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BSE: 500048 Sector: Engineering
NSE: BEML ISIN Code: INE258A01016
BSE 00:00 | 19 Jun 863.55 -11.25






NSE 00:00 | 19 Jun 864.05 -8.65






OPEN 868.70
VOLUME 44416
52-Week high 1947.45
52-Week low 827.00
P/E 27.78
Mkt Cap.(Rs cr) 3,596
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 868.70
CLOSE 874.80
VOLUME 44416
52-Week high 1947.45
52-Week low 827.00
P/E 27.78
Mkt Cap.(Rs cr) 3,596
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

BEML Ltd. (BEML) - Director Report

Company director report

Your Board of Directors has pleasure in presenting the 53rd Annual Report and AuditedAccounts for the year ended 31.03.2017.

Financial Results:

(Rs. Crores)

Particulars 2016-17 2015-16
Gross Revenue 2836.98 3422.92
Revenue from operations 2834.66 3284.33
Profit before Depreciation 208.07 182.72
Interest and Tax
Finance costs 47.80 49.03
Depreciation and amortization expense 61.98 55.77
Profit Before Tax 98.29 77.92
Tax Expense 13.85 14.26
Other Comprehensive Income 11.89 10.51
Total Comprehensive Income 72.55 53.15
Profit available for appropriations 292.29 272.40
Debenture Redemption Reserve 30.96 32.61
Balance c/f 261.33 239.79

Turnover and Profitability:

Your Company achieved gross revenue of '2836.98 crores including the value ofconsortium supplies against '3422.92 crores of corresponding value in the previous year.The revenue from operations stood at '2834.66 crores as against '3284.33 crores in theprevious year registering decline in growth of 13.69%. The drop in sales is primarilybecause of lack of orders from Indian Railways and due to the fact that RS-10 Metro Carcontract being only a labour contract. Further there was a drastic drop in placement oforders by Coal companies by over 70% vis-a-vis FY 2015-16. However Defence Business hadposted a growth of over 50.39% in sales vis-a-vis FY 2015-16.

The Value of Production (net of consortium supplies and excise duty) is '2623.90 croresas against '2736.90 crores in the previous year. The Profit before Tax was '98.29 croresas against

Profit before Tax of '77.92 crores recorded in the previous financial year which isthe highest ever in the last five years. In addition the positive factor is considerabledecrease in the finance costs and increase in the other income during the year.

There was no change in the nature of business of the Company during the year. Furtherthere was no material change / commitment occurred affecting the financial position of theCompany subsequent to the financial year ended 31.03.2017 till the date of this report.

Performance vis-a-vis MoU:

Performance of your Company in terms of the Memorandum of Understanding (MoU) signedwith the Department of Defence Production Ministry of Defence (MoD) Government of Indiawas rated as "Good" for the financial year 2015-16 and the rating for thefinancial year 2016-17 is estimated as ‘Very Good' based on self-evaluation.

Further to achieve ‘Very Good' rating for FY 2017-18 the MoU targets proposedare '2900 crores for Revenue from Operations and 0.8% of the Revenue from Operations asOperating Profit.


Your Board of Directors has recommended a dividend of '8 per equity share i.e.80% forthe year 2016-17 keeping in view the future prospects of the Company and at the same timemeeting the aspirations of the shareholders.

Amount transferred to reserves:

During the year under review your Company has transferred an amount of '30.96 croresto Debenture Redemption Reserve.


During 2016-17 your Company made exports aggregating '30.80 crores (physical exportsof '20.18 crores deemed exports of '9.98 crores and export incentive of '0.64 crores) asagainst '275.23 crores (physical exports of '31.55 crores deemed exports of '240.57crores and export incentive of '3.11 crores) during the previous year. The internationalpresence of the Company increased to 67 countries with the entry to Benin during the year.

Strategic Disinvestment:

Ministry of Defence vide its letter dated 01.12.2016 communicated that CabinetCommittee on Economic Affairs (CCEA) has accorded "in-principle" approval forstrategic disinvestment of the Company. DIPAM vide its O.M. dated 19.12.2016 hascommunicated that an Inter-Ministerial Group (IMG) has been constituted by the competentauthority for the purpose of appointing intermediaries such as Transactional Adviser (TA)and Legal Adviser (LA) for the strategic disinvestment of 26% equity in the Company out ofGovernment of India shareholding of 54.03%.

After confirmation the Company vide letter dated 06.01.2017 intimated NSE and BSEabout the ‘inprinciple' approval of CCEA and also posted on the web-site of theCompany in terms of Regulation 30 of SEBI (Listing Obligations & DisclosureRequirements) Regulations 2015.

As per the terms MoD has appointed M/s RBSA Valuation Advisers LLP Ahmadabad asAsset Valuer and DIPAM has appointed M/s. SBI Capital Markets Limited as TA and M/sCrawford Bayley as LA respectively. Preliminary Information Memoradum (PIM) and Expressionof Interest (EoI) has been submitted by TA.


Your Company views quality improvement as a business strategy and hence remainsproactive in the areas of product and service quality. At BEML a Corporate Quality Policyemphasizing Total Quality Management ensures that quality system adopted results inproducts services and processes that meet stringent standards and requisite performancecriteria. A separate Quality Department spearheads the thrust towards Total QualityManagement.

All manufacturing divisions have been certified for ISO 9001-2008 Quality ManagementSystem (QMS). KGF Complex Bengaluru Complex and Mysuru Complex are also certified for ISO14001- 2004 Environmental Management System (EMS). ISO body has revised these standards to2015 version. Accordingly in order to upgrade these certifications awareness trainingprogrammes internal auditor programmes and lead auditor programmes are being conducted inthe Company.

Further Bengaluru Complex is certified for BS OHSAS 18001-2007 Integrated ManagementSystem and Aerospace division Mysore complex is certified for AS9100C Aerospacecertification.

Key initiatives / actions taken during the year for continuous improvement towardsQuality Assurance are as under:

> Vendor development remains the "focus area" to improve quality ofsupplies made by the vendors. Revised vendor registration procedure and applicable formatshave been uploaded on Company's website to enable the new vendors for fast and easyregistration.

> Various Quality Assurance initiatives have been taken up to bring in Qualityimprovements on continuous basis towards Processes/System/ Product Quality improvements.Concept of 5S Kaizen and Quality Circles are practised at grass root level throughout theCompany.

> Periodic process / system audits are being conducted and feedbacks are given tothe vendors on day-to-day basis with regard to the rejections and necessary guidance givenfor corrective and preventive action for process / system improvements right fromdevelopment stage to ensure quality in their supplies.

> Quality Improvement Projects are identified across the divisions through CrossFunctional Teams. Pertaining to feedback from Customers and most of the them have beencompleted and balance are under observation.

> Team "METRO" from Bengaluru Complex has participated in InternationalCompetition ICQCC 2016 at Bangkok from 23rd August to 26th August 2016 and bagged"GOLD" award in the competition.

> A dedicated screen ‘BEML Quality BOARD' on intranet has been updated with thedisplay of quality related improvements and service bulletins periodically.

> Your Company has planned to upgrade the existing Production testing facilities atKGF and Mysuru for obtaining NABL certifications with enhanced scope during 2017-18 formeeting the Defence production requirements.

Make in India Initiative:

Your company is committed for the success of ‘Make in India' programme and hasadopted various initiatives under ‘Make in India' concept launched by the Governmentof India. It is Company's endeavour to achieve self-reliance by wholeheartedlyparticipating in ‘Make in India' drive with increased sourcing from localmanufacturers.

Your Company recognizes outsourcing as one of the strategic tools to achieve costbenefits and also complement the strengths of private sector to build a strong industrialbase. Your Company is well on its journey to become a system integrator by outsourcing asubstantial part of manufacturing activities from Indian vendors enabling the Company toenhance the capacity attain cost effectiveness and improve competitiveness in the globalmarket. To facilitate outsourcing the Company has well established policies proceduresand guidelines.

Company has nominated a Nodal Officer for ‘Make in India' drive and list of itemsfor indigenization are hosted on Company's website www.bemlindia. com. Also a display center is set-up in Bengaluru Complex where prospective vendors canhave access to samples drawings and technical specifications and explore opportunities topartner with the Company.

Under this initiative the Company has designed and developed various products such asBH205E Dump Truck BE1800E Electrical Excavator BL120H Loader cum Excavator under Mining& Construction segment Stainless steel EMU Overhead Inspection Car under Rail &Metro segment and 10xl0 HMV for SMERCH project indigenization of engine and axleassemblies for High Mobility Vehicles under Defence segment.

Start Ups :

The Ministry of Commerce & Industry Government of India has launched ‘StartUps' concept under ‘Make in India' initiative on 16.01.2016.

An entity working towards innovation development deployment or commercialization ofnew products processes or services driven by technology or intellectual property if itaims to develop and commercialize a new product or service or process or a significantlyimproved existing product or service or process that will create or add value forcustomers or workflow are covered under this Start Ups.

A Company that has been in existence for less than five years and with sales revenuesnot exceeding '25 crores will be recognised under Start Ups.

However your Company has relaxed the aforesaid eligibility criteria of prior turnoverand experience for registration from Start Ups in order to encourage them to participatein supplies for Company's procurements. Further the Company's identified areas of StartUps are hosted on Company's web-site www.bemlindia.comand vendors need to contact Quality wing of the Company for Start Ups activities.

Renewable Energy Development Energy Conservation Research & Development andTechnology Absorption:

(i) Renewable Energy Development:

In realizing the goal of go green and achieve 100% renewable energy your Company hascommenced its initiation by setting up a 5MW Windmill Project at Gadag District Karnatakawhich is generating power since 2007. It has generated 90 Lakhs Kwh power during 2016-17resulting in green house gas reduction. In addition the Company has also set up 18MWWindmill Project at Dammur Village Koppal district and Mittalkode Bagalkot district inKarnataka. 9MW Windmill at Dammur Village is already commissioned and has generated 110Lakhs Kwh power during 2016-17. The balance 9MW project at Mittalkode is undercommissioning. With this the total commissioned renewable energy capacity of over 23MWwould meet the total power requirement of the Company.

Further your Company has installed and commissioned 200 kWp grid connected roof topsolar project at Mysuru Complex to support the green energy mission to make the countrythe green energy capital.

(ii) Energy Conservation:

Your Company continues to give emphasis on conservation of energy. The efficiency ofenergy utilization is closely monitored to attain higher level of energy conservation.

(iii) Research & Development and Technology Absorption:

Your Company has an in-house design research and development setup. It continues toplay a vital role in design and development of new products / aggregates continuousup-gradation of existing products and indigenization activity.

R&D Centre at KGF Complex ("R&D Facility") the biggest design anddevelopment center for earth moving machinery in India is supplemented by R&D centerslocated at Truck Division and Engine Division at the Mysuru Complex and ProductEngineering teams colocated at EM and H&P divisions in KGF. Facilities in specializedareas like hydraulics powertrain structural engineering and material science areavailable at the R&D Centre. Computer Aided Design (CAD) / Computer Aided Engineeringfacilities are established for digital design and virtual simulation for product designand validation. R&D facilities for diesel engine design and development includingemission measuring infrastructure and testing facilities are located at the MysuruComplex.

The R&D set-up in Defence business vertical is engaged in the areas of HighMobility Heavy Duty vehicles Armoured Recovery and Repair vehicles (ARRVs) Mine PloughsTransmissions and Engines. The Company has entered into technology tie-up with M/s.Pearson Engineering Ltd UK for Mine Ploughs.

The R&D set-up in Rail & Metro business vertical is basically involved indesign & development of Metro & Railway rolling stock up-gradation of existingproducts based on the market need and indigenisation of imported aggregates. In thisregard the Company has entered into technology tie-up with M/s. Hyundai Rotem Company forMetro Cars.

During the year R&D designed developed and launched upgraded version of 100TDumper (BH 100-1) to suit customer requirements in addition to successful up-gradation ofother existing products of the Company.

In terms of Section 134(3)(m) of the Companies Act 2013 read with Rule 8 of theCompanies (Accounts) Rules 2014 the information on energy conservation and technologyabsorption including the products developed by the Company during the year is placed atAnnexure-I.

Foreign Exchange Earnings and Outgo:

During the year the Company's foreign exchange earnings stood at '16.86 crores and thetotal foreign exchange utilized was '638.66 crores.

A sum of '0.76 crores was incurred towards deputation of personnel abroad for business/ export promotion after-sales-services and training purposes.


The working capital requirements were met from the internal accruals and creditfacilities availed from banks. There was no overdue installment of principal and/orinterest to the banks.

The Company's contributions to Central and State Exchequers were in the order of'693.46 crores during the year by way of Excise Duty Customs Duty Sales Tax ServiceTax Dividend and Tax there on and other taxes and duties.

Internal Financial Controls:

Your Company has put in place adequate Internal Financial Controls (IFCs) with respectto Financial

Statements. The Company has various manuals such as Accounts Cost Accounting &Pricing Stores Purchase Audit etc. and the same are being periodically updated forcarrying out various activities in a transparent manner as per the delegation of powersand no instances of material weakness in the operations has been observed. The adequacy ofinternal financial controls over financial reporting is covered by the Statutory Auditorsin their Audit Report. Further the details of the IFCs are included under the heading‘Internal control systems and their adequacy' in the Management Discussion &Analysis Report which forms part of this report.

Fixed Deposits:

The Company did not accept any fixed deposits during the year and there was nooutstanding Fixed Deposits at the beginning / end of the year. Accordingly there was nodefault in payment of deposits / interest thereon.

Enterprise Risk Management:

In terms of Section 134(3)(n) of the Companies Act 2013 Regulation 17(9) of theListing Regulations and Para 7.3 of DPE Guidelines your Company has formulated"Risk Management Policy" with an objective to ensure sustainable business growthwith stability and to promote a pro-active approach in identifying evaluating reportingand managing or mitigating risks associated with the business. In order to achieve the keybusiness objectives the policy establishes a structured and disciplined approach to riskmanagement in order to manage or mitigate risk related issues. The said policy is alsoplaced on the Company's website www.bemlindia . com.

In terms of Regulation 21 of the Listing Regulations the Company has constituted RiskManagement Committee consists of Director (Rail & Metro Business) Director (Mining& Construction Business) Director (Defence Business) Director (Finance) and oneIndependent Director.

Further the aforesaid Risk Management Committee shall appraise the key risks alongwith mitigation plans and report to the Board periodically.

Related Party Transactions:

Your Company has formulated a "Policy on Related Party Transactions" toregulate transactions entered into between the Company and its related parties. In termsof Regulation 46(2)(g) of the Listing Regulations the said policy is placed on thewebsite of the Company at .

During the year 2016-17 all transactions that were entered into with the relatedparties were fair transparent and at arm's length basis and also in the ordinary courseof business of the Company. The said related party transactions were also duly consideredand noted by the Audit Committee.

Report on the performance and financial position of subsidiaries and joint venturecompany

Subsidiary Companies:

(i) M/s Vignyan Industries Limited (VIL):

VIL has recorded a turnover of '33.21 crores as against '32.18 crores therebyregistering a growth of 3.20% over the previous year. The value of production of theCompany stood at '32.29 crores as against '30.88 crores and the Company achieved Profitbefore Tax of '0.13 crores as against profit of '0.67 crores in the previous year.

VIL is planning to explore new markets for reducing dependency on M/s BEML Limited theholding company. However in anticipation of order from BEML for high alloy grade castingslike T-72 and Tatra Variants relating to Defence business Axle Box and Buffer Assemblyrelating to Rail business and new castings for Mining & Construction businessnecessary development and production are planned. VIL has executed order for MIDHANIanother DPSU Hyderabad to manufacture and supply 100 MTs of ballast casting of U-2 gradesteel valued about '1.35 Crs. These proposals would help VIL to achieve about '74 Crs by2020-21 as envisaged in the Perspective Plan.

The order book position remained at 1710 MTs as on 01.04.2017. More and more castingrequirements are expected from Holding Company as well as from other customers. With thisVIL is confident of achieving better results for the financial year 2017-18.

(ii) M/s MAMC Industries Limited (MIL):

Your Company entered into a Consortium Agreement with M/s. Coal India Limited (CIL) andM/s. Damodar Valley Corporation (DVC) on 08.06.2010 for acquiring specified assets of M/s.Mining and Allied Machinery Corporation Limited (under liquidation). The agreementinter-alia provided for formation of a Joint Venture company (JV) with a shareholdingpattern of 48:26:26 among BEML CIL and DVC respectively. The Company has paid theproportionate share of '48 crores towards the total bid consideration of '100 crores forthe said acquisition based on the order passed by the Hon'ble High Court of Calcutta. Thesaid assets were taken possession by the MAMC Consortium. Further up to 2016-17 theCompany has incurred a sum of '9.44 crores towards maintenance security and other relatedexpenditure. The expenditure incurred by CIL and DVC on account of this proposal is notascertained. The total sum of '57.44 crores is included under the head other loans andadvance's pending allotment of equity shares in the capital of JV company. Since theCompany intends to treat this as long term investment no independent valuation of thesaid assets has been carried out and the diminution in the value of investments if anycan be ascertained only after the formulation of business plan and obtaining necessaryapproval for shareholders' agreement from Ministry of Defence (MoD) and consequentialallotment of shares in the JV.

In the meantime a company in the name of ‘MAMC Industries Limited' (MIL) wasformed and incorporated by your Company as a wholly owned subsidiary for the intendedpurpose of JV formation. Shareholders' agreement as duly approved by the Boards of allthree members of the consortium has been submitted to MoD for necessary approval.Further MoD has directed to submit ‘Business Plan' and ‘Financial ViabilityReport' of the proposed JV. A meeting of Interim Board of Management of Consortium hasdecided to engage M/s SBI Caps for preparing the "Financial viability & BusinessPlan" report for taking further decision in the matter.

(iii) M/s BEML Brazil Industrial Ltda. (BBIL):

Your Company entered the Brazil market for brand building exercise and local valueaddition for the products to meet local standards in anticipation of good businesspotentials for Freight Wagons and Mining & Construction equipment. As per therequirement under the local laws BBIL was established. Based on the enquiries few miningequipment were also supplied to local customers. In the meantime low cost Chineseequipment flooded the Brazilian market along with their local manufacturing facilities.Further your Company faced stiff competition in high-end equipment segment frominternational players like CAT and Komatsu. In view of these developments it is proposedto handle the Brazilian market directly and to wind up the existing facilities in Brazil.In view of this BBIL is kept under dormant state.

Joint Venture Company - M/s BEML Midwest Limited (BmWL):

BMWL was formed and registered with the Registrar of Companies at Hyderabad on18.04.2007. BEML holds 45% share and M/s Midwest Granite Pvt. Ltd. (MGPL) and P T SumberMitra Jaya of Indonesia as partners holding the balance 55% share. The Company has beenestablished to capitalize on the growing business opportunities in the contract miningsegment. However due to certain unauthorized transactions and the oppression andmismanagement by the nominees of MGPL your Company had filed an application beforeHon'ble Company Law Board (CLB) seeking for suitable relief. As a counter measure MGPLhad also filed a petition on the matter. CLB vide its common order dated 01.06.2012directed the Central Government to appoint an inspector to investigate the affairs of BMWLand take appropriate action. As per the legal advice your Company preferred two appealsbefore Hon'ble High Court of Andhra Pradesh at Hyderabad against the said common order ofCLB. The Hon'ble High Court passed the order on 19.08.2013 thereby setting aside the saidcommon order and directing CLB to proceed with a fresh enquiry and decide the issue inaccordance with law and merits also taking into consideration the report of investigationas directed by CLB and pass appropriate orders without getting influenced by the impugnedcommon order of CLB. The Company has filed an application with CLB praying for necessarydirections to Regional Director Ministry of Corporate Affairs Hyderabad for time boundcompletion of investigation so that the matter could effectively be heard by CLB. In themeanwhile the Government has constituted National Company Law Tribunal (NCLT) bydissolving CLB and notified that the jurisdiction is shifted to Hyderabad from Chennai.The case files were transferred to NCLT. However hearings are yet to commence due to thereason that investigation report is pending submission by RD MCA Hyderabad.

There was no company which became or ceased to be a subsidiary joint venture orassociate of the Company during the year under review.

A separate section on report on the performance and financial position of each of thesubsidiaries joint venture company are placed under Form AOC-1 provided in theconsolidated financial statement of the Company in terms of section 129(3) of theCompanies Act 2013 read with rule 5 of Companies (Accounts) Rules 2014.

Particulars of Loans Guarantees or Investments:

Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 are given in the notes to the Financial Statement.

Consolidated Financial Statement:

Consolidated Financial Statement of your Company and its subsidiaries and joint venturecompany is attached to this report.


The Company under the aegis of full-time Chief Vigilance officer has undertakenseveral preventive vigilance activities like surprise checks of stores medical centresinspection of works and contracts study of tenders etc with the objective of promotingintegrity transparency accountability equity efficiency and productivity by leveragingtechnology and many systemic improvements were recommended and successfully implemented.

Vigilance Awareness Week-2016 with the theme "Public participation in promotingintegrity and eradicating Corruption" was observed in the Company.

Online Vigilance Clearance for below Board level executives has been set up andIntegrity Pact has been fully implemented.

During the year 22 complaints were handled out of which 19 complaints were disposed.Disciplinary action and system / process improvement has been recommended in some caseswhere lapses were observed.


Your Company endeavours to procure materials and services through e-procurementplatform on ERP system. During the year about 70% of the total requirements were sourcedthrough e-procurement.

Micro and Small Enterprises:

Following steps have been adopted under the Micro and Small Enterprises (MSEs) Order2012:

> List of components that could be sourced from MSEs are placed on the Company'swebsite for the information of MSE vendors.

> Appropriate weightage has been given for MSEs in the MoU from the year 2015-16onwards in order to ensure the objective of achieving overall procurement of 20% fromMSEs.

> In order to enhance the vendor base for MSEs and MSEs owned by SC/STentrepreneurs your Company has organized Vendor Development Programmes for MSEs andexclusively for MSEs owned by SC/ST entrepreneurs and participated in various exhibitionsorganized by Micro small and Medium Enterprises National Small Industries CorporationCII etc whereincomponents are displayed for MSEs and details/ advantages of the abovepolicy is propagated.

> During 2016-17 your Company placed orders for goods and services to the extent of'303.93 crores from MSEs which constituted 20.42% of the total procurement value of'1488.14 crores and 32.93% of indigenous procurement of '922.90 crores.

Vendor Development:

As per the directives of Ministry of Defence the Company has framed an‘Outsourcing and Vendor Development Policy' as duly approved by the Board. Theobjective of the policy is to enhance cost effectiveness and improve competitiveness ofthe Company in global market. The other significant objective of this Outsourcing andVendor Development Policy is to build a manufacturing eco system in the country to attainself-reliance. On the other hand participation of Indian private industry will be anenabler in building technological and manufacturing capability inside the country. Basedon the policy so framed a Road Map for vendor development for two years i.e. 2016-17 and2017-18 has been prepared with yearly targets and monitored at the Board level onquarterly basis.

Compliance under the Right to Information Act 2005 :

The information required to be provided to citizens under Section 4(1)(b) of RTI Act2005 is placed on Company website . It contains general information ofthe Company functions and duties powers and duties of employees/officers decisionmaking process rules regulations manuals and records held by the Company directory ofthe Company's officers pay scales of officers / employees etc. and procedure for seekinginformation and inspection of records. The Company has nominated a Central PublicInformation Officer Appellate Authority Transparency Officer and six Central AssistantPublic Information Officers representing Complex / Divisions to attend to the queries andappeals. During the year 2016-17 the Company received 256 applicationsand queries relatedto human resources recruitment contracts tenders business related matters etc. andthe same were disposed off.


Your Company continued its efforts in implementing the Official Language (OL) Policy.OL Implementation Committee is constituted to review the status of use of Hindi across theCompany. The said Committee met quarterly during the year and reviewed the implementationstatus.

OL Inspection was carried out by the Officials of Department of Defence ProductionMinistry of Defence New Delhi at Mysuru Complex and Regional Office at Hyderabad.Further OL inspection carried out by Deputy Director (RIO) Kolkata at RO Dhanbad.Parliamentary Committee on OL inspected Regional Office at Mumbai reviewed theimplementation of OL policy and expressed its satisfaction over the progress made.

402 executives / employees were trained in Hindi under Hindi Teaching Scheme ofGovernment of India during the period under review. 18 Hindi workshops were organized inwhich 374 officers/ employees were trained. Hindi Fortnight was observed from 14.09.2016to 29.09.2016 throughout the Company and variety of competitions was organized. HindiConference was organized at RO- Singruali for two days from 20-21st January 2017.

Website of your company is made available in Hindi also and updated the contentsperiodically.

Corporate Governance Report:

In terms of Para 8.2.3 of the DPE Guidelines of CPSEs grading is done by DPE on thebasis of compliance with Corporate Governance guidelines/ norms. Accordingly your Companyis graded as ‘Excellent' for the year 2016-17. Further in terms of Regulation 34 ofthe SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 and Chapter 8of the DPE Guidelines a report on Corporate Governance along with Compliance Certificateis placed at Annexure-II.

Management Discussion and Analysis Report:

In terms of Regulation 34(2)(e) of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 and Para 7.5.1 of the DPE Guidelines of CPSEs a report onManagement Discussion and Analysis Report is placed at Annexure-III.

Business Responsibility Report:

In terms of Regulation 34(2)(f) of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the annual report of the top 500 listed entities based onmarket capitalization shall contain Business Responsibility Report (BRR) w.e.f. FY 2016-17for the first time. The said BRR contains the initiatives taken by the Company from anenvironmental social and governance prospective which is placed at Annexure-IV.


> On 27.07.2016 Company was bestowed with Rajbhasha Award in Big PSU category forCorporate Office by the Town Official Language Implementation Committee for PSUs forcommendable performance in implementation of Hindi during 2015-16.

> On 22.08.2016 Company received two awards- (i) Excellence in Training Learningand Development Programmes and (ii) Outstanding Contribution in CSR. These awards werepresented in recognition of Talent Management Talent Development and Talent Innovationinstituted by Employer Branding Institute Mumbai.

> On 21.09.2016 Company won the prestigious QCI - DL Shah National QualityAward-2016 at the 11th National Quality Conclave held at New Delhi for metro qualityassurance with a case study on ‘Optimization of painting process parameters' formetro car interior panels.

> On 23.09.2016 Company was awarded theprestigious ‘International Gold Award'for its Quality initiatives in the manufacture of Metro Cars at the InternationalConvention of Quality Circle Competition held at Bangkok.

> On 25.10.2016 Company was bestowed with the prestigious award ‘BuildconIndia's Top Challenger 2015-16' instituted by ASAPP Info Global Group during the 14thConstruction World Annual Awards-2016 at Mumbai.

> On 29.11.2016 Company was bestowed with Rajbhasha Award in Small PSU category forRO-Sambalpur by the Town Official Language Implementation Committee for PSUs forcommendable performance in implementation of Hindi during 2015-16.

> On 14.12.2016 Company had won prestigious ‘Star Performer Award' in theExport category for the year 2014-15.

> On 16.12.2016 the Chairman & Managing Director of the Company was conferredwith CEPM Fellowship Award-2016 at the 24th Global Symposium organized by Centre forExcellence in Project Management.

> On 26.01.2017 Company had bagged various awards for best maintenance of gardensat Complexes Headquarters and Township Parks in the garden competitions held duringRepublic Day Horticultural Show-2017.

> On 17.04.2017 your Company is bestowed with Hindustan PSU Award under thecategory ‘Fastest Growing Organisation - Miniratna.'

> On 25.04.2017 your Company is bestowed with Equipment India Awards under twocategories viz. Best Seller in Rigid Dump Trucks and Best seller in Crawler Dozers forthe year 2017.

> On 30.05.2017 your Company is bestowed with Raksha Mantri award in the category"Design Effort: Own initiative projects" for the design and development of 180TClass Electric Hydraulic Excavator BE1800E.


The number of employees of the Company as on 31.03.2017 stood at 8221 as against 8827of the previous year.

The category-wise number of SC/ST and ExServicemen employees as on 01.01.2017 andrecruitment made are as under :

Category Group

Total Strength As on

No. of SC/ST and Ex-servicemen

Scheduled Caste

Scheduled Tribe

Ex-Service Men

1.1.2016 1.1.2017 1.1.2016 1.1.2017 1.1.2016 1.1.2017 1.1.2016 1.1.2017
Group-A 1549 1735 283 318 56 73 6 6
Group-B 794 518 135 88 65 43 13 15
Group-C 6568 6041 1475 1373 306 284 275 258
Group-D 25 23 14 13 4 4 0 0
Total 8936 8317 1907 1792 431 404 294 279

The Company has recruited 9 candidates during the year under review as under:

> 1 from General category in Group A

> 2 each from General category and OBC in Group B and

> 1 each from General category and OBC & 2 from Scheduled Caste in Group C

Human Resource Development & Industrial Relations:

The HR Department identified several thrust areas for continuously updating technical/professional knowledge and skills of employees towards fostering a performance driven workculture in all areas of operations particularly at shop floors. During the year theCompany organized several in-house and external training programs covering 17849man-days.

The overall industrial relation situation in the Company was cordial during the year.

Prohibition of Sexual Harassment of Women at Workplace:

In terms of the provisions of the Sexual Harassment of Women at a Work Place(Prevention Prohibition & Redressal) Act 2013 an Internal Complaints Committee isconstituted in all the manufacturing units. No sexual harassment complaint was reportedunder the said Act during the year 2016-17.

Compliance under Persons with Disabilities Act 1995:

Your Company complies with the provisions under the Persons with Disabilities (Equalopportunities Protection of rights and full participation) Act 1995 (PwD Act). In termsof various provisions under PwD Act your Company has ensured reservation of vacancies forthe posts identified for each disability carry forward of vacancies which could not befilled up due to non-availability of suitable persons with disability and maintenance ofrequisite records / roster.

Corporate Social Responsibility & Sustainability:

In terms of Section 135 of the Companies Act 2013 and DPE Guidelines on MoU theCorporate Social Responsibility & Sustainability (CSR) Committee has been constituted.Further details of CSR are placed under the same heading in Annexure-II and an annualreport on CSR activities undertaken during the year is placed at Annexure-V.

Environment and Pollution Control:

In order to protect the environment in and around the factory premises/township treeplantation were undertaken. Your Company planted saplings of various types of avenue trees/ flower bearing trees in the vacant lands belonging to the Company for maintainingecological balance in the surrounding areas.

Particulars of Employees:

There were no employees of the Company who received remuneration in excess of thelimits prescribed under Rule 5 of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014.

Skill India initiative:

Your Company has undertaken ‘Skill Development' initiatives in line withGovernment of India's ‘Skill India' initiative launched during 2015. Continuoustechnical trainings are being organised to train Employees through in-house Centre forExcellence at each division / complex and at reputed technical training Institutes. Tohone-up skills in-house training is also imparted to ITI / NAC Diploma / EngineeringGraduate apprentices.

Your Company has adopted Govt. ITI at KGF and at KM Doddi Mandya as part of skilldevelopment initiatives. Trainees of Govt. ITI at KGF are being provided with 6 monthspractical training in KGF Complex while Mysore Complex is the industrial partner to ITI atKM Doddi and is being provided with assembly items etc.

To enhance the capability of the Engineers working in Production R&D and alliedareas a tie-up was established with IIT-Madras and IIT- Kharagpur.

Service training programmes for the customers from all over the country and abroad andfor BEML Service personnel are conducted at Service Training Centres at KGF and at Mysore.For customer personnel equipment-wise training programmes including operator training onMining & Construction equipments are held while BEML service personnel are impartedtraining on dealer development in addition to training on Mining and Constructionequipments.

Further various organizational development initiatives such as Employee SatisfactionSurvey Development of Competency Assessment Framework & Leadership Pipelineformalization of value statement of the Company; ‘BEML FIRST' have been carried outto effect the cultural enhancement aligned with our organizational growth.

Various competency and leadership development initiatives are taken up to drive the‘Development of Leadership Pipeline' initiated during 2014-15.

Swachh Bharat Abhiyan:

Swachh Bharat Mission was launched by the Government of India during 2014 with theobjective of fulfilling the dream of transforming urban India in totally sanitizedhealthy and livable cities and towns during next five years. In this direction yourCompany being a Socially responsible business entity has undertaken various initiatives atits Corporate Office Manufacturing Complexes Townships and Schools to ensureparticipation of its Employees Officers and School Children. Company has charted out a‘Five Year Swachh Bharat' Plan to organize and conduct various Swachh Bharatinitiatives. Some of the key ‘Swachh Bharat' initiatives undertaken by the Companyare as under:

> Company has adopted Ajjapalli Village near KGF during the year 2015-16 undersustainable Rural Development plan and provided requisite amenities for conducive living.

> The first and second anniversary of Swachh Bharat Abhiyan was celebratedthroughout the organization as ‘Swachh Bharat Diwas' on 2nd October coinciding with‘Gandhi Jayanthi' in the year 2015 & 2016 respectively and conducted variouscleanliness programmes in this regard.

> Swachh Bharat Pakhwada' was observed across the Company during the period from 1stMay to 15th May 2016. Various activities/competitions focused on cleanliness wereorganized at Corporate Office all its Manufacturing Complexes Townships Regional &District Offices during the above period.

> In addition Company has undertaken various activities under Annual Action Planbased on the recommendations of the Group of Secretaries on ‘Swachh Bharat &Ganga Rejuvenation' (GoS) for the period from 2016-17 up to 02.10.2019.

Statutory Auditors

The Comptroller & Auditor General of India has appointed M/s. S.R.R.K SharmaAssociates Chartered Accountants Bengaluru as the Statutory Auditors for the financialyear 2016-17.

Observation if any made in the Independent Auditors' Report on the financialstatement including consolidated financial statement and thereply of the Board ofDirectors thereto will be given by way of an addendum to this report.

Cost Auditors

Your Company appointed M/s Murthy & Co. LLP Cost Accountants Bengaluru as CostAuditors for the year 2016-17 in terms of Section 148 of Companies Act 2013 read withthe Companies (Cost Records and Audit) Rules 2014 for preparing and filing necessary‘Cost Audit Report' for Railway Rolling Stock and its Parts. Further as requiredunder the said Rules the remuneration payable to the said Cost Auditor was ratified bythe members in the 52nd Annual General Meeting held on 15.09.2016.

Secretarial Auditors

In terms of Section 204 of the Companies Act 2013 read with the Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 the Company appointed M/s V NAssociates Practicing Company Secretaries Bengaluru to undertake the Secretarial Auditof the Company for the year 2016-17.

The Secretarial Audit Report and the replies to the observations made in the saidreport are placed at Annexure-VI.

C&AG Audit

The Comments of the Comptroller & Auditor General of India under section 143(6)(b)of the Companies Act 2013 on the financial statement including consolidated financialstatement are appended at page no. 149 and 220 to the annual report.


(1) Appointment of Independent Directors

During the year no Independent Directors have been appointed on the Board of theCompany.

Pursuant to Schedule IV of the Companies Act 2013 the appointment of the IndependentDirectors would be formalized through a letter ofappointment setting out the terms andconditions of their appointment which is also placed on the web-site of the Company . In terms of section 149 of the Companies Act 2013 the provisions ofsection 152(6) and (7) in respect of retirement of directors by rotation shall not beapplicable to appointment of independent directors.

(2) Statement on declaration by Independent Directors

Independent Directors have given declarations u/s 149(7) of the Companies Act 2013that they meet the criteria of independence as laid down u/s 149(6) of the said Act.

(3) Board Evaluation:

The Board of Directors of the Company comprises Functional Directors GovernmentNominee Directors and Independent Directors appointed by the Government of India from timeto time.

Further the tenure and remuneration of Functional Directors including Chairman andManaging Director are decided by the Government of India through Public EnterprisesSelection Board / Search Committee. The Government communication also indicates thedetailed terms and conditions of their appointment including a provision for theapplicability of the relevant rules of the Company. The Government Nominee Directors arenot entitled to any remuneration / sitting fee. The Independent Directors are entitled tositting fees for attending the Board/Committee meetings as duly approved by the Boardconsidering the government directives statutory acts rules and regulations.

In view of the above the performance of all Functional Directors and GovernmentNominee Directors is being evaluated by the Administrative Ministry every year based onown evaluation methodology. Further considering the educational qualifications age richand varied experience of the applicants the Administrative Ministry / Department wouldappoint the IDs on the Board on the recommendation of Search Committee after obtainingapproval of competent authority.

Considering the above a separate evaluation criteria was not framed by the Company.

(4) Remuneration of Directors:

Your Company being a Central Public Sector Enterprise the appointment tenure andremuneration of Directors are decided by the Government of India. The Governmentcommunication appointing the Functional Directors indicate the detailed terms andconditions of their appointment including a provision for the applicability of therelevant rules of the Company.

Government Nominee Directors were neither paid any remuneration nor sitting fee forattending Board / Committee meetings.

Independent Directors are paid only sitting fee of '20000 per meeting of the Board /Committee of the Board attended by them. Further if there are more than one such meetingon the same day a sitting fee @ '10000 is paid for the second and subsequent meeting/s.

Neither there was payment of commission to the Board of Directors nor any stock optionscheme offered to them during the year.

Further none of the Directors had any pecuniary relationship nor entered into anyrelated party transactions with the Company during the year.

Pursuant to the provisions of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 the details of remuneration paid to the Directors during 2016-17are provided under the ‘Report on Corporate Governance' annexed to this report.

(5) Change of Directors and Key Managerial Personnel

In terms of Article 97 of the Articles of Association of the Company the President ofIndia is vested with the power to appoint the Directors of the Company from time to timeand also shall determine the term of office of such Directors. However there was no freshappointment made subsequent to last Annual General Meeting.

Further in terms of section 179 of the Companies Act 2013 read with Rule 8 of theCompanies (Meetings of Board and its Powers) Rules 2014 Key Managerial Personnel shouldbe appointed by the Board of Directors. Accordingly Shri S V Ravisekhar Rao is appointedas Company Secretary and Compliance officer of the Company w.e.f. 19.10.2016 in place ofShri M E V Selvamm who had since resigned and joined M/s ONGC Limited.

(6) Number of meetings of Board:

During the year six meetings of the Board were held on 20.04.2016 27.05.201628.06.2016 14.09.2016 25.11.2016 and 13.02.2017. Requirements on number and frequency ofmeetings in terms of Section 173(1) of the Companies Act 2013 Regulation 17(2) of theListing Regulations and Para 3.3.1 of the DPE Guidelines were complied with in full.

(7) Directors' Responsibility Statement:

Pursuant to section 134(5) of the Companies Act 2013 your Directors state that basedon the representation received from the management

(a) in the preparation of the annual financial statements for the year ended31.03.2017 the applicable accounting standards has been followed along with properexplanation relating to material departures;

(b) such accounting policies have been selected and applied consistently and judgmentsand estimates have been made that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company as at 31.03.2017 and of the profit of theCompany for that period;

(c) proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

(d) the annual financial statements have been prepared on a going concern basis;

(e) proper internal financial controls were in place and that the said internalfinancial controls were adequate and operating effectively.

(f) proper systems have been devised to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.

Extract of Annual Return

In terms ofSection 92(3) ofthe Companies Act 2013 read with Rule 12 of the Companies(Management and Administration) Rules 2014 an extract of the Annual Return in theprescribed form is placed at Annexure-VII.


Your Directors express their hearty thanks to the Company's valued customers inparticular Defence Services M/s Coal India Limited and its Subsidiaries M/s SingareniCollieries Company Limited M/s Steel Authority of India Limited Railway Board M/s DelhiMetro Rail Corporation Limited M/s Bangalore Metro Rail Corporation Limited M/s JaipurMetro Rail Corporation Limited M/s Kolkata Metro Rail Corporation Limited M/s BharatElectronics Limited M/s Bharat Dynamics Limited Ordinance Factory Board and DefenceResearch & Developement Organisation for their patronage and confidence reposed on theCompany. The Directors also acknowledge and thank all collaborators vendors and otherservice providers for their valuable assistance and cooperation extended to the Company.

The Directors express their appreciation to the members of Company's Consortium ofBanks and other Bankers and Financial Institutions for their continued support to theCompany's operations. The Directors also thank all the shareholders / investors forreposing continued confidence in the Company.

The Directors wish to thank the Comptroller & Auditor General of India thePrincipal Director of Commercial Audit & Ex-officio Member Audit Board and StatutoryAuditors for their valued cooperation.

The Directors also acknowledge the valuable support and assistance received fromvarious Ministries of Government in particular Ministry of Defence Ministry of CoalMinistry of Mines Ministry of Steel Ministry of Railways and the Ministry of ExternalAffairs. The Directors are also grateful to the Government of Karnataka and Kerala for thesupport and co-operation extended to the Company.

Your Directors take this opportunity to place on record their appreciation for theinvaluable contribution made and excellent co-operation extended by the employees andexecutives at all levels for the continued progress and prosperity of the Company.

For and on behalf of the Board of Directors

Bengaluru D K Hota
30.05.2017 Chairman & Managing Director

Annexure to Board's Report for the Financial Year 2016-17


(a) Steps taken or impact on conservation

of energy

(i) Reconditioning of Heating Chamber of INDAID High Heat F/C thereby reduced HeatLoss.

(ii) In-house reconditioning of 1000kg (PTC- 1) furnace at Heat Treatment shop.

(iii) Replacement of underground compressor airline for optimum utilization ofcompressor.

(iv) Replacement of LED lighting for Machine Work Lamps plant indoor and outdoor GLSlighting.

(v) Installation of Energy Saving Devices for Roof Lighting at TS-I & PL Shops

(vi) Installation of 18W Solar Street Lighting System in place of 125W HPMV Lamps

(vii) Installed LED light fittings by replacing conventional MHL lights

(viii) Premixed engine coolant used in captive power generation DG sets as well asForklifts to enhance the engine efficiency.

(ix) Used lower rating 20HP Air compressors for PBB painting application during 2nd& 3rd shifts in place of Main 215 HP Air compressor.

(x) Conversion of 400Watts Street light fitting to 250 Watts HPMV lamp fitting.

(b) Steps taken by Company for utilizingalternate sources of energy

Please refer para (i) of the ‘Renewable Energy Development Energy ConservationResearch & Development and Technology Absorption' of Board Report

(c) Capital investment on energy conservationequipments

During the year under review your Company has invested '123.84 lakhs for implementingvarious energy saving measures.


Research & Development (R&D):

(i) Efforts made towards Technology Absorption:

During the year R&D Department took initiatives for design and development of hightechnology products and aggregates for Mining & Construction Defence and Rail &Metro segments as per customer requirements. Some of such products were also manufacturedand launched for customer trials.

Depending on the sectoral needs for the year 2016-17 R&D launched the followingproducts / projects:

Mining & Construction:

> BH100-1 - design and development of MTU Engine Allison Transmission on new framewith Bolt on type Power Train and Bolt on type Hydraulic & Fuel Tank assembly withintegral Transmission Oil Cooler & Brake Oil Cooler in the bottom tank of Radiator

> BD65-1 - development of Power Angle & Tilt (PAT) dozer attachment

> BL200-1 - engineering of indigenous

Transmission on 3T capacity Front End Loader Model

> BL14TH - engineering of indigenous

Transmission on Tyre Handler Model with Payload capacity 3.5T

> BG405A - engineering of BEML BSIII compliant engine on Motor Grader Model

> BH100 - up gradation of integral parking brake and low noise cabin with tiltableand telescopic Tier-II complaint engine

> BH60M - integral parking brake low noise cabin tiltable and telescopic steeringcolumn independent replaceable exhaust blanket and design and development of optimizedFront & Rear Suspensions for 60T Dump Truck Model to enhance the life of Suspensions

> BWS70 - new tank structure with optional hoist system

> BG825 - indigenous development ofTransmission Control Valve for Motor Grader Model

> BD85 - design and development of Torque Convertor for Dozer Model

> Development of Telematics based Vehicle Tracking System along with geo fencing(TBTS) for Dozer Excavator and Loader applications

> BD155/355 Dozer - design and development of CAN based single 7" LCD displayinstrumentation and electrical system with enhanced diagnostics safety features and datalogging of critical parameters and also development of Proportional Steering & Brakevalve

> BE 1000 - design and development of Splash Lubrication PTO for 100T classexcavator Model

> 100T Dump Truck - development of Rear Axle with Wet multiple disc brake andintegral parking brake and development of Front &Rear Suspension with optimum tube.


Design and development of various parts and accessories in respect of Aijun ArmouredRepair & Recovery Vehicles (ARRV) has been completed.

Rail & Metro:

> DMRC RS13 - Prototype developed incorporating upgraded features in propulsionsystem and incorporation of CCTV. Main line tests/trails under progress.

> Kolkata Metro (E-W) - Conceptual design has been successfully completed for thekey systems. Prototype development is in progress. Further Standard Gauge Bogie frame ofKolkata metro cars developed and the same are undergoing fatigue testing at R&DStructures laboratory.

> Diesel Electric Tower Car (DETC) - Design completed and development work is underprogress.

(ii) The benefits derived like product improvement cost reduction product developmentor import substitution

Major R&D initiatives helped the product improvement cost reduction and alsoprovided cutting edge technology features for the existing products that enabled theCompany to retain the existing customers expand the market share and also helped inexploring emerging markets.

These new initiatives enhanced the skill sets knowledge expertise of R&Dpersonnel and raised the confidence level in taking up new challenges arising from time totime.

Design and development of DMRC RS13:

Product improvements in the broad gauge metro cars propulsion system will lead tohigher energy efficiency.

Kolkata Metro (E-W):

In Kolkata Metro project bogie design with third rail current collection (TRCC) hasbeen developed and this can be used for upcoming metro projects with third railcollection.

(iii) Imported technology (imported during last three years reckoned from the beginningof the financial year) - Nil.

(iv) Future plan of action:

Keeping in view of emerging trends in technology and also in line with the unfoldingbusiness scenario R&D has put in place plan of action to take up a number ofprojects with enhanced allocation of resources. To achieve this R&D infrastructureand resources are being continuously strengthened/ upgraded to handle and cope up withthe latest technologies effectively.

R&D has also planned to develop a series of products / aggregates covering all thethree business segments.

(v) Expenditure on R&D:

Company has spent '78.08 crores on R&D during 2016-17 which is about 2.75% of theturnover (Gross Revenue).

For and on behalf of the Board of Directors

Bengaluru D K Hota
30.05.2017 Chairman & Managing Director