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Bharat Heavy Electricals Ltd.

BSE: 500103 | NSE: BHEL |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE257A01026 | SECTOR: Infrastructure - General

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Annual Report

For Year :
2018 2017 2016 2015 2014 2013 2012 2011 2010

Director’s Report

Dear Members,

The Board of Directors have pleasure in presenting the 54th Annual Report on the business and operations of your Company and the Audited Financial Statements for the year ended March 31, 2018.

Financial Results

(Rs. crore)

For the year ended

March 31, 2018

March 31, 2017




Revenue from operations






Operational EBIDTA



Profit before tax



Profit after tax



Total comprehensive income



Dividend (including interim dividend ) paid #



EPS (in Rs.)




a) Turnover and Revenue from operations exclude excise duty & taxes, unless specifically stated, for better comparison.

b) # Dividend includes final dividend for the previous year and interim dividend for the current year.

State of Company Affairs

As a result of enhanced focus on increasing market share and diversification, the Company secured orders worth Rs. 40,932 crore, a significant 74% rise over FY 2016-17. This comprises orders worth Rs. 33,342 crore in the power segment and Rs. 7,590 crore in the industry and overseas segments combined. The Company ended the year with a total order book of over Rs. 1,18,000 crore, the highest in the last five years.

In a shrunken and highly competitive Indian power sector market, your Company has reinforced its leadership position by securing 100% of the market share in main plant equipment for thermal utility segment during FY 2017-18.

Turnover in FY 2017-18 was Rs. 27,850 crore as against Rs. 27,740 crore in FY 2016-17. However, on like to like basis, turnover for FY 2017-18 is Rs. 28,338 crore, higher by 2.2%, w.r.t FY 2016-17 despite subdued business environment. (Refer details in note 27 of Annual Accounts “Revenue from Operations”).

The Company registered Profit before tax (PBT) of Rs. 1,585 crore in FY 2017-18 as compared to Rs. 628 crore in FY 2016-17 - a growth of 152 % .

Your Company has reinforced its leadership position by securing 100% of the market share in main plant equipment for thermal utility segment during FY 2017-18.

Net profit (PAT) stood at Rs. 807 crore in FY 2017-18, against Rs. 496 crore in FY 2016-17, a 63% jump. Your Company has delivered a significant improvement in operational EBIDTA, which could be achieved through various cost reduction initiatives.

BHEL has commissioned/synchronised 4,319 MW of power generating sets in FY 2017-18.

Your Company has delivered a significant improvement in operational EBIDTA, which could be achieved through various cost reduction initiatives.

Change in Share Capital

As approved in the Annual General Meeting held on September 22, 2017, bonus shares were allotted on October 3, 2017 in the ratio of 1:2 i.e. one equity share for two existing fully paid up equity shares. Consequently, the paid-up share capital has increased from Rs. 489.52 crore in FY 2016-17 to Rs. 734.28 crore in FY 2017-18 by capitalization of reserves.

Transfer to Reserve

The Company has not transferred any amount to the reserves during FY 2017-18.


Your Company has paid an interim dividend of Rs.0.80 per equity share (@ 40% on equity share of Rs.2/- each) amounting to Rs.293.71 crore on the paid up share capital of Rs.734.28 crore, in February 2018. Further, the Board of Directors has recommended, in its meeting held on May 29, 2018, a final dividend of Rs.1.02 per equity share (@ 51% on equity share of Rs.2/- each) amounting to Rs.374.48 crore, out of profit for FY 2017-18, subject to your approval. With this, the total dividend for FY 2017-18 amounts to Rs.668.19 crore (91% on the enhanced equity), registering a growth of 73% over FY 2016-17.

The Company is committed to enhance shareholder value and has a track record of paying dividend uninterruptedly since 1976-77.

The Company has in place a dividend distribution policy in pursuance to the requirements of Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR”). Dividend distribution policy is available on the Company’s website at and also provided separately in the Annual Report.


The Company has not accepted deposits from the public falling within the ambit of Section 73 of the Companies Act, 2013 during FY 2017-18.

MoU Rating

Your Company has been rated as ‘Excellent’ on MoU performance for FY 2016-17 by Government of India. The MoU performance for FY 2017-18 is under evaluation.

Material Changes and Commitments Affecting the Financial Position

There are no material changes and commitments affecting the financial position of the Company between the end of the financial year and the date of this report of FY 2017-18.

Directors’ Responsibility Statement

Pursuant to section 134(5) of the Companies Act, 2013, the Board of Directors confirms that:

a) In the preparation of the Annual Accounts, the applicable Accounting Standards (Ind AS) have been followed along with proper explanations relating to material departures;

b) The Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of financial year and of the profit of the Company for that period;

c) The Directors have taken proper and sufficient care for maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) The Directors have prepared the Annual Accounts on a going concern basis;

e) The Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and operating effectively;

f) The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Management Discussion & Analysis

Domestic economy is experiencing a recovery. GDP growth improved continuously every quarter during FY 2017-18, though annual growth was at 6.7% compared to 7.1% in FY 2016-17 (as per CMIE). For FY 2018-19, RBI has projected GDP growth of 7.4%. Government initiatives and interventions are expected to stimulate capital expenditure, rural demand, and social & physical infrastructure development, invigorating economic activity.

Though operating in a difficult business environment, the Company is aiming to maintain leadership in existing businesses and focus on diversification by harnessing opportunities in the areas of solar power, transmission, transportation, defence & aerospace and water businesses, to drive the next wave of growth.

Driven by the vision of ‘Creating BHEL of Tomorrow’, the Company has embarked upon a transformational journey in order to enhance responsiveness to emerging opportunities and building new levels of robustness, thereby laying the foundation for a sustainably rising BHEL. The Company is focusing its efforts through specific strategies and their enablers to ensure sustained growth in the future. For further details pl refer Annexure-I .

Corporate Governance

Pursuant to Regulation 34 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, a report on Corporate Governance (including Board/Committee meeting details) together with the following, is given at Annexure - II.

(i) Auditors certificate on Corporate Governance under Listing Regulations & DPE guidelines on Corporate Governance.

(ii) Secretarial Audit Report u/s 204(1) of the Companies Act, 2013 and management reply thereon.

(iii) Extracts of Annual Return pursuant to section 92(3) of the Companies Act, 2013 read with rule 12(1) of the Companies (Management and Administration) Rules, 2014.

Declaration under section 149(6) of the Companies Act, 2013 pertaining to criteria of Independence has been given by the Independent Directors to the Board of Directors.

Links to Company Websites:

1. Details regarding familiarization programme of Independent Directors are available on the website of the Company ‘’ at web link ‘ index.php/ind_dir’ under the heading ‘Familiarisation Programme for Independent Directors {under Independent Director- Related Information}’.

2. Policy determining material subsidiaries and policy dealing with related party transactions, weblink :

Audit Committee

The Company has in place a Board Level Audit Committee, in terms of the requirements of the Companies Act, 2013 read with rules made thereunder and Regulation 18 of the SEBI (Listing Obligation & Disclosure Requirements) Regulations, 2015, the details in respect of which are given at point 2.3 of the Corporate Governance Report. Further, there has been no instance where the Board of Directors has not accepted the recommendation of Audit Committee.

Compliance with Secretarial Standards

The Company has complied with applicable Secretarial Standards.

Changes in Directors & Key Managerial Personnel


Shri Desh Deepak Goel and Shri Ranjit Rae have been appointed as Part-time Non-official (Independent) Directors w.e.f. September 23, 2017.

Shri Subodh Gupta has been appointed as Whole Time (Functional) Director w.e.f. April 18, 2018 to take charge of the office of Director (Finance).

Shri Pravin L. Agrawal, Joint Secretary, Department of Heavy Industry, Ministry of Heavy Industries & Public Enterprises has been appointed as Part-time Official Director w.e.f. May 18, 2018.

Shri S. Balakrishnan has been appointed as Whole Time (Functional) Director w.e.f. June 1, 2018 to take charge of the office of Director (IS&P).

In accordance with Section 161 of the Companies Act, 2013 and Article 67(iv) of the Articles of Association of the Company, S/Shri Desh Deepak Goel, Ranjit Rae, Subodh Gupta, Pravin L. Agrawal and S. Balakrishnan, having been appointed as additional directors, shall hold directorship upto the 54th Annual General Meeting of the Company and are eligible for appointment as Directors at the Meeting.


Shri A.N. Roy, who was appointed as Part-time Non-official (Independent) Director on August 27, 2014, ceased to be a Director of the Company on completion of his tenure on August 20, 2017.

Shri T. Chockalingam, who was appointed as Director (Finance) on February 11, 2016, ceased to be a Director of the Company on attaining the age of superannuation on November 30, 2017.

Shri Bhaskar J. Mahanta, the then Joint Secretary, Department of Heavy Industry, Ministry of Heavy Industries & Public Enterprises, who was appointed as Part-time Official Director on January 3, 2017, ceased to be Part-time Official Director on May 18, 2018.

Shri Amitabh Mathur, who was appointed as Director (IS&P) on September 1, 2015, ceased to be a Director of the Company on attaining the age of superannuation on May 31, 2018.

The Board of Directors place on record their deep appreciation for the valuable services rendered as well as advice and guidance provided by S/Shri A.N. Roy, T. Chockalingam, Bhaskar J. Mahanta and Amitabh Mathur during their tenure.

Further, pursuant to Section 152 of the Companies Act, 2013 and Article 67(i) of the Articles of Association of the Company, Dr. Subhash Chandra Pandey and Shri Akhil Joshi will retire by rotation at the Annual General Meeting and being eligible, offered themselves for re-appointment.

In compliance with Regulation 36(3) of the SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015, brief resume of the Directors proposed for appointment and re-appointment alongwith the nature of their expertise in specific functional areas and names of companies in which the person also holds directorship alongwith the membership of the Committees of the Board are given in the explanatory statement/ annexure to the Notice.

No Director has resigned during the year.

CEO/CFO Certificate

CEO/CFO certificate (as per Regulation 17(8) of Listing Regulations) is placed at Annexure- III.

Loans and Investments

Details of loans and investments covered under the provisions of Section 186 of the Companies Act, 2013 form part of financial statement. Loan of Rs.3 crore towards working capital was given during FY 2015-16 to M/s BHEL EML, BHEL’s subsidiary Company, and has been provided for in FY 2017-18.

Consolidated Financial Statements

The brief on consolidated financial statements prepared pursuant to section 129 (3) of the Companies Act, 2013 and Regulation 34 of the SEBI (Listing Obligations & Disclosure Requirement) Regulations 2015, is given in para 1.5.4 under Management Discussion & Analysis.

Sustainable Development

Sustainability, amply reflected in our mission statement “Providing Sustainable Business Solutions in the fields of Energy, Industry & Infrastructure”, is ingrained in our business processes. It is our constant endeavor to minimise our environmental footprint across our value chain. Optimizing product designs to minimise cost as well as environmental footprint, reducing material consumption in products, continuously reducing/controlling use of natural resources in all operations, sound waste management based on the concept of reduce/recycle/reuse, energy conservation activities, moving towards greater use of greener fuels and increasing use of solar energy in our operations, protecting/preserving existing plantations and carrying out new plantations every year are the corner stones of our environmental sustainability strategy. For social sustainability, BHEL has focused its CSR programs towards inclusive and sustainable development of the society. The details of these initiatives pertaining to Sustainable Development are given in Annexure-IV.

Business Responsibility Report

As per Regulation 34 of the SEBI (Listing Obligation & Disclosure Requirements) Regulations, 2015, Business Responsibility Report describing the initiatives taken by the Company from environmental, social and governance perspectives as per the prescribed format is enclosed at Annexure - V.

Achievements of R&D and Technological Development

BHEL’s R&D strategy, structure and infrastructure are aligned to meet the challenges of present & future business environment. The R&D expenditure of the Company for FY 2017-18 is Rs. 753 crore which is 2.7% of the turnover. This includes the expenditure incurred on R&D efforts made at manufacturing units for major modifications/ improvements in products/ designs/ against customer requirements apart from R&D projects. The Company has filed 530 patent and copyright applications during the year, enhancing the Company’s intellectual capital to 4,357. Approximately 19% of the company’s turnover, amounting to Rs. 5,247 crore has been achieved from its in-house developed products. Further details have been provided in Annexure- VI.

Implementation of Official Language

Continuous efforts are being made for propagation and effective implementation of Rajbhasha in all units of the Company and the progress is being reviewed and monitored continuously. Committee of Parliament on Official Language appreciated the efforts being made in this area during their inspection of various Units. Department of Heavy Industry also carried out the inspection of certain units.

Hindi Diwas / Week / Fortnight / Month was celebrated in all the units / divisions including corporate office, during which various competitions, seminars, cultural programs and kavi-sammelans were organized. Rajbhasha Ullas Parva was organized in the offices based in Delhi / NCR. Hindi Diwas function was held in corporate office under the chairmanship of Director (Power) in which Dr. Satyanarayan Jatiya, Vice President of Committee of Parliament on Official Language, was the Chief Guest. Meeting of Hindi Advisory Committee of the Ministry of Heavy Industries and Public Enterprises was held in Gangtok, Sikkim in November 2017 under the chairmanship of the Minister of Heavy Industries and Public Enterprises.

Your Company is playing an active role in Town Official Language Implementation Committees located in different cities. Many competitions, seminars, conferences and programs are organized under the auspices of these committees.

Fifteen Hindi magazines are published in the Company and employees are encouraged to contribute articles for publishing and selected entries are awarded.

Vigil Mechanism

BHEL advocates the principles of Good Governance, Transparency, Probity and Ethics so as to ensure maintenance of highest level of integrity in its functioning. The Vigilance function in the Company is headed by the Chief Vigilance Officer (CVO) who functions as a link between the Central Vigilance Commission (CVC), Central Bureau of Investigation (CBI) and the Management. Besides a Vigilance Department at the Corporate Office, all manufacturing Units / Power Sector Regions of BHEL also have a vigilance set up which is headed by a senior level executive reporting to the CVO. The Vigilance apparatus in BHEL facilitates an environment for the employees to work with integrity, efficiency, transparently, while upholding highest ethical standards for the Company. Vigilance Department has adopted a multipronged strategy and approach to combating corruption, which encompasses punitive, preventive and participative vigilance.

Preventive Vigilance has been the focus area of BHEL Vigilance. The main objective of Preventive Vigilance is not to wait for commission of an offence but to ensure its prevention by identifying the vulnerable areas in the organization & plugging the loopholes. Some of the significant preventive measures undertaken during the year are as follows:

- Surprise inspections, routine inspections and Chief Technical Examiner (CTE) type inspections were conducted across 23 units/ regions/ offices of the Company. Systemic improvements are being undertaken based on the learnings from such inspections.

- Continuous review/ updation of various policies/ guidelines is undertaken in order to align them with the Govt. Policies / guidelines, to minimize discretionary powers and bring clarity in provisions where there is scope for interpretations.

- Works Account Manual and Capital Budget Manual were reviewed and revised versions issued.

- Awareness programmes on Preventive Vigilance and for promoting ethical & value based culture were organized. One session of vigilance has been included as mandatory input for the General Management Programme/Strategic Management Programmes, for middle and senior level executives. About 2800 BHEL employees were sensitized on vigilance issues during the training programmes held in various units/ regions.

Vigilance Awareness Week (VAW) was observed from October 30 to November 4, 2017 on the theme of “My Vision - Corruption Free India”. Besides BHEL employees, outreach programmes were undertaken for vendors and public with a view to make them aware about corruption and to publicize the menace of corruption and to emphasize its ill effects on the wellbeing of the country with an aim to encourage them prevent and combat corruption. The initiatives included publicizing of the Integrity e-Pledge; conducting awareness Gram Sabhas and awareness Campaigns in schools / colleges; organizing lectures, panel discussions, debates, quizzes, essay writing, slogans/elocution/cartoon/poster competitions on topics such as moral values, ethics, good governance practices etc. The events were organized in over 70 schools/ colleges by the Company reaching out to more than 8000 students and youth.

BHEL had signed Integrity Pact with Transparency International on December 16, 2008 and the same was adopted in February 2009. Structured meetings are held with the Independent External Monitors (IEMs) every quarter wherein procurement related issues and complaints thereupon are taken up. The threshold value for tenders has been brought down from Rs. 10 crore to Rs. 5 crore (w.e.f. February, 2016) so as to increase the coverage under Integrity Pact. Presently, about 56% of the total procurement is covered under Integrity pact.

The Company is also having a Complaint Handling Policy in place in line with the guidelines / instructions issued by Government of India and CVC. It provides guidance on the manner in which BHEL receives and handles complaints. Out of total 162 complaints handled during the year, 09 cases were taken up for detailed investigation and appropriate actions were initiated, wherever necessary.

Publication of Quarterly e-Newsletter ‘DISHA’ by the Vigilance Department was initiated in June 2013 with a view to create awareness about procurement policy, rules and procedures, disseminate instructions/ guidelines issued by CVC and Government of India from time to time, sharing best practices and also case studies that reveal lapses observed/investigated in various critical areas of work and learning(s). This newsletter is being uploaded on the intranet sites of all the regions/ units and the link is being sent to all the employees through e-mails. Twenty issues of ‘DISHA” have been published.

Health, Safety & Environment (HSE)

The responsibilities of Occupational Health and Safety (OHS) are driven by our commitment to protect our employees, people we work with, and the community at large. The Company believes in zero tolerance for unsafe work and non-conformance to safety in all its business activities.

There are well established systems, procedures and practices related to Health, Safety and Environment (HSE). Efforts for strengthening the HSE Management Systems & Procedures are made continuously in the organization. All manufacturing units and project sites have HSE departments and required resources, including qualified safety officers. Safety inspections, HSE audits, work place environment monitoring, health monitoring etc. are carried out as per laid down systems and procedures. All units and regional offices, having certification for ISO 14001 & OHSAS 18001, have undergone periodic audits by the certifying agency to ensure effectiveness of systems.

During the year, training programs were organised for all cadre of employees, as well as contract workers on various HSE related issues. Efforts towards enhancing awareness on HSE issues continued through celebrating Industrial Safety Week, Road Safety Week, National Safety Week, World Environment Day etc. During these events, various competitions like slogan writing, poster making, essay writing, quiz, etc. were organized for employees, contract workers and school children. Mimes were also organized on importance of safety at shop floors at HPEP Hyderabad and HEP Bhopal units.

As a recognition of their good safety practices and performance, many units won several awards. EDN, Bengaluru unit won second prize in the State Level Safety competition under Mega- Industry category for adopting best safe practices in the year 2017. A team of artisans from EDN, Bengaluru unit won the Third prize in the State Level Safety Quiz competition. BHEL Trichy unit won two international awards during the 27th Annual Global Conclave of International Institute of Security & Safety Management (IISSM) -2017 and six National Safety Awards.

Data and Cyber Security

Your Company has established a state-of-the-art Security Operations Centre (SOC), a facility in which an information security team continuously monitors and improves the organisation’s security posture while preventing, detecting, analysing and responding cyber security incidents with the aid of both technology as well as well-defined processes and procedures.

The hardware and software of the SOC have been installed at BHEL Hyderabad unit and the Control Centre has been established at BHEL Noida office. SOC collects and analyses security event data in real time for early detection of targeted attacks and data breaches. All Internet traffic that goes out of BHEL and enters BHEL across the organisation is being monitored in SOC on 24x7 basis. SOC has reduced enterprise risk since it protects the business and helps BHEL to move from reactive response to pro-active mitigation.

Establishment of SOC also complies with the advice of Government appointed national nodal agencies like National Critical Information Infrastructure Protection Centre (NCIIPC) and Indian Computer Emergency Response Team (CERT-In).

Other disclosures

Information in accordance with the provisions of Section 134(3)(m) of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 regarding conservation of energy, technology absorption and foreign exchange earnings and outgo is given at Annexure-VII.

As per provisions of section 197 of the Companies Act, 2013 read with the Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, every listed Company is required to disclose the details of the remuneration of the Directors etc. in the Board’s Report. However as per Notification No. GSR 463(E) dated June 5, 2015 issued by the Ministry of Corporate Affairs, Government Companies are exempted from complying with provisions of section 197 of the Companies Act, 2013. BHEL being a Government Company, such particulars are not included as part of Board’s Report.

Statement pursuant to Section 129 of the Companies Act, 2013 (Form AOC-1) relating to subsidiary companies & joint ventures and Form AOC-2 pursuant to section 134(3)(h) of the Companies Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014 are given at Annexure-VIII.


The Statutory Auditors of your Company are appointed by the Comptroller and Auditor General of India. Three firms of statutory auditors were appointed as joint statutory auditors and five firms were appointed as branch auditors. The names of audit firms appointed for FY 2017-18 are given separately in the Annual Report.

Auditors’ Report on the Accounts

The Auditors’ Report and Comments of the Comptroller and Auditor General of India on Standalone and Consolidated Financial Statements for FY 2017-18 of the Company are given at Annexure- IX. There is no qualification in the Auditors report on the Financial Statements of the Company. The Comptroller & Auditor General of India, has also given ‘NIL’ Comments on the Financial Statements of the Company after conducting supplementary audit under Section 143 (6) (a) read with Section 129 (4) of the Companies Act, 2013.

Secretarial Audit

In terms of section 204(1) of the Companies Act, 2013, the Company has engaged M/s P.P. Agarwal & Co., Practising Company Secretaries, as Secretarial Auditors for conducting Secretarial Compliance Audit for FY 2017-18 and their report is forming part of Corporate Governance section.

Cost Auditors

In terms of provisions of Section 148 of the Companies Act, 2013 and as per the Companies (Cost Records and Audit) Rules, 2014 and amendments thereof, the Board, on the recommendation of the Audit Committee, approved the appointment of seven firms of Cost Accountants as Cost Auditors for auditing the cost accounts of your Company for FY 2017-18.

The detail of cost auditors appointed for FY 2017-18 are given separately in the Annual Report. The Cost Audit Report for FY 2016-17 has been filed under XBRL mode on September 8, 2017, well within the due date of filing.


Your Directors gratefully acknowledge all the help, support and guidance received from Ministry of Heavy Industries & Public Enterprises and all other departments/agencies of the Government of India, in the Company’s operations and developmental plans. The Directors also express their gratitude to the Comptroller and Auditor General of India, Chairman and Members of Audit Board, Statutory Auditors, Branch Auditors, Secretarial Auditor and Cost Auditors for constructive suggestions and continuous cooperation. The Directors also wish to place on record their appreciation for the continued cooperation received from all the technology collaborators, suppliers, contractors and for the support provided by the financial institutions, bankers and stock exchanges.

Your Directors place on record their sincere appreciation towards the Company’s valued customers in India and abroad and esteemed shareholders 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.

Last but not the least, your Directors wish to place on record their sincere appreciation for the diligent efforts and contributions of all BHEL employees, to ensure that the Company continues to grow and prosper.

For and on behalf of the Board of Directors of


Atul Sobti

Chairman & Managing Director

Place : New Delhi

Dated : July 25, 2018

Director’s Report