The Directors are delighted to present the 48th Annual Report on the
business and operations of the Company and the statement of accounts
for the year ended March 31,2012.
Figures (in Rs. crore except per share data) 2011-12 2010-11
(a) Turnover (Gross) 49510 43337
(b) Revenue from operations (Net) 47228 41566
(c) Other Operational Income 751 680
(d) Operating expenses 38092 33663
(e) Operating profit 9887 8583
(f) Add : Other income 1266 1021
(g) Profit before depreciation, finance
cost & tax expense 11153 9604
(h) Less: Depreciation 800 544
(i) Less: Finance costs 51 55
(j) Profit before tax 10302 9005
(k) Less: Tax expense 3262 2994
(l) Profit after Tax 7040 6011
(m) Add: Balance brought forward
from the previous year 812 575
(n) Profit available for appropriation 7852 6586
(including interim dividend) 1567 1525
ii) Corporate Dividend tax
(incl. on interim dividend) 254 249
iii) Amount transferred to General Reserve 5000 4000
(o) Balance in Profit & Loss 1031 812
(p) Earnings per Share (Rs.) @ 28.76 24.56
(q) NAV per share (Rs.) @ 103.67 82.34
(r) Economic Value Added (Rs. crore) 4032 3793
@ Calculated on post-split on number of shares for 2010-11 on like to
During the year, the company witnessed growth in Turnover by 14.2% to Rs.
49510 crore from Rs.43337 crore in the previous year. The Revenue from
operations (Net) increased by 13.6% from Rs. 41566 crore in 2010-11 to Rs.
47228 crore in 2011-12. Profit before Tax for the year 2011-12 is
placed at Rs. 10302 crore as against Rs. 9005 crore during 2010-11, a
growth of 14.4% as compared to previous year. Profit after Tax is
placed at Rs. 7040 crore as against Rs. 6011 crore during 2010-11, a growth
of 17.1% over previous year.
Excluding impact of change in policy related to warranty obligation for
earlier years in 2010-11, the turnover, PBT and PAT were Rs.41299 crore,
Rs. 8487 crore and Rs. 5665 crore respectively, an increase of 19.9%, 21.4%
and 24.3% respectively in 2011-12 as compared to 2010-11.
The company has registered a significant growth in turnover, profit and
other financial parameters during the year 2011-12.
During the year company has sub-divided existing equity shares of face
value of Rs. 10/- into 5 equity shares of face value of Rs. 2/- each and
the record date was fixed October 04, 2011.
Net worth of the company has gone up from Rs. 20154 crore to Rs.25373 crore
registering an increase of 25.9%. Net asset value (NAV) per share has
been placed at Rs. 103.67 in 2011-12 as against Rs. 82.34 (post-split) in
The company had filed Draft Red Herring Prospectus (DRHP) dated
28.09.2011 with Securities and Exchange Board of India (SEBI) on
30.09.2011 for disinvestment of 5% of the paid up equity capital out of
Government of India''s shareholding. Consequent upon the receipt of
''no-objection'' for withdrawal of DRHP for FPO, from Department of
Heavy Industry/ Department of Disinvestment, the Board of Directors in
its meeting held on April 03, 2012 has approved the withdrawal of DRHP
filed by the company with SEBI.
The Board has recommended a Final Dividend of 184% (Rs. 3.68 per share),
Rs. 900.72 crore, for the year 2011-12. An interim dividend of 136%
(Rs.2.72 per share), Rs. 665.75 crore, on share capital of Rs. 489.52 crore,
has already been paid for the year 2011-12. Thus the total dividend
(exclusive of dividend tax) for the year 2011-12 is Rs.1566.47 crore (Rs.
6.40 per share) as against r 1524.85 crore paid in the previous year.
Provision of Rs. 146.12 crore has been made for Corporate Dividend Tax on
the Final dividend proposed. Corporate Dividend Tax of Rs. 108 crore has
already been paid on the interim dividend.
Orders worth Rs.22096 crore were received during the year as against Rs.
60507 crore in 2010-11. Sector-wise orders booked are as follows:
(Rs in Crore)
Power Sector 14012 46393
Industry Sector* 7850 10375
International Operations 234 3739
Total Orders Booked 22096 60507
Order Book outstanding at the end of the year 135300 164145
* excludes inter sectoral orders
The decrease in order book is mainly due to sharp slow down witnessed
in the Indian power sector. The developers are facing numerous
constraints like coal allocation, gas allocation, environment
clearance, land acquisition, legal issues, financing and fund tie-ups
As a result bidding process of many projects was delayed and many
projects, including those for which the bids have been opened in last
financial year, could not be concluded for one or more of the above
issues. Further, the year 2011-12 witnessed unforeseen turmoil in
various parts of the globe influencing BHEL''s international business
RATING OF BHEL VIS-A-VIS MOU TARGETS
Performance of BHEL for the year 2010-11 has been rated as
''Excellent'' in terms of MoU signed with the Government of India.
BHEL has been awarded the MoU Composite score of ''1.02''.
The MoU rating for 2011-12 is under finalisation by the Government of
India. However, company''s own assessment places performance of the
company in ''Excellent'' category for Financial Year 2011-12.
MANAGEMENT DISCUSSION AND ANALYSIS
A report on Management Discussion and Analysis is placed at Annexure
BOARD OF DIRECTORS
Shri Trimbakdas S. Zanwar has been re-appointed as Part-time
Non-Official Director w.e.f. 11.10.2011.
Shri R. Krishnan has been appointed as an Additional Director w.e.f.
01.04.2012 to take charge of the office of Director (HR).
Shri Vijay Shankar Madan, IAS, Additional Secretary & Financial Advisor
Department of Industrial Policy and Promotion (DIPP), Ministry of
Commerce & Industry has been appointed as Part-time Official Director
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, R. Krishnan and Vijay Shankar Madan shall hold their
directorships upto the 48th 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 had resigned and ceased to be a Director of
the Company w.e.f. 20.09.2011.
Shri Anil Sachdev, who was appointed as Director (HR) w.e.f. 01.09.2007
ceased to be a Director of the Company on attaining the age of
superannuation on 31.03.2012.
Shri Saurabh Chandra, IAS, former Additional Secretary & Financial
Advisor, Ministry of Commerce & Industry, consequent upon his
appointment as Secretary, Department of Industrial Policy & Promotion
has relinquished his position as Part-time Official Director w.e.f.
Shri Ashok Kumar Basu, Shri M.A. Pathan and Smt. Reva Nayyar who were
appointed as Part-time Non-Official Directors w.e.f. 22.06.2009 ceased
to be Directors of the Company on completion of their tenure on
The Board of Directors place on record their deep appreciation of the
valuable services rendered as well as advice and guidance provided by
S/Shri Anil Sachdev, Saurabh Chandra, Ashok Kumar Basu, M.A. Pathan and
Smt. Reva Nayyar 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, S/Shri
V.K. Jairath, O.P Bhutani and S. Ravi will retire by rotation at the
Annual General Meeting and being eligible, offer themselves for
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. Other important activities
undertaken during the year for the compliance of Official Language
policy of Govt. of India are as under:
1. In order to remove hesitation among the employees, and give
necessary impetus to work in Hindi, Hindi workshops and Hindi computer
training programmes were organised in all the Units/Divisions including
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 14.09.2011 and organised
various Hindi competitions during the celebration of Hindi Week/
Fortnight/Month in the month of September, 2011.
3. BHEL Hindi Coordinators Meet was held on 11th & 12th October, 2011
in Cochin, Kerala to discuss the various issues relating to the
Official Langauge implementation.
4. Various Hindi competitions and programmes were organised by most of
the Units/Divisions including Corporate Office for member organisations
under the auspices of Town Official Language Implementation Committees
during the year.
5. 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.
6. All the major Units and some of the Divisions of the Company
published 12 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 by Bhopal, BHEL Ganga by Haridwar,
Srijan by Jhansi, Shakti Punj by Power Sector (Hq), Abhivyakti by Power
Sector-NR, Poorvabha by Power Sector-ER and Tarangini by Power Sector-
WR during the year. Corporate Office also brought out issues of its
half yearly Hindi Magazine Arunima during the year.
7. A Hindi Booklet ''Rajbhasha Digdarshika'' was published
consolidating the various provisions regarding Official Langauge and
useful information''s for the employees for Hindi work e.g.
English-Hindi glossary and notings, Manak Vartani, bilingual addresses
of the Units/Divisions, incentive schemes etc.
8. Many awards were received by the employees of major Units/divisions
in various Hindi Competitions organised under the auspices of Town
Official Language Implementation Committee.
9. Haridwar unit was awarded third prize by the Town Official Language
Implementation Committee for active contribution in Official Langauge
implementation. In addition, Town Official Language Implementation
Committee, Haridwar constituted and being operated under the
Chairmanship of our Haridwar Unit received second prize from Deptt. of
Official Langauge, Ministry of Home Affairs.
10. Committee of Parliament on Official Language inspected our
Industry Sector, Power Sector-SR, ROD-Hq. 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.
11. 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 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.
BHEL reiterates its commitment to United Nations Global Compact (UNGC)
Programme and set core values enshrined in its principles on human
rights, labour standards, and environment and anti corruption.
Company intends to advance GLOBAL COMPACT (GC) principles, as a
responsible corporate citizen. BHEL has taken a lead role in promoting
GC 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 of 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.
The Vigilance organisation of BHEL is headed by the Chief Vigilance
Officer (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 area of BHEL Vigilance
throughout all the years and the same received focused attention during
the year. A climate of preventive vigilance was generated to sensitize
officials at all levels about the ill effects of corruption and
Apart from the above, an attitudinal shift was made to inculcate
greater seriousness in observance of rules / procedures / guidelines.
Awareness amongst employees of the organization was generated by
organizing training programmes. 83 such programmes were organized
during the year 2011-12 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
With a view to making systems more effective and transparent, Vigilance
had carried out regular surveillance checks and system studies during
the year 2011-12. Many suggestions towards system improvement have been
rendered. Some of the major areas where suggestions for improvement
were given are:
- Customer approval of vendors
- Expanding vendor base in single vendor/ two vendor categories
- Guidelines for appointment of agents for export contracts
In addition, suitable recommendations were made for correction in
certain provisions of the following procedures:
- Supplier Evaluation, Approval & Review Procedure
- Purchase Policy
- Reverse Auction Guidelines
- Criteria for financial loading of commercial offers, received
during the tendering process
- Suspension of Business Dealings with suppliers / contractors
As per CVC directions, the Company has taken many initiatives to make
available all relevant information on the web on real time basis. One
of the major initiatives was to start pilot implementation of
e-procurement in select Units of BHEL. In addition, periodic checks are
undertaken to ensure that :
- Status of Purchase Orders, Works Contracts concluded every month,
as per CVC format, is being uploaded by all Units.
- Procedure and forms related to Vendor registration are hosted on
the Company web site.
- Status of vendor registration applications is hosted on the web and
can be viewed by vendors.
- List of banned firms is uploaded on Company web site.
- E-payment of vendor bills is being implemented throughout the
organization and principle of first-in, first-out is being followed as
a rule in payment of vendor bills.
- Status of bill payment can be viewed by the vendors on-line.
- Indents are being raised on-line in most of the Units.
- Information relating to Rules/Procedures governing the issue of
license, permissions, clearances etc., is available on the BHEL/Units
The Company''s security mechanism is sufficient and geared up to
provide security to each Plant / Unit. Whereas 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. 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 Corporations.
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 suggestions have been
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. Monthly report on
theft/ pilferage and fire incident is being complied by Corporate
Security Department alongwith quarterly reports on various security
related issues as per the decision taken after meeting of HR & Security
Heads on 20th March, 2012. Quarterly meetings have also been envisaged
and likely to take place in the month of July 2012.
The Management, Security Staff and the employees of Company are
sensitized to the security needs of Company.
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 service, providing safe and healthy working
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.
The Department of Public Enterprises (DPE) has issued guidelines on
Sustainable Development on 23rd Sept. 2011. In conformance to the
guidelines, a Board-Level Committee for Corporate Social Responsibility
& Sustainable Development (BLC for CSR & SD), has been constituted.
BHEL has defined its SD policy in keeping in view the scale & nature of
activities, products & services.
The SD projects will have thrust on the projects in the fields of Rain
water harvesting, afforestation, captive power generation based on
Solar energy, use of renewable energy, energy efficiency & conservation
and waste disposal.
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
(i) that in the preparation of the annual accounts for the financial
year ended 31st March, 2012 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 2011-12
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, 2012 on a ''going concern'' basis.
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)].
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
Statement pursuant to Section 212 of the Companies Act, 1956 relating
to Subsidiary Companies is given at Annexure-V.
EVENTS OCCURRING AFTER THE BALANCE SHEET DATE
There were no significant events occurring after the Balance sheet
The Auditors of your Company are appointed by the Comptroller and
Auditor General of India. The names of auditors appointed for the year
2011-12 are printed separately in the Annual Report.
The detail of cost auditors appointed for the year 2011-12 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.
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
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 company proud.
For and on behalf of the Board of Directors of
BHARAT HEAVY ELECTRICALS LTD.
Chairman & Managing Director
Place : New Delhi
Dated : July 26, 2012