BEML Ltd

The Directors have pleasure in presenting the 47^th Annual Report and AuditedAccounts for the year ended 31.03.2011.

(Rs crores)

TURNOVER AND PROFITABILITY

Your Company attained an all time high turnover of Rs.3,623.52 crores, an increase ofRs.65.85 crores registering a growth of 1.85% over the previous year. The value ofproduction was Rs.3,768.60 crores recording an increase of about 1.62% over the previousyear. Despite the increase in sales volume, the Profit Before Tax was Rs. 186.75 crores asagainst Rs.319.55 crores recorded in the previous financial year. The reduction in profitwas mainly on account of implementation of wage revision for employees, change in productmix propelled by the market demand, lesser quantum of sales of spares coupled with severecompetition that had exerted pressure on margins. However, Company has initiated steps tomaximize the profits.

DIVIDEND

The Board of the Company has recommended a dividend of Rs. 10 per share i.e., 100% onthe Paid-up Equity Share Capital for the year 2010-11 keeping in view the past performanceand future prospects and simultaneously meeting the aspirations of the shareholders.

EXPORTS

International Business Division of the Company has achieved a turnover of Rs. 217.50crores (including Trading) as against Rs. 156.25 crores in the previous year recording agrowth of 39.2% over previous year. The international presence of the Company hasincreased to about 58 countries including African countries viz., Kenya, Mali, to whichentry was made during the year.

QUALITY

The year 2010-11 was observed as "Year of Quality" wherein necessary drivewas undertaken to strengthen the 'quality team', to focus on quality, under the changedbusiness environment and work towards building world class equipment so that the Company's'Vision' of becoming 'Global market leader' is achieved. The measures taken up during theyear are briefed below :

a. Quality Management System:

All manufacturing divisions have been updated to ISO9001-2008 Quality Management System(QMS) certification. KGF, Bangalore and Mysore Complexes are certified for ISO 14001-2004Environmental Management System (EMS). Also, the Bangalore Complex is certified for BSOHSAS 18001-2007 Integrated Management System. Having diversified into Aerospace Division,Engine Division, Mysore Complex is certified for AS9100B Aerospace certification.Laboratories at R&D, KGF and Engine Division, Mysore continue to hold N ABLaccreditations.

Company's new manufacturing unit at Palakkad, Kerala has also successfully implementedand obtained ISO9001-2008 QMS Certification.

Consultancy services of M/s. NIQR, Chennai were engaged for study and review of theexisting Quality Management System followed by Divisions, and to submit therecommendations. Task force teams have been formed to take forward and ensure effectiveimplementation of the recommendations made by NIQR.

b. Quality Improvement:

To enhance the existing quality level, deviation approval system was withdrawn atdivisional level thus avoiding re-works/ deviations at divisions. Professional expertiseare being sought for guidance to analyze the bottleneck areas and to assure quality incritical areas like welding, fabrication, painting, oil testing, etc.

Concept of 5S, Kaizen and Quality Circles are practiced at grass root level throughoutthe Company to bring in continual improvements in product and process quality. To motivatethe activity, our annual event 'BEML-Nonimara Award' Competition is being conducted andthe winning teams are deputed for regional/national level competitions where our teamshave achieved recognition as meritorious performers. Six-Sigma process approach is inplace at all Divisions with 75 Black Belts working on various projects.

During the year, Quality Circle Team "WHEEL" of Earthmoving Division, KGFComplex has been conferred with the life time award by M/s. QCFI as the "Longest& Active Quality Circle". The prize has been awarded after the recommendationfrom the Evaluation Committee of M/s. QCFI, who visited KGF Complex for interaction andevaluating the QCteam.

c. Vendor Development:

As vendor supplied items form the major share of the components that go into buildingup of the equipment, utmost care is taken right from the inclusion of vendor tillclearance of their supplies for further assembly. Periodical visits are made and necessaryinputs and expert guidance in respect of process/system improvements are given to thevendors' right from development stage to ensure quality in their supplies. To enhance theoverall performance of vendor supplied items, the services of third party inspectionagencies are engaged for carrying out source inspection at vendors' premises and also tocarry out surveillance inspection of items received at all Divisions.

To motivate vendors and to make these self-reliable, dedicated vendors are identifiedbased on their performance and encouraged by awarding "Self Certification"status for their supplies. "Cluster Vendor" concept - an idea to handhold andtransform the vendor as "Zero Defect" supplier is practiced with few identifiedvendors by giving inputs with regard to the non-conformances observed in the suppliesmade, and necessary guidance in the areas covering technological aspects, skillimprovement and quality initiatives like 5S, Kaizen etc.

d. Customer Satisfaction:

To ensure higher equipment availability and reliability, 'Task Force' comprising ofApex and Action drive teams are formed at KGF and Mysore Complexes to address theperformance related issues pertaining to BH100/BG825/BE1600/BE1000 equipments available inthe field. Action drive teams visited customers for implementation of improvements in BH100/BG825.

Minimum number of test hours have been stipulated for all models of Mining &Construction Equipments to take care of any possible errors which otherwise would havepassed on to field/customer.

Also, to further with a view to enhance the customer confidence, third party inspectionis being introduced at Earthmoving and Equipment Divisions for inspection and clearance ofthe Mining & Construction equipment at the final stage before despatching it to thecustomers.

e. Technology Up-gradation:

Quality Engineering personnel at all levels are deputed to various training/seminarprogrammes covering topics in areas of technological updates and data analysis tools whichare essential for taking up quality improvement projects.

During the year, the services of M/s TQM International are engaged for Six Sigma BlackBelt training and project guidance. 22 Black Belts across divisions have been trained andare all working on projects.

RESEARCH & DEVELOPMENT

The Company's Research & Development Centre continues to play a vital role in thedesign and development of products, critical aggregates, indigenization activity etc.During the year, R&D has developed BA10 Aircraft Towing Tractor with front cabin, GRADBM21 MBRLS on special 6x6 Chassis, field artillery tractor for towing of heavy artilleryguns, High mobility vehicle on 6x6 chassis integrated with material handling crane, BroadGauge Catenary Maintenance Vehicle for DMRC and 8 W Catenary Maintenance Vehicles.

The information on R&D, Technology Absorption, Adaptation and Innovation is atAnnexure-I.

FINANCE

The working capital requirements were met from the internal resources and creditfacilities availed from banks. There was no overdue installment of principle and interest.

The Company's contribution to exchequer was in the order of Rs. 657.92 crores duringthe year by way of Excise Duty, Customs Duty, Sales Tax, Income Tax, Wealth Tax, ServiceTax and Cess.

FOREIGN EXCHANGE EARNINGS AND OUTGO

During the year, the Company's export earning stood at Rs. 179.37 crores. The totalforeign exchange utilized during the year was Rs.652.67 crores.

A sum of Rs.2.02 crores was incurred towards deputation of personnel abroad forbusiness/ export promotion, after-sales-services and training.

FIXED DEPOSITS

The Company has not accepted / renewed any fixed deposits during the year.

VIGILANCE

The Company has an independent Vigilance Department headed by a Chief VigilanceOfficer. The Vigilance Department of the Company functions on the premise that well laiddown systems and procedures and their meticulous follow up are bound to pave way for thecorporate growth. Regular inspections, surprise checks, scrutiny of purchase/contractfiles are part of these exercises which helped in streamlining systems and procedures andensure greater transparency and accountability in decision-making. Carrying out systemaudits and system improvement studies as well as regular awareness cum sensitizationprograms have been inbuilt in the functioning of the department. These efforts were foundto be useful in identifying the loopholes in the systems and procedures and theircorrection/ improvement. In addition, the Vigilance Department has made available a windowin the Company's website for the stakeholders/ shareholders to lodge complaints.

Nevertheless, the Vigilance Department ensures that the Company adheres to theguidelines/ instructions issued by Central Vigilance Commission (CVC) from time to time inmaintaining probity.

In nutshell, the conscientious functioning of the Vigilance Department has supportedthe Company in its enhanced efficiency combined with the code of accountability.

CORPORATE GOVERNANCE

A report on Corporate Governance including Management Discussion and Analysis Reportalong with a compliance certificate from the Auditors as required under the ListingAgreement entered into with the Stock Exchanges is annexed to this report.

SUBSIDIARY COMPANY

M/s Vignyan Industries Limited (VIL) achieved a turnover of Rs.33.82 crores and valueof production of Rs.35.68 crores during the year. It incurred a loss of Rs. 1.60 crores,mainly due to the delay in stabilization of the expansion process for shifting fromtraditional "C0₂" to "no-bake" system and non-availabilityof quality sand due to heavy and unprecedented rainfall.

The statement and particulars relating to VIL, pursuant to Section 212 of the CompaniesAct, 1956 is attached.

In accordance with Section 212(8) of the Companies Act, 1956, your Company has beenexempted from attaching the Balance Sheet, Profit & Loss Account, Auditors' Report,Directors' Report, etc., of the subsidiary Company to the Balance Sheet of BEML Limited asper Government of India order No.51/12/2007-CL-III, dated 08.02.2011 issued under GeneralCircular No.2/2011. However, the Company will make available these documents upon requestby any member of the Company.

JOINT VENTURE COMPANY

A JV Company, M/s BEML Midwest Limited incorporated on 18^th April, 2007 atHyderabad with BEML having 45% share, M/s Midwest Granite Pvt. Ltd., and P T Sumber MitraJaya of Indonesia as partners with 55% share. The Company has been established tocapitalize the growing business opportunities in the mining segment. However, due tocertain unauthorized transactions and the oppression and mismanagement by the nominees ofMidwest Granite Pvt. Limited, BEML has filed a petition u/s 397 and 398 of the CompaniesAct, 1956 seeking suitable relief, and the matter is pending before the Hon'ble CompanyLaw Board.

MICRO, SMALL AND MEDIUM ENTERPRISES

The Micro, Small and Medium Enterprises continue to get support and preference fromBEML wherever there is shortage of in-house capacity. The company extends technicalguidance and requisite support to these industries wherever required. Our quality controlpersonnel visit the industries to assist and ensure that the quality of the products meetthe requisite standards.

During 2010-11, the Company procured items worth Rs. 563.24 crores from the saidcategory of units.

RAJBHASHA

• Your Company ensured compliance of the Official Languages Act, 1963 and theRules made thereunder and administrative instructions regarding use of Hindi received fromthe Department of Official Language and Ministry of Defence from time to time.

• Hindi training for all the three courses viz., Prabodh, Praveen and Pragya underHindi Teaching Scheme of Ministry of Home Affairs, Department of Official Language werearranged at Corporate office, all Complex offices and few Regional/District offices. Atotal of 271 employees have been trained during the year.

• Five officials of the Company have been trained in Computer Training programmein Hindi organised by National Informatics Centre in collaboration with Central HindiTraining Institute, Ministry of Home Affairs.

• To inculcate interest and efficiency among the staff, 13 Hindi workshops wereorganized for 192 employees at Corporate Office and Business Complex Offices during theyear.

• Hindi Month was observed with great zeal in the Corporate Office, all theBusiness Complex Offices and Regional offices of Hyderabad, Mumbai and Chennai from 1^stto 30^th September, 2010. During this period, to motivate the employees,competitions viz. Hindi Antakshari, Hindi Quiz, Hindi Crossword and Noting & Drafting,were organized and the winners of these competitions were awarded. Further, Hindi Day i.e.14^th September, 2010 was observed in accordance with the guidelines issued bythe Ministry of Defence and Department of Official Language, Ministry of Home AffairsFurther, Hindi Month was observed with two days Hindi Conference held at Mumbai on 29-30^thSeptember, 2010 in which 23 participants from Western Regional offices/District officesparticipated in the Conference.

• During the period, all translation work and Hindi typing work relating to AnnualReports, Technical Reports, MoUs, Reports on SC/ST, RTI, Reservation policy, Standingorders, Product Profiles, Advertisement Materials and Standard Forms was attended to withfull efficiency and dedication.

• All the sign boards outside the premises of the Company displayed tri-linguallyi.e. Kannada (Regional Language), Hindi and English and the name plates which aredisplayed within the premises of the Company are also in tri-lingual form.

• A session on "Official Language Policy" is included in all in-housetraining programmes.

• Hindi Library is functioning in Corporate Office with good number of Hindi Booksand Hindi periodicals. Hindi Dictionaries, Administrative Glossaries, Help-literatures aresupplied to the staff to encourage them to do official work in Hindi.

• Website of BEML is made available in Hindi also.

AWARDS

• Public Relations Council of India (PRCI), a premier body of the Public Relationsand Communication Professionals has bestowed the prestigious 'Chanakya Award' on CMD, ShriV RS Natarajan, on 03.04.2010, for having steered the Company to unprecedented levels ofsuccess both in business operations as well as territorial expansions.

• The Second Dalai Street Investment Journal (DSIJ) PSU Award-2010 held at NewDelhi on 6^th April 2010, BEML has beenbestowed with "Wealth Builder-Miniratna-Manufacturing" Award under percentagesurge in Market Cap category.

• The Heavy Fabrication Unit (HFU) of BEML at KGF Complex has been adjudged as'Winner' in the National Safety Awards (performance year 2008) under Scheme-V (LowestAverage Frequency Rate) and Scheme-VI (Accident Free Year) and received the award on27.10.2010 from Ministry of Labour & Employment, Government of India.

• BEML has won the prestigious Raksha Mantri's Institutional Award for Excellencein Performance (FY 2008-09) and Group award for Design Efforts for design and developmentof Intermediate Cars for Delhi Metro RS4 Project, on 10.11.2010.

• BEML was conferred with the prestigious SCOPE Award - Medium PSE Category forthe year 2008-09 on 15.12.2010 by Ministry of Heavy Industries & Public Enterprisesfor Excellence and Outstanding Contribution to Public Sector Management.

• BEML was bestowed with EEPC INDIA Award for outstanding contribution toengineering exports (FY 2008-09) by Engineering Export Promotion Council on 22.12.2010.

• BEML was bestowed with the Aerospace & Defence Award under the category'Excellence in Technology Awards' for the snow cutter. This was instituted by SAP MediaPublications, an internationally renowned business magazine in the field of Aerospace on08.02.2011.

• BEML had received the Public Relations Councilof IndiaAward for "Best WallCalendars" at the Global PR Conclave-2011 on 17-18^th March, 2011 atChandigarh.

• BEML was bestowedwith two awards, one is 'Game changes for diversification' andthe other 'R&D and enhanced global presence' instituted by Dalai Street InvestmentJournal in its 'India's best Public Sector Enteprises-2011' on 21.04.2011 at New Delhi.

• As per the survey, commissioned by the Economic Times, Corporate Dossiermagazine and conducted by IMRB International, Shri V RS Natarajan, Chairman and ManagingDirector of the Company, has been ranked at 77^th position in the list of 'IndiaINC's most powerful CEOs-2011', published in the Economic Times on 29.04.2011.

MANPOWER

The manpower strength as on 31^st March, 2011 stood at 11,798 as against12,052 of the previous year.

Representation of SC/ST and Ex-Servicemen category-wise as on 01.01.2011 andrecruitment made are as under:

Representation of SC/ST/Ex-Servicemen as on 01.01.2011

Recruitment during 2010

HUMAN RESOURCES DEVELOPMENT & INDUSTRIAL RELATIONS

The HR Department identified several thrust areas for continuously updatingtechnical/professional knowledge and skills of employees and bring about attitudinalchanges in fostering a performance driven work culture in all areas of operationsparticularly at shop floors. During the year, the Company organized several in-house andexternal training programs for 13,402 employees covering 30,691 man-days.

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

CORPORATE SOCIAL RESPONSIBILITY / SOCIAL WELFARE

• BEML Limited provides opportunity to such of the unskilled Contract Labourerswho are literates, by extending on-Job skilled training to consider them for regularemployment.

• Extension of out-patient medical facilities to ex-BGML employees and theirfamilies by deputing a doctor and 2 para-medical staff to the areas of Marikuppam,Champion Reef and Oorgaum and medicines are dispensed free of cost for general illness.

• Provided medical treatment through Company's medical centres and dispensaries tothe common public dwelling in the adopted village of Dasarahosahalli at KGF.

• BEML runs one Junior College, and Nursery School at KGF and one Nursery Schoolat Bangalore. These Institutions not only meant for BEML employees children, it alsocaters to a large extent to the local population. In addition, BEML runs a KendriyaVidyalaya Project School at KGF by providing school building with infra-structurefacilities, mid-day meal programme and other facilities.

• BEML has extended facilities viz., school building, furniture and otherinfrastructure and one attender for mid-day meal programme and night watchman toGovernment English Higher Primary School at KGF.

• The Company has extended all help and support to the Labour Welfare Fund (LWF)functioning in the production units for the benefits of Employees, their dependants andlocal population. The LWF had conducted training programmes in Tailoring, Computer, Typing/ Shorthand course, Diploma course in Laboratory Technology, Job Oriented Courses,Music/Dance classes, spoken English Course, Summer camps for art/painting and sports andvarious entertainment activities during the year.

• Company has sponsored a scheme for award of Scholarship to the SC/ST studentspursuing full time undergraduate Engineering course in Engineering Institutions all overthe country. The scheme also aims at providing employment to students who successfullycomplete the Engineering programme.

• Your Company has adopted four children from the United Physically HandicappedSchool of Coimbatore and decided to continue the adoption till the children can beemployed suitably under PH quota / services to orphans and unsupported.

• Your Company has taken up Development of Parks in BEML Housing Co-operativeSociety layout at Mysore. Company has also proposed to develop parks in BEML HousingCo-operative Society layouts Stage-I and Stage-II at Mysore. In pursuance of this, Companywill share 60% and the balance 40% of the total cost will be borne by BEML HousingCo-operative Society Ltd, Mysore.

• Your Company has taken up planting of avenue trees from Hootagalli to PaperMills Circle (KRS Road in front of BEML premises) and from Engine Division Corner toInfosys Circle, Mysore.

PARTICULARS OF EMPLOYEES

There were no employees of the Company who received remuneration in excess of thelimits prescribed under Section 217(2A) of the Companies Act, read with the Companies(Particulars of Employees) Rules, 1975.

ENVIRONMENT AND POLLUTION CONTROL

In order to protect the environment in and around the factory premises/township, treeplantation were undertaken. Saplings of various types of avenue tree/flower bearing treeswere planted in the vacant lands belonging to the Company for maintaining ecologicalbalance in the surrounding areas. Further, measures have also been taken to protect theexisting flora and fauna from any basic interference.

Effluent treatment plants have been constructed inside the factory premises of theProduction Units for treatment of domestic/industrial effluents. Further, treatmentplants/oxidation ponds for treatment of natural process of treating effluents have beeninstalled in various locations inside the factory and township. Treated effluent water isbeing utilized by the Landscaping Department in the production units. Artificial tankshave been constructed in Manufacturing Complexes to harvest rain water, restrict soilerosion and to raise ground water level. Storage yard facility for Hazardous waste atsalvage stores in the Divisions is constructed as per ISO 14001 requirements.

In a bid to harness renewable energy, the Company commissioned a 5 MW Wind Mill duringthe year 2007-08 in Gadag District of Karnataka. The energy generated by the plant is fedinto the KPTCL grid and sold to Hubli Electricity Supply Co. Ltd., (HESCOM) and as of30.06.2011, 332.28 lakh Kwh power has been generated enabling green house gas reduction.Further, your Company is contemplating to setup an additional 18 MW Wind Mill Farm todevelop green energy towards being self sufficient on power requirements.

ENERGY CONSERVATION

The Company continues to give emphasis on conservation of energy. The efficiency ofenergy utilization is closely monitored to attain a higher level of effectiveconservation. Some of the measures adopted during the year for energy conservation are:

1. One portable air compressor of 4 KW in place of 55 KW capacity motor has beenreplaced to meet the requirement of heat treatment shop furnaces.

2. Introduction of 2 Nos. 5000 litres capacity solar water heating system in WorkersCanteen for pre-heating of water at 60 centigrade.

3. Replacement of Inverter welding sets (18KW) in place of old type Kirloskar makeMotor Generator welding set of 3 OK W.

4. Introduction of 150W metal halide high bay fitting for street lights in place of800W HPMV lamp at various places in the unit premises.

5. Reduction of HSD generation by optimizing utilization of grid power.

6. Usage of CFL lamps in the production area and in office building.

The particulars as prescribed under sub-section (1 )(e) of Section 217 of the CompaniesAct, 1956, read with the Companies (Disclosure of particulars in the Report of the Boardof Directors) Rules 1988, are annexed to this report.

STATUTORY AUDITORS

M/s. Padmanabhan Ramani & Ramanujam, Chartered Accountants, Chennai, were appointedby Comptroller & Auditor General of India as Statutory Auditors for the year 2010-11.

Reply of the Board of Directors to the observations made in the report of the Auditorson the Accounts are given in the addendum to this report.

COST AUDITORS

Your Company has appointed the following firms as Cost Auditors with the approval ofCentral Government:

(i) M/s Rao, Murthy & Associates for 'Heavy Earth Equipments', and

(ii) M/s AGI & Associates for'IC Engines'. DIRECTORS

• The President of India has appointed Smt. Rashmi Verma, Joint Secretary (LandSystems), Ministry of Defence on 09.11.2010 as Government Nominee Director on the Board ofthe Company in place of Shri V Somasundaran. The President of India has also appointed Dr.S C Pandey, Addl. Financial Adviser & Joint Secretary, Ministry of Defence with effectfrom 07.06.2011 as Government Nominee Director in place of Shri PK Mishra.

• Dr. (Smt.) Rekha Bhargava, Lt. Gen. (Retd.) Noble Thamburaj, Shri Kanwal Nath,Shri Ramesh Bhat, Prof. S Sadagopan were appointed as Independent Directors of the Companywith effect from 09.11.2010.

• Shri M Poongavanam, Director (Mining & Construction Business) relinquishedthe office of Director on 28.02.2011 consequent upon his superannuation and Shri C NDurgesh has been appointed as Director (Mining & Construction Business) with effectfrom 18.03.2011. Further, Shri V Mohan, Director (Defence Business) relinquished theoffice of Director on 30.06.2011 consequent upon his superannuation and Shri P R Naik hasbeen appointed as Director (Defence Business) with effect from 01. 7.2011.

• The Board placed on record its deep appreciation of the valuable servicesrendered by S/Shri V Somasundaran, M Poongavanam, PK.Mishra and V Mohan.

DIRECTORS' RESPONSIBILITY STATEMENT

The Board of Directors of the Company confirm:

i) that in the preparation of the annual accounts, the applicable accounting stendardshave been followed and there has been to material departure;

ii) that the selected accounting policies were applied consistently and the Directorsmade judgements and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at 31^st March, 2011 and ofthe profit of the Company for the year ended on that date;

iii) that proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;and

iv) that the annual accounts have been prepared on a going concern basis.

ACKNOWLEDGEMENTS

Your Directors express their hearty thanks to the Company's valued customers, inparticular Defence Services, M/s Coal India Limited and its Subsidiaries, M/s SingareniCollieries Company Limited, Railway Board, M/s Steel Authority of India Limited, M/s DelhiMetro Rail Corporation and M/s Bangalore Metro Rail Corporation for their patronage andconfidence in the Company. The Directors also express their gratitude to ourCollaborators, M/s Rotem, South Korea, M/s Tatra Sipox Limited, UK, M/s PearsonEngineering Limited, UK, M/s Terex Corporation, USA, M/s Bumar, Poland and others fortheir valuable assistance to the Company.

The Directors express their appreciation to the State Bank of India and other membersof Consortium of Banks and Financial Institutions for their continued support to theCompany's operation. The Directors also thank all the shareholders/investors for reposingcontinued confidence in the Company.

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

The Directors also gratefully acknowledge the valuable support and assistance receivedfrom various Ministries of Government, in particular Ministry of Defence, Ministry ofCoal, Ministry of Mines, Ministry of Steel, Ministry of Railways and the Ministry ofExternal Affairs. The Directors are also grateful to the Government of Karnataka for thesupport and co-operation extended.

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

For and on behalf of the Board of Directors

V RS Natarajan

Chairman & Managing Director

Form for disclosure of particulars with respect to Conservation of Energy

1. SPECIFIC AREAS IN WHICH R&D CARRIED OUT BY THE COMPANY:

The R&D at BEML has designed and developed number of high technology products andaggregates for Mining & Construction, Metro & Rail and Defence sectors as percustomer requirements without any collaboration and the same have been manufactured andlaunched for customer trials.

Depending on the sectorial needs for the year 2010-11 R&D, BEML has launched thefollowing products / projects:

Mining & Construction:

1. BA10 Aircraft Towing Tractor with front cabin.

Metro & Rail:

1. Intermediate Cars for DMRC Metro Cars.

2. Broad Gauge Catenary Maintenance Vehicle for Metro projects.

3. 8 W Catenary Maintenance Vehicle.

Defence:

1. GRAD BM21 MBRLS on special 6x6 chassis.

2. Field Artillery Tractor for towing of heavy artillery guns.

3. High Mobility Vehicle mounted on 6x6 chassis integrated with material handlingcrane.

2. BENEFITS DERIVED AS A RESULT OF ABOVER&D:

Major R&D initiatives have enlarged the product range and also provide latesttechnology for the existing products that enables Company to retain the existingcustomers, increase the market share and enter new markets. These new initiatives haveenhanced the skill sets, knowledge, expertise and induced confidence in taking up newchallenges that are arising from time to time.

Intermediate Cars (M&T Cars) for DMRC -RS4 Project :

The indigenous design, development, testing & commissioning of Intermediate Carshas led to the indigenous development of raw materials for car body (stainless steel) andbogies. Many of the intricate castings and forgings for Bogies have been developedindigenously.

It may be noted that the Bogie Test setup has been put up exclusively for the Metroproject and is the only such facility in India apart from that in RDSO. The type testingof Bogies at BEML R&D centre has been successfully completed using the established setup. The experience in Bogie testing has placed BEML as an alternate test center for Bogietesting in India and enabled BEML to independently take up Bogie testing.

With the successful development of Intermediate cars, BEML established capability ofdesign, development, testing & commissioning without any foreign collaborators.

SSEMU:

The design & development of SS EMU project has been taken up by BEML R&D,Bangalore Complex for the first time in India against developmental order from RailwayBoard. BEML has applied for patenting design of SS EMU. Indian Railways has planned toreplace EMUs that are in operation at Mumbai, Kolkata & Chennai in phased manner.

3. FUTURE PLAN OF ACTION:

One of the key objectives of R&D is product diversification. Keeping in mind thefuture trends in technology in line with changing business scenario, R&D has in place,plan of action to take up a number of projects with enhanced allocation of resources. Toachieve this, R&D infrastructure and resources are being continuouslystrengthened/upgraded as needed, to handle the latest technologies effectively.

BEML R&D, has planned to develop a series of products / aggregates covering all thethree business segments i.e.. Mining & Construction, Defence and Metro & Rail inthe coming years.

4. EXPENDITURE ON R&D FOR 2010-11:

Company has spent Rs. 94.33 crores on R&D during 2010-11 which is about 2.60% ofthe turnover as shown below:

(Rs. crores)

The Company contemplates spending 2% of its turnover towards R&D during FY2011 -12 for technology up-gradation and new product development.

5. TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION:

Efforts made and benefits derived in brief towards technology absorption, adaptationand innovation are:

• Acquisition & Absorption of new technologies

• Faster and newer introduction of competitive product

• Import Substitution

• Customer satisfaction and Business growth

• Indigenization and standardization

Future Plan of Action:

Infrastructure established for indigenization of components for Metro cars and some ofthe Defence products. Scanning and identification of technology/partners for mining andconstruction products including higher capacity dump trucks and underground miningequipment are on the cards.