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Bharat Heavy Electricals Ltd.

BSE: 500103 Sector: Engineering
NSE: BHEL ISIN Code: INE257A01026
BSE 12:36 | 12 Apr 46.15 -5.35






NSE 12:29 | 12 Apr 45.80 -5.70






OPEN 48.00
VOLUME 6280584
52-Week high 56.50
52-Week low 20.40
Mkt Cap.(Rs cr) 16,070
Buy Price 46.05
Buy Qty 501.00
Sell Price 46.15
Sell Qty 19645.00
OPEN 48.00
CLOSE 51.50
VOLUME 6280584
52-Week high 56.50
52-Week low 20.40
Mkt Cap.(Rs cr) 16,070
Buy Price 46.05
Buy Qty 501.00
Sell Price 46.15
Sell Qty 19645.00

Bharat Heavy Electricals Ltd. (BHEL) - Director Report

Company director report

Dear Members

The Board of Directors have pleasure in presenting the 56th Annual Report onthe business and operations of your Company and the Audited Financial Statements for theyear ended March 31 2020.

Financial Results

( Rs Crore)

For the year ended

March 31 2020 March 31 2019
Revenue (Turnover) 20491 29423
Revenue from operations 21486 30423
EBIDTA 348 2810
Operational EBIDTA (233) 2132
Profit before tax (662) 2048
Profit after tax (1473) 1209
Total comprehensive income (1747) 1089
EPS (in Rs) (4.23) 3.33

Note: Figures in () represent negative values.

State of Company Affairs

The revenue for the year was mainly impacted due to Covid-19 pandemic in the lastquarter of FY 2019-20 which led to a nationwide lockdown from 25th March 2020disrupting the operations in manufacturing facilities and project execution activities atsites. Even though the lockdown was imposed in the country from 25th March2020 the impact on company's operations was being felt much earlier on account ofdisruptions in material supplies from China Italy etc. which started from January 2020itself and significantly affected the performance during the entire quarter.

For FY 2019-20 the company has incurred a loss of ^ 662 Crore as against a profit of ^2048 Crore in FY 2018-19 mainly due to lower revenue and higher material cost. Howeverstringent budgetary control measures and prudent provisioning has helped in restrictingthe loss.

Loss after tax for the FY 2019-20 is ^ 1473 crore as against profit of ^ 1209 cr in2018-19. The loss after tax for FY 2019-20 is significantly higher due to restatement ofdeferred tax asset at the rate of 25.168% as against 34.944% having an impact of ^ 957Crore.

The Company secured orders worth ^ 23547 crore in FY 2019-20. This comprises ordersworth ^ 13784 crore in the Power segment ^ 8757 crore in the Industry segment and ^ 1006crore in International operations. The order book outstanding at the end of March 31 2020was around ^ 108443 crore (executable order of ^88284 crore) against ^ 108680 crore(executable order of ^ 86953 crore) as on March 31 2019. The order book figures areinclusive of applicable taxes.

Transfer to Reserve

The Company has not transferred any amount to Reserves during 2019-20.


Due to COVID 19 pandemic and extra ordinary circumstances the Board decided not togive any dividend for the year 2019-20 in its meeting held on June 13 2020.

The Company has in place a dividend distribution policy in pursuance to therequirements of Regulation 43A of the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 ("LODR"). Dividenddistribution policy is available on the Company's website at and is alsoprovided separately in the Annual Report.


The Company has not accepted deposits from the public falling within the ambit ofSection 73 of the Companies Act 2013 during FY 2019-20.

MoU Rating

Your Company has been rated as 'Excellent' on MoU performance for FY 2018-19 byGovernment of India.

Credit Rating

The credit ratings of your Company are as follows:

Rating Agency Date of Rating Long Term Rating Outlook Short Term Rating
CRISIL 22-08-2019 CRISIL AA+ Negative CRISIL A1+
21-11-2019 CRISIL AA Stable CRISIL A1+
24-07-2020 CRISIL AA Negative CRISIL A1+
INDIA RATINGS 21-08-2019 Ind AA+ Negative Ind A1+
06-07-2020 Ind AA Negative Ind A1+
CARE 03-09-2019 CARE AA+ Stable CARE A1+
24-06-2020 CARE AA Stable CARE A1+

Material Changes and Commitments Affecting the Financial Position

There are no material changes and commitments affecting the financial position of theCompany between the end of the financial year and the date of this report of FY 2019-20.

Directors' Responsibility Statement

Pursuant to section 134(5) of the Companies Act 2013 the Board of Directors confirmsthat:

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

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

c) The Directors have taken proper and sufficient care for maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets 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 theCompany and that such internal financial controls are adequate and operating effectively;

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

Management Discussion & Analysis

Economic growth continues to be subdued both globally as well as domestically. With aGDP growth of 4.2% in 2019-20 against 6.1% during the previous year the Indian economywitnessed decline in industrial production and power and consumption demand. Theprotracted impact of the outbreak of COVID-19 pandemic internationally and geopoliticaldevelopments in many parts of the world have further deepened the crisis. Government ofIndia has launched many initiatives intended to improve financial liquidity increaseindustrial activity by promoting self-reliance in manufacturing and support agriculturalsector for bringing economic growth back on track.

Amidst this uncertainty in business environment continues to throw up short term aswell as long term challenges. BHEL is transforming itself into a Global EngineeringEnterprise with strict quality and cost controls and focusing on various transformationinitiatives - building and maintaining profitable growth by maintaining leadership in thecore business in the short term and diversifying by harnessing emerging opportunities inthe long term. Identification and implementation of strategies in new growth areas is oneof company's topmost priorities. Our efforts are focused towards a successfultransformation while continuing to be at the core of self-reliance in engineering andmanufacturing in India. For further details please refer Annexure-I to the Board'sReport.

Corporate Governance

Pursuant to Regulation 34 of the SEBI (Listing Obligations & DisclosureRequirements) Regulations 2015 a report on Corporate Governance (includingBoard/Committee meeting details) together with the following is given at Annexure -IIto the Board Report.

(i) Certificate of Non-Disqualification of Directors under Schedule V of the ListingRegulations.

(ii) Auditors certificate on Corporate Governance under Listing Regulations & DPEguidelines on Corporate Governance.

(iii) Secretarial Audit Report under section 204(1) of the Companies Act 2013 andManagement Reply thereon.

(iv) Extract of Annual Return pursuant to rule 12(1) of the Companies (Management andAdministration) Rules 2014.

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

In the opinion of the Board the Independent Directors appointed during the yearpossess integrity and necessary expertise & experience. All the Independent Directorshave registered themselves in the online database of Indian Institute of Corporate Affairs(IICA). As on date the Independent Directors (except Shri Manish Kapoor) have yet toundergo the online proficiency self-assessment test conducted by IICA (notified underSection 150).

Links under Company Website:

1. Familiarization Programme of Independent Directors:

2. Policy Determining Material Subsidiaries and Policy Dealing with Related PartyTransactions: Party_Transactions_010419.pdf

3. Annual Return:

Audit Committee

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

Compliance with Secretarial Standards

The Company has complied with applicable Secretarial Standards.

Changes in Directors & Key Managerial Personnel Appointment

Shri Shashank Priya Additional Secretary & Financial Adviser Ministry of Commerce& Industry has been appointed as Part-time Official Director w.e.f. October 4 2019.

Shri Anil Kapoor has been appointed as Whole Time (Functional) Director w.e.f. October15 2019 to take charge of the office of Director (HR).

Shri Raj Kamal Bindal and Shri Manish Kapoor have been appointed as Part-timeNon-official (Independent) Directors w.e.f. January 31 2020.

In accordance with Section 161 of the Companies Act 2013 and Article 67(iv) of theArticles of Association of the Company S/ Shri Shashank Priya Anil Kapoor Raj KamalBindal and Manish Kapoor having been appointed as additional directors shall holddirectorship up to the 56th Annual General Meeting of the Company and areeligible for appointment as Directors at the Meeting.


Shri D. Bandyopadhyay who was appointed as Director (HR) on August 1 2015 ceased tobe a Director of the Company on attaining the age of superannuation on August 31 2019.

Shri R. Swaminathan who was re-appointed as Part-time Non-official (Independent)Director on December 1 2018 ceased to be a Director of the Company on completion of histenure on November 30 2019.

The Board of Directors place on record their deep appreciation for the valuableservices rendered as well as advice and guidance provided by Shri D. Bandyopadhyay andShri R. Swaminathan during their tenure.

Further pursuant to Section 152 of the Companies Act 2013 and Article 67(i) of theArticles of Association of the Company Shri Manoj Kumar Varma and Shri Kamalesh Das willretire by rotation at the Annual General Meeting and being eligible offer themselves forre-appointment.

In compliance with Regulation 36(3) of the SEBI (Listing Obligations & DisclosureRequirements) Regulations 2015 brief resume of the Directors proposed for appointmentand re-appointment along with the nature of their expertise in specific functional areasand names of companies in which the person also holds directorship along with themembership of the Committees of the Board are given in the explanatory statement/ annexureto the Notice.

CEO/CFO Certificate

CEO/CFO certificate as per Regulation 17(8) of the SEBI (Listing Obligations &Disclosure Requirements) Regulations 2015 is placed at Annexure- III to the Board'sReport.

Loans and Investments

Details of loans and investments covered under the provisions of Section 186 of theCompanies Act 2013 form part of financial statement. Loan of ^3 crore towards workingcapital was given during FY 2015-16 to M/s BHEL EML BHEL's subsidiary Company and hasbeen already provided for impairment.

Consolidated Financial Statements

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

Sustainable Development

The mission statement of BHEL - "Providing Sustainable business solutions in thefields of Energy Industry & Infrastructure" underscores that the tenets ofsustainable development are deeply ingrained into our business processes.

BHEL continuously focuses on products and technologies having a lower environmentalfootprint for its customers. In its internal processes the company strives forconservation of natural resources including water through deployment of 3-R principle(Reduce- recycle-Reuse) increasing the share of renewable energy generated throughin-house solar systems installed at our premises conserving energy through energyefficiency improvement projects reducing carbon footprint in operations and protectingthe biodiversity by enhancing and maintaining the green cover through tree plantationamong others.

As a responsible corporate citizen working towards promotion of inclusive growth in thesociety BHEL's structured CSR Programme aims at creating a social infrastructure for thecommunity. The details of these initiatives taken during the year 2019-20 are given in Annexure-IVto the Board's report.

Business Responsibility Report

In line with the requirement of the listing regulations Business Responsibility Reportdescribing the initiatives taken by the company from environmental social and governanceperspectives as per the suggested format is enclosed at Annexure V to the Board'sreport.

Achievements of R & D and Technological Development

Innovation and R&D framework established in BHEL is fully equipped to meet thetechnological challenges posed by the current and future business requirements. In theyear 2019-20 the R&D expenditure is ^766 cr which is approx. 3.74% of the revenue.This includes expenditure incurred on R&D efforts made at manufacturing units formodifications/ improvements in products and designs against customer requirements apartfrom R&D projects. The company filed 549 patents and copyright applications during theyear enhancing the company's intellectual capital to 4849. Approx. 23.4% of the company'srevenue amounting to ^4792 Crore has been achieved from its in-house developed products.Further details have been provided in Annexure-VI to the Board's Report.

Implementation of Official Language

Continuous efforts are made for effective implementation of Official Language Act 1963and Official Language Rules 1976 in all units of the company and the progress is reviewedand monitored continuously.

Committee of Parliament on Official Language appreciated the efforts being made in thisarea during their inspection of various Units. Inspection of certain units was alsocarried out by Department of Heavy Industries who expressed their satisfaction towardsRajbhasha implementation in BHEL. Further details have been provided in Annexure-VII A tothe Board's Report.

Vigil Mechanism

The Vigilance function of BHEL is headed by Chief Vigilance Officer who acts as anextended arm of Central Vigilance Commission (CVC) in the Company. All units &divisions of BHEL have a vigilance set-up headed by a senior officer reporting to the CVO.

To reduce the chances of corruption preventive vigilance has been the focus area inBHEL. The main objective is to progressively reduce ambiguity and discretion in processesby plugging the loopholes in the system thereby making decision-making process moreobjective & transparent and also reducing the scope for malpractices. One of the keythrust areas for preventive vigilance is surveillance. During the year multiplemanufacturing units/ regions of BHEL were inspected by the Corporate Vigilance team tostudy the various processes being adopted in the units and to identify areas which requireimprovement. The audit reports (internal statutory and CAG reports) relating to BHEL havealso been scrutinized so as to determine whether there is any vigilance angle involved inrespect of the irregularities brought out in such reports. In line with the extantguidelines Annual Property returns of about 4200 employees were scrutinized during theyear. Random checks of the activities in the organization were conducted through routineinspections surprise checks system studies CTE type inspection etc.

Based on the findings of these inspections/ scrutiny improvements were suggested onvarious provisions of BHEL Policies Guidelines and Manuals so as to minimizediscretionary powers and to bring clarity in provisions where there may be scope formisinterpretation. Accordingly revised Reverse Auction (RA) Guidelines 2020 amendmentto Guidelines for Suspension of Business Dealings with Suppliers/ Contractors andGuidelines for Quality cum Cost Based Selection (QCBS) based ordering have been issued.Further details have been provided in Annexure-VII A to the Board's Report.

Health Safety & Environment (HSE)

Occupation Health Safety & Environment is a key focus area for the organization.Company-wide HSE safety management objectives and processes have been established forimproving operational discipline and evolving inherent safety measures.

Systems are continuously standardized and upgraded to reach the target of zero injuriesand incidents. BHEL is having a three-tier HSE monitoring system in place. HSE relatedissues are reviewed in various forums like plant level apex committee joint committeecentral safety committee shop level committee risk management committee etc.

ISO 14001 and OHSAS 18001 / 45001 certification of our units is enabling us to manageHSE related risk and achieve excellence in our HSE performance. Many new initiatives weretaken this year to enhance the effectiveness of HSE training including training on firesafety awareness programme on ISO 14001 & ISO 45001 "Training of Trainers"on Safety e-module development for ISO 14001 & ISO 45001 fire safety stewardstraining etc. Further details have been provided in Annexure-VII A to the Board'sReport.

Data and Cyber Security

Endpoint security has been deployed across BHEL's IT assets comprising of PCs laptopsand servers and integrated with its Cyber Security Operations Centre. This approachenables implementation of advanced anti-malware techniques ensuring data security forevery connected device. The whole process is managed through a single console. Thissuccessful integration provides BHEL significantly enhanced protection for the company'sgeographically distributed endpoints and servers under a single umbrella.

Cyber Threat Intelligence (CTI) generation is an initiative of Ministry of Electronics& Information Technology (MeitY) Govt. of India to gather cyber threat intelligenceand utilize the same to secure the cyber ecosystem of the country. Indian ComputerEmergency Response Team (CERT-In) the national nodal agency for Cyber Security underMeitY is the apex implementation agency. BHEL is also a part of this initiative and iscontributing to the same.

Other disclosures

Information in accordance with the provisions of Section 134(3)(m) of the CompaniesAct 2013 read with Companies (Accounts) Rules 2014 regarding conservation of energytechnology absorption and foreign exchange earnings and outgo is given at Annexure-VIIto the Board's Report.

As per provisions of section 197 of the Companies Act 2013 read with the Rule 5 of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 every listedcompany is required to disclose the details of the remuneration of the Directors etc. inthe Board's report. However as per Notification No. GSR 463(E) dated June 5 2015 issuedby the Ministry of Corporate Affairs Government Companies are exempted from complyingwith provisions of section 197 of the Companies Act 2013. BHEL being a GovernmentCompany 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 tosubsidiary companies & joint ventures and Form AOC-2 pursuant to section 134(3)(h) ofthe Companies Act read with Rule 8(2) of the Companies (Accounts) Rules 2014 is given at Annexure-VIIIto the Board's Report.


The Statutory Auditors of your Company are appointed by the Comptroller and AuditorGeneral of India. Three firms of statutory auditors were appointed as joint statutoryauditors and four firms were appointed as branch auditors. The names of audit firmsappointed for FY 2019-20 are given separately in the Annual Report.

Auditors' Report on the Accounts

The Auditors' Report and comments of the Comptroller & Auditor General of India onStandalone and Consolidated Financial Statements for FY 2019-20 of the Company are givenat Annexure- IX to the Board's Report. There is no qualification in the Auditorsreport on the Financial Statements of the Company. The Comptroller & Auditor Generalof India has also given 'NIL' comment on the Financial Statements of the company afterconducting supplementary audit under Section 143(6) (a) read with Section 129 (4) of theCompanies Act 2013.

Secretarial Audit

In terms of section 204(1) of the Companies Act 2013 the Company engaged M/s K.K.Sachdeva & Associates Company Secretaries in whole-time practice as SecretarialAuditors for conducting Secretarial Audit for FY 2019-20 and their report is forming partof Corporate Governance section.

The observations made by Secretarial Auditor in his Audit report is as under:

The composition of the Board of Directors is not in compliance with Regulation 17(1) ofthe Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 and Para 3.1.4 of the DPE Guidelines on CorporateGuidelines as the Company did not have requisite number of independent directors includingat least one independent woman director on its Board.

The Managements' reply on the above observation is as under:

BHEL being a Government Company the Independent Directors are selected by theAdministrative Ministry viz. Department of Heavy Industry in consultation with the SearchCommittee of the Department of Public Enterprises. The Company is in constantcommunication with the Department of Heavy Industry (DHI) for the appointment of requisitenumber of Independent Directors including at least one independent woman director on itsBoard in order to comply with the provisions of the SEBI Listing Regulations and DPEGuidelines.

Cost Auditors

In terms of provisions of Section 148 of the Companies Act 2013 and as per theCompanies (Cost Records and Audit) Rules 2014 and amendments thereof the Board on therecommendation of the Audit Committee approved the appointment of seven firms of CostAccountants as Cost Auditors for auditing the cost accounts of your Company for FY2019-20. Cost accounts and records as specified by the Central Government undersub-section (1) of section 148 of the Companies Act 2013 have been properly maintainedand complied with.

The detail of cost auditors appointed for FY 2019-20 are given separately in the AnnualReport. The Cost Audit Report for FY 2018-19 has been filed under XBRL mode on August 232019 well within the due date of filling and there was no qualification in the cost auditreport.

Appreciation and Acknowledgement

Your Directors gratefully acknowledge all the support and guidance extended by Ministryof Heavy Industries & Public Enterprises and all other departments and agencies of theGovernment of India in the Company's operations and developmental plans. The Directorsalso express their gratitude to the Comptroller and Auditor General of India Chairman andMembers of Audit Board Statutory Auditors Branch Auditors Secretarial Auditor and CostAuditors for constructive suggestions and continuous cooperation.

The Directors place on record their sincere appreciation towards the Company's valuedcustomers in India and abroad and esteemed shareholders for the support and confidencereposed by them in the management of the Company and look forward to the continuance ofthe same in future.

The Directors also wish to place on record their appreciation for the continuedcooperation received from all the technology collaborators suppliers contractors and forthe support provided by the financial institutions bankers and stock exchanges.

Your Directors also wish to place on record their sincere appreciation for the diligentefforts hard work and commitment put in by all BHEL employees.

For and on behalf of the Board of Directors of
Dr. Nalin Shinghal
Chairman & Managing Director
Place: New Delhi
Dated: 28.08.2020