Dear shareholders
 
 It is a great pleasure to communicate to you directly once again and to
 share with you the highlights of the achievements of your Company
 during the past year and the future outlook for the Company.
 
 Highlights of the year
 
 In FY 2010-11, new records have been set for order acquisition,
 revenues, order book, profits and exports. Your Company achieved a
 turnover of Rs. 552,969 lakhs in 2010 - 11 as against Rs. 521,977 lakhs in
 2009 - 10, registering a growth of 5.94 %.  Exports sales saw a quantum
 jump from US $ 23.67 millions in 2009 - 10 to US $ 41.53 millions in
 2010 - 11, an increase of 75.45 %. The order book more than doubled
 from Rs. 1,135,000 lakhs as on 1st April 2010 to Rs. 2,360,000 lakhs as on
 1 April 2011.
 
 All the nine manufacturing Units of the Company have performed well and
 earned profits during the year. Our efforts to streamline our costs and
 execution capabilities yielded dividends, which resulted in increase of
 Profit After Tax for 2010-11 to Rs. 86,147 lakhs from Rs. 72,087 lakhs last
 year, an increase of 19.50% in spite of the additional cost of wage
 revision. R&D continues to be our thrust area and our expenditure on
 R&D was Rs. 38,818 lakhs, which is 7 % of the sales revenue.
 
 Defence being our mainstay, the sector contributed 80 % to our sales
 revenue with the balance of 20 % coming from the civilian sector.
 Indigenously developed products contributed 78% to the turnover out of
 which 57 % came from in - house developments and 21 % from products
 developed by other indigenous agencies. 22 % of the turnover was
 contributed by products using foreign technology.
 
 A few of the other highlights are :
 
 - The Defence Minister inaugurated the newly set up Product Support
 Centre at Kalamessery, Kochi, for providing product support to Southern
 Naval Command.
 
 - A modern D&E facility with Embedded Systems Lab was started at BEL''s
 Hyderabad Unit.
 
 - During FY 2010 - 11, BEL took up some major and prestigious projects
 like Akash Weapon System, Humsa NG, Integrated Fire Detection and
 Suppression System for Tanks and Armoured Vehicles, and Coastal
 Security System for the Indian Coast Guards.
 
 - Four numbers of India''s first and wholly indigenous Nuclear,
 Biological and Chemical Recce Vehicles developed by BEL in association
 with DRDO were delivered to the Indian Army.
 
 - On the civil business side, Ministry of Home Affairs has nominated us
 for the creation of the National Population Register for the Country.
 
 You will be happy to know that your Company has received several
 accolades, the most notable being :
 
 - The Gold trophy for SCOPE Meritorious Award for Corporate
 Governance for the year 2009 - 10.
 
 - Award for the Top Indian Company under the Electrical and Electronic
 Equipment, Technology Development Sector for the Dun and Bradstreet -
 Rolta Corporate Awards 2010.
 
 - International Aerospace Awards 2011 under the category of Most
 Influential Company of the Year and Excellence in Innovation.
 
 Future outlook
 
 The Govt. of India has put in place a policy for replacing and
 acquiring weapon systems / platforms for its defence and paramilitary
 forces. Helped by the steady economic growth in the Country, the Govt.
 is in a position to provide the required resources too.
 
 The Govt''s modernisation drive for its security forces will provide
 business opportunities for BEL in future. Starting with an all time
 high order book, we are targeting a turnover of Rs. 620,000 lakhs during
 2011 - 12. As stated before, segments like radar, communications,
 network centric warfare and weapon systems will drive the Company''s
 growth. While pursuing our forays into new businesses like nuclear
 instrumentation, solar / clean energy solutions and homeland security,
 we are continuing our efforts in forging alliances in the areas of
 radars for civilian and select defence applications, seekers for
 missiles, and RF & microwave components.  Radars are and will continue
 to be one of our primary business segments in future also. Another
 major segment will be defence communication equipments and systems.
 The weapon systems segment is emerging as a major area along with
 command and control systems. Electro optics will grow due to its demand
 from both defence and civil sectors.  Defence will continue to be our
 priority and provide close to 80 % of our revenues while civilian
 business will continue to provide the balance 20 %.
 
 It is extremely important for BEL to stay abreast of technology and
 develop new products regularly. Thrust on R&D across the Company will
 continue. I am pleased to inform you that during the last year, your
 Company developed many new products and systems. Some of the major new
 products / systems introduced during 2010 - 11 include Akash Weapon
 System, New Generation Humsa Sonar, Mobile Communication Terminal, and
 Combat Management Systems for ships.
 
 The year 2011 - 12 looks promising as well as challenging.  The Defence
 Sector is increasingly being opened up for private sector participation
 and changes are being brought into the Defence Purchase Procedure. All
 this has pushed the Company towards much higher competitiveness and
 productivity. Apart from strengthening its in - house R&D, the Company
 is also laying greater emphasis on working closely with DRDO labs,
 other research institutions and academic institutions for development
 of new products and systems.
 
 This year the Company will work for many strategically important
 projects like Akash Weapon System, Battlefield Surveillance System,
 Upgraded Weapon Locating Radar, next generation Electronic Warfare
 Systems and Coastal Surveillance System.  On the exports front, we
 shall be achieving growth through offsets as well as export of Coastal
 Security Network for Government of Mauritius.
 
 Governance and sustainability
 
 Your Company takes pride in constantly adopting and maintaining the
 highest standards of ethics in all its business activities. The tenets
 of Corporate Governance are implemented in letter and spirit and the
 results are obvious through recognition of this fact by SCOPE. A
 detailed report on compliance with the Corporate Governance guidelines
 / norms as per Clause 49 of the Listing Agreement with Stock Exchanges
 and the DPE Guidelines on Corporate Governance for CPSEs forms part of
 the Directors'' Report.
 
 The major principles for fulfilling its social, environmental and
 economic responsibilities have been integrated and embedded in the core
 business processes of BEL, and these principles have been incorporated
 into its strategy for responsible business. Sustainability in BEL is
 the outcome achieved by balancing the social, environmental and
 economic impacts of business. This process ensures that the business
 goals are pursued without compromising any of the three elements.
 
 Acknowledgements
 
 I deeply appreciate the continuing support of our customers, especially
 Ministry of Defence and Defence Services, our business associates,
 shareholders, my colleagues and members of the Board for their support
 and guidance.
 
 I also wish to express my sincere gratitude to all the officers and
 employees of BEL for their dedication and commitment, which is a major
 strength for driving growth in the Company.  It shall be our continuous
 endeavour to build on these strengths to face future challenges to
 continue the journey of profitable growth.
 
 Best wishes,
 
                                                          Sincerely,
 
 
 
 Bangalore                                       Ashwani Kumar Datt
 
 12th August 2011                      Chairman & Managing Director