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Bharat Electronics Ltd.

BSE: 500049 Sector: Engineering
NSE: BEL ISIN Code: INE263A01024
BSE 00:00 | 17 May 148.10 4.75






NSE 00:00 | 17 May 148.15 4.80






OPEN 145.00
VOLUME 622582
52-Week high 155.55
52-Week low 61.55
P/E 20.66
Mkt Cap.(Rs cr) 36,086
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 145.00
CLOSE 143.35
VOLUME 622582
52-Week high 155.55
52-Week low 61.55
P/E 20.66
Mkt Cap.(Rs cr) 36,086
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Bharat Electronics Ltd. (BEL) - Director Report

Company director report

Board's Report

To the Members

Your Directors take pleasure in presenting their Report and the Audited FinancialStatements for the financial year ended 31 March 2017 together with the reports of theStatutory

Auditors and the comments of Comptroller and Auditor General of India thereon.

Financial Results and Performance Highlights

A summary of the Company's financial results is given below :

( Rs. in Lakhs)

Particulars 2016-17 2015-16
Value of Production 924383 777537
Turnover (Gross) 882470 754117
Profit Before Depreciation
Finance Cost and Tax 223272 190884
Finance Cost 1178 451
Depreciation 19152 17221
Provision for Tax 48180 42476
Profit After Tax 154762 130736
Other Comprehensive Income (9185) (2236)
Total Comprehensive Income 145577 128500
Dividend paid 61604 24560
Tax on Dividend 12541 4999
Transfer to General Reserve 40000 40000
Transfer to Capital Reserve - 2
Other Equity (including 728518 874360
Reserves and Surplus)
Net Worth 750854 898360
Earnings Per Share (in Rs. )* 6.64 5.45
Book Value Per Share (in Rs. )* 33.62 37.43

* Consequent to sub division of equity shares (in March 2017) the earnings per share(EPS) has been adjusted for previous year in accordance with Indian Accounting Standard(Ind AS) 33 Earnings Per Share (EPS). Accordingly the book value per share for theprevious year has also been adjusted.

Distribution of Value of Production for 2016-17 is given below :

Particulars ( Rs. in Lakhs) Percentage
Materials 483222 52%
Employee Cost 154831 17%
Other Expenses (Net) 64236 7%
Depreciation & Amortization 19152 2%
Provision for Tax 48180 5%
Profit After Tax 154762 17%
Total 924383 100%

Company's turnover for the year 2016-17 has increased to Rs. 882470 lakhs from Rs.754117 lakhs in 2015-16 registering a growth of 17.02%. Profit after Tax for the year isRs. 154762 lakhs as against Rs. 130736 lakhs in the previous year. Turnover fromindigenously developed products is 87%. Supplies to the defence contributed to 88% ofturnover as against 82% in 2015-16.

During the year 2016-17 your Company had bought back 16637207 equity shares of Rs.10/- each fully paid-up at price of Rs. 1305/- per share subsequent to which the paid-upshare capital of the Company stands reduced to Rs. 22336 lakhs.

During the year the Company had completed sub-division of one equity share of Rs. 10/-each fully paid-up into 10 equity shares of Rs. 1/- each fully paid-up w.e.f. 16 March2017.


The Board has recommended a Final Dividend of Rs. 1.05/- per equity share of Rs. 1 each(105%) Rs. 23453 lakhs for the year 2016-17. A first interim dividend of Rs. 3.00/- perequity share of Rs. 10 each (30%) Rs. 6701 lakhs and second interim dividend of 90 paisaper equity share of Rs. 1 each (after sub-division of equity shares) (90%) Rs. 20103lakhs was paid for the year 2016-17. Thus the total dividend for the year 2016-17 isRs. 2.25/- per equity share calculated at Rs. 1 per equity share (225%) Rs. 50257lakhs (excluding dividend distribution tax).

Amount Transferred to Reserves

An amount of Rs. 40000 lakhs is proposed to be transferred to General Reserves for theyear 2016-17.

Major Orders Executed

Major Projects executed during the year for tri services and non-defence customersinclude : Akash Weapon System (Army & Airforce) Hand Held Thermal Imager with LaserRange Finder to Army 3 Dimensional Tactical Control Radar to Army Weapon Locating Radarto Army Fire control Systems to Navy Integrated Air Command and Control System to AirForce L 70 Gun Upgrade to Army Low Level Light Weight Radar to Airforce Ship Borne EWSystem to Navy and New Generation Sonars to Navy.


Your Company achieved an export sale of US$ 65.5 Million over the previous year'sexport turnover of US$ 85.07 million. BEL has an export order book of US$ 85 million as on

1 April 2017 which includes offset order book of US$ 17 million. The targeted exportsales for the year 2017-18 is US$ 72 million. The long term export plan of BEL is to reachsustained export sales to total sales turnover ratio of 10% from the current level of4.9%.

During this year major range of products exported includes CSS CoMPASS VHF RadioBharti ACCS SANKET EO FCS

Electro Mechanical parts etc.

During the year few major naval projects planned for execution did not materialise asthe customer was not ready to receive the system integration and consequentially there wasa decline in export. The transforming political scenario change in the leadership andglobal financial crunch has resulted in not realizing the contracts even though BEL hassubmitted proposals for various products/systems to countries like Myanmar Vietnam SriLanka Malaysia Egypt. The African and Latin American countries are carefullyprioritizing their procurements to meet their social needs ahead of defence procurements.Many of the MoUs signed with OEMs for discharging offset have not progressed to contractstage as per MoD acquisition plan. In view of the revised DPP for discharge of offsetsoffset business has not been as anticipated earlier. However BEL continues its effortsto enhance export business.

BEL is the only organization in the country which is fully geared up to meet theexpectations of "Make in India" program in the field of Professional defenceelectronics equipment development and manufacturing with a focus on exports.

BEL has a dedicated International Marketing Division for providing an increased thrustfor harnessing the export potential of defence electronics products and systems whichrepresent its core area of business. BEL has been exporting various products and systemsto friendly countries of India. Apart from this BEL is interacting with electoralcommissions of various democratic countries to market Electronic Voting Machines. Havingestablished a Coastal Surveillance Radar System for few neighboring countries BEL isinteracting with Ministry of External Affairs on a regular basis for supply of the systemto other friendly countries of India.

BEL has identified the market segments and has a structured market plan for itsproducts and systems. BEL has been visiting customers on a periodic basis to understandtheir requirements acquisition process and to establish long term customer relationshipfor enhancing export business.

BEL is focusing on the opportunities in the areas of helping OEMs to meet their offsetobligations in various RFPs of MOD on account of the "Offset" policyincorporated in Defence Procurement Procedure (DPP). In this regard BEL is closely workingwith various major foreign Aerospace and Defence companies. BEL identifiedcontractmanufacturing has also (both build to print and build to spec) as one of the areas toaddress the emerging opportunities with OEMs. Further efforts are being made to establishlong-term supply chain relationships with global players.

BEL has participated in three International Exhibitions to showcase its products &capabilities and for creating brand awareness among global supply chain partners. BELpublishes periodic advertisements in international/defence magazines /periodicals/journals to enhance the visibility of BEL. BEL participated in Aero India2017 Bengaluru with a focus on exports.

BEL has been receiving awards for Excellence in Exports under the category"Electronics & Communication (excluding IT/ BT) - Medium and Large" from theGovernment of Karnataka during the last six consecutive years.

MoU with Government

Your Company has been signing a Memorandum of Understanding (MoU) every year with theGovernment of India Ministry of Defence. Performance of BEL for the year 2015-16 has beenrated as "Excellent" in terms of the MoU with the Government. The MoU rating for2016-17 is under review by the Government.

Order Book Position

The order book of Company as on 01 April 2017 is around Rs. 40242 Crores. The orderbook comprises mainly major programs like Integrated Air Command Control System LongRange Surface to Air Missile Battlefield Weapon Locating Radar EW Suite Hand HeldThermal Imager with Laser Range Finder Advance Composite Communication System GroundBased Mobile ELNIT Command Information Decision Support System Electronic Votingmachine Fire Control System Gun/Tank Upgrades Communication Sets

New Generation Radars and Sonars etc.


During this year your company has been able to enhance shareholders value throughBuyback of shares and higher dividend payout. The Company returned 25% of share capitaland free reserves amounting to Rs. 217116 lakhs to the shareholders which was completedin November 2016. Apart from the final dividend of Rs. 34800 lakhs (145%) of

2015-16 which was paid out in 2016-17 two interim dividends amounting to Rs. 26804lakhs were paid out before the closure of the financial year 2016-17. Further the facevalue of equity shares of Rs. 10 each was sub divided into 10 equity shares of Rs. 1 eachin order to enhance the retail participation in the shares of the Company. The initiativestaken by your Company in taking up some major projects is progressing well and the outcomeshould strengthen the Company's journey to a higher trajectory of turnover and growth.During the year your Company has been able to meet all the incremental working capitalrequirements and most of the capital requirements. Company has availed a term loan of Rs.5000 lakhs to fund its CAPEX requirements as on 31 March 2017. Your Company has retainedthe highest rating by ICRA for both short term and long term.

The Inventory position (net) of the company as on 31 March 2017 was Rs. 490501 lakhsas against Rs. 417747 lakhs as on 31 March 2016. This works out to 206 days of value ofproduction (DPE) as on 31 March 2017 thus maintaining the 206 days achieved as on 31 March2016.

The position of Trade Receivables (net) as on 31 March 2017 was Rs. 435488 lakhs asagainst Rs. 371193 lakhs as on 31 March 2016. This works out to 180 days of turnover thusmaintaining the 180 days of turnover achieved during the previous year. This has beenpossible due to better performance in collection of receivables.

Indian Accounting Standards

As required under Companies (Indian Accounting Standard)

Rules 2015 (notification no. 111 (E) dated 16.02.2015 issued by Ministry of CorporateAffairs) the company has prepared its financial statements in accordance with IndianAccounting Standards (Ind AS) with effect from financial year 2016-17 along withcomparatives for the previous financial year 2015-16. As required the company has alsoprepared an Ind AS compliant opening Balance Sheet as on the date of transition to Ind ASi.e. 1st April 2015.

The newly notified "Indian Accounting Standards" (Ind AS) has replaced theexisting Indian GAAP prescribed under Section 133 of the Companies Act 2013 read withRule 7 of the Companies (Accounts) Rules 2014.

An explanation of how the transition from previous GAAP (IGAAP) to Ind AS has affectedthe reported Balance Sheet financial performance and cash flows has been provided at Note37 of the Standalone and Consolidated financial statements.


The Company does not have any Public Deposit Scheme at present. However matured(collected in the past) Public Deposit amount with the Company was Rs. 36.95 lakhs as on31 March 2017. Out of these 34 deposits amounting to Rs. 36.50 lakhs are not claimed ornot paid as these accounts are frozen on advice by Karnataka Lokayukta remaining maturedeposits of Rs. 0.45 lakh as on 31 March 2017 is unpaid due to in-sufficientdocuments/records produced by Depositors. The entire amount of Public Deposit outstandingas on 31 March 2017 is included in the Other Financial Liabilities Note of the BalanceSheet.

Research & Development

Research and Development (R&D) has been the core strength of BEL. Various R&DDivisions of BEL are involved in developments of Strategic components Technology ModulesSubsystems Products Systems and System of Systems. Apart from in-house efforts BELR&D Engineers are working with DRDO Other National Research Laboratories and AcademicInstitutes for Joint development. During 2016-17 R&D activities have been carried outin all the business segments namely Radars Military Communication Naval Systems MissileSystems Electronic Warfare Avionics C4I systems Electro-optics Tank Electronics Gunup-grades Civilian Equipments & Systems and Components.

BEL has Three-Tier R&D Structure namely CRL Central D&E and PD&IC (ProductDesign & Innovation Centre) and D&Es attached to SBUs/Units.

Two Central Research Laboratories (CRLs) at Bengaluru and Ghaziabad are involved inconducting futuristic R&D in core technology areas of BEL and develop enablingtechnology modules for use by SBUs/Units.

Central D&E and PD&IC at Bengaluru develop common technology modules asrequired by SBUs/Units like Radar Signal Processing Units Encryption modules Microwavecomponents Computing elements Power Amplifiers supplies MMICs Displays etc.

SBU/Unit D&E groups provide System and System of Systems solutions having therequired domain expertise technical support during the complete product life cycle : fromconcept design to post sale obsolescence management of Product/System and developsub-systems and processes as necessary from CRLs C-D&E PD&IC and CollaborativeR&D.

The analysis of turnover of the company for the year 2016-17 indicates that 87% of theTurnover is from products developed through in-house effort and jointly with DRDO andremaining 13% of Turnover is from Products/System for which technologies were acquiredthrough Foreign/Indian Collaborators.

During 2016-17 the R&D Divisions of BEL have completed development of several newProducts/Systems/Technology modules.

The following are some New Products/Systems for which development has been completedand some of them were introduced during the year.

Weapon Locating Radar (First-off Production Model)

Weapon Locating Radar is developed for identifying the launch points of weaponsaccurately. It acts as a forced multiplier in the war field.

BFSR – XR Radar

Battle Field Surveillance Radar is a man portable battery operated tripod mountedPulse Doppler Radar. It is capable of detecting moving targets in the operating band. TheRadar can be operated using remote Control and Display Unit .


Identification of Friend or Foe Radar Mark II is designed to work with Air Defence FireControl Radar in interrogation modes.


HUMSA NG for P15B class of ships is a Bow mounted Active cum Passive Sonar used forsurveillance and tracking of surface & subsurface targets in both active & passivemodes with enhanced fault tolerance and interfacing capabilities.


USHUS-2 an Integrated Submarine Sonar Suite designed to effectively challenge theunderwater threats in a comprehensive way. It consists of multi sensors for ActivePassive Under Water Communication Intercept and Obstacle Avoidance operations.

Coastal surveillance System – Maldives

Coastal Surveillance system is a Maritime Rescue Co-ordination Centre built bynetworking 10 Radar Sensors connected to a Control Centre. The Radar Stations are builtwith sensor equipment such as Radar Automatic Identification System and Electro-opticSystem for generating the data related to air and sea surface targets.

ACCS for Indigenous Aircraft Carrier

The Advanced Composite Communication System (ACCS) is an IP based Integratedcommunication system provides quick and reliable communication over VLF MF HF V/UHF andSatcom bands facilitating Ship to Ship Ship to Shore and Ship to Air communications. TheSystem is installed in Indigenous

Air Craft Carrier.

Ship Data Network for P15B

The Gigabit Ethernet based Ship Data Network (GBE SDN) for P15B provides a singlebroadband network for voice traffic real time data and video for external communicationCombat Management System and Ship System Equipment. SDN also provides a Network HealthMonitoring system to monitor and manage the health of its elements.

RRF Upgrade to 8 Mbps (High Band)

Existing Radio Relays supplied to customer support 2 Mbps data rate. The equipment havebeen upgraded to 8 Mbps and additionally ECCM feature has been added. It gives reliablecommunication in terminal mode and in repeater mode.

Bharati Radio (Export)

VHF Tactical Radio (Bharati) is software indigenously designed frequency hopping Radioin the frequency band of 30 MHz to 88 MHz. It is a lightweight compact design highperformance Voice and Data communication equipment for Manpack and Mobile role.

Data Link for Missiles

Missile Data link provides secure two way communication between Ground station andMissile. The design is based on CDMA-Direct Sequence Spread Spectrum (DSSS) technology.


BEACON MKIII is a compact crypto device providing high grade of secrecy for datacommunication on PSTN Lines using V.34 modem and LAN/WAN Network (10/100 Mbps). Itsupports both ‘‘ON Line & OFF Line'' modes of operation.

Ship borne EW system

Ship borne EW system is a modern ESM system operating from B-J Band with high Directionof Arrival accuracy (DoA). The system is designed with wide band and narrow band receiverswith inbuilt finger printing capability. The system is compact and can be configured fordifferent class of ships.

Hand held Thermal Imager with Laser Range Finder (HHTI with LRF)

HHTI with LRF is an integrated multifunction sight consisting of Thermal Imager LaserRange Finder CCD Colour Day Camera Global Positioning System and Digital MagneticCompass with inbuilt Clinometer. The equipment is capable of providing day and nightviewing capability target range measurement Self Position of Observer and targetco-ordinates during day/night.

Border Surveillance System (BoSS)

Border Surveillance System (BoSS) uses sensors like Day Camera Thermal Imager andBattle Field Surveillance Radar (BFSR) to acquire target information and transmit theseinformation to Control station through Optical Fiber Cable

(OFC)/Wireless Link.

Uncooled TI Binocular

Uncooled TI binocular is a state-of-the-art long range hand held dual field of viewthermal imaging camera used for surveillance purpose.

VVPAT (Voter Verifiable Paper Audit Trail)-MK2

VVPAT system is designed with a Thermal printer that interfaces with the Control Unitand Ballot Unit in the conventional Electronic Voting Machine (EVM). The VVPAT systemprints the voter's franchise on a thermal Paper slip and gives visual indication to thevoter.

POS for FPS Automation

The Point of Sale (POS) device is used for automation of Ration distribution processincluding online Aadhar Authentication of beneficiaries distribution to genuinebeneficiaries and inventory reporting at the Fair Price Shop.

Dual Frequency IP Modem

Dual Frequency IP Modem is a Ethernet coherent modem with Dual frequency outputs tomitigate multipath effects and supports voice/video/data for Tropo Communication.

2 KW SSPA (Tropo)

2KW L/S Band Amplifier is a broadband high frequency Power amplifier with modularconstruction to achieve graceful degradation of power and network management support.

New Facilities Established During the Year

Company has been continuously modernizing its infrastructure to be in tune with thechanging needs of the technology/ products. Specific groups in all the units scan thetechnology changes that are taking place and identify new processes in the world marketfor acquisition. This enables the company to maintain its infrastructure on par withinternational standards.

During the year 2016-17 Company has spent Rs. 612 Crores as part of CAPEX investments.The expenditure is fully met through internal accruals. Following are some of the majorfacilities established during the year.

Inauguration of New Radar Assembly Hangar at Ghaziabad unit for Assembly Testing andIntegration of Radar & Antenna Systems.

"Blowing Sand & Dust Test Facility" at Bengaluru Unit established fortesting of Abrasion resistance of subsystems mounted externally on Aircrafts as part ofaugmenting the quality related infrastructure.

Electro Magnetic Compatibility (EMC) Chamber for system level testing facility atBengaluru Unit.

Pulse Current Injection Test Facility (PCI) for High Altitude

Electro Magnetic Pulse/Nuclear Electro Magnetic Pulse

(HEMP)/(NEMP) test of various system level projects at Bengaluru Unit.

New Electronics Manufacturing Services (EMS) assembly line with state-of-the-ArtSurface Mount Technology (SMT) machine wave soldering machine and Automated OpticalInspection (AOI) at Bengaluru Unit.

The Low Pressure Chemical Vapor Deposition (LPCVD) equipment of the IC Wafer FabFacility upgraded to handle wafers from 4" dia. to 6" diameter at Bengaluru


New Photovoltaic Module Line and up-gradation of the existing Solar Cell Plant withauto wet etching & automated printing lines at Bengaluru Unit.

Automated Transmit/Receive Module Assembly Line consisting of die-attach &wire-bonding lines to increase the X-Band TR Modules production capacity.


Quality Technology and Innovation are three guiding pillars of BEL's businessinitiatives. Quality being the first pillar has been one of the focus areas for thecompany. Quality initiatives have been taken up for improvement in performance related toProduct Design On-time-Delivery Process Cycle Times SPC Quality Control etc. in orderto enhance Quality of Products and Services rendered to customers. Improvement of CustomerSatisfaction Index to 84% during 2016-17 is an important outcome of the efforts.

The Company is committed for improvement of its activities through process approach inline with World-Class Quality Systems. All Units/Strategic Business Units (SBUs)/CentralServices Groups (CSGs) are accredited to ISO 9001 Quality Management System (QMS) sinceearly nineties. Seven Units / SBUs viz. Ghaziabad Panchkula Kotdwara HyderabadMilitary Communications Electronics Warfare & Avionics and Export Manufacturing haveupgraded their QMS to Aerospace Standard AS 9100.

Units of Company are committed to Environment Management System through ISO 14001Certification. Ghaziabad Unit and Engineering Services of Bengaluru Unit are accredited toOHSAS (Occupational Health Safety and Assessment Series) 18001.

The ISO 9001:2008 version for QMS and ISO 14001:2004 version for EMS have been revisedto 2015 versions in September 2015. Similarly AS 9001 Ver ‘C' has been upgraded toVer ‘D' in Oct 2016. In order to upgrade these certifications in BEL AwarenessTraining programmes Lead Auditor Training programmes and Conversion Programme for LeadAuditors of older versions of Standards to newer versions of the Standards have beenconducted for personnel from various SBUs/Units. Some of the SBUs/CSGs viz. CommonManufacturing Services Engineering Services Central Quality Assurance of BG-CX PuneUnit Machilipatnam Unit have upgraded to the latest 2015 Version of ISO 9001Certification.

Test Equipments Calibration and Maintenance departments of Bangalore Complex Ghaziabadand Panchkula Units are certified by National Accreditation Board for Testing andCalibration Laboratories (NABL) in accordance with ISO/IEC 17025 Standard. Pune Unitmanufacturing X-ray tubes is certified for ISO 13485 Standard for Medical Devices. BharatElectronics Software Technology Centre (BSTC) at Bangalore Complex is CMMi level 5certified. D&E - NCS and CRL - Ghaziabad are certified for CMMi level 3.

EFQM (European Foundation of Quality Management) Model for Business Excellence is beingfollowed in BEL since 2002 in BEL as another approach for overall strategic andoperational excellence to meet and exceed the needs & expectations of stakeholders andenhancement in competitiveness. Its deployment status was assessed in the company throughparticipation in ‘CII-EXIM Bank Award for Business Excellence' in a phased manner.All Units/SBUs of BEL have achieved ‘Commendation for Strong Commitment to Excel'status. Bengaluru Ghaziabad and Kotdwara Units achieved next higher level i.e.‘Commendation for Significant Achievement'.

Continual improvements in products and processes are being brought about throughvarious approaches. One such approach is ‘Six Sigma methodology'. Junior and Middlelevel executives select Sig Sigma projects from different areas of concern related toproducts and processes to bring about improvements. In order to effectively implementSix-Sigma methodology and to bring in a culture of improvement through analyticalapproach select senior executives (16 persons) from the Units are periodically trained as‘Black Belt' by Indian Statistical Institute Bengaluru. These Black Belts guideother executives (Green Belts) in their Six Sigma projects. 452 Six Sigma projects werecompleted in financial year 2016-17. Thirty Seven Six Sigma projects were nominated forNational level Competitions/Seminars and all have won various categories of awards. TwoBEL Projects won National Level Championships in February 2017 in DFSS and LEAN streams.

The organization has facilitated involvement of Non-executives in the Quality Movementthrough Quality Control Circles (QCC). In the year 2016-17 753 QCC Presentations forimprovement in products and processes were made by various QCCs. Many QCC circles werenominated to participate in national competitions/conventions and all were adjudged forvarious categories of Awards. One of the QCCs which won CMD's Rolling Shield in InterUnit QCC Competition represented BEL in International Convention ICQCC 2016 held atBangkok Thailand and won the "Gold award".

Another approach for Quality Improvement is through Suggestion Scheme whereinemployees from Non executives up to Managers provide suggestions for which they aresuitably rewarded on implementation of their suggestions. Around 3400 suggestions weregiven by employees this year. Selected BEL employees participated at 27th National LevelConvention conducted by Indian National Suggestion Schemes' Association during January2017 at Jamshedpur and won 6 Awards under various categories. Bangalore Complex wasawarded the First Prize for "Excellence in Suggestion

Scheme 2016" under Engineering Industry Category at the National Level.

The Company has nominated D&E engineers for Certified Reliability Engineer (CRE)program conducted by American Society for Quality (ASQ). 39 D&E engineers wereprofessionally certified for CRE in year 2016-17 taking the number of CREs in the Companyto 191.

37 operating level Quality engineers in various SBUs/ Units were certified during theyear under Certified Quality

Engineers (CQE) program by the American Society for Quality (ASQ) taking the number ofCQEs in the Company to 141. Next higher level program viz. Certified Manager for Qualityand Organisation Excellence (CMQ&OE) for senior level executives was also conductedby ASQ and 14 senior executives were certified during the year.

Revision of existing BEL Quality Manual in line with the latest versions of the QualityManagement Systems Standard including Business Excellence was taken up during the year.

A ‘Quality Recognition Award' scheme was introduced this year. Units/SBUs wereevaluated for a number of Quality related parameters and best three Units viz. EW&ASBU of BG-CX PK Unit and RAD SBU of Ghaziabad Unit were awarded prizes.

In order to inculcate a culture of Project Management training programs for ProjectManagement Professionals (PMP) were conducted. Post training 75 PMPs was certified byProject Management Institute (PMI) in year 2016-17. Besides this customised trainingprograms viz. Project Management

Implementation Programme (PMIP) were conducted for lower level executives to enablethem to use Project Management concepts in their work.

An independent Customer Satisfaction Survey (CSS) was done through an external agencyviz. M/s Market Insight Consultants (MIC) NOIDA to capture the Customers' Perceptions onQuality of BEL's Products and Services. Fourteen products from various Units/SBUs wereincluded in the Survey. Customer Satisfaction Index of 84% (average) was the outcome ofthe Survey which is marginally higher than 83% achieved in 2015-16 and with an increasingtrend over the years.

New Transaction Codes are introduced in SAP ERP system based on user requirements forbetter management and analysis of the processes thereby helping in their overallimprovement. Customer Relationship Management Module

(CRM) and Supplier Relationship Management Module (SRM) in SAP are enablingimprovements in Customer Services and Procurement Efficiencies.

Human Resources

Your Company employed 9716 persons as on 31 March

2017 as against 9848 persons as on 31 March 2016. Of these employees 4676 wereengineers/scientists and 2028 were women employees as on 31 March 2017. A total of 192executives and 152 non-executives were inducted during the year. 58 employees belonging toSC 22 employees belonging to ST 119 employees belonging to OBC and 19 employeesbelonging to the minority community were recruited during the year.

Your Company has been implementing the Government Directives on Reservation. Theparticulars of SC/ST and other categories of employees as on 31 March 2017 are as under:

Executives Non-Executives
Category of Employees Group ‘A' Group ‘B' Group ‘C' Group ‘D'
Scheduled Caste 975 32 702 42
Scheduled Tribe 327 5 142 23
OBC 1166 36 871 33
Ex-Servicemen 98 6 281 65
Physically Challenged 98 3 123 13

Various Training programs were conducted during the year to enhance competencies inTechnical Functional Managerial and Leadership areas. Structured Executive DevelopmentPrograms were conducted regularly with premier Institutes to meet the evolving trainingneeds of executives as they progress through various grades.

The training programs are designed to enhance competencies in various areas likeTechnical Functional and Managerial / Leadership.

A detailed write up on Company's HR philosophy and specific HR initiatives during theyear is provided separately in the Management Discussion and Analysis Report which formspart of this report.

Disclosure under Sexual harassment of Women at Workplace Prevention (Prohibition andRedressal) Act 2013

The Company is an equal opportunity employer and consciously strives to build a workculture that promotes dignity of all employees. As required under the provisions of SexualHarassment of Woman at Workplace (Prevention prohibition and Redressal) Act and Rulesframed there under the Company has implemented the policy on prevention prohibition andredressal of sexual harassment at the workplace which has been uploaded on the Company'sintranet portal. All women permanent temporary or contractual including those of theservice providers are covered under the policy.

An Internal Complaints Committee has been constituted in each of the nine constituentunits including Corporate Office to redress complaints relating to sexual harassment.During the year the Company received 2 complaints on sexual harassment and one complaintis pending as at the end of the financial year.

Awareness programs were conducted across the Company to sensitize the employees anduphold dignity of their colleagues at workplace particularly with respect to preventionof sexual harassment.

Awards and Recognitions

Your Company continues to be a highly trusted for the quality of its productsinnovation and renovation of its products based on strong consumer insights and theability to engage with consumers across the country. During the year your Company hasreceived various Awards and Recognitions. Some of the important accolades received duringthe year by your Company include:

BEL has won Dun & Bradstreet Corporate Award 2016 in Electrical & ElectronicsCategory.

BEL won four "PSE Excellence Awards 2015" instituted by the Indian Chamberof Commerce Kolkata under the Navratna category.

Details of Award received : o Second prize in "Operational PerformanceExcellence" o Second prize in "R&D Technology Development andInnovation" o Third prize in "Corporate Governance" o Third prize in"HR Management Excellence"

India Skill Award -2016: BEL won India Skill Award 2016 in recognition of augmentingskill development process for the country by engaging maximum apprentices in the categoryof Central Public Sector from Ministry of Skill Development & Entrepreneurship.

Most Enterprising CEO in Electronics Sector : The Indo Global Business Council (IGBC)a policy think tank based in New Delhi has awarded the Chairman and Managing Director as"Most Enterprising CEO in Electronics Sector".

BEL has won the "State Export Excellence Award 2014-15" in the productcategory of Electronics and Communication from Govt. of Karnataka under medium/largeEnterprise category.

India Pride Awards 2016-17: BEL has won the "Dainik Bhaskar India PrideAward" for the year 2016-17 in the ‘Defence' category.

Panchkula Unit has won Gold Prize in the International Convention of Quality Circle(QCC) held at Bangkok.

BEL has won 4 Gold 6 Silver and 1 Bronze Award in the Quality Circle Forum of India(QCFI) Six Sigma Competition held on 22 May 2016 in Mysuru Karnataka.

INSSAN Award for Excellence in Suggestion Scheme : BEL Bengaluru and Ghaziabad Unitswere awarded the 1st and 3rd prizes respectively for excellence in suggestion schemes forthe year 2015-16 in Engineering Industry Group during the 27th National Conventionorganized by Indian National Suggestion Schemes' Association (INSSAN) on 20 & 21January 2017 at Jamshedpur.

Environment Management

The philosophy of Bharat Electronics is to bring sustainability initiatives in allaspects of its operations by systematically integrating best practices to bring in cleanertechnologies and greening the environment through recycle reuse and reduce approach. Allthe units of Bharat Electronics are continuously introducing environment friendlyprocesses to build in sustainability in their products and services bringing forthenvironmental sustainability results. The company is guided by DPE guidelines and otherdirectives from the Ministry of Defence to achieve sustainability targets for enhancingenvironmental performance of products and services by adopting breakthrough technologiesto minimise environmental impacts from design to disposal at end of life. The practices ofconserving natural resources energy conservation water conservation and reduction inwaste generation are inculcated in the fabric of the organisation across all units of thecompany. The company looks at opportunities beyond legal requirements to meetenvironmental commitments through improvised performance.

The Sustainability Report annexed to this report contains further details onenvironment management and sustainable development initiatives.

Subsidiaries Joint Ventures and Associates

BEL Optronic Devices Limited (BELOP) engaged in the business of manufacturing of ImageIntensifier wholly owned subsidiary of BEL. Your Company has made further investment tothe tune of Rs. 4919.60 lakhs (2138957 equity shares of Rs. 100/- each at a premium ofRs. 130/- per share) in the equity shares of BELOP by subscribing to right issue made byBELOP.

BELOP achieved a turnover of Rs. 12388 lakhs for the year as against Rs. 10928 lakhsin the previous year. The profit after tax (PAT) for the year was Rs. 482 lakhs as againstRs. 279 lakhs in the previous year. BELOP has proposed a dividend of Rs. 2.44 per sharefor FY 2016-17.

The associate Company GE-BE Private Limited continues to perform well. This Companymanufactures CT Max and other latest version X-Ray Tubes. BEL supplies some parts requiredfor the products manufactured by this Company. GE-BE Pvt. Ltd. recorded a turnoverof Rs. 79985 lakhs for the year as against Rs. 79523 lakhs in the previous year. Theprofit after tax (PAT) was Rs. 10130 lakhs for the year as against Rs. 12750lakhs in the previous year. The Company has declared 100% dividend for the year 2016-17and BEL will receive Rs. 260 lakhs as dividend from this Company on BEL's share ofinvestment.

M/s BEL-THALES Systems Limited (BTSL) a subsidiary was formed for designdevelopment marketing supply and support of civilian and select defence radars forIndian and Global markets. Your Company holds 74% of the equity capital of BTSL. YourCompany has made further investment to the tune of Rs. 2606 lakhs by subscribing to2605938 equity shares of Rs. 100/- each during the year. During the third year of itsoperation it incurred a loss of Rs. 82 Lakhs as against a loss of Rs. 245 lakhs incurredduring the previous year.

In pursuant to provisions of section 129(3) of the Companies

Act read with Rule 5 of Companies (Accounts) Rules 2014 the statement containingsalient features of the financial statement of Subsidiaries/Associate/Joint Ventures isattached to the financial Statements.

Consolidated Financial Statements

Consolidated Financial Statements of your Company and its Subsidiaries and associateCompanies are attached to this



The Company's Vigilance Department is headed by the Chief Vigilance Officer (CVO) anIAS Officer. Permanent Vigilance Officers were posted in each of the Units and in theSBUs.

Vigilance Committees were formed in the each of the Units to look after the VigilanceAdministration in the Units and

SBUs and the Unit/SBU heads are also designated as Chairman of the Vigilance Committee.Apart from this there exists a Vigilance Committee at the Corporate where the Chairmancum Managing Director is the Chairman of the Committee and the CVO is the Membersecretary. Preventive Vigilance has been the thrust area of the Vigilance Department andthe same received focused attention during the current year. The Vigilance Departmentexamines procurement/subcontract Contracts and processes on continual basis conductsregular and surprise inspections and investigates instances of any suspected transactionsreferred to it. Any employee or third parties can refer any suspected transaction to thenotice of CVO for investigation which are examined as per the Complaint Handling Policy ofthe Company. Online complaint management system has been made operational and onlinecomplaints can be filed through accessing the Vigilance Portal in BEL website.

During the year 2422 Purchase Orders/Contracts have been reviewed. CTE Type intensiveexamination has been restructured with the formation 5 IE teams. CTE Type of IntensiveExamination of 34 High value Procurements Contracts has been taken during the year.Regular and surprise checks/inspection has also been conducted by the field VigilanceOfficers. During the year 70 Complaints including the 6 Complaints referred byCVC/MOD/CBI were received. Out of this 43 Complaints including

6 Complaints referred by CVC/MOD/CBI were disposed. Disciplinary action andSystem/Process improvement has been recommended in some cases where lapses were observed.Three Complaints are pending with CBI for investigation.

During the year 105 Probationary Engineers at the induction level 629 Executives and266 Non-executives were given Basic Awareness Program on Vigilance. Apart from this 474Senior Executives were given Customised Training Program on Vigilance Cyber Crimes andPreventive Vigilance measures. 37 Executives & 34 Non Executives working in sensitiveareas for more than 3 years have been job rotated and the percentage coverage is 99%.

Vigilance Department received the ISO 9001/2015 Certification for the Vigilancefunction of BEL in June 2016. The Surveillance Audit has been completed during February2017.

In line with the CVC's guidelines on Leveraging Technology to ensure transparencythrough effective use of website the following information has been made available on BELwebsite :

E Procurement - about 85% of the procurements excluding the ToT procurement Long termRate Contracts and Repeat Orders were covered under e-procurement mode.

Online registration of Vendors.

Vendor Payment Information System.

E Payment to Vendors.

Details of Awarded Contracts/Purchase Orders valuing more than Rs. 10 lakhs in respectof works contracts service contracts capital items and non-production items have beenposted in the website.

Details of Awarded Contracts/Purchase Orders issued on nomination/single tender basisvalue exceeding Rs. 5 Lakhs have been posted in the website.

Purchase Procedure and Works Contract Manual have been revised and were posted in theBEL website.

Complaint Handling Policy and Whistle Blower Policy is posted in the website.

Corruption Risk Management Policy is framed and issued for implementation. The same isposted in the web site.

Vendors' Directory after flagging removing defunct vendors have been posted in theCompany's website.

File Lifecycle Management System has been implemented across the company and thecoverage is about 79% of the total files generated in the Company.

On-line filing of Annual Property Returns (APRs) is implemented for all the Executivesand the Executives have filed their Annual declaration of Assets and Liabilities (APR) inSAP for the year 2014 2015 and 2016.

Vigilance setup in BEL has been continuously endeavouring to bring transparencyfairness and equity in all transactions and processes of the company through creating asense of awareness on System and Procedures through awareness campaign and trainingprogram. Some of the key activities that have been carried out during the year are :

1) Vigilance awareness week 2016 was observed during October/November 2016. Theobservance of the Week was marked with special address by eminent personalities. About2000 students from Government Schools and Colleges in and around Bengaluru were brought toBEL campus and were shown Skit plays and Video films portraying National Integration andAnti

Corruption messages. Similar Anti Corruption Awareness

Program in the form of skit plays and inspirational video films were arranged for theSchool students of BEL Educational institutions covering about 750 students.

Anti Corruption Awareness Program through 5th Pillar an

NGO on Anti Corruption movement was also organized during the observance of the VAW2016 covering about 750 students from BEL Schools and College. During the week Walkathonand Cycle rally by BEL School Children Tree plantations and distribution of saplingsunveiling of Vigilance Slogan Boards and series of lecture by distinguished personalitiesand Competitions were organized.

2) E Pledge an initiative of the Commission was facilitated in BEL-Intranet apart fromtaking the pledge in the CVC website.

3) Training programs were organised for Vigilance Officers through Guest lectures byfaculties from CBI Bengaluru Deloitte Data Security Council of India.

4) Nine Vigilance Officers underwent the training course on ISO 9001/2015 and certifiedas Qualified Internal Auditors on ISO 9001:2015 Standards.

5) Information booklet on "Guidelines for Contract Workers and useful information(Edition 2) was issued by BEL-GAD Unit for the benefit of the Contract Workers engaged inBEL-GAD Unit.

6) Information booklet on "Do's and Dont's in Procurement and Works Contract wasalso issued for the benefit of Executives who are working in Contracts and PurchaseDepartments.

7) About 3041 BEL employees have successfully completed the Online Certified Program onPublic Procurement organized by World Bank. About 60 Executives who have successfullycompleted the CPPP with distinction have taken the next level course of "ProfessionalDiploma in Public Procurement" conducted by Indian Institute of Materials Management(IIMM). Apart from this 173 employees have successfully completed the CPCM (CertificateProgram in Contract Management) conducted by World Bank.

Integrity Pact

One of the recent initiatives of the Central Vigilance Commission (CVC) to eradicatecorruption in procurement activity is introduction of the Integrity Pact in large valuecontracts in Government Organizations. In line with the directives from Ministry ofDefence and the Central Vigilance Commission your Company has adopted Integrity Pact withall vendors/suppliers/contractors/service providers for all Orders/Contracts of value Rs.2000 lakhs and above initially. This threshold value was reduced to Rs. 1000 lakhs fromMarch 2013 and further reduced to Rs. 500 lakhs from May 2014 subsequently it was furtherreduced to Rs. 400 lakhs from September 2016. The Pact essentially envisages an agreementbetween the prospective vendors/bidders and the Principal (BEL) committing thePersons/officials of both sides not to resort to any corrupt practices in anyaspect/stage of the contract. Only those vendors/bidders who commit themselves to such apact with the Principal would be considered competent to participate in the biddingprocess. Integrity Pact in respect of a particular contract would be operative from thestage of invitation of bids till the final completion of the contract. Any violation ofthe same would entail disqualification of the bidders and exclusion from future businessdealings.

As recommended by the CVC the Company has appointed Mr M D Paliath IDAS (Retd) and MrShankar Narayan

Dy. CAG (Retd) for monitoring implementation of Integrity Pact in the Company. Duringthe financial year 2016-17 the IEMs reviewed 260 contracts and held structured meetingswith the Chairman & Managing Director.

Procurement from MSEs

Your Company has been providing increased thrust on enhancing procurement from MSEs andis implementing Public Procurement Policy for Micro & Small Enterprises (MSEs) as perthe guidelines/notification issued by the Ministry of MSEs

Out of the total procurement during 2016-17 Procurement from MSE vendors is more than20%.

In order to facilitate MSEs the company is deploying all efforts to classify theexisting vendors into Micro & Small Enterprises in the company's procurement systemthrough web-based real time centralized ERP System (SAP). Online Vendor registration formsare available in the Company's official website ( Nodal Officers arenominated to assist vendors regarding Procedure for Registration understanding therequirements of BEL report grievances if any etc. Some of the other initiatives includeuploading of company's procurement plan for MSEs based on the production plan withperiodic update and details of Unit/

SBU specific Nodal Officers in the Company's official website participation in variousvendor development programmes like exhibitions workshops establishment of industrialestate to give maximum encouragement to ancillaries etc.

BEL and MSME Development Institute Bengaluru jointly organized National VendorDevelopment Program 2016 and Industrial Exhibition on 2 & 3 December 2016 atBengaluru. The objective of the event was to bring all the stakeholders at one platformand provide them an opportunity to interact with each other. In addition to vendors fromacross India including large numbers from MSE sector the program was attended byGovernment officials Financial Vendor Associations BEL officials from ProcurementR&D and Vigilance areas. The program also provided opportunity to MSE vendors forshowcasing their capabilities in the Industrial Exhibition.

Implementation of Official Language Policy

Your company is committed to adhere to the OL policies of the Government of India.During 2016-17 efforts made towards implementation of Official Languages include :

OL Inspections :

Committee of Parliament on Official Language conducted OL inspections of Panchkula 07June 2016 and Corporate Office on 14 July 2016. MoD officials conducted OL inspections ofHyderabad Unit on 24 October 2016. DD/OL - RIO conducted OL inspections of CO on 28September 2016 and CRL/BG on 04 November 2016. Corporate OL Audit team conducted OLinspections at Ghaziabad Hyderabad and Navi Mumbai Units CRL-Ghaziabad and RegionalOffice at Delhi.

Annual Programme & Hindi Month Celebrations :

Company has achieved the targets prescribed in the Annual Program 2016-17 issued byDept. of OL MHA GoI to transact official work in Hindi. Hindi Month was observed in allthe Units and Offices of the Company. During Hindi month employees and officersparticipated enthusiastically in various programs/competitions. Employees of variousUnits/Offices and Corporate Office bagged prizes in the Inter Organization TOLICCompetitions. Hindi workshops for those having working knowledge in Hindi were conductedduring the year. Training on Unicode is being imparted for all Executives and Employees.Various Incentive Schemes are propagated among all employees and maximum number ofExecutives / Employees took part in the scheme.

OL in Website & SAP :

OL Portal is in place to facilitate OL implementation across the company and to providelatest inputs pertaining to OL and is being updated. Hindi language has been enabled inSAP. Most of the Units have uploaded data pertaining to OL Training Roster on SAP.Company's website is available in Hindi and English and updated simultaneously.

New initiatives :

Organising of maiden All India OL Conference on 10 January 2017 at CO Auditorium inwhich all units/Offices of BEL and TOLIC members were Institutions participated.

Facility for On-line submission of OL Reports across BEL

Publishing of CO-OL Magazine "Nava Prabha"

Introducing Desk-to-Desk Workshop "RAJBHASHA AAP TAK"

Efforts are in progress to ensure OL Implementation and achieving progressive usage ofHindi across BEL.

Implementation of RTI Act

The information required to be provided as per Section 4(1)(b) of the Right toInformation Act 2005 has been posted on the website of the Company TheInformation posted on the website contains general information about the Company powersand duties of employees decision making process rules regulations manuals and recordsheld by BEL a directory of the Company's officers pay scales procedure for requestingadditional information about the Company by citizens and associated request formats.

During the year 2016-17 the Company received and attended 489 requests for informationunder RTI Act. Most of the requests were for information related to recruitment servicerelated matters third party and commercial secrets information.

Board Meetings/Change in Directors and Key Managerial Personnel

During the year 6 Board meetings were held the details of which form part of theCorporate Governance Report.

Following changes took place in the Directorate and Key Managerial Personnel (KMP) ofyour Company during the financial year:

Sl. No. Name of the Director Desig- nation Date of Appointment Date of Cessation
1 Mr Amol L Newaskar Director (OU) NA 30.04.2016
2 Mr Manmohan Director (BG) NA 30.04.2016
3 Mr Girish Kumar Director (BG) 01.05.2016 NA
4 Mr Nataraj Director (OU) 01.05.2016 NA
5 Mr P C Jain Director NA 31.07.2016
6 Mr P R Acharya Director NA 19.08.2016
(Finance) &
7 Mr S K Sharma Chairman & NA 30.09.2016
8 Mrs Anandi Director 16.09.2016 NA
Ramalingam (Marketing)
9 Mr Koshy Alexander CFO 24.10.2016 NA
10 Mr M L Shanmukh Director (HR) NA 31.10.2016
11 Mr M V Gowtama Chairman & 08.11.2016 NA
12 Mr R N Bagdalkar Director (HR) 23.01.2017 NA

During the year there was change in the Key Managerial Personnel of the Company i.e. MrM V Gowtama was appointed as Chairman & Managing Director in place of

Mr S K Sharma who retired on 30 September 2016 and

Mr Koshy Alexander GM (Finance) was appointed as Chief

Financial Officer in place of Mr P R Acharya Director (Finance) who was relieved fromhis services on 19 August 2016.

Mr M V Gowtama Chairman & Managing Director

Mr Koshy Alexander Chief Financial Officer and Mr S Sreenivas Company Secretary arethe KMP's as defined under the Section 2(51) of the Companies Act 2013.

The following Additional Directors are being appointed as

Directors on terms as set-out in the Notice of the 63rd Annual General Meeting;

Mr M V Gowtama Mrs Anandi Ramalingam and Mr R N


Mr Nataraj Krishnappa Director (Other Units) retires by rotation at the ensuing AnnualGeneral Meeting and being eligible offers himself for reappointment.

Directors' Responsibility Statement:

To the best of their knowledge and belief and according to the information andexplanations obtained by them your Directors in terms of Sections 134(3)(c) & 134(5)of the

Companies Act 2013 state that : a) in the preparation of the annual accounts theapplicable accounting standards had been followed along with proper explanation relatingto material departures; b) the directors had selected such accounting policies and appliedthem consistently and made judgments and estimates that are reasonable and prudent so asto give a true and fair view of the state of affairs of the company as at 31 March 2017and of the profit Company for the year ended on that date; c) the directors have takenproper and sufficient care for the maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities; d) the directors haveprepared the annual accounts on a going concern basis; e) proper internal financialcontrols were in place and such financial controls were adequate and were operatingeffectively; and f) systems to ensure compliance with the provisions of all applicablelaws were in place and same were adequate and operating effectively.

Significant and material orders

There are no significant regulators or courts or tribunals impacting the going concernstatus and Company's operations in future.

Events Subsequent to the Date of Financial Statements :

Material changes and commitments affecting the financial position of the company whichhave occurred between 31 March 2017 and date of signing of this Report are - Nil.

Bonus Issue :

The Board of the Company has in its meeting held on 10th August 2017 approved theproposal for issue of one bonus equity share for every 10 equity shares held by theexisting shareholders of the Company and the proposal is subject to approval of members atthe ensuing Annual General Meeting.

Related Party Transactions

There were no materially significant related party transactions with the Company'sPromoters Directors Management or their relatives which could have had a potentialconflict with the interests of the Company. Transactions with related parties that wereentered into during the financialyear were on an arm's length basis and were in theordinary course of business. All Related Party Transactions are placed before the AuditCommittee as also the Board for approval if required. Members may refer to the notes tothe accounts for details of related party transactions. The policy for related partytransaction has been uploaded on the Company's website Informationpursuant 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 1".

Corporate Social Responsibility

Pursuant to the provisions of Section 135 of the Companies Act 2013 and the Companies(Corporate Social Responsibility) Rules 2014 read with various clarifications amendmentsissued by Ministry of Corporate Affairs & DPE guidelines the Company has undertakenvarious activities as per the CSR Policy. The programmes/initiatives/projects are taken upin line with the Schedule-VII of the Companies Act 2013 which are duly incorporated inCSR policy and forms the guiding principle for all our programmes.

The Corporate Social Responsibility and sustainability policy of the Company is postedon the Company's website

Pursuant to the requirement under the Companies (Corporate

Social Responsibility) Rules 2014 as amended a report on CSR activities forfinancial year 2016-17 is annexed herewith as and material orders passed by the "Annexure2".

Dividend Distribution Policy

Pursuant to Regulation 43A of the SEBI (LODR) Regulations 2015 the top 500 listedCompanies based on market capitalization shall formulate a Dividend Distribution Policy.Accordingly the Board of Directors at their meeting held on 26 April 2017 has approvedthe Dividend Distribution Policy to set out the parameters and circumstances that will betaken into account by the Board in determining the distribution of dividend to itsshareholders and/or retaining profits earned by the Company. The Dividend DistributionPolicy has been posted on the Company's website


Statutory Auditors

Pursuant to Section 139(5) of the Companies Act 2013 the Comptroller and AuditorGeneral of India appointed M/s. Badari Madhusudhan & Srinivasan Chartered AccountantsBengaluru as Statutory Auditors for the financial year 2016-17 for audit of accounts ofBengaluru Hyderabad and Chennai Units and Corporate Office. M/s Ved & CompanyChartered Accountants Ghaziabad were appointed as Branch Auditors of Ghaziabad Panchkulaand Kotdwara Units for the financial year 2016-17. M/s Malani Somani Chandak &Associates Chartered Accountants Pune were appointed as Branch Auditors for Pune andNavi Mumbai Units for the financial year 2016-17. M/s Tungala & Co. CharteredAccountants Machilipatnam were appointed as Branch Auditors for Machilipatnam Unit forfinancial year 2016-17.

Cost Auditors

Pursuant to Section 148 of the Companies Act 2013 read with the Companies (CostRecords and Audit) Rules 2014 (as amended) the cost audit records maintained by theCompany in respect of its Manufacturing activities are required to be audited by the CostAuditor. Your Directors had on the recommendation of the Audit Committee appointed M/sGNV & Associates Cost Accountants Bengaluru as Cost Auditors of the Companyfor the financial year 2016-17 for conducting the audit of cost records of the


Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed Mr Thirupal G Practicing Company Secretary (PCS Registration No. 6424) for thefinancial year 2016-17 to undertake the Secretarial Audit of the Company.

The Secretarial Audit Report is annexed to this report as "Annexure 3".

The Secretarial Auditor in his Report observed that the Company is yet to appoint theadequate number of

Independent Directors as per the requirements of the Securities and Exchange Board ofIndia (Listing Obligations and Disclosure Requirements) Regulations 2015. It is informedthat the appointment of Directors is done by Govt. of India and filling up of vacancies ofthe said Independent Directors is also pending with the appointing authority namelyGovernment of India.

Auditors' Report

Auditors' Report on the financial statements for the financial year 2016-17 and "Nil"Comments of the Comptroller & Auditor General of India under Section 143(6)(b) of theCompanies Act 2013 on the financial statements are appended to this report.

Extract of Annual Return

In accordance with Section 134(3)(a) of the Companies Act 2013 an extract of theannual return in the form MGT-9 is annexed to this report as "Annexure 4".

Business Risk Management

Pursuant to the Reg. 21 of SEBI (LODR) Regulations 2015 the Company has constituted aRisk Management Committee. The details of Committee and its terms of reference RiskManagement Policy etc. are set out in the Corporate Governance Report and a detailed noteon Risk Management is provided in the Management Discussion and Analysis Report.

Remuneration Policy and Board Evaluation

The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors Senior Management and theirremuneration Board Evaluation etc. The details are set out in the corporate governancereport.

Vigil Mechanism /Whistle Blower Policy

The Company has a vigil mechanism named Whistle Blower Policy to deal with instance offraud and mismanagement if any. The details of the policy are set out in the corporategovernance report.

Declaration from Independent Directors

The Company has received necessary declaration from each Independent Director of theCompany under Section 149(7) of the Companies Act 2013 stating that the IndependentDirectors of the Company meet with the criteria of their Independence laid down in Section149(6) of the Companies Act 2013.

Management Discussion and Analysis Report

Management Discussion and Analysis Report required under the SEBI (LODR) Regulations2015 and also under the Government (DPE) Guidelines on Corporate Governance for CentralPublic Sector Enterprises (CPSEs) is attached to this

Report as "Annexure 5".

Particulars of Loans Guarantees & Investments

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

Internal Financial Controls

The Company has in place adequate internal financialcontrols with reference tofinancial statements. A detailed note on Internal Financial controls is provided in theManagement Discussion and Analysis Report.

Composition of Audit Committee

The Audit Committee comprises of Independent Directors viz. Mrs Usha Mathur Chairmanof the Committee Dr R K Shevgaonkar Dr Bhaskar Ramamurthi and Government Director MrsKusum Singh as its members. All the recommendations made by the Audit Committee wereaccepted by the Board.

Corporate Governance Report

DPE guidelines on Corporate Governance for CPSEs provide that CPSEs would be graded onthe basis of their compliance with the guidelines. DPE has graded BEL as"Excellent" for 2015-16. In terms of Regulation 34 of the Securities ExchangeBoard of India (Listing Obligations and Disclosure Requirements) Regulations 2015 and DPEGuidelines a Report on Corporate Governance along with Compliance Certificate of theCompany is attached to this report as "Annexure 6".

Sustainability Report

The DPE guidelines on Sustainable Development for CPSEs mandate CPSEs to disclose theirSustainable Development efforts in a ‘Standalone Report' or as a separate chapter inthe Annual Report. Pursuant to this requirement a Report on your Company's efforts on"Sustainable Development" is attached to this Report as "Annexure7".

Business Responsibility Report

The Securities and Exchange Board of India (SEBI) has mandated inclusion of BusinessResponsibility Report ("BR report") as part of the Annual Report for 500 listedentities based on market capitalization. This SEBI mandate is also inserted as Regulation34(2)(f) of SEBI (LODR) regulations 2015. The SEBI (LODR) Regulations 2015 provide aformat for BR reports. It also contains a list of nine Key Principles and various coreelements under each principle to assess compliance with Environmental Social andGovernance norms. Listed companies are required to prepare policies based on these nineKey principles and core elements put in place a framework to integrate and embed thepolicies into business activities and a mechanism to measure and report the achievementsas BR report.

Your Company has prepared a comprehensive policy framework for BR report afterstudying the SEBI (LODR) Regulations 2015 requirements and keeping in view the businessand governance environment in which BEL as a Defence PSU operates. Highlights of thispolicy are posted on the Company's website The Company's BR report forthe year is attached to this Report as

"Annexure 8".

Other Disclosures

Information required to be disclosed in accordance with issued by Statutory Auditors

Section 134(3)(m) of the Companies Act 2013 read with the Companies (Accounts) Rules2014 regarding conservation of energy technology absorption and foreign exchange earningsand outgo is given at

"Annexure 9".


Your Directors place on record their deep appreciation and gratitude for the valuablesupport received from all the customers particularly the Defence Services and theparamilitary forces and look forward to their continued support and co-operation infuture. Your Directors also place on record their gratitude for the support received fromvarious Ministries of the Government of India especially the Ministry of Defence

Department of Defence Production. Your Directors express their gratitude to the DefenceResearch and Development Organisation and the various Research Laboratories under DRDO forthe support it received particularly in the joint development programmes and new productsbrought out with the help of them. Your Directors express their sincere thanks to theComptroller and Auditor General of

India Chairman Members and employees of the Audit Board Statutory Auditors BranchAuditors Cost Auditors Secretarial Auditor Company's Bankers Collaborators and

Vendors. Your Directors appreciate the sincere efforts put in by the employees at alllevels which enabled the Company to achieve the good performance during the year. Your

Directors express their appreciation and gratitude to all the shareholders/investorsfor the trust and confidence reposed in the Company and look forward to their continuedsupport and participation in sustaining the growth of the Company in the coming years.

For and on behalf of the Board
Bengaluru M V Gowtama
11 August 2017 Chairman & Managing Director