BGR ENERGY Chairmans Speech

Dear Shareholders,

Warm Greetings.

It is my pleasure in communicating with you through the 26th annual
report. I shall take this opportunity to give you highlights of our
results for FY 2011-12, a brief about the orders that we had won and
the outlook for the future of your company, BGR Energy Systems Limited.

Your company now holds the distinction of having established itself as
a strong player in the EPC segment and joins the big league to be among
the top three in the Indian Power sector. Our revenue for last year
wasRs. 3452 Crores and we earned a net profit ofRs. 224 Crores. The drop in
revenues compared to the previous year is attributable to the sluggish
pace of order inflows. Yet, the good sign of growth from within comes
from the fact that our capital goods businesses - Air Fin Cooler
division (AFC), Environment Engineering Division (EED), Oil and Gas
Equipment Division (OGED) and Electrical Projects Division (EPD) -
contributed 11.71% to the revenue compared to 7.17% last year. The AFC,
EED and EPD business registered significant growth over the previous
year. We achieved a higher EBIDTA margin of 13.73% and your board is
pleased to recommend a dividend of Rs. 7.00 per share. As of 31st March
2012, your company carried an order book of over Rs. 15000 Crores.

FY 2011-12 was a hallmark yearfor BGR Energy winning large orders for
EPC and supply of Boiler, Turbine and Generator. On 15th September
2011, BGR Energy emerged as the successful bidder for NTPC''s 9x800 MW
Supercritical Steam Turbine and Generators. We would supply four TG
units to 2x800 MW to Lara Super Thermal Power project in Chattisgarh
and 2x800 MW Darlipali Super Thermal Power project in Orissa for an
aggregate value of Rs. 2968 Crores. In quick sequence, we received an EPC
contract for setting up 2x300 MW Thermal Power project in Chattisgarh
by TRN Energy Private Limited with an order value of Rs.1698 Crores.

On 29th February 2012, BGR Energy emerged as the successful bidder in
NTPC''s 660 MW super critical boiler tender. BGR Energy would supply six
units to Solapur Super Thermal Power Project (2x660 MW) - Maharashtra,
Meja Thermal Power Project (2x660 MW) - Uttar Pradesh and Raghunathpur
Thermal Power Project, Phase II (2x660 MW) - West Bengal. The aggregate
value of the contracts is aboutRs. 5565 Crores.

BGR Energy''s Electrical Projects Division was awarded a prestigious
turnkey implementation contract by The Nuclear Power Corporation at two
of its upcoming nuclear power plants. The order valued at Rs. 444 Crores
involves supply, erection, testing and commissioning of main plant
electrical systems including Nuclear island electricals at Kota,
Rajasthan (2x700 MW) and Kakrapara, Gujarat (2x700 MW).

With great pleasure, I wish to inform you that last year, BGR Energy
successfully completed the world''s tallest natural draught cooling
tower - 202 Metres tall having a diameter of 145 Metres at Kalisindh
1200 MW power project in Rajasthan.

Now, let me present you a quick summary of the Industrial context in
which we were operating and the outlook. The Indian power industry was
fraught with hurdles and challenges - coal availability, land
availability and delay in approvals, lack of clarity in policies
impacting businesses-your company''s strategy to stay on its course and
FOCUS on growth has paid dividends.

The Government of India''s policy to impose 21% duty hike on imported
equipment is expected to offer a level playing field for domestic
manufacturers. While Independent Power Producers (IPPs) rely on
imported equipment, State and Central Government generation companies
prefer reliable domestic equipment manufacturers.

OurBTG manufacturing facilities which are being established in JV with
Hitachi are expected to become operational in 2013. To all of us at BGR
Energy, it is a leap forward in the tracks of our growth.

I thank you all for your continued support and providing us the
inspiration to leap ahead. Your company continues to stay competitive
providing exceptional service to a growing marquee customers like NTPC.
We continue to add skilled manpower to strengthen our domain expertise
and allow them to perform at their best with customer delight as their
most critical key result area.

Thanking you

B.G. Raghupathy

Chairman and Managing Director

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