Bharat Heavy Electricals Ltd

To the Members,

We are delighted to present our 47^th Annual Report on the business andoperations of the Company for the year ended March 31, 2011.

FINANCIAL HIGHLIGHTS

During the year, the company witnessed growth in Turnover by 26.89% to s 43337 Crorefrom s 34154 Crore in the previous year. The Turnover (net of excise duty) increased by26.49% from s 32861 Crore in 2009-10 to s 41566 Crore in 2010-11. Profit before Tax forthe year 2010-11 is placed at s 9006 Crore as against s 6591 Crore during 2009-10, agrowth of 36.64% as compared to previous year. Profit after Tax is placed at s 6011 Croreas against s 4311 Crore during 2009-10, a growth of 39.43% over previous year.

Increase in turnover coupled with savings in material cost over previous year hascontributed to the better financial performance during the year.

Net worth of the company has gone up from s 15917 Crore to s 20154 Crore registering anincrease of 26.62%. Net asset value (NAV) per share has increased from s 325.16 in 2009-10to s 411.71 in 2010-11.

DIVIDEND

The Board has recommended a Final Dividend of 179% (s 17.90 per share), s 876.24 Crore,for the year 2010-11. An interim dividend of 132.50% (s 13.25 per share), s 648.61 Crore,on share capital of s 489.52 Crore, has already been paid for the year 2010-11. Thus thetotal dividend payment for the year 2010-11 is s 1524.85 Crore (exclusive of dividend tax)as against s1140.58 Crore paid in the previous year.

Provision of s 142.15 Crore has been made for Corporate Dividend Tax on the Finaldividend proposed. Corporate Dividend Tax of s 107.73 Crore has already been paid on theinterim dividend.

ORDERS RECEIVED

Orders worth s 60507 Crore were received during the year as against s 59037 Crore in2009-10. Sector-wise orders booked are as follows:

RATING OF BHEL VIS--VIS MOU TARGETS

Performance of BHEL for the year 2009-10 has been rated as ‘Excellent’ interms of MoU signed with the Government of India. BHEL has been awarded the MoU Compositescore of ‘1.17’.

The MoU rating for 2010-11 is under finalisation by the Government of India. However,company’s own assessment places performance of the company in ‘Excellent’category for FY 2010-11.

MANAGEMENT DISCUSSION AND ANALYSIS

A report on Management Discussion and Analysis is placed at Annexure – I.

BOARD OF DIRECTORS

Appointment

Shri Trimbakdas S. Zanwar has been appointed as Part-time Non-official Director w.e.f.12.11.2010.

Shri S. Ravi has been re-appointed as Part-time Non-official Director w.e.f.10.03.2011.

Shri Ambuj Sharma, IAS, Joint Secretary, Department of Heavy Industry, Ministry ofHeavy Industries & Public Enterprises has been appointed as Part-time OfficialDirector w.e.f. 15.03.2011.

Shri M.K. Dube has been appointed as an Additional Director w.e.f. 25.06.2011 to takecharge of the office of Director (IS&P).

Shri P.K. Bajpai has been appointed as an Additional Director w.e.f. 01.07.2011 to takecharge of the office of Director (Finance).

In accordance with Section 260 of the Companies Act, 1956 and Article 67(iv) of theArticles of Association of the Company, S/Shri Trimbakdas S. Zanwar, S. Ravi, AmbujSharma, M.K.Dube and P.K. Bajpai shall hold their directorships upto the 47^thAnnual General Meeting of the Company and are eligible for appointment as Directors at theMeeting.

Cessation

Shri S. Ravi who was appointed as Part-time Non-official Director w.e.f. 29.11.2007ceased to be a Director of the Company on completion of his tenure on 28.11.2010.

Shri Rajiv Bansal, IAS, Joint Secretary, Department of Heavy Industry, Ministry ofHeavy Industries & Public Enterprises ceased to be a Part-time Official Directorw.e.f. 15.03.2011.

The Board of Directors place on record their deep appreciation of the valuable servicesrendered as well as advice and guidance provided by Shri S. Ravi and Shri Rajiv Bansalduring their tenure.

Further pursuant to Sections 255 and 256 of the Companies Act, 1956 and Article 67(i)of the Articles of Association of the Company, Smt. Reva Nayyar, Shri Anil Sachdev andShri Atul Saraya will retire by rotation at the Annual General Meeting and being eligible,offer themselves for re-appointment.

In compliance with Clause 49(IV)(G)(i) of the Listing Agreement, brief resumes of theDirectors proposed for appointment and re-appointment along with the nature of theirexpertise in specific functional areas and names of companies in which the person alsoholds the directorship along with the membership of the Committees of the Board are givenat Annexure - II forming part of the Directors’ Report.

OFFICIAL LANGUAGE IMPLEMENTATION

The Company continued its thrust on Official Language implementation in line with Govt.of India’s policy. Apart from other activities important activities undertaken duringthe year are as under:

1. In order to facilitate the employees to work in Hindi and also to give necessaryinput to work in Hindi, Hindi workshops and Hindi computer training programmes inprescribed numbers were organised in all the Units/Divisions including Corporate Office.

2. With a view to create favourable atmosphere for usage of Hindi in the Company, allthe Units/ Divisions of the company, including Corporate Office, celebrated Hindi Divas on14/9/2010 and organised various Hindi competitions during the celebration of Hindi Week inthe month of September, 2010.

3. All national level functions e.g Republic Day, Independence Day, InternationalWomen’s Day etc. were conducted in Hindi in Corporate Office and major Units of theCompany.

4. All the major Units and some of the Divisions of the Company published 11 annualHindi magazines namely, BHEL Chandan by EDN, BHEL Darpan by EPD,BHEL Kiran by Tiruchi,Surya Kiran by ISG, BHEL Yashasvi by RC Puram, Hyderabad, BHEL Bharati (Half yearly) byBhopal, BHEL Ganga by Haridwar, Srijan by Jhansi, Shakti Punj by Power Sector (Hq), NewDelhi, Abhivyakti by Power Sector-NR,Noida, Poorvabha by Power Sector-ER, Kolkata duringthe year. Corporate Office also brought out 04 issues of its quarterly Hindi Magazine"Arunima" during the year.

5. To recognise the best performers and enhance competitive spirit for implementationof Official Language Policy among our Units/Divisions, six Units namely PowerSector-NR,Jhansi, Bhopal, EDN, ISG & EPD were awarded Rajbhasha Shield by the Companyfor excellent implementation of Official Language Policy in their Units.

6. Many awards were received by the employees of major Units in various HindiCompetitions organised under the auspices of Town Official Language ImplementationCommittee.

7. Committee of Parliament on Official Language inspected our Power Sector(Hq), NewDelhi, Power Sector-ER, ROD-Mumbai and Power Sector-NR during the year and appreciated theefforts being made in implementing Official Language Policy of the Govt. of India, whiletaking a few assurances from us to enhance the use of Hindi in official work.

8. BHEL Units/Divisions were inspected by Corporate Rajbhasha Implementation Group forfacilitating them to make progressive use of Hindi as per the Govt. policy.

PARTICIPATION INTHE GLOBAL COMPACT OFTHE UNITED NATIONS

BHEL reiterates its commitment to United Nations Global Compact (UNGC) Programme andset of core values enshrined in its ten principles on human rights, labour standards, andenvironment and anti corruption.

Company intents to advance GLOBAL COMPACT (GC) principles, as a responsible corporatecitizen. BHEL has taken a lead role in promoting G.C. principles in other IndianOrganization through Global Compact Network (GCN) – an apex level nodal agency,formed by the leading Indian organizations. BHEL continued to remain in the forefront inall activities of the Network as Secretary/GCN being BHEL nominee. Noteworthy activitiesof the year were participating in the National Convention and holding of monthly meetingsof the Network through case studies/ organizational experience sharing, addressing theGlobal Compact principles in Indian context.

In recognition of BHEL’s contribution in support of Global Compact programme andits outstanding Communication on Progress (COP), UNGC continued to place BHEL under‘Notable COP’ category.

BHEL is an environment friendly company in all its activities, products & services,besides providing safe and healthy working environment to all its stakeholders and hasmade UNGC programme as part of the Company’s strategy, culture and day-to-dayoperations.

VIGILANCE

The Vigilance organisation of BHEL is headed by the CVO. Each Unit/Region of BHEL has avigilance set up headed by a senior vigilance executive reporting to the CVO.

Preventive vigilance has been the thrust areas of BHEL Vigilance throughout the yearsand the same received focused attention during 2010-11. In line with the directions of theCVC for improving Vigilance Administration, efforts were put in to shift priority frompreventive vigilance to proactive and predictive Vigilance Management.

Lack of knowledge or misinterpretation of the Company’s policies, rules andprocedures may lead to lapses/irregularities. Awareness amongst employees of theorganization is generated by organizing training programmes. 67 such programmes wereorganized during the year 2010-11 in various Units, Regions and offices of BHEL.Interactive sessions were held with line executives representing different functionalareas, in order to create vigilance awareness and to enhance their knowledge of theCompany’s rules, procedures and policies.

With a view to make systems more effective and transparent, Vigilance had carried outsystem studies during the year 2010-11. Many suggestions towards system improvement havebeen rendered. Some of the major areas where suggestions for improvement were given are:

• Amendments to Vendor Registration Procedures

• Purchase Policy

• Reverse Auction Guidelines

• Criteria for financial loading of offers, on account of acceptable deviationsfrom tendered scope / specifications.

As per CVC directions, the Company has taken many initiatives to make available allrelevant information on the web on real time basis. Towards this end, periodic checks areundertaken to ensure that:

• Status of Purchase Orders, Works Contracts concluded every month is beinguploaded by all Units as per the CVC format.

• Procedure and forms related to Vendor registration are hosted on the web site.

• Status of vendor registration is hosted on the web and can be viewed by vendors.

• E-payment of vendor bills are being implemented throughout the organization andprinciple of first come first served is being followed as a rule in payment of vendorbills.

• Status of bill payment can be viewed by the vendors on-line.

• Indents being raised on-line.

• Information relating to Rules/Procedures governing the registration of vendors,clearance of bills etc. is available on the BHEL/Units websites.

SECURITY

The Company’s Security mechanism is at present sufficient and it is geared up toprovide security to each Plant/Unit. Whereas, the security of the most of the Plants ofthe Company which are categorized in ‘A’ category is being managed by the CISF,in some plants, the Company has its own Security. In other Plants, Corporate Office andRegional Offices, the security is being looked after by the private agencies like M/s.EATS sponsored by Directorate General Resettlement, Govt. of India or Ex-ServicemenCorporation.

Adequate measures have been taken for Security of computers. Department of Electronics,Govt. of India (SRAC) have also carried out inspection of our software security mechanismand their suggestion have been implemented. Security audit of major plants is being doneby the Intelligence Bureau periodically and the additional requirements, wherever pointedout by them, are immediately complied with by the concerned Units. Review of Security isdone internally also from time to time and necessary corrective measures are being takenas per the requirements. The Management, Security staff and employees of the Company aresensitized to the Security needs of Company.

SUSTAINABILITY

Sustainability is an integral part of the company’s strategy. BHEL is committed tobe an Environment friendly company in all its areas of activities, products and services,providing safe and healthy working environment.

In line with the company’s strategy, Environment Improvement Projects andCommunity Development Programmes are given special thrust. Some of the major EIPs executedin the past at BHEL plants and townships included tree plantation drives, installation ofrain harvesting plants, efficient water and energy management, reduction in noise level,improvement in chemical storage and handling systems etc.

BHEL’s scheme on Corporate Social Responsibility has evolved over the years andhas been endorsed by the top management as a policy statement, on the underlying principlethat BHEL is a Committed Corporate Citizen and its Corporate Social Responsibility is notonly to build synergy between business and Corporate Social Responsibility but is anintegral part of business strategy.

All manufacturing Units/Regions of the company are accredited to internationalstandards viz. ISO-14001 certification for environmental management and OHSAS-18001certification for occupational health and safety management systems.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956, it is hereby confirmed:

(i) that in the preparation of the annual accounts for the financial year ended 31stMarch, 2011 the applicable Accounting Standards have been followed along with properexplanation relating to material departures;

(ii) that the Directors have selected such accounting policies and applied themconsistently and made judgments and estimates that were reasonable and prudent so as togive a true and fair view of the state of affairs of the Company as at the end of thefinancial year 2010-11 and of the profit of the company for that period;

(iii) that the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act,1956for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;

(iv) that the Directors have prepared the annual accounts for the financial year ended31st March, 2011 on a ‘going concern’ basis.

CORPORATE GOVERNANCE

As per the requirements of Clause 49 of the Listing Agreement a detailed report onCorporate Governance together with the following is given at Annexure – III:

(i) CEO/CFO Certificate [as per Clause 49(V)] and

(ii) Certificate from the Company’s Auditors [as per Clause 49(VII)].

OTHER DISCLOSURES

Information in accordance with the provisions of Section 217(1)(e) of the CompaniesAct, 1956 read with Companies (Disclosure of Particulars in the Report of the Board ofDirectors) Rules, 1988 regarding conservation of energy, technology absorption and foreignexchange earnings and outgo is given at

Annexure-IV.

None of the employees have drawn remuneration in excess of the limits prescribed undersection 217(2A) of the Companies Act, 1956 read with Companies (Particulars of employees)Rules, 1975 during the year 2010-11.

Statement pursuant to Section 212 of the Companies Act, 1956 relating to SubsidiaryCompanies is given at

Annexure-V.

AUDITORS

The Auditors of your Company are appointed by the Comptroller and Auditor General ofIndia. The names of auditors appointed for the year 2010-11 are printed separately in theAnnual Report.

The detail of cost auditors appointed for the year 2010-11 and Cost Audit details areprinted separately in the Annual Report.

The replies to the points referred to in the Auditors’ Report and to the Commentsof the Comptroller and Auditor General of India are given at Annexure – VI.

ACKNOWLEDGEMENTS

The Board places on record its sincere appreciation towards the Company’s valuedcustomers in India and abroad for the support and confidence reposed by them in themanagement of the company and look forward to the continuance of this mutually supportiverelationship in future.

The Board also gratefully acknowledges the support and guidance received from variousMinistries of the Government of India, particularly the Department of Heavy Industry, inCompany’s operations and developmental plans. The Directors express their gratefulthanks also to the Comptroller and Auditor General of India, Chairman and Members of AuditBoard, Statutory Auditors, Branch Auditors and Cost Auditors. The Company also wishes toplace on record its appreciation of the continued co-operation received from all theTechnology Collaborators and Suppliers and support provided by the Financial Institutionsand bankers. Last but not the least the Board wishes to place on record its deep gratitudeto all BHELites whose enthusiasm, commitment and sense of ownership has made this greatcompany proud.

ANNEXURE - II TO THE DIRECTORS’ REPORT

Brief Resume of Directors Proposed for Appointment and Re-appointment as per ListingAgreement [Clause 49 IV (G) (I)]

PART–TIME OFFICIAL DIRECTOR

SHRI AMBUJ SHARMA

Shri Ambuj Sharma, aged 52 years, was inducted as a Part-time Official Director onthe Board of BHEL w.e.f. 15^th March, 2011. He is a post graduate in Geology andBusiness Administration. He is a member of the Indian Administrative Service 1983 batch.He has served in senior Government positions, both in the State Government of Tamil Naduand Government of India. Important positions held by him in recent year have been inpolicy making, senior level posts in the Departments of Industry, Revenue, Home and UrbanDevelopment respectively. At present, he is posted as Joint Secretary to the Government ofIndia in Department of Heavy Industry, looking after the auto sector, heavy electricalequipment sector, vigilance and several Public Sector Enterprises, including BHEL, whichare engaged in the production of a wide range of goods and services. He also oversees theimplementation of the National Auto Testing, Research and Infrastructure Project beingimplemented at an outlay of s 2288 Crores, aimed at establishing modern, state of the artauto testing, homologation and R&D facilitates at 7 centers across India.

Shri Ambuj Sharma does not hold any shares of BHEL.

Smt. Reva Nayyar, aged 65 years, was inducted as a Part-time Non official Directoron the Board of BHEL w.e.f. 22^nd June, 2009. She is an IAS officer (Retd.) of1968 batch from Haryana cadre and holds Post Graduate degree in Political Science.

Smt. Nayyar has over 30 years wide experience in Public Administration and HumanResource Management with varied exposure to governance at the Center and State level aswell as in State Public Sector Undertakings and the Union Parliament. She was Secretary tothe Government of India, Ministry of Woman & Child Development during 2004-06 and wasinstrumental in enactment of major policy and legislation pertaining to women andchildren, such as Protection of Women from Domestic Violence Act, 2005, Commission forProtection of Child Rights Act, 2005 and National Plan of Action for Children 2005. Shealso served as a Secretary to the Government of India, Department of Development of NorthEastern Region during January 2004-June 2004. During this period she had supervisedoverall development of all the seven States in the North-East and Sikkim and finalisedannual allocation for the plan budgets for these States in consultation with PlanningCommission. She has also worked as Adviser, Planning Commission, Member-Secretary NationalCommission for Women, Joint Secretary Deptt. of Revenue, Joint Secretary Lok Sabha,Secretary (Cultural Affairs, Govt. of Haryana).

Smt. Reva Nayyar sucessfully managed annual budgets of more than R 5000 Crores atMinistry level in Govt. of India. She had supervised and directed Research projects andprogrammes in several Departments in the Govt. of India.

At present, Smt. Reva Nayyar is serving as Chairperson of Community Friendly Movementand Bal Sahyog Society, Delhi and a Director on the Board of Essel Social WelfareFoundation. She is also Trustee of Micronutrient Initiatives India and The Cathedral VidyaTrust.

Smt. Reva Nayyar does not hold any shares of BHEL.

Shri Trimbakdas S. Zanwar, aged 57 years, was inducted as Part-time Non officialDirector on the Board of BHEL on 12^th November, 2010. Shri Zanwar holds a PostGraduate degree in Law. He has diverse experience in various fields including social,political and education. He has been a member of various committees appointed by the StateGovernment from time to time. At present he is the President of the Rajya SaksharataParishad (State Literacy Council - State Minister Status) and Member of the MarathwadaState Council of Education and Agricultural Research, Executive Council of the MarathwadaAgricultural University, Parbhani and the Latur District Planning and DevelopmentCommittee. Shri Zanwar is currently a Director on the Board of Shree Saibaba SugarsLimited.

Shri Trimbakdas S. Zanwar does not hold any shares of BHEL.

Shri S. Ravi, aged 52 years was inducted for the second term as Part-timeNon-official Director on the Board of BHEL w.e.f. 10^th March, 2011, aftercompletion of his initial tenure on 28^th November, 2010. He is a Fellow Memberof the Institute of Chartered Accountants of India and holds a Masters Degree in Commerce.

His experience includes holding a number of positions on the Board of Banks, FinancialInstitutions, Asset Management Company, Company involved in Merchant Banking and Companyoperating as a primary dealer. As the Promoting and Managing Partner of Ravi Rajan &Co., Chartered Accountants, he supervises the entire gamut of audit and accountingactivities of the firm and offers Financial and Management Consultancy in specializedareas comprising of Business Valuations, Brand Valuation, Mergers and Acquisitions,Rehabilitation, Restructuring and Turnaround Strategies. He is also Managing Partner ofRRCA & Associates.

He has a rich experience in Banking Sector which includes tenure as director of UCOBank (appointed by Govt. of India). As the Shareholder’s Director of Dena Bank during2000-02, he was member in the Audit Committee, Asset-liability and Risk ManagementCommittee and Board’s Committee for monitoring NPAs. He was also Chairman ofBoard’s Financial Review Committee. He also served on the Board of Corporation Bankand was the Chairman of its Audit Committee. His experience in the banking and financesector also includes serving as director on the Boards of IFCI, CANBANK Fund and PrincipalTrustee Company Private Limited. He was also a member of Technical Expert’s Committeeof Punjab & Sind Bank and Working Group formed by Reserve Bank of India forpreparation of the Draft Government Securities Regulations within the framework of theGovernment Securities Bill, 2004. Presently, he is Director on the Board of Union Bank ofIndia.

At present, Shri S. Ravi is Director on the Boards of Mahindra Ugine Steel Co. Ltd.,IDBI Capital Market Services Ltd., UTI Trustee Company Pvt. Ltd., LIC Housing FinanceLtd., Maharishi Housing Development Finance Corporation Limited, GMR Chennai Outer RingRoad Pvt. Ltd., SME Rating Agency of India Limited, Canbank Venture Capital Fund Ltd and SRavi Financial Management Services Pvt. Ltd.

He is Chairman of Audit Committees of IDBI Capital Market Services Ltd and LIC HousingFinance Ltd. and Member of Audit Committees of Mahindra Ugine Steel Co. Limited, UTITrustee Company Pvt. Ltd. and Maharishi Housing Development Finance Corporation Ltd. He isalso Member of the Investors’ Grievance Committee of Mahindra Ugine Steel Co. Limitedand LIC Housing Finance Ltd.

Shri S. Ravi does not hold any shares of BHEL.

Shri Anil Sachdev, aged 59 years, was inducted as Director (HR) on the Board ofBHEL w.e.f. 1^st September, 2007. He is a Mechanical Engineering Graduate fromJabalpur University and an MBA in Production Management from University of Bhopal.

Prior to assuming charge as Director (HR) in BHEL, Shri Sachdev had 32 years of richexperience in Production which includes 27 years at BHEL, Bhopal and 5 years at BHEL,Haridwar. During his tenure of 27 years in production at Bhopal, he headed Traction MotorsManufacturing Department and Tool & Gauge Manufacturing Department. Shri Sachdev wasalso responsible for the Turnaround of Central Foundry Forge Plant in a short span of twoyears which was a major breakthrough. Under his leadership as Executive Director, HeavyElectrical Equipment Plant, Haridwar, recorded an all time high turnover in 2006-07 (anincrease of 22% over the previous year). In 2006, under his able guidance, HEEP, Haridwarwas the first BHEL Unit to be awarded the CII EXIM Bank Award for Business Excellence.

Shri Sachdev took over the reins of the position of Director (HR)/BHEL at a verycrucial juncture when the Company was in the process of gearing up its operations to meetthe heavy demands from the Power Sector and increasing competition from new players withinthe country and abroad. Shri Sachdev has been instrumental in inducting 4000 employeesevery year, which comprises of engineer and supervisor trainees and fresh ITIs. He hasintroduced re-employment scheme through which a large number of executives have joined usback and the exigency employment scheme for retired employees has helped us to retain theexperienced professionals for our project sites. Shri Sachdev is also deeply involved invendor development initiative for large castings and forgings, balance of plant items,turbine blades etc.

Shri Sachdev is currently Chairman of the Board of Raichur Power Corporation Limited.

Shri Sachdev does not hold any shares of BHEL.

Shri Atul Saraya, aged 57 years, has been inducted as Director (Power) w.e.f. 1^stOctober, 2009. He is a Graduate in Electrical Engineering from Harcourt ButlerTechnological Institute, Kanpur and also holds a PG Diploma in Business Management. ShriSaraya joined BHEL Haridwar as an Engineer Trainee in 1976 and has more than 33 years ofdiversified and versatile professional experience of manufacturing at BHEL’s HeavyElectricals Equipment Plant, Haridwar, Business Development at Power Sector-MarketingDivision at New Delhi and Project implementation and Construction at Power Sector EasternRegion Construction Division, Kolkata. As Executive Director he held the charge of bothPower Sector Marketing and Power Sector Eastern Region concurrently.

Apart from being the full time Director (Power) in BHEL, he is also a Board member ofthe Joint Venture Company (JVC) of BHEL & Tamil Nadu Electricity Board, BHEL &Karnataka Power Corp. Ltd. and BHEL & Madhya Pradesh Electricity Board; companiesformed for setting up Power Plants at Udangudi in Tamil Nadu, Raichur in Karnataka and atKhandwa in Madhya Pradesh respectively. He is also the board member of NTPC – BHELPower Projects Private Limited (NBPPL), a BHEL-NTPC JVC.

As Director (Power), he is responsible for spearheading the Power Sector of BHEL, whichhandles about 75% of the organisation’s business. New domestic and increasing foreigncompetition in the country is the biggest challenge being faced within the sector by theorganisation today. Shri Saraya is addressing these issues by successfully formulatingstrategies for securing not only business for the growth of the organisation but alsoensuring timely completion of the Projects in hand leading to enhanced customersatisfaction.

Shri Saraya has also initiated various activities towards Corporate SocialResponsibility helping children and other backward communities in their difficult times.

Shri Saraya is holding 200 equity shares of BHEL.

Shri M.K. Dube, aged 58 years was inducted as Director (Industrial Systems &Products) w.e.f. 25^th June’ 2011. He is a Mechanical Engineering Graduatefrom MACT (now MANIT) Bhopal. He joined BHEL as an Engineer Trainee in 1976. Shri Dube hasmore than 35 years of diversified and versatile professional experience.

During his earlier tenure at Bhopal in various capacities in Production &Operations Management, he spearheaded technology absorption for Pump Turbines. Shri Dubeassumed charge as General Manager Monitoring at Corporate Office BHEL, New Delhi in 2004.Subsequently as GM (Hydro) he was given responsibility of Product Manager (Hydro) inBhopal. On promotion as Executive Director, he was given charge of Power Sector TechnicalServices and in Jan 2009, charge of Unit Head BHEL Bhopal was entrusted to him.

During his tenure as General Manager (Corporate Monitoring) he was responsible forcompletion of physical and financial targets; dovetailing Strategic plans to Operatingplans, preparation of budgets in line with operating plans and ensuring accomplishment ofbudgeted parameters through regular review & monitoring of operations. He alsoparticipated in finalization of MoU of the company.

Subsequently, as GM (Hydro) at Bhopal, Shri Dube looked after concept to delivery ofvarious rating Hydro Turbines which included preparation of offers for Order Booking,Material Planning, Design, Manufacturing, testing of equipment, Cash Collection andproviding after Sales services to the valued customers. Shri Dube spearheaded thecapability building initiative of establishing the state-of-the-art New CNC Hydro Blockfor further augmenting the manufacturing capacity of Hydro Turbines and spearheadeddevelopment of supplies of large rating Pump Motor sets for lift irrigation schemes toGovt. of A.P.

On his elevation as Executive Director (Power Sector Technical Services) he wasresponsible for Monitoring of the performance of BHEL- supplied equipment, enabling theprocesses of Performance Testing and troubleshooting as well as exploring solutions togeneric issues in power generating equipment.

In January 2009, Shri Dube took charge of the Bhopal manufacturing plant as ExecutiveDirector. Under his stewardship, the Bhopal plant achieved many milestones including thesuccessful manufacture and testing of India’s first 1200 kV, 333 MVA Auto Transformerand the development of IGBT based traction convertor for 3 phase drive technology in theEMU segment. Under his leadership, capability building initiatives were taken to enhancetotal capacity to 30000 MVA for Transformers and to 2250 nos. for Motors. For hiscontribution to the field of hydro power, Shri Dube was awarded the ENERTIA Award 2010.Shri Dube steered the unit to achieve a turnover of s 4202 Crore during 2010-11 with a PBTof s 696 Crore.

Shri Dube is a Non-Executive Director on the Board of Madhya Pradesh Madhya KshetraVidyut Vitaran Company Limited.

Shri Dube holds 20 shares of BHEL.

Shri P.K. Bajpai, aged 56 years has been inducted as Director (Finance) w.e.f. 1^stJuly 2011. He is a B.Tech (Mech) from IIT, Kanpur, MBA from the University of

Leeds (UK) and AICWA from the Institute of Cost & Works Accountants of India.

Shri Bajpai joined BHEL in the year 1977 and has more than 34 years of versatileexperience. He has played a critical role as Head of Finance of Profit Centres comprisingentire value chain of the Organization viz, Engineering (Project Engineering andManagement), Manufacturing and Erection Commissioning and Services. Shri Bajpai was postedas Head of Finance of BHEL’s Manufacturing Unit at Bhopal when the Unit showed lossin 2000-2001 after showing profit continuously since 1972-73. At this critical juncture,he was able to make an immediate turnaround, with Unit showing profit in 2001-2002. Duringhis tenure as Head of Finance of Erection and Commissioning Unit, Power Sector —Northern Region from 1996-2001 there was an all round improvement in Turnover, Value Addedand PBT of the Region. As Head of Finance of Project Engineering and Management division,he played critical role in initiating the development of integrated software called PULSE,sizing and specifications of packages for procurement and rationalization andsimplification of processes.

As General Manager (Finance) Internal Audit/ Management Improvement Cell, Shri Bajpaiintroduced Systems Audit. He developed a system on Effectiveness of Internal Audit andImprovements for higher maturity level, effective Coordination with CAG office for‘NIL’ comments on Annual Accounts.

Besides heading critical SBUs, Shri Bajpai has also worked in Corporate FinancialServices Division looking after Treasury Management, Forex Exposure Management,Receivables Management, Operation Surplus/ Deficit Management, Banking facility —Cash / Non Cash limits. He was also Head of Finance of Power Sector HQs and also dealtwith HR, Management Services, IT & HRDD functions. In addition currently he is alsoworking on Risk Management and formation of a new NBFC.

Shri Bajpai is currently a Part-time Director on the Boards of Powerplant PerformanceImprovement Limited and Latur Power Company Limited.

Shri Bajpai does not hold any shares of BHEL.

ANNEXURE – IV TO THE DIRECTORS’ REPORT

Conservation of Energy

Energy Management is an important thrust area in BHEL. Energy Cost as a percentage ofGross Turnover, net of excise, for the financial year 2010-11 was 0.92% as against 0.99%in the previous year.

Following main activities were performed during the financial year:

• "Tips on ENCON (Energy Conservation) in English" were published inPratibimb (Newsletter of Corporate Office). "Tips on ENCON in Hindi" werepublished in Arunima (Rajbhasha Patrika of Corporate Office). These tips (Hindi &English) were hosted on Corporate Energy Management website and also on Energy Managementwebsite of unit’s for awareness generation of employees.

• National Energy Conservation Day is celebrated every year in India. The week(14-21 December, 2010) was celebrated across the company and ENCON activities wereorganized for awareness generation of employees.

• Incandescent lamp/ bulbs were replaced with energy efficient lamps.

• Computers (PC/ Laptop) were set up for energy saving mode to reduce energyconsumption.

• Energy Audit was conducted at HEEP-Haridwar, CFFP-Haridwar, EDN-Bangalore,HERP-Varanasi and SSTP-Tiruchy. Unit-wise following OFIs (Opportunities for Improvements)have been implemented:

HEEP-Hardwar:

•  Fixed Mode reactive compensation (in form of HT Capacitor Banks on both11KV incomers) was incorporated to improve power factor.

•  Compressor No. 3 being operated at recommended operating pressure.

•  Leakage points found large in number in Block-1 and Block-3 were beingmonitored regularly for the leakages and the leakage points plugged.

CFFP-Hardwar: Energy Efficient Lights installed in place of Conventional Lights.

HERP-Varanasi: Existing 36W Tube replaced with 28W T-5 Tube having electronicchoke.

EDN-Bangalore:

•  Capacitors banks installed for management of power factor.

•  4^th DG set was removed from operations and the three DG Setused using synchronization technology for meeting requirement.

The energy audit was conducted at SSTP-Trichy in last week of March 2011.

The activities to implement the remaining OFIs were in different stages of approval/tendering/ procurement.

Technology Absorption and Research & Development

The following are the major thrust areas for R&D and technology:

• More efficient conventional thermal power plants using supercritical parameters

• More efficient conventional thermal power plants using ultra-supercritical &Advanced Ultra supercritical parameters

• Advanced control and instrumentation platform for thermal power plant andindustrial application

• Coal research for refinement of understanding Indian coal characteristics

• Integrated Gasification Combined Cycle (IGCC) power plants

• Green technologies for Reduction of emissions such as Underground CoalGasification, clean development mechanism (CDM) projects etc.

• Atmospheric and Circulating Fluidized Bed Combustion (CFBC) boilers

• Large size hydro power plants with higher efficiency and longer life

• Advanced transmission systems like 800kV HVDC, 765 kV, 1200 kV Transmissionsystems/ products

• Flexible AC Transmission systems, including devices such as Thyristor ControlledSeries Compensation, phase shifting transformer, static synchronized compensator(STATCOM), controlled shunt reactor, etc.

• Gas insulated switchgear

• Efficient, reliable and cost effective transportation solutions including IGBT– based applications, three-phase AC drive system for diesel electric locos

• Higher rating Industrial steam turbines

• Enhancing efficiency of the existing products

• Grid connected renewable energy systems such as solar PV, solar thermal, windetc.

• Simulators

• Advanced Fabrication Technologies

• Surface coatings including ceramic applications

• Residual life assessment studies

• Deployment of new technologies including deployment Intelligent machines &robotics, for reducing cycle time and cost

• Specialized engineering software applications

• Knowledge Management

• Total Engineering solutions including EPC with focus on automation.

• Vibration and noise reduction

• Applications based on high temperature Superconductors

• Desalination and Water Treatment Plant

• Nano-technology application

• Hydrogen energy and fuel cells

Technology Absorption and Adoption

Details of technology imported during the last 5 years:

Foreign Exchange Earnings and Outgoings

a) Activities relating to export information are given in the Director’s Reportunder the heading ‘International Business’.

b) Total foreign exchange used and earned:

(s in Crore)

Statement pursuant to Section 212 of the Companies Act,1956 relating to SubsidiaryCompany

Note : A subsidiary company has been incorporated on 19th January 2011 under thename of "BHEL Electrical Machines Limited". BHEL owns 51% equity in the companyand Govt. of Kerala owns 49%. The first financial year of the company has commenced from19.01.2011 and shall end on 31.03.2012.