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Bharat Electronics Ltd.

BSE: 500049 Sector: Engineering
NSE: BEL ISIN Code: INE263A01024
BSE LIVE 15:40 | 17 Nov 178.75 -1.15
(-0.64%)
OPEN

180.00

HIGH

182.35

LOW

178.20

NSE 15:58 | 17 Nov 178.70 -1.05
(-0.58%)
OPEN

181.00

HIGH

182.50

LOW

178.10

OPEN 180.00
PREVIOUS CLOSE 179.90
VOLUME 441036
52-Week high 192.50
52-Week low 115.50
P/E 25.79
Mkt Cap.(Rs cr) 43,919
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 180.00
CLOSE 179.90
VOLUME 441036
52-Week high 192.50
52-Week low 115.50
P/E 25.79
Mkt Cap.(Rs cr) 43,919
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Bharat Electronics Ltd. (BEL) - Chairman Speech

Company chairman speech

Chairman's Letter

Dear Shareholders

It gives me immense pleasure to share through this letter the achievements and nancialhighlights of your Company during the past year. In year under review there wereconsiderable challenges in the environment we operate. Inspite of the challenges yourCompany has achieved the growth targets with greater emphasis on R&D technologyupdation and constantly modernizing infrastructure to meet the fast changing technologies.Your Company has achieved signi cant growth in revenues and pro ts. At Rs. 4024200 Lakhs(as on 1 April 2017) the order book continues to be healthy and also good order in owprojections are expected in the next 2-3 years. Your Company has continued to maintain itsleadership position in supplying equipments / systems to Defence forces and is on a steadygrowth path. I take this opportunity to share with you the performance highlights duringthe past year and the future outlook for the Company.

Highlights of the Year

Your company achieved a turnover of Rs. 882470 Lakhs during 2016-17 against Rs.754117 Lakhs in 2015-16

A signi cant thereby registering a signi cant growth of 17% growth of 17%.BEL achieved an in turnover export sale of US$ 65.5 Million over the previousyear's export turnover of US$ 85.07 million. The major products exported during the yearinclude Coastal Surveillance System CoMPASS VHF Radio Bharti Advanced CompositeCommunication System Ship Borne EW System Electro Optic Fire Control System etc.

All the 9 manufacturing Units of the Company have performed well. The Pro t After Taxfor 2016-17 is Rs. 154762 Lakhs against Rs. 130736 Lakhs in 2015-16 an increase of18% over previous year. The Net Worth of the Company has decreased from Rs. 898360 Lakhsto Rs. 750854 Lakhs in year 2016-17 due to buyback of shares. The Company had during theyear bought back 16637207 equity shares of Rs. 10/- each fully paid-up at price of Rs.1305/- per share aggregating to Rs. 217116 lakhs. The Company had also sub-divided itsone equity share of Rs. 10/- each fully paid-up into 10 equity shares of Rs. 1/- eachfully paid-up w.e.f. 16 March 2017.

R&D has been the main focus area of your Company for increasing indigenisation andvalue addition in our products / systems. The total investment in R&D as a percentageof 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% ofour turnover from indigenous products. Only 13% of our revenues came from productsmanufactured through ToT from foreign OEMs. Defence being the mainstay of the company hascontributed 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 LocatingRadar BFSR-XR (Extended Range) IFF MK XII USHUS-2 HUMSA NG for P15B Gigabit Ethernetbased Integrated Communication System for P15 ACCS for Indigenous Aircraft CarrierMissile two way Data link for QRSAM RRF upgradation (High band) BEACON MKIII for ArmyCIDSS phase 2 (Build 2- Software) Air traf c control software SoTM Dual Frequency IPModem 2KW SSPA (for Tropo Communication) Modern EW system (non-com) (Varuna) VVPATMKII Point of Sale (POS) device Border Surveillance System (BoSS) High Resolution TIfor Directed Energy Weapon IACCS Beta version VCCS for IACCS RCWS Pressurisedcontainer. Your Company received Orders worth Rs. 16300 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 VotingMachine Static Tropo Upgrade Electronic Warfare Suite for Naval application Giga BitEthernet based Ship Data Network for P17 Hand Held Thermal Imager Low Intensity Con ictEW System Home Land Security ALG Communication. On the Export front the order book ason 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 ledapplications for 20 Patents in the areas of Radars Communication Electro Optics etc. Asmany as 91 technical papers were published by scientists and R&D engineers of BEL invarious 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 AndhraPradesh to expand the Night Vision Devices Business has commenced.

• New Radar Assembly Hanger at Ghaziabad unit for Assembly Testing andIntegration of Radar & Antenna Systems has been established.

• "Blowing Sand & Dust Test Facility" at Bangalore Unit establishedfor 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 tothe Nation by Hon'ble Prime Minister of India Shri. Narendra Modi at CherrapunjiMeghalaya.

• Excellent "MoU" Rating for 2015-16 from DPE.

• Seven Units / SBUs certi ed 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 andIndustrial Exhibition to bring all the stakeholders at one platform and provide them anopportunity to interact with each other.

• 18 Collaborative R&D partners have been empanelled during 2016-17. The totalCollaborative partners are now 193. You will be happy to know that your company hasreceived 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 IndianChamber of Commerce Kolkata under the Navratna category. The awards won are : ? Secondprize in "Operational Performance Excellence" ? Second prize in "R&DTechnology Development and Innovation" ? Third prize in "CorporateGovernance" ? Third prize in "HR Management Excellence"

• India Skill Award -2016: BEL won India Skill Award 2016 in recognition ofaugmenting skill development process for the country by engaging maximum apprentices inthe 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 2014-15" in the productcategory of Electronics and Communication from Govt. of Karnataka under medium/ largeEnterprise category.

• India Pride Awards 2016-17 : BEL has won the "Dainik Bhaskar India PrideAward" for the year 2016-17 in the 'Defence' category.

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

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

• INSSAN Award for Excellence in Suggestion Scheme : BEL Bengaluru and GhaziabadUnits were awarded the 1st and 3rd prizes respectively for excellence in suggestionschemes for the year 2015-16 in Engineering Industry Group during the 27th NationalConvention 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 providesa great opportunity for the Company to enhance its indigenization efforts and to addressthe opportunities in Indian Defence sector. BEL is having a healthy order book positionand 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 TankElectronics Gun upgrades Electro Optic systems and Electronic Warfare & Avionicssystems will continue to drive the Company's growth in the coming years. Modernisation andcreating several world-class facilities for R&D Testing Production and Skilldevelopment are planned for achieving the targeted growth. In the civil segment yourCompany is pursuing business in the eld of Solar Energy Homeland Security Smart Cityelements 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 ofDefence Procurement Procedure. The Government is also planning introduction of"Strategic Partnership" model for broader participation of private sector andalso to enhance the capacities in major defence platform manufacturing in addition toDPSUs. All this has pushed your company towards much higher competitiveness andproductivity through initiatives for enhancing value addition. It is extremely importantfor BEL to stay abreast of technology and develop new products regularly. Thrust onR&D across the company will continue with roadmaps drawn for the development offuturistic products and acquisition of key technologies. The company is also layinggreater emphasis on working closely with DRDO labs other research institutions andacademic institutions as well as niche technology companies for development of newproducts and systems. Strategies and action plans are in place to face competitionmaintain technological edge and retain the leadership position in strategic electronics.Some of the major projects planned for execution in this year are IACCS Weapon LocatingRadar HHTI EVM Akash Weapon System LYNX U2 LLTR Radar Tropo Upgrade HLS Schilkaupgrade ACCS for P71 ICS for P15B BSS Varuna ESM System Ground based mobile ELINTElectronic Fuzes L70 upgrade VVPATs etc.

Strategic New Initiatives

Your company is working in strategic areas like Electronic Fuzes Homeland SecuritySolutions 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 standardsof values and principles. A detailed report on compliance of the guidelines on CorporateGovernance as required the SEBI (LODR) Regulations 2015 and the guidelines issued by theDepartment of Public Enterprises for CPSEs forms part of the Directors' Report.

Your Company has received "Nil" comments certi cate from the C&AG for theeighth consecutive year.

The corporate performance of BEL measured in terms of the economic environmental andsocietal parameters augers well to reinforce the image of BEL as a socially responsiblecorporate entity. Sustainability in BEL is the continuing commitment to behave ethicallyand contribute towards economic development while improving the quality of life of itsworkforce their families and the local community and society at large. The philosophy ofgreening the environment through recycle reuse and reduce approach will continue in thenear future.

Acknowledgements

I am grateful to the Board of Directors and members of management committee for theirunwavering support and guidance. Ministry of Defence Defence Services and other Customershave been continuously providing valuable guidance and support. I further deeplyappreciate our shareholders esteemed customers and business associates for providing theopportunities to earn their con dence. The dedication and commitment of our employees andof cers at all levels continues to be the major strength of our company. We shall makecontinuous efforts to build on these strengths to face future challenges and sustain themomentum for pro table growth.

With Best Wishes

Yours sincerely
Bengaluru M V Gowtama
11 August 2017 Chairman & Managing Director