Bharat Heavy Electricals

2008-09 was a challenging year for the globalised world. The Indian
 economy also experienced a slowdown in comparison with the robust
 growth performance witnessed in the preceding five years, largely due
 to the knock-on effect of the global financial crisis. Notwithstanding
 the global and domestic economic impacts, including the commodity price
 rises, BHEL has managed yet another stellar performance.
 
 I would like to briefly take you through the results for the FY
 2008-09.
 
 Performance during 2008-09
 
 BHEL defied the slowdown and notched up a top line growth of 31% with
 the turnover reaching Rs 28,033 Crore. Profit Before Tax (PBT) was Rs.
 4,849 Crore, an increase of 9.5% over last fiscal and Profit After Tax
 (PAT) rose to Rs. 3,138 Crore, an increase of 9.8% over last year.
 There have been several significant achievements and these include:
 
 - The company surpassed its own record set in 2007-08 by booking orders
 worth Rs 59,678 Crore. Utility orders amounted to 17,020 MW and
 Industry Sector order inflows crossed Rs.10,000 Crore mark for the
 first time.
 
 - Maiden orders for 2x800 MW supercritical boilers for Krishnapatnam
 and 2x660 MW supercritical turbine generator sets forBarh-ll, NTPC were
 received.
 
 - First-ever order for steam generators for new rating 700 MWe Nuclear
 sets - moving forward to capitalize on emerging business opportunities
 in the Nuclear sector
 
 - Manufacturing capacity expansion from 10,000 MW to 15,000 MW p.a.
 proceeding apace and further augmentation to 20,000 MW p.a.  planned by
 2011-12.
 
 - BHELs R&D spend increased to Rs.690 Crore amounting to 2.46% of the
 Turnover, a commendable achievement for a company operating in the
 Capital Goods segment.
 
 - Economic Value Addition (EVA) reached Rs.2,008 Crore, a 11% increase
 over that of Rs.1810 Crore in the year before.
 
 - Earnings per Share on the post-bonus equity capital increased to Rs
 64.11 against previous years Rs.58.41.
 
 - A final dividend of 80% has been recommended by Board, in addition to
 the interim dividend of 90% for the year, making a total of 170% for
 the year. BHEL is maintaining the track record of paying dividends
 uninterruptedly since 1976-77.
 
 While the details of performance of the company have been furnished
 elsewhere, I would like to focus on some important and strategic
 developments.
 
 Future Ready
 
 The challenge before the country is to move ahead with rapid expansion
 of its installed power generating base. Massive capacity additions have
 been planned for both XI and XII Plan periods. Realizing these would
 demand up-gradation to higher range equipment, faster capacity
 augmentation and shorter cycle times with better project execution
 cycles which is a daunting task. Several positive initiatives have been
 put in place by the government for creating conditions that would
 encourage both public and private sectors to invest in this field.
 
 This challenge is an opportunity for your company; to grow business
 many fold and to serve people of this great country. With the
 manufacturing capacity of 10,000 MW already in place and implementation
 well under way for achieving 15,000 MW by December 2009, the company
 intends to capitalize on the opportunities. At the same time, the
 emerging competition due to market expansion requires your company to
 adopt a new paradigm. This new paradigm calls for a strategic shift
 that will require BHEL to build capabilities to address the stringent
 demands from its stakeholders.
 
 Our ongoing thrust on capacity and capability building initiatives are
 intended to make your company Future Ready. BHEL has forayed into new
 areas like Supercritical thermal sets, 500 MW Nuclear set for Fast
 Breeder Reactor, Advanced-class gas turbines (Fr.9FA) etc. Company
 plans to increase R&D spend to at least Rs. 1000 crore by 2011 -12. To
 strengthen its human resource assets base, 4717 employees were
 recruited in 2008-09.
 
 Your company is forging strategic alliances by way of JVs to leverage
 equipment sales in the Supercritical technology domain, JVs for
 technology sourcing, JVs for sourcing critical inputs, equipment, etc.
 Companies like NTPC, NPCIL, TNEB, KPCL, GSECL, KEL, BEL, HEC and PTC
 have become our esteemed partners in these ventures.
 
 Diversification of the portfolio and geographic spread are important
 strategies to mitigate risks in future. BHEL is taking necessary steps
 in this direction. Routes of inorganic growth are being explored in the
 areas of Transmission, Transportation, Photovoltaics and Nuclear.
 Bharat Heavy Plate & Vessels (BHPV), which has been acquired as a 100%
 subsidiary is being revived with adequate managerial & financial
 support.
 
 International business is being further enhanced by focusing on
 consolidation in existing international markets as well as entering new
 markets. A breakthrough was achieved with the Long term business tie-up
 in the form of a rate contract for 126 MW rated Gas Turbine generating
 sets with Petroleum Development Oman.
 
 Financial parameters are one of the indicators of performance. Going
 forward, sustainable progress calls for a heightened level of creation
 of value in other aspects as well. BHEL has put in place Corporate CSR
 Policy to further build on its efforts of being a responsible corporate
 citizen. To cater to the concerns for climate change, BHEL is making
 all efforts to promote clean coal technology in the country.
 
 Conclusion
 
 Our journey to become a world-class engineering enterprise can not be
 achieved without acknowledging dedicated and committed efforts of each
 member of BHEL family. I would like to thank my fellow directors for
 their support and valuable input that they have provided over the past
 year. I am grateful to all our esteemed shareholders, our stakeholders
 like customers, business associates, and all others who have reposed
 their faith in BHEL. Various ministries of the Government of India
 particularly the Department of Heavy Industry have been providing
 continuous guidance and support in our efforts. I believe that by
 maintaining our strength, stability and focus, we will be able to grow
 our businesses and will become a positive contributor in the Nation
 building. I look forward to your continued support in this journey.
 
                                             With best wishes,
 New Delhi                                    (K. Ravi Kumar)
 August 12,2009                  Chairman & Managing Director