FUTURE BEL Chairmans Speech

Dear Shareholders,

It gives me immense pleasure to share through this letter, the achievements and financial highlights of your Company during the past year. In year under review, there were considerable challenges in the environment we operate. Inspite of the challenges, your Company has achieved the growth targets with greater emphasis on R&D, technology updation and constantly modernizing infrastructure to meet the fast changing technologies. Your Company has achieved significant growth in revenues and profits. At Rs.40,24,200 Lakhs (as on 1 April 2017) the order book continues to be healthy and also good order inflow projections are expected in the next 2-3 years. Your Company has continued to maintain its leadership position in supplying equipments / systems to Defence forces and is on a steady growth path. I take this opportunity to share with you the performance highlights during the past year and the future outlook for the Company.

Highlights of the Year

Your company achieved a turnover of Rs.8,82,470 Lakhs during 2016-17 against Rs.7,54,117 Lakhs in 2015-16, thereby registering a significant growth of 17%. BEL achieved an export sale of US$ 65.5 Million over the previous year’s export turnover of US$ 85.07 million. The major products exported during the year include Coastal Surveillance System, CoMPASS, VHF Radio Bharti, Advanced Composite Communication System, Ship Borne EW System, Electro Optic Fire Control System, etc.

All the 9 manufacturing Units of the Company have performed well. The Profit After Tax for 2016-17 is Rs.1,54,762 Lakhs against Rs.1,30,736 Lakhs in 2015-16, an increase of 18% over previous year. The Net Worth of the Company has decreased from Rs.8,98,360 Lakhs to Rs.7,50,854 Lakhs in year 2016-17 due to buyback of shares.

The Company had during the year bought back 1,66,37,207 equity shares of Rs.10/- each fully paid-up at price of Rs.1,305/- per share aggregating to Rs.217,116 lakhs. The Company had also sub-divided its one equity share of Rs.10/each fully paid-up into 10 equity shares of Rs.1/- each fully paid-up w.e.f. 16 March 2017.

R&D has been the main focus area of your Company for increasing indigenisation and value addition in our products / systems. The total investment in R&D as a percentage of turnover during the year was 8.81% which is one of the highest among the defence PSUs. It is our constant efforts on indigenous developments that have led us to achieve 87% of our turnover from indigenous products. Only 13% of our revenues came from products manufactured through ToT from foreign OEMs.

Defence being the mainstay of the company, has contributed to 88% of sales revenue, with the balance 12% coming from the civilian sector.

Some of the major products / systems introduced during 2016-17 are Weapon Locating Radar, BFSR-XR (Extended Range), IFF MK XII, USHUS-2, HUMSA NG for P15B, Gigabit Ethernet based Integrated Communication System for P15, ACCS for Indigenous Aircraft Carrier, Missile two way Data link for QRSAM, RRF upgradation (High band), BEACON MKIII for Army, CIDSS phase 2 (Build 2- Software), Air traffic control software, SoTM, Dual Frequency IP Modem, 2KW SSPA (for Tropo Communication), Modern EW system (non-com) (Varuna), VVPAT MKII, Point of Sale (POS) device, Border Surveillance System (BoSS), High Resolution TI for Directed Energy Weapon, IACCS Beta version, VCCS for IACCS, RCWS, Pressurised container.

Your Company received Orders worth Rs.16,300 Crores during the year 2016-17.

Major Orders received during the year include Long Range Surface to Air Missile (LR-SAM) with MFSTAR, Advanced Composite Communication System for P17, Electronic Voting Machine, Static Tropo Upgrade, Electronic Warfare Suite for Naval application, Giga Bit Ethernet based Ship Data Network for P17, Hand Held Thermal Imager, Low Intensity Conflict EW System, Home Land Security, ALG Communication. On the Export front, the order book as on 1 April 2017 is US$ 85 Million including Offset orders of US$ 17 Million.

I have the privilege to inform you that during the year, your Company has filed applications for 20 Patents in the areas of Radars, Communication, Electro Optics etc. As many as 91 technical papers were published by scientists and R&D engineers of BEL in various National and International journals / seminars/ conferences.

Some of the performance highlights of your company are :

* Construction of New Advanced Night Vision Products factory at Nimmaluru, Andhra Pradesh to expand the Night Vision Devices Business has commenced.

* New Radar Assembly Hanger at Ghaziabad unit for Assembly, Testing and Integration of Radar & Antenna Systems has been established.

* ”Blowing Sand & Dust Test Facility” at Bangalore Unit established for testing of Abrasion resistance of subsystems mounted externally on Aircrafts.

* Product Development and Innovation Centre (PDIC) R&D Lab recognized by DSIR.

* Supplies for Integrated Air Command and Control System program to IAF commenced.

* Indigenously developed Polarimetric Doppler Weather Radar (DWR) was dedicated to the Nation by Hon’ble Prime Minister of India Shri. Narendra Modi at Cherrapunji, Meghalaya.

* Excellent “MoU” Rating for 2015-16 from DPE.

* Seven Units / SBUs certified for AS 9100 Aerospace standard

* Green Energy generated during 2016-17 is about 243 Lakh units.

* Procurements from MSMEs has increased to more than 20%.

* BEL and MSME Development

Institute, Bengaluru jointly organized National Vendor Development Program and Industrial Exhibition to bring all the stakeholders at one platform and provide them an opportunity to interact with each other.

* 18 Collaborative R&D partners have been empanelled during 2016-17. The total Collaborative partners are now 193.

You will be happy to know that your company has received several accolades, the most noteworthy being:

* BEL has won Dun & Bradstreet Corporate Award 2016 in Electrical & Electronics Category.

* BEL won four “PSE Excellence Awards 2015” instituted by the Indian Chamber of Commerce, Kolkata under the Navratna category. The awards won are:

- Second prize in “Operational Performance Excellence”

- Second prize in “R&D, Technology Development and Innovation”

- Third prize in “Corporate Governance”

- Third prize in “HR Management Excellence”

* India Skill Award -2016: BEL won India Skill Award 2016 in recognition of augmenting skill development process for the country by engaging maximum apprentices in the category of Central Public Sector from Ministry of Skill Development & Entrepreneurship.

* Most Enterprising CEO in Electronics Sector: The Indo Global Business Council (IGBC), a policy think tank based in New Delhi has awarded Mr S K Sharma (former CMD) as”Most Enterprising CEO in Electronics Sector”.

* BEL has won the “State Export Excellence Award 201415” in the product category of Electronics and Communication from Govt, of Karnataka under medium/ large Enterprise category.

* India Pride Awards 2016-17 : BEL has won the “Dainik Bhaskar India Pride Award” for the year 2016-17 in the ‘Defence’ category.

* Panchkula Unit of BEL has won Gold Prize in the International Convention of Quality Circle (QCC) held at Bangkok.

* BEL has won 4 Gold, 6 Silver and 1 Bronze Award in the Quality Circle Forum of India (QCFI) Six Sigma Competition held on 22 May 2016 in Mysuru, Karnataka.

* INSSAN Award for Excellence in Suggestion Scheme : BEL Bengaluru and Ghaziabad Units were awarded the 1st and 3rd prizes respectively for excellence in suggestion schemes for the year 2015-16 in Engineering Industry Group, during the 27thNational Convention organized by Indian National Suggestion Schemes’ Association (INSSAN) on 20 & 21 January 2017 at Jamshedpur.

Future Outlook

Government’s greater emphasis on ‘Make in India’ initiative in Defence sector provides a great opportunity for the Company to enhance its indigenization efforts and to address the opportunities in Indian Defence sector.

BEL is having a healthy order book position and new orders are expected. BEL is targeting a healthy growth of 12-15% during 2017-18. Segments like Radar and Missile systems, Communication and Network Centric Systems, Tank Electronics, Gun upgrades, Electro Optic systems and Electronic Warfare & Avionics systems will continue to drive the Company’s growth in the coming years. Modernisation and creating several world-class facilities for R&D, Testing, Production and Skill development are planned for achieving the targeted growth. In the civil segment your Company is pursuing business in the field of Solar Energy, Homeland Security, Smart City elements, Smart Cards, Cyber Security, Telecom and Space Electronics .

Looking forward, the future for your Company looks promising as well as challenging. The Defence Sector is being opened up for private sector participation with evolutions of Defence Procurement Procedure. The Government is also planning introduction of “Strategic Partnership” model for broader participation of private sector and also to enhance the capacities in major defence platform manufacturing in addition to DPSUs. All this has pushed your company towards much higher competitiveness and productivity through initiatives for enhancing value addition. It is extremely important for BEL to stay abreast of technology and develop new products regularly. Thrust on R&D across the company will continue with roadmaps drawn for the development of futuristic products and acquisition of key technologies. The company is also laying greater emphasis on working closely with DRDO labs, other research institutions and academic institutions as well as niche technology companies for development of new products and systems. Strategies and action plans are in place to face competition, maintain technological edge and retain the leadership position in strategic electronics. Some of the major projects planned for execution in this year are IACCS, Weapon Locating Radar, HHTI, EVM, Akash Weapon System, LYNX U2, LLTR Radar, Tropo Upgrade, HLS, Schilka upgrade, ACCS for P71, ICS for P15B, BSS, Varuna ESM System, Ground based mobile ELINT, Electronic Fuzes, L70 upgrade, VVPATs, etc.

Strategic New Initiatives

Your company is working in strategic areas like Electronic Fuzes, Homeland Security Solutions, Smart Cities, Cyber security in line with the emerging needs of the Customers.

Governance and Sustainability

Your company takes pride in constantly adopting and maintaining the highest standards of values and principles.

A detailed report on compliance of the guidelines on Corporate Governance, as required the SEBI (LODR) Regulations, 2015 and the guidelines issued by the Department of Public Enterprises for CPSEs, forms part of the Directors’ Report.

Your Company has received “Nil” comments certificate from the C&AG for the eighth consecutive year.

The corporate performance of BEL measured in terms of the economic, environmental and societal parameters augers well to reinforce the image of BEL as a socially responsible corporate entity. Sustainability in BEL is the continuing commitment to behave ethically and contribute towards economic development while improving the quality of life of its workforce, their families and the local community and society at large. The philosophy of greening the environment through recycle, reuse and reduce approach will continue in the near future.


I am grateful to the Board of Directors and members of management committee for their unwavering support and guidance. Ministry of Defence, Defence Services and other Customers have been continuously providing valuable guidance and support. I further deeply appreciate our shareholders, esteemed customers and business associates for providing the opportunities to earn their confidence.

The dedication and commitment of our employees and officers at all levels continues to be the major strength of our company. We shall make continuous efforts to build on these strengths to face future challenges and sustain the momentum for profitable growth.

With Best Wishes, Yours sincerely

Bengaluru M V Gowtama

11 August 2017 Chairman & Managing Director

CIN: U67190WB2003PTC096617. Trading in Commodities is done through our Group Company Dynamic Commodities Pvt. Ltd. The company is also engaged in Proprietory Trading apart from Client Business.

Disclaimer: There is no guarantee of profits or no exceptions from losses. The investment advice provided are solely the personal views of the research team. You are advised to rely on your own judgment while making investment / Trading decisions. Past performance is not an indicator of future returns. Investment is subject to market risks. You should read and understand the Risk Disclosure Documents before trading/Investing.

Disclosure: We, Dynamic Equities Private Limited are also engaged in Proprietory Trading apart from Client Business. In case of any complaints/grievances, clients may write to us at compliance@dynamiclevels.com

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