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BSE: 500048 Sector: Engineering
NSE: BEML ISIN Code: INE258A01016
BSE 00:00 | 29 Jul 1281.80 -5.00






NSE 00:00 | 29 Jul 1280.85 -7.00






OPEN 1292.50
52-Week high 1544.25
52-Week low 584.20
P/E 71.37
Mkt Cap.(Rs cr) 5,337
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 1292.50
CLOSE 1286.80
52-Week high 1544.25
52-Week low 584.20
P/E 71.37
Mkt Cap.(Rs cr) 5,337
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 56th Annual Report along withAudited Financial Statements for the Financial Year 2019-20 of the Company for the yearended 31.03.2020 as under:

Financial results:

(Rs. in Crores)
Particulars 2019-20 2018-19
Revenue from Operations 3029 3481
Value of Production 3321 3467
Profit before Depreciation Interest ana Tax 136 260
Finance costs 41 59
Depreciation and amortization expense 71 70
Profit Before Tax 24 131
Tax Expense (44) 67
Other Comprehensive Income 43 13
Total Comprehensive Income 25 50
Profit available for appropriations 337 267
Net worth 2257 2187

Turnover & Profitability:

Your Company achieved revenue from operations of Rs.3029 crores as against Rs.3481crores in the previous year reduction by 13%.

The Value of Production is Rs.3321 crores as against Rs.3467 crores in the previousyear reduction by 4%. The Profit before Tax was Rs.24 crores as against Profit before Taxof Rs.131 crores recorded in the previous financial year.

The spread of COVID-19 Pandemic and subsequent lockdown in the last week of March 2020has impacted the Company's turnover and production due to the closure of Company'smanufacturing facilities disruption in spares & service business non-receipt ofitems on account of supply chain disruptions restrictive movements/nonavailability ofrequired trailers etc.

Based on the information available (internal as well as external) upto the date ofapproval of these financial results Company expects to recover the carrying amounts ofintangible assets trade receivables inventory and other financial assets. Efforts arebeing made to minimize the impact and Company will continue to closely monitor thedevelopments & future economic & business outlook and its impact on Company'sfuture financial statements.

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 31.03.2020 till the date of this report.

Performance vis-a-vis Moll:

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 2018-19 and the rating for thefinancial year 2019-20 is under self- evaluation.


Your Board of Directors had approved an interim dividend of Rs.2.50/- per equity sharei.e. 25% on equity shares of f 10 each on 13.03.2020 which was distributed among theeligible shareholders during March 2020. Further the Board of Directors has recommendeda final dividend of Rs.3.50 per equity share i.e. 35% on equity share of flO eachaggregating to a total dividend of  Rs.6.00/- (i.e. 60% on equity share capital) forFY 2019-20 keeping in view the future prospects of the Company and at the same timemeeting the aspirations of the shareholders.

In terms of Regulation 43A of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 your Company has formulated a 'Dividend DistributionPolicy' which includes the parameters and circumstances in determining the distribution ofdividend to its shareholders and/or retaining profits earned by the Company. The saidPolicy is posted on Company's website

Order Book Position:

The Order Book of Company as on 01.04.2020 is Rs.9795 crores the highest ever asagainst Rs.9125 crores in the previous year a growth of over 7%. The Order bookcomprises of three business verticals i.e. Mining & Construction Defence &Aerospace and Rail & Metro.


During 2019-20 your Company made exports aggregating Rs.15.33 crores (physical exportsof Rs.14.50 crores and export incentive of Rs.0.83 crores) as against Rs.19.49 crores(physical exports of Rs.19.20 crores and export incentive of f 0.29 crores) during theprevious year. Exports were low due to impact of Covid-19 and delay in finalisation oftenders by customers.

Strategic Disinvestment:

Ministry of Defence (MoD) vide its letter dated 01.12.2016 communicated that CabinetCommittee on Economic Affairs (CCEA) had accorded "inprinciple" approval forstrategic disinvestment of the Company. The Department of Investment and Public AssetManagement (DIPAM) vide its O.M. dated 19.12.2016 communicated that an Inter- MinisterialGroup (IMG) had been constituted by the competent authority for the purpose of appointingintermediaries such as Asset Valuer (AV) Transactional Advisor (TA) and Legal Advisor(LA) for the strategic disinvestment of 26% equity in the Company out of Government ofIndia shareholding of 54.03%. After confirmation the Company vide letter dated 06.01.2017intimated NSE and BSE about the 'in-principle' approval of CCEA and also posted on theweb-site of the Company in terms of Regulation 30 of SEBI (Listing Obligations &Disclosure Requirements) Regulations 2015 [hereinafter referred to as 'ListingRegulations'].

As per the terms DIPAM has appointed M/s. SBI Capital Markets Limited as TA and M/s.Crawford Bayley as LA and MoD has appointed M/s. RBSA Valuation Advisers LLP Ahmadabadas Asset Valuer respectively. Further based on the advice of DIPAM due diligence has beencompleted and the matter is under consideration of DIPAM/MoD.

DIPAM has further identified the non-operational/surplus assets. Land issues(non-operative) have to be decided before disinvestment of BEML by way of assetmonetization and in case of assets not being sold appropriate decision to be taken eitherto retain with the Company or otherwise. The legal advisor will take cognizance of theissue and advise the options available for settlement of land issues before disinvestment.DIPAM has appointed two Consultants M/s. CBRE South Asia Private Limited Gurgaon andM/s. JLL Property Consultants (India) Private Limited Gurugram for monetization ofidentified assets have already visited the properties and are in the process of submittingtheir reports to DIPAM.


At BEML Corporate Quality Policy emphasizing Total Quality Management (TQM) ensuresthat Products Services and Processes meet stringent standards and requisite performancecriteria. A separate Quality Department spearheads the thrust towards Total QualityManagement. The Quality function is headed by an Executive Director reporting directly toCMD of the Company and is responsible for overall Product and Service Quality.

All manufacturing divisions have been certified for Quality Management System (QMS) toISO 9000- 2015 Standard and also for Environmental Management System (EMS) toISO-14001-2015 Standard. Further Bengaluru Complex is certified as per BS: OHSAS18001-2007 Integrated Management System Standard and Aerospace Manufacturing Division(ASMD) Mysuru Complex has been certified as per AS9100D standard.

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

• Towards improving Quality of welding Moll for welding consultancy was enteredwith M/s WRI Trichy during the year. Some of the challenges being faced by the divisionsin developing Critical Structure Analysis of structures and Weld joint design for newproducts like Rope Shovel/Walking dragline Bogie frame Aluminum car body Weldingprocess qualification of Titanium/Miraging steel/Armor steel welding of Aerospace divisionare taken up.

• Mobile app - Customer complaint handling system was introduced during theprevious year is being utilized by Customer and Service team to resolve customercomplaints. This has resulted in addressing the customer grievances quickly.

• Vendor development remains the "focus area" to improve Quality ofVendors' supplies. During the year focus was given to upgrade the Quality system ofvendors by extending support and encouraging vendors to improve their facilities andimplement quality system which resulted in increase of ISO 9000 certified vendors in thevendor base to 88.5%.

• Supply of Products and Spares to Armed Forces are currently being inspected byDGQA. BEML has taken up the task of getting Self certification status and has successfullyregistered 33 products and spare parts by DGQA. The process of getting Self certificationis expected to be completed during 2020-21.

• Quality Assurance system was continuously monitored across all the manufacturingdivisions to ensure Quality improvements in Design Processes Systems. Few initiativestaken towards Quality Improvement across the divisions through Cross Functional Teamsare as under:

(i) 642 Kaizen projects were implemented across the divisions.

(ii) 137 Quality Improvement projects were implemented to reduce rejection and overcomefield failures.

(iii) 39 Design and system improvements to enhance the reliability of the productswere implemented during the year.

(iv) 188 nos. Jigs & Fixture were added and upgraded to improve ManufacturingQuality.

(v) Continuous training through Centre of Excellence established at all Complexes isbeing carried out for skill upgradation.

• To motivate Quality improvement initiatives in the divisions Quality Circleactivities are promoted in the organization and also Quality Circle teams are nominated toparticipate in National and International Level competitions. For the year 2019-20 ThreeQC teams had participated in International convention on Quality control circles(ICQCC-2019) held at Tokyo and all were accorded with GOLD awards.

Make in India Initiative and Indigenization:

BEML has achieved level of indigenization over 90% in the mainline M&C productsRail coaches & EMU's over 80% in High Mobility vehicles (HMV) and over 65% in Metrocars. Further following efforts are underway to reach higher levels:

During the year under this initiative Company has designed and developed products suchas BE1000-1 Hydraulic Excavator BE210 Hydraulic Excavator BD155 with CLSS hydraulicsystem AI based Predictive Maintenance of mining equipment in M&C Business AIPowered Medical Health Diagnostic System (MHDS) Medium Bullet Proof Vehicle (MBPV)Mobile Standby Command Post Vehicle (MSCP) Mounted Gun System (AK630) in Defence businessand design and development of 8W (SG) CMV 6 car train set of BMRCL 42 cars contractKolkata Metro (E-W) train sets further to safety clearance have been deployed into revenueservice 8W DETC successfully completed the Oscillation trials and clearance obtained forbulk production in Rail & Metro business.

Your Company is working towards 'ZERO IMPORT' policy of the Government throughToT/JVs; BEML has published 'Expression of Interest' for indigenous development ofimported items. Development POs have since been placed for 139 items. In line with MoDguidelines Top-20 imported items have been identified for Indigenization out of which 7items have been indigenized during 2019- 20.

BEML has planned to set up 'Make in India Parks' for indigenous manufacture of cabinsfor HMVs through ToT indigenous manufacture of defence spares and propulsions for MetroCars/ EMUs through Jvs.

To further enhance indigenisation BEML has invited 'Expression of Interest' formanufacturing and technology partnerships with reputed global OEMs looking to establishand/or expand their supply chains/manufacturing base in India for the manufacture ofvarious goods and/or service business in the areas of Defence & Aerospace Rail &Metro Mining & Construction Engines and aggregates with the overarching objective of"Aatmanirbhar Bharat".

Renewable Energy Development Energy Conservation Research & Development and Technology Absorption:

(i) Renewable Energy Development:

Your Company has installed 23MW Windmill Projects and 250KWp Solar Power units inrealizing the goal of  'Go Green'. With this and other initiatives 87% of energyrequirement of the Company is being met through "Green Energy" as against 75%during 2018-19 resulting in mitigation of 24037 tons of carbons during the year 2019-20.

(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.Across all units and offices of BEML all the conventional lighting viz. Bulbs/FluorescentTubes/CFL have been switched over to LED Lighting system and reconditioning of furnaces toreduce heat loss and conserve energy. Further change over to LED lighting system is beingcarried out in townships.

(iii) Research & Development and Technology Absorption:

Your Company has given special focus to spread the awareness about innovation cultureand intellectual property rights in the Company and 51 patents 13 designs 4 copyrightsand 2 trademarks were registered during the year which was 140% of the MoD target (50).11 technical papers were published by R&D engineers in national/internationaljournals/conferences during the year 2019-20.

R&D center at KGF is fully equipped with facilities for design simulation andtesting of Earth Moving & Construction and Defence equipment and is one of the biggestdevelopment centers in India and it is supported by R&D centers located at Truck andEngine Divisions in Mysuru and at Rail & Metro division in Bengaluru.

R&D Centers at KGF Mysuru & Bengaluru are recognized by the Department ofScience & Technology Government of India.

During the year 2019-20 R&D test facilities have been upgraded with latest testingequipment.

The R&D set-up of Mining & Construction Business is engaged in development ofhigh- end Mining equipment Rope Shovels and Walking Draglines besides upgradation ofexisting products to meet customer needs.

Defence R&D set-up is engaged in development of Armoured Vehicles Medical HealthDiagnostic System Recovery Vehicles Trailers High Mobility Heavy Duty Vehicle.

Rail & Metro R&D set-up is engaged in design & development of Metro &Railway rolling stock products up-gradation of existing products based on the market needand indigenization of imported aggregates.

All R&D set-ups are also engaged in indigenization and development of importsubstitution products.

68% of sales turnover achieved was from in- house R&D developed products.

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 at Annexure-X.

Foreign Exchange Earnings and Outgo:

During the year the Company's foreign exchange earnings stood at Rs.489 crores and thetotal foreign exchange utilized was Rs.371 crores.

A sum of Rs.1.51 crores was incurred towards deputation of personnel abroad forbusiness/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. ICRA has affirmed the long-term rating of [ICRAJA+ and theshort-term rating of [ICRAJA1+ for Rs.4500 Crores (enhanced from Rs.2750 Crs) on14.05.2020 towards fund based cash credit and non-fund based bank guarantee limit. Theoutlook on the long-term rating is Negative. Further ICRA has affirmed the rating of longterm non-convertible debenture of Rs.300 crores with [ICRA]A+ (Negative). In additionICRA has assigned the rating [ICRA]A1+ for the proposed issue of Commercial Paper. Thisrating indicates very strong degree of safety regarding timely payment of financialobligations and carry lowest credit risk. Accordingly the said changes in the creditratings has been communicated to Stock Exchanges and the same are placed on Company'swebsite.

Pursuant to BSE Circular LIST/COMP/59/2019-20 dated 03.03.2020 (initial disclosure wasmade on 22.04.2019 as per SEBI notification SEBI/HO/ DDHS/CIR/P/2018/144 dated26.11.2018) confirmation was filed by the Company on 05.05.2020 that BEML is notidentified as Large corporate (LC) as per the framework provided the Company does notcomply with the requirement under clause 2.2(iii)-Credit rating of 'AA'and above.

Your Company has issued Commercial Paper (CP) of 2000 units valuing Rs.100 crores toSBI on 22.06.2020 at discounted price of 3.9% through IDBI Bank Ltd as the Issuing andPaying Agent of CP and the same will be matured after 90 days from the date of issue. Thesaid CP has been listed with BSE.

As mandated by the Ministry of Corporate Affairs the financial statements for the yearended on 31.03.2020 has been prepared in accordance with the Indian Accounting Standards(IND AS) notified under Section 133 of the Companies Act 2013 read with the Companies(Accounts) Rules 2014. The estimates and judgements relating to the Financial Statementsare made on a prudent basis so as to reflect in a true and fair manner the form andsubstance of transactions and reasonably present the Company's state of affairs profitsand cash flows for the year ended 31.03.2020.

The Company's contributions to Central and State Exchequers were in the order of Rs.314crores during the year by way of Customs Duty GST Dividend and Tax there on and othertaxes and duties.

Internal Financial Controls:

Adequate Internal Financial Controls (IFCs) are put in place by the Company withrespect to Financial Statements. The Company has various manuals such as manual forAccounts Cost Accounting & Pricing Stores Purchase Audit etc. and the same arebeing periodically updated circulated and also uploaded in 'BEML Bulletin Board' forviewing and compliance by employees and executives concerned for carrying out variousactivities in a transparent manner and in line with the delegation of powers and noinstances 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 heading'Internal control systems and their adequacy' in the Management Discussion & AnalysisReport 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:

Your Company has formulated "Risk Management Policy" pursuant to Section134(3)(n) of the Companies Act 2013 Regulation 17(9) of the Listing Regulations andPara 7.3 of DPE Guidelines with an objective to ensure sustainable business growth withstability and to promote a pro-active approach in identifying evaluating reporting andmanaging 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 mitigate the risk related issues.

The Corporate Risk Committee prepares the key risks along with mitigation plans andreport to the Risk Management Committee constituted in terms of Regulation 21 of theListing Regulations for review and apprising the Board.

The Board reviewed the key risks along with mitigation plans and monitoring the statuson risk management periodically. The said policy is placed on the Company's

Related Party Transactions:

Pursuant to Regulation 23 of the Listing Regulations your Company has formulated a"Policy on Related Party Transactions" to regulate transactions entered intobetween the Company and its related parties. Further in terms of Regulation 46(2)(g) ofthe Listing Regulations the said policy is placed on the web-site of the Company

During the year 2019-20 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. Information as required under section 188 in Form AOC-2pursuant to Section 134(3)(h) of the Companies Act 2013 read with Rule 8(2) of theCompanies (Accounts) Rules 2014 is attached to this report as Annexure-II.

Report on the performance and financial position of subsidiaries and Joint VentureCompany

Subsidiary Companies:

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

VIL has achieved Revenue from Operations of Rs.14.68 crores as against Rs.27.08 croresin the previous year declined in the growth by about 46%. The value of production of theCompany stood at Rs.14 crores as against Rs.25 crores and the Company incurred a loss ofRs.4.70 crores as against profit of Rs.0.51 crores in the previous year due to breakdownof 20 ton Mixer barrel and electrical cables connecting the 2 ton Furnace and otherrelated problems faced during the year and lock down due to COVID 19 pandemic impact inMarch 2020.

MoD vide letter dated 27.02.2019 has constituted Inter-Ministerial Group (IMG) andEvaluation Committee (EC) for disinvestment of BEML shares in VIL. AccordinglyTransaction Advisor (TA) Legal Advisor (LA) and Asset Valuer (AV) were appointed. Byfollowing due process Eol/PIM was published on 04.09.2019 for seeking probable bidders.However no response was received. Matter has been taken up with MoD for further advice ondisinvestment/closure.

(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 Rs.48 crores towards the total bid consideration of Rs.100 croresfor the said acquisition based on the order passed by the Hon'ble High Court of Calcutta.The said assets were taken possession by the MAMC Consortium. Further up to 2019-20 theCompany has incurred a sum of Rs.12.54 crores (Previous Year- Rs.10.51 crores) towardsmaintenance security and other related expenditure. The expenditure incurred by CIL andDVC on account of this proposal is not ascertained. The total sum of Rs.60.54 crores(Previous Year - Rs.58.51 crores) is disclosed as 'Advance to MAMC Consortium' pendingallotment of equity shares in the capital of JV company.

In the meantime a company in the name of 'MAMC Industries Limited' (MIL) was formedand incorporated by your Company as a wholly owned subsidiary for the intended purpose ofJV formation. Shareholders' agreement as duly approved by the Boards of all three membersof the consortium has been submitted to MoD for necessary approval. Further MoD hasdirected to submit 'Business Plan' and 'Financial Viability Report' of the proposed JV. Ameeting of Interim Board of Management of Consortium has decided to engage M/s. SBI Capsfor preparing the "Financial viability & Business Plan" report. But it hasbeen decided not to pursue the matter considering the exorbitant fee quoted by SBI Caps.

Further a communication vide letter dated 20th August 2019 was sent to CIL & DVCseeking their consent on BEML Proposal for (i) to transfer BEML shares to consortiummembers or to dispose-off the assets of erstwhile MAMC in open market through auction. CILvide mail communication dated 30.12.2019 informed that the matter was deliberated in theirFDs meeting held on 27.12.2019 &approved as under:

i) To give NOC to dispose of the assets of MAMC at New Delhi and Nagpurto M/s BEML onpresent market rate

ii) Re-valuation of property of MAMC by third party on cost sharing basis

iii) Disposal of scrap of MAMC plant Durgapur to be discussed in the next IBM meeting.

iv) Exit of BEML from the MAMC Consortium to be discussed in the next Interim Board ofManagement meeting.

After consistent follow up with DVC a communication has been received on 15.05.2020stating that matter could not be put up formally to their board for decision due toCovid-19 and lockdown and will be taken up after opening of the office.

(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.

BEML has decided to close the office based on the legal opinion obtained. In thisprocess an amount of USD 55380.87 has been repatriated from BBIL account to the accountof BEML India. Cancellation of company registration number (CNPJ No) is completed and theCompany is closed on 21.05.2019.

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. Based on 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 passed appropriate orders without getting influenced by theimpugned common order of CLB. The Company has filed an application with CLB praying fornecessary directions to Regional Director (RD) Ministry of Corporate Affairs Hyderabadfor time bound completion of investigation so that the matter could effectively be heardby CLB. In the meanwhile the Government has constituted National Company Law Tribunal(NCLT) by dissolving CLB and notified that the jurisdiction is shifted to Hyderabad fromChennai. The case files were transferred to NCLT. Based on the order of NCLT dated22.12.2017 consequent to the request from the landlord to vacate the premises ofRegistered Office (RO) of BMWL for his bonafide use it has been shifted to a suitableplace in the city on 30.03.2018 and the communication in this regard has been sent to MCANCLT & MGPL. Regular hearings are taking place at NCLT however RD- MCA is yet tosubmit the investigation report for deciding the matter.

There was no company which became or ceased to be a subsidiary joint venture orassociate of the Company during the year under review excepting the subsidiary M/s BEMLBrazil Industrial Ltda was closed on 21.05.2019.

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:

In terms of Section 129(3) of the Companies Act 2013 your Company has prepared theConsolidated Financial Statement of its subsidiaries excepting consolidation with respectto JV company M/s BEML Midwest Limited due to complete cessation of activities as thematter is subjudice is attached to this report.


Your Company has a Vigilance Department headed by an independent full-time ChiefVigilance Officer (CVO). The Vigilance Activities were carried out in a holistic mannerand covered prevention detection and enforcement. Vigilance is basically and admittedly amanagerial function and therefore it is an integral part of the duties of an executive.CVO advises management on all matters pertaining to Vigilance. As an extended arm of theCentral Vigilance Commission in its exercise of superintendence over VigilanceAdministration of the Company CVO provides the link to the Administrative Ministry andthe CBI.

Complaints received by the Vigilance Department were handled as per Complaint HandlingPolicy of the Company. Such complaints were registered after owning and investigated onlyafter determining 'Vigilance Angle'. The registered complaints are disposed after detailedinvestigation. 09 registered complaints were investigated and 07 were disposed of as on31.03.2020. Subsequently balance 02 registered complaints have been disposed of. Afterdue verification/investigation recommendations were made to the Management for initiatingdisciplinary action against Executives/Employees who were found responsible for theirregularities.

Surprise checks periodic checks scrutiny of purchase orders/contracts Scrutiny ofTA/DA & Medical reimbursement claims scrutiny of Annual Property Returns 08 CTE typeof in-house inspections and 12 system studies were conducted during the fiscal year2019-20. Based on the outcome of these Systemic Improvements were recommended toManagement which mainly pertain to process improvements management of procurementactivities contract stores/inventory engagement of advisors/consultants quality ofproducts/aggregates review/rationalisation of routes of buses hired for transportationetc.

From April 2019 to March 2020 more than 5250 vigilance clearances have been processedon-line for executives and employees of BEML on the 'SAMPARK' Portal.

Requirement of CCTV Cameras installed was reviewed & additional installations toaugment the surveillance of sensitive points were recommended. The introduction of CCTVsurveillance in new area has also helped the organisation to reduce the daily manpowerrequirement and thereby accrue annual savings directly besides enhancing vigilanceeffectiveness.

BEML Vigilance Department is striding fast ISO 9001:2015 certification for vigilancedepartment at all BEML locations. Certification Audit completed at all the divisions byMarch 15 2020 except HQ and just one step away (due to COVID-19 lockdown) from gettingISO 9001:2015 certification.

The Vigilance Awareness Week-2019 with the theme "Integrity - A way of life"was observed in BEML Limited from 28th October 2019 to 2nd November 2019 in line with CVCguidelines. Citizens Integrity pledge was also administered to the Staff of BEML Limitedas well as students & staff at schools and colleges where the Company had organisedevents as part of Observance of Vigilance Awareness Week - 2019.

A 'Vendor Meet' was organised at Corporate Office of BEML on 25.10.2019 &simultaneously across all divisions of BEML linked through Video Conferencing facility.Presentations were made regarding Vendor Development initiatives and vendor oriented ITinitiatives like receipt of Tender fee & EMD through SRM and Auto return of EMDthrough SRM display of technical compliance sheets display of quotation details on-linebill tracking & alert system etc. Vendors evinced keen interest in BEML initiativesand a very active interaction session was observed. The grievances aired were addressedand suggestions for improvement were noted.

At Bengaluru the staff of PSUs including PSBs participated in a 2 km Walkathon -"Vigithon" on 03.11.2019. The theme of VAW- "Integrity - A way ofLife" was the emphasis during the "Vigithon." Almost 265 staff from all ofthe above organisations put together participated in the "Vigithon." Walkathonwas also organised at all the Complexes of BEML during VAW-2019.

On account of systemic improvements there is substantial increase in Open Tenderpercentage in total procurement.

During 2019-20 CVO inspected various Regional/ District offices of BEML Limitedvendor works/ defence installations and recommendations on systemic improvements were madesuch as improving stores activities streamlining supplies to Stores inventorymanagement clearing of bills customer complaint handling as well as management of BEMLland good practices to be adopted etc.

Other initiatives were also reviewed with respect to payment system to vendorsincreasing transparency in dealing with public/stakeholders training programmes onvigilance awareness meetings on preventive vigilance 'BEML Cares' mobile app launchedfor handling customer complaints etc.

As an innovative initiative towards integrated approach to Ethical Management to dealwith ethical dilemmas at work place coined as 'PRAYAAS' by CVO BEML various levels ofexecutives were trained and a booklet was released during VAW- 2019 as well as publishedon BEML website.

Whistle Blower Policy:

Pursuant to the provisions of Section 177(9) of the Companies Act 2013 Regulation 22of the Listing Regulations and Para 4.3 of the DPE Guidelines your Company has formulated"Vigil Mechanism/Whistle Blower Policy" for directors and employees to reportgenuine concerns. The said policy provides for adequate safeguards against victimizationof director/s or employee/s or any other person who avail the said mechanism and alsoprovides for direct access to the chairperson of the Audit Committee in appropriate orexceptional cases. Further pursuant to Schedule II (A)(18) of Listing Regulations and asper 4.2.12 of DPE Guidelines the Audit Committee reviews the functioning of the whistleblower mechanism periodically. As per the said policy none of the employees have beendenied access to Audit Committee. In terms of Regulation 46(2)(e) of the ListingRegulations the said policy is placed on the Company's website

Integrity Pact:

Integrity pact is being adopted pursuant to the directives from Central VigilanceCommission and Ministry of Defence with all Vendors/Supplier's/Contractor's/serviceproviders for all orders/contracts of valued 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 any corruptpractices in any aspect/stage of the contract.

Only those vendors/bidders who commit themselves to such a pact with the principalwould be considered competent to participate in the bidding process.

Integrity pact in respect of a particular contract would be operative from the stageof invitation of bids till the completion of contracts. Any violation of the same wouldentail disqualification of bidders and exclusion for future business dealings.

Two Independent External Monitors (IEMs) have been appointed to review the cases onbi-monthly or quarterly basis. During the FY 2019-20 Rs.2863 Crores of purchase orderswere entered into Integrity pact.


As part of continuous improvement towards transparency and convenience to suppliers/partners your Company has implemented "Online Vendor Payment Tracking Option" tocheck status of payments against supplier/ services/payment orders. Tender status updatesare provided through automatic emails to bidders with reasons for rejections.

After opening of the Price Bids all technically qualified/ pre-qualified bidders willbe able to see the price details of other bids submitted against the tender.

During the year about 89% of the total requirement was sourced through e-procurement.

Micro and Small Enterprises:

As per the directive of Government minimum 25% (from 9th November 2018) ofprocurements have to be procured from MSEs amended from 20% earlier and provide a minimum3% reservation for women owned MSEs and 4% for SC/ST Enterprises.

Your Company has systematically developed extensive vendor base covering most of theoutsourcing requirements and during the year 2019-20 Company has procured Rs.405 Croresout of Rs.1610 Crores local procurement which constitutes 25% from MSE's.

In order to encourage MSEs vendor meet had been organized and list of components thatcould be sourced from MSEs are placed on Company's website for the information of MSEVendors. Further MSE procurement data is uploaded on "MSME SAMBANDH" portal onmonthly basis.

Vendor Development:

Your Company's vendor development is a continuous process to identify and develop newvendors to bring in competition among the vendors and to reduce costs. The followingmethods are generally followed to identify potential new vendors. The methods generallyfollowed to identify potential new vendors are Publication of Expression of Interest(Eol) in BEML Website Participation in exhibitions and seminars and Organize Vendormeets.

In order to increase vendor base Open ended Expression of Interest (Eol) forregistering the new vendors development of the critical items and Import substitute itemsis published and available on BEML website. During the year 2019-20 91 vendors have beenincluded.

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. BEML has established itself as a system integrator by outsourcing a substantial partof manufacturing activities from domestic vendors. To facilitate outsourcing policiesprocedures and guidelines are put in place and the Company has established VendorDevelopment Cell as a single window help desk.

• New vendors can register through Online/ Manual.

• New vendors are supported by way of imparting knowledge on manufacturingprocesses specifications quality plans etc.

• Company also extends its testing facilities to its vendors wherever required.

• To attract new vendors Company resorts to publishing of open ended Eolparticipation in all vendor development programs organized by MoD MSMEs CII FICCICODISSIA NSIC PIA NSSH and other agencies.

• To enhance transparency in all its procurement processes Company has wellestablished e-Procurement Portal.

Further as per the directives of Ministry of Defence BEML 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. Based on the policy so framed a Road Map for Vendor Development has beenprepared with yearly targets and monitored at the Board level periodically. Theprocurements from Single source are being reviewed by the Audit Committee and Boardperiodically.

Compliance under the Right to Information Act 2005:

Pursuant to Section 4(l)(b) of Right to Information Act 2005 (RTI) the requisiteinformation for citizens is provided on our Company website i.e. Itcontains general information of the Company Functions Duties Powers ofemployees/executives decision making process rules regulations manuals & recordsheld by BEML directory of the Company's executives pay scales of executives/employeesetc. and procedure for seeking information and inspection of Records. The company hasnominated a Central Public Information officer Appellate Authority Transparency Officerand Six Central Assistant Public Information executives representing for Complex/Divisionsto attend to the queries and appeals. Further during the year 2019-20 the Companyreceived 173 applications seeking information pertaining to human resources recruitmentcontracts tenders business related matters etc. and the same were disposed of.


Your Company is committed to adhere to the Official Language (OL) policy of theGovernment of India. During 2019-20 Company has achieved various targets prescribed inthe Annual Program 2019-20 issued by Department of Official Language Ministry of HomeAffairs Government of India to transact official work in Hindi. The efforts made towardsimplementation of Official Languages include :

• OL Inspections: MoD officials conducted OL inspections of RO Mumbai on 21 May2019 and Activity Centre Vizag on 3 October 2019.

Ministry of Home Affairs Officials conducted OL inspection of RO Kolkata on 19 July2019. Committee of Parliament on Official Language conducted OL inspection of RegionalOffice New Delhi on 28 February 2020. A total of 6 inspections on OL conducted during theyear under review by Sr. Executives of the Corporate Office at Singarauli MysoreBilaspur New Delhi Mumbai and Chennai.

• Bilingualisation: A comprehensive document of bilingual standard correspondence(Pre recruitment to post retirement) of HR Department was prepared and issued by OL Deptfor usage in all UnitsD/D Offices of the Company. Section 3(3) documents replies to theletters received in Hindi correspondence Rule 11 items (stationary codes and manualsprocedural literature) are being issued in bilingual in all Units and offices of companyin accordance with OL rules.

• Hindi Fortnight Celebrations: Hindi Fortnight was observed in the CorporateOffice all Complexes and all Regional/District offices with great zeal from September 142019 to September 27 2019. During this period executives and employees were motivated todo their maximum work in Hindi and competitions such as Hindi Quiz Hindi CrosswordAdministrative Terminology Hindi calligraphy Antakshari Noting & Drafting etc.were organised. Instructions were issued to all offices to take the pledge on Hindi Dayi.e. on September 14 2019 in accordance with the guidelines issued by the Ministry ofDefence and Department of Official Language Ministry of Home Affairs.

• Hindi Training: A total of 330 executives/ employees were trained in variouscourses of Hindi under Hindi Teaching Scheme of Government of India during the periodunder review.

• Hindi workshops: A total of 17 Hindi workshops have been convened and 474executives/employees were trained.

• Rajbhasha Award: Corporate Office has bagged Rajbhasha Shield from Town OfficialLanguage Implementation Committee (PSU) Bengaluru for commendable performance inimplementation of Hindi during the year 2018-19.

• Hindi Annual Report and 3 Issues of "BEML Journal" have been broughtout during the year. Company's website is also available in Hindi and being updatedsimultaneously. Efforts are in progress to ensure OL Implementation and achievingprogressive usage of Hindi across BEML.

Committees of the Board:

The following Committees required under Companies Act Listing Regulations DPEguidelines/MoD Directives are constituted by the Board to function according to theirrespective roles and defined scope:

• Audit Committee

• Nomination and Remuneration Committee

• Stakeholders' Relationship Committee

• Risk Management Committee

• Corporate Social Responsibility and Sustainability Committee

• Procurement Committee

• Share Certificate Committee

The details of the Committees along with their composition number of meetings held andattendance at the meetings are provided in the Corporate Governance Report.

Composition of Audit Committee:

In terms of Section 177 of the Companies Act 2013 Regulation 18 of the ListingRegulations and Chapter 4 of the DPE Guidelines your Company has constituted the AuditCommittee. The Committee comprises of Dr. Gurmohinder Singh Independent Director asChairman Shri Arvind Kumar Arora Independent Director Shri M V Rajasekhar Director(Mining & Construction Business) as its members. All the recommendations made by theAudit Committee were accepted by the Board.

Compliance of applicable Secretarial Standards:

Section 118(10) of the Companies Act 2013 stipulates that the Company shall observesecretarial standards with respect to Meetings of Board of Directors (SS-1) and GeneralMeetings (SS-2) as specified by the Institute of Company Secretaries of India. Furtherthe Standard 9 of SS-1 stipulated that the Report of the Board of Directors shall includea statement on compliances of applicable Secretarial Standards. Accordingly your Companyhas complied with the provisions of applicable standards of SS-1 and SS-2 issued by theInstitute 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 done by DPE on thebasis of compliance with Corporate Governance guidelines/norms. Accordingly your Companyis graded as 'Excellent'for the year 2019-20. Further in terms of Regulation 34 of theListing Regulations and Chapter 8 of the DPE Guidelines a report on Corporate Governancealong with Compliance Certificate is placed at Annexure-III.

Management Discussion and Analysis Report:

In terms of Regulation 34(2)(e) of Listing Regulations and Para 7.5.1 of the DPEGuidelines a report on Management Discussion and Analysis Report is placed at Annexure-IV.

Business Responsibility Report:

In terms of Regulation 34(2)(f) of Listing Regulations a Business ResponsibilityReport (BRR) for FY 2019-20 describing the initiatives taken by the Company onenvironmental social and governance perspective in the format as specified by SEBI fromtime to time is placed at Annexure-V.

Awards & Recognitions:

> On 2nd August 2019 BEML received "SKOCH Award" under 'CorporateExcellence Gold Category' and "SKOCH Order of Merit" Award for design &development of Armoured Repair & Recovery Vehicle and Metro Cars for KMRCL

> On 24th September 2019 Company bagged "International Quality GoldAward-2019"for 'Cost Reduction in BH60M Dump Truck components by process improvements& Cycle Time Reduction' 'Performance Improvement in BG605 - Motor GraderTransmission' and 'Elimination of Auto Obstruction Detection Error in Metro PassengerSaloon Door'.

> On 17th October 2019 Company was bestowed with Equipment India Awards undertwo categories best seller in rigid Dump Truck and best seller in Crawler Dozer for theyear 2018 at a function held at New Delhi.

> On 8th December 2019 CMD has been conferred with Honorary Doctorate ofPhilosophy (Ph.D) by Manav Rachna University Faridabad

> On 18th December 2019 CMD was honoured with The Machinist 'Hall of Fame'award for invaluable contribution to Indian Manufacturing Industry at Global ManufacturingSummit held at Ahmedabad.

> On 18th December 2019 BEML Palakkad Complex has won the 'Kerala State EnergyConservation Award 2019' at a function held at Energy Management CentreThiruvananthapuram.

> On 17th January 2020 CMD was conferred with 'Most Admired Leader Award 2020'by IIPM and FEIL "for outstanding contribution as a leader focussed on developingpeople and organisational capability".

> On 19th February 2020 BEML was honoured with 'Research & Innovation andDigital PSU Award' by 'Governance Now' for outstanding contribution.


The number of employees of the Company as on 31.03.2020 stood at 6602 as against 7185of the previous year resulting in 8.11% reduction.

The category-wise number of SC/ST and Ex- Servicemen employees as on 01.01.2020 andrecruitment made are as under:

Category / Group


No. of SC/ST and Ex-servicemen

Strength As on

Scheduled Caste

Scheduled Tribe

Ex-Service Men

1.1.2020 1.1.2019 1.1.2020 1.1.2019 1.1.2020 1.1.2019 1.1.2020 1.1.2019
Group-A 2049 2083 382 387 107 107 25 23
Group-B 71 77 12 13 4 5 0 0
Group-C 4595 5115 1038 1157 248 263 223 238
Group-D 15 18 8 10 3 3 0 0
Total 6730 7293 1440 1567 362 378 248 261

The Company has recruited 32 candidates in Group A during the year under review asunder:

• 20 from General category

• 3 from Scheduled Caste

• 1 from Scheduled Tribe and

• 8 from other Backward Community

Human Resource Development & Industrial Relations:

Your Company is a leading multi-technology & multi-location CPSE with track recordof continuous growth & Innovation believes that People and Skill Development is ofcritical importance to the company operations and key for future competitiveness intoday's highly complex & changing global business environment.

People being the building block of our organization continuous emphasis is provided onnurturing retaining developing our Human Resources to ensure that the people are 'Futureready'. The Learning and Training eco-system plays a critical role in this process.

As a continued endeavor during 2019-20 BEML deputed its Executives & Employees tovarious Training Programmes & Seminars organized In-house & by External agencies.As a part of the Employees Development agenda encompassing all manufacturing ComplexesMarketing Division & Corporate Office in 2019-20 regular Training Programmesequivalent to 19443 Man days were conducted to ensure that all Employees & Executivesare imparted with the requisite training and a new benchmark of Training coverage wascreated by surpassing the Target by 127%. At the same time various Training Processimprovements were implemented to have the desired impact and transfer of Learning.

Under the directives of Govt of India 2019-20 MoU parameters had specific focus onTalent Management initiatives by imparting high-level specific Training Programmes to 10%of the total Executives. Customized Training Programmes were designed & conductedin-collaboration with IIM- Indore NLSUI-Bangalore XIME-Bangalore i2p2m ProjectManagement Institute-Delhi etc. In addition a large no. of executives were nominated forvarious important external Training Programmes & Seminars to support their Learning& Development. BEML took special initiative for competency Development on key areaslike Contract Management Legal Compliance GST Cyber Security System Project Managementetc.

During the year a new Learning Initiative through Web-learning Modules was rolled outto facilitate wider reach and 24x7 learning opportunity by the BEML-ians.

It is notable to mention that BEML took specific initiative for its Women Executives& Employees in the areas of Work-life balance Wellness & Leadership Development.These Programmes had a wide coverage of 217 nos. participants for 'Work-life Balance' 93nos. participants for Wellness & 94 nos. participants for Leadership development fromvarious BEML locations and was well received by the Participants as it had added value totheir Professional & Personal arena.

Aligning with BEML's Core-values a unique Training programme on 'Ethical Dilemma atWorkplace' was conceptualized piloted and rolled out focusing the importance of BusinessEthics in today's context. The Programme named as "PRAYAAS" has beenconsidered as very effective by the senior BEML Leadership team and the Participants. Theinitiative was well appreciated by Secretary-CVC & Secretary-Defence Production forits importance & implementation at BEML.

In line with the Govt of India directives under 'Mission Raksha Gyan Shakti (MRGS)'BEML has imparted IPR Training Programmes to 392 nos. BEML Personnel against the Target of360 nos. of Ministry of Defence. IPR training was also extended to the Vendors covering625 nos. across locations.

Training on Quality processes & aspects has a significant role in BEML. ThreeNational Level BEML Teams from Bangalore KGF & Mysore Complexes were deputed toparticipate in "International Convention on Quality Control Circle (ICQCC2019)" held from 23rd to 26th September 2019 at Tokyo Japan organised by Union ofJapanese Scientists & Engineers (JUSE). Participation in these InternationalConventions helps Participants to exchange & learn the global Best Practices throughnetworking &collaborations.

With the recent emphasis on the topical issues like Climate Change Data SecurityCorporate Governance Emotional Intelligence etc BEML ensured extensive participation invarious related Forums & Seminars. Similarly to embrace new technology areasincluding Industry 4.0 Artificial Intelligence 3-D Printing etc. BEML provided theneeded Training to its R&D IT Manufacturing teams.

Being a leading Engineering organisation deep knowledge & expertise in 'ProjectManagement' is a pre-requisite for Project executions & timely delivery to Customers.During 2019-20 in collaboration with the i2p2m Project Management Institute-Delhi BEMLdeputed its 10 key Officials for Executive Diploma in Project Management (EDPM) for IndianModules and 2 among them for the USA Module.

On the subject BEML acknowledges the support of Department of Public Enterprises (DPE)for sponsoring BEML Executives to High-end Training Programmes at IIMs IITs ASCI NIBMICAI etc.

The industrial relations scenario in the Company has been peaceful cordial and smoothrelations were maintained between the Management and the Unions/Associations. Regularmeetings with the representatives of the recognized Union/Officers Associations at theDivisional Complex and Corporate Levels were held and employee related matters wereresolved amicably. The functioning of various bi-partite committees at Complex levelresolved production related matters.

Grievance Redressal System for SCs/STs:

Your Company has constituted SC/ST Cell at all Complexes/Divisions in terms ofDepartment of Personnel & Training guidelines wherein the HR heads being LiaisonOfficers of the respective Complex/Division are conducting periodical meetings withrespective representatives of SC/ST Employees Welfare Associations to redress thegrievances/issues appropriately. Further the Chief Liaison Officer who is in the rank ofExecutive Director/Chief General Manager meets all the Cell Officers Liaison Officers andOffice Bearers of SC/ST Welfare Associations periodically and monitor the status onredressal of grievances.

Public Grievance Redressal through CPGRAMS:

The Department of Administrative Reforms and Public Grievances under the Ministry ofPersonnel Public Grievances and Pensions has initiated Centralized Public GrievanceRedress and Monitoring System (CPGRAMS) which 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:

In terms of various provisions under the Persons with Disabilities (Equalopportunities Protection of rights and full participation) Act 1995 (PwD Act). YourCompany has ensured reservation of vacancies for the posts identified for each disabilitycarry forward of vacancies which could not be filled up due to non-availability ofsuitable persons with disability during the year.

Corporate Social Responsibility & Sustainability:

In terms of Section 135 of the Companies Act 2013 and DPE Guidelines on MoU yourCompany has constituted Corporate Social Responsibility & Sustainability (CSR)Committee. The Committee comprises Dr. Gurmohinder Singh Independent Director asChairman Shri MV Rajasekhar Director (Mining & Construction Business) and Shri AjitKumar Srivastav Director (Defence Business) as members. The CSR Committee oversees theCSR & SD activities and its implementation in compliance with the Companies Act 2013and DPE Guidelines on the subject.

Further details of CSR are placed under the same heading in Annexure-III and an annualreport on CSR activities undertaken during the year are placed at Annexure-VI.

Environment and Pollution Control:

Your Company has undertaken tree plantation in order to protect the environment in thevicinity of the factory premises/township and also planted saplings of various types ofavenue trees/flower bearing trees in the vacant lands belonging to the Company formaintaining ecological balance in the surrounding areas. The Company in association withthe State Forest Department had undertaken planting of saplings at all its ManufacturingComplexes and Townships on a regular basis. During the year a total of 16098 Nos of TreeSaplings have been planted at KGF Bengaluru Mysuru and Palakkad Complexes as part ofsustainable development.

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 Development Initiatives (SDI):

As an integral part of the Government of India Policy your Company is committed toSkill Development of various Stakeholders. The umbrella framework for Skill Developmentactivities includes Centres of Excellence Service Training Centres ApprenticeshipTraining Centres and continuous Capability Building processes across the Company asdetailed below:

BEML ensures Skill Training as per the specified standard and the processes to achievethe desired level of productivity and efficiency.

(a) Centre of Excellence (CoE):

All the major Manufacturing Complexes of BEML located at Kolar Gold Fields (KGF)Bengaluru Mysuru and Palakkad have Centres of Excellence (CoE) to support SkillDevelopment of its Employees Contract workmen Customer's personnel including DefenceOfficials Engineering students and local youth.

KGF Complex:

• At KGF School of Hydraulics & Welding is specialized in Hydraulic Systemand Welding Process Training for various Equipments.

Bengaluru Complex:

• CoE at Bengaluru Complex imparts Training in Stainless Steel Welding andWire-Harnessing to support the Metro Car manufacturing.

• This CoE also provides Skill Training on Crane operations to Contract Operators& BEML Employees.

Mysuru Complex:

• Mysuru Complex houses specialized COE in Electrical & Electronics systemsfor heavy equipments like Dumper Motor Grader etc. The Centre also provides intensivepractical & theorical Training on Calibration Wire- Harnessing Trouble Shooting ofEquipments.

Palakkad Complex:

• CoE at Palakkad specializes on Power-Train mechanism including Axle EngineTransmission Differential Assembly and Electrical system of heavy vehicles like TATRA andother equipments used for Defence Applications.

(b) Service Training:

At BEML Service Training Centers at KGF and Mysuru has a significant role in SkillDevelopment. It encompasses Training on new equipments subsystems trouble shootingefficient operations etc. for BEML personnel Defence officials & employees of majorCustomers like Coal India & its subsidiaries NLC NMDC SAIL NALCO etc. During theyear 2019-20 the Service Training Centers at KGF & Mysore have trained 887 & 324personnel from Customers Organizations' and BEML respectively.

(c) Apprenticeship Training:

Systematic and continuous Training for various types of Apprentices in variousTrades/areas such as Fitter Machinist Welder Turner Electrician AutomobileElectronics & Communication Civil Computer & Information Science etc. areimparted as per the guidelines of Regional Directorate of Skill Development &Entrepreneurship (RDSDE).

All the BEML Apprenticeship Training Centres located at its four ManufacturingComplexes provides one-year & six-month duration Industrial Training to therespective groups of Graduate Engineering Students Technician Trainees & TradeApprentices. All Trainees are allotted different manufacturing shops/areas to gain thehands-on skills & experience followed by theoretical & Practical examinationleading to acquiring the proficiency certificates by the Regional Directorate Board. Theyare also provided inputs on Best practices on Industrial Safety Kaizen 5S ISO Systemsetc.

In line with the Government directives BEML has been ensuring the mandatory complianceof minimum 2.5% of Trade Apprentice strength in a systematic manner & the actualpercentage of apprentice engagement is 8.45% of the total Manpower of the Company on anaverage for the last three financial years.

(d) Technology Tie-up with Industry Leaders & Academia:

As a strategic initiative to provide the impetus towards the adoption of futuretechnology during 2019-20 BEML has tied-up with world's leading Technology partners likeM/s. Lockheed Martin Yakovlev Design Bureau Wipro Infrastructure Engineers Hitachi& Bharat Forge Limited etc. These tie-ups paved the way towards knowledge transfer andnew skill development.

In order to leverage the cutting-edge technology to build the future people capabilityto remain ahead of the competition BEML has several tie-ups with Premier AcademicInstitutions & Research Centers. Notable among them: Tie-up with Centre for RailwayResearch at IIT Kharagpur and Welding Research Institute (Trichy) towards specializedwelder technology related to manufacturing under Aerospace Division and other criticalprojects involving complex welding M/s. Prognosis Medical Systems etc. for Jointdevelopment of AI related Medical health diagnostic system.

Prohibition of Sexual Harassment of Women at Workplace:

Under the provisions of the Sexual Harassment of Women at a Work Place (PreventionProhibition & Redressal) Act 2013 an Internal Complaints Committee (ICC) isfunctional in all Complexes/Divisions for receiving complaints of Sexual Harassment ifany and it has been displayed in all the prominent locations for the information of allwomen employees. No cases have been filed under this Act during the year 2019-20.

IT Initiatives:

At BEML the extent of digitization has picked up in last few fiscal years with supportof visionary leadership that wishes to leverage IT to deliver top class experience tostakeholders adopt digitization and automation of processes and use technology as anenabler to improve effectiveness efficiency and responsiveness across various core aswell as support functions.

Footprint of Video Conferencing was further enhanced by conducting meetings virtuallyat Board Level Inter-regional Committee Level for conducting Interviews Client andPartner Interactions as well as conducting training sessions across multiple locationsresulting in significant cost savings.

Paperless office initiative was further enhanced by implementing paperless meetings.Board Board Committee and Procurement Committee meetings were conducted with onlinestreaming of meeting contents on member devices. FLM contributed to over 97% of ourapproval workflow management leading to transparency and cycle time improvements in theprocess.

Mobility initiative meant our senior and mid-senior level executives were able toaccess information while away from their desks improving efficiency of decision making.

Customer experience was enhanced by implementation of Customer Relationship App for keycustomers across regions.

Employee experience was improved by implementing workflow enabled processes such asTravel Management Expense Claim Management Leave Encashment E-Learning Portal MISReports On-line On-Boarding On-line Pay-slip delivery and visitor declaration forms forCovid-19.

Technology was leveraged for conducting on-line promotion test (OPT) and interviewswith remote candidates this year ensuring compressed timelines and reduced costs to enablecompletion of CDC process before June 30th a significantly improved experience foremployees of our organization.

Air GAP network was installed to improve Cyber Security framework. Reliability ofInternet connectivity was improved by installing a backup line and augmenting thebandwidth of existing line to allow for larger traffic.

As part of our five-year plan for augmentation of internal hosting environment SAPhosting environment has additional compute and storage capacity both at our main datacentre as well as Disaster Recovery (DR) Data Centre. Considering the criticality of FLMit was added to the high availability framework and also included to our DR set up. FLMversion upgrade was carried out.

As part of our initiative to modernize our technology infrastructure and reduce manualtouch points we integrated weigh bridges to our ERP platform auto selection of vendorsat the time of floating tenders is in the pilot implementation stage.

R&D teams have been provided with latest design modelling and analysis software toimprove their efficiency and quality of designs that will reflect in the new designinitiatives undertaken in coming years. A new design centre was equipped with latesttechnology support to deliver best in class support to our product design function.

Technology support during Covid-19 lockdown was provided by swiftly enabling videoconferencing capability using popularly available tools in the market senior executivesand other select staff were enabled to work remotely for carrying out critical businessactivity using VPN.

The journey of leveraging technology will continue into next year through our pipelineinitiatives such as implementation of collaboration platform analytics customerrelationship management ERP enhancements Compliance Management.

Your Company is continuing with technology refresh programme as part of modernizationinitiative.

Cyber Security will continue to be our focus in coming years with a number of pipelineinitiatives to improve cyber security posture and build internal self-assessmentcapability.

Swachh Bharat Abhiyan:

The Company has joined hands with Hon'ble Prime Minister of India towards fulfillingthe dream of Mahatma Gandhiji for 'Clean India'. In this endeavor the Company hasundertaken the various initiatives under Swachh Bharat Abhiyaan & Swachh VidyalayaAbhiyaan during the current year 201920. Important Swachh Bharat Initiatives at BEMLLimited for 2019-20 are as hereunder:

a) Swachh Bharat Initiatives: BEML has adopted all Swachh Bharat initiatives likePledge taking conducting public awareness programmes on cleanliness Swachh VidyalayaEnvironment protection public awareness on cleaning nearby areas arranged for fixing ofawareness boards participation of employees/executives in 'Shramadaan' (100 Hrs in ayear) to ensure cleanliness of the work area & surroundings Training programme onwaste management importance of cleanliness walkathon organizing skit/street play tocreate awareness on cleaning and cleanliness construction of toilets vermi-compost binspainting of buildings extensive cleaning of hangars clean my street continuousHousekeeping & renovation of toilets fogging & eradication of mosquito menacefocus on creating plastic free zones etc.

b) Celebration of Fifth Anniversary of Swachh Bharat Campaign (Swachhta Hi Seva): As aprecursor to the 150th Birth Anniversary of Gandhiji Swachhta Hi Seva was organised from11th September 2019 to 2nd October 2019. The Theme for the year was Plastic WasteManagement and phasing out of Single Use Plastic (SUP). Various activities like Pledgetaking Mass awareness on Plastic Wastes its impact on environment ways to dispose ofplastic waste replacing usage of Plastic in Factory premises Townships & LocalCommunities was organised across the Divisions/Complexes/Offices of BEML Limited.Shramdaan for Swachhta was carried out by Employees/Executives/Students in the Townships& Local communities etc. The Locations for collections & segregation of Plasticwaste and Logistics for disposal was done through Authorised Agencies.

BEML had organized "Celebration of Fifth Anniversary of Swachh BharatCampaign" on 2nd October 2019 to coincide with the 'Gandhi Jayanthi'. Under theSwachhta Hi Seva celebrations various programmes like administration of Swachhta Pledgeorganizing special cleaning drives Walkathon to spread the message of cleanlinessdistribution and planting of saplings Painting & Drawing competitions ImpromptuSpeech competitions etc. were conducted at Corporate Office BEML manufacturing Unitslocated at Bengaluru KGF Mysuru Palakkad Regional & District Offices and also atits subsidiary Unit VIL-Tarikere.

c) Annual Action Plan for Swachh Bharat Activities: BEML has undertaken variousactivities as per the Annual Action Plan based on the recommendations of the Group ofSecretaries on 'Swachh Bharat & Ganga Rejuvenation' (GoS) for the period from 2019-20.The main activities were construction of toilets at School of Mines KGF Awarenessprogrammes for Employees/Executives/Students & Local Vendors Tree plantationRenovation of Toilets at Mysore Complex Maintaining & improvement of parks at MysoreSegregation of waste in association with local municipality Painting of Buildings &general up-keeping Horticulture activities Fogging for eradication of mosquitoesHousekeeping & cleanliness activities within factory premises Cleanliness ofTownships Local Communities Drainage systems weeding of old files/furniture in officesetc.

d) Celebration of Swachh Bharat Pakhwada: In line with the directives of Ministry"Swachhta Pakhwada" was organised across all the Divisions/Complexes/Offices ofthe Company from 16th to 30th of August 2019 and 1st December 2019 to 15th December2019 with a thrust for Plastic Waste Management and stopping Single Use Plastic (SUP).Various events/activities like oath taking ceremony March Past display ofposters/banners Awareness programs tree plantations Cleanliness drive in Factorypremises Townships Local Communities Shopping complexes Children ParksEssay/Painting/Drawing/Speech competitions Fumigations of insecticides Weeding of oldfiles/furniture/office equipment Disposal of scrap materials Mini-Marathon to spreadawareness on cleanliness Branding/publicity etc. as per the calendar of events wasconducted during the fortnights at Divisions/ Complexes and Offices of the Company.

e) Plogging: Picking up of Litter while jogging was organised by BEML on 7th December2019 in the Townships of Bengaluru Complex KGF Complex Mysuru Complex and PalakkadComplex of the Company. Around 800 Employees/Executives/Contract Personnel carried out thecleaning activity/ picking of litter while jogging from the Township premises. BEML SchoolStudents at KGF and School Students from the nearby schools at Mysore also participatedenthusiastically in the programme and carried out the cleaning activity while jogging.Waste /Litter was collected and disposed off through Authorised Waste Disposal Agencies.

Statutory Auditors:

The Comptroller & Auditor General of India has appointed M/s. V. Krishnan &Co. Chartered Accountants Bengaluru as the Statutory Auditors for the financial year2019-20.

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

Cost Auditors:

M/s R M Bansal and Co Cost Accountants Bengaluru were appointed as Cost Auditors forthe year 2019-20 in terms of Section 148 of Companies Act 2013 read with the Companies(Cost Records and Audit) Rules 2014 to conduct the audit of the cost records of theCompany. The Company maintains Cost records as specified by the Central Government undersection 148(1) of the Companies Act 2013 in respect of the Railway and Rolling Stocks(Bangalore Complex) other Machinery (Truck Engine EM H&P Divisions) and Power (EMDivision).

Further as required under the said Rules the remuneration payable to the Cost Auditorwas ratified by the members in the 55th Annual General Meeting held on 26.09.2019.

Secretarial Auditors:

Your Company appointed M/s V N Associates Practicing Company Secretaries (PCS)Bengaluru to undertake the Secretarial Audit of the Company for the year 2019-20 in termsof Section 204 of the Companies Act 2013 read with the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014. The Secretarial Audit Report given bythe PCS and the replies to the observations made in the said Report shall be annexed withthe Board's Report. In addition an Annual Secretarial Compliance Report issued by the PCShas been filed with the Stock Exchanges within 60 days from the end of financial year2019-20.

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

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 165 & 248 to the annual report.

Extract of Annual Return:

An extract of the Annual Return in the prescribed form in terms of Section 92(3) of theCompanies Act 2013 read with Rule 12 of the Companies (Management and Administration)Rules 2014 is placed at Annexure-VIII.


(1) Appointment/re-appointment of Independent Directors:

During the year the Government of India vide letter Ref: 8(2)/2014-D(BEML) dated10.07.2019 appointed Shri Arvind Kumar Arora (DIN: 07409509) as Independent Director ofthe Company. Further the Government of India vide letter Ref: 8(2)/2014-D(BEML)-Vol-IIdated

21.01.2020 appointed Smt. Balmuri Vanitha (DIN: 08679028) as Independent Director ofthe Company and her appointment has taken effect from 24.01.2020.

Shri B P Rao Shri Sudhir Kumar Beri and Shri M G Raghuveer ceased to be IndependentDirectors w.e.f. 02.12.2019 consequent to end of their tenure. The Board placed on recordthe appreciation of services rendered by the IDs whose tenure has ended during the year.

Pursuant to Schedule IV of the Companies Act 2013 the appointment/re-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-si te ofthe Compa ny a t 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 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 pursuant to Article 97 of Articles of Association of the Company. Further theGovernment communication also indicates the detailed terms and conditions of theirappointment based on applicability of the relevant rules of the Company.

In view of the above the performance of all Functional Directors and GovernmentNominee Directors is being evaluated by the Administrative

Ministry every year based on own evaluation methodology. Further considering theeducational qualifications age rich and varied experience of the applicants theAdministrative Ministry/ Department would appoint the IDs on the Board on therecommendation of Search Committee after obtaining approval of competent authority. Inaddition the assessment/ evaluation of performance of Independent Directors who will becompleting their 1 year extended tenure was undertaken by the Administrative Ministryduring November 2019.

Considering the above a separate evaluation criterion has not been framed by theCompany.

(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 was neither paid any remuneration nor sitting fee forattending Board/Committee meetings.

Independent Directors are paid only sitting fee of Rs.20000 per meeting of theBoard/Committee of the Board attended by them. Further if there are more than one suchmeeting on the same day a sitting fee of Rs.10000 is paid for the second and subsequentmeeting/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 2019-20are provided under the 'Report on Corporate Governance' annexed to this report.

(5) Change of Functional 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. Accordingly the followingappointments on the Board of your Company were effected during 2019-20 as per thedirectives of the President of India:

(i) Shri M V Rajasekhar (DIN: 08467141) Executive Director has been appointed asDirector (Mining & Construction Business) of the Company vide MoD letter No.8(1)/2018-D(BEML) dated 15.02.2019 in place of Shri B R Viswanatha. He took charge on 01.06.2019.

(ii) Shri R Panneer Selvam (DIN: 08075917) Executive Director (Corporate Planning& Materials) has been appointed as Director (Human Resources) of the Company vide MoDletter No.8(3)/2016-D(BEML) dated 27.11.2019. He took charge on 28.11.2019.

(iii) Shri Ajit Kumar Srivastav (DIN: 08741858) Chief General Manager (DefenceMarketing) has been appointed as Director (Defence Business) of the Company vide MoDletter No.8(1)/2019-D(BEMl) dated 16.03.2020 in place of Shri RH Muralidhara. He tookcharge on 01.06.2020.

Shri Suraj Prakash (DIN-08124871) Director (Finance) and Shri M V Rajasekhar (DIN:08467141) retires by rotation at the ensuing annual general meeting and being eligibleoffered themselves for re-appointment. Shri. B R Viswanatha and Shri. R H Muralidhara wereceased to be Directors consequent upon attaining the superannuation. The Board placed onrecord its deep appreciation for invaluable services rendered by Shri B R Viswanatha andShri. R H Muralidhara as Directors on the Board whose term of office ended during theyear.

(6) Number of meetings of Board:

During the year nine meetings of the Board were held on 25.05.2019 02.08.201926.08.2019 26.09.2019 02.11.2019 20.01.2020 11.02.2020 13.03.2020 and 23.03.2020.Requirements on number and frequency of meetings in terms of Section 173(1) of theCompanies Act 2013 Regulation 17(2) of Listing Regulations and Para 3.3.1 of the DPEGuidelines were complied with in full.

(7) Directors' Responsibility Statement:

Pursuant to section 134(3)(c) and 134(5) of the Companies Act 2013 your Directorsstate that:

(a) in the preparation of the annual accounts for the year ended 31.03.2020 theapplicable accounting standards has been followed along with proper explanation relatingto material departures;

(b) the directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year 2019-20and of the profit of the Company for that period;

(c) the directors had taken proper and sufficient care 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 directors had prepared the annual accounts on a going concern basis;

(e) the directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively.

(f) the directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.


Your Directors express their hearty thanks to the Company's valued customersGovernment of India Administrative Ministry the Ministry of Defence and in particularthe Department of Defence Production M/s Coal India Limited and its Subsidiaries M/s.Singareni Collieries Company Limited M/s Steel Authority of India Limited Railway BoardM/s Delhi Metro Rail Corporation Limited M/s Bengaluru Metro Rail Corporation LimitedM/s Jaipur Metro Rail Corporation M/s Kolkata Metro Rail Corporation M/s. Maha MetroRail Corporation Limited Integral Coach Factory- Chennai M/s Bharat Electronics LimitedM/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 and confidence reposed on the Company. The Directors alsoacknowledge and thank all collaborators vendors and other service providers for theirvaluable 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 for reposingcontinued 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 Ministry of Housing and UrbanAffairs Ministry of External Affairs and Ministry of Home Affairs. The Directors are alsograteful to the Government of Karnataka and Kerala for the support and co-operationextended 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
27.06.2020 Chairman & Managing Director