 equity capital.
 
 Hitachi, Ltd., Japan – BGR Turbines company Private Limited
 
 Your Company has signed a Joint Venture agreement with Hitachi, Ltd.,
 Japan for the business of design, engineering and manufacture of
 Supercritical Steam Turbine and Generators of 660 MW, 800 MW and 1000
 MW capacity and the new JV Company “BGR Turbines Company Private
 Limited” will establish manufacturing facilities as a Special Purpose
 Vehicle. Hitachi will contribute 26% of the equity share capital of the
 JV Company. During FY 2010-11, your Company invested Rs. 95.96 Crore in
 the share capital of the JV Company and holds 74% of the equity
 capital.
 
 With these strategic Joint Ventures your Company has positioned itself
 well to capture entire value chain in EPC contracting business for
 power sector.
 
 INDIAN POWER SECTOR SCENARIO
 
 The Indian economy has emerged rapidly from the global slowdown of
 2007-2009 and remains one of the fast growing economies of the world.
 The GDP growth is well over 8% and the growth momentum is maintained.
 The Government of India and State and Central utilities continue to
 accord primacy to capacity addition in power generation. In view of
 environmental consideration and need for higher efficiency, there has
 been marked preference for supercritical technology based power
 equipment viz., Boiler, Turbine and Generator of large unit sizes
 during the year under review. The capacity addition target for the 12th
 Five year plan is well over 100,000 MW. Of this, it is estimated that
 about 80,000 MW would be coal based thermal power plants utilizing
 supercritical technology. The Government policy on power sector
 investment encourages manufacturing capacity build-up within the
 country. During the year, the investment interest in power sector by
 private sector industries has witnessed a positive trend. A number of
 IPP projects currently planned on merchant power plant basis auger well
 for the power sector development in India. Your Company is now
 targeting projects for an aggregate capacity of 40,000 MW and
 anticipates to be successful to secure sizeable market share.
 
 During the year under review, there has been a slow down and delays in
 award of contracts for large power projects by State and Central
 utilities on account of variety of reasons including coal linkage,
 environmental clearance, land acquisition etc.
 
 FUTURE OUTLOOK, THE YEAR AHEAD
 
 The growth trajectory of Indian economy makes it imperative for the
 public and private sector utilities to make investment in generation,
 transmission and distribution of power. The capacity addition programme
 of 12th Five Year Plan and investment plans by private parties in power
 sector offer robust growth opportunities for your Company. Your
 Company’s strategic initiative to set up manufacturing facilities to
 manufacture Super Critical Boiler, Turbine and Generator would provide
 competitive edge in terms of cost, price and delivery. EPC and BOP
 contracting business of the Company faces intense competition from
 domestic players.  Your Company’s position of pre-eminence in the
 industry, despite intense competition and cost pressures, is expected
 to reinforce your Company’s ability to overcome these challenges. With
 robust demand for power in the foreseeable future and the resulting
 opportunities for power generation equipment and EPC business, your
 Company’s power projects division is well positioned to sustain the
 growth momentum in the mid-term and in the long-term as well. The
 proven execution capabilities, competencies and the capacity to offer
 the entire range of services and equipment viz., design, engineering,
 project execution, construction, manufacturing and supply of Steam
 Generator, Steam Turbine and Generator, BOP equipment and civil works
 would continue to facilitate your Company to achieve improved order
 booking, revenue and Profitability.
 
 CONSOLIDATED FINANCIAL STATEMENT
 
 In accordance with the Accounting Standard AS-21 on Consolidated
 Financial Statements read with Accounting Standard AS-27 on financial
 reporting of interest in Joint Ventures, the audited Consolidated
 Financial Statements are annexed to this Annual Report.
 
 PERFORMANCE OF SUBSIDIARIES
 
 In accordance with the general circular issued by the Ministry of
 Corporate Affairs, Government of India, the Balance Sheet, Profit and
 Loss Account (wherever applicable) and other documents of the
 subsidiary companies are not attached with the financial statements of
 the Company. The Company will make available the annual accounts of the
 subsidiary companies and related information to the members of the
 Company who may be interested in obtaining the same. The annual
 accounts of the subsidiary companies will also be kept open for
 inspection at the Registered Office of the Company.  The Consolidated
 Financial Statements presented by the Company include the financial
 results of its subsidiary companies.
 
 HUMAN RESOURCES
 
 In the backdrop of growth in power and infrastructure sector, there has
 been an acute shortage of human resources. However, your Company has
 been successful in attracting talents at senior and middle level
 positions to manage design, engineering and project management
 responsibilities. Your Company has initiated steps to build a highly
 competent and motivated manpower pool and has recruited graduate
 engineers from colleges of National repute.
 
 In order to evaluate, reward and recognize performance, the Company has
 installed robust Performance Management System.  The Company’s Human
 Resource process is being IT enabled.  Your Company continues to lay
 strong emphasis on HR, talent acquisition and retention. Your Company
 has witnessed a rapid growth in human resources during the financial
 year 2010-11 and the current employee strength is 1829.
 
 EMPLOYEE STOCK OPTION SCHEME
 
 The Company has implemented the Employee Stock Option Scheme (“Scheme”)
 in accordance with the SEBI (Employee Stock Option Scheme and Employee
 Stock Purchase Scheme) Guidelines, 1999 (“the SEBI Guidelines”). The
 Compensation Committee, constituted in accordance with the SEBI
 Guidelines, administers and monitors the Scheme. The applicable
 disclosures as stipulated under the SEBI Guidelines as at March 31,
 2011 are attached as Annexure – I of this report.
 
 STATUTORY INFORMATION
 
 The disclosure of information pursuant to Section 217 (1) (e) of the
 Companies Act, 1956 read with the Companies (Disclosure of Particulars
 in the Report of the Board of Directors) Rules, 1988 with respect to
 conservation of energy are not applicable to your Company. The
 particulars relating to technology absorption are enclosed as Annexure
 – II of this report. During the FY 2010-11, the Foreign exchange
 earnings and outgo were Rs. 1124.90 Crore and Rs. 24.32 Crore respectively.
 In terms of the provisions of Section 217 (2A) of the Companies Act,
 1956 read with the Companies (Particulars of Employees) Rules 1975, as
 amended, the names and other particulars of the employees are set out
 in the annexure to the Directors’ Report. Having regard to the
 provisions of Section 219(1) (b)(iv) of the said Act, the Annual Report
 excluding the aforesaid information is being sent to all the members of
 the Company. Any member interested in obtaining such particulars, may
 write to the Company Secretary of the Company.
 
 BOARD OF DIRECTORS
 
 Mr. M. Gopalakrishna and Mr. S.A. Bohra, Directors, retire by rotation
 and being eligible for re-appointment, offer themselves for
 re-appointment. The Board recommends their re-appointment.  profile of
 these Directors are given in the Notice convening the 25th Annual
 General Meeting of the Company.
 
 On February 10, 2011, Mr. Gnana Rajasekaran has been co-opted as an
 independent Director on the Board and he holds Office up to the date of
 the forthcoming Annual General Meeting in terms of Section 257 of the
 Companies Act, 1956. The Company received a notice proposing Mr. Gnana
 Rajasekaran for appointment to the Office of Director. The profile of
 Mr.Gnana Rajasekaran is given in the Notice convening the 25th Annual
 General Meeting of the Company. The Board recommends his appointment.
 
 Mr. S. Rathinam was re-appointed as Director – Finance of the Company
 for a period of one year effective from February 7, 2011.  The profile
 of Mr. S. Rathinam and the terms and conditions of his appointment
 including remuneration are given in the Notice convening the 25th
 Annual General Meeting of the Company.
 
 DIRECTORS’ RESPONSIBILITY STATEMENT
 
 Pursuant to the requirements under Section 217 (2AA) of the Companies
 Act, 1956 with respect to Directors’ responsibility statement, it is
 hereby confirmed that:
 
 a) In the preparation of the annual accounts for the Financial year
 ended March 31, 2011, the applicable accounting standards read with
 requirements set out under Schedule VI to the Companies Act, 1956 have
 been followed and there are no material departures from the same;
 
 b) the Directors have 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 March 31, 2011 and of the Profit of the Company for
 the financial year ended on that date;
 
 c) the Directors have taken proper and suffcient 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; and
 
 d) the Directors have prepared the annual accounts for the year ended
 March 31, 2011 on a going concern basis.
 
 STATUTORY AUDITORS’ AND AUDITORS’ REPORT
 
 Manohar Chowdhry & Associates, Chartered Accountants, Statutory
 Auditors of the Company, hold Office until the conclusion of the ensuing
 Annual General Meeting and are eligible for re-appointment.
 
 The Company has received a letter from Manohar Chowdhry & Associates,
 Chartered Accountants to the effect that their re- appointment, if
 made, would be within the limits prescribed under Section 224(1B) of
 the Companies Act, 1956 and that they are not disqualified for
 re-appointment within the meaning of Section 226 of the Companies Act,
 1956.
 
 CORPORATE GOVERNANCE
 
 The Company is committed to maintain and comply with the standards of
 Corporate Governance as set out in Clause 49 of the Listing Agreement
 and your Directors are pleased to attach a report on Corporate
 Governance together with the following Certifcates / Declarations.
 
 a) Chief Executive Officer and Chief Financial Officer certifcate.
 
 b) Declaration on code of conduct.
 
 c) Certifcate from the Company’s Auditors.
 
 MANAGEMENT DISCUSSION AND ANALYSIS REPORT
 
 Management Discussion and Analysis report for the financial year under
 review, as stipulated under Clause 49 of the Listing Agreement with the
 Stock Exchanges, is presented in a separate section forming part of the
 Annual Report.
 
 ACKNOWLEDGEMENTS
 
 Your Directors wish to take this opportunity to thank the customers,
 vendors, consortium of banks, collaborators, business partners /
 associates, statutory authorities, Central and State Governments for
 the valuable co-operation, assistance and support received during the
 last financial year. Your Directors place on record their sincere
 appreciation of the contribution made by the employees of the Company
 at all levels through their hard work, dedication and support.
 
                                        For and on behalf of the Board
 
 Place : Chennai                                      B. G. Raghupathy
 
 Date : May 26, 2011                      Chairman & Managing Director