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BEML Ltd.

BSE: 500048 Sector: Engineering
NSE: BEML ISIN Code: INE258A01016
BSE 00:00 | 30 Sep 1484.85 3.25
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NSE 00:00 | 30 Sep 1482.80 2.90
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OPEN 1490.00
PREVIOUS CLOSE 1481.60
VOLUME 2804
52-Week high 1659.09
52-Week low 880.82
P/E 42.62
Mkt Cap.(Rs cr) 6,183
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Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 1490.00
CLOSE 1481.60
VOLUME 2804
52-Week high 1659.09
52-Week low 880.82
P/E 42.62
Mkt Cap.(Rs cr) 6,183
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

57 Annual Report of the Company along with Audited Financial Statement for the yearended 31.03.2021 as under:

Financial results:

(Rs in Crores)

Particulars 2020-21 2019-20
Revenue from Operations 3557 3029
Value of Production Profit before 3556 3321
Depreciation Interest and Tax 203 136
Finance costs 39 41
Depreciation and amortization expense 71 71
Profit Before Tax 93 24
Tax Expense 18 (44)
Other Comprehensive Income 76 43
Total Comprehensive Income (1) 25
Profit available for appropriation 329 337
Net worth 2224 2257

Revenue from Operations & Profitability:

Your Company achieved highest ever Revenue from Operations of 3557 crore as against3029 crore in the previous year increased by 17.45%.

Achieved highest ever Value of Production of 3556 crore as against 3321 crore in theprevious year increased by 7.09%.

With increased business and continued focus on cost control your Company registered aProfit before Tax of 93 crore as against Profit before Tax of 24 crore in the previousfinancial year increased by 285.74%.

Improvements in other financial / operational parameters are provided hereunder:

Defence Business registered a growth of 23.61% over the previous year.

Rail & Metro Business registered a growth of 16.91% over the previous year.

Mining & Construction Business achieved highest ever revenue from operations andregistered a growth of 16.06% over the previous year.

Palakkad Complex has achieved highest ever Revenue from Operations 283 croreregistering a growth of 23.29% over the previous year.

M&C and Defence spare parts business has achieved highest ever Revenue fromOperations 734 crore & 182 crore registering a growth of 8.26% & 25.52%respectively over the previous year.

Revenue from operations per employee increased by 28%.

Value added per employee is 25 lakhs as against 22 lakhs in the previous year ajump of 13.64%.

Employee cost to revenue from operations down by 4%.

Inventory down by about 2%.

Despite the spread of COVID-19 Pandemic during the year Your Company had achievedimprovement in all parameters as mentioned above with the unstinted efforts of employeesand executives of the Company.

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 31.03.2021 till the date of this report.

Exports:

During 2020-21 your Company made exports aggregating 463.63 crore which includesphysical exports of 28.24 crore deemed exports of 434.90 crore and export incentive of0.49 crore as against 62.34 crore which includes physical exports of 14.50 crore deemedexports of 47.01 crore and export incentive of 0.83 crore during the previous year.

Order Book Position:

Your Company recorded highest ever order book position of 11363 crore as on 01.04.2021as against 9795 crore orders in the previous year a growth of over 16.01%. The Orderbook comprises of three business verticals i.e. Mining & Construction Defence &Aerospace and Rail & Metro and in particular Defence & Aerospace Business baggedhighest ever orders worth 2453 crore from MoD & Defence Services during the year.

Performance vis-a-vis MoU:

Performance of your Company in terms of the Memorandum of Understanding (MoU) signedwith the Department of Defence Production Ministry of Defence (MoD) Government of Indiawas rated as 'Good' for the financial year 2019-20 and the rating for the financial year2020-21 is under self-evaluation.

Dividend:

Your Board of Directors approved an interim dividend of 4.80/- per equity share i.e.48% on equity shares of 10 each at its Board Meeting held on 10.02.2021 which wasdistributed among the eligible shareholders. Further the Board of Directors hasrecommended a final dividend of

1.20 per equity share i.e. 12% on equity share of

10 each aggregating to a total dividend of 6.00/-(i.e. 60% on equity share capital)for FY 2020-21 keeping in view the future prospects of the Company and at the same timemeeting the aspirations of the shareholders.

Your Company formulated a 'Dividend Distribution Policy' which includes the parametersand circumstances in determining the distribution of dividend to its shareholders and/orretaining profits earned by the Company in terms of Regulation 43A of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015. The said Policy is posted onCompany's website https://www. bemlindia.in/writereaddata/Downloads/201806251810Dividend%20Distribution%20Policy.pdf.

Strategic Disinvestment:

Ministry of Defence (MoD) vide its letter dated 01.12.2016 communicated that CabinetCommittee on Economic Affairs (CCEA) had accorded "in-principle" approval forstrategic disinvestment of 26% equity in the Company out of Government of Indiashareholding of 54.03% along with management control. Inter-Ministerial Group (IMG) wasconstituted by the competent authority. Department of Investment & Public AssetManagement (DIPAM) has appointed M/s. SBI Capital Markets Limited as Transaction Advisor(TA)

& M/s. Crawford Bayley as Legal Advisor (LA) and Ministry of Defence (MoD) hasappointed M/s. RBSA Valuation Advisers LLP Ahmedabad as Asset Valuer (AV) respectively.Further based on the advice of Inter-Ministerial Group (IMG) road shows were completedand Preliminary Information Memorandum (PIM) was published on 04.01.2021 for globalinvitation of Expression of Interest (EOI). EOI from interested bidders have been receivedand evaluation process by TA is under progress.

MoD advised to hive-off identified surplus / non-core assets separately and excludedthem from the process of strategic disinvestment of BEML. DIPAM has appointed twoConsultants M/s. CBRE South Asia Private Limited Gurgaon and M/s. JLL PropertyConsultants (India) Private Limited Gurugram for monetization of identified surplus /non-core assets and the same is under process.

Based on IMG advice BEML had appointed M/s. Deloitte Haskins & Sells LPP asconsultant for advising undertaking and implementing the Demerger of identified surplus /non-core assets of the Company which are not part of BEML strategic disinvestment.

For demerger of identified surplus / non-core assets a separate Wholly Owned Subsidiary(WOS) of BEML by name "BEML Land Assets Limited" has been incorporated on15.07.2021.

Finance:

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 reaffirmed the long-term rating of [ICRA]A+ and theshort-term rating of [ICRA]A1+ for 4500 crore raised towards fund-based cash credit andnon-fund-based bank guarantee & letter of credit facilities. The outlook on thelong-term rating is Negative due to covid pandemic prevalent across India.

Further the Company had issued Non-convertible Debentures (NCDs) of 300 crore during2012 out of which the first tranche of 100 crore was redeemed on 18.05.2020 and thesecond tranche of

100 crore was redeemed on 18.05.2021. The Company has paid the redemption amount alongwith interest to the debenture holders. ICRA has affirmed the rating of long term NCDs of200 crore with [ICRA]A+. Brickwork Rating has also affirmed the rating for NCDs with BWRAA/Stable. These ratings are considered to have a high degree of safety regarding timelyservicing of financial obligations.

Your Company has raised funds through Commercial Paper (CP) within the sanctionedlimits on four occasions i.e. (i) 2000 units valuing 100 crore on 24.06.2020 and maturedon 22.09.2020 (ii) 3000 units valuing 150 crore on 22.09.2020 and matured on 23.12.2020(iii) 3000 units valuing

150 crore on 23.12.2020 and matured on 23.03.2021 and (iv) 4000 units valuing 200crore on 19.05.2021 and matured on 17.08.2021. ISIN numbers have been generated throughNSDL/CDSL and listed with BSE. ICRA has affirmed the rating of [ICRA]A1+ for CP which isconsidered to have very strong degree of safety regarding timely payment of financialobligations. Such instruments carry lowest credit risk. Any change in the credit ratingsis being communicated to Stock Exchanges and the same are placed on Company's websitehttps://www. bemlindia.in/Credit_Rating.aspx.

Pursuant to SEBI notification and BSE Circular BEML is identified as Large Corporate(LC) for the year 2020-21 as per the framework provided.

As mandated by the Ministry of Corporate Affairs the financial statements for the yearended 31.03.2021 has been prepared in accordance with the Indian Accounting Standards (INDAS) notified under Section 133 of the Companies Act 2013 read with the Companies(Accounts) Rules 2014. The estimates and judgments 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 31.03.2021.

The Company's contribution to Central and State Exchequers were in the order of 333crore during the year by way of Customs Duty GST Dividend etc.

Internal Financial Controls:

Your Company has various manuals such as manual for Accounts Cost Accounting &Pricing Stores Purchase Audit Shop etc. and the same are being periodically updatedcirculated and also uploaded in 'BEML Bulletin Board' for viewing and compliance byemployees and officers concerned for carrying out various activities in a transparentmanner and in line with the delegation of powers and no instances of material weakness inthe operations has been observed. The internal audit process is designed to review theadequacy of internal control checks in the system and covers all significant areas of theCompany's operations. Further the Company has put in place adequate Internal FinancialControls (IFCs) with respect to Financial Statements. The adequacy of IFCs over financialreporting is covered by the Statutory Auditors in their Audit Report. In addition thedetails of the IFCs are included under the heading 'Internal control systems and theiradequacy' in the Management Discussion & Analysis Report which forms part of thisreport.

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. Hence there was no defaultin payment of deposits / interest thereon.

Foreign Exchange Earnings and Outgo :

During the year the Company's foreign exchange earnings stood at 280 crore and thetotal foreign exchange utilized was 327 crore.

Further a sum of 0.12 crore was incurred towards deputation of personnel abroad forbusiness/ export promotion after-sales-services and training purposes.

Particulars of Loans Guarantees or Investments :

As per the provisions of Section 186 of the Companies Act 2013 the details of LoansGuarantees and Investments are given in the notes forming part of Financial Statement.

Quality :

Your Company views quality improvement as a business strategy and hence remainsproactive in the areas of product and service quality. At BEML Corporate Quality Policyemphasizing Total Quality Management (TQM) ensures that Products Services and Processesmeet stringent standards and requisite performance criteria. A separate Quality Departmentspearheads the thrust towards Total Quality Management.

All manufacturing divisions have been certified for

Quality Management System (QMS) to ISO 9001-2015 Standard and also for EnvironmentalManagement System (EMS) to ISO-14001 2015 Standard. Further Bengaluru Complex iscertified for Occupational Health & Safety standard as per BS OHSAS 18001-2007. BEMLAerospace manufacturing division (ASMD) Mysuru complex is certified to AS9100D Aerospacestandard. For the current year Rail & Metro division Bengaluru complex is alsocertified to ISO-3834 Welding Standard Level-1 Qualification. This is a prerequisite towelding certification for EN15085 Rolling stock welding management system for which finalcertification is awaited. This has helped Company to bid against stringent RFQqualification during International Bidding process. Further BEML Aerospace is accreditedwith NADCAP quality management system certification for Fluorescent Penetrant Inspection(FPI) and Heat Treatment of Aluminium components. These certifications will facilitateBEML to associate with global OEM's / Tier-1 & Tier-2 firms.

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

By entering into MOU with M/s WRI Trichy many Welding Quality issues of Rail andMetro verticals were resolved. Independent Audit carried out by M/s. WRI team on BMRCL /MRS-1 Bogie Frame and recently delivered MEMU Coaches has helped the Division to overcomeweld distortion & other Quality issues and thus resulted in overall improvement ofWelding Quality.

Vendor development remains the "focus area" to improve quality of vendorssupplies. During the year focus was given to upgrade the Quality system of vendors byextending technical support and encouraging vendors to improve their Quality Controlmechanism which resulted in increase of ISO 9000 certified vendors to around 90%.

Process of Self-certification for Defence Spares was initiated during previous yearand Self Certification status was awarded by DGQA during August 2020. With this BEML cansupply over 6700 identified parts with self-certification.

Quality Assurance system is being continuously monitored across all themanufacturing divisions to ensure Quality improvements in Design Processes and Systems.Few initiatives taken through Cross Functional Team (CFT) towards Quality Improvementacross the divisions are as under.

(i) 585 Kaizen projects were implemented across the Divisions.

(ii) 148 Quality Improvement projects were implemented to reduce rejection andovercome field issues.

(iii) 36 Design and Process improvement to enhance reliability of products wereimplemented during the year.

(iv) 229 nos. Jigs & Fixture were added and upgraded to improve manufacturingQuality.

(v) 152 Vendor visits and Vendor process Audits were carried out to improveIncoming Material Quality.

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

To encourage Quality Improvement initiatives at Divisions Quality Circle activitiesare promoted in the organization. Inter divisions Quality Circle competition known as BEML"NONIMARA AWARD" was conducted during Nov-2020. Subsequently the winning teamswere nominated to participate in National and International level Quality Circlecompetition. In National level two teams from BEML won Par-Excellence / Excellence awardand now they are eligible for international level Quality Circle Competition ICQCC 2021.

Make in India Initiative and Indigenization:

BEML recognizes indigenization activity (Atmanirbhar Bharat) as one of the strategictools to achieve cost benefits and also complement the strengths of private sector tobuild a strong industrial base.

BEML has achieved level of indigenization over 90% in the mainline M&C productsRail coaches & EMU's over 84% in High Mobility vehicles (HMV) and over 65% in Metrocars. Further efforts are underway to reach higher levels.

During the year under this initiative Company has designed and developed products suchas India's first driverless Metro car Mainline Electrical Multiple Unit (MEMU) in Rail& Metro Minefield Marking Equipment MK-II 117 HP HeliPortable Dozer (BD50HST) inDefence and 150 Ton Dump Truck

0

(BH150E) BE1800D Excavator AI based 360 Surrounding View Monitoring System for miningequipment in Mining & Construction.

To further enhance indigenization levels in High Mobility Vehicles ToT has been signedfor manufacture of cabins and one proto type has been developed. Development POs havesince been placed for 214 items for Indigenization under Atmanirbhar Bharat out of which107 items have been indigenized during 2020-21.

Further with the overarching objective of 'Make in India' and enhancing'Atmanirbharta' in line with the vision of Hon'ble Prime Minister of India growthstrategy (Project Abhyudhay) exercise has been taken up by your Company to achieve theaccelerated growth and sustainable financial performance over next 4-5 years. BEML islooking to significantly augment its business by strengthening and broadening its corebusinesses and exploring adjacent and new opportunities with adaptive strategies forenhancing resilience in today's uncertain business environment with a thrust on exportsand globalization as the driving theme. M/s Mckinsey & Company Inc is appointed as themanagement consultant. The expected revenue contributions from Railways & Metro willbe around 40% Aerospace & Defence around 25% Mining & Construction around 25%and Exports around 10% for which immediate-term initiatives like accelerating strategicpartnership with global OEMs in the Aerospace & Defence and Rail & Metro segmentand Industry 4.0 technology integration Mining & Construction segment have beenrecommended.

Renewable Energy Development Energy Conservation Research & Development andTechnology Absorption:

(i) Renewable Energy Development:

Your Company had installed 23MW Windmill

Projects and 250KWp Solar Power units in realizing the goal of 'Go Green'. With thisand other initiatives Green Energy for Captive Consumption stood at 94% which is highestever and registered an increase of 8% over the previous year resulting in mitigation of25381 tons of carbons during the year 2020-21.

(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 to reduce heat loss and conserve energy.Further changeover to LED lighting system is being carried out in townships.

(iii) Research & Development and Technology Absorption:

With an objective to meet Global Standard in Design your Company has set-up'Innovation Centre: Industrial Design' during the year. The basic purpose of setting up"Innovation Centre : Industrial Design" is to:

Bring in requisite competitive edge in product design for the national/international markets.

Promote a culture of Industrial Design innovation and creative problem solving forBEML products.

Promote knowledge sharing and collaboration amongst industry academia andGovernment Institutions.

It will also provide an ecosystem to support introduction of world class products withunique styling which will assist the growth of the Company in all three businessverticals. BEML's Industrial Design Centre located at its Bengaluru Complex wasinaugurated by Hon'ble Defence Minister Shri Rajnath Singh on 10 August 2020.

Your Company has given special focus to spread the awareness about innovation cultureand intellectual property rights (IPRs) in the Company. During the year 55 IPRs whichincludes 13 patents 9 designs 18 copyrights and 15 trademarks were registered which was110% of the MoD target (50). Further 8 technical papers were published by R&Dengineers in national / international journals / conferences during the year 2020-21.

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 Centersat KGF Mysuru & Bengaluru are recognized by the Department of Science &Technology Government of India.

During the year 2020-21 R&D test facilities have been upgraded with latest testingequipment. The R&D set-up of Mining & Construction Defence & Aerospace andRail & Metro is engaged in development / up-gradation of various products in theirrespective segments. All R&D set-ups are also engaged in indigenization anddevelopment of import substitution products.

About 69% 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-I.

Vigilance:

Your Company has a Vigilance Department headed by an independent full-time ChiefVigilance Officer (CVO) till 03.01.2021 and part-time CVO from 04.01.2021 to 15.08.2021. Afull-time CVO has been appointed w.e.f. 16.08.2021. The Vigilance Activities were carriedout in a holistic manner and covered prevention detection and enforcement.

Vigilance is basically and admittedly a managerial function and therefore it is anintegral part of the duties of an executive. CVO advises management on all matterspertaining to Vigilance. As an extended arm of the Central Vigilance Commission in itsexercise of superintendence over Vigilance Administration of the Company CVO provides thelink to the Administrative Ministry and the CBI.

Complaints received by the Vigilance Department were handled as per Complaint HandlingPolicy of the Company & CVC guidelines. Such complaints were registered after owningand investigated only after determining 'Vigilance Angle' by CVO. The registeredcomplaints are disposed after detailed investigation. During the year 2020-21 02registered complaints were carried forward from 2019-20 and 12 fresh complaints werereceived out of which 13 complaints were disposed during the year. After dueverification/investigation recommendations were made to the Management.

Surprise checks periodic checks scrutiny of purchase orders/contracts scrutiny ofTA/DA & Medical reimbursement claims scrutiny of Annual Property Returns 07 CTE typeof in-house inspections and 11 system studies were conducted during the fiscal year2020-21. Based on the outcome of these systemic improvements were recommended tomanagement & implemented which mainly pertain to process improvements management ofprocurement activities contract stores/inventory engagement of advisors/ consultantsquality of products/ aggregates etc.

From April 2020 to March 2021 4390 vigilance clearances have been processed on-line(and some special cases off-line) for executives and employees of BEML on the 'SAMPARK'Portal.

Based on Vigilance recommendations:

(a) New SOPs have been released for Reverse Auction Proprietary Certificateconducting negotiation in special cases and Physical Stock Verification at RegionalOffices.

(b) Major IT initiatives in 2020-21:

Linking of SAP and SRM

Linking of Weighbridge to SAP

Vendor Bill/Payment Tracking and Alert System as per CVC guidelines

Online receipt and auto return of Tender fee & EMD in Tenders

New SAP T-Code to effectively monitor Performance Bank Guarantee

Medicine issues at Medical centre

BEML Vigilance Department has been accredited with ISO 9001:2015 Certification afterscrutiny of all procedures in the Vigilance department by a third party agency. This isthe first time in BEML that Vigilance department is accredited with the latest version ofISO 9001:2015 at all BEML locations.

Vigilance Awareness Week-2020 (VAW-2020) with the theme "Satark Bharat SamriddhBharat" was observed in the Company during 27 October 2020 nd

to 2 November 2020 in line with the directives by Central Vigilance Commission (CVC).Citizens Integrity pledge was also administered to the Staff of BEML Limited as well asstudents & staff at schools and colleges where the Company had organized events aspart of observance of VAW 2020. Also considering the pandemic situation many GuestLectures by eminent personalities in relevant field with topics of current relevance wereorganized by Vigilance Department virtually.

A 'Vendor Meet' was organised at Corporate Office of BEML on 21 October 2020 virtually& simultaneously across all divisions of BEML 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 addressed& suggestions for improvement were noted.

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

During 2020-21 CVO inspected Regional/District offices of BEML Limited andrecommendations on systemic improvements were made such as improving stores activitiesstreamlining supplies to Stores inventory management clearing of bills customercomplaint handling as well as management of BEML land good practices to be adopted etc.

Whistle Blower Policy:

Your Company has formulated "Vigil Mechanism / Whistle Blower Policy" fordirectors and employees to report genuine concerns as per the provisions of Section 177(9)of the Companies Act 2013 Regulation 22 of the Listing Regulations and Para 4.3 of theDPE Guidelines. The said policy provides for adequate safeguards against victimization ofdirector/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 and Competent Authority. In terms of Regulation 46(2)(e)of the Listing Regulations the said policy is placed on the Company's websitehttps://www.bemlindia.in/writereaddata/ Downloads/202102251405Whistle_Blower_Mechanism.pdf.

Integrity Pact:

Pursuant to the directives from Central Vigilance Commission and Ministry of DefenceIntegrity Pact (IP) is being adopted with all Vendors / Supplier's / Contractor's /service providers for all orders / contracts of value Rs1 crore and above. The IPessentially envisages an agreement between the prospective vendors / bidders and theCompany 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 committhemselves to such a pact with the principal would be considered competent to participatein the bidding process. IP in respect of a particular contract would be operative fromthe stage of invitation of bids till the completion of contracts. Any violation of thesame would entail 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 2020-21 2746 crore worth of purchase orderswere entered into IP.

Procurement:

Your Company has implemented "Online Vendor

Payment Tracking Option" to suppliers/ partners as part of continuous improvementtowards transparency and convenience to check status of payments against supplier/services/ payment orders. Tender status updates are provided through automatic emails tobidders with reasons for rejections. After opening of the Price Bids all technicallyqualified/ pre-qualified bidders will be able to see the price details of other bidssubmitted against the tender.

BEML endeavors to procure materials and services through e-procurement platform on ERPsystem. BEML upgraded the e-procurement software i.e SRM version from SRM-5 to SRM-7which is having encryption facility for better security. During the year about 87% of thetotal requirement was sourced through e-procurement.

Procurement through GeM:

Government e-Marketplace (GeM) is implemented by the Government with the aim totransform the way in which procurement of goods and services is done by the GovernmentMinistries and Departments Public Sector Undertakings and other apex autonomous bodies ofthe Central Government. The portal was launched on 9 August 2016 by the Commerce &Industry Minister. Procurement on GeM has been authorized by General Financial Rules bymaking necessary changes in government rules. GeM is a completely paperless cashless andsystem driven e-market place that enables procurement of common use goods and serviceswith minimal human inter face. During the year 2020-21 your Company has procuredmaterials & services worth 106.36 crore

( 1.06 crore for FY 2019-20) through GeM constituting 6.15% over the total domesticprocurement value and further efforts are being made to improve the procurement throughGeM.

Micro and Small Enterprises :

Your Company has systematically developed extensive vendor base covering most of theoutsourcing requirements. As per the directive of Government minimum 25% (from 9November 2018) of procurements have to be procured from Micro & Small Enterprises(MSEs) amended from 20% earlier and provide a minimum 3% reservation for Women owned MSEsand 4% for SC/ST Enterprises. During the year 2020-21 Company has procured 513 crore outof 1727 crore local procurement which constitutes about 30% from

MSE's which is the highest ever. Further Company is procuring materials required forproduction & for other requirements through MSEs. 358 items which are reserved arebeing procured exclusively from MSEs. Appropriate weightage has been given for MSEs in theMoU from the year 2015-16 onwards.

Your Company is making the payments through Trade Receivable e-Discounting System(TReDS) platform for registered MSME Vendors with TReDS platform service providers M/sReceivables Exchange of India Ltd and M/s Mynd Solutions Pvt Ltd thereby reducing theworking capital cost of MSME vendors. As on 31.03.2021 51 BEML vendors registered inTReDS platform and 20 crore approx. transacted through this platform.

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:

Vendor development is a continuous process to identify and develop new vendors to bringin competition among the vendors and to reduce costs. The methods generally followed toidentify potential new vendors are; Publication of Expression of Interest (EoI) in BEMLWebsite for registration of new vendors development of critical items and importsubstitute items Participation in exhibitions and seminars and Organize Vendor meetsincluding virtual. Accordingly 75 vendors have been included through EoIs publishedduring the year 2020-21.

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. Policies procedures and guidelines areput in place to facilitate outsourcing and the Company has established Vendor DevelopmentCell as a single window help desk:

New vendors can register through Online/ Manual.

New vendors are supported by way of imparting knowledge on manufacturing processesspecifications 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 EoIparticipation 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.

Rajbhasha :

During 2020-21 your Company has achieved various targets prescribed in the AnnualProgram 2020-21 issued by Department of Official Language Ministry of Home Affairs andGovernment of India to transact official work in Hindi. Company is committed to adhere tothe Official Language (OL) policy of the Government of India. The efforts made towardsimplementation of OL include:

Online Half yearly meeting by various Town Official Language ImplementationCommittees (TOLICs): A total of 10 Online Hindi meetings on OL conducted during the yearunder review by TOLIC Bengaluru Singrauli Nagpur Mumbai Mysuru Kolkata HyderabadDhanbad New Delhi and Chennai.

Bilingualisation: A comprehensive document of bilingual standard correspondence(pre-recruitment to post-retirement) of HR Department was prepared and issued by OLDepartment for usage in all Units / Offices of the Company. Section 3(3) documentsreplies to the letters received in Hindi correspondence Rule 11 items (stationary codesand manuals procedural literature) are being issued in bilingual in all Units and officesof company in accordance with OL rules.

Hindi Fortnight Celebrations: Hindi Fortnight was observed with great zeal in theCorporate Office all Complexes and all Regional/District offices from September 14 2020to September 28 2020. During this period officers and employees were motivated to dotheir maximum work in Hindi and competitions such as Hindi Quiz Hindi CrosswordAdministrative Terminology Hindi calligraphy Antakshari Noting & Drafting etc.were organized in virtual manner. Pledge was taken on Hindi Day i.e. on September 14 2020across the Company in accordance with the guidelines issued by the Ministry of Defence andDepartment of Official Language Ministry of Home Affairs.

Hindi Training: A total of 213 executives/ employees were trained in various coursesof Hindi under Hindi Teaching Scheme of Government of India during the period underreview.

Hindi workshops: A total of 19 Hindi workshops have been convened among which someof the workshops have been arranged online and a total of 454 executives/employees weretrained in these workshops across BEML.

3 Issues of "BEML Journal" in Hindi have been brought out during the year.

Company's website is also available in Hindi and being updated simultaneously. Effortsare in progress to ensure OL Implementation and achieving progressive usage of Hindiacross BEML.

Awards & Recognitions:

On 15 October 2020 Company received the

prestigious 8 Annual Equipment India Awards 2020 in 'Best Seller in Crawler Dozers'& 'Best Seller in Rigid Dump Trucks' categories.

On 28 October 2020 Company received the prestigious SKOCH Award in Gold Categoryfor outstanding work in response to contain COVID-19.

BEML has been awarded with 'Digital PSU

Award 2020' in the 7 Governance Now PSU 2020 for various digital initiativesimplemented by BEML.

Manpower :

The number of employees of the Company as on 31.03.2021 stood at 6053 as against 6602of the previous year resulting in over 8.31% reduction.

The category-wise number of SC/ST and Ex-Servicemen employees as on 01.01.2021 andrecruitment made are as under:

Category / Total No. of SC/ST and Ex-servicemen
Group Strength As on Scheduled Caste Scheduled Tribe Ex-Service Men
1.1.2021 1.1.2020 1.1.2021 1.1.2020 1.1.2021 1.1.2020 1.1.2021 1.1.2020
Group-A 1977 2049 367 382 108 107 23 25
Group-B 61 71 10 12 2 4 0 0
Group-C 4112 4595 941 1038 235 248 215 223
Group-D 8 15 5 8 1 3 0 0
Total 6158 6730 1328 1440 346 362 238 248

The Company has recruited 2 candidates in Group A i.e. 1 each from General categoryand Scheduled Tribe during the year under review.

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.

Human Resource Development & Industrial Relations:

Your Company pioneer of indigenously manufactured equipment & a flag-bearer ofIndia's Engineering Sector supplies global standard products to multi-sectors such asDefence & Aerospace Mining & Construction Rail & Metro is known for itscompetiveness in-house R&D cost effective & creative solutions to the Customers.In this journey BEML considers 'Skills Development initiatives' as the key to promoteCompany's economic growth & competitiveness. Through multi-dimensional SkillTrainings BEML ensures absorption of sophisticated Technology in its business areas byits workforce towards making the state-of-the-art Products in-line with the India's needfor self-reliance ('Atmanirbharata').

During 2020-21 amidst Corona virus & challenging situation BEML rapidlytransitioned from the traditional class-room based Skill-Training & developmentsessions to the on-line Programmes across the Company locations. In-line with the Covid& Employee safety protocols BEML adapted to the new Learning & collaborationtechnology for virtual delivery of various programmes.

During the year 104 External and 333 Internal Training & Skill DevelopmentProgrammes on various technical functional behavioural areas were conducted covering6113 Executives and 7800 Employees encompassing all manufacturing Complexes MarketingDivision & Corporate Office equivalent to 14212 Man-days surpassing the Target by7% in spite of the Covid scenario. In line with the Govt of India directives under'Mission Raksha Gyan Shakti (MRGS)' BEML has imparted IPR Training Programmes to 293 BEMLPersonnel against the Target of 250 of Ministry of Defence. IPR training was also extendedto 169 Vendors covering across locations.

During the year 2020-21 BEML implemented a series of Skill Development Initiatives(SDI) spanning across various Functions & organizational levels. A Certificateprogramme for Senior Executives namely 'Creating High Resilient Boards that deliver' wasconducted in collaboration with CII as part of Succession Planning Process. As 'Coaching'signifies very high importance in an organization BEML continued to focus on 'GroupCoaching' Skill Development. Multiple Technical Programmes like 'Metallurgical FailureAnalysis of industrial Components' 'Autonomous Maintenance as a Tool to enhanceproductivity' 'Virtual series on Emerging Technologies' 'Executive Diploma in ProjectManagement (EDPM)' etc. were imparted to enhance our Employees Skill level.

BEML acknowledges the support of Department of Public Enterprises (DPE) for sponsoringBEML Executives to important Training Programmes namely 'Procurement Policy Procedure''High Impact on Corporate Governance' 'MoU Guidelines'.

BEML ensured to provide Skill & Knowledge Programmes on contemporary areas ofEthics (PRAYAAS) & Preventive Vigilance Corporate Governance Emotional IntelligenceArbitration Techniques Strategic Planning & Decision Making Risk ManagementArtificial Intelligence Industry 4.0 Emergency/Crisis Management Contract ManagementReliability Engineering etc. to its R&D IT & Manufacturing teams.

The transparent and continuous communication with all employees in the shop floor isthe driving mantra of smooth and peaceful Industrial Relations Scenario in the Company.The thrust given to participatory culture which was instrumental in maintaining aconstructive harmonious relationship between the management and the unions / associations.Regular meetings with the representatives of the recognized unions / officers associationsat the Divisional Complex and Corporate levels were held and resolved employee relatedissues amicably. The functioning of various bi-partite committees at Complex level focusedon improvement of overall performance of the Company by resolving issues mutually inproduction related matters.

Skill Development Initiatives (SDI):

Your Company is committed to Skill & Competency development of Employees ContractWorkmen Vendors Customers Local Youth etc. as an integral part of the Govt of IndiaPolicy. The umbrella framework for Skill Development activities are as detailed below:

(a) Centre of Excellence (CoE):

All the major Manufacturing Complexes of BEML located at Kolar Gold Fields (KGF)Bengaluru Mysuru & Palakkad have Centre of Excellence (CoE) to support SkillDevelopment:

KGF Complex:

• School of Hydraulics & Welding specialized in Hydraulic System andStructural Welding used in equipment like Dozers Hydraulic Excavators HydraulicCylinders & Pumps. Both practical training & theory classes for skill up-gradationof Employees & Contract Operators are deployed.

Bengaluru Complex:

• CoE at Bengaluru Complex focuses on Training on Stainless Steel Welding andWire-Harnessing to support the High-tech Metro Car manufacturing.

• It also provides Training on Mild Steel Welding & provides Welders'Certification Training conduct Tests to meet the requirement as per EN15085 Standards.

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

Mysuru Complex:

• Mysuru Complex houses specialized CoE in Electrical & Electronics devicesused for heavy equipment like Dumper Motor Grader etc.

• The Centre provides intensive practical & theorical Training on CalibrationWire-Harnessing Trouble Shooting of Equipment to Service personnel & Customersrepresentatives.

• It also provides Certification programme on Electrical & Electronics TradeApprentices.

• Various Trouble Shooting Projects for Service Engineers & Employees areundertaken which also supports skill & Knowledge building process.

Palakkad Complex:

• CoE at Palakkad Complex specializes on Power-Train mechanism including AxleEngine Transmission Differential Assembly & Electrical system of heavy vehicles likeTATRA and other equipment used for Defence Applications.

• The CoE also provides systematic training for Defence Service personnel onvarious Skill Training.

(b) Service Training Centers:

At BEML Service Training Centers at KGF and Mysuru Complexes provide systematic &customized training on new equipment subsystems trouble shooting efficient operationsetc. for BEML personnel Defence officials & employees of major Customers like CoalIndia & its subsidiaries NLC NMDC SAIL NALCO etc.

During the year 2020-21 these Service Training Centers at KGF & Mysuru havetrained 318 & 1196 personnel from Customers Organizations and BEML respectively.

(c) Apprenticeship Training:

BEML as a responsible Corporate citizen supports national priority of buildingvocational & technical training on a large scale to the sections of the youth in andaround the states of Karnataka Kerala Tamil Nadu Andhra Pradesh etc.

These Trainings for various types of Apprentices are imparted for various Trades/areassuch as Fitter Machinist Welder Turner Electrician Automobile Electronics &Communication Civil Computer & Information Science etc. as per the guidelines ofRegional Directorate of Skill Development & Entrepreneurship (RDSDE).

BEML Apprenticeship Training Centers located at its four Manufacturing Complexes. Itprovides one-year & six-month duration

Industrial Training to the respective groups of Graduate Engineering StudentsTechnician Trainees & Trade Apprentices. All Trainees are allotted differentmanufacturing shops/areas to gain the hands-on skills & experience followed bytheoretical & Practical examination leading to acquiring the proficiency certificatesby the Regional Directorate Board. They are also provided inputs on Best practices onIndustrial Safety Kaizen 5S ISO Systems etc.

BEML has been ensuring the mandatory compliance of Trade Apprentice strength as minimum2.5% of total manpower of the Company. As at the end of 31.03.2021 the average TradeApprentice strength is 7.97% for the 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 2020-21 BEML has entered into an MoUs & ToT with world's leadingTechnology partners/ Organizations like Council of Scientific and Industrial Research(CSIR) National Aeronautics Laboratory (NAL)-Bengaluru UP Expressway IndustrialDevelopment Authority (UPEIDA)-Lucknow Advance Navigation Positioning Company (ANPC)-USAPrimoco UAV SE-Czech Republic Torus Robotic Pvt. Limited-Chennai OutduMediatech Pvt.Limited-Bengaluru SKAT Systems-Russia Hacklab Solutions Pvt Limited-Bengaluru JSC'Rosoboron' export-Russia S'YOMKA S VOZDUHA (Shooting from Air)-Russia Adani DefenceSystems & Technologies Limited-Ahmedabad. In order to leverage the cutting-edgetechnology to build the future people capability to remain ahead of the competition BEMLalso has tie-ups with IIT-Kanpur & NASSCOM.

Compliance under the Right to Information Act 2005:

The requisite information for citizens pursuant to Section 4(1)(b) of Right toInformation Act 2005 (RTI) is provided on Company website i.e. www.bemlindia.in. Itcontains general information of the Company functions duties powers of employees /executives decision making process rules regulations manuals & records held byBEML directory of the Company's executives pay scales of executives / employees etc.and procedure for seeking information and inspection of Records. The Company has nominateda Central Public Information Officer Appellate Authority Transparency Officer and SixCentral Assistant Public Information Officers representing for Complex/Divisions to attendto the queries and appeals. Further during the year 2020-21 the Company received 121Applications seeking information pertaining to human resources recruitment contractstenders business related matters etc. and the same were disposed of.

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.

Prohibition of Sexual Harassment of Women at Workplace :

An Internal Complaints Committee (ICC) has been constituted and is functional in allComplexes / Divisions for receiving complaints of Sexual Harassment if any under theprovisions of the Sexual Harassment of Women at a Workplace (Prevention Prohibition &Redressal) Act 2013 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 2020-21. Further the sexual harassment of Women at work place is notified asmisconduct as per BEML CDA Rules 2019 applicable to Officers and Certified StandingOrders applicable to Workmen.

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 rankof Executive Director / Chief General Manager meets all the Cell Officers LiaisonOfficers and Office Bearers of SC/ST Welfare Associations periodically and monitor thestatus on redressal 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 General Manager HR (Offtg.) as the Nodal Officer to deal withvarious public grievances and to ensure prompt and proper feedback to the concernedpersons.

Environment and Pollution Control:

Your Company in association with the State Forest Department had undertaken planting ofsaplings at its Manufacturing Complexes and Townships on a regular basis. During theperiod from April 2020 to March 2021 a total of 11104 Nos. of Tree Saplings have beenplanted at Corporate Office KGF Bengaluru Mysuru and Palakkad Complexes.

The Company's 5MW Windmill at Gadag and 18 MW Windmill at Bagalkot Districts inKarnataka have contributed towards ensuring clean energy by mitigating 25381 Tons(approx) of Carbon up to

March 2021. In order to conserve energy the Company has undertaken to replace all itsoffice light fittings with LED Lighting in a phased manner. At Corporate Office 100%achievement has been made in replacement of light fittings with Energy efficient LEDLights. At other Divisions / Complexes the same are being done in a phased manner.

The Company in association with the Local Authorities and the Communities of theadopted villages has facilitated Desilting & Rejuvenation of Ajjappanahalli VillageLake Kodi Kannur Village Pond Bethmangala and Ramasagar Lake by providing BEML Dozers.These Lakes have sustained the adopted village with the required water facilitiesespecially during Covid.

Swachh Bharat Abhiyan:

The Company has joined hands in the National Mission towards 'Clean India'. In thisendeavor the Company has undertaken Swachh Bharat initiatives during the year 2020-21 areas hereunder:

a) Swachh Bharat Initiatives:

BEML has adopted Swachh Bharat initiatives like Pledge taking conducting publicawareness programmes on cleanliness Swachh Vidyalaya Environment protection publicawareness on cleaning nearby areas arranged for fixing of awareness boards participationof employees/officers in 'Shramadaan' (100 Hrs in a year) to ensure cleanliness of thework area & surroundings Training programme on waste management importance ofcleanliness walkathon organizing skit/street play to create awareness on cleaning andcleanliness construction of toilets vermi-compost bins painting of buildings extensivecleaning of hangars clean my street continuous Housekeeping & renovation of toiletsfogging & eradication of mosquito menace focus on creating plastic free zones etc.

b) Celebration of Sixth Anniversary of Swachh

Bharat Campaign & 150 Birth Anniversary of Mahatma Gandhi (Swachhta Hi Seva):

In addition to the regular Swachh Bharat Activities as precursor to Birth Anniversaryof Mahatma Gandhi BEML had organized

"Celebration of 150 Birth Anniversary of Mahatma Gandhi" from 28.09.2020 to

02.10.2020. Various programs were organised in all the Divisions / Complexes viz.Bengaluru KGF Mysuru Palakkad Regional & District Offices and also at itsSubsidiary Unit VIL Tarikere of the Company such as Swachhta pledge taking ceremonyLecture Programs on Life of Mahatma Gandhi Cleanliness of the work place and periphery ofthe factory premises Competitions viz. Essay / Painting / Drawing on Mahatma GandhiPlanting & Distribution of tree saplings Swadeshi Abhiyaan Promotion of Indianproducts and Handicrafts Celebration of Gandhi Jayanti with campaign on replacing plasticbags with jute / cotton bags and distribution of prizes to winners of the Competitions.

c) Annual Action Plan for Swachh Bharat Activities:

BEML has undertaken various activities as per the Annual Action Plan based on therecommendations of the Group of Secretaries on 'Swachh Bharat & Ganga Rejuvenation'(GoS) for the year 2020-21. The main activities are conducting awareness programmesConstruction of Toilets Tree plantation Renovation of Toilets Maintenance andUp-keeping of buildings etc.

d) Celebration of Swachh Bharat Pakhwada:

BEML had organized 'Swachh Bharat

Pakhwada' from 1 December 2020 to 15 December 2020. Various activities in line withthe Action plan was held at Corporate Office Manufacturing Complexes Townships District& Regional Offices and also at VIL-Tarikere. Various events / activities like Oathtaking ceremony and March Past Display of Posters and Banners Disposing of scrapmaterial in the factory premises and storage in organized manner Cleanliness Drive in thepublic places Organising Plogging like activities and collection of plastic wasteWeeding out of old files and offices equipment Cleaning of Furniture and almirah ofoffices Tree plantation in township area residential complexes and Factory premisesetc. Organising seminars on cleanliness Display of Banners/Posters to create awarenessamong the people Painting /

Essay competitions on importance of cleanliness for the children of the employeesFumigation of insecticides in the township for prevention of mosquitoes and other insectsMaking of plastic free zone in Factory premises and residential complexes Disposal ofe-wastes in Administrative offices Cleanliness drive in drainage systems in Factorypremises and residential complexes Branding and Publicity of Pakhwada activities inelectronic and print media platforms at both field and central level make use of socialmedia such as MyGov Twitter and Facebook extensively for the purpose.

Welfare Activities:

Welfare Activities like Medical Facilities Housing facilities Canteen facilitiesat Complexes Educational facilities at KGF and Bengaluru for Employee's childrenFacility for Sports events etc.has been extended for welfare of Employees. Moreovervarious Schemes are in operation for benefit of Executives and Employees includingInsurance benefits viz. BEML Executive Superannuation (Pension) Scheme BEML Ltd. PostSuperannuation Medical Benefit Scheme Group Insurance Scheme BEML Life Risk CoverageInsurance Scheme BEML Death Relief Fund (DRF) etc.

The Company has extended all help and support to the Labour Welfare Fund (LWF)functioning in the production units for the benefit of Employees their dependents andlocal population. The LWF conducted training programmes in Tailoring Driving ComputerTyping/Shorthand course diploma course in Laboratory Technology Para-medical JobOriented courses Music/Dance classes spoken English Course summer camps forart/painting and sports and various entertainment activities.

A full-fledged Medical Centers for employees and dependent family members at all thethree Manufacturing Units viz. Bengaluru Mysuru and KGF Medical facilities are alsoextended to the villagers in Company adopted Dasarahosahalli Ajjapalli village near KGF.Out-patient Department (OPD) medical facilities are also being extended to all theContract Labour in the Company Medical Centre. The Company is also extending the MedicalInsurance facilities for the benefit of retired Employees / Officers & their spousesfor Medical treatment/ Hospitalization.

BEML runs one Junior College and two Nursery Schools at KGF and one at Bengaluruwhich is administered through separate Management. These Institutions although meantprimarily for the children of the employees but also caters to a large extent to the Localpopulation. BEML also runs a Kendriya Vidyalaya at KGF for the benefit of the employees'children and also for the local population. The Company also provided School buildingFurniture Attender for Midday Programme and Security Personnel for the Government EnglishModel Higher Primary School. For the Academic Year 2020-21 the Company is providingeducation to 2924 students out which 1937 non-BEML Students have enrolled at BEML Schoolsfor their education during the current academic year and have availed online education.

COVID-19 relief activities:

Keeping in view the hardship faced by the Employees Local Communities and the CovidFrontline workers / victims during the Covid-19 pandemic your Company has taken up thefollowing relief activities

Contributed 50 Lakhs voluntarily to PM CARES Fund during the FY2020-21.

Carried out frequently awareness campaign on COVID appropriate behaviour norms atall Complexes/Divisions and various preventive measures including washing ofhands/sanitization wearing mask/face cover thermal screening digital mode of operationetc. and observing social distancing.

The Nodal Doctors and Chief Medical Officers are continuously liasioning with theGovernment Officials towards providing vaccines beds oxygen etc. for our Employees /Officers and their dependents.

Covid care centers with 20 beds at KGF Complex and with 10 beds at Bengaluru Complexwere established.

Distributed Food packets to Construction labour Police personnel slum dwellers andGram Panchayat at its Complexes located in Bengaluru KGF Mysuru and Palakkad towardsmitigating hardship during the pandemic.

The Company has also distributed Covid kits to all the Employees / Officers andContract personnel as precautionary measures to contain the Covid.

Setting-up of one No. of Medical Oxygen Plant at Government General Hospital KGFKolar District at an approximate cost of 1.10 crore under CSR Activity which is likelyto be done by November 2021.

First Independent Medical Oxygen Plant (GO 960) was manufactured and successfullyrolled out through ToT from DEBEL DRDO for supplying to the hospitals to cater to therising needs of Covid patients. As on date 64 nos. of MoP have been despatched todistrict hospitals across India.

As directed by Hon'ble Raksha Mantri on 24.04.2021 the Company joined hands andcontributed 50 Lakhs to DRDO for establishing 500-Bed Covid Care Hospital at Lucknow.

The vaccination drive has been carried out vigorously towards ensuring Employees /Officers safety. As on 02.08.2021 17752 employees / Officers Contract workers theirdependent family members and others are vaccinated.

Digital Transformation Initiatives :

BEML IT department has been renamed as DT department (Digital Transformation) in syncwith emerging digital implementations across business vertical eco-system and externalcompetitive world. Company is embarking implementing digital transformative initiativesfor the business processes covering all 3 business verticals. Digital strategy envisagedfor 3 years is in advanced progress. In BEML currently the following initiatives are inprogress and all these projects have positive impact on business top-line and bottom-lineimproving manufacturing areas logistics areas sales marketing procurement processesfinancial processes MIS and dashboard to top management.

A. Cyber Security Initiatives:

1. Implementing CSG-MoD Guidelines: As we must continuously comply with MoD guidelineswe are in the process of implementing all CSG-MoD (Cyber Security Group-Ministry ofDefense) requirements strictly. Executing CIRA (Cyber Information Research Agency)incident guidelines on day today basis. Carrying out cyber security Audits as perguidelines. Remediating every area of IT continuously so as to stay safe & secure fromvulnerabilities.

2. Setting up Cyber Security Operation Center (SOC): As part of CSG guidelines we arein the process of setting up SOC for monitoring of all security incidents and remediatingthe same. RSA product has been selected & implementation is in progress. This will beto protect our network & devices from any data leakage and online monitoring &analysis of all kinds of system logs security logs and users' activity logs from routersswitches servers endpoints & firewalls.

3. Implementation of Patching Automation & Asset Management : Implementedpatching automation system using tool called Manage Engine. Patching server distributeslatest patches for every BEML end point (desktop/laptop) from time to time as required.Asset management tool collects IT inventories of software's and hardware's in the entireBEML connected network. By bringing every endpoint device to the latest patch level makesit secure from vulnerability. Setting up of various security measures is in progress byimplementing Endpoint security Microsoft Bitlocker Firewall-Checkpoint and Multi-factorauthentication refreshing of windows OS PCs Servers and Networking active components.

4. Implementation of AIRGAP Network: This project is one of the requirements of CSG-MoDas to separate Business network from Internet network (airgap). Business network isphysically isolated from internet hence protecting BEML business data including R&Dfrom external world or any data leakage. Implemented a Airgap (separate network) forinternet users where staff will connect with separate pc for internet browsing andexternal emailing. All external communication takes place from these PC's. Robustfirewall's with rules have been installed to protect airgap network from cyber-attacks.

B. Digital Initiatives:

1. Net based in-house Application Developments: Aim is to digitalize all processes inuse eliminating paperwork across BEML. Have developed in-house self-service portal tohandle business processes with workflow automation like executive/employee self-serviceportal includes pay-slip delivery attendance management leave management exit permitsgate entries complaint handling maintenance logs travel requests HR activitiesattendance BEML connect e-connect etc. Alerts are being sent via SMS / email for thosein the workflow sequence. One can approve from the link in the alerts. This portal isintegrated with SAP ERP. Enhancing of user experience for productivity is in progress.

2. RPA (Robotic Process Automation) Solution for Medical direct bill processing: Thisis one of the most advanced technologies being adopted by business houses for solvingcomplex process & labour issues. For Complex and repetitive data entry of businessprocesses it will be handled by means of software bot. Any data entry to be made by humanbeing / company staff in this case it will be done by software bot. BoT is nothing but aDIGITAL WORKER who does data entry job much efficient faster and accurate way. One botcan do jobs of more than 100 data entry staff. In BEML we are automating the full lifecycle of "hospital direct medical billing processes". Simple process goes likethis - staff who wants to visit hospital he/she requests referral letter thrusystem(portal) HR/CMO will validate and issue referral letter to the requester andhospital thru email. After treatment is over hospital sends bills to BEML thru email inthe form of PDF. BoT will check the mailbox processes the bill by applying business rulesor validates rate cards against each category.

It will be sent to HR/CMO for review after review this will be entered into SAPscreen. This will bring speed and accuracy in bill processing eliminating paper work anddelay.

3. CRM Solution (Customer Complaint Management): Implementation of customer complainthandling system is in progress. The system will have functions like call center to receiveto process customer calls arising thru telephones emails mobile APP & Portal. Callsget logged creating auto tickets for every incident. This ticket gets closed after theresolution for the incident. Service engineer at field will scan the QR code on theequipment to check the service history and helps speed up service calls resolution. Everyticket undergoes CRM life-cycle like incident problem resolution & closure thruworkflow approval cycle. The calls will be handled thru interactive Mobile APP for fieldservice staff and customer. This is integrated with SAP inventory module for issuingspare-parts during service incident fulfillments. This application speeds up complaintresolution turn-around time and saving service costs and leading to increased customersatisfaction. Also service staff will able to create quotation from this application.Finally all kinds of reports & analytics are available at various executives involvedin the business.

4. ANALYTICS Platform with Data Lake: In the process of setting up of Analyticsplatform for entire BEML business. Data lake will be built on which analytics engine runsto produce various results with descriptive predictive & prescriptive analytics.Also alerts shall be triggered for top executives in exception business rules.

5. AI/ML based BEML Equipment: Strategy in place to embed AI/ML in BEML products.Possible JV with leading AI/ML providers partnership is in progress. Also in the month ofMarch 2021 we conducted IoT week inviting leading IoT providers for our products. Thisinitiative will bring our products at par with international market helps in acquiringmarket share. Also to serve customers better by adding these features to existingequipment at customer places.

6. FLM Improvements: FLM system is being used heavily in the organization for approvalworkflow and also for full cycle of procurement processes approvals. Whereas the existingsystem provides basic workflow approvals we are in the process of improving entire filecycle by introducing various features like SMS triggering cascading individual processesin the PR-PO conversion flow. Developing track & trace features. Introducing proactivealerts as reminders. Improving user interface and easy navigation and dashboard statisticsto be made available for every user.

7. SRM Improvements: Improvements in the linking processes between SAP and SRM systemsto make the processes more automated and reduce manual work and also building better userexperience while vendor on boarding. Enabled auto selection of vendors. Tracking &Protecting tender documents while downloading from public.

8. SAP ERP ECC6 Critical Improvements: (1) Quality Rejection Automation In SAPwhenever quality rejection takes place system will intimate to supplier thru SMS/Emailabout rejected items along with reason. (2) Weighbridge automation weighbridge isintegrated with SAP. (3)Dynamic QR codes in Invoicing This has been made mandatory bytaxation for every invoice information should be included in QR Code. (4) Audit Traillogs requirement from Ministry of Corporate Affairs we are in the process of developingprovisioning for audit trails in SAP.

9. Vigilance Suggestions & Compliance Implementation: (1) SRM improvements &integration (2) Attendance system integration and improvements (3) New Vendorregistration thru BEML website (3) Quality rejection automation (4) Alerts andstatistics on Website content updates on weekly basis.

10. VMS Software: All the paper work being handled at all security gates across allcomplexes will be digitalized. Paper works like in/out movement passes vehicles courierentries keys management visitor invites etc. will be automated implementation is inprogress.

11. Collaboration Platform: New Email system for both business and airgap separately.System includes features like audio/video/text chatting email handling security ofemails. Also we are setting up Files sharing facility for users and department levels.These facilitate digital workspace productivity improvements.

C. Manufacturing Automation:

1. Industry 4.0 for manufacturing shop floor: In KGF H&P division we haveidentified 25 nos of CNC machines & 2 test rings for data acquisition & processanalytics. Wireless IoT devices are being mounted on each CNC machine to captureprocess/maintenance data. Each operator will be given tablet where he/she will checkdrawings before loading onto CNC machine. Drawing parameters shall be downloaded to eachmachine. Operator will able to view production information Quality rejection info andMaintenance information from tablet. This data will then be collected in the server. Fromserver it will be viewed by all management staff about accurate production Qualityrejection Visual inspection Machine uptime and also arrive at OEE (Overall Equipment'sEffectiveness). This information can be accessed from Mobile Application. This projectbrings more accurate results in reporting and better efficiency in the process. Downtimealerts Track & trace.

D. Infrastructure Setup:

1. IT Infrastructure Implementation:

Building BEML's Private Cloud in our DC (data center) is in progress. Setting up thisprivate cloud platform using HP servers farm Cisco switches and VM Ware virtualization& management software's. This brings high availability stable hardware environmentfor all our software applications like eConnect CRM VMS Email Intranet File sharingserver Antivirus server Active directory server Patch management server Cyber SOCserver etc.

Polycom VCs are installed for video conferencing and integrated with Microsoft teamsfor facilitating individual PC/Laptop to connect with Polycom VCs. Also using Webex forexternal world collaborations. New email servers are being implemented for business andairgap network separately. Microsoft AD is being implemented enabling latest features suchas SSO Multi factor authentication integrating with 3 party tools.

Refreshing of windows XPOS Old PCs Old Servers and old Networking active componentsis in progress. Remote troubleshooting tool is being implemented for IT service supportengineers.

Enhancing of Bandwidth: Upgradation of Internet & MPLS bandwidths &setting up SDWAN; Load balancing between primary line and secondary are in progress.

Firewalls: Introduced firewalls for all DO's/RO's and at the HQ.

BEML infra is now ready for WFH (work from home) leverage at any point of time. SecuredVPNs features have setup for higher level management to operate from anywhere.

Licensing of Microsoft S/Ws: Microsoft software licensing enterprise direct agreementwith Microsoft is being executed for office teams windows client and server OS SQLserver AD Bitlocker. This is to facilitate better support services from Microsoft and becompliant.

DR site has been setup in Mysuru for DC facility is in Bengaluru HQ. DR covers both SAPand non-sap applications.

Smart Interactive Classroom Projector HR

Training Halls: All HR training halls across BEML are being equipped with smart digitalinteractive classroom projector featuring like Audio Visual presentation Virtual writingwall.

Thin Client PC'S for Airgap: All 350 airgap PCs are being replaced with thin client PCsfacilitating cost efficiency.

Enhancement of Website Visitor Experience: Present website is static in nature. Work isin progress to build an interactive dynamic video/photo rich user experience website.

Related Party Transactions :

Your Company has formulated a "Policy on Related Party Transactions" pursuantto Regulation 23 of the Listing Regulations to regulate transactions entered into betweenthe Company and its related parties. Further in terms of Regulation 46(2)(g) of theListing Regulations the said policy is placed on the web-site of the Companyathttps://www.bemlindia.in/writereaddata/Downloads/202003301756Related_Party_Transactions_P olicy.pdf.

During the year 2020-21 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.

Compliance of applicable Secretarial Standards:

Your Company has complied with the provisions of applicable secretarial standards withrespect to Meetings of Board of Directors (SS-1) and General Meetings (SS-2) issued by theInstitute of Company Secretaries of India in terms of Section 118(10) of the CompaniesAct 2013. Further as per Standard 9 of SS-1 a statement on compliances of applicableSecretarial Standards is included in the Report of the Board of Directors.

Corporate Governance Report:

A report on Corporate Governance (CG) compliance is included in the Board's Report interms of Regulation 34 of the Listing Regulations and Chapter 8 of the DPE Guidelines. M/sVelichety & Co. Chartered Accountants have issued a Compliance Certificate on thesame. In terms of Para 8.2.3 of the DPE Guidelines of CPSEs the Company's compliancelevel as per the grading report on Corporate Governance is rated at 'Excellent' with95.41% (average for 4 quarters) for FY 2020-21 based on self-evaluation. The aforesaidreport on Corporate Governance along with Compliance Certificate is placed at

Annexure-III.

Management Discussion and Analysis Report:

A report on Management Discussion and Analysis in terms of Regulation 34(2)(e) ofListing Regulations and Para 7.5.1 of the DPE Guidelines is placed at

Annexure-IV.

Business Responsibility Report:

A Business Responsibility Report (BRR) for FY 2020-21 in terms of Regulation 34(2)(f)of Listing Regulations describing the initiatives taken by the Company on environmentalsocial and governance perspective in the format as specified by SEBI from time to time isplaced at Annexure-V.

Committees of the Board:

The following mandatory Committees required under the Companies Act ListingRegulations DPE guidelines / MoD Directives are constituted by the Board to functionaccording to their respective 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 terms of reference numberof meetings held and attendance at the meetings are provided in the Corporate GovernanceReport.

Composition of Audit Committee:

Your Company has constituted the Audit Committee in terms of Section 177 of theCompanies Act 2013 Regulation 18 of the Listing Regulations and Chapter 4 of the DPEGuidelines. The Committee comprises of Shri Arvind Kumar Arora Independent Director asChairman Smt Balmuri Vanitha Independent Director and Shri M V Rajasekhar Director(Mining & Construction Business) & CMD (I/c) as its members. All therecommendations made by the Audit Committee were accepted by the Board.

Enterprise Risk Management:

Your Company has constituted Risk Management Committee (RMC) and implemented Boardapproved "Risk Management Policy" (RMP) pursuant to Section 134(3)(n) of theCompanies Act 2013 Regulation 17(9) & 21 of the Listing Regulations and Para 7.3 ofDPE Guidelines. Further the composition reconstitution and the terms of reference inline with quorum minimum number of meetings gap between two meetings of RMC and Powersroles and responsibilities of RMC as duly approved by the Board are incorporated / amendedin the RMP as per the amended SEBI Listing Regulations on 05.05.2021. With the inductionof Independent Director all Business Group Directors Director (Finance) Director (HR)and Independent Director will be the members of the Committee and senior most FunctionalDirector will head the Committee. During the year one meeting of RMC was held on17.03.2021.

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. The said key risks and mitigation plans will be placed before AuditCommittee and it recommends for review and approval of the Board.

The Board reviews the key risks along with mitigation plans and monitor the status onrisk management periodically. The RMP is placed on the Company's websitehttps://www.bemlindia.in/writereaddata/Downloa ds/202003302233Risk_ Management_Policy.pdf.

Corporate Social Responsibility & Sustainability Committee :

Your Company has constituted Corporate Social Responsibility & Sustainability (CSR)Committee and implemented Board approved "CSR Policy" pursuant to Section 135 ofthe Companies Act 2013 read with Companies (Corporate Social Responsibility policy)Rules 2014 as amended from time to time and DPE Guidelines on MoU. Further thecomposition reconstitution and enhanced terms of reference as duly approved by the Boardare incorporated in the CSR Policy as per the MCA circular dated 21.01.2021.

The Committee comprises Dr. Gurmohinder Singh Independent Director as Chairman ShriMV

Rajasekhar Director (Mining & Construction Business) and Chairman and ManagingDirector (I/c) and Shri Ajit Kumar Srivastav Director (Defence Business) as members.During 2020-21 the CSR Committee met once on 26.06.2020. An amount of 4.04 crore wasspent during FY 2020-21 towards CSR activities which was more than 2% that is 2.13 croreas stipulated under the Companies Act 2013 and was in line with the Board's approvedpurposes and the same was certified by the Chief Financial Officer / Director (Finance)(I/c). Further your Company has proposed to spend 599.60 lakhs towards long term and newprojects in FY 2021-22. Annual Report on CSR activities undertaken during FY 2020-21 isplaced at Annexure-VI.

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

1.45 crore and Value of Production (VOP) of

1.44 crore for the year ended 31.03.2021 as against 14.68 crore of Revenue fromOperations and 14.20 crore of VoP during the corresponding period in the previous year.VIL incurred a loss of 5.72 crore for the year ended 31.03.2021 as against loss of

4.70 crore in the corresponding period in previous year. However the figures of FY2020-21 are not comparable with the figures of 2019-20 since production was stopped witheffect from 10.10.2020 as VIL is under closure.

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 by BEML.By following due process Expression of Interest (EoI) / Public Information Memorandum(PIM) was published on 04.09.2019 for seeking probable bidders. Since no response wasreceived MoD accorded 'in-principle' approval on 07.07.2020 for closure of VIL inaccordance with the provisions of DPE Guidelines on time bound closure of sick/loss makingCPSEs. Further M/s KPMG has been appointed as Consultant for closure of VIL and therecommendations of KPMG had been sent to MoD for CCEA approval. Requisite approvals areunder progress.

(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.MAMC Industries Limited (Formerly known as Mining and Allied Machinery Corporation Limited(under liquidation). The agreement inter-alia provided for formation of a Joint Venturecompany (JV) with a shareholding pattern of 48:26:26 among BEML CIL and DVC respectively.The Company has paid the proportionate share of

48 crore towards the total bid consideration of 100 crore for the said acquisitionbased on the order passed by the Hon'ble High Court of Calcutta. The said assets weretaken possession by the MAMC Consortium. Further up to 2020-21 the Company has incurred asum of 16.87 crore (Previous Year- 12.54 crore) towards maintenance security and otherrelated expenditure. The total sum of

64.87 crore (Previous Year 60.54 crore) is disclosed as 'Advance to MAMC Consortium'due to delay in conversion of MIL into a JV.

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.Preparation of the said report is not materialized due to exorbitant fee quoted by theconsultant firms.

Further it was proposed to register all properties in the name MAMC and accordinglyM/s. Fox & Mondal Advocates & Solicitors have prepared the final draft sale deedof the MAMC properties at different locations for registration purpose. The same shall besubmitted to the Official Liquidator for his concurrence. During the meeting of InterimBoard of Management (IBM) of Consortium was held on 19.02.2021 BEML informed that basedon earlier discussions with CIL BEML visualized manufacturing of Longwall Continuous andsurface miners at MAMC plant and accordingly published EOI for the said equipment. Alsoit was informed that BEML is in advance stage of finalization with FAMUR Poland formanufacturing of Longwal & responses from prospective manufacturing partners forsurface miners and continuous miners is still awaited. However to proceed forcollaboration agreement CIL support on partnership basis or assured orders on nominationbasis was requested. Further CIL informed that the scope of Power Support Long Wall(PSLW) equipment are limited in CIL. Also BEML informed that GoI has taken up strategicdisinvestment of BEML and it is in advance stage.

(iii) M/s BEML Land Assets Ltd. (BLAL)

BEML has incorporated a Wholly Owned Subsidiary in the name of "BEML Land AssetsLimited" on 15.07.2021 for transfer of identified surplus / non-core assets as partof demerger under strategic disinvestment of BEML initiated by Government of India.

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 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 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 pass appropriate orders without getting influenced by the impugnedcommon order of CLB. The Company has filed an application with CLB praying for necessarydirections to Regional Director (RD) Ministry of Corporate Affairs Hyderabad for timebound completion of investigation so that the matter could effectively be heard by CLB. Inthe meanwhile the Government has constituted National Company Law Tribunal (NCLT) bydissolving CLB and notified that the jurisdiction is shifted to Hyderabad from Chennai.The case files were transferred to NCLT. 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 in the city on30.03.2018 and the communication in this regard has been sent to MCA NCLT & MGPL.Regular hearings are taking place at NCLT. However RD-MCA is yet to submit theinvestigation report for deciding the matter.

In the meanwhile State Bank of India (SBI) had offered One Time Settlement (OTS) of

182.91 Lakhs against the total liability of

2151.90 lakhs as full and final settlement of BEML liability towards the corporateguarantee issued in favour of SBI in the credit limits availed by BMWL which was settledby the Company on 23.11.2020. The Corporate Guarantee had got discharged and the casepending before Debt Recovery Tribunal (DRT) has been closed.

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

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

Consolidated Financial Statement:

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

Statutory Auditors:

M/s. Sundaram & Srinivasan Chartered Accountants Bengaluru were appointed as theStatutory Auditors for the financial year 2020-21 by the Comptroller & Auditor Generalof India.

Observations made in the Independent Auditors' Report on the consolidated financialstatement and the reply of the Board of Directors there to are given by way of an addendumat page No. 252 to the annual report.

Cost Auditors:

In terms of Section 148 of Companies Act 2013 read with the Companies (Cost Recordsand Audit) Rules 2014 M/s R M Bansal and Co Cost Accountants Bengaluru were appointedas Cost Auditors for the year 2020-21 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(Bengaluru 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 Auditorfor FY 2020-21 was ratified by the members in the 56 Annual General Meeting held on25.09.2020.

Secretarial Auditors:

In terms of Section 204 of the Companies Act 2013 read with the Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 your Company had appointed M/s V NAssociates Practicing Company Secretaries (PCS) Bengaluru to undertake the SecretarialAudit of the Company for the year 2020-21.The Secretarial Audit Report given by the PCSand the replies to the observations made in the said Report are annexed to the Board'sReport as Annexure-VII. In addition an Annual Secretarial Compliance Report issuedby the PCS has been filed with the Stock Exchanges within the due date from the end offinancial year 2020-21.

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. 172 & 253 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 https://www.bemlindia. in/Annual_Report_Investors.aspx.

Directors & Key Managerial Personnel:

(1) Appointment / re-appointment of Independent Directors

During the year 2020-21 no Independent Director (ID) was appointed on the Board of theCompany. In terms of section 149 of the Companies Act 2013 the provisions of section152(6) and (7) in respect of retirement of directors by rotation shall not be applicableto IDs. Pursuant to Schedule IV of the Companies Act 2013 the appointment/ reappointmentof the Independent Directors would be formalized through a letter of appointment settingout the terms and conditions in case of their appointment which is also availableweb-site of the Company at www.bemlindia.in.

(2) Statement on declaration by Independent Directors

Independent Directors had furnished necessary declarations in terms of Section 149(7)of the

Companies Act 2013 stating that they had fulfilled the criteria of independence asprovided under Section 149(6) of the said Act and Rule 6 of the Companies (Appointment andQualification of Directors) Rules 2014 subject to the exemptions granted to theGovernment Companies. The Board reviewed the said declarations and noted the same.

(3) Change of Key Managerial Personnel / Directors

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 2020-21 as per thedirectives of the President of India:

(i) 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.

(ii) Shri Amit Banerjee (DIN: 08783660) Executive Director (Rail & Metro Business)has been appointed as Director (Rail & Metro Business) of the Company vide MoD letterNo.8 (2)/2019-D (BEML) dated 08.10.2020 in place of Shri Suresh S

Vastrad. He took charge on 09.10.2020.

Shri MV Rajasekhar (DIN-08467141) Director (Mining & Construction Business) hasbeen given additional charge of the post of Chairman & Manager Director w.e.f.01.02.2021 in place of Dr. Deepak Kumar Hota who had since superannuated on 31.01.2021.Further Shri Ajit Kumar Srivastav Director (Defence Business) has been given additionalcharge of the post of Director (Finance) w.e.f. 09.04.2021 in place of Shri SurajPrakash who had since resigned on 08.04.2021.

Shri MV Rajasekhar (DIN-08467141) retires by rotation at the ensuing Annual GeneralMeeting and being eligible offers himself for re-appointment.

Shri RH Muralidhara Shri Suresh S Vastrad Shri R Panneer Selvam Dr. Deepak KumarHota ceased to be Directors / Chairman and Managing Director consequent upon attainingthe age of superannuation and Shri Suraj Prakash ceased to be Director of the Companyconsequent upon tendering the resignation. Dr. Gurmohinder Singh Independent Directorceased to be Director w.e.f. 10.08.2021 consequent upon end of his tenure as per MoDletter dated 10.08.2018. The Board placed on record its deep appreciation for invaluableservices rendered by the aforesaid Directors / CMD on the Board whose term of office endedduring the year.

(4) Remuneration of Key Managerial Personnel:

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

Independent Directors are paid sitting fee of

20000 per meeting of the Board / Committee of the Board attended by them. Further ifthere are more than one such meeting on the same day a sitting fee @ 10000 is paid forthe second and subsequent meeting/s.

Neither there was payment of commission to the Board of Directors nor any stock optionscheme offered to them during the year. Further none of the Directors had any pecuniaryrelationship nor entered into any related party transactions with the Company during theyear.

Pursuant to the provisions of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 the details of remuneration paid to the Directors during 2020-21are provided under the 'Report on Corporate Governance' annexed to this report.

(5) Number of meetings of Board:

During the year eleven meetings of the Board were held on 01.05.2020 27.05.202027.06.2020 07.08.2020 24.09.2020 01.10.2020 06.11.2020 21.11.2020 16.12.202010.02.2021 and 05.03.2021. Requirements on number and frequency of meetings in terms ofSection 173(1) of the Companies Act 2013 Regulation 17(2) of Listing Regulations andPara 3.3.1 of the DPE Guidelines were complied with in full.

(6) Directors' Responsibility Statement:

Pursuant to section 134(3)c and 134(5) of the Companies Act 2013 your Directors statethat;

(a) in the preparation of the annual accounts for the year ended 31.03.2021 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 2020-21and of the profit of the Company for that period;

(c) the directors had taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;

(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.

(7) Board Evaluation:

The Board of Directors of the Company comprises Functional Directors GovernmentNominee Director 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 Director is being evaluated by the Administrative Ministry every year based on ownevaluation methodology. Further considering the educational qualifications age rich andvaried experience of the applicants the Administrative Ministry/ Department would appointthe IDs on the Board on the recommendation of Search Committee after obtaining approval ofcompetent authority. In addition the assessment/ evaluation of performance of IndependentDirectors who will be completing their tenure / seeking extension is being undertaken bythe Department of Public Enterprises through Administrative Ministry periodically.

Acknowledgements:

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

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

The Directors also acknowledge the valuable support and assistance received fromvarious Ministries of Government in particular Ministry of Defence Ministry of CoalMinistry of Mines Ministry of Steel Ministry of Railways 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 MV Rajasekhar
18.08.2021 Chairman & Managing Director (I/c)

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