Bharat Dynamics Ltd Directors Report.

Dear Members,

Your Directors presents the 51" Annual Report together with the audited financial statements of the Company for the year ended 31 March 2021.

1. HIGHLIGHTS ON OPERATIONS :

• Handed over Astra Weapon system by Honble Raksha Mantri to Chief of Air Staff on 18 December 2020 at New Delhi. Further as a part of the User Trial Order from DRDL, your Company has successfully integrated 1st batch of ASTRA missiles and handed over to the DRDL.

• Secretary, Department of Defence R&D and Chairman, DRDO Flagged off the first Varunastra, the Heavy Weight Torpedo, being delivered to the Indian Navy, at a ceremony held at BDL, Vishakhapatnam on 21 November 2020.

• CMD, BDL Commodore Siddharth Mishra (Retd) presenting a model of Dishani, an underwater weapon, to Honble Raksha Mantri during product launch of Dishani at Aero India - 2021.

• CMD,BDL Commodore Siddharth Mishra (Retd) presenting a model of Garudastra, an underwater weapon, to Hon’ble Raksha Mantri during product launch ofGarudastra at Aero India - 2021.

2. FINANCIAL RESULTS AND PERFORMANCE HIGHLIGHTS :

2.1 Performance of the Company in financial terms is summarized below:

Rs. in Crore

S.No. Particulars

2020-21 2019-20

% of lncrease/(Decrease)
i) Sales/Revenue from Operations 1914 3105* (38.36)
H) Value of Production 2043 2601* (21.45)
Hi) Profit Before Tax 341 742 (54.04)
iv) Profit After Tax 258 535 (51.78)
v) Value Added 1073 1587* (32.39)
Vi) Earnings per share# (in Rupee) 14.06 29.18 (51.82)

# EPS has been calculated based on profits excluding the other comprehensive income.

* Figures have been reclassified and regrouped.

2.2 Following data reflect the financial position of the Company:

Particulars

Rs. in Crore

% of Increase/ (Decrease)
2020-21 2019-20
Gross Block (PPE) 1070 1011 5.84
Accumulated Depreciation 327 258 26.74
Net Block 743 753 (1-33)
Working Capital 2378 2260 5.22
Capital Employed 3293 3192 3.16
Net Worth 2685 2607 2.99

2.3 COVID-19: COVID-19 pandemic and consequent lockdown in the first quarter of the year under review, has adversely impacted your Companys operations, there was no production during this period. All the subcontractor factories (i.e Local vendors, Ordnance factories & other DPSUs) were closed and overseas supplies also got delayed, as a result the supply-chain got affected and required input materials were not received in time, which had cascading effect on the production and resultant sales during the year. There was also delay in allotment of Field Firing Range for Proof firing of ATGM Missiles due to pandemic.

2.4 During the year under review, your Company has achieved a revenue from operations of Rs.1913.76 Crore and profit after tax (PAT) of Rs.257.77 Crore. Covid-19 pandemic and consequent lockdown has led to severe disruptions, affecting production, sales and profit during the current reporting period. Therefore, the performance of the Company for this period is not being compared with the corresponding period or any period of previous year.

2.5 The order book position of the Company as on 01 April 2021 is about Rs.8386 Crore comprising mainly of Akash, MRSAM, ATGMs and Varunastra.

3. FIXED DEPOSITS FROM PUBLIC:

The Company did not accept any fixed deposits from Public during the year, and there was no outstanding Fixed Deposits atthe beginning/end of the year. Accordingly, there was no default in payment of deposits/interest thereon.

4. DIVIDEND&TRANSFERTO GENERAL RESERVE:

Your Company has a consistent track record of dividend Payment. The Board has recommended a final dividend of Rs.0.65 /- per equity share of Rs.10/-each amounting to Rs.11.91 Crore for the year 2020-21. Further, your Company has paid interim dividend of Rs.6.70 per share amounting to Rs.122.80 Crore in March 2021. An amount of Rs.250 Crore is being transferred to General Reserve forthe year 2020-21.

5. CAPITALSTRUCTURE:

The paid up capital of the Company as on 31 March, 2021 stood at Rs.183.28 Crore (18,32,81,250 equity shares of Rs.10/- each). The Authorized Capital of the Company is Rs.200 Crore (20,00,00,000 equity shares of Rs.10/- each) as on 31 March 2021.

Offer for Sale (OFS) by Govt, of India:

Duringtheyear, OFS was announced by the Government of India for sale of its shareholding in the Company to the extent of 27,492,188 Equity Shares of face value of Rs.10/-each representing 15% of the total paid up equity share capital of the Company. The OFS took place on September 8,2020 and September 9,2020 and accordingly the Govt, of India has sold a total of 23,503,770 equity shares of the Company to non-retail investors and retail investors on the basis of valid bids received on T day and T+1 day (i.e., September 8,2020 and September 9,2020). On completion of OFS, the Govt, of India shareholding in the Company has come down from 87.75% (representing 160,829,297 equity shares of Rs.10/- each) to 74.93% (representing 137,325,527 equity shares of Rs.10/- each). As on 31 March 2021, the Govt, of India shareholding in the Company stands at 74.93% (representing 137,325,527 equity shares of Rs.10/- each).

6. PERFORMANCE AGAINST MoU:

Your Company signs a Memorandum of Understanding (MoU) every year with the Ministry of Defence, Government of India. The performance of the Company is likely to be rated as very good for the year 2019-20 and performance for the year 2020-21 is under evaluation.

7. MODERNIZATION, UPGRADATION AND INDIGENIZATION:

7.1 During the year, an amount of Rs.57.30 Crore has been spent on Capital Expenditure (CAPEX) programme towards modernization of Plant & Machinery and other infrastructure development.

7.2 Your Company is putting up determined efforts towards increasing Indigenisation contents in the manufacture of ATGMs, SAMs and Torpedoes with the objective of the increasing self-reliance, reduction of imports. Indigenisation of products like Konkurs-M, Invar, Milan-2T, Akash,TAL-XP and Varunastra has been achieved up to 96.3%, 78.6%, 71%, 96%, 91% and 86% respectively.

8. RESEARCH & DEVELOPMENT:

8.1 Your Company recognizes that, Research and Development (R&D) is a thrust area for the growth of the organization. During the year, R&D facilities like Real Time Data Acquisition and Processing System, Frequency Response Analyzer, High Speed Cameras, Graphics Processing Unit (GPU) development kits, Microelectronic Boards, and Laser Safety Set-up have been established.

8.2 Your Company has identified various products to meet the requirements of Indian Armed Forces and currently its R&D is focusing on the following:

a) Amogha-lll Anti-Tank Guided Missile (ATGM):

Amogha-lll is a 3rd generation man-portable fire-and-forget ATGM based on MR Seeker guidance. The missile has been tested at different stages of development by conducting field firing tests. A project sanction order has been received from Indian Army and your Company is working on the prototypes to be offered to Indian Army for validation trials as per the project sanction order.

b) Your company is also working on next generation ATGM which is currently at the initial stages of development. It is expected that a significant development of this ATG M will be achieved in F Y-2021-22

8.3 The following table shows the recent trend in in-house R&D expenditure:

(tin Crore)
Particulars 2020-21 2019-20 2018-19
Sales Turnover (Gross) 1914 3105 3069
R&D expenditure 42.95 73.87 53.45
R&D expenditure as % of Sales Turnover 2.24 2.38 1.74

9. PROCUREMENT FROM MSMEs

9.1 Your Company has put in place a robust procurement process where in special emphasis is being given for procurement from Micro, Small & Medium Enterprises (MSMEs). In line with the Public Procurement Policy of Government of India (as amended), your Company has achieved more than mandated procurement of 25% from MSMEs. For the year 2020-21, your Company has made 32% of its procurements from MSMEs. Apart from that, your Company provides interest free advances to MSMEs by taking Bank Guarantee of 110% on the amount of Purchase Value. Your Company also extends Test facilities, Free Issue Materials (wherever the cost of the raw material is high). Apart from exemption of EMD/SD your Company also provides jigs, fixtures and gauges free of cost at the time of production.

9.2 Vendor Development:

Your Company strives to increase vendor base through conducting special drives and also by providing free registration in certain cases & occasions. A total of 3 vendor meets have been conducted in the year 2020-21. Virtual Vendor Meet was conducted on the occasion of Vigilance Awareness Week on 30 October 2020. The other vendor meets were conducted on 24 March 2021 and 31 March 2021 on the occasion of Azadi Ka Amrit Mahotsav and outsourcing opportunities organized by M/s EEPC India respectively. Your Company has over 900 registered vendors on its rolls as on date.

10. EXHIBITIONS:

Senior Executives and Directors participated in National and International Exhibitions during the Year 2020-21. Your Company has participated in the Aero-lndia-2021 exhibition held at Bangalore during 03 Feb to 05 Feb 2021 and displayed its products. Molls were signed during the exhibition.

• Inauguration of Surface-Mount Technology & High Performance Computing facility by Distinguished Scientist & Director, RCI, DRDO on 7 August 2020.

• Honble Raksha Mantri laid the foundation stone for setting up Seeker Facility Centre at an event held virtually on 10 August 2020.

• Honble Raksha Mantri laid the foundation stone for establishing Warhead Building at an event held virtually on 10 August 2020.

11. EXPORTS:

Apart from regular supplies to Indian Armed Forces, your Company is also exporting Light Weight Torpedoes to a friendly country through a private channel partner. Ministry has created lot of opportunities for export market and accordingly your Company has bagged four export orders till date. Out of four export orders received, your Company has already supplied first and second contract of LWT-XP in 2019-20 and supplied third and fourth contracts of LWT-XP amounting to Rs.145 Cr in FY 2020-21. Your Company has been in regular interaction with overseas customers for achieving its export targets. Offset implementation also offers a major opportunity to achieve export targets. As such your Company is regularly interacting with aero-space and defence majors in Europe and Russia to seize opportunities arising out of offsets. Your Company has given thrust on export of Weapon Systems, recently Cabinet Committee on Security (CCS) also accorded clearance for export of Akash Weapon Systems to nine countries. BDL is also executing programs like Light Weight Torpedo, Heavy Weight Torpedo, CMOS, ATGMs, Air to Air Missiles, Air to Surface weapons under the MAKE IN IN Dl A category which will cater to the export market in addition to the requirements of Indian Armed Forces.

12. ATMANIRBHAR BHARAT:

12.1 Your Company has been focusing on indigenizing the technology for self-reliance. In the case of Konkurs-M and Invar missiles even though technology transfer was limited your Company took the initiative and achieved an indigenous content of 80 % to 95%. The IGMDP program of DRDO, where your Company is prime production agency, gave further thrust to the indigenization concept and as a result your Company successfully established a wide eco system of vendors which includes MSMEs. In the recent years, your Company has been outsourcing to the extent of 60% across its projects barring critical items and weapon system integration.

12.2 In response to the clarion call given by the Honble Prime Minister for creation of "Atmanirbhar Bharat", BDL observed Atmanirbhar Bharat week from 7th Aug to 14th Aug 2020. During the week, following initiatives were taken by the Company:

• Products Launch of Konkurs Missile Test Equipment (KMTE) & Launch of Konkurs LauncherTest Equipment

(KLTE) indigenously designed and developed by BDL, by Hon’ble Raksha Mantri at an event held virtually on 13 August 2020.

Honble Raksha Mantri launching BDL indigenized products from New Delhi in the presence of Chief of Defence Staff, Secretary (Defence), Secretary (Defence Production) and senior officials from the Ministry of Defence and CMD, BDL Commodore Siddharth Mishra (Retd), Directors, CVO and senior officials from BDL.

• Issue of Expression of Interest by Honble Raksha Mantri for components and sub-assemblies proposed to be indigenized by BDL, at an event held virtually on 14 August 2020.

• Secretary, Department of Defence R&D and Chairman, DRDO laid foundation stone for establishing High Temperature Carbon Composite manufacturing facility at an event held virtually on 14 Aug 2020.

12.3 The above facilities will help BDL to reduce dependency on the foreign technologies. A frame work for implementation of Make-ll procedure at OFBand DPSUs was issued by MoDon 11 February 2019. The objective of the framework is to, inter alia, incorporate features of Make-ll in the procurement manuals of OFB and DPSUs so as to empower them to take up project for indigenization of items, particularly the ones being imported regularly. Accordingly, your Company has amended the IMM manual and procedure incorporating the Indigenization of components and spares of BDL products.

12.4 As a part of Atma Nirbhar Bharat, your Company has made an Indigenization Plan for the next five years and has set a target of indigenization of 166 items. During the year 2020-21 against the target of 72 items, 79 items were indigenized and the value of imports was reduced to Rs.144.71 Crore.

12.5 Your Company is designing and developing indigenous 3rd generation ATG M named as Amogha III. The product is being developed as a Make-ll project under Indian Indigenously Designed Developed and Manufactured (Indian IDDM) category of Defence Procurement Procedure. The successful completion of this product will make India, Atma Nirbhar in the manufacturing of 3rd generation ATG Ms.

12.6 SR I JAN portal which is a one stop shop online portal that provides access to the vendors to take up items that can be taken up for indigenization. In this portal, BDL has uploaded 265 items. These 265 items include all the items imported by BDL These items on completion of its indigenization could save about Rs.930 crore of imports for the country.

The above are opportunities offered to domestic defence industry for indigenization of items being imported by BDL. On successful indigenization of above items, procurement will be done by BDL through these domestic defence industries. This will help in the growth of domestic defence industry.

An E - Book on "BDL - A journey towards Atmanirbharta" was released by Secretary (Defence Production), Ministry of Defence from New Delhi. Commodore Siddharth Mishra (Retd), CMD, BDL along with Directors, CVO and senior officials of the Company at BDL, Hyderabad after the release of E-Book.

13. BOARD OF DIRECTORS:

13.1 The Board of Directors of the Company comprises of Functional Directors, Government Nominee Directors and Independent Directors (i.e Non Official Part Time Directors) who are appointed by the Government of India from time to time. Further, the tenure and remuneration of Functional Directors including Chairman and Managing Director are decided by the Government of India through Public Enterprises Selection Board/Search Committee. The Government communication also indicates the detailed terms and conditions of their appointment including a provision forthe applicability of the relevant rules of the Company.

13.2 The Government Nominee Directors are not entitled to any remuneration/ sitting fee. The Independent Directors (i.e Non Official Part Time Directors) are entitled to sitting fees for attending the Board/Committee meetings as duly approved by the Board considering the government directives, statutory acts, rules and regulations.

13.3 Independent Directors (i.e Non Official Part Time Directors)

In order to fulfill the requirement of SEBI (LODR) Regulations, 2015, Government of India vide its letter No. H-62011/2/2016-D(BDL) datedl3 September, 2017 appointed three new Independent Directors viz., Shri Ajay Nath, Shri.K.S.Sampath and Smt.Latha Narasimhamurthy as Part-time Non-Official Directors w.e.f 13 September 2017 for a period of three years or until further orders whichever is the earliest. Accordingly, term of the said Independent Directors was completed on 12 September 2020. The Board places on record its appreciation for their valuable contributions extended to the Company during their tenure.

Statement on declaration bv Independent Directors:

Independent Directors have given declarations u/s 149(7) of the Companies Act, 2013 that they meet the criteria of independence as laid down u/s 149 (6) of the said Act.

13.4 During the year 2020-21, Shri.N.Srinivasulu was appointed as Director (Finance) & CFO with effect from 01 July 2020 in place of Shri.S.Piramanayagam who retired from the services on 30 June 2020 on attaining the age of superannuation. The Ministry of Defence, Department of Defence Production, Government of India vide its Office Memorandum No. 8 (32)/2019-D (Coord/DDP) dated 02.02.2021 appointed Shri.Chandraker Bharti as Government Nominee Director in place of Shri.Ashwani Kumar. The Board places on record its appreciation for the valuable contributions of Shri.S.Piramanayagam and Shri.Ashwani Kumar extended to the Company during theirtenure.

13.5 In terms of provisions of section 152 of the Act, Shri.P. Radhakrishna, Director (Production) and Shri.N.Srinivasulu, Director (Finance) retire by rotation at the ensuing Annual General Meeting and being eligible, offers themselves for reappointment.

13.6 Number of Meetings of Board:

During the year 2020-21, Five (5) Board Meetings were held on 29 June 2020,31 August 2020,12 November 2020, 12 February 2021 and 12 March 2021.

13.7 Performance Evaluation:

The provisions of Section 134(3)(p) of the Companies Act, 2013 relating to evaluation of Board of Directors do not apply to your Company since necessary exemptions are provided to all government companies. Further, similar exemptions were granted to your Company by Securities Exchange Board of India (SEBI) under the provisions of SEBI (Listing Obligations and Disclosure Requirements {LODR}) Regulations, 2015 vide their letter No. SEBI/HO/CFD/DIL1/OW/P/2018/1679/1 dated January 17,2018.

14. DIRECTORSRESPONSIBILITY STATEMENT:

As per Section 134(3)(C) and 134(5) of the Companies Act, 2013 as amended, the Directors state that:

(a) In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relatingto material departures.

(b) The directors had selected such accounting policies and applied them consistently and judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31 March 2021 and of the profit of the Company for the year ended on that date.

(c) Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

(d) Directors have prepared the annual accounts on a going concern basis.

(e) Directors have laid down internal financial controls which are being followed by the Company and that such internal financial controls were adequate and operating effectively and

(f) The directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

15. SIGNIFICANT AND MATERIALORDERS:

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Companys operations in future.

16. EVENTSSUBSEQUENTTOTHE DATEOF FINANCIALSTATEMENTS:

Material changes and commitments affecting the financial position of the Company which have occurred between 31

March 2021 and date of signing of this Report are - Nil.

17. MANPOWER AND RESERVATION OF POSTS FOR SCs/STs:

17.1 The Company has been following Presidential Directives of the Government with regard to reservation of posts forSCs/STs/OBC in recruitments.

17.2 Total manpower strength as on 31 March 2021 is at 2812 (including four functional directors), out of which, the number of persons on temporary rolls is 36. Of the total strength, 87 are ex-servicemen, 550 are of Schedule Caste, 211 are of Scheduled Tribes and 789 are of OBC category. The percentage of Scheduled Caste and Scheduled Tribes in respect of Employees is at 19.56% and 7.50% respectively.

17.3 Number of persons on temporary rolls as on 31 March 2021 is 36, out of which 6 belong to Scheduled Caste category and 2 belong to Scheduled Tribe category.

17.4 The No. of Scheduled Caste, Scheduled Tribes and OBC in various categories of posts as on 31 March 2021 is given below:

Number of Employees

Category

Total Strength

Scheduled Castes

Scheduled Tribes

OBC

31-03-2021 31-03-2020 31-03-2021 31-03-2020 31-03-2021 31-03-2020 31-03-2021 31-03-2020
Group-A 794 833 151 155 82 82 160 164
Group-B 71 72 16 17 4 4 22 22
Group-C 1682 1762 316 324 107 108 514 523
Group-D 225 242 61 64 16 17 84 92
Temporary 36 37 6 6 2 2 9 10
Total 2808* 2946* 550 566 211 213 789 811

‘excluding four functional directors.

17.5 Recruitment of employees in Scheduled Caste, Scheduled Tribes and OBC during 2020-21 is given below:

Classification of posts Total Vacancies Released Total Recruitment

Reservation of posts (out of Col.2)

Recruitment made during the year 2020-21

(1) (2) (3) (4) (5)
SCs STs OBC SCs STs OBC
Group-A
Group-B
Group-C NIL
Group-D
Total

18. EMPLOYMENT OF WOMEN:

As per the recommendation No.51, Para (ii)(a) of the National Commission for Women (NCW) in its Annual Report for the year 1995-96, the employment position of Women as on 31 March 2021 is given below as directed by the Ministry of Defence, vide their letter Nos. 39(6)/99/D(B&C), dated 27 August 1999.

I. EXECUTIVES

Grade No. of Employees Women Percentage
1 71 12 16.90
II 155 21 13.55
III 155 26 16.77
IV 191 23 12.04
V 83 10 12.05
VI VII 162 32 11 6.79
VIII 13 1 7.69
IX 3 - -
Functional Directors 3 - -
CMD 1 - -
Total 869* 104 11.97

* CVO is not included in this report.

II. NON-EXECUTIVES

Grade No. of Employees Women Percentage
WG-0 - - -
WG-1 4 - -
WG-2 102 14 13.73
WG-3 72 14 19.44
WG-4 227 25 11.01
WG-5 292 30 10.27
WG-6 135 27 20.00
WG-7 215 28 13.02
WG-8 28 4 14.29
WG-9 120 6 5.00
WG-10 15 - -
WG-11 55 2 3.64
WG-12 642 48 7.48
Total 1907* 198 10.38

* Excluding Temporary Employees

19 PERSONS WITH DISABILITIES (PWD) AS ON SI MARCH 2021:

The total number of Physically Challenged employees as on 31 March 2021 is 103 and its percentage to total employees works outto3.66%.

HI LD VI Total
Group-A 6 13 5 24
Group-B 0 0 0 0
Group-C 17 43 8 68
Group-D 4 4 3 11
Total 27 60 16 103

HI- Hearing Impaired, LD-Locomotive Disability, Vl-Visually Impaired.

20. HUMAN RESOURCE DEVELOPMENT:

During the year under review the Company has conducted various training programmes on knowledge based, development oriented and on need based topics. Such training programmes were organized in-house and at premises of external agencies to coverthe present and future requirements of the Company. The details of the same are as below:

No. of Employees Trained During FY 2020-21

(Executive VS Non Executives)

Particulars No. of Executives participated No. of Non Executives participated TOTAL

21. PARTICULARS OF EMPLOYEES:

There were no employees of the Company who received remuneration in excess of the limits prescribed under Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.Further in accordance with Ministry of Corporate Affairs Notification No. GSR 463(E) dated June 05,2015, Government Companies are exempt from Section 197 of the Companies Act, 2013 and its rules thereof.

22. FOREIGN VISITS:

Your Company incurred an expenditure of around Rs.15.93 lakh during the year under report towards foreign travel for business trips and also for on the Job-Training of personnel.

23. INDUSTRIAL RELATIONS AND EMPLOYEE WELFARE:

23.1 Your Company continues to enjoy cordial and harmonious Industrial relations with the cooperation and support of all sections of employees viz. Recognized Trade Union, Associations such as SC, ST, OBC, Ex-serviceman and Officers Association. All Statutory and Non-Statutory Committees such as Works Committee, Safety Committee, Canteen Management Committee, Welfare Committee and other participative forums have extended their cooperation to maintain discipline at all levels.

23.2 Compliance on statutory welfare provisions are followed meticulously. The Company has been taking care of medical needs of employees and their family members as per BDL Medical Rules. Further, in line with DPE guidelines, Company has framed Pension Scheme and Post-Superannuation Medical Benefit Scheme for the Executive and Non- Executives of the Company.

23.3 In the ongoing pandemic situation, the recognized union as well as associations are extending full support to Management in maintaining the production activities by scrupulously following all Covid protocols.

24. SECURITY:

24.1 Central Industrial Security Force (CISF) is providing Security and Fire Services in both Kanchanbagh and Bhanur Units. During the year under report, CISF has played a vital role in the Security and safeguarded Company Property. CISF team adopted robust security measures combining physical measures with technology to keep the highly sensitive installations secure even in the pandemic Covid-19 situations.

24.2 The Plant Security Council is in place to review the security arrangements and implementation of IB guidelines. Regular security review meetings are being conducted both by Management and CISF to beef up security.

24.3 As a part of security measures and to comply the statuary governing bodies, Company is in process of upgradation of existing Access Biometric Control systems with contactless Face Recognition system suitable to thwart the ongoing pandemic Covid - 19 situation, in addition to the computerized photo identity cards, to prevent any unauthorized entry. CCTV cameras have been installed all over the factory premises to cover more areas under CCTV surveillance. Door frames, metal detectors, X-Ray Baggage machines are in place. Barricades, Boom Barriers and Morchas are provided to strengthen physical security measures.

24.4 Company conducts regular programmes on security and safety awareness besides observing Security Week/Fire Week. Employees are sensitized on the security threat and action to be taken in case of emergency and fire accidents.

25. SAFETY:

25.1 Your Company is strictly following applicable normsto maintain Safety, Health and Environment (SHE) at BDL The two Safety Committees i.e. Industrial Safety Committee and Explosive Safety Committee are held at regular intervals for monitoring Safety, Health and Environment as per the statutory requisite. The Industrial works are carried out in compliance with the Factories Act 1948, and Explosive Safety is strictly adhering to the Storage & Transport of Explosive Committee (STEC) regulations framed by Center for Fire, Explosive & Environment Safety, (CFEES)MoD, New Delhi.

25.2 Explosive Safety audit by Centre for Fire, Explosive & Environment Safety (CFEES) New Delhi and their observations made by the audit team have been complied with. Special medical checkups are carried out for employees working in Electroplating and Canteen. Periodical medical checkups are also carried outfor employees working in other areas by qualified medical team.

25.3 Safety Day/Week was observed during the month of March-2021. On this occasion Safety Pledge was administered to all the employees on 4th March at respective work places by safety team and departmental heads.

25.4 Safety Engineering Department has conducted a one-day workshop on Industrial Safety, Explosive Safety and Hazardous Processes to all Graduate, Diploma, ITI and Vocational apprentices. The various topics covered are COVID Safety, Road Safety, Workshop Safety and Hazardous Processes such as Welding, Heat Treatment, Electroplating, Chemical lab, NOT (X-ray & Radiography), Explosive Safety- safe handling, storage and transport, DOs & DONTs awareness was imparted to all participants of the program. Safety Department is continuously coordinating with Civil & Welfare departments in sanitization of all buildings & departments in day to day activity in this pandemic situation.

25.5 Safety Engineering Department is in continuous interaction with Inspector of Factories, Telangana State Pollution Control Board (TSPCB) and Centre for Fire, Explosive & Environment Safety (CFEES) MoD, New Delhi to update their guidelines for compliance. Fire mock drills are conducted at regular intervals to ensure fire-fighting preparedness.

26. ANNUAL RETURN:

In accordance with the provisions of the Companies Act, 2013, Company is required to attach an extract of Annual Return for the year under report and the same is placed as Annexure-I. The same is also available on the BDL website.

27. ENVIRONMENT AND POLLUTION CONTROL:

27.1 All three Units of BDL i.e. Kanchanbagh, Bhanur and Visakhapatnam have been re-certified with ISO 14001:2015 (EMS). For all the units, internal audits are conducted and surveillance audits are conducted by certification bodies as per frequency. The solid and hazardous waste are being disposed off through certified agencies and testing of environmental parameters of Ambient Air Quality, Stack Quality of DG sets/venturi scrubbers, Sewage Treatment Plants and Effluent Treatment Plants and noise levels are done as per the specified frequency. Waste water quantity is being monitored by installing separate water meters and electricity consumption is also being monitored as perthe requirement of consent conditions.

27.2 Celebration of World Environment Day 2020:

The World Environment Day-2020 was celebrated with great enthusiasm in all the units of BDL. On this occasion, saplings were planted on 05 Jun 2020 in all the units by maintaining social distancing as per MHA Guidelines. Speech was given on the theme i.e. "Biodiversity".

Cmde.Siddharth Mishra (Retd), Chairman & Managing Director inaugurated tree plantation programme at Bhanur on 05 Jun 2020. Executive Directors, GMs, Senior executives and employees also participated in the plantation programme.

28. QUALITY:

At present, Akash, Electronics, Design & Engineering and CP-IGMP Divisions of Kanchanbagh Unit, Bhanur Unit and Visakhapatnam Units have been certified with AS 9100D Standard for Aerospace Quality Management System. Corporate Office at Financial District, Hyderabad is certified with ISO 9001:2015 (Quality Management System). Electronics Division has been certified with AFQMS (Approval of the Firm and its Quality Management System) by DGAQA.

Electronics Lab of Milan Division and Bhanur units and Material Testing Lab have been accredited for ISO / IEC 17025:2005 (NABL) certification.

For all the ISO/AS certified divisions, internal audits are conducted by our own internal auditors and surveillance audits are conducted by certification bodies as per frequency. Customer satisfaction is being measured for all major products manufactured in those divisions. BDL is continuously striving to improve customer satisfaction through customer meets, interaction with users and by conducting Quality Review Meetings. Corrective actions are also taken wherever necessary for improvement.

29. OFFICIAL LANGUAGE (OL) IMPLEMENTATION:

29.1 Implementation of OL Act-1963 (as amended 1967) & Rules made there under are ensured. Quarterly OLIC Meetings are held regularly under the Chairmanship of CMD and Directors besides submission of Quarterly progress reports on use of OL are sent in time to authorities concerned.

29.2 Under OL Act, 1963 and the Presidential Orders thereon, the papers laid before the Parliament, Annual Report of the Company, MoU with MoD and brief of the Company along with presentations for various delegations and Parliamentary Committees are prepared in bilingual form and submitted.

29.3 Hindi Fortnight was celebrated from 01 to 14 September, 2020 at Corporate Office and at all the Units of the Company. During the fortnight, various competitions were conducted ONLINE for the Officers and Employees of

Corporate office, Kanchanbagh Unit, Bhanur Unit & Visakhapatnam Unit keeping in view the Covid-19 guidelines issued by Govt, of India. Hindi Day was celebrated on 14th September, 2020 ONLINE in a centralized manner under the chairmanship of CM D. On this occasion. Directors, Unit Heads of all the Units and Head of Liaison office, New Delhi along with Higher Officials were present. Cash Awards were given to the winners of the competitions and Officers and Employees for doing original work in Hindi during the year.

29.4 Complying with the assurance given to the Parliamentary Committee on OL and directives issued by CMD as a part of drive to increase the use of Hindi on Internet & Intranet Names & Designations of all the Executives were prepared in bilingual form. Besides this, routine phrases in bilingual form were also provided to all the Executives and oriented them for its usage on Computers. Two orientation programs in form of Hindi Workshops were organized for Higher Officials such as General Managers, Additional General Managers on 19th & 25th February, 2021 respectively.

29.5 E-Inspection of Visakhapatnam Unit on OL implementation was held by Dy.Director (Implementation) Southern Region, Bengaluru on 30.06.2020. Appreciations were recorded in the reports received there on. Action taken report on the suggestions mentioned in the report was sent to the authority concerned under the signatures of Unit Head of Visakhapatnam Unit. Similarly, Inspection on OL implementation at Liaison Office, New Delhi was done by Assistant Director, DDP, MoD on 18 January 2021. Appreciations were recorded in the reports received thereon.

29.6 Town Official Language Implementation Committee (U) functioning carried out by BDL Hindi Department for PSUs of twin cities consisting of 47 Organizations was declared to receive NATIONAL RAJBHASHA KIRTI PURSKAR (first place) by Govt, of India in Region C for the year 2019-20.

29.7 The Organization is assigned with functioning of TOLIC (U) consisting 47 PSUs as its Member Offices. Regular half yearly Meetings of the body are organized in May & October respectively. Due to Covid-19 pandemic, this year first Half Yearly Meeting of the Committee was organized on 29 July, 2020. During the Meeting 17th Issue of PATH IKthe House Journal of the Committee was released. The second half yearly Meeting was organized on 22 October, 2020. During the Meeting, TOLIC Shield /Trophy/ Cup and Best Magazine awards were announced. Both the Meetings were chaired by CM D, BDL & Chairman, TOLIC (U).

29.8 An Online Joint Hindi Workshop for small Member Offices of Town Official Language Implementation Committee was organized on 29 November, 2020.

29.9 In compliance to the decision taken in the 52"’ Half Yearly Meeting of Town Official Language Implementation Committee, a special practice based training program was organized on 23 February, 2021 on KANTHASTH, online translation platform facility developed by the Department of Official Language, MHA, Gol. Shri Mohan Chandra Bahuguna, Assistant Director, Dept, of Official Language imparted the training on the usage and features ofKANTHASTHthrough onlinefrom Department of Official Language Head Quarters, New Delhi.

29.10 Under the auspices of TOLIC (U) an ONLINE "Orientation Program on OL" was organized for newly joined Hindi Officers/Translators/Nodal Officers/Staff of Member Offices of TOLIC (U) on 05 March, 2021.

29.11 On the occasions of Republic Day, Independence Day Celebrations, Atmanirbhar Bharat Week, CMD of the Organisation addressed in Hindi. Similarly, Vigilance Awareness Week, Swatchata Pakhawada, Constitution Day the pledge was taken in Hindi & English.

29.12 The Website of the company prepared in Hindi was updated from time to time in compliance to the directives of Govt, of India. Officers and Employees of the organization took active participation in the Inter PSU Competition conducted by TOLIC (U) and won FIVE prizes.

29.13 With an objective to promote and propagate Hindi and inculcate the reading habit among the Officers & Employees of the Company, various Hindi Magazines and News Papers such as (1) Hindi Milap (2) Swatrantra Vaartha (3) Anuvad (4) Sahitya Amrit (5) Avishkar (6) Yojna (7) Hindi Rozgar Samachar (8) Pratiyogita Darpan (9) Meri Saheli (10) Dakshin Samachar (11) Golconda Darpan (12) Milind Patrika (13) Hans are subscribed regularly. Besides this, popular Hindi books on all subjects are also purchased annually with the same objective as per the directives of DOL.

30. VIGILANCE:

30.1 The foremost objective of Vigilance Department of the Company has been preventive/pro-active vigilance. As a part of its proactive vigilance measure the department has issued twenty one Systemic Improvement Suggestions in the areas of like e-reverse auction, Recruitment, Departmental Promotion, Reservation, Sensitive Area Rotation, Civil work and Service Contracts etc. and of which many have been implemented by the Management during the year under report. Brief of all the Systemic Improvements have been hosted on BDL website https://bdl-india.in.

30.2 In furtherance of its preventive vigilance approach, the department conducted an integrity survey’ for executives with an objective to gauge the integrity orientation of the organization. A total seventy-three percent of executives participated in the survey and the findings were communicated to management indicating improvement in the areas of communication, commercial decision making and workplace harmony etc.

30.3 Vigilance Module incorporated as part of in-house training program in the company. Two Days training program on preventive vigilance for 215 mid-career executives (Managers, Sr. Managers, DGMs) was conducted in 3 batches with the help of subject matter experts from industry and academia during 23 December 2020 to 06 January 2021.

30.4 Being an extended arm of the Central Vigilance Commission (CVC), New Delhi, the department has submitted Various reports (e.g. Monthly, Quarterly, Annual & CTE Type) to the Commission and also to Ministry of Defence and to the Board of the Company. The Department has also issued vigilance clearances to employees in cases of Recruitment, Promotion, Absorption, Confirmation, Foreign visits, for postings in sensitive areas etc. The department has also accorded priority in handlingthe complaints as perthe complaint handling policy of the CVC.

30.5 Observation of Vigilance Awareness Week is an integral part of the Vigilance department. As directed by the Central Vigilance Commission, Vigilance Awareness Week (VAWJ-2020 was observed across units of the Company from 27 October 2020 to 02 November 2020. Various activities were conducted to promote the theme of the year "Vigilant India-Prosperous India" and to create awareness amongst employees and citizens about the evil impacts of corruption and benefits of transparency, accountability and corruption-free governance. Keeping in view the prevailing pandemic situation, most of the activities were conducted on digital platforms and with strict adherence to COVID-19 guidelines.

30.6 The observance of Vigilance Awareness Week-2020 commenced with Chairman & Managing Director, Cmde Siddharth Mishra (Retd.) administering integrity pledge for citizens on 27 October 2020 at Corporate Office. This was followed by reading out messages of Honble President of India, Hon’ble Vice-President of India, Honble Prime Minister of India and Honble CVC by CVO and other Directors. The program was live across units of the Company through video conference. The integrity pledge for citizens was also hosted on company intranet for the benefit of employees. A total of 2942 employees of BDL have taken the Integrity Pledge during observance of vigilance awareness week.

30.7 As part of Vigilance Awareness Week - 2020, a sensitization program for 30 employees especially for new joinees was conducted at Visakhapatnam Unit on 29 October, 2020 on matters relating to preventive vigilance, service matters such as CDA Rules, Standing Order, Leave Rules, Procurment Process. Shri. S V Kameswar, Genaral Manager - VU inaugurated the program and shared his experience of working in Vigilance department and Corporate Commercial department. The other sessions were taken by faculties from Vigilance, HR and IMM department.

30.8 In order to create awareness on vigilance and the importance of it in day-to-day life, various competitions such as Essay Writing, Elocution, Slogan Writing, Poster/Collage making on issues relating to Anti-corruption were conducted in online mode for employees, spouse and children of employees during the Vigilance Awareness Week-2020. As women play a bigger role in creating prosperous nation, competitions were held for spouse of employees forthefirsttime.

30.9 To spread the message of Vigilant India-Prosperous India and sensitize employees and public at large, Banners on the theme were displayed at conspicuous places across units of the company. To promote citizens to take CVC e-integrity pledge, a link of CVC website was hosted in the BD L website. Short telephonic messages were sent to all employees with the message, "Vigilance Awareness Week-2020, Join BDLs endeavor to make ‘Integrity-A way of life. Click the link http://pledge.cvc.nic.in to take integrity pledge. Vigilance Department, BDL".

30.10 A virtual Vendors Meet was organized on 30 October 2020, wherein, 65 vendors from across the country participated. The meeting was inaugurated by Shri P Radha Krishna, Director (Production). Director (Production) highlighted the importance of having vendor meet periodically so as to ensure transparency and accountability. Shri N.P. Diwakar, Director (Technical) was also present during the inauguration. Speaking on the occasion, after administering integrity pledge to vendors, CVO, Dr. Upender Vennam expressed that the business should be done in a transparent manner & with highest integrity. He also stressed on Multiple Vendor Development to reduce dependency and increase competitiveness. An online session was conducted during the meet on Integrity Pact and Role of Independent External Monitors (lEMs) by Shri GN Sudharshan Reddy, Additional General Manager (Corporate Commercial).

30.11 The observance of Vigilance Week-2020 was concluded with a valedictory function on 02 November 2020 at Corporate Office of the Company. Prof. Madabhushi Sridhar Acharyulu, Former Central Information Commissioner was invited to grace the occasion as Chief Guest and to deliver a key note address on the broad theme of Vigilant India-Prosperous India. The program was attended by CMD, Directors and CVO and was conducted online for the benefit of all employees of the Company across units of BDL. On this occasion, the l" edition of annual vigilance newsletter, "CHETANA" was released by the Chief Guest. "Chetana" covers various systemic improvement suggestions issued by the vigilance wing, prize winning posters and slogans, gist of latest CVC circulars, article on post-Covid contract management and VAW photographs (2012-2020) etc. The newsletter has been hosted on BDL intranet for employees and also in BDL website forthe benefit of citizens.

30.12 Keeping the priority of preventive vigilance, various workshops/seminars/training programmes were organized and vigilance awareness initiatives were undertaken by the Vigilance Department during the year under report.

31. CORPORATE SOCIAL RESPONSIBILITY AND SUSTAINABILITY DEVELOPMENT:

31.1 Pursuant to the provisions of Section 135 of the Companies Act, 2013 and The Companies (Corporate Social Responsibility) Rules, 2014 read with various clarifications/amendments issued by Ministry of Corporate Affairs & DPE guidelines, the Company has undertaken various activities as per the CSR Policy. The programmes/initiatives/projects are taken up in line with the Schedule-VI I of the Companies Act-2013, which are duly incorporated in CSR policy and forms the guiding principle for all our programmes. The Board of Directors of your Company has constituted Board Level Committee on Corporate Social Responsibility and Sustainable Development (CSR & SD) (please refer Corporate Governance Report) in line with the provisions of Section 135 of the Companies Act, 2013. The Committee has formulated and recommended CSR Policy to the Board indicating the projects/activities to be undertaken by the Company as specified in Schedule VII of the Companies Act, 2013.

31.2 The CSR and SD activities are monitored periodically by the Committee and an annual report on CSR and SD activities undertaken duringtheyear2020-21 is enclosed at Annexure-ll.

31.3 Your Company has been very conscious about its responsibilities towards society. Your Company has also ventured into backward/ under developed areas in Andhra Pradesh and Telangana to undertake Corporate Social Responsibility (CSR) activities by sponsoring various schemes.

31.4 The core areas of focus under CSR are Health Care, Nutrition, Education & Literacy, Skill Development & Sustainable Livelihoods, Sanitation, Safe Drinking Water etc. Your company also adopted villages in Andhra Pradesh and Telangana State under Corporate Social Responsibility initiative and the focus is on the necessities of human life-health, waterand other conveniences.

31.5 During the year 2020-21, the CSR & SD expenditure target was Rs.1533.43 lakh (including carry forward unspent amount of previous years). Against the target, the company has incurred an expenditure of Rs.1540.70 lakh and achieved 100% CSR target amount required under the provisions of Companies Act, 2013. CSR activities being undertaken are placed on Companys website hhtp://www.bdl-india.in

32. AUDIT COMMITTEE:

Three Audit Committee meetings were held during the year 2020-21 to review internal control systems and their adequacy, including coverage of Audit Functions. Details of composition, terms of reference, etc., are covered in Report on Corporate Governance.

33. RELATED PARTY TRANSACTIONS

There are no materially significant related party transactions during the year under review which may have a potential conflict with the interest of the Company at large. Thus, disclosure in Form AOC-2 is not required. Members may refer to the notes to the accounts for details of related party transactions. The policy for related party transaction has been uploaded on the Companys website www.bdl-india.in.

34. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS:

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statement

35. INTERNAL CONTROL SYSTEMS:

Your Company had put in place all required internal controls and systems to meet the canons of financial propriety. External audit firms are appointed to ensure their adequacy and report thereon. Detailed analysis of reports of Internal Audit Firms as well as reports of Internal Audit Department of your Company is placed before the Audit Committee for its review and advice. The adequacy of internal control procedures are reviewed and reported by Statutory Auditors in their Audit Report. The necessary disclosures have been made in Notes to Accounts. Your Company being a Government Company is subject to Government Audit also.

36. AUDITORS:

M/s.G. Natesan & Co., Chartered Accountants, Hyderabad were appointed as Statutory Auditors of the Company for the financial Year 2020-21 by the Comptrollers Auditor General of India. The Auditors have audited the Accounts and their Report is placed as a part of the Annual Report.

37. COMMENTS OF THE COMPTROLLERS AUDITOR GENERAL OF INDIA:

The Comments of Comptroller and Auditor General of India (CSAG) under Section 143 (5) of the Companies Act, 2013 on the accounts of the Company forthe year ended 31 March 2021 are placed nextto the Statutory Auditors Report

38. COST AUDITORS:

Your Company appointed M/s. Narasimha Murthy SCo., Cost Accountants, Hyderabad as Cost Auditors forthe FY 202021 in terms of Section 148 of the Companies Act, 2013, read with the Companies (Cost Records and Audit) Rules 2014.

39. 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 has appointed M/s.Narender & Associates, Practicing Company Secretaries (PCS Registration No.5024) for the financial year 2020-21 to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed to this report as Annexure III.

40. CEO/CFO CERTIFICATION:

As per the requirements of SEBI Listing Regulations and DPE Guidelines, the CEO/CFO certificate has been obtained and placed before the Audit Committee and the Board.

41. REPORTING OF FRAUDS BY AUDITORS:

During the year, neither the Statutory Auditor nor the Secretarial Auditor have reported to the Audit Committee under Section 143(2) of the Companies Act, 2013, any instance of fraud committed against the Company by its officer or employees, the details of which needs to be mentioned in the Boards Report.

42. MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

Management Discussion and Analysis Report required underthe SEBI (LODR) Regulations, 2015 and also underthe DPE Guidelines on Corporate Governance for Central Public Sector Enterprises (CPSEs), is attached to this Report as Annexure IV.

43. CORPORATE GOVERNANCE:

43.1 Corporate Governance is about application of best management practices, compliance of laws and adherence to ethical standards to achieve Companys objective of enhancing stakeholders value and discharge of social responsibility.

43.2 The Company has a well-established, transparent and fair administrative set up to provide for professionalism and accountability.

43.3 As per the guidelines on Corporate Governance for CPSEs issued by DPE vide its OM No. 18 (8)/2005-GM, dated 14 May 2010 and in terms of the SEBI (LODR) Regulations, 2015, Report on Corporate Governance along with Certificate on compliance of conditions on Corporate Governance from a Practicing Company Secretary are attached to this report as Annexure-V.

43.4 Quarterly and Yearly compliance reports on Corporate Governance are being forwarded to Stock Exchanges and MoD in the prescribed format. Your Company received "Excellent" rating from MoD for compliance of Corporate Governance under DPE Guidelines for the year 2019-20 and compliance on Corporate Governance for the year 2020-21 is under evaluation.

44. RISK MANAGEMENT:

Pursuant to the Reg. 21 of SEBI (LODR) Regulations, 2015, the Company has constituted a Risk Management Committee. The details of Committee and its terms of reference. Risk Management Policy etc. are set out in the Corporate Governance Report

45. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013:

In line with the provisions contained under "The Sexual Harassment of Women at the workplace (Prevention, Prohibition & Redressal) Act, 2013 your Company has put in place "Anti Sexual Harassment Policy" in line with the requirements of the above Act. During the year 2020-21, your Company has not received any Sexual harassment complaints.

46. COMPLIANCE UNDERTHE RIGHTTO INFORMATION ACT, 2005:

The information required to be provided to citizens under Section 4(l)(b)of Right to Information Act, 2005 is placed on Companys Website www.bdl-india.in. It contains general information of the Company, functions, powers and duties of employees/officers, decisions making process, rules, regulations, manuals and records held by the Company, directory of the Companys Officers, pay scales of officers/ employees and procedure for seeking information and inspection of records. The Company has nominated a Central Public Information Officer of Senior Manager Level to attend to queries and appeals. Further, during the year 2020-21 the Company received 84 applications/queries and the same were disposed-off.

47. VIGIL MECHANISM:

Pursuant to the provisions of the Section 177(9) of the Companies Act, 2013 read with Rule (7) of the Companies (Meeting of the Board & its Power) Rules, 2014 and DPE Guidelines for CPSEs, the Board of Directors had approved the policy on Whistleblower/Vigil Mechanism and the same was hosted on website of the Company. The policy inter-alia provides a direct access to the Chairman of the Audit Committee

48. BUSINESS RESPONSIBILITY REPORT:

The Securities and Exchange Board of India (SEBI) has mandated inclusion of Business Responsibility Report ("BR report") as part of the Annual Report based on market capitalization. Your Company has prepared a comprehensive policy framework for BR report, after studying the SEBI (LODR) Regulations, 2015 requirements and keeping in viewthe business and governance environment in which BDL as a Defence PSU operates. The Companys BR report for the year is attached to this Report as Annexure VI.

49. DIVIDEND DISTRIBUTION POLICY:

In terms of SEBI (LODR) Regulations,2015 (as amended), dividend distribution policy has been adopted by your Company to set out the parameters and circumstances that will be taken into account by the Board in determining the distribution of dividend to its shareholders and/or retaining the profit into the business. The policy is available on the BDLs website www.bdl-india.in

50. ACKNOWLEDGEMENT:

50.1 Your Directors gratefully acknowledge the valuable support and assistance received from all Government Agencies, particularly Ministry of Defence, Ordnance Factories, Department of Defence Production, DRDO Laboratories, Central Government Departments, State Governments of Telangana and Andhra Pradesh, Quality Assurance Agencies of Government of India and other PSUs for the help extended by them from time to time.

50.2 The Company wishes to place on record its appreciation for the cooperation extended and guidance provided by the Comptroller & Auditor General of India, the Principal Director of Commercial Audit & Ex-officio Member, Audit Board, Statutory Auditors, Bankers and Suppliers.

50.3 The Directors take this opportunity to place on record their deep appreciation for the valuable contribution made and co-operation extended by the employees at all levels to propel the Company to greater heights and to sustain its growth path in the years to come.

For and on behalf of the Board
Cmde Siddharth Mishra (Retd)
Chairman and Managing Director
DIN:08367035
Place: Hyderabad
Date : 21 June, 2021