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.
 
 FINANCIAL PERFORMANCE
 
                                                  Financial       Year
 
 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
 
 i) Dividend
 (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
 like basis.
 
 FINANCIAL HIGHLIGHTS
 
 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
 2010-11.
 
 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.
 
 DIVIDEND
 
 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 RECEIVED
 
 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) 
   
                                                2011-12      2010-11
 
 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
 etc.
 
 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
 prospects.
 
 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
 -I.
 
 BOARD OF DIRECTORS 
 
 Appointment
 
 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
 w.e.f.  19.07.2012.
 
 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.
 
 Cessation
 
 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.
 17.04.2012.
 
 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
 21.06.2012.
 
 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
 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. 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
 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 14.09.2011 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.
 
 VIGILANCE
 
 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
 malpractices.
 
 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
 policies.
 
 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
 websites.
 
 SECURITY
 
 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
 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 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
 
 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
 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.
 
 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
 confirmed:
 
 (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
 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 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
 irregularities;
 
 (iv)that the Directors have prepared the annual accounts for the
 financial year ended 31st March, 2012 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
 2011-12.
 
 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
 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.
 
 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.
 
                                                         B.Prasada Rao
 
                                          Chairman & Managing Director
 
 Place : New Delhi 
 
 Dated : July 26, 2012