Bharat Heavy Electricals

The are delighted to present our 44th Annual Report on the business and
 operations of the Company for the year ended March 31, 2008.
 
 FINANCIAL RESULTS
 
                                                         (Rs. in Crore) 
                                                2007-08        2006-07
 
 (a) Turnover                                     21401          18739
 
 (b) Profit before depreciation,
 interest & tax                                    4763           4052
 
 (c) Less: Depreciation                             297            273
 
 (d) Less: Interest & Finance charges                36             43
 
 (e) Profit before tax                             4430           3736
 
 (f) Less: Provision for Taxes                     1571           1321 
 (including deferred tax &
 Fringe benefit tax)
 
 (g) Profit after Tax                              2859           2415
 
 (h) Add:/(less) Statutory
 
 appropriation                                        1              1
 
 (i) Distributable Profit                          2860           2416
 
 (j) Add: Balance brought forward
 
 from the previous year                             443            219
 
 k) Balance available for
 
 appropriation                                     3303           2635
 
 i) Dividend (including interim                     746            600
 dividend)
 
 ii) Corporate Dividend tax
 
 (incl. on interim dividend)                        127             92
 
 iii) Amount transferred to
 General Reserve                                   2000           1500
 
 I) Balance in P&L account to be
 carried forward                                    430            443
 
 (m) Earnings per Share based
 
 on enhanced Share capital (Rs.)                   58.4           49.3
 
 (n) NAV per share based
 
 on enhanced Share capital (Rs.)                  220.1          179.5
 
 (o) Economic Value Added (Rs. crore)              1810           1657
 
 
 FINANCIAL HIGHLIGHTS
 
 During the year the turnover increased by 14.2% to Rs. 21401 crore from
 Rs. 18739 crore in the previous year. Profit after tax registered an
 increase of 18.4% to Rs. 2859 crore as against Rs. 2415 crore in the
 previous year. The increase in profit is driven by the higher volume of
 operations and enhanced interest income.  Net worth of the company has
 gone up from Rs. 8788 crore in 2006-07 to Rs. 10774 crore in 2007-08
 registering an increase of 22.6%. NAV per share, based on enhanced
 share capital, has increased from Rs. 179.5 in 2006-07 to Rs. 220.1 in
 2007-08.
 
 DIVIDEND
 
 The Board has recommended a final Dividend of 62.5%, Rs. 306 crore, for
 the year 2007-08. An interim dividend of 90%, Rs. 440 crore, on share
 capital of Rs. 490 crore, has already been paid for the year 2007-08.
 Thus the total dividend payment for the year 2007-08 is Rs. 746 crore
 (exclusive of dividend tax) as against Rs. 600 crore paid in the
 previous year.
 
 Provision of Rs. 52 crore has been made for Corporate Dividend Tax on
 the final dividend proposed. Corporate Dividend Tax of Rs. 75 crore has
 already been paid on the interim dividend.
 
 ORDERS RECEIVED
 
 Orders received during the year increased by 41 % from Rs. 35643 crore
 in 2006-07 to Rs. 50270 crore in 2007-08. Sector wise orders booked are
 as follows:
 
 (Rs. in Crore)                             2007-08       2006-07
 
 Power Sector                                 41069        27730
 
 Industry Sector                               7860         6556
 
 International Operations                      2312         1903
 
 Total Orders Booked*                         50270        35643
 
 Order Book outstanding
 at the end of the year                       85200        55000
 
 * Net of Inter Sectoral Orders
 
 RATING OF BHEL VIS-A-VIS MOU TARGETS
 
 Performance of the BHEL for the year 2006-07 has been rated as
 Excellent in terms of MoU signed with the Government of India. For
 the first time, BHEL has been awarded the MoU Composite score of
 perfect 1.00. The MoU rating for 2007-08 is under finalization by the
 Government.
 
 MANAGEMENT DISCUSSION AND ANALYSIS
 
 A report on Management Discussion and Analysis is placed at Annexure -
 1.
 
 BOARD OF DIRECTORS Appointment
 
 Shri R.S. Sirohi, IAS, Additional Secretary and Financial Adviser,
 Ministry of Heavy Industries and Public Enterprises was appointed as a
 Part-time Official Director w.e.f. 29th October, 2007.
 
 Shri S. Ravi was appointed as Part-time, Non-Official Director w.e.f.
 29th November, 2007.
 
 Shri B.S. Meena, IAS, Additional Secretary and Financial Adviser,
 Ministry of Steel was appointed as a Part-time Official Director w.e.f.
 25th January, 2008.
 
 Shri K.Ravi Kumar, Director (Power), BHEL was entrusted with additional
 charge of the post of Chairman & Managing Director in addition to his
 existing duties for a period of six months w.e.f. 1st March, 2008.
 
 Cessation
 
 Shri N. Gokulram, IAS, Additional Secretary and Financial Adviser,
 Ministry of Commerce and Industry ceased to be Part-time Official
 director w.e.f. 29th October, 2007.
 
 Shri R.S. Sirohi, IAS, resigned as Part-time Official Director w.e.f.
 28th December, 2007 due to relinquishment of charge of the post of
 Additional Secretary and Financial Adviser in the Ministry of Heavy
 industries and Public Enterprises.
 
 Shri Ashok K. Puri laid down the office of Chairman & Managing Director
 on attaining the age of superannuation on 29th February, 2008.
 
 The Board of Directors places on record its deep appreciation of the
 valuable service rendered/advice and guidance provided by S/Shri N.
 Gokulram, Part- time Official Director, R.S. Sirohi, Part-time Official
 Director and Ashok K. Puri, Chairman and Managing Director.
 
 Pursuant to Article 67 (i) of the Articles of Association of the
 Company, S/Shri Ashok K. Aggarwal, Manish Gupta and Shekhar Datta
 retire by rotation at the ensuing Annual General Meeting and being
 eligible, offer themselves for re-appointment.
 
 In compliance with Clause 49 IV (G) (i) of the Listing Agreement, brief
 resume of the Directors proposed for appointment and reappointment,
 nature of their expertise in specific functional areas and names of
 Companies in which they hold directorship and Membership of Committees
 of the Board are given at Annexure-2 forming part of the Directors
 Report.
 
 OFFICIAL LANGUAGE IMPLEMENTATION
 
 • The Company continued its thrust on official language implementation
 in-line with GOIs Policy on the same.
 
 • Some of the activities undertaken during the year included
 
 a) imparting training in Hindi to employees in Region C
 
 b) organising Hindi workshops
 
 c) organising inter-unit and inter-departmental competitions.
 
 • Further, to promote Hindi writing in the company, a scheme for
 Maulik Hindi Lekhan Puraskar has been launched. To create interest
 among the employees in Hindi and to make the libraries well equipped
 with Hindi Books, an amount of Rs. 0.07 crore was spent on purchase of
 Hindi Books during the year.
 
 • Committee of Parliament on Official Language inspected our PS-SR,
 Chennai office in the month of October, 2007 and appreciated the
 efforts being made in implementation of official language.
 
 • Further, Hindi magazines were also brought out by various units. The
 Hindi magazine Poorvabha by Power Sector-Eastern Region received
 TOLIC and Maya Ram Surjan Awards during the year.
 
 • TOLIC Incentive award was received by Corporate Office for Rajbhasha
 Implementation. Two employees of Corporate Office received 1st prize in
 the competitions held under the auspices of TOLIC. R.C.Puram Hyderabad
 and Power Sector- Northern Region were awarded prizes by TOLIC for
 excellent implementation of Rajbhasha.
 
 • All the Units of the company, including Corporate Office, celebrated
 Hindi Diwas on 14th September, 2007. Hindi Fortnight was also
 celebrated during which various Hindi competitions were organised and
 awards were given to employees & their wards. Republic Day &
 Independence Day Celebrations were conducted in Hindi at our Noida
 Township.
 
 PARTICIPATION IN THE GLOBAL COMPACT OF THE UNITED NATIONS
 
 BHEL reiterates its commitment to United Nations Global Compact
 Programme and set of core values enshrined in its ten principles on
 human rights, labour standards, environment and anti corruption.
 Company intents to advance G.C.  Principles as a responsible corporate
 citizen.
 
 BHEL has taken a lead role in promoting G.C. principles in other Indian
 organizations through Global Compact Society (GCS) - an apex level
 nodal agency, formed by the leading Indian Organizations. BHEL
 continued to remain in the forefront in all activities of the Society-
 as Secretary /GCS being BHEL nominee. Notable activities of the year
 were a National Convention organized on 10th December,2007, attended by
 Mr. Georg Kell, head of Global Compact in United Nations and holding of
 monthly meetings of the Society, through case studies/organizational
 experience sharing, addressing the Global Compact principles in Indian
 context.
 
 In recognition of BHELs contribution in support of Global Compact
 programme and its outstanding Communication on Progress (COP), UNGC has
 placed BHEL under Notable COP category among 177 organisations world
 over.
 
 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
 Companys strategy, culture and day-to-day operations,.
 
 Clean Development Mechanism
 
 BHEL has taken initiatives on Clean Development Mechanism (CDM)
 projects to reduce green house gas emissions in a more focused way and
 vigorous efforts are being made to achieve milestones in this area.
 During the year, CDM Awareness Programs for the Nodal Officers of the
 units were conducted and in each unit a CDM projects Committee has been
 formed to identify projects, oversee the registration, implementation
 and generate carbon credit. A broad reference list of CDM activity
 projects both of in house implementation and joint claim projects with
 customers has been generated. CDM is now a planned activity for each
 unit.
 
 Corporate Social Responsibility
 
 Environment Improvement Projects (EIPs) undertaken by the Company
 included mass aforestation (over 31 lakhs) , host of rain water
 harvesting plants, water, energy & precious resource conservation
 plants besides projects which helped in reduction of noise level,
 improvement in fume extraction , utilisation of NCES products etc. As a
 result of these projects BHEL has been able to maintain healthy
 environment at its work places & townships besides savings accrued
 through various resource conservation projects.
 
 All manufacturing units/regions of the company are accredited to latest
 international standards viz.  ISO-14001 certification for Environmental
 Management and OHSAS-18001 certification for Occupational Health and
 Safety Management Systems.
 
 The company is well recognised as a social conscious organisation and
 continues to play an active role through a host of community
 development & other measures in and around its plants and surrounding
 areas. As part of this, number of welfare projects was undertaken at
 the Companys 56 adopted villages having nearly 80,000 inhabitants.
 These included Blood Donation Camps and Health Check-up camps besides
 providing infrastructure support at these villages.
 
 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 was one of the thrust areas of BHEL Vigilance
 during 2007-08. Greater awareness of the Companys policies, rules and
 procedures amongst employees through training programmes was undertaken
 as a measure of preventive vigilance.  42 such programmes were
 organized during the year 2007-08 in various Units, Regions and offices
 of BHEL.
 
 During the year 2007-08, System Studies on Vendor Registration,
 Procurement of Capital Equipment, Scrap Disposal, Recruitment of
 Artisans etc. were carried out with a view to make systems more
 effective and transparent. Interactive sessions were held with line
 executives representing different functional areas, in order to create
 vigilance awareness and to enhance their knowledge of the Companys
 policies, rules and procedures.
 
 CVC has decreed that Vigilance objectives can be better achieved
 through implementation of Transparency Measures in various areas of
 Company operations, especially those requiring interface with customers
 and suppliers. Some of these successfully implemented measures include
 hosting of tender details on the Companys web site, personal and
 vendor payments through Electronic mode and vendor applications
 tracking system.
 
 SECURITY
 
 The security of most of the plants of the company is being managed by
 the CISF. In some smaller plants, the company has its own security,
 while in other plants, Corporate office and regional offices the
 security is being looked after by the Private agencies like EATS
 sponsored by DGR.
 
 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.
 
 The management, security staff and the employees of company are
 sensitized to the security needs of company.
 
 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, 2008 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 2007-08
 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, 2008 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-3:
 
 (i) CEO/CFO Certificate [as per Clause 49(V)] and
 
 (ii) Certificate from the Companys 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 - 4.
 
 None of the employees of the Company is drawing remuneration in excess
 of the limits prescribed under section 217(2A) of the Companies Act,
 1956 read with Companies (Particulars of employees) Rules, 1975.
 
 AUDITORS
 
 The Auditors of your Company are appointed by the Comptroller and
 Auditor General of India. The names of auditors appointed for the year
 2007-08 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-5.
 
 ACKNOWLEDGEMENTS
 
 The Board places on record its sincere appreciation towards the
 Companys valued customers in India and abroad for the support and
 confidence reposed by them in the organisation and looks 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 Companys 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 auditor, 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. The Board wishes to record its deep gratitude
 to all members of the BHEL family whose enthusiasm, dedication and
 co-operation has made the achievement of an excellent performance
 possible.
 
                        For and on behalf of the Board of Directors of 
                                          BHARAT HEAVY ELECTRICALS LTD.
 
                                                         K. RAVI KUMAR
                                          CHAIRMAN & MANAGING DIRECTOR
 
 Place : New Delhi
 Dated : July 21, 2008