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Bharat Heavy Electricals Directors Report, BHEL Reports by Directors
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Bharat Heavy Electricals
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Download Annual Report PDF Format 2013 | 2012 | 2011 | 2010
Directors Report Year End : Mar '13    « Mar 12
To the Members,
 
 The Directors are delighted to present the 49th Annual Report on the
 business and operations of the Company and the statement of accounts
 for the year ended March 31, 2013.
 
 Financial Performance
 
                                                     Financial Year
 
 Figures                                           2012-13     2011-12
 (in Rs. Crore except per share data)
 
 (a) Turnover (Gross)                                50156       49510
 
 (b) Revenue from operations                         47618       47228 
 (Net)
 
 (c) Other Operational Income                          807         751
 
 (d) Operating expenses                              39037       38092
 
 (e) Operating profit                                 9388        9887
 
 (f) Add : Other income                               1122        1266
 
 (g) Profit before depreciation,                     10510       11153 
 finance cost & tax expense
 
 (h) Less: Depreciation                                953         800
 
 (i) Less: Finance costs                               125          51
 
 (j) Profit before tax                                9432       10302
 
 (k) Less: Tax expense                                2817        3262
 
 (l) Profit after Tax                                 6615        7040
 
 (m) Add: Balance brought forward                     1031         812 
 from the previous year
 
 (n) Profit available for                             7646        7852 
 appropriation
 
 i) Dividend (including                               1323        1567 
 interim dividend)
 
 ii) Corporate Dividend tax                            221         254 
 (incl. on interim dividend)
 
 iii) Amount transferred to                           5000        5000 
 General Reserve
 
 (o) Balance in Profit & Loss                         1102        1031
 
 (p) Earnings per Share (Rs.)                        27.03       28.76
 
 (q) NAV per share (Rs.)                            124.38      103.67
 
 (r) Economic Value Added (Rs. Crore)                 2657        4032
 
 Financial Highlights
 
 During 2012-13, BHEL recorded its highest-ever turnover of Rs. 50156
 Crore. Profit before tax is Rs. 9432 Crore and Profit after tax is
 placed at Rs. 6615 Crore.
 
 Net worth of the company has gone up from Rs. 25373 Crore to Rs. 30444
 Crore registering an increase of 19.9%. Net asset value (NAV) per share
 has been placed at Rs. 124.38 in 2012-13 as against Rs. 103.67 in
 2011-12.
 
 Dividend
 
 The Board has recommended a Final Dividend of 164.5% (Rs. 3.29 per
 share), Rs. 804.11 Crore, for the year 2012-13. An interim dividend of
 106% (Rs. 2.12 per share), Rs. 518.89 Crore, on share capital of Rs.
 489.52 Crore, has already been paid for the year 2012-13.  Thus the
 total dividend (exclusive of dividend tax) for the year 2012-13 is Rs.
 1323 Crore (Rs. 5.41 per share) as against Rs. 1566.47 Crore (Rs. 6.40
 per share) paid in the previous year.
 
 Provision of Rs. 136.66 Crore has been made for Corporate Dividend Tax
 on the Final dividend proposed.  Corporate Dividend Tax of Rs. 84.18
 Crore has already been paid on the interim dividend.
 
 Orders Received
 
 Orders worth Rs. 31650 Crore were received during the year as against
 Rs. 22096 Crore in 2011-12. Sector-wise orders booked are as follows:
 
                                                    (Rs. in Crore)
 
                                                2012-13     2011-12
 
 Power Sector                                     25560       14012
 
 Industry Sector*                                  4086        7850
 
 International Operations                          2004         234
 
 Total Orders Booked                              31650       22096
 
 Order Book outstanding at the
 end of the year                                 115100      135300
 
 *excludes inter sectoral orders
 
 Rating of BHEL vis-a-vis MoU Targets
 
 Performance of BHEL for the year 2011-12 has been rated as ''Excellent''
 in terms of MoU signed with the Government of India. BHEL has been
 awarded the MoU Composite score of Rs.1.085''.
 
 Maharatna Status
 
 Consistent performance in a highly competitive environment enabled BHEL
 attain the coveted ''Maharatna'' Status and be counted among seven select
 PSU''s having this status.
 
 Management Discussion and Analysis
 
 A report on Management Discussion and Analysis is placed at Annexure
 -I.
 
 Board of Directors Appointment
 
 Smt. Chandra Iyengar has been appointed as Part-time Non-official
 Director w.e.f. 01.04.2013.
 
 Ms. Kusumjit Sidhu, IAS, Additional Secretary & Financial Adviser,
 Department of Industrial Policy & Promotion, Ministry of Commerce &
 Industry has been appointed as Part-time Official Director w.e.f.
 10.05.2013.
 
 Shri W.V.K. Krishna Shankar has been appointed as an Additional
 Director w.e.f. 01.08.2013 to take charge of the office of Director
 (IS&P).
 
 In accordance with Section 260 of the Companies Act, 1956 and Article
 67(iv) of the Articles of Association of the Company, Ms. Kusumjit
 Sidhu and Shri W.V.K.  Krishna Shankar shall hold their directorships
 upto the 49th Annual General Meeting of the Company and are eligible
 for appointment as Directors at the Meeting.
 
 Cessation
 
 Shri V.K. Jairath who was appointed as Part-time Non-official Director
 w.e.f. 12.11.2009 ceased to be a Director of the Company on completion
 of his tenure on 11.11.2012.
 
 Shri Vijay S. Madan, IAS, former Additional Secretary & Financial
 Adviser, Ministry of Commerce & Industry, consequent upon his
 appointment as Officer on Special Duty in the Unique Identification
 Authority of India has relinquished his position as Part-time Official
 Director w.e.f. 22.03.2013.
 
 Smt. Chandra Iyengar, Part-time Non-official Director, consequent upon
 her appointment as Member on the Maharashtra Electricity Regulatory
 Commission, has resigned from the BHEL Board on 29.05.2013.
 
 Shri O.P. Bhutani, who was appointed as Director (E,R&D) w.e.f.
 24.12.2009 ceased to be a Director of the Company on attaining the age
 of superannuation on 31.05.2013.
 
 Shri M.K. Dube, who was appointed as Director (IS&P) w.e.f. 25.06.2011
 ceased to be a Director of the Company on attaining the age of
 superannuation on 31.07.2013.
 
 The Board of Directors place on record their deep appreciation of the
 valuable services rendered as well as advice and guidance provided by
 Shri V.K. Jairath, Shri Vijay S. Madan, Smt. Chandra Iyengar, Shri O.P.
 Bhutani and Shri M.K.Dube 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
 P.K. Bajpai and 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
 
 1.  Corporate Office was awarded first prize by Town Official Language
 Implementation Committee (Undertaking), Delhi for excellent
 implementation of Official Language.
 
 2.  RC Puram, Hyderabad won first prize for excellent O.L.
 implementation from TOLIC, Hyderabad.
 
 3.  PS-WR got third prize from TOLIC, Nagpur for excellent editing of
 their Hindi Magazine ''Tarangini''.
 
 4.  PS-ER was awarded second prize for excellent editing of their Hindi
 Magazine ''Poorvabha'' by TOLIC, Kolkata.
 
 5.  PS-WR got award of Active Member of TOLIC, Nagpur from TOLIC,
 Nagpur.
 
 6.  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 and Hindi Week/Fortnight/Month
 during which various competitions were held. 11 Hindi competitions were
 held by Corporate Office. 230 participants participated in the
 competitions and 85 of them were given cash awards.
 
 7.  In addition, wards of the employees of various Units/Divisions, who
 secured minimum 60% in class XII exam and B2 grade in class X exam in
 Hindi subject were given cash prize.
 
 8.  ''Hindi Shabdakosh Jnan'' competition was held by Corporate Office
 under auspices of TOLIC (Undertaking), Delhi. Various Hindi
 competitions and programmes were also conducted by the Units/Divisions
 under auspices of TOLIC existing at their cities.
 
 9.  13 Hindi magazines were published by Units and Divisions of the
 company during the year.  Corporate Office also brought out 2 issues of
 its half yearly Hindi magazine ''Arunima'' during the year.
 
 10.  40 Translation Assistants (FTA) and 14 Typing Assistants (FTA)
 were recruited in various Units/ Divisions of the company during the
 year. 6 days Rajbhasha Orientation Programme was oraganized for
 Translation Assistants.
 
 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 it has made United Nations Global Compact
 (UNGC) programme as part of the Company''s strategy, culture and
 day-to-day operations.
 
 BHEL continues to be a member of the United Nations Global Compact
 (UNGC) Programme and stands commited to the core values enshrined in
 its principles on human rights, labour standards, and environment and
 anti corruption. BHEL is now a Lifetime Corporate member of Global
 Compact Network, India.
 
 Vigilance
 
 The Vigilance organisation of BHEL is headed by a Chief Vigilance
 Officer (CVO) appointed by the Ministry. Each manufacturing Unit /
 Power Sector Region of BHEL has a vigilance set up headed by a senior
 vigilance executive reporting to the CVO.
 
 In addition to preventive vigilance which has remained the focus area
 of BHEL Vigilance all through the years, additional impetus was also
 given for effective vigilance administration through leveraging
 technology during 2012-13. This has helped in proactive and predictive
 Vigilance Management.
 
 Training programmes were conducted to update employees on Company''s
 policies, rules and procedures. 119 such programmes were organized
 during the year 2012-13 in various Units, Regions and offices of BHEL.
 Interactive sessions were held with line executives representing
 different functional areas, in order to sensitize employees and to
 enhance their knowledge of the Company''s rules, procedures and
 policies.
 
 To create awareness about the procedures of procurement in BHEL, to
 disseminate the instructions issued by Statutory Authorities and to
 share the case studies, the inaugural issue of quarterly e-Newsletter
 DISHA was published on 01.07.2013.
 
 With a view to making systems more effective and transparent, Vigilance
 had carried out system studies during the year 2012-13 based on which
 suggestions towards system improvement have been rendered.  Some of the
 major areas where suggestions for improvement were given are:
 
 - Purchase Policy
 
 - Amendments to ''Vendor Registration Procedures - SEARP, 2010''.
 
 - Systemic changes in ''Reverse Auction Guidelines''.
 
 - Amendments to certain provisions in ''Guidelines for Suspension of
 Business Dealings with Vendors''.
 
 - Formulation of Common Loading Criteria in evaluation of tenders.
 
 With a view to restructure the mechanism for effective and timely
 disposal of complaints a ''Complaint Handling Policy'' was issued on
 24.06.2013 wherein the complaints received by Vigilance can be dealt in
 a consistent manner, in accordance with the extant instructions issued
 by the CVC.
 
 A workshop was organized at Corporate Office on 29.05.2013 wherein
 senior executives of major PSUs- SAIL, ONGC, IOCL, EIL, NLC, RINL,
 BPCL, participated to share the best practices being followed by
 various PSUs for Reverse Auction (RA). The inputs will be helpful while
 revising the RA guidelines of BHEL.
 
 As per the directions of the Central Vigilance Commission (CVC), the
 Company has taken many initiatives to make available all relevant
 information on the web on real time basis. Following have been ensured
 to make available all relevant information on the web:
 
 - 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.
 
 - 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 of the Company is
 available on the BHEL/Units websites.
 
 - This year the Company has initiated uploading of project
 documentation on VIGEYE GPMS, an initiative taken up by the CVC, with a
 view to raise alerts on probable inconsistencies during project
 execution.
 
 Security
 
 The Company''s Security mechanism is sufficient and geared up to provide
 security to each Plant/Unit.  Whereas, the security of the 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 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) has also carried out inspection
 of our software security mechanism and their suggestions 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. Monthly report on
 theft / pilferage and fire incidents is being compiled by Corporate
 Security Department along with quarterly reports on various security
 related issues as per the decisions taken in the meetings of HR &
 Security Heads.
 
 CCTV''s are being installed and standard operating procedures (SOP) are
 being prepared to deal with any security threat.
 
 The Management, security staff and the employees of Company are
 sensitized to the security needs of Company.
 
 Sustainability
 
 The concept of Sustainability has been ingrained in the DNA of BHEL
 which is evident from the Mission Statement - Providing Sustainable
 Business solutions in the fields of Energy, Industry & Infrastructure.
 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 while providing a safe and
 healthy working environment. In line with the company''s strategy,
 Environment Improvement Projects (EIP) / Sustainable Development (SD)
 Projects and Community Development Programmes are being given special
 thrust.
 
 BHEL has defined its Sustainable Development (SD) policy keeping in
 view the scale & nature of organization''s activities, products &
 services. The SD projects undertaken in 2012-13 were in the areas of
 Rain water harvesting, afforestation, captive power generation based on
 solar energy, use of renewable energy, energy efficiency &
 conservation, and responsible waste disposal. A broad strategic
 management framework has also been developed for ensuring Sustainable
 Development in BHEL through its product and services as well as
 in-house activities.  Through these initiatives, organization is
 directing its efforts to minimize the carbon footprint of the
 organizational activities. Further it is also helping the customer to
 reduce the carbon footprint in their operations as well through
 development of cleaner technologies.
 
 In keeping with the commitment to promote the use of renewable power in
 manufacturing units, the company has installed 250 KWp Solar power
 plant at Bhopal unit and Roof Top Solar power plant of 20 KWp at Trichy
 unit in 2012-13. Company also installed more than 1200 Turbo
 ventilators across its units to encourage energy conservation. As a
 part of Energy Efficiency more than 20 energy efficiency projects were
 completed at the units. Total expenditure incurred on such activities
 taken under Sustainable Development Projects for the year 2012-13 was
 Rs. 8.16 Crore against target of Rs. 7.44 Crore.
 
 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.
 
 BHEL has been awarded with the prestigious Golden Peacock Award for
 Sustainability 2012.
 
 EPD Bangalore was honored with the Gold Award during 2012 for its
 outstanding achievement in the Safety Management by M/s Greentech
 Foundation.
 
 BHEL, EPD-Bangalore & BHEL, Trichy units received CII-ITC
 Sustainability Award 2012 for being India''s, ''one of the most
 Sustainable organization''.
 
 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, 2013 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 2012-13
 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, 2013 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
 2012-13.
 
 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
 date.
 
 Auditors
 
 The Auditors of your Company are appointed by the Comptroller and
 Auditor General of India. The names of auditors appointed for the year
 2012-13 are printed separately in the Annual Report.
 
 The detail of cost auditors appointed for the year 2012-13 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 -
 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
 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.
 
 Place : New Delhi                                     (B.Prasada Rao)
 
 Dated : August 3, 2013                  Chairman & Managing Director
Source : Dion Global Solutions Limited
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