Your Board of Directors has pleasure in presenting the 54thAnnual Report and Audited Accounts for the year ended 31.03.2018.
|Particulars ||2017-18 ||2016-17 |
|Gross Revenue ||3306 ||2837 |
|Revenue from operations ||3305 ||2835 |
|Profit before Depreciation Interest and Tax ||276 ||208 |
|Finance costs ||48 ||48 |
|Depreciation and amortization expense ||64 ||62 |
|Profit Before Tax ||164 ||98 |
|Tax Expense ||34 ||14 |
|Other Comprehensive Income ||71 ||12 |
|Total Comprehensive Income ||59 ||73 |
|Profit available for appropriations ||280 ||292 |
|Debenture Redemption Reserve ||- ||31 |
|Balance c/f ||280 ||261 |
Turnover & Profitability:
Your Company achieved all time high Revenue from Operations of '3305crores as against '2835 crores in the previous year registering growth of 16.61% comparedto previous year Revenue from Operations. The increase in sales is mainly on account ofincrease in the turnover of Rail & Metro Business due to increase in sale of metrocars to Delhi Metro Rail Corporation under RS-10 RS-13 and Kolkata Metro Rail Corporationprojects. In addition to the above Mining & Construction business and Defencebusiness also contributed to the growth in turnover over previous year.
The Value of Production (net of consortium supplies and excise duty) is'3227 crores as against '2624 crores in the previous year. The Profit before Tax was about'164 crores as against Profit before Tax of '98 crores recorded in the previous financialyear which is the highest ever in the last six years.
There was no change in the nature of business of the Company during theyear. Further there was no material change / commitment occurred affecting the financialposition of the Company subsequent to the financial year ended 31.03.2018 till the date ofthis report.
Performance vis-a-vis MoU:
Performance of your Company in terms of the Memorandum ofUnderstanding (MoU) signed with the Department of Defence Production Ministry of Defence(MoD) Government of India was rated as Very Good for the financial year2016-17 and the rating for the financial year 2017-18 is under selfevaluation.
Your Board of Directors has recommended a dividend of '8/- per equityshare i.e. 80% for the year 2017-18 keeping in view the future prospects of the Companyand at the same time meeting the aspirations of the shareholders.
Order Book Position:
The Order Book of Company as on 01.04.2018 is over '6700 crores. TheOrder book comprises of three business verticals i.e. Mining & ConstructionDefence Rail & Metro.
During 2017-18 your Company made exports aggregating '28.53 crores(physical exports of '28.13 crores and export incentive of '0.40 crores) as against '30.80crores (physical exports of '20.18 crores deemed exports of '9.98 crores and exportincentive of '0.64 crores) during the previous year.
Ministry of Defence vide its letter dated 01.12.2016 communicated thatCabinet Committee on Economic Affairs (CCEA) had accorded in-principleapproval for strategic disinvestment of the Company. Department of Investment and PublicAsset Management (DIPAM) vide its O.M. dated 19.12.2016 communicated that anInter-Ministerial Group (IMG) had been constituted by the competent authority for thepurpose of appointing intermediaries such as Asset Valuer (AV) Transaction Advisor (TA)and Legal Advisor (LA) for the strategic disinvestment of 26% equity in the Company out ofGovernment of India shareholding of 54.03%. After confirmation the Company vide letterdated 06.01.2017 intimated NSE and BSE about the inprinciple' approval of CCEAand also posted on the web-site of the Company in terms of Regulation 30 of SEBI (ListingObligations & Disclosure Requirements) Regulations 2015 [hereinafter referred to as'Listing Regulations'].
As per the terms MoD has appointed M/s RBSA Valuation Advisors LLPAhmedabad as Asset Valuer and DIPAM has appointed M/s. SBI Capital Markets Limited as TAand M/s Crawford Bayley as LA respectively.
Further DIPAM has advised that due diligence to be undertaken fortaking further action in the matter.
Your Company views quality improvement as a business strategy and henceremains proactive in the areas of product and service quality. At BEML Corporate QualityPolicy emphasizing Total Quality Management (TQM) ensures that quality system adoptedresults in products services and processes that meet stringent standards and performancecriteria. Quality Department is empowered to spearhead the thrust towards Total QualityManagement.
All manufacturing divisions have been certified for Quality ManagementSystem (QMS) as per ISO 9000-2008 standard. KGF Complex Bengaluru Complex and MysuruComplex are also certified for Environmental Management System (EMS) as per ISO 14000. Twomanufacturing divisions Bengaluru
Complex and Hydraulics & Powerline Division have been awarded withthe above certifications as per 2015 version standards and for remaining manufacturingunits the same certification is planned by September 2018.
Further Bengaluru Complex is certified as per BS OHSAS 18001-2007Integrated Management System standard and Aerospace Manufacturing Division (ASMD) Mysurucomplex is certified as per AS9100C standard.
Key initiatives / actions taken during the year for continuousimprovement towards Quality Assurance is as under:
Customer complaint handling system was created to enable directon-line logging of complaints through company website and analyzing complaints tochannelize quality improvement actions.
Vendor development remains a continuous focus areato improve quality of vendors' supplies. Focus is given to upgrade the quality systemof vendors by extending support and encouraging vendors to upgrade facilities andimplement quality systems. These initiatives have resulted in increase in the number ofISO 9000 certified vendors and improved quality performance.
Various Quality Assurance initiatives have been taken up such asintroduction of additional jigs and fixtures imbibing the Concept of 5S Kaizen Zerodefect work centers and Quality Circles across the company with target based monitoringof progress by each manufacturing division and have resulted in lower internal andexternal failure costs.
Periodic process / system audits are being conducted andfeedbacks are given to vendors on continuous basis with regard to the rejections andnecessary guidance given for corrective and preventive action for process / systemimprovements right from development stage to ensure quality in their supplies.
Quality Improvement Projects are identified across thedivisions through Cross Functional Teams. Wherever design modifications are required thesame is effected to enhance product reliability in the form of Design improvementprojects.
Quality Circle Team Metro from Bengaluru complex haswon the prestigious QCI - DL Shah National Quality award 2017 for the case studyEnsuring Zero defect in Metro coach bogie manufacturing by Business ProcessReengineering.
Your Company has upgraded the existing Laboratory facilities atKolar Gold Fields and Mysuru manufacturing divisions and is in the process of obtainingNational Accreditation Board for Testing and Calibration Laboratories certification during2018-19.
Make in India Initiative and Indigenization:
Your Company is committed for the success of Make in Indiaprogramme and has adopted various initiatives under Make in India' conceptlaunched by the Government of India. It is Company's endeavour to achieveself-reliance by wholeheartedly participating in 'Make in India' drive with increasedsourcing from local manufacturers.
During the year under this initiative Company has designed anddeveloped products such as 180T (BE1800D) Diesel Excavator 850HP BD475-1Bull Dozer underMining & Construction Segment Arjun Armed Repair & Recovery Vehicle TruckMounted Crane Medium Bullet Proof Vehicle High Mobility Vehicle for 155mm caliberMounted Gun System under Defence Segment and Metro Cars for Kolkata Metro Rail Corporationand Intermediate Metro Cars for Bangalore Metro Rail Corporation Limited under Rail &Metro Segment.
Your Company has achieved level of indigenization over 90% in themainline M&C products Rail Coaches & EMU's over 80% in High MobilityVehicles (HMV) and over 60% in Metro cars. Further efforts are underway to reach higherlevels. Company has nominated a Nodal Officer for 'Make in India' drive and list of itemsfor indigenization are hosted on Company's website www.bemlindia.in. Also a displaycenter is set-up in Bengaluru Complex where prospective vendors can have access tosamples drawings and technical specifications and explore opportunities to partner withthe Company. The new Public Procurement (Preference to Make in India) Order 2017announced by Govt. of India has given a new impetus for local manufacturers by way ofeligibility to address the surging metro market in India.
The Ministry of Commerce & Industry Government of India haslaunched Start Up' concept under Make in India' initiative during2016.
An entity working towards innovation development deployment orcommercialization of new products processes or services driven by technology orintellectual property if it aims to develop and commercialize a new product or service orprocess or a significantly improved existing product or service or process that willcreate or add value for customers or workflow are covered under this Startup.
A Company that has been in existence for less than seven years and withsales revenues not exceeding '25 crores will be recognized under Start Ups. However yourCompany has relaxed the aforesaid eligibility criteria of prior turnover and experiencefor registration from Start Ups in order to encourage them to participate in supplies forCompany's procurements. Further the Company's identified areas of Start Up arehosted on Company's web-site www.bemlindia.in and vendors need to contact Qualitywing of the Company for Start Up activities.
Renewable Energy Development Energy Conservation Research &Development and Technology Absorption:
(i) Renewable Energy Development:
In realizing the goal of Go Green' your Company hascommenced its initiation by setting up a 5MW Windmill Project at Gadag District Karnatakawhich is generating power since 2007. It has generated 84 Lakh Kwh power during 2017-18aggregating to 899 Lakh Kwh from the date installation resulting in green house gasreduction. In addition the Company has also set up 9MW Windmill Project at DammurVillage Koppal district and has generated 87 Lakh Kwh power during 2017-18 aggregatingto 193 Lakh Kwh from the date of installation. Another 9MW project at Mittalkode has beencommissioned. With this the total commissioned renewable energy capacity of over 23MWwhich will meet major portion of captive consumption of the Company. The Company's5MW Windmill at Gadag and 9MW Windmill at Bagalkot District have contributed towardsensuring clean energy as part of sustainable development by mitigating 15710 tons ofcarbon during the year 2017-18.
(ii) Energy Conservation:
Your Company continues to give emphasis on conservation of energy. Theefficiency of energy utilization is closely monitored to attain higher level of energyconservation. In order to conserve energy your Company has replaced all its lightfittings with LED Lighting and has undertaken to replace other energy saving equipment ina phased manner.
(iii) Research & Development and Technology Absorption:
Your Company has an in-house Research and Development setup. Itcontinues to play a vital role in design and development of new products/ aggregatescontinuous up-gradation of existing products and indigenization activity.
R&D centre at KGF Complex (R&D Facility) thebiggest design and development center for earth moving machinery in India is supplementedby R&D centers located at Truck Division and Engine Division at Mysuru Complex andProduct Engineering teams co-located at all manufacturing divisions. Facilities inspecialized areas like hydraulics power train structural engineering and materialscience are available at the R&D Centre. Computer Aided Design (CAD) / Computer AidedEngineering facilities are established for digital design and virtual simulation forproduct design and validation. R&D facilities for diesel engine design anddevelopment including emission measuring infrastructure and testing facilities arelocated at Mysuru Complex.
The R&D set-up in Defence business vertical is engaged in the areasof High Mobility Heavy Duty vehicles Armoured Recovery and Repair Vehicles (ARRVs) MinePloughs Transmissions and Engines. The Company has entered into technology tie-ups withM/s. Pearson Engineering Ltd UK for Mine ploughs.
The R&D set-up in Rail & Metro business vertical is basicallyinvolved in design & development of Metro & Railway rolling stock productsup-gradation of existing products based on the market need and indigenization of importedaggregates. In this regard the Company has entered into technology tie-up with M/s.Hyundai Rotem Company for Metro Cars.
During the year R&D designed developed and launched upgradedversion of various products under Mining & Construction Rail & Metro and Defencesegments of the Company.
In terms of Section 134(3)(m) of the Companies Act 2013 read with Rule8 of the Companies (Accounts) Rules 2014 the information on energy conservation andtechnology absorption including the products developed by the Company during the year isplaced at Annexure-I.
Foreign Exchange Earnings and Outgo:
During the year the Company's foreign exchange earnings stood at'23 crores and the total foreign exchange utilized was '396 crores.
A sum of '0.88 crores was incurred towards deputation of personnelabroad for business / export promotion after-sales-services and training purposes.
The working capital requirements were met from the internal accrualsand credit facilities availed from banks. There was no overdue installment of principaland/or interest to the banks. ICRA has reaffirmed the long-term rating of [ICRA]A+ and theshort-term rating of [ICRA]A1+ for '2750 Crores limit towards fund based cash credit andnon fund based bank guarantee limit for the year 2017-18. The outlook on the long termrating is Stable.
The Vision-2018 for Payment and Settlement Systems in India brought bythe RBI in June 2016 reiterated the commitment to encourage greater use of electronicpayments by all sections of society so as to achieve a less-cash society.Government also made fiscal measures for the encouragement of card culture in 2016 budget.In this direction BEML has also adopted cashless transactions across the Company. TheCompany has organised various awareness programmes on Digital India initiative foremployees and executives including their dependants residing in townships also. To takestock of the effectiveness of the cashless initiatives of the Company Internal Audit hastaken up the Audit on cashless transactions periodically.
Goods and Service Tax (GST) one of the biggest tax reforms sinceindependence has been rolled out by Govt. of India with effect from 01.07.2017. GST hassubsumed several of the erstwhile indirect taxes levied by Union of India and States/UnionTerritories. GST is an integrated tax which works on the concept of One Nation OneTax. Some of the major benefits of GST implementation accruing to the industry atlarge and your Company in particular would be removal of cascading effect of taxes andseamless flow of Input Tax credit benefits reduced compliances. The Company has migratedto GST regime by enrolling in 17 States covering all its plants Regional and Districtoffices spread across the country within the statutory time lines. The Company hasupgraded and customized ERP system to be totally GST compliant. With the above GST waseffectively implemented from 01.07.2017. Further to the implementation of GST alltransactions are being carried out in compliance to the GST law.
The Company's contributions to Central and State Exchequers werein the order of '948.44 crores during the year by way of Excise Duty Customs Duty SalesTax Service Tax GST 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 respect to Financial Statements. The Company has various manuals such asManual for Accounts Cost Accounting & Pricing Stores Purchase Audit etc. and thesame are being periodically updated circulated and also uploaded in BEML BulletinBoard' for viewing and compliance by concerned employees and officers for carryingout various activities in a transparent manner and in line with 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. In addition the details of the IFCs are included under the headingInternal control systems and their adequacy' in the Management Discussion &Analysis Report which forms part of this report.
The Company did not accept any fixed deposits during the year andthere was no outstanding Fixed Deposits at the beginning / end of the year. Accordinglythere was no default in payment of deposits / interest thereon.
Enterprise Risk Management:
In terms of Section 134(3)(n) of the Companies Act 2013 Regulation17(9) of the Listing Regulations and Para 7.3 of DPE Guidelines your Company hasformulated Risk Management Policy with an objective to ensure sustainablebusiness growth with stability and to promote a pro-active approach in identifyingevaluating reporting and managing or mitigating risks associated with the business. Inorder to achieve the key business objectives the policy establishes a structured anddisciplined approach to risk management in order to manage or mitigate risk relatedissues. The said policy is also placed on the Company's website www.bemlindia.in.
In terms of Regulation 21 of the Listing Regulations the Company hasconstituted Risk Management Committee consists of Director (Rail & Metro Business)Director (Mining & Construction Business) Director (Defence Business) Director(Finance) and one Independent Director as per the policy.
Further the aforesaid Risk Management Committee shall appraise the keyrisks along with mitigation plans and report to the Board periodically.
Related Party Transactions:
Your Company has formulated a Policy on Related PartyTransactions to regulate transactions entered into between the Company and itsrelated parties. In terms of Regulation 46(2)(g) of the Listing Regulations the saidpolicy is placed on the web-site of the Company at www.bemlindia.in.
During the year 2017-18 all transactions that were entered into withthe related parties were fair transparent and at arm's length basis and also in theordinary course of business of the Company. The said related party transactions were alsoduly considered and noted by the Audit Committee. Information as required under section188 in Form AOC-2 pursuant to Section 134(3)(h) of the Companies Act 2013 read with Rule8(2) of the Companies (Accounts) Rules 2014 is attached to this report as Annexure-II.
Report on the performance and financial position of Subsidiaries andJoint venture company
(i) M/s Vignyan Industries Limited (VIL):
VIL has recorded Revenue from Operations (Net of ED) of '30 croreswhich is at the same level recorded during FY 2016-17. The value of production of theCompany stood at '31 crores as against '29 crores and the Company achieved
Profit before Tax of '0.43 crores as against profit of '0.13 crores inthe previous year. Further VIL Board has recommended a dividend of '5 per share i.e. 5%on the paid up equity share capital amounting '14 lakhs excluding tax after a gap of 7years.
VIL is planning to explore new markets for reducing dependency on M/sBEML Limited the holding company. However in anticipation of order from BEML for highalloy grade castings like T-72 and Tatra Variants relating to Defence business Axle Boxand Buffer Assembly relating to Rail business and new castings for Mining &Construction business necessary development and production are planned. These proposalswould help VIL to achieve about '74 Crs by 2020-21 as envisaged in the Perspective Plan.
The order book position remained at 1444 MTs as on 01.04.2018. Moreand more casting requirements are expected from Holding Company as well as from othercustomers. With this VIL is confident of achieving better results for the financial year2018-19.
(ii) M/s MAMC Industries Limited (MIL):
Your Company entered into a Consortium Agreement with M/s. Coal IndiaLimited (CIL) and M/s. Damodar Valley Corporation (DVC) on 08.06.2010 for acquiringspecified assets of M/s. Mining and Allied Machinery Corporation Limited (underliquidation). The agreement inter-alia provided for formation of a Joint Venture company(JV) with a shareholding pattern of 48:26:26 among BEML CIL and DVC respectively. TheCompany has paid the proportionate share of '48 crores towards the total bid considerationof '100 crores for the said acquisition based on the order passed by the Hon'bleHigh Court of Calcutta. The said assets were taken possession by the MAMC Consortium.Further up to 2017-18 the Company has incurred a sum of '10.01crores towards maintenancesecurity and other related expenditure. The expenditure incurred by CIL and DVC on accountof this proposal is not ascertained. The total sum of '58.01 crores is disclosed as'Advance to MAMC Consortium' pending allotment of equity shares in the capital of JVcompany.
In the meantime a company in the name of MAMC IndustriesLimited' (MIL) was formed and incorporated by your Company as a wholly ownedsubsidiary for the intended purpose of JV formation. Shareholders' agreement as dulyapproved by the Boards of all three members of the consortium has been submitted to MoDfor necessary approval. Further MoD has directed to submit Business Plan' andFinancial Viability Report' of the proposed JV. A meeting of Interim Board ofManagement of Consortium has decided to engage M/s SBI Caps for preparing theFinancial viability & Business Plan report.
Considering that further investment / expenditure on this project wouldbe an additional burden on the Company the Board of Directors suggested taking up thematter with Interim Board of Management of Consortium of BEML CIL and DVC for exit optionrather than pursing with M/s. SBI Caps for the aforesaid report. Hence it was proposed totake up with IBM for exploring the possibility of selling the assets of erstwhile MAMCpurchased through Court auction either by Consortium as a whole or the share of BEML to aprospective buyer if any. Further to the discussion held on 25.04.2018 among the membersof MAMC Consortium a draft Deed of Conveyance has been proposed to submit to the Officialliquidator of Calcutta High Court for further action.
(iii) M/s. BEML Brazil Industrial Ltda (BBIL):
Your Company entered the Brazil market for brand building exercise andlocal value addition for the products to meet local standards in anticipation of goodbusiness potentials 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. BEML has decided to close the officefor which legal action is underway and BBILs registration will be cancelled soon aftercapital repatriation.
Joint Venture Company - M/s BEML Midwest Limited (BMWL):
BMWL was formed and registered with the Registrar of Companies atHyderabad on 18.04.2007. BEML holds 45% share and M/s Midwest Granite Pvt. Ltd. (MGPL) andP T Sumber Mitra Jaya of Indonesia as partners holding the balance 55% share. The Companyhas been established to capitalize on the growing business opportunities in the contractmining segment. 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 measureMGPL had 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 thesaid common order and directing CLB to proceed with a fresh enquiry and decide the issuein accordance with law and merits also taking into consideration the report ofinvestigation as directed by CLB and pass appropriate orders without getting influenced bythe impugned common order of CLB. The Company has filed an application with CLB prayingfor necessary directions to Regional Director (RD) Ministry of Corporate AffairsHyderabad for time bound completion of investigation so that the matter could effectivelybe heard by CLB. In the meanwhile the Government has constituted National Company LawTribunal (NCLT) by dissolving CLB and notified that the jurisdiction is shifted toHyderabad from Chennai. The case files were transferred to NCLT. Regular hearings aretaking place at NCLT however RD MCA is yet to submit the investigation report fordeciding the matter. In the meanwhile based on the order of NCLT dated 22.12.2017consequent to the request from the landlord to vacate the premises of Registered Office(RO) of BMWL for his bonafide use it has been shifted to a suitable place.
There was no company which became or ceased to be a subsidiary jointventure or associate of the Company during the year under review.
A separate section on report on the performance and financial positionof each of the subsidiaries Joint Venture Company are placed under Form AOC-1 provided inthe consolidated 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 theprovisions of Section 186 of the Companies Act 2013 are given in the notes to theFinancial Statement.
Consolidated Financial Statement:
Consolidated Financial Statement of your Company and its subsidiariesand Joint Venture Company prepared in terms of Section 129(3) of the Companies Act 2013is attached to this report.
The Company has an independent Vigilance department headed by ChiefVigilance Officer (CVO). The Vigilance activities were carried out in a holistic mannerand covered prevention detection and enforcement. CVO has provided aid and advice to theexecutives of the Company on all matters pertaining to Vigilance as an extension of theCVC in its exercise of superintendence over Vigilance Administration of the Company andprovided the link to the Administrative Ministry and the CBI.
Complaint Handling Policy - The CVO after determining theVigilance Angle' handled 16 registered Complaints during the FY 2017-18 (12Complaints added during the FY 2017-18 04 Complaints brought forward from last year).
During the year 16 complaints were handled out of which 7complaints were disposed. Disciplinary action and system / process improvements have beenrecommended and implemented.
Online Vigilance Clearance for Executives and Employees has beenset up.
CCTV Cameras at Sensitive areas and Display of Vigilance Boardsat prominent locations were positioned across BEML complexes.
Vigilance Manual of 2nd edition (updated version) was publishedduring August 2017 wherein certain new topics have been added. All the latest Revisionsto the Rules Instructions & Circulars issued by Central Vigilance Commission arealso incorporated into this Edition in a user friendly format.
Keeping in view the changing business scenario after riskassessment exercise the sensitive areas list was reviewed and fresh areas were notified assensitive.
The Vigilance Awareness Week-2017 with the theme My Vision- Corruption Free India was observed in BEML Limited from 30.10.2017 to 04.11.2017.Citizens Integrity pledge was also administered to the Students & Staff at Schools andColleges where the Company had organized events as part of Observance of VigilanceAwareness Week - 2017 (VAW). Vendors meet organised on 07.11.2017 wherein vendors fromall over India were invited to share business
prospects of the Company and also to address their Grievances. Companyjointly with BEL and HAL has organised a 2 km Walkathon - Vigithon on 05.11.2017 with thecaption Clean- Green-Vigil'. About 400 staff from all the three organisationsparticipated in the Vigithon. To inculcate values of Integrity Morality and Ethics amongschool students an Integrity Club was opened at BEML Shishya SchoolBengaluru and Kendriya Vidyalaya & BEML Composite Pre-university College at KolarGold Fields. Thus VAW-2017 was observed at all BEML Complexes/ Divisions in line with thedirectives of CVC.
Pursuant to the directives from Central Vigilance Commission andMinistry of Defence your Company is adopting Integrity Pact with all vendors / suppliers/ contractors / service providers for all orders / contracts of value '1 crore and above.The pact essentially envisages an agreement between the prospective vendors / bidders andthe Company committing the persons / officials of both sides not to resort to anycorrupt practices in any aspect / stage of the contract. Only those vendors / bidders whocommit themselves to such a pact with the principal would be considered competent toparticipate in the bidding process. Integrity Pact in respect of a particular contractwould be operative from the stage of invitation of bids till the final completion ofcontract. Any violation of the same would entail disqualification of the bidders andexclusion for future business dealings. Two Independent External Monitors (IEMs) have beenappointed to review the cases on bi-monthly basis. During the year '858 crores worth ofpurchase orders were entered into Integrity pact.
BEML Supplier Relationship Management (SRM) is aiming to establish webbased seamless relationship and collaboration of procurement process with its globalbusiness partners. Your Company endeavours to procure all materials and services throughe-procurement platform on ERP system. Presently the Company upgraded the SRMe-procurement software which is having encryption facility for better security. During theyear about 86% of the total requirements were sourced through e-procurement.
Micro and Small Enterprises:
Following steps have been adopted under the Micro and Small Enterprises(MSEs) Order 2012:
Your Company is procuring materials required for production andfor others through Micro & Small Enterprises (MSEs). 358 items which are reserved arebeing procured exclusively from MSEs.
Appropriate weightage has been given for MSEs in the MoU fromthe year 2015-16 onwards in order to ensure the objective of achieving overall procurementof 20% from MSEs.
In order to encourage MSEs vendors meet has been organized andlist of components that could be sourced from MSEs are placed on the Company'swebsite www.bemlindia.in for the information of MSE vendors. Further local procurementmade by your Company is uploaded on MSME SAMBANDH' Portal.
As per the directives of Government minimum 20% of procurementshave to be procured from MSE's out of which 4% from SC/ST Enterprises. During2017-18 your Company placed orders for goods and services to the extent of '323 croresfrom MSEs which constituted 26.09% (includes '0.18 crores constituting 0.0145% from SC/STEnterprises) of the indigenous procurement of '1238 crores.
Vendor development is a continuous process to identify and develop newvendors to bring in competition among the vendors and to reduce costs. The methodsfollowed to identify potential new vendors are publication of Expression of Interest (EoI)in BEML website participation in exhibitions and seminars and organize vendor meets. Inorder to increase vendor base open ended EoI is published and made available on BEMLwebsite. During the year 2017-18 44 vendors have responded. The procurements from singlesource are being reviewed periodically by Audit Committee and at Board Level.
Your Company recognizes outsourcing as one of the strategic tools toachieve cost benefits and also complement the strengths of private sector to build astrong industrial base. Your Company is well on its journey to become a system integratorby outsourcing a substantial part of manufacturing activities from Indian vendorsenabling the Company to enhance the capacity attain cost effectiveness and improvecompetitiveness in the global market. To facilitate outsourcing the Company has wellestablished policies procedures and guidelines -
Your Company has a Vendor Development Cell to work as a singlewindow help desk for new vendors.
New vendors can register through Online / Manual.
New vendors are supported by way of imparting knowledge onmanufacturing processes specifications quality plans etc.
Company also extends its testing facilities to its vendorswherever required.
To attract new vendors Company resorts to publishing of EoIperiodically participation in all vendor development programs organized by MSMEs CIIFICCI CODISSIA NSIC PIA NSSH and other agencies.
To enhance transparency in all its procurement processesCompany has well established e-Procurement Portal.
Further as per the directives of Ministry of Defence the Company hasframed an Outsourcing and Vendor Development Policy' as duly approved by theBoard. The objective of the policy is to enhance cost effectiveness and improvecompetitiveness of the Company in global market. The other significant objective of thisOutsourcing and Vendor Development Policy is to build a manufacturing eco system in thecountry to attain self-reliance. On the other hand participation of Indian privateindustry will be an enabler in building technological and manufacturing capability insidethe country. Based on the policy so framed a Road Map for vendor development has beenprepared with yearly targets and monitored at the Board level periodically.
Compliance under the Right to Information Act 2005:
The information required to be provided to citizens under Section4(1)(b) of RTI Act 2005 is placed on Company website at www.bemlindia.in. It containsgeneral information of the Company and its functions and duties powers and duties ofemployees / officers decision making process rules regulations manuals and recordsheld by the Company directory of the Company's officers pay scales of officers /employees etc. and procedure for seeking information and inspection of records. TheCompany has nominated a Central Public Information Officer Appellate AuthorityTransparency Officer and six Central Assistant Public Information Officers representingComplex / Divisions to attend to the queries and appeals. Further during the year 2017-18the Company received 154 applications seeking information pertaining to human resourcesrecruitment contracts tenders business related matters etc and the same were disposedof.
Your Company continued its efforts in implementing the OfficialLanguage (OL) Policy. OL Implementation Committee is constituted under the Chairmanship ofCMD to review the status of the use of Hindi across the Company. The said Committee metquarterly during the year and reviewed the implementation status.
OL inspection was carried out by the Officials of Department of DefenceProduction Ministry of Defence New Delhi at Palakkad complex Regional office at Kolkataand District offices at Guwahati and Bhilai. Further OL inspection carried out by DeputyDirector (RIO) at RO Kolkata.
252 executives/employees were trained in various courses of Hindi underHindi Teaching Scheme of Government of India during the period under review. 15 Hindiworkshops were organized in which 394 officials were trained. Hindi Fortnight was observedfrom 14.09.2017 to 28.09.2017 throughout the Company and variety of competitions wasorganized. World Hindi Day was observed on 10.01.2018 at RO Singrauli.
District office Bhilai has been awarded with Rajbhasha Vishisht SevaSamman-2017 by TOLIC Bhilai.
The newly revamped website of your company is made available in Hindialso and the contents are updated periodically.
Composition of Audit Committee:
In terms of Section 177 of the Companies Act 2013 Regulation 18 ofthe Listing Regulations and Chapter 4 of the DPE Guidelines on Corporate Governance forCPSEs your Company has constituted the Audit Committee. The Committee comprises of Shri BP Rao Independent Director as Chairman Shri Sudhir Kumar Beri and Shri M G RaghuveerIndependent Directors and Shri B R Viswanatha Director (Mining & ConstructionBusiness) as its members. All the recommendations made by the Audit Committee wereaccepted by the Board.
Whistle Blower Policy:
In terms of the provisions of Section 177(9) of the Companies Act2013 Regulation 22 of the Listing Regulations and Para 4.3 of the DPE Guidelines yourCompany has formulated necessary Vigil Mechanism/ Whistle Blower Policy fordirectors and employees to report genuine concerns. The said policy provides for adequatesafeguards against victimization of director/s or employee/s or any other person who availthe said mechanism and also provides for direct access to the chairperson of the AuditCommittee in appropriate or exceptional cases. As per the said policy none of theemployees have been denied access to Audit Committee. In terms of Regulation 46(2) (e) ofthe Listing Regulations the said policy is placed on the Company's websitewww.bemlindia.in.
Compliance of applicable Secretarial Standards:
Section 118(10) of the Companies Act 2013 stipulates that the Companyshall observe secretarial standards with respect to Meetings of Board of Directors (SS-1)and General Meetings (SS-2) as specified by the Institute of Company Secretaries of India.Further the Standard 9 of SS-1 stipulated that the Report of the Board of Directors shallinclude a statement on compliances of applicable Secretarial Standards. Accordingly yourCompany has complied with the provisions of applicable standards of SS-1 and SS-2 issuedby the Institute of Company Secretaries of India in letter and spirit.
Corporate Governance Report:
In terms of Para 8.2.3 of the DPE Guidelines of CPSEs grading is doneby DPE on the basis of compliance with Corporate Governance guidelines / norms.Accordingly your Company is graded as Excellent' for the year 2017-18.Further in terms of Regulation 34 of the Listing Regulations and Chapter 8 of the DPEGuidelines a report on Corporate Governance along with Compliance Certificate is placedat Annexure-III.
Management Discussion and Analysis Report:
In terms of Regulation 34(2) (e) of the Listing Regulations and Para7.5.1 of the DPE Guidelines of CPSEs a report on Management Discussion and AnalysisReport is placed at Annexure-IV.
Business Responsibility Report:
In terms of Regulation 34(2) (f) of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the annual report of the top 500 listedentities based on market capitalization shall contain Business Responsibility Report (BRR)w.e.f. FY 2016-17. The said BRR contains the initiatives taken by the Company from anenvironmental social and governance perspective which is placed at Annexure-V.
Awards & Recognitions:
On 15.08.2017 your Company has bagged many prizes during theIndependence Day Horticulture Show 2017 conducted by Mysore Horticultural SocietyBengaluru which is a matter of pride to the Company.
On 22.09.2017 Metro Team of your Company won theprestigious QCI - DL Shah National Quality Award -2017. The team made a presentation onMetro Quality Assurance' with a case study on Ensuing Zero Defect inMetro Coach Bogie Manufacturing by Business Process Reengineering based on six sigmausing Taguchi Method.
On 12.12.2017 your Company received Certificate of Yellow DotAward for 50 plus years of invaluable contribution in the field of infrastructure andconstruction sector to build strong Nation.
On 17.12.2017 your Company has bagged the SKOCH ORDER-OF-MERITAward for qualifying amongst Top 80 Technology Projects in India for Designand Development of 180T Electric Excavator BE1800E.
On 16.01.2018 your Company bagged best seller award for CrawlerDozers at the 5th Annual Equipment India Awards 2018 held in New Delhi.
On 19.01.2018 the Company has bagged Top Public SectorExporter in Southern Region (GOLD) award for the year 2015-16 organized byFederation of Indian Export Organisations (FIEO) under Ministry of Commerce. The awardwas presented to BEML after considering various parameters including export turnoverpresence in emerging markets product diversification and growth.
On 23.01.2018 Mr. M.S. Nagendra of Mysuru Complex won the Goldmedal in the All India level open Rifle shooting championship in the Para Senior mensection held at Hubballi.
On 25.01.2018 Mr T.M Thammaiah Machinist Mysuru Complex wasawarded Prime Minister's Shram Shree award for the year 2016 inrecognition of his duties.
On 25.01.2018 Company has bagged many prizes under Industrialcategory at the Republic Day Horticultural Flower Show which is a matter of pride to theCompany.
On 10.02.2018 two R&D engineers received TechnologyInnovation awards from SODET (Society of Defence Technologists) for Design &Development of Stainless Steel EMU' & Design and Development of All WheelSteering System (AWS) for BEML HDT 8x8 Vehicle.
The number of employees of the Company as on 31.03.2018 stood at 7722as against 8221 of the previous year resulting in 6% reduction.
The category-wise number of SC/ST and ExServicemen employees as on01.01.2018 and recruitment made are as under :
|Category! Group || |
Total Strength As on
No. of SC/ST and Ex-servicemen
| ||1.1.2018 ||1.1.2017 ||1.1.2018 ||1.1.2017 ||1.1.2018 ||1.1.2017 ||1.1.2018 ||1.1.2017 |
|Group-A ||1824 ||1735 ||394 ||318 ||109 ||73 ||13 ||6 |
|Group-B ||383 ||518 ||5 ||88 ||5 ||43 ||8 ||15 |
|Group-C ||5619 ||6041 ||1286 ||1373 ||279 ||284 ||246 ||258 |
|Group-D ||19 ||23 ||10 ||13 ||3 ||4 ||0 ||0 |
|Total ||7845 ||8317 ||1695 ||1792 ||396 ||404 ||267 ||279 |
The Company has recruited 45 candidates in Group A during the yearunder review as under:
29 from General category
8 from OBC category and
7 from Scheduled Caste and 1 from Scheduled Tribe category
Human Resource Development & Industrial Relations:
In your Company's approach to value creation emphasis is given onthe people and their engagement well-being and development which has been the key factorin achieving business success in today's competitive scenario.
The financial year 2017-18 was a milestone year for the Company asmajor improvements and initiatives were implemented in the HR areas related to leveragingIT for HR Succession Planning for critical senior positions process re-engineering andoptimization of human capital Leadership development programmes through training abroadand also at IIM's / XLRI etc.
Special efforts have been put in place to create a comprehensive HRPortal SAMPARK which provides various Employee Self Services On-linePerformance Management System On-line Vigilance Clearance System On-line Promotion TestOn-line submission of Property Returns On-line Attendance Management System etc.
During the year based on the Assessment Development Centres (ADC)scores and Individual Development Plan recommendation senior level executives werenominated for Strategic and Leadership Programmes abroad and also premier institutionssuch as IIM's/ XLRI. Continued importance was also given on Project ManagementCreativity Ethical & Moral Competencies Conflict Resolutions & SkillDevelopment.
To ensure systematic Talent Management Company implemented revisedPromotion Policy for more objectivity and transparency with due linkage to AssessmentDevelopment Centres scores and also through on-line written test.
The Industrial Relations Scenario in the Company has been peaceful.Cordial and smooth relations were maintained between the Management and the Unions /Associations. Regular Meetings with the representatives of the recognized Unions /Officers Associations at the Divisional Complex and Corporate Levels were held andemployee related matters were resolved amicably.
The functioning of various bi-partite Committees at Complex levelresolved production related matters.
Outstanding contribution and dedication of our employee to his dutieswas also recognized through winning of Prime Minister Shram Shree Award by Shri.T.M.Thammaiah Mysuru Complex.
Grievance Redressal System for SCs/STs
In terms of Department of Personnel & Training guidelines yourCompany has constituted SC/ST Cell at all Complexes / Divisions wherein the HR headsbeing Liaison Officers of the respective Complex/ Division are conducting periodicalmeetings with respective representatives of SC / ST Employees Welfare Associations toredress the grievances / issues appropriately. Further the Chief Liaison Officer who isin the rank of Executive Director meets all the Cell Officers Liaison Officers and OfficeBearers of SC/ ST Welfare Associations periodically and monitor the status on redressal ofgrievances.
Public Grievance Redressal through CPGRAMS
Centralized Public Grievance Redress and Monitoring System (CPGRAMS)initiated by the Department of Administrative Reforms and Public Grievances under Ministryof Personnel Public Grievances and Pensions is the platform based on web technologyprimarily aims to enable submission of grievances by the aggrieved citizens forscrutinizing and taking action for speedy redressal of these grievances. For this purposeyour Company has nominated Deputy General Manager (HR) as the Nodal Officer to deal withvarious public grievances and to ensure prompt and proper feedback to the concernedpersons.
Compliance under Persons with Disabilities Act 1995:
Your Company complies with the provisions under the Persons withDisabilities (Equal opportunities Protection of rights and full participation) Act 1995(PwD Act). In terms of various provisions under PwD Act your Company has ensuredreservation of vacancies for the posts identified for each disability carry forward ofvacancies which could not be filled up due to non-availability of suitable persons withdisability during the year.
Corporate Social Responsibility & Sustainability:
The Company has constituted Corporate Social Responsibility &Sustainability (CSR) Committee in terms of Section 135 of the Companies Act 2013 and DPEGuidelines on MoU. The Committee comprises of Shri. Sudhir Kumar Beri IndependentDirector as Chairman Shri. B R Viswanatha Director (Mining & Construction Business)and Shri. R H Muralidhara Director (Defence Business) as members. The CSR Committeeoversees the CSR & SD activities and its implementation in compliance with theCompanies Act 2013 and DPE Guidelines on the subject. Further details of CSR are placedunder the same heading in Annexure-III and an annual report on CSR activities undertakenduring the year are placed at Annexure-VI.
Environment and Pollution Control
In order to protect the environment in the vicinity of the factorypremises / township tree plantation were undertaken. Your Company planted saplings ofvarious types of avenue trees / flower bearing trees in the vacant lands belonging to theCompany for maintaining ecological balance in the surrounding areas. The Company inassociation with the State Forest Department had undertaken planting of saplings at allits Manufacturing Complexes and Townships on a regular basis. During the year a total of10298 Nos. of Tree Saplings have been planted at Bengaluru Mysuru and Palakkad Complexesas part of sustainable development. Apart from this an exclusive Dr. B.R. AmbedkarEnvironment Park' was inaugurated at KGF Complex on the eve of WorldEnvironment Day' and around 4500 saplings were planted. Thus total saplings plantedduring the year is about 14798.
Particulars of Employees
There were no employees of the Company who received remuneration inexcess of the limits prescribed under Rule 5 of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014.
Skill India Initiatives
Your Company has undertaken 'Skill Development Initiatives' (SDI)in line with Government of India's 'Skill India' initiative launched during 2015.Skill development programmes in your Company is aimed to hone the skills of the productivemanpower ensure optimum utilization of resources and also to skill the marginalized /unskilled manpower of the organization. Apart from such organizational requirementsvarious other skill development initiatives have also been undertaken to contributetowards Skilling India' in addition to apprenticeship training conducted tohone the skill/trade of students passing out of various ITIs/ Polytechnics/EngineeringColleges. At BEML the SDI includes the following main activities:
(a) Centres of Excellence(CoE) for Hydraulics Structural WeldingElectrical and Engine at KGF Complex Stainless Steel welding & Electrical and WireHarnessing at Bengaluru Complex and for Electrical & Electronics at Mysuru(Impartingtraining Programme on assembling and Testing of Electrical aggregates skill developmentof advanced/upgraded electrical system of BEML Equipments) Power Train of Tatra vehicleat Palakkad are established.
(b) Service training Programme for the customers from all over thecountry and abroad and for BEML Service personnel are conducted at Global Service Centreat Nagpur Service Training Centre at KGF and at Mysuru.
(c) Apprenticeship training under the Apprenticeship Act is imparted atTraining Centres to upgrade the skills of ITI passed students in their respective Tradesas also that of Diploma Holders and Engineering Graduates. As per the Apprentices Act1961 the Company has imparted training to the apprentices constituting 10.08% of thetotal workforce.
(d) Capability Building in the area of Technology to enhance thecapability of the Engineers working in Production R&D and allied areas a tie-up hasbeen established with Indian Institute of Technology - Madras (IIT-M) and a MoU signed forlong term collaboration for Sponsoring R&D projects and training of Engineers throughContinuing Education Programmes. Having a permanent BEML facility at IIT-M Technology Parkfor utilizing R&D facilities of IIT-M is also under consideration. Tie-up withAdvanced Product Design and Prototyping (APDAP) setup of Indian Institute of ScienceBengaluru (IISc) Centre for Railway Research at IIT Kharagpur and National Institute ofDesign Ahmedabad (NID) for Engineering Consultancy Services are in advanced stages offinalization.
(e) Other SDI such as Unskilled to Skilled training Skilling theunskilled by imparting Semi-Skilled Training and multi-skilling for training in othertrade/s viz. Welder/Fitter/Electrician/Crane Operators etc. so that their services can beoptimally utilized.
For the Society at large your Company has also adopted Govt. ITI atKGF and Govt. ITI at Mysuru as a part of SDI. Trainees of Govt ITI at KGF are beingprovided with six month practical training in KGF Complex while Mysuru Complex is theindustrial partner to ITI at KM Dodi and is being provided with assembly items etc.
Prohibition of Sexual Harassment of Women at Workplace:
In terms of the provisions of the Sexual Harassment of Women at a WorkPlace (Prevention Prohibition & Redressal) Act 2013 an Internal ComplaintsCommittee is functional in all Complexes / Divisions for receiving complaints of SexualHarassment if any and it has been displayed in all the prominent locations for theinformation of all women employees. No cases have been filed under this Act during theyear 2017-18.
IT is being seen as a great enabler at your Company having undertakenseveral initiatives on Technology front. State-of-the-art video conferencing facilities
at Corporate Office and at other major offices have improvedcommunication capabilities. The Company has improved infrastructure resiliency by settingup disaster recovery data center and redundant connectivity to improve availability of thesystems. File Life-Cycle Management (FLM) a step towards paperless office has beenintroduced. Sampark' a portal for employee has been launched and the same isaimed at improving employee experience through several workflow enabled processes likeperformance appraisal and is going to work as a platform for further automation to beadded in future. Further transparent information sharing has been enabled usingBEML Bulletin Board'.
Your Company is investing in securing the business environment byimplementing the concept of Air Gap and Network Operations Centre monitoring links devicehealth and security alerts. Implementation of Customer Complaint Management System willhelp to improve customer service experience and bring in more transparency through on-linetracking. Company has implemented Biometric Attendance Tracking system that integrateswith ERP system to improve workforce management process by recording accurate attendanceof our workforce.
Swachh Bharat Abhiyan:
Swachh Bharat Mission was launched by the Government of India during2014 with the objective of fulfilling the dream of transforming urban India in totallysanitized healthy and livable cities and towns during next five years. The Company hascommitted towards realization of the dream of Father of the Nation for a CleanIndia' through the Swachh Bharat Abhiyan.
Your Company had organized Swachh Bharat Pakhwada' from 1stDecember to 15th December 2017 across the Company. Various Programmes relatedto cleanliness and competitions were conducted across the Company on daily basis duringthe fortnight as per the calendar of activities drawn for the purpose.
Your Company has celebrated the Third Anniversary of SwachhBharat Campaign on October 2 2017 to coincide with the Gandhi Jayanthi'.Various programmes like administration of Swachhta Pledge organizing special cleaningdrives Walkathon to spread the message of cleanliness distribution and planting ofsaplings etc were conducted across the Company including its subsidiary VIL.
The following activities were undertaken during the year 2017-18 underthe Swachh Bharat Abhiyan:
Pledge taking and conducting public awareness programmes oncleanliness and environment protection such as walkathons skit/street play to createawareness on cleaning surroundings etc. All employees have taken a pledge to devote 100hours in a year as Shramadaan' to ensure cleanliness of the work area &surroundings. Various training programmes on waste management need and significance ofcleanliness have been conducted as part of the initiative.
Construction of toilets bio-gas units for utilization oforganic waste and vermi-compost bins painting of buildings extensive cleaning ofproduction hangars high standard of housekeeping renovation of toilets fogging anderadication of mosquito menace etc are being undertaken.
Separate bins for collection of dry / wet waste paper plasticetc are kept at required places to ensure segregation of waste.
In addition your Company has undertaken various activities asper the Annual Action Plan based on the recommendations of the Group of Secretaries onSwachh Bharat & Ganga Rejuvenation'(GoS) for the period from 201718 up to02.10.2019. The main activities are conducting awareness programmes construction ofToilets construction of Bio-gas Units Vermi- Compost Bins Tree plantation Renovationof Toilets Adoption of Dual Pipeline system & Rain Water Harvesting System etc.
Dividend Distribution Policy
In terms of Regulation 43A of the Listing Regulations the top fivehundred listed entities based on market capitalization (calculated as on March 31 of everyfinancial year) shall formulate a dividend distribution policy which shall be disclosed inits annual report and on its website. Accordingly the Board of Directors at their meetingheld on 25.05.2018 has approved the Dividend Distribution Policy including the parametersand circumstances in determining the distribution of dividend to its shareholders and/orretaining profits earned by the Company. The said Policy is posted on Company'swebsite www.bemlindia.in.
The Comptroller & Auditor General of India has appointed M/s.S.R.R.K Sharma Associates Chartered Accountants Bengaluru as the Statutory Auditors forthe financial year 2017-18.
Observation if any made in the Independent Auditors' Report onthe financial statement including consolidated financial statement and the reply of theBoard of Directors thereto will be given by way of an addendum to this report.
Your Company appointed M/s R M Bansal and Co Cost AccountantsBengaluru as Cost Auditors for the year 2017-18 in terms of Section 148 of Companies Act2013 read with the Companies (Cost Records and Audit) Rules 2014 to conduct the audit ofthe cost records of the Company. Further as required under the said Rules theremuneration payable to the Cost Auditor was ratified by the members in the 53rdAnnual General Meeting held on 21.09.2017.
In terms of Section 204 of the Companies Act 2013 read with theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the Companyappointed M/s. V N Associates Practicing Company Secretaries Bengaluru to undertake theSecretarial Audit of the Company for the year 2017-18.
The Secretarial Audit Report and the replies to the observations madein the said report are placed at Annexure-VII.
The Comments of the Comptroller & Auditor General of India undersection 143(6)(b) of the Companies Act 2013 on the financial statement includingconsolidated financial statement are appended at page No. 154 & 220 to the annualreport.
Extract of Annual Return
In terms of Section 92(3) of the Companies Act 2013 read with Rule 12of the Companies (Management and Administration) Rules 2014 an extract of the AnnualReturn in the prescribed form is placed at Annexure-VIII.
(1) Appointment of Independent Directors
During the year no Independent Directors have been appointed on theBoard of the Company.
Pursuant to Schedule IV of the Companies Act 2013 the appointment ofthe Independent Directors would be formalized through a letter of appointment setting outthe terms and conditions of their appointment which is also placed on the web-site of theCompany at www.bemlindia.in. In terms of section 149 of the Companies Act 2013 theprovisions of section 152(6) and (7) in respect of retirement of directors by rotationshall not be applicable to appointment of independent directors.
(2) Statement on declaration by Independent Directors
Independent Directors have given declarations u/s 149(7) of theCompanies Act 2013 that they meet the criteria of independence as laid down u/s 149(6) ofthe said Act.
(3) Board Evaluation:
The Board of Directors of the Company comprises Functional DirectorsGovernment Nominee Directors and Independent Directors appointed by the Government ofIndia from time to time pursuant to Article 97 of Articles of Association of the Company.
Further the tenure and remuneration of Functional Directors includingChairman and Managing Director are decided by the Government of India through PublicEnterprises Selection Board / Search Committee and the pay scales are governed by thePresidential Directives received from the Ministry of Defence. The Governmentcommunication also indicates the detailed terms and conditions of their appointment basedon applicability of the relevant rules of the Company. The Government Nominee Directorsare not entitled to any remuneration / sitting fee. The Independent Directors are entitledto sitting 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 andGovernment Nominee Directors is being evaluated by the Administrative Ministry every yearbased on own evaluation methodology. Further considering the educational qualificationsage rich and varied experience of the applicants the Administrative Ministry /Department would appoint the IDs on the Board on the recommendation of Search Committeeafter obtaining approval of competent authority. In addition the assessment / evaluationof performance of Independent Directors who will be completing their 3 years tenure wasundertaken by the Administrative Ministry.
Considering the above a separate evaluation criteria has not beenframed by the Company.
(4) Remuneration of Directors:
Your Company being a Central Public Sector Enterprise the appointmenttenure and remuneration of Directors are decided by the Government of India. TheGovernment communication appointing the Functional Directors indicate the detailed termsand conditions of their appointment including a provision for the applicability of therelevant rules of the Company.
Government Nominee Directors were neither paid any remuneration norsitting fee for attending Board / Committee meetings.
Independent Directors are paid only sitting fee of '20000 per meetingof the Board / Committee of the Board attended by them. Further if there are more thanone such meeting on the same day a sitting fee @ '10000 is paid for the second andsubsequent meeting/s.
Neither there was payment of commission to the Board of Directors norany stock option scheme offered to them during the year.
Further none of the Directors had any pecuniary relationship norentered into any related party transactions with the Company during the year.
Pursuant to the provisions of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the details of remuneration paid to theDirectors during 2017-18 are 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 Companythe President of India is vested with the power to appoint the Directors of the Companyfrom time to time and also shall determine the term of office of such Directors.Accordingly the following appointments on the Board of your Company were effected as perthe directives of the President of India:
Shri Suraj Prakash (DIN-08124871) was appointed as Director(Finance) of the Company vide MoD letter No.8 (2)/2016-D (BEML) dated 09.05.2018. Heassumed the charge of the post w.e.f 10.05.2018. Further in terms of section 179 readwith Rule 8 of the Companies (Meetings of Board and its Powers) Rules 2014 and Section203 of the Companies Act 2013 Shri Suraj Prakash is appointed as a Key ManagerialPersonnel and Chief Financial Officer of the Company.
Shri Rajib Kumar Sen (DIN-07669981) Economic Adviser Ministryof Defence was appointed as Government Nominee Director on the Board vide MoD letterNo.8(80)/2015-D(Coord/DDP) dated 30.05.2018 in place of Shri Sanjay Prasad. Consequent tothe supersession of earlier orders issued by MoD for appointment of Government Directorson the Board nomination of Smt. Surina Rajan Government Nominee Director was withdrawnon 13.06.2018.
Shri Gurmohinder Singh (DIN-08199586) was appointed asIndependent Director vide MoD letter No. 8(2)/2014-D(BEML) dated 10.08.2018 and hisappointment had taken effect from
Shri B R Viswanatha (DIN- 07363486) Director (Mining &Construction Business) and Shri R H Muralidhara (DIN-07363484) Director (DefenceBusiness) retires by rotation at this annual general meeting and being eligible offeredthemselves for reappointment. Shri. Aniruddh Kumar (DIN - 06861374) Director (Rail &Metro Business) ceased to be Director with effect from 01.11.2017 on attaining the age ofsuperannuation.
The Board placed on record its deep the appreciation of the valuableservices rendered by the Directors whose term of office ended during the year.
(6) Number of meetings of Board:
During the year seven meetings of the Board were held on 12.04.201730.05.2017 11.08.2017 20.09.2017 10.11.2017 18.12.2017 and 07.02.2018. Requirements onnumber and frequency of meetings in terms of Section 173(1) of the Companies Act 2013Regulation 17(2) of the Listing Regulations and Para 3.3.1 of the DPE Guidelines werecomplied with in full.
(7) Directors' Responsibility Statement:
Pursuant to section 134(3)(c) and 134(5) of the Companies Act 2013your Directors state that
(a) in the preparation of the annual accounts for - -
the year ended 31.03.2018 the applicable accounting standards has beenfollowed along with proper explanation relating to material departures;
(b) the directors had selected such accounting policies and appliedthem consistently and made judgments and estimates that are reasonable and prudent so asto give a true and fair view of the state of affairs of the Company at the end of thefinancial year 2017-18 and of the profit of the Company for that period;
(c) the directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of theCompanies Act 2013 for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities;
(d) the directors had prepared the annual accounts on a going concernbasis;
(e) the directors had laid down internal financial controls to befollowed by the company and that such internal financial controls are adequate and wereoperating effectively;
(f) the directors had devised proper systems to ensure compliance withthe provisions of all applicable laws and that such systems were adequate and operatingeffectively.
Your Directors express their hearty thanks to the Company's valuedcustomers in particular Defence Services M/s Coal India Limited and its SubsidiariesM/s. Singareni Collieries Company Limited M/s Steel Authority of India Limited RailwayBoard M/s Delhi Metro Rail Corporation Limited M/s Bangalore Metro Rail CorporationLimited M/s Jaipur Metro Rail Corporation M/s Kolkata Metro Rail Corporation IntegralCoach Factory-Chennai M/s Bharat Electronics Limited M/s Bharat Dynamics
Limited Ordnance Factory Board Defence Research & DevelopmentOrganization (DRDO) M/s Brahmos Aerospace Pvt. Ltd. Indian Space Research OrganizationM/s Hindustan Aeronautics Limited Aeronautical Development Agency for their patronage andconfidence reposed on the Company. The Directors also acknowledge and thank allcollaborators vendors and other service providers for their valuable assistance andcooperation extended to the Company.
The Directors express their appreciation to the members ofCompany's Consortium of Banks and other Bankers and Financial Institutions for theircontinued support to the Company's operations. The Directors also thank all theshareholders / investors for reposing continued confidence in the Company.
The Directors wish to thank the Comptroller & Auditor General ofIndia the Principal Director of Commercial Audit & Ex-officio Member Audit Board andStatutory Auditors for their valued co-operation.
The Directors also acknowledge the valuable support and assistancereceived from various Ministries of Government in particular Ministry of DefenceMinistry of Coal Ministry of Mines Ministry of Steel Ministry of Railways Ministry ofExternal Affairs and Ministry of Home Affairs. The Directors are also grateful to theGovernment of Karnataka and Kerala for the support and co-operation extended to theCompany.
Your Directors take this opportunity to place on record theirappreciation for the invaluable contribution made and excellent co-operation extended bythe employees and executives at all levels for the continued progress and prosperity ofthe Company.
|For and on behalf of the Board of Directors |
| ||Sd/- |
|Bengaluru ||D K Hota |
|25.05.2018 ||Chairman & Managing Director |