Dear Shareholders,
 
 It gives me great pleasure in reporting that we concluded another
 successful year of BHELs growth story. 2010-11 was an excellent year,
 which saw private as well as public sector utilities and other
 customers reposing confidence in company''s capabilities. Your company
 turned out spectacular financial performance. Your company has managed
 to sustain its leadership position and is ready to embark on a new
 phase of dynamic growth.  I take this opportunity to share with you
 some of the key highlights of the year gone by:
 
 Business & Financial Accomplishments:
 
 Turnover of your company has quadrupled and profit has increased by six
 times during last six years. Top line of the company was Rs. 43,337
 crore, recording the strong growth of 27%. With Profit Before Tax of Rs.
 9006 crore and Profit After Tax of Rs. 6011 crore, the profitability rose
 appreciably by 37% and 39% respectively during the year. BHEL had many
 accomplishments in various business areas. Some of them are:
 
 - In spite of difficult market conditions, BHEL booked orders of 7 nos.
 Boilers and 9 nos. Turbine-Generators with supercritical parameters
 from public as well as private sector utilities.
 
 - BHEL secured record orders worth Rs. 60,507 Crore, during the year,
 despite various challenges confronting the power sector in recent
 times. At the end of the year, total orders in hand for execution in
 2011-12 and beyond, stand at aboutRs. 1,64,145 Crore.
 
 - Order of first 700 MW Nuclear TG (2 sets) for KAPP 3,4 from NPCIL in
 consortium with Alstom - new rating introduced.
 
 - Repeat order for 10 sets of 270 MW each from the Indiabulls Group
 indicating confidence of customers in your company.
 
 - Export orders from 24 countries across five continents.
 
 - The company is continuing to invest heavily in building capacities
 and capabilities, not only to cope with rising demand, but also in view
 of our drive to strengthen our engineering character. Therefore,
 Capital investment of Rs. 1,655 crore and R&D expenditure of Rs. 982 crore
 were incurred during the year.
 
 - Economic Value Addition (EVA) reached Rs. 3,793 Crore, a 42% y-o-y
 increase.
 
 - EPS on the post-bonus equity capital increased to Rs. 122.80 against
 previous year''s Rs. 88.06.
 
 - A final dividend of 179% has been recommended by Board, in addition
 to the interim dividend of 132.5% for the year, making a total of
 311.50% for the year.
 
 For a New Phase of Dynamic Growth
 
 BHEL is committed to drive a new phase of growth, at a time of
 increasing focus of Government of India on developing infrastructure
 sector.  In this environment, your company has over a period of time
 established a number of differentiating competitive strengths,
 including a powerful manufacturing base, world-class equipment
 performance, the technology edge, diversified business portfolio,
 country-wide efficient after-sales-service network, a robust balance
 sheet capable of supporting its growth ambitions and strong human
 capital base.
 
 Backed by these attributes, your company continues to pursue its
 ''6-Point Strategy'' to sustain its leadership in its current business
 areas and capture opportunities in emerging growth areas.
 
 1.  Capacity Enhancement
 
 Augmentation of manufacturing capacity from 15,000 MW to 20,000 MW is
 on track for completion by March 2012. I am pleased to inform you that
 BHPV Vizag which we acquired in 2008 as part of our inorganic growth
 strategy has turned profitable in 2010-11. Further, your company has
 taken 51% stake in Kasargod unit of KEL Kerala for rapid capacity
 enhancement for rotating electrical machines. We will continue to build
 capacities both organically as well as inorganically.
 
 2.  Accelerated Project Execution
 
 Your company has continually been improving its execution capabilities.
 Key drivers of our strategy are vendor base expansion, Advanced
 Manufacturing Actions, greater application of Information Technology,
 Rate Contracts, enhanced outsourcing, deployment of additional tools
 and plants, Away Center Fabrication and greater empowerment of project
 managers. Further, to address skill deficit in power sector your
 company has taken various initiatives like adoption of ITIs and
 leveraging in-house training infrastructure for skill enhancement in
 the sector.  On the back of these initiatives, we were able to
 synchronize/ commission highest ever 9442 MW of power plant equipments
 during the year.
 
 3.  Product Cost Competitiveness & Quality
 
 There is a constant endeavor to reduce costs. Points of focus include
 global sourcing, quicker indigenization, and various integrated
 operations improvement initiatives like Design-to-Cost (DTC), Purchase
 and Supply Chain Management (PSM) and Lean Manufacturing. These
 initiatives and others will increase our cost competitiveness while
 maintaining quality for which your company is well known.
 
 4.  Diversification
 
 Your company is well positioned to continue its diversification
 strategy to enhance shareholders'' value as we expand our offerings in
 new growth areas viz. Solar, Nuclear, Transportation, Transmission &
 Distribution, and Water. We remain positive that our diversification
 strategy would generate broad-based revenue streams for your company in
 the long run.
 
 5.  Engineering & Technology
 
 As a result of conscious commitment to anticipate future needs of our
 society and to convert these needs into innovative technologies, your
 company continues to invest heavily in R&D. Company registered 31%
 growth in IPR capital taking the total to 1438 patents/ copyrights. It
 is heartening to note that today innovation- led business strategy of
 your company is globally recognized.
 
 6.  People Development
 
 We strongly believe that the contribution of all of our talent is an
 essential component to our growth aspirations. Accordingly, we are
 reorienting focus of our Human Resource to develop not only each
 person''s competencies, but also their performance and potential in
 alignment with our ongoing business challenges.
 
 Conclusion
 
 I would like to thank my fellow Directors on the Board and the members
 of the Management Committee for their wisdom and support. Various
 ministries of GoI particularly the Department of Heavy Industry have
 been providing valuable guidance and support in our efforts. And thanks
 also to our customers, shareholders, and other business partners for
 the opportunities to earn your confidence. Your company has been
 fortunate to have had visionary leaders and dedicated employees as the
 drivers of success.  I look forward to continued support from all
 stakeholders in BHELs challenging yet exciting journey into the future.
 
                                                      B.Prasada Rao
 
                                       Chairman & Managing Director 
 
 New Delhi 
 
 August 12, 2011