To the Members,
The Directors feel privileged to present the 50th Annual Report on the
business and operations of the company and the statement of accounts
for the year ended March 31, 2014.
Figures (in Rs. Crore except 2013-14 2012-13
per share data)
a) Turnover (Gross) 40338 50156
b) Revenue from 38389 47618
c) Other Operational 720 807
d) Operating expenses 34595 39037
e) Operating profit 4514 9388
f) Add : Other income 1616 1122
g) Profit before 6130 10510
cost & tax expense
h) Less: Depreciation 983 953
i) Less: Finance costs 133 125
j) Profit before tax 5014 9432
k) Less: Tax expense 1553 2817
l) Profit after Tax 3461 6615
m) Add: Balance brought 1102 1031
forward from the
n) Profit available for 4563 7646
i) Adjustment 81
ii) Dividend (including 693 1323
iii) Corporate 118 221
Dividend tax ((incl. on interim
iv) Amount transferred 2500 5000
to General Reserve
o) Balance in Statement 1171 1102
of Profit & Loss
p) Earnings per Share (Rs.) 14.14 27.03
q) NAV per share (Rs.) 135.02 124.38
Despite various issues relating to power projects like fuel linkages,
fund constraints, land acquisition etc., BHEL recorded a turnover of Rs.
40338 Crore in the year 2013-14. Net worth of the company has gone up
by 8.55 %.
Performance of BHEL for the year 2012-13 has been rated as ''Very Good''
in terms of MoU signed with the Government of India. BHEL has been
awarded MoU Composite score of ''2.49''.
The Board has recommended a final dividend of 76 % (Rs. 1.52 per share),
Rs. 372.04 Crore, for the year 2013-14. An interim dividend of 65.5 % (Rs.
1.31 per share), Rs. 320.64 Crore, on share capital of Rs. 489.52 Crore,
has already been paid for the year 2013-14. Thus the total dividend
(exclusive of dividend tax) for the year 2013-14 is Rs. 692.68 Crore (Rs.
2.83 per share) as against Rs. 1323 Crore (Rs. 5.41 per share) paid in the
Provision of Rs. 63.23 Crore has been made for Corporate Dividend Tax on
the final dividend proposed. Corporate Dividend Tax of Rs. 54.49 Crore
has already been paid on the interim dividend.
Despite operating in a subdued but healthy competitive business
environment, the company secured orders worth Rs. 28007 Crore during the
year. Sector-wise orders booked are as follows:
(Rs. in Crore)
Power Sector 20433 25560
Industry Sector* 5007 4086
Operations 2567 2004
Booked 28007 31650
outstanding at the
end of the year 101500 115100
*excludes inter sectoral orders
Events Occurring after the Balance Sheet Date
There were no significant events occurring after the Balance sheet
Directors'' Responsibility Statement
Pursuant to Section 217(2AA) of the Companies Act, 1956, it is hereby
(i) that in the preparation of the annual accounts for the financial
year ended 31st March, 2014 the applicable Accounting Standards have
been followed along with proper explanation relating to material
(ii) that the Directors have selected such accounting policies and
applied them consistently and made judgments and estimates that were
reasonable and prudent so as to give a true and fair view of the state
of affairs of the company as at the end of the financial year 2013-14
and of the profit of the company for that period;
(iii) that the Directors have taken proper and sufficient 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
(iv) that the Directors have prepared the annual accounts for the
financial year ended 31st March, 2014 on a going concern'' basis.
Management Discussion and Analysis
A report on Management Discussion and Analysis is placed at Annexure -
I. Board of Directors
Shri Atul Sobti has been appointed as an Additional Director w.e.f.
01.12.2013 to take charge of the office of Director (Power).
Pursuant to DHI letter no. 1(18)/2011-PEXI, dated 31.12.2013, the term
of Shri B. Prasada Rao, CMD, has been extended by the President of
India for a period of two years w.e.f. 01.01.2014.
Shri S.K. Bahri, Additional Secretary & Financial Adviser, Department
of Industrial Policy & Promotion, Ministry of Commerce & Industry has
been appointed as Part-time Official Director w.e.f. 31.03.2014.
Ms. Harinder Hira has been appointed as Part-time Non-official Director
In accordance with Section 161 of the Companies Act, 2013 and Article
67(iv) of the Articles of Association of the company, Shri Atul Sobti,
Shri S.K Bahri and Ms. Harinder Hira shall hold their directorships
upto the 50th Annual General Meeting of the company and are eligible
for appointment as Directors at the Meeting.
Shri Trimbakdas S. Zanwar who was appointed as Part-time Non-Official
Director w.e.f. 12.11.2010 ceased to be a Director of the company on
completion of his tenure on 11.11.2013.
Shri Atul Saraya, who was appointed as Director (Power) w.e.f.
01.10.2009 ceased to be a Director of the company on attaining the age
of superannuation on 30.11.2013.
Ms. Kusumjit Sidhu, IAS, former Additional Secretary & Financial
Adviser, Ministry of Commerce & Industry, consequent upon her
appointment as Secretary, Department of Public Enterprises, has
relinquished her position as Part-time Official Director w.e.f.
Shri S. Ravi who was appointed as Part-time Non- Official Director
w.e.f. 10.03.2011 ceased to be a Director of the company on completion
of his tenure on 09.03.2014.
The Board of Directors place on record their deep appreciation for the
valuable services rendered as well as advice and guidance provided by
Shri Trimbakdas S. Zanwar, Shri Atul Saraya, Ms. Kusumjit Sidhu and
Shri S. Ravi during their tenure.
Further, pursuant to Section 152 of the Companies Act, 2013 and Article
67(i) of the Articles of Association of the company, S/shri R. Krishnan
and W.V.K Krishna Shankar will retire by rotation at the Annual General
Meeting and being eligible, offer themselves for re-appointment.
In compliance with Clause 49(IV)(G)(i) of the Listing Agreement, brief
resumes of the Directors proposed for appointment and re-appointment
along with the nature of their expertise in specific functional areas
and names of companies in which the person also holds directorship
along with the membership of the Committees of the Board are given at
Annexure-II forming part of the Directors'' Report.
The concept of sustainability is ingrained in the DNA of BHEL which is
evident from the mission statement- Providing Sustainable Business
solutions in the fields of Energy, Industry & Infrastructure. BHEL is
committed to be an environment friendly company in all its areas of
activities, products and services and providing a safe & healthy work
The company is putting in efforts to reduce the carbon footprint of its
organisational activities and also its customers by adopting
sustainable business practices. Various projects and initiatives are
being undertaken in the areas of Renewable Energy Generation, Material
and Natural Resource Management, Energy Management, Water & Bio-
Diversity Management and Carbon Management.
BHEL has always been endeavouring to act as a responsible corporate
citizen committed to the welfare of society through inclusive growth
aimed at capacity building, empowerment of communities, environment
protection and development of backward regions and upliftment of the
marginalised & under-privileged sections of the society.
During 2013-14, BHEL spent 1.64% of PAT of the year 2012-13 towards CSR
& Sustainability activities. company has supported various social
initiatives across the country by undertaking projects in diversified
areas like Community Development, Health & Hygiene, Education,
Environment Protection, Disaster Management, and Talent up
gradation/Skill development. Further details are given in Annexure–III.
In line with the requirement of clause 55 of the listing agreement,
Business Responsibility Report describing the initiatives taken by the
company from an environmental, social and governance perspective as per
the suggested format is enclosed at Annexure - IV.
R&D and Technological Achievements
BHEL''s products and systems are technology intensive and thus, BHEL has
adopted R&D and technology development as the central driver for
implementing its strategy and fulfilling its endeavour to become a
global engineering enterprise. As part of Strategic Plan 2012-17, the
company is transforming its R&D and innovation in a structured and
focused manner through five pronged approach consisting of Strategic
Direction, Portfolio Management, Partnerships & Alliances, Knowledge
Management and Enablers to improve the performance of existing products
and develop new product for meeting global benchmarks.
The R&D expenditure of the company during 2013- 14 was Rs. 1114 Crore
which was 2.76% of the turnover as against 2.49% for the previous year.
This also includes the expenditure incurred on R&D efforts gone into
major modifications / improvements in products/designs against customer
requirements which are not covered in R&D projects. Similarly, the IPR
capital of the company has grown by 19% as compared to 2012-13, taking
the total to 2589.
Further, investments in R&D are being intensified to enhance
capabilities in Product Development & Engineering. Company will
continue to pursue various projects undertaken in recent years with
focus on low-carbon path technologies including faster assimilation of
supercritical technology, development of Advanced Ultra Super Critical
Technology, IGCC Technology commercialisation, Carbon capture, Solar
(PV, Thin Film, CSP), 765/1200 kV Transmission System, GIS up to 765
kV, ±800 kV HVDC system, IGBT based Propulsion Systems for higher
rating Locos, EMU, Metro coaches on mission mode. Further details are
given in Annexure-V.
Official Language Implementation
Continuous efforts were made for propagation and effective
implementation of Rajbhasha in the company. All the Units and Divisions
have Hindi cells for assistance in fulfilling the Rajbhasha
requirements. Quarterly Meetings of Official Language Implementation
Committee were conducted on regular basis to monitor and review the
progress made in achieving the targets fixed in Annual Programme for
More than 600 non Hindi speaking employees were imparted training under
Hindi teaching scheme of Govt. of India. Training for using Unicode
Hindi on computer was also imparted to employees of all the
Units/Divisions. To motivate employees to work in Hindi 80 Hindi
workshops were organized covering more than 2000 employees. In
addition, 2 Translation Training Programmes were conducted with the
help of Central Translation Bureau, Rajbhasha Vibhag, Ministry of Home
Inter Unit Rajbhasha Scheme has been introduced to increase the
competition amongst the Units and Divisions in this area. Under the
scheme, 12 Units were given award for excellent Rajbhash
Implementation. Two executives were awarded for Hindi Book writing
under Hindi Book Award Scheme.
All the Units/Divisions of the company, including Corporate Office,
celebrated Hindi Divas and
Hindi Week/ Fortnight/Month during which various competitions,
Seminars, Cultural Programme and Kavi Sammelan were held.
Twelve wards of employees who obtained B-2 grade or above in Hindi
subject at Board level examinations were given awards.
Our company is playing an active role in Town Official Language
Implementation Committees constituted in various cities. Many
interesting competitions, seminars and programmes are conducted under
auspices of these committees. This year 10 Units/ Divisions of BHEL
were awarded by the TOLICs for various achievements in this area.
The Vigilance organisation of BHEL is headed by a Chief Vigilance
Officer (CVO) appointed by the Ministry. Major manufacturing Units /
Power Sector Region of BHEL have a vigilance set up headed by a senior
vigilance executive reporting to the CVO.
Preventive vigilance has remained the focus area of BHEL Vigilance all
through the years. During 2013-14 emphasis was on systemic
improvements. Based on system studies carried out, suggestions towards
system improvements were rendered for incorporation in the policies /
guidelines. Consequently policies / guidelines were revised during the
Reverse Auction Guidelines
Guidelines for Suspension of Business
Dealings with Vendors
Amendments to Vendor Registration Procedures
- SEARP, 2010.
Public Awareness is an important corner stone for good governance. An
enlightened employee not only can contribute in achieving the
organisational goal but also in system improvements. Training
programmes were conducted to update employees about companys policies,
rules and procedures. 104 such programmes were organized during the
year 2013-14 in various BHEL Units and Regions. In addition,
interactive sessions were held with line executives representing
different functional areas to sensitise them about the risk prone
To create awareness about the procedures of procurement in BHEL, to
disseminate the instructions issued by Statutory Authorities and to
share the case studies, quarterly e-Newsletter DISHA is being
The Vigilance Awareness Week was observed from 28th October to 2nd
November, 2013 in Corporate Office, Manufacturing Units, Power sector
Regions and Project Sites of BHEL. Observance of Vigilance Awareness
Week commenced with the PLEDGE of Integrity by the employees.
Interactive sessions/discussions on the theme Promoting Good
Governance-Positive Contribu- tion of Vigilance, were organized at
Corporate Office and in Units/Regions. Lectures and interactions with
various eminent personalities, expert speakers on relevant topics
varying from RTI, Fraud Risk Management to Ethics and Values etc. were
also organized across the organisation during Vigilance Awareness Week.
During 2013-14, Vigilance emphasised on procure- ment through open
tender route particularly for high value packages. Tender conditions
related to rate contracts were studied and suitable terms and
conditions were incorporated to thwart cartelisation by vendors.
Further, quality inspections and utilization of BHEL T&Ps in
sub-contracted/ outsourced works were selected as focus area for
enhancing the end quality of products and productivity.
Corporate Vigilance teams inspected 6 Vigilance Units of BHEL. The
findings were discussed in interactive sessions with the Unit
Managements. It was impressed upon officials to focus on the aspects
of estimation and price reasonability while dealing with procurement to
remain competitive in the market. The interactive sessions helped
BHEL officials to appreciate the role of Vigilance in promoting a
strong, viable and competitive organisation.
BHEL is committed to bring transparency in day to day operations of the
company by leveraging technology. The information regarding procurement
related matters like status of purchase orders and Contracts, vendor
registration along with their current status is hosted on the company
web site. In addition, e-tendering route is being promoted for
procurement and e-payment system has been implemented to reduce vendor
Safety & Security
Dedicated Safety and Occupational Health Centers are being run in the
factory premises taking care of safety and health issues at the work
place. Various measures like periodic health and safety awareness
campaigns, mock drills in identified hazardous areas once in 6 months,
job safety analysis for identified activities, periodic maintenance &
testing of material handling equipment, monitoring of quality of food &
water etc. are being taken to ensure best possible safe working
environment. Most of the manufacturing units and other entities have
been accredited to Environmental Management Systems (ISO 14001:2004)
and Occupational Health & Safety Management Systems (OHSAS 18001:2007).
The company''s security mechanism is sufficient and geared up to provide
security to each Plant/Unit. Installation of CCTV''s and SOP have been
installed in many of the plants. Security audit of major plants is
being done by the Intelligence Bureau periodically and the additional
requirements, wherever pointed out by them, are immediately complied
with by the concerned units. The Management, security staff and the
employees of company are sensitised to the security needs of company.
Adequate measures have been taken for Security of computers and
software. Department of Electronics, Govt. of India (SRAC) has also
carried out audit/ review of our software security mechanism and their
suggestions have been implemented.
As per the requirements of Clause 49 of the Listing Agreement a
detailed report on Corporate Governance together with the following is
Annexure - VI:
(i) CEO/CFO Certificate [as per Clause 49(V)] and
(ii) Certificate from the company''s Auditors [as per Clause 49(VII)].
Information in accordance with the provisions of Section 217(1)(e) of
the Companies Act, 1956 read with Companies (Disclosure of Particulars
in the Report of the Board of Directors) Rules, 1988 regarding
conservation of energy, technology absorption and foreign exchange
earnings and outgo is given at Annexure-VII.
As per Notification No. GSR 289(E) dated March 31, 2011 issued by the
Ministry of Corporate Affairs, amending the provisions of the Companies
(Particulars of Employees) Rules, 1975 issued in terms of Section
217(2A) of the Companies Act, 1956, it is not necessary for Government
companies to include the particulars of employees drawing salaries of Rs.
60 lakh or more per annum, employed throughout the financial year or Rs.
5 lakh per month, if employed for part of the financial year. The
company being a Government company, the information has not been
included as a part of the Directors'' Report. However such particulars
will be made available to any member on receiving a specific request in
this regard during the course of Annual General Meeting.
Statement pursuant to Section 212 of the Companies Act, 1956 relating
to Subsidiary Companies is given at Annexure-VIII.
The Auditors of your company are appointed by the Comptroller and
Auditor General of India. The names of auditors appointed for the year
2013-14 are printed separately in the Annual Report.
The detail of cost auditors appointed for the year 2013-14 and Cost
Audit details are printed separately in the Annual Report.
The reply to the point referred to in the Auditors Report and Comments
of the Comptroller and Auditor General of India are given at Annexure -
The Board places on record its sincere appreciation towards the
company''s valued customers in India and abroad and esteemed
shareholders for the support and confidence reposed by them in the
management of the company and look forward to the continuance of this
mutually supportive relationship in future.
The Board also gratefully acknowledges the support and guidance
received from various Ministries of the Government of India,
particularly the Department of Heavy Industry, in company''s operations
and developmental plans. The Directors express their grateful thanks
also to the Comptroller and Auditor General of India, Chairman and
Members of Audit Board, Statutory Auditors, Branch Auditors and Cost
Auditors. The company also wishes to place on record its appreciation
for the continued co-operation received from all the Technology
Collaborators and Suppliers and support provided by the Financial
Institutions and bankers. Last but not the least the Board wishes to
place on record its deep gratitude to all BHELites whose enthusiasm,
team efforts, devotion and sense of belongingness has made this great
For and on behalf of the Board of Directors of
BHARAT HEAVY ELECTRICALS LTD.
B. Prasada Rao
Chairman & Managing Director
Place : New Delhi
Dated : July 14, 2014