FUTURE BHEL Directors Report

The Directors are pleased to present the 52nd Annual Report on the
business and operations of the company and the audited financial
statements for the year ended March 31, 2016.

During the year, the company created new benchmark in project execution
with the commissioning/ synchronization of all-time high of 15,059 MW
of power plants in a single year, up by 26% from the previous year.
This includes an all-time high power generation capacity addition of
13,061 MW to the Indian utility segment, 59% more than the last year.

The company secured orders worth Rs. 43,727 Crore ? the highest in the
last five years. The company was able to increase its market share in
Power sector from five-year average of 66% to 74%. BHEL recorded
Turnover of Rs. 26,587 Crore during the year despite unfavourable
business environment.

Financial Performance

Financial Year

Figures (in Rs. Crore except 2015-16 2014-15
per share data)

a) Turnover (Gross) 26587 30947

b) Excise Duty and (1449) (1405)
Service Tax

c) Revenue from 25138 29542
Operations (Net)

d) Other Operational 492 700

e) Total Revenue 25630 30242

f) Operating Expenses (27594) (28153)

g) Operating Profit/ (1964) 2089

h) Other Income 1450 1220

i) Profit/ (Loss) before (514) 3309
Depreciation, Finance cost &
Direct Tax

j) Depreciation (936) (1077)

k) Finance Cost (27) (92)

l) Profit/ (Loss) before (1477) 2140

m) Direct Tax including 564 (721)
Deferred Tax

n) Profit/ (Loss) after (913) 1419

o) Balance brought 1209 1171
forward from the previous year

p) Depreciation - (40)

q) Profit available for 296 2550

r) Appropriation

i) Dividend (including (98) (284)
interim dividend)

ii) Corporate (20) (57)
Dividend tax (incl. on interim

iii) Amount transferred - (1000)
to General Reserve

s) Balance in Statement 178 1209
of Profit and Loss

t) NAV per share (Rs.) 135.04 139.26

Figures in bracket denote expenses, loss or appropriation.

Performance of BHEL for the year 2014-15 has been rated as "Good" in
terms of MoU signed with the Govt. of India.


The Board has recommended a final dividend of 20 % (Rs. 0.40 per share)
on share capital of Rs. 489.52 Crore for the year 2015-16. The total
payout on account of dividend (Rs. 97.90 Crore) along with Corporate
Dividend Tax (Rs. 19.93 Crore) amounts to Rs. 117.83 Crore.

Orders Received

Despite operating in a subdued business environment, the company
secured orders worth Rs. 43,727 Crore during the year, the highest in
the last five years and 42% growth over 2014-15. Sector-wise orders
booked are as follows:

Rs. in Crore

2015 -16 2014 -15

Power Sector 38529 24873

Industry Sector 5125 5221

International Operations 73 720

Total Orders Booked 43727 30814

Order Book outstanding at the
end of the year 110730* 101000

*Orders worth Rs. 7429 Crore have been excluded during the year from
the order outstanding which are not likely to commence and this has no
impact on revenue.

Events Occurring after the Balance Sheet Date

There were no significant events occurring after the Balance Sheet

Directors'''' Responsibility Statement

Pursuant to Section 134(5) of the Companies Act, 2013, it is hereby
confirmed that:

(i) In the preparation of the annual accounts for the financial year
ended March 31, 2016, the applicable accounting standards have been
followed and proper explanation relating to material departures has
been provided;

(ii) The Directors have selected such accounting policies and applied
them consistently and made judgments 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 the financial year and of the profit and
loss of the company for that period;

(iii) The Directors have taken proper and sufficient care for the
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;

(iv) The Directors have prepared the annual accounts on a going concern

(v) The Directors have laid down internal financial controls to be
followed by the company and that such internal financial controls are
adequate and were operating effectively;

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

Management Discussion and Analysis

Indian economy is experiencing a turnaround with economic growth
projected at 7.6 per cent in 2016-17 in an environment of slow global
economic recovery. Performance of the company during the year was
affected by subdued business environment.

During the year, an unprecedented feat in the execution of projects was
achieved by your company by commissioning/synchronizing an all-time
high 15,059 MW of power generation equipment. BHEL booked orders worth
Rs. 43,727 Crore - highest in the last five years from its Power
Sector, Industry Sector and International Operations. Long term growth
strategy of BHEL is to maintain leadership in existing businesses and
expand industry business by harnessing opportunities emerging from
''''Make in India'''' in the areas of Solar power, transmission,
transportation, defence and water.

Company has mitigation strategies in place to address risks emanating
from prevailing economic uncertainties and volatility in business
environment. Further, a strong resolve has been made towards
transformation of BHEL into an organization which is "Responsive,
Robust and Rising" to needs of the customers, employees and
shareholders. Focus on Execution, Consolidation and Simplification
(ECS) is one of the first steps to initiate this transformation

Further details are given in Annexure-I.

Board of Directors

- Details of changes in Directors & Key Managerial Personnel


Shri Amitabh Mathur was appointed as Additional Director w.e.f.
01.09.2015 to take charge of the office of Director (IS&P). He was
subsequently appointed as Director in the 51st Annual General Meeting
of the Company.

Shri Subrata Biswas was appointed as Additional Director w.e.f.
24.09.2015 to take charge of the office of Director (E,R&D).

S/Shri Rajesh Kishore, Keshav N. Desiraju and R. Swaminathan have been
appointed as Part-time Non-official Directors w.e.f. 18.12.2015.

Shri Atul Sobti, the then Director (Power), BHEL pursuant to DHI Order
dated 01.09.2015, was appointed as Chairman & Managing Director, BHEL
w.e.f. 01.01.2016.

Shri T. Chockalingam was appointed as Additional Director w.e.f.
11.02.2016 to take charge of the office of Director (Finance).

Dr. Subhash Chandra Pandey, Additional Secretary & Financial Adviser,
Department of Industrial Policy and Promotion, Ministry of Commerce &
Industry has been appointed as Part-time Official Director w.e.f.

Shri Akhil Joshi was appointed as Additional Director w.e.f. 10.08.2016
to take charge of the office of Director (Power).

In accordance with Section 161 of the Companies Act, 2013 and Article
67(iv) of the Articles of Association of the Company, S/ Shri Subrata
Biswas, Rajesh Kishore, Keshav N. Desiraju, R. Swaminathan, T.
Chockalingam, Dr. Subhash Chandra Pandey and Akhil Joshi being
appointed as additional directors, shall hold directorship upto the
52nd Annual General Meeting of the company and are eligible for
appointment as Directors at the Meeting.


Shri W.V.K Krishna Shankar, who was appointed as Director (IS&P) w.e.f.
01.08.2013 ceased to be a Director of the company on attaining the age
of superannuation on 31.08.2015.

Shri B. Prasada Rao, who was appointed as Chairman and Managing
Director w.e.f. 01.10.2009, ceased to be Chairman and Managing Director
w.e.f. 31.12.2015 on completion of his tenure.

Shri S.K. Bahri, former Additional Secretary & Financial Adviser,
Department of Industrial Policy and Promotion, Ministry of Commerce &
Industry, pursuant to Order dated 26.02.2016 of the Department of
Industrial Policy & Promotion, Ministry of Commerce & Industry
regarding his repatriation to parent cadre, relinquished his charge of
the post of Part-time Official Director on the Board of BHEL w.e.f.

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 W.V.K. Krishna Shankar, B. Prasada Rao and S.K. Bahri 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, S/Shri D.
Bandyopadhyay and Amitabh Mathur will retire by rotation at the Annual
General Meeting and being eligible, offer themselves for re-

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 given resignation during the year.

- Audit committee details

Details of Board Level Audit Committee are given at Point 6.3 of the
Corporate Governance Report. Further, there has been no instance where
the Board of Directors have not accepted recommendation of the Audit

CEO/CFO Certificate

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

Sustainable Development

BHEL believes in doing business in a sustainable manner. To promote
inclusive growth, the thrust on CSR initiatives continued which
resulted in creating social infrastructure for the benefit of
community. During 2015-16, an amount of Rs. 66.20 Crore was spent on
CSR initiatives by BHEL. The details of sustainability initiatives has
been provided in Annexure-III.

Business Responsibility Report

In line with the requirement of the listing regulations, Business
Responsibility Report describing the initiatives taken by the company
from environmental, social and governance perspectives as per the
suggested format is enclosed at Annexure-IV.

R & D and Technological Achievements

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 2015-16 is Rs. 893.07 Crore which is
3.36% 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 which
are not covered in Corporate R&D projects. The company filed 477 patent
and copyright applications during the year 2015-16, enhancing the
company''''s intellectual property in terms of number of such rights to

Further details have been provided in Annexure -V.

Official Language Implementation

Continuous efforts were made for propagation and effective
implementation of Rajbhasha in the company. Inspection of 12
Units/Divisions was done to monitor and review the progress in this
area. Committee of Parliament on Official Language appreciated the
efforts being made in the area of Official Language implementation
during the inspection of HERP- Varanasi on 18th September, 2015 and
HPBP Trichy on 25th January, 2016.

More than 950 non-Hindi speaking employees were imparted training under
the Hindi teaching scheme of Govt. of India. Training for using Hindi
in Unicode on computers was also imparted to more than 5000 employees
of all the Units/Divisions. 75 Hindi workshops covering more than 1700
employees were organised to motivate employees to work in Hindi. In
addition, a five-day translation training programme was conducted with
the help of Central Translation Bureau, Rajbhasha Vibhag, Ministry of
Home Affairs, Govt. of India.

Under Inter Unit Rajbhasha Shield Scheme, 11 Units were given award for
excellent Rajbhasha implementation. In addition, 323 employees were
given cash award for doing their original work in Hindi.

Thirteen Hindi magazines are being published all over the company. A
handbook "Rajbhasha Sandarshika" has been prepared as helping material
for doing work in Hindi and was distributed to all the Units/Divisions.


The vigilance department of BHEL is headed by a Chief Vigilance Officer
(CVO) appointed by Department of Heavy Industry (DHI), Ministry of
Heavy Industries & Public Enterprises, Govt. of India. Major
manufacturing units / power sector regions of BHEL have vigilance set
ups headed by senior vigilance executives reporting to the CVO.

BHEL is laying more focus on preventive vigilance to tackle corruption.
The approach to preventive vigilance includes a combination of review
of rules & policies particularly concerning procurement and
recruitment, awareness measures and targeting specific functional
areas/ issues by engaging stakeholders, in order to minimize scope for
corruption. Some of the preventive measures initiated in recent times
are as under:

- Review and update of the policies / manuals in order to align them
with the extant Govt. policies / guidelines, to bring clarity in the
provisions to avoid scope for different interpretations

- Expansion of vendor base to ensure competitiveness

- Demarcation of BHEL land and digitization of land records

- Introduction of audit trail in computerized systems for tracking

- Installation of CCTVs to check material movements and improve
security environment in unit premises

- Issue of Fraud Prevention Policy and Complaint Handling Policy of the

- Introduction of on-line complaint system to bring more transparency

A detailed Corruption Mitigation Action Plan in respect of potential
areas of corruption in BHEL has been prepared and it has been taken up
for implementation by all units / regions. Potential areas of
corruption have been identified, and in each case, detailed strategy
has been identified in respect of causes of corruption, proposed action
plan to mitigate the same and measurable targets and persons
responsible for implementation in the respective units.

Vigilance department is publishing a quarterly e-Newsletter ''''DISHA''''
with a view to create awareness about relevant policies, rules and
procedures, etc., to disseminate the instructions/ guidelines issued by
CVC & Govt. of India from time to time and to share best practices and
case studies.

The Vigilance Awareness Week was observed from 26-31 October, 2015 in
corporate office, manufacturing units, power sector regions and project
sites of BHEL with the Pledge of Integrity undertaken by the employees.
During the week, a documentary film on BHEL "Chalo Sath Chalein- Ek
Anubhav BHEL ka" was made by BHEL and telecast by Doordarshan in
October 2015. Besides showcasing the good governance, transparency and
best practices adopted by BHEL, the film highlights how the collective
approach of BHEL''''s management and vigilance has brought benefits to the

Routine / surprise inspections were carried out by units / Corporate
Vigilance and the learnings were shared with the senior executives of
management. In addition, circulars were issued by Corporate Vigilance
for systemic improvements in critical areas.

Since BHEL has adopted Integrity Pact, structured meetings are held
with the Independent External Monitors (IEMs) every quarter wherein the
procurement related issues and complaints thereupon are discussed. The
Integrity Pact has been made mandatory for all purchase orders /
contracts of value more than Rs. 5 Crore.

Safety & Security

At BHEL we believe that human life is priceless, loss of which can
neither be made up for by monetary compensations nor can its dedication
and expertise be substituted. This very premise forms the core of
occupational safety programmes in BHEL and inspires us to make the
workplace safer for the employees of BHEL as well as for our business
associates. BHEL''''s major manufacturing units are OHSAS 18001 certified,
having strong Health, Safety & Environment (HSE) management systems in
place. This has resulted in improvement of company?s safety
performance. At project sites, compared to the year 2014, there was
approximately 27% reduction in incidences of fatalities and nearly 29%
reduction in the man-days lost due to various types of accidents.

Dedicated Safety and Occupational Health Centres are being run in the
factory premises catering to safety and health issues of employees at
the work place. Some of the initiatives taken in our units to build and
maintain safety and health culture at work place during 2015-16

- Sponsoring BHEL officials for one year advanced diploma course in
Industrial Safety, conducted by Central / Regional Labour institute at
Mumbai, Kanpur, Kolkata, Chennai and Faridabad

- Sharing of good practices through in-house magazines and hand books
on various safety related topics

- Creating awareness about safety through display of posters, safety
instructions, standard operating procedures and periodic awareness

- Conducting health & safety related training sessions for regular
employees, contract workers & trade apprentices

- Creating awareness about hazardous chemicals through making available
the Material Safety Data Sheet (MSDS) and Standard Operating Procedure

- Conducting special programme on health awareness for women employees

- Creating awareness about road safety amongst the truck drivers
associated with transportation of our products

- Conducting as well as getting 3rd party external audit for Safety.

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 places,
the company has its own security/ private agencies sponsored by
Directorate General Resettlement, Govt. of India or Ex - Servicemen

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.

Adequate measures have been taken by installation of CCTV''''s and
Standard Operating Procedure (SOP) in many plants and offices to
mitigate any security threats. The management, security staff and the
employees of the company are sensitized to the security needs of the

Data and Cyber Security

An organizational Crisis Management Group (CMG) has been set up in BHEL
for countering cyber-attacks and cyber terrorism, in pursuance of
priorities and directives from Ministry of Heavy Industries and Public
Enterprises, Govt. of India. Crisis Management Plan (CMP) for BHEL is
also in place. All database administrators across various locations of
the company are notified.

BHEL has created a team of 65 information security professionals
through training and certification courses, meeting one of the key
objectives of national cyber security policy of Govt. of India to
protect Indian cyber space.

All units, regions and divisions of BHEL have been certified for
ISO/IEC 27001:2013 for Information Security Management System (ISMS).

Corporate Governance

As per the requirements of the Listing Regulations, a detailed report
on Corporate Governance (including Board/Committee meeting details)
together with the following is given at Annexure ? VI.

(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.

Loans and Investments

Details of loans and investments covered under the provisions of
Section 186 of the Companies Act, 2013 forms part of financial
statement, attached as a separate section in the Annual report FY
2015-16. Loan of Rs. 3 Crore towards working capital was given during
2015-16 to M/s BHEL EML, BHEL''''s subsidiary company.

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 outgoings 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 Directors''''
Report. However as per Notification No. GSR 463(E) dated 5th June, 2015
issued by the Ministr y 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 Directors'''' 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.

Links to Company Websites :

1. Familiarisation Programme of Independent Directors, Weblink :

http://www.bhel.com/investor relations/investor. php

2. Policy Determining Material Subsidiaries and Policy Dealing with
Related Party Transactions, Weblink :

http://www.bhel.com/pdf/Policy with regard to Related Party


The auditors of BHEL are appointed by the Comptroller and Auditor
General of India. The names of auditors appointed for the year 2015-16
are printed separately in the Annual Report.

The detail of cost auditors appointed for the year 2015- 16 and cost
audit details are printed separately in the Annual Report.

The Auditors'''' Report and Comments of the Comptroller and Auditor
General of India are given at Annexure- IX.


The Board places on record its 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.

The Board also gratefully acknowledges the support and guidance
received from various ministries of the Govt. of India, particularly
the Department of Heavy Industry, in the companys 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. The company also wishes to place on record its
appreciation for the continued co-operation received from all the
technology collaborators and suppliers and for the 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 effort, devotion and sense of belongingness have
made this great company proud.

For and on behalf of the Board of Directors of


Atul Sobti

Chairman & Managing Director

Place : New Delhi

Dated : August 10, 2016

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