To the Members,
 
 We are delighted to present our 47th Annual Report on the business and
 operations of the Company for the year ended March 31, 2011.
 
 FINANCIAL PERFORMANCE
 
                                                   Financial Year
 
 (In R Crore except per share data)        2010-11           2009-10
 
 (a) Turnover(Gross)                         43337             34154
 
 (b) Profit before depreciation,
 
 interest & tax                               9605              7083
 
 (c) Less: Depreciation                        544               458
 
 (d) Less: Interest & Finance charges           55                34
 
 (e) Profit before tax                        9006              6591
 
 (f) Less: Provision for Taxes                2995              2280 
 (including deferred tax)
 
 (g) Profit after Tax                         6011              4311
 
 (h) Add:/(less) Statutory appropriation         -                 1
 
 (i) Distributable Profit                     6011              4312
 
 (j) Add: Balance brought forward from
 the previous year                             575               595
 
 (k) Balance available for appropriation      6586              4907
 
 i) Dividend (including interim dividend)     1525              1141
 
 ii) Corporate Dividend tax
 (incl. on interim dividend)                   249               191
 
 iii) Amount transferred to
 General Reserve                              4000              3000
 
 (l) Balance in P&L account to be
 carried forward                               812               575
 
 (m) Earnings per Share (s)                 122.80             88.06
 
 (n) NAV per share (s)                      411.71            325.16
 
 (o) Economic Value Added (s Crore)           3793              2670
 
 FINANCIAL HIGHLIGHTS
 
 During the year, the company witnessed growth in Turnover by 26.89% to
 Rs 43337 Crore from Rs 34154 Crore in the previous year. The Turnover
 (net of excise duty) increased by 26.49% from Rs 32861 Crore in 2009-10
 to s 41566 Crore in 2010-11. Profit before Tax for the year 2010-11 is
 placed at Rs 9006 Crore as against Rs 6591 Crore during 2009-10, a growth
 of 36.64% as compared to previous year. Profit after Tax is placed at Rs
 6011 Crore as against Rs 4311 Crore during 2009-10, a growth of 39.43%
 over previous year.
 
 Increase in turnover coupled with savings in material cost over
 previous year has contributed to the better financial performance
 during the year.
 
 Net worth of the company has gone up from Rs 15917 Crore to Rs 20154
 Crore registering an increase of 26.62%. Net asset value (NAV) per
 share has increased from Rs. 325.16 in 2009-10 to Rs 411.71 in 2010-11.
 
 DIVIDEND
 
 The Board has recommended a Final Dividend of 179% (RS. 17.90 per share),
 Rs.876.24 Crore, for the year 2010-11. An interim dividend of 132.50% (RS.
 13.25 per share), Rs. 648.61 Crore, on share capital of Rs.489.52 Crore,
 has already been paid for the year 2010-11.  Thus the total dividend
 payment for the year 2010-11 is Rs.1524.85 Crore (exclusive of dividend
 tax) as against Rs.1140.58 Crore paid in the previous year.
 
 Provision of Rs.142.15 Crore has been made for Corporate Dividend Tax on
 the Final dividend proposed.  Corporate Dividend Tax of Rs.107.73 Crore
 has already been paid on the interim dividend.
 
 ORDERS RECEIVED
 
 Orders worth Rs. 60507 Crore were received during the year as against s
 59037 Crore in 2009-10. Sector-wise orders booked are as follows:
 
 (Rs in Crore)                          2010-11     2009-10
 
 Power Sector*                            46393       41982
 
 Industry Sector*                         10375       13484
 
 International Operations                  3739        3571
 
 Total Orders Booked                      60507       59037
 
 Order Book outstanding
 
 at the end of the year                  164145      144300
 
 * Excludes inter Sectoral Orders
 
 RATING OF BHEL VIS-A-VIS MOU TARGETS
 
 Performance of BHEL for the year 2009-10 has been rated as ''Excellent''
 in terms of MoU signed with the Government of India. BHEL has been
 awarded the MoU Composite score of ''1.17''.
 
 The MoU rating for 2010-11 is under finalisation by the Government of
 India. However, company''s own assessment places performance of the
 company in ''Excellent'' category for FY 2010-11.
 
 MANAGEMENT DISCUSSION AND ANALYSIS
 
 A report on Management Discussion and Analysis is placed at Annexure –
 I.
 
 BOARD OF DIRECTORS
 
 Appointment
 
 Shri Trimbakdas S. Zanwar has been appointed as Part- time Non-official
 Director w.e.f. 12.11.2010.
 
 Shri S. Ravi has been re-appointed as Part-time Non- official Director
 w.e.f. 10.03.2011.
 
 Shri Ambuj Sharma, IAS, Joint Secretary, Department of Heavy Industry,
 Ministry of Heavy Industries & Public Enterprises has been appointed as
 Part-time Official Director w.e.f. 15.03.2011.
 
 Shri M.K. Dube has been appointed as an Additional Director w.e.f.
 25.06.2011 to take charge of the office of Director (IS&P).
 
 Shri P.K. Bajpai has been appointed as an Additional Director w.e.f.
 01.07.2011 to take charge of the office of Director (Finance).
 
 In accordance with Section 260 of the Companies Act, 1956 and Article
 67(iv) of the Articles of Association of the Company, S/Shri Trimbakdas
 S. Zanwar, S. Ravi, Ambuj Sharma, M.K.Dube and P.K. Bajpai shall hold
 their directorships upto the 47th Annual General Meeting of the Company
 and are eligible for appointment as Directors at the Meeting.
 
 Cessation
 
 Shri S. Ravi who was appointed as Part-time Non-official Director
 w.e.f. 29.11.2007 ceased to be a Director of the Company on completion
 of his tenure on 28.11.2010.
 
 Shri Rajiv Bansal, IAS, Joint Secretary, Department of Heavy Industry,
 Ministry of Heavy Industries & Public Enterprises ceased to be a
 Part-time Official Director w.e.f. 15.03.2011.
 
 The Board of Directors place on record their deep appreciation of the
 valuable services rendered as well as advice and guidance provided by
 Shri S. Ravi and Shri Rajiv Bansal during their tenure.
 
 Further pursuant to Sections 255 and 256 of the Companies Act, 1956 and
 Article 67(i) of the Articles of Association of the Company, Smt. Reva
 Nayyar, Shri Anil Sachdev and Shri Atul Saraya 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 the directorship
 along with the membership of the Committees of the Board are given at
 Annexure - II forming part of the Directors'' Report.
 
 OFFICIAL LANGUAGE IMPLEMENTATION
 
 The Company continued its thrust on Official Language implementation in
 line with Govt. of India''s policy. Apart from other activities
 important activities undertaken during the year are as under:
 
 1. In order to facilitate the employees to work in Hindi and also to
 give necessary input to work in Hindi, Hindi workshops and Hindi
 computer training programmes in prescribed numbers were organised in
 all the Units/Divisions including Corporate Office.
 
 2.  With a view to create favourable atmosphere for usage of Hindi in
 the Company, all the Units/ Divisions of the company, including
 Corporate Office, celebrated Hindi Divas on 14/9/2010 and organised
 various Hindi competitions during the celebration of Hindi Week in the
 month of September, 2010.
 
 3.  All national level functions e.g Republic Day, Independence Day,
 International Women''s Day etc.  were conducted in Hindi in Corporate
 Office and major Units of the Company.
 
 4.  All the major Units and some of the Divisions of the Company
 published 11 annual Hindi magazines namely, BHEL Chandan by EDN, BHEL
 Darpan by EPD,BHEL Kiran by Tiruchi, Surya Kiran by ISG, BHEL Yashasvi
 by RC Puram, Hyderabad, BHEL Bharati (Half yearly) by Bhopal, BHEL
 Ganga by Haridwar, Srijan by Jhansi, Shakti Punj by Power Sector (Hq),
 New Delhi, Abhivyakti by Power Sector- NR,Noida, Poorvabha by Power
 Sector-ER, Kolkata during the year. Corporate Office also brought out
 04 issues of its quarterly Hindi Magazine Arunima during the year.
 
 5.  To recognise the best performers and enhance competitive spirit for
 implementation of Official Language Policy among our Units/Divisions,
 six Units namely Power Sector-NR,Jhansi, Bhopal, EDN, ISG & EPD were
 awarded Rajbhasha Shield by the Company for excellent implementation of
 Official Language Policy in their Units.
 
 6.  Many awards were received by the employees of major Units in
 various Hindi Competitions organised under the auspices of Town
 Official Language Implementation Committee.
 
 7.  Committee of Parliament on Official Language inspected our Power
 Sector(Hq), New Delhi, Power Sector-ER, ROD-Mumbai and Power Sector-NR
 during the year and appreciated the efforts being made in implementing
 Official Language Policy of the Govt. of India, while taking a few
 assurances from us to enhance the use of Hindi in official work.
 
 8.  BHEL Units/Divisions were inspected by Corporate Rajbhasha
 Implementation Group for facilitating them to make progressive use of
 Hindi as per the Govt. policy.
 
 PARTICIPATION IN THE GLOBAL COMPACT OF THE UNITED NATIONS
 
 BHEL reiterates its commitment to United Nations Global Compact (UNGC)
 Programme and set of core values enshrined in its ten principles on
 human rights, labour standards, and environment and anti corruption.
 
 Company intents to advance GLOBAL COMPACT (GC) principles, as a
 responsible corporate citizen. BHEL has taken a lead role in promoting
 G.C. principles in other Indian Organization through Global Compact
 Network (GCN) – an apex level nodal agency, formed by the leading
 Indian organizations. BHEL continued to remain in the forefront in all
 activities of the Network as Secretary/GCN being BHEL nominee.
 Noteworthy activities of the year were participating in the National
 Convention and holding of monthly meetings of the Network through case
 studies/ organizational experience sharing, addressing the Global
 Compact principles in Indian context.
 
 In recognition of BHEL''s contribution in support of Global Compact
 programme and its outstanding Communication on Progress (COP), UNGC
 continued to place BHEL under ''Notable COP'' category.
 
 BHEL is an environment friendly company in all its activities, products
 & services, besides providing safe and healthy working environment to
 all its stakeholders and has made UNGC programme as part of the
 Company''s strategy, culture and day-to-day operations.
 
 VIGILANCE
 
 The Vigilance organisation of BHEL is headed by the CVO. Each
 Unit/Region of BHEL has a vigilance set up headed by a senior vigilance
 executive reporting to the CVO.
 
 Preventive vigilance has been the thrust areas of BHEL Vigilance
 throughout the years and the same received focused attention during
 2010-11. In line with the directions of the CVC for improving Vigilance
 Administration, efforts were put in to shift priority from preventive
 vigilance to proactive and predictive Vigilance Management.
 
 Lack of knowledge or misinterpretation of the Company''s policies, rules
 and procedures may lead to lapses/irregularities. Awareness amongst
 employees of the organization is generated by organizing training
 programmes. 67 such programmes were organized during the year 2010-11
 in various Units, Regions and offices of BHEL. Interactive sessions
 were held with line executives representing different functional areas,
 in order to create vigilance awareness and to enhance their knowledge
 of the Company''s rules, procedures and policies.
 
 With a view to make systems more effective and transparent, Vigilance
 had carried out system studies during the year 2010-11. Many
 suggestions towards system improvement have been rendered. Some of the
 major areas where suggestions for improvement were given are:
 
 - Amendments to Vendor Registration Procedures
 
 - Purchase Policy
 
 - Reverse Auction Guidelines
 
 - Criteria for financial loading of offers, on account of acceptable
 deviations from tendered scope / specifications.
 
 As per CVC directions, the Company has taken many initiatives to make
 available all relevant information on the web on real time basis.
 Towards this end, periodic checks are undertaken to ensure that:
 
 - Status of Purchase Orders, Works Contracts concluded every month is
 being uploaded by all Units as per the CVC format.
 
 - Procedure and forms related to Vendor registration are hosted on the
 web site.
 
 - Status of vendor registration is hosted on the web and can be viewed
 by vendors.
 
 - E-payment of vendor bills are being implemented throughout the
 organization and principle of first come first served is being followed
 as a rule in payment of vendor bills.
 
 - Status of bill payment can be viewed by the vendors on-line.
 
 - Indents being raised on-line.
 
 - Information relating to Rules/Procedures governing the registration
 of vendors, clearance of bills etc. is available on the BHEL/Units
 websites.
 
 SECURITY
 
 The Company''s Security mechanism is at present sufficient and it is
 geared up to provide security to each Plant/Unit. Whereas, the security
 of the most of the Plants of the Company which are categorized in ''A''
 category is being managed by the CISF, in some plants, the Company has
 its own Security. In other Plants, Corporate Office and Regional
 Offices, the security is being looked after by the private agencies
 like M/s. EATS sponsored by Directorate General Resettlement, Govt.  of
 India or Ex-Servicemen Corporation.
 
 Adequate measures have been taken for Security of computers. Department
 of Electronics, Govt. of India (SRAC) have also carried out inspection
 of our software
 
 security mechanism and their suggestion have been implemented. 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.  Review of
 Security is done internally also from time to time and necessary
 corrective measures are being taken as per the requirements. The
 Management, Security staff and employees of the Company are sensitized
 to the Security needs of Company.
 
 SUSTAINABILITY
 
 Sustainability is an integral part of the company''s strategy. BHEL is
 committed to be an Environment friendly company in all its areas of
 activities, products and services, providing safe and healthy working
 environment.
 
 In line with the company''s strategy, Environment Improvement Projects
 and Community Development Programmes are given special thrust. Some of
 the major EIPs executed in the past at BHEL plants and townships
 included tree plantation drives, installation of rain harvesting
 plants, efficient water and energy management, reduction in noise
 level, improvement in chemical storage and handling systems etc.
 
 BHEL''s scheme on Corporate Social Responsibility has evolved over the
 years and has been endorsed by the top management as a policy
 statement, on the underlying principle that BHEL is a Committed
 Corporate Citizen and its Corporate Social Responsibility is not only
 to build synergy between business and Corporate Social Responsibility
 but is an integral part of business strategy.
 
 All manufacturing Units/Regions of the company are accredited to
 international standards viz. ISO-14001 certification for environmental
 management and OHSAS-18001 certification for occupational health and
 safety management systems.
 
 DIRECTORS'' RESPONSIBILITY STATEMENT
 
 Pursuant to Section 217(2AA) of the Companies Act, 1956, it is hereby
 confirmed:
 
 (i) that in the preparation of the annual accounts for the financial
 year ended 31st March, 2011 the applicable Accounting Standards have
 been followed along with proper explanation relating to material
 departures;
 
 (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 2010-11
 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
 irregularities;
 
 (iv) that the Directors have prepared the annual accounts for the
 financial year ended 31st March, 2011 on a ''going concern'' basis.
 
 CORPORATE GOVERNANCE
 
 As per the requirements of Clause 49 of the Listing Agreement a
 detailed report on Corporate Governance together with the following is
 given at Annexure – III:
 
 (i) CEO/CFO Certificate [as per Clause 49(V)] and
 
 (ii) Certificate from the Company''s Auditors [as per Clause 49(VII)].
 
 OTHER DISCLOSURES
 
 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-IV.
 
 None of the employees have drawn remuneration in excess of the limits
 prescribed under section 217(2A) of the Companies Act, 1956 read with
 Companies (Particulars of employees) Rules, 1975 during the year
 2010-11.
 
 Statement pursuant to Section 212 of the Companies Act, 1956 relating
 to Subsidiary Companies is given at Annexure-V.
 
 AUDITORS
 
 The Auditors of your Company are appointed by the Comptroller and
 Auditor General of India. The names of auditors appointed for the year
 2010-11 are printed separately in the Annual Report.
 
 The detail of cost auditors appointed for the year 2010- 11 and Cost
 Audit details are printed separately in the Annual Report.
 
 The replies to the points referred to in the Auditors'' Report and to
 the Comments of the Comptroller and Auditor General of India are given
 at Annexure – VI.
 
 ACKNOWLEDGEMENTS
 
 The Board places on record its sincere appreciation towards the
 Company''s valued customers in India and abroad 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
 of 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,
 commitment and sense of ownership has made this great company proud.
 
                      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 26, 2011