Bharat Dynamics Ltd Directors Report

DEAR MEMBERS,

Your directors present the 56 th Annual Report together with the audited financial statements of the company for the year ended 31 March 2026.

1. SIGNIFICANT ACHIEVEMENTS

1.1 Despite challenging conditions, your company achieved a production value of 3,215 crore against 3,767 crore in the previous financial year. Further, it recorded a sales turnover of 2,442 crore against 3,345 crore in the previous financial year.

1.2 BDL has successfully completed First Off Production Model (FOPM) of Improved Akash Weapon System (AWS) with upgraded sub systems, thereby enhancing performance and bolstering the combat capability of the Indian Armed Forces. The system demonstrated high precision against diverse aerial threats. Bulk Production Clearance of upgraded version of Akash Weapon System has been received on 27 March 2026.

1.3 First off Production Material (FoPM) trials of Astra Mk-I Missile were successfully carried out using a BDL manufactured launcher on 03 November 2025.

1.4 The Stage-1 transfer of Authority Holding Sealed Particulars (AHSP) for the indigenous Heavy Weight Torpedo was successfully concluded with a formal handover from DRDO-NSTL to Director General of Naval Armament Inspection (DGNAI) on 10 June 25. This transfer marks a significant milestone in the Indigenisation, Successful Production, Delivery and Operational readiness of the Heavy weight Torpedo Weapon System by BDL.

1.5 BDL was awarded first place in the Excellence in Process Innovation category at the Governance Now PSU Awards, held in New Delhi on 11 March 2026.

1.6 As part of its technology upgradation, BDL successfully test-fired an Anti-Tank Guided Missile (ATGM) featuring an in-house developed RF guidance system on 11 January 2026.

1.7 BDL has achieved 100% Renewal Energy share across all three of its units.

1.8 Proof firing of Konkurs-M ATGM was successfully conducted using an in-house manufactured warhead.

1.9 BDL has been awarded Greentech Energy Management Excellence Gold Award 2026 in excellent Energy Management category. The award was presented to BDL during the Greentech Energy Management Excellence Summit held on 13 May 2026 at New Delhi.

1.10 As a Development-cum-Production Partner (DcPP) with NSTL (DRDO), BDL successfully delivered the first indigenous production-grade Wire-Guided Heavyweight Torpedo (WGHWT) to NSTL (DRDO), Visakhapatnam, on 23 April 2026. 1.11 An in-house developed 3rd-generation Anti-Tank Guided Missile (ATGM) was successfully test-fired in direct mode against a target placed at minimum range on 15 April 2026.

1.12 User Trials of Extended Range Anti-Submarine Rocket (ER-ASR) were successfully carried out during the period under review. All the specified objectives of the trials were successfully demonstrated.

1.13 As part of user evaluation trials, the Akash-NG Missile was successfully test fired and met all Provisional Staff Qualitative Requirements (PSQR). During the trials, Akash-NG Missile intercepted aerial targets at different range and altitudes. 1.14 On 15 May 2026, the Honble Raksha Mantri, Shri Rajnath Singh, laid the foundation stone for Bharat Dynamics Limiteds (BDL) new state-of-the-art Naval Systems Manufacturing Facility at T. Sirasapalli village in the Anakapalli district of Andhra Pradesh. The new manufacturing complex is being established to meet the growing requirements of the Indian Navy. Spread across nearly 160 acres, the facility will include advanced manufacturing and assembly infrastructure, integration buildings, explosive handling and storage facilities, testing infrastructure (including acoustic tank facilities), administrative buildings, and a dedicated green belt.

1.15 Flight trials of the Unmanned Aerial Vehicle Launched Precision Guided Missile (ULPGM-V3) were successfully conducted from 18 to 20 May 2026 in the Kurnool district of Andhra Pradesh. BDL team was actively involved in the integration and testing activities of the ULPGM at RCI (DRDO), Hyderabad.

1.16 The U.S. Green Building Council (USGBC) has awarded a Platinum-rated Green Building Certificate to BDLs Design & Engineering building.

2. FINANCIAL RESULTS AND PERFORMANCE HIGHLIGHTS:

2.1 Performance of the company in financial terms is summarised below:

	in crore
Particulars	2025-26	2024-25	% of Increase/ (Decrease)
Sales/Revenue from Operations	2,442	3,345	(27)
Value of Production	3,215	3,767	(15)
i) Import Material Consumed	290	110	164
ii) Indigenous Material Consumed	1,706	1,990	(14)
Total Material Consumed	1,996	2,100	(5)
Value Added	1,219	1,667	(27)
Profit Before Tax	568	749	(24)
Profit After Tax	420	550	(24)
Earnings per share# (in Rupee)	11.47	14.99	(23)

# EPS has been calculated based on profits excluding the other comprehensive income and number of shares outstanding at the end of the year is adjusted for the impact of sub division of 1 fully paid up equity share having a face value of 10 each into 2 fully paid up equity shares having a face value of 5 each

2.2 Following data reflect the financial position of the company:

	in crore
Particulars	2025-26	2024-25	% of Increase/ (Decrease)
Gross Block (Excl. CWIP)	1,697	1,601	6
Accumulated Depreciation	819	743	10
Net Block	878	858	2
Working Capital (Net)	6,411	6,018	7
Capital Employed	4,150	3,886	7
Net Worth	4,241	4,009	6

*Figures have been reclassified and regrouped, wherever necessary.

2.3 Revenue from operations for the fiscal year experienced a temporary decrease compared to the previous year. This was primarily due to shift in the delivery timeline for Surface-to-Air Missiles (SAM) and associated Ground Support Equipment (GSE), to meet the extended requirements of customer. Consequent to reduction in turnover and higher R&D spent, the Profit Before Tax (PBT) and Profit After Tax (PAT) also affected during the year as compared to previous financial year.

2.4 During the year, the company achieved a Profit Before Tax (PBT) of 568 crore and a Profit After Tax (PAT) of 420 crore, as against 749 crore and 550 crore respectively in the previous financial year. This reduction was mainly due to lower sales volumes and higher development expenditure during the year compared to the previous year. Despite these challenges, your company has managed to maintain liquidity, reduce operational costs and focus on core areas to ensure stability.

2.5 The major products delivered during the year included Anti-Tank Guided Missiles (ATGMs), Surface-to-Air Missiles (SAMs), and Air-launched Weapons. The order book position of the company as of 31 March 2026 stands at approximately 26,176 crore.

2.6 Future Outlook: Your company is transitioning from a manufacturing-led setup to a technology-driven powerhouse aligned with Indias Atmanirbharta vision. By accelerating internal R&D and deep tech collaborations, we are indigenising critical components. This protects our supply chains and secures long-term intellectual property for the Indian Armed Forces.

Our growth roadmap is secured by an outstanding order book of approximately 26,176 crore as on 31 March, 2026. This provides high multi-year revenue visibility. To execute these defence orders efficiently, your company is implementing automated manufacturing and digital-twin technologies across our units to optimise production cycles and maintain high quality.

Your company maintain a sharp focus on operational efficiency to safeguard and expand our operating margins. Strategic cost optimisation, increased localised sourcing, and economies of scale from large defence contracts will continue to drive healthy profitability and maximise long-term shareholder value.

Your company is expanding its global footprint across South-East Asia, the Middle East, and Africa under the Make in India, For the World mandate. Concurrently, your company is investing in next-generation platforms like drone ammunition, directed energy weapons, and AI-driven countermeasures to address the shifting dynamics of modern warfare.

3 FIXED DEPOSITS FROM PUBLIC:

The company did not accept any fixed deposits from the public during the year, and there were no outstanding fixed deposits at the beginning or end of the year. Accordingly, there was no default in payment of deposits/interest thereon.

4 DIVIDEND & TRANSFER TO GENERAL RESERVE:

Your company has a consistent track record of Dividend Payment. The Board has recommended a Final Dividend of 0.40/- per equity share of face value of 5/-each amounting to 14.66 crore for the year 2025-26. Further, your company has paid interim dividend of 4.50 per share (at face value of 5/- each) amounting to 164.95 crore for the year 2025-26. An amount of 250 crore is being transferred to General Reserve for the year 2025-26.

5 CAPITAL STRUCTURE:

The paid-up capital of the company as on 31 st March, 2026 stood at 183.28 crore (36,65,62,500 equity shares of 5/- each). The Authorised Capital of the company is 200 crore (40,00,00,000 equity shares of 5/- each) as on 31 st March 2026. As on 31 March 2026, the Govt. of India shareholding in the company stands at 74.93% (representing 27,46,51,054 equity shares of 5/- each).

6 SUBSIDARIES/JOINT VENTURES/ASSOCIATE COMPANIES:

As on 31 March 2026, your company has two section 8 companies viz., M/s. Electronic Warfare (Defence) Testing Foundation and Advanced Materials (Defence) Testing Foundation formed under Defence Testing Infrastructure Scheme (DTIS) promulgated by Department of Defence Production, Ministry of Defence. Your company holds 10% shareholding in M/s. Electronic Warfare (Defence) Testing Foundation and 20% shareholding in Advanced Materials (Defence) Testing Foundation. Though these entities are associates, these entities are not considered for preparation of consolidated financial statements as the company does not gave rights to variable returns from its involvement, other than equity investment.

7 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 for the year 2024-25 was rated as Very Good and the performance for the year 2025-26 is under evaluation.

8 MODERNISATION & UPGRADATION:

During the year, an amount of 228.75 crore has been spent towards Capital Expenditure (CAPEX) programmes for the modernisation of plant & machinery and other infrastructure development. The majority of this amount spent towards infrastructure, plant & machinery of Jhansi Unit, which is under establishment for manufacturing of propellants, infrastructure work at Phase II of Ibrahimpatnam Unit and towards acquisition of land in AP, for Vizag Unit expansion. Additionally, your company has planned to spend approximately 200 crore, during the current financial year 2026-27 on various CAPEX programmes including infrastructure, modernisation of plant & machinery programmes etc.

Your company is making determined efforts to enhance the indigenisation content in the manufacturing of ATGMS, SAMS, Air launched weapons and under water weapons. This objective aims to enhance self-reliance and reduce dependence on imports.

9 RESEARCH & DEVELOPMENT:

Your company acknowledges that Research and Development (R&D) plays a pivotal role in the growth of the organisation. To cater to the requirements of the Indian Armed Forces, your company has identified several products for R&D. The following table shows the recent trend of in-house R&D expenditure:

Particulars	2025-26	2024-25	2023-24
Sales Turnover (Gross) ( in crore)	2,441.79	3,345.05	2,369.28
R&D expenditure ( in crore)	198.23	222.92	75.37
R&D expenditure as % of Sales Turnover	8.12%	6.66%	3.18%
PBT	567.82	748.76	828.24
R&D expenditure as % of PBT	34.91%	29.77%	9.10%

10 PROCUREMENT FROM MSMES:

Bharat Dynamics Limited (BDL) committed to maintaining the standards of transparency, equity, and competitiveness in its procurement processes. The Integrity Pact (IP) serves as an instrument in ensuring ethical conduct between the organisation and its vendors. In alignment with vigilance guidelines, the Integrity Pact was mandatorily implemented for all high-value procurement files with a minimum estimated value of 2 crore.

Independent External Monitors (IEMs) were engaged to ensure transparency in tendering and compliance in contract execution. BDL has provided an online provision to raise concerns by vendors to ensure procurement process remains unbiased. In this financial year no compliant observed in procurement process.

During the financial year 2025-26, Bharat Dynamics Limited (BDL) continued its commitment to prioritising procurement from Micro and Small Enterprises (MSEs). Our procurement strategy aligns with the Public Procurement Policy, ensuring that Micro & small-scale industries remain integral to our supply chain.

In the financial year 2025-26, BDL has procured goods & services to the tune of 36.64% (amounting to 1,234.94 crore) from MSEs, out of its total annual procurement value of 3,370.23 crore, which has surpassed the mandatory 25% procurement target set by the Government of India. Out of total annual procurement value, the procurement from women MSE enterprises is 4.40% (which is amounting to 149.88 crore) against given target of 3%.

The procurement from SC/ST owned MSMEs stood at 1.03% (amounting to 34.84 crore) of total annual procurement value against the mandated procurement of 4%. BDL planned to conduct special outreach programmes & vendor development meets to bridge this gap in the coming fiscal year.

As on 31 March 2026, BDL has onboarded on all five RBI approved TReDS platforms to facilitate MSEs. The total 927 MSEs were engaged in the FY 2025-26.

Government e Market Place (GeM):

Your company registered as both a Buyer and Seller with the Government e-Marketplace (GeM). GeM is utilised for procuring common items and services. Throughout the year, your company has successfully procured common goods and services worth 2,972.79 crore through GeM out of total procurement of 3,370.23 crore (Gross Merchandise Value) with staggered deliveries. This demonstrates your companys active engagement and utilisation of GeM for streamlined procurement processes.

11 EXHIBITIONS:

During the year, the Senior Executives and Directors have participated in National and International Exhibitions. The details along with the photographs of such exhibitions are as follows:

1. Egypt Defence Exhibition (EDEX-2025) was held from 01 - 04 Dec 2025 at Egypt International Defence Exhibition, Cairo, Egypt. BDL participated as an Exhibitor.

A Military delegation led by Air Marshal Amr Abdelrahman Saqr, Egyptian Air Force commander visited BDL stall:

2. LAAD 2025 International Military-Technical Exhibition was held at RIOCENTRO, Rio de Janeiro, Brazil from 01 to 04 April 2025, where BDL participated as an Exhibitor.

The then Director (Production) Shri P V Raja Ram briefed Shri Suresh K Reddy, Ambassador of Embassy in Republic of Brazil, Vice Admiral Adriano Marcelino Batista (Naval Industrial Director, Brazilian Navy) and Lieutenant General Carla Lyrio Martins (Commandant Superior Defence School, Brasilia, Brazil) about the BDL portfolio providing a comprehensive overview of BDL products and capabilities:

3. Defence and Security Equipment International (DSEI) is a biennial defence and security trade exhibition held from 09 - 12 Sep, 2025 at London, UK, where BDL participated as a Delegation. The then CMD BDL Cmde A Madhavarao (Retd.) had meeting with Mr. Florent; Management Committee Member and Executive Group Director Export Sales, Mr. George Kyriakides; International Industrial Co-operation Director and Mr. Shimon; Director of Strategic Programmes at the UK Ministry of Defence (MoD)

12 EXPORTS

Bharat Dynamics Limited continued to strengthen its position as a trusted global supplier of defence systems during FY 2025-26. Building upon the strong momentum achieved in the previous year, the company intensified its export outreach initiatives, strengthened engagement with friendly foreign nations, and expanded the international visibility of its indigenously developed defence platforms and weapon systems.

BDLs export strategy remains aligned with the Government of Indias vision of Atmanirbhar Bharat and the national objective of establishing India as a leading global hub for defence manufacturing and exports. The companys diverse portfolio — comprising Anti-Tank Guided Missiles (ATGMs), Surface-to-Air Missile systems, torpedoes, Counter Measure Dispensing Systems (CMDS), and other advanced defence equipment continued to receive encouraging responses from overseas customers owing to proven reliability, competitive pricing, and indigenous technological strengths.

During FY 2025-26, BDL achieved export turnover of 702.23 crore. To accelerate export growth, BDL continued to strengthen collaborations with Indian Embassies, Defence Attachés, and channel partners across multiple geographies to enhance market access and customer engagement. The company also pursued opportunities to establish representative office overseas to improve customer interface, after-sales support, and long-term strategic engagements. Accordingly, during the year, your company has opened a representative office in Armenia to improve customer interface, after-sales support, and long-term strategic engagements in Western Asia. Indias defence exports reached a new record level during FY 2025-26, underscoring the growing global confidence in Indian defence manufacturing capabilities and creating new opportunities for BDL across both emerging and established international markets.

Going forward, BDL remains committed on leveraging its strong manufacturing capabilities, robust product portfolio, and technological expertise to expand its global presence and further reinforce its role as a key contributor to Indias growing defence export ambitions.

13 ATMANIRBHAR BHARAT & INDIGENISATION:

Bharat Dynamics Limited (BDL) is actively accelerating Indias vision of an Atmanirbhar Bharat (Self-Reliant India) by aggressively indigenising defence technologies right from contract inception. BDL manufactures advanced missile systems under Technology Transfer (ToT) agreements with both the Defence Research and Development Organisation (DRDO) and foreign Original Equipment Manufacturers (OEMs).

While foreign OEM agreements initially provided just a 60% baseline for technology transfer, BDLs targeted internal initiatives have successfully driven domestic content to over 80%–90% across multiple product lines. For indigenous DRDO-designed platforms, BDL has achieved an exceptional indigenisation rate exceeding 90%, and continues to push towards total self-reliance.

Digital Ecosystem & MSME Empowerment:

To systematically curb import dependencies, BDL leverages the Ministry of Defences Srijan Portal to actively collaborate with Indias private sector.

» Targeted Indigenisation: BDL has listed 3,143 imported components and Tier-1 vendor items on the portal to crowdsource domestic engineering solutions.

» Proven Track Record: Cumulatively, 228 critical components have already been successfully indigenised through this ecosystem.

» Grassroots Support: BDL provides extensive technical consultancy, regulatory guidance, and procedural clarity to Micro, Small, and Medium Enterprises (MSMEs) through dedicated Vendor Development Seminars and hardware exhibitions.

Strategic Alignments & Policy Milestones:

BDL strictly aligns its production timelines with the Ministry of Defences Positive Indigenisation Lists (PILs), which mandate strict import embargoes on critical defence hardware. Out of 59 BDL-linked items featured across the five issued PILs, 51 have already been fully indigenised, with the remaining items in advanced stages of domestic development.

Fostering Next-Gen Defence Innovation:

Through a strategic partnership with the Innovations for Defence Excellence (iDEX) programme, BDL is cultivating a robust R&D ecosystem alongside tech startups and entrepreneurs. By formalising agreements and defining clear problem statements, BDL provides startups with vital growth and commercialisation pathways.

This collaborative innovation pipeline has already yielded breakthrough defence technologies, including: » Miniaturised Visual Imaging Guidance System (MVIGS) » Scalable Wireless Communication Networks for Autonomous Mobile Platforms » Night Vision Goggle (NVG) compatible Display Panels » Military-Grade Connectors » The Sanja 1 Mini Turbojet Engine—propelling the future of indigenous aerospace propulsion.

14 MANPOWER AND RESERVATION OF POSTS FOR SCS/STS:

14.1 The company has been following Presidential Directives of the Government with regard to reservation of posts for SCs/STs/OBC in recruitments.

14.2 Total manpower strength as on 31 March 2026 is at 2101 (including four functional directors). Out of the total strength, 67 are ex-servicemen, 434 are of Schedule Caste, 196 are of Scheduled Tribes, 772 are of OBC category and 12 are of EWS category. The percentage of Scheduled Caste and Scheduled Tribes in respect of employees is at 20.66% and 9.33% respectively.

14.3 The No. of Scheduled Caste, Scheduled Tribes, OBC and EWS in various categories of posts as on 31 March 2026 is given below:

	Number of Employees (excluding CVO)
Category	Total Strength		Scheduled Castes		Scheduled Tribes		OBC		EWS
	31-03-2026	31-03-2025	31-03-2026	31-03-2025	31-03-2026	31-03-2025	31-03-2026	31-03-2025	31-03-2026	31-03-2025
Group-A	741	757	138	142	80	80	220	211	12	10
Group-B	2	2	0	0	0	0	2	2	0	0
Group-C	1245	1375	262	284	106	110	507	526	0	0
Group-D	113	135	34	39	10	10	43	53	0	0
Temporary	0	0	0	0	0	0	0	0	0	0
Total	2101	2269	434	465	196	200	772	792	12	10

14.4 Recruitment of employees in Scheduled Caste, Scheduled Tribes, OBC, EWS during 2025-26 is given below:

Classification of posts	Total Vacancies Released	Total Recruitment made		Reservation of posts			Recruitment made during the year 2025-26
(1)	(2)	(3)		(4)			(5)
			SCs	STs	OBC- NCL	EWS	SCs	STs	OBC	EWS
Group-A	87	42	16	04	20	08	07	04	09	04
Group-B	-	-	-	-	-	-	-	-	-	-
Group-C	-	-	-	-	-	-	-	-	-	-
Group-D	-	-	-	-	-	-	-	-	-	-
Total	87	42	16	04	20	08	07	04	09	04

14.5 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 2026 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
I	2	2	100
II	158	26	16.46
III	67	12	17.91
IV	191	30	15.71
V	150	22	14.67
VI	114	13	11.40

Grade	No. of Employees	Women	Percentage
VII	49	6	12.24
VIII	6	1	16.67
IX	2	0	-
Functional Directors	3	0	-
CMD	1	0	-
Total	743	112	15.07

II. NON-EXECUTIVES

Grade	No. of Employees	Women	Percentage
WG-0	-	-	-
WG-1	-	-	-
WG-2	17	4	23.53
WG-3	61	10	16.39
WG-4	49	6	12.24
WG-5	90	17	18.89
WG-6	267	12	4.49
WG-7	148	29	19.59
WG-8	194	29	14.95
WG-9	118	16	13.56
WG-10	23	3	13.04
WG-11	80	3	3.75
WG-12	311	31	9.97
Total	1358	160	11.78

14.6 Persons with Disabilities (PWD) as on 31 March 2026:

The total number of Physically Challenged employees as on 31 March 2026 is 86 and its percentage to total employees works out to 4.09%.

	VI	HI	LD	MD	Total
Group-A	06	06	10	02	24
Group-B	00	00	00	00	00
Group-C	08	15	31	00	54
Group-D	03	02	03	00	08
Total	17	23	44	2	86

HI- Hearing Impaired, LD-Locomotive Disability, VI-Visually Impaired, MD-Multi Disability

15 HUMAN RESOURCE DEVELOPMENT:

During the year 2025-26, your company reinforced its commitment to building a future-ready workforce. It conducted 117 offline training programmes for Executives and Non-Executives through in-house and external agencies. These programmes focussed on skill enhancement, technological adaptation, leadership development, and statutory compliance, training a total of 2,519 employees. i) Training Footprint by Competency

Competency Category	No. of Programmes	No. of Employees Trained
Skill Based	90	1,388
Leadership	22	282
Emerging Tech & AI	12	249
Behavioural	10	455
Cybersecurity	7	444
Health and Safety	4	217
POSH	3	380
Board Level	1	1
Total	117	2,519

ii) Key Training Initiatives and Highlights

» Vigilance Awareness (17.09.2025 – 03.11.2025): Conducted CVC-mandated training covering GeM procurement, Conduct Rules, cyber security, POSH, and disciplinary procedures.

» Skill & Digital Transformation: Delivered advanced modules on Industry 4.0, GeM procurement, SAP (HR), and AI tools for contract drafting and productivity.

» iGOT Karmayogi Adoption: Promoted the digital learning platform with an 87% employee registration rate. A pilot phase saw 33% of employees complete core modules in ethics, governance, and cyber vigilance.

» Mandatory Campaign Learning:

» Sadhana Saptah: Mandatory completion of 16 AI/GenAI courses and 13 leadership/tech marketplace courses via iGOT.

» International Yoga Day: Promoted workplace wellness through 8 dedicated yoga and stress-management modules.

» Specialised & Outbound Programmes:

» Management Trainees: Technical orientation on Missile Technology at DIAT, Pune.

» Management Development: Inner Engineering leadership retreats at Isha Leadership Academy, Coimbatore. » Diversity, Inclusion & Equity: Organised targeted workshops on reservations and rosters for SC/ST/OBC/PwBD associations, alongside special sessions on International Day of Disabled Persons.

» Prime Ministers Internship Scheme (PMIS): Commenced Phase 2 on 03 June 2025. The company rolled out 300 internship positions across all units, providing interns with comprehensive mentorship alongside full lodging, boarding, transport, and medical support.

16 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 05 June, 2015, Government Companies are exempt from Section 197 of the Companies Act, 2013 and its rules thereof.

17 FOREIGN VISITS:

Your company incurred an expenditure of around 3.07 crore during the year under report towards foreign travel for business trips.

18 INDUSTRIAL RELATIONS AND EMPLOYEE WELFARE:

Your company maintains cordial and harmonious industrial relations through the cooperation of all employee sections, including the Recognised Trade Union and associations for SC, ST, OBC, Ex-Servicemen, and Officers. Statutory and non-statutory committees like the Works Committee, Safety Committee, Canteen Managing Committee, and Welfare Committee play a key role in maintaining workplace discipline.

Compliance with statutory welfare provisions is strictly followed. The Post Superannuation Medical Benefit Scheme addresses the medical needs of retired employees and their families. The Recognised Trade Union and all associations fully support the management, ensuring the smooth functioning of the organisation.

19 SECURITY:

The Central Industrial Security Force (CISF) provides critical security and fire protection services across BDLs Kanchanbagh and Bhanur units. During the reporting year, the CISF successfully safeguarded organisational property by integrating physical guarding with advanced security technology. To maintain highest safety standards, the Plant Security Council regularly implements Intelligence Bureau (IB) and Ministry of Defence (MoD) recommendations, supported by monthly review meetings between the BDL Security Department and CISF officials.

Awareness & Infrastructure Upgrades

BDL actively fosters a safety-first culture through regular security and fire awareness programmes, including the annual Security and Fire Safety Weeks. To comply with statutory guidelines and modernise operations, the company significantly upgraded its security infrastructure this year through the following initiatives:

» Surveillance & Command: Installed 227 new CCTV cameras with intrusion detection systems across the BDL-KBU perimeter and plant areas, connected to a newly constructed, modernised Security Control Room.

» Access & Vehicle Control: Deployed an Under-Vehicle Scanning System (UVSS), launched an online vehicle pass mechanism, and introduced biometric-enabled photo ID cards for all CISF staff and contractual workers.

» Screening & Alerts: Procured 10 Hand-Held Metal Detectors (HHMD) for foolproof gate screening and installed electric sirens across all watchtowers, fire stations, and guard posts for instant emergency alertness.

» System Maintenance: Ensured seamless operational maintenance of all core security hardware, including existing UVSS, X-Ray baggage scanners, and Door Frame Metal Detectors (DFMD).

20 SAFETY:

Your company strictly follows statutory norms to maintain a safe and healthy workplace. At the Kanchanbagh Unit (KBU), the Industrial Safety Committee and Explosive Safety Committee monitor operations. Production activities comply with the Factories Act, 1948. Explosive handling strictly adheres to the STEC-2025 regulations framed by the Centre for Fire, Explosive & Environment Safety (CFEES), Ministry of Defence (MoD). The Executive Director and Unit Head regularly review safety parameters to ensure total compliance.

During the year, the company validated its safety standards through external audits. BDL fully complied with all observations from the Annual Explosive Safety Audit conducted by CFEES, New Delhi. Furthermore, the Environmental Management System (EMS) successfully secured ISO 14001:2015 external re-certification in January 2026 with zero major non-conformances.

To promote a proactive safety culture, BDL installed outdoor safety display boards and organised extensive campaigns. The 55 th National Safety Day on 04 March 2026 was celebrated through a month-long campaign that concluded on 29 March 2026. Activities included administering safety pledges, distributing badges, and displaying banners. The company also organised safety quizzes, firefighting demonstrations, and multilingual slogan, essay, and drawing competitions in Hindi, Telugu, and English.

Workforce training and health surveillance remain top priorities. BDL delivered structured safety induction training to new joiners and management trainees. The company conducted 10 internal safety training batches for 550 permanent and contract employees, and sponsored three external safety programmes. Regular fire mock drills were also executed to maintain emergency readiness. Additionally, specialised medical checkups were conducted for Electroplating and Canteen staff, alongside periodic health checkups for all other employees.

The Safety Engineering Department maintains continuous liaison with the Telangana State Factories Department, the Telangana State Pollution Control Board (TSPCB), and CFEES (MoD) to seamlessly update and implement statutory safety guidelines.

During the year 2025-26, the company has taken up the following health & safety initiatives as a part of compliance requirements under MoU-2025-26:

1) Organising Special Health Check-Ups for employees of age 40 years & above across all units in Second/ Third quarter: Comprehensive Medical camps and special check-ups were organised for employees aged 40 & above. These initiatives delivered preventive healthcare to a total of 630 personnel, including employees, CISF staff, Township residents and Canteen workers.

2) Organising Quarterly Medical Examination for all Employees working in Hazardous Areas: Periodical Medical Check-ups were organised for around 100 employees engaged in Hazardous areas & Electroplating section. Additionally, Special Eye Checkup was conducted for around 51 employees working in Wire spool and Gyro Sections.

3) Organising Cancer screening camps for all Women Employees along with Health awareness sessions in Third/ Fourth quarters: Health awareness campaign covering Hepatitis & Liver Health and dedicated Cancer screening camps were organised, engaging 292 Employees.

4) Conducting of Safety Refreshments (Internal) training for atleast 120 employees in each unit: Safety refresher Trainings and Specialised Explosive area trainings were delivered to around 800 Employees by both Internal & External Experts.

5) Conducting of Statutory Safety Regulations (External/ Internal) training for atleast 40 Employees: Training on Statutory Safety Regulations, safety culture and Hazard identification were conducted for around 50 employees by State and National safety bodies through internal & external programmes.

6) Organising Safety awareness & Health Camps for Contract employees engaged through outsourcing agencies: Safety mandates & Cleanliness awareness sessions were extended to 36 outsourced/ GOCO personnel. Additionally, advanced tactical emergency mock-drills were conducted with the National and State Security forces for 600 participants.

21 ENVIRONMENTAL, SOCIAL AND GOVERNANCE:

As per the companys environmental policy, your company is committed to manufacturing and supplying defence products to the Indian armed forces in an environmentally friendly manner. The key environmental commitments include: » Protecting the environment and preventing all types of pollution.

» Fulfilling compliance obligations. » Conserving natural resources.

» Continually improving to enhance environmental performance.

Your company demonstrates a strong commitment to environmental sustainability and compliance with regulations through various initiatives and certifications. Here are the key environmental management practices and measures in place across all three units—Kanchanbagh, Bhanur, and Visakhapatnam:

Environmental Management Practices:

1. ISO 14001:2015 Certification:

» All units are recertified with ISO 14001:2015 (EMS) to assess pollution levels and ensure compliance with legal requirements.

2. Waste Management:

» Plastic Use Reduction: Issued a circular to discourage the use of plastics.

» E-waste and Hazardous Waste: Disposed of through agencies registered with the Pollution Control Board. » Solid Waste: Disposed of through M/s MSTC, a government undertaking, specifically ferrous and non-ferrous metals. » Biomedical Waste: Disposed of through an agency registered with the Pollution Control Board.

» Housekeeping: Proper practices are maintained to ensure a clean and safe environment.

3. Zero Liquid Discharge System:

» Effluent Treatment: Treated water from the effluent treatment plant undergoes further treatment through reverse osmosis (RO).

» Usage of Treated Water:

» RO treated water is utilised in the Demineralised Water (DM) plant for producing DM Water. » RO treated water is converted to Demineralised Water (DM). » Gardening: Treated water from the sewage treatment plant is used for gardening within the premises.

4. Audits and Monitoring:

» Internal and Surveillance Audits: Conducted at regular intervals by certification bodies for all units.

» Environmental Parameters Monitoring:

» Ambient air quality, stack quality of DG sets/venturi scrubbers, sewage treatment plants, and effluent treatment plants.

» Noise levels tested as per specified frequencies.

» Resource Monitoring: Water quantity monitored using separate water meters and electricity consumption is tracked to comply with consent conditions.

5. WORLD ENVIRONMENT DAY – 2025

The World Environment Day – 2025 was celebrated with high spirit in all the units of BDL. On this occasion, banners were displayed at prominent locations and saplings were planted on 5 June 2025. Slogan, Essay writing and Quiz competitions were also organised based on the theme Ending Plastic Pollution. Prizes were distributed to the winners on valedictory function.

The speaker Dr. Siddappa Shetty, Ethnobotanist, Senior Fellow, Atree and Prof. Dr. Chetan Srivastava, Central University, Hyderabad has delivered speech on the theme which includes usage of plastics and how this can be avoided or minimised in day-to-day life. Various competitions were also organised based on the theme.

Additional General Manager and Unit Head (VU) addressed the gathering on the above theme i.e. Ending Plastic Pollution. The guest speaker Prof. Dr. Solomon Raju, Department of Environmental Science, Andhra University, Visakhapatnam, has delivered speech on the theme which includes type of plastics, and its detrimental effect on planet life. Various competitions were also organised based on the theme. Prizes were also distributed to the winners on valedictory function.

22 QUALITY:

All production divisions/units of Kanchanbagh Unit, Bhanur, and Visakhapatnam Units are certified with AS 9100D, an aerospace quality management system standard. Kanchanbagh, Bhanur, and Visakhapatnam Units are also certified with ISO 14001:2015 (EMS), which is an environmental management system standard. The Corporate Office is recertified with ISO 9001:2015 (QMS), which focuses on quality management systems. The MRSAM Division is also certified with AS 9100D and certificate is valid up for three years. The Material Testing Lab, Electronics Lab, and Standard Labs are certified with ISO/IEC 17025:2017, which pertains to the competence of testing and calibration laboratories. The Electronics Division is certified with AFQMS (Approval of a Firm and its Quality Management System). Furthermore, BDL holds the ISO/IEC 27001:2022 certification for information security management systems (ISMS). Internal audits for all ISO/AS certified divisions are conducted by the companys own internal auditors, while surveillance audits are carried out by certification bodies as per the prescribed frequency.

In addition to these certifications, your company is committed to continuously improving customer satisfaction through customer meets and interactions with users. Corrective actions are implemented wherever necessary to drive improvement in processes and meet customer expectations.

23 OFFICIAL LANGUAGE

23.1 Your company strictly ensures the implementation of the Official Language Act, 1963 (as amended 1967) and its underlying rules. Quarterly Official Language Implementation Committee (OLIC) meetings are regularly held under the chairmanship of the CMD and Directors, with progress reports submitted timely to authorities. In compliance with statutory mandates and Presidential Orders, all key documents—including papers laid before Parliament, the Annual Report, the MoD MoU, corporate briefs, and parliamentary presentations—are prepared and submitted in bilingual format. The companys official website is also regularly updated in Hindi in accordance with Government of India directives.

23.2 The companys outstanding performance in promoting Hindi was recognised with major national and regional accolades during the year. BDL was honoured with the prestigious national-level Rajbhasha Kirti Puraskar for the best implementation of Official Language in Region C (2024–25). The award was presented to the General Manager (HR) by the Honble Minister for Law and Justice on 14 September 2025 during the Hindi Diwas programme in Indore. Additionally, the Town Official Language Implementation Committee (Undertakings) awarded BDL the TOLIC Rajbhasha Shield for excellence across the twin cities, and bestowed the TOLIC Best Magazine Award on BDLs house journal, BDL BHARATI. Furthermore, BDL employees actively participated in Inter-PSU competitions conducted by TOLIC (U) and won six prizes.

23.3 To actively celebrate and promote Hindi, BDL organised a series of institutional, literary, and technical events. Hindi Month was celebrated in two phases from 1 to 29 September 2025, featuring various competitions and an awards ceremony for winners and beneficiaries of the Hindi original work Incentive Scheme. On 17 March 2026, the company hosted a one-day seminar on indigenisation and official language dimensions in the defence sector, followed by a Kavi Goshthi poetry session featuring eminent poets. The next day, a technical lecture series was organised where executives delivered presentations in Hindi on various technical subjects. Major corporate events, including Republic Day, Independence Day, Vigilance Awareness Week, Swachhata Pakhwada, and Constitution Day, were also seamlessly conducted in both Hindi and English.

23.4 BDL remains committed to workforce capability building and cultivating regular reading habits among its employees. In compliance with the directives of the Parliamentary Committee on OL, the company conducted 10 specialised workshops covering 335 officials to integrate Hindi into day-to-day functioning. These sessions included hands-on training for Kanthasth 2.0, the memory-based translation software developed by the Department of Official Language (GoI). An orientation programme was also organised on 8 November 2025 to educate newly joined executives on the Government of Indias OL policy. To encourage original technical and non-technical writing, the company released the 5th and 6th issues of its dedicated e-magazine, BDL BHARATI. Additionally, BDL regularly subscribes to 10 prominent Hindi newspapers and magazines, and purchases popular Hindi books annually to propagate the language across the organisation.

24 VIGILANCE:

24.1 The Vigilance Department of your company focuses primarily on preventive and proactive vigilance to enhance institutional transparency. During the reporting year, the department issued eight systemic improvement suggestions addressing crucial operational areas, including immovable property rules, SAP HR module management, contract manpower attendance, single-source tendering, and travel allowance bills. Many of these recommendations have already been successfully implemented by the management. Acting as an extended arm of the Central Vigilance Commission (CVC), the department regularly submitted monthly, quarterly, annual, and Chief Technical Examiner (CTE) type reports to the CVC, the Ministry of Defence, and the BDL Board. Additionally, the department processed vital vigilance clearances for recruitments, promotions, confirmations, foreign visits, and sensitive area postings, while prioritising complaints in line with CVC policies.

24.2 In compliance with CVC directives, BDL executed a comprehensive three-month preventive vigilance campaign from 18 August to 17 November 2025 across all units. This specialised campaign focussed on the timely disposal of pending complaints and cases, capacity-building programmes, asset management, and digital initiatives. A core highlight of this period was the observance of Vigilance Awareness Week (VAW) from 27 October to 02 November 2025 under the theme : (Vigilance: Our Shared Responsibility). The week commenced with an institutional Integrity Pledge administered across the Kanchanbagh, Bhanur, Visakhapatnam, and Ibrahimpatnam units via video conferencing, recording participation from 2,310 employees. The ceremony included reading official messages from the President, Vice-President, Prime Minister of India, and the Central Vigilance Commissioner.

24.3 To institutionalise safety and compliance values, the company organised numerous sensitisation and promotional programmes. BDL conducted internal training sessions for employees covering public procurement, cyber hygiene, disciplinary procedures, CVC complaint policies, and the roles of inquiry and presenting officers. Public awareness was extended through theme banners at conspicuous locations, mobile message alerts, and an e-integrity pledge link hosted on the corporate website. Furthermore, the Bhanur Unit organised an anti-corruption walkathon at Singapuram village involving 350 employees, led by the Chief Vigilance Officer (CVO) and Director (Finance). The Corporate Commercial Department also hosted an online Vendor Meet to promote vendor diversification, enhance competitiveness, and administer the integrity pledge to partners.

24.4 The campaign concluded with a high-level valedictory function marked by key leadership reviews and official publications. Shri V. V. Lakshmi Narayana, IPS (Retd.), visited the Kanchanbagh Unit as the Chief Guest, where he was briefed on company operations by the then Chairman & Managing Director (CMD), followed by a performance presentation on preventive vigilance from the CVO. In his keynote address to senior executives, the Chief Guest commended BDLs transparency initiatives and highlighted the ongoing need for institutional alertness. To mark the conclusion of the event, the 6 th edition of BDLs annual vigilance newsletter, CHETANA, was officially released to summarise the years achievements and promote ongoing anti-corruption awareness.

24.5 An Online Vendor Meet was organised by Corporate Commercial Department of BDL on 28.10.2025. Smt. Spurthi Reddy, IRS, CVO, BDL has delivered the inaugural speech of the vendor meet. Shri D.V. Srinivas Rao, Director (Technical) and Director (Production) Addl. Charge has administered the integrity pledge for citizens to vendors and emphasised on Multiple Vendor Development to reduce dependency, increase competitiveness.

25 ANTI-BRIBERY AND ANTI-CORRUPTION POLICY:

Your company has zero tolerance approach to bribery and corruption. Your company prohibits all forms of bribery and corruption whether involving, but not limited to Government Officials or a Private Sector persons or company and whether directly or indirectly. The Board of Directors had approved a policy on Anti-Bribery and Anti-Corruption and the same was hosted on website of the company https://bdl-india.in/sites/default/files/BDLACABPolicy_0.pdf.

26 BOARD OF DIRECTORS & KMPS

26.1 The Board of Directors of the company comprises 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 for the applicability of the relevant rules of the company.

26.2 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 approved by the Board, considering the government directives, statutory acts, rules and regulations.

26.3 Independent Directors (i.e. Non-Official Part-Time Directors)

During the year, out of two (2) Independent Directors, the term of office of one (1) Independent Director namely Shri Jashwant Lal was completed with effect from 24 February 2026. The Board expressed its gratitude for the valuable contributions made during his tenure.

The Ministry of Defence, Government of India vide its letter No. -M0001(11)/3/2018-D(BDL) dated 22.04.2025 appointed Shri Chetan Bansilal Kankaria as Part-Time Non-Official Independent Director for a period of one year or until further orders whichever is the earliest and his term was also completed with effect from 22 April 2026. The Board expressed its gratitude for the valuable contributions made during his tenure.

Statement on declaration by 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.

26.4 During the year, the Ministry of Defence, Department of Defence Production, Government of India, through its Office Memorandum No.8 (32)/2019-D (Coord/DDP) dated 14.07.2025, appointed Ms. Meera Mohanty, Joint Secretary (P&C) as the Part-Time Official Director (Government Director) on the Board of the company, replacing Shri Amit Satija. The Board acknowledges and appreciates the valuable contributions made by Shri Amit Satija during his tenure.

26.5 During the year, Shri P.V. Raja Ram, Director (Production), superannuated on 30 September 2025, and his term as Director on the Board of BDL concluded upon his superannuation. The Board expressed its gratitude for the valuable contributions made by him during his tenure. The Ministry of Defence, Department of Defence Production, Government of India, through its Office Memorandum DDP-M0001(11)/1/2025-D(BDL) Pt.1 dated 04 February 2026 appointed Cmde. Sujay Kapoor (Retd.) as Director (Production). He assumed charge as Director (Production) on the Board of BDL with effect from 06 March 2026.

26.6 In accordance with the provisions of Section 152 of the Companies Act, Shri D.V. Srinivas Rao, Director (Technical), retires by rotation at the upcoming Annual General Meeting and, being eligible, offers himself for reappointment.

26.7Apart from above, there is no change in Key Managerial Personnel (KMPs) in the company.

26.8 Number of Meetings of Board:

During the year 2025-26, Six (6) Board Meetings were held on 27 May, 2025; 12 August, 2025; 26 September, 2025; 13 November, 2025; 29 December, 2025 and 31 January, 2026.

26.9Performance 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 17 January, 2018.

26.10 Committees of the Board

The following are the statutory committees constituted by the Board and they function according to their respective roles and defined scope: » Audit Committee » Nomination and Remuneration Committee » Corporate Social Responsibility Committee » Stakeholders Relationship Committee » Risk Management Committee The Audit Committee and Nomination & Remuneration Committee were suspended w.e.f. 24 February, 2026 due to non-availability of required Independent Directors on the Board. BDL being the CPSU, the power to appoint all directors vest with Government of India. The details of composition, terms of reference and number of meetings held for respective Committees are given in the Report on Corporate Governance, which forms a part of this Annual Report.

27 AUDIT COMMITTEE:

During the year 2025-26, Four (4) Audit Committee meetings were held 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.

28 CORPORATE SOCIAL RESPONSIBILITY AND SUSTAINABILITY:

28.1 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-VII 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 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.

28.2 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.

28.3 The core areas of focus under CSR are Health Care, Nutrition, Education & Literacy, Skill Development & Sustainable Livelihoods, Sanitation etc.

28.4 The CSR and SD activities are monitored periodically by the Committee and a detailed annual report on CSR and SD activities undertaken during the year 2025-26 is enclosed at Annexure-I.

28.5 During the year 2025-26, the CSR & SD obligation was 1,326.63 lakh. Against the total CSR obligation, the company has incurred an expenditure of 1,344.71 lakh and achieved 100% CSR target amount required under the provisions of Companies Act, 2013. CSR activities being undertaken are placed on companys website https://bdl-india.in/csr-projects

29 RISK MANAGEMENT:

The company has a Board approved Risk Management Policy. The policy aims at elimination or reduction of risk exposures through identification and analysis of various types of risks and facilitating timely action for taking risk mitigation measures. The policy envisages that all programmes, project reviews will highlight the progress of risk mitigation plans till the closure and signing off the mitigation plans. 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.

30 DIRECTORS RESPONSIBILITY STATEMENT:

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

(i) in the preparation of the annual accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures.

(ii) the Directors have selected such accounting policies and applied them consistently and judgements 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 2026 and of the profit of the company for the year ended on that date.

(iii) the 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.

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

(v) the 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 (vi) 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.

31 SIGNIFICANT AND MATERIAL ORDERS:

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.

32 EVENTS SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENTS:

Material changes and commitments affecting the financial position of the company which have occurred between 31 March 2026 and date of signing of this Report are - Nil.

33 ANNUAL RETURN:

In accordance with the provisions of the Companies Act, 2013, Annual Return of the company for the year under report is available on the companys website https://bdl-india.in/sites/default/files/Draft_AnnualReturn_2025-26_0.pdf.

34 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 https://bdl-india.in/sites/default/files/PolicyonRelatedPartyTransactions_1_1.pdf.

35 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

36 CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

As a Defence Public Sector Undertaking (DPSU), your company is exempted from disclosing specific information regarding the conservation of energy, technology absorption, and foreign exchange earnings and outgo. This exemption is granted under Section 134(3)(m) of the Companies Act, 2013, read with Rule 8(3) of the Companies (Accounts) Rules, 2014, as amended by the Ministry of Corporate Affairs vide Notification G.S.R. 680 (E) dated 04 September 2015.

However, as a responsible corporate citizen committed to sustainable development, the company has proactively implemented several key energy conservation measures across its operations as under: » 100% Renewable Energy: Achieved complete reliance on renewable energy across all manufacturing units by adopting green energy tariffs and securing 100% green power supply.

36

» Green Infrastructure: Converted the Design & Engineering building into an eco-friendly facility, earning the prestigious Platinum Rating certification from the U.S. Green Building Council (USGBC).

» Eco-Friendly Mobility: Enhanced internal campus transit by introducing battery-operated vehicles, including four electric bicycles and one electric truck.

» Energy-Efficient Equipments: Upgraded facility infrastructure with the installation of 320 Brushless Direct Current (BLDC) fans, 11 Variable Frequency Drives (VFDs), 35 occupancy sensors, 2 Automatic Power Factor Correction (APFC) controllers, and 3 high-efficiency IE4 motors.

37 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 is being 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.

38 AUDITORS:

Statutory Auditor:

M/s. Tej Raj & Pal, Chartered Accountants, Hyderabad were appointed as Statutory Auditors of the company for the financial Year 2025-26 by the Comptroller & Auditor General of India. The Auditors have audited the Accounts and does not contain any qualification, reservation or adverse remarks The Auditors Report on the financial statements for the financial year 2025-26 and the Comments of Comptroller and Auditor General of India (C&AG) under Section 143 (6) of the Companies Act, 2013 are appended to the Annual Report.

Cost Auditor:

Your company appointed M/s. Narasimha Murthy & Co., Cost Accountants, Hyderabad as Cost Auditors for the FY 2025-26 for the audit of the cost records of the company. The company maintains cost records as specified by the Central Government under section 148(1) of the Companies Act, 2013 in respect of its manufacturing activities.

Secretarial Auditor:

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (as amended), the company had appointed M/s. C. V. Reddy K & Associates, Practicing Company Secretaries (PCS Registration No.7976) from the financial year 2024-25 to 2028-29 to undertake the Secretarial Audit of the company. The Secretarial Audit Report is appended to the Annual Report.

39 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.

40 REPORTING OF FRAUDS BY AUDITORS:

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

41 MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

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

42 CORPORATE GOVERNANCE:

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

42.2 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-III.

42.3 Quarterly and Yearly compliance reports on Corporate Governance are being forwarded to Stock Exchanges and MoD in the prescribed format.

42.4 The company has complied with Secretarial Standards issued by the Institute of Company Secretaries of India on Meetings of the Board of Directors and General Meetings.

42.5 No proceedings are made or pending under the Insolvency and Bankruptcy Code, 2016 and there is no instance of onetime settlement with any Bank or Financial Institution.

42.6 There has been no change in the nature of business of the company.

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

The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 has been notified in the company. In line with the Guidelines received from time to time, necessary actions have been taken to prevent Sexual Harassment of Women at Workplace. The BDL CDA Rules applicable to Officers and the Certified Standing Orders applicable to Workmen have the required provisions in this regard. The Internal Complaints Committees as per Section 4 of the Act have been put in place. The details of sexual harassment complaints received, disposed off and pending as on 31 March 2026 is as follows:

a) Number of complaints received :	1
b) Number of complaints disposed off :	0
c) Number of complaints pending :	1
d) Number of cases pending for more than 90 days :	1

44 COMPLIANCE UNDER THE RIGHT TO INFORMATION ACT, 2005:

The information required to be provided to citizens under Section 4(1)(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. During the year 2025-26, the CPIO has received 215 applications/queries, out of which 199 applications have been disposed-off and 02 (Two) application are transferred to other Public Authority. 14 RTI queries are under process. Further, out of 31 appeals received, 31 are disposed-off by Final Appellate Authority as on 31 March 2026.

45 VIGIL MECHANISM/ WHISTLE BLOWER POLICY:

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 (as amended) 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 https://bdl-india.in/sites/ default/files/WBP.pdf. The policy inter-alia provides a direct access to the Chairman of the Audit Committee.

Employees are encouraged to raise any of their concerns by way of whistle blowing and none of the employees have been denied access to the Audit Committee.

46 BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT:

The Securities and Exchange Board of India (SEBI) has mandated inclusion of Business Responsibility and Sustainability Report (BRSR report) as part of the Annual Report based on market capitalisation. Your company has prepared a comprehensive policy framework for BRSR report, after studying the SEBI (LODR) Regulations, 2015 (as amended) requirements and keeping in view the business and governance environment in which BDL as a Defence PSU operates. The companys BRSR report for the year is available on the BDLs website at https://bdl-india.in/sites/default/files/BRSR-2025-26.pdf.

47 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 https://bdl-india.in/sites/default/files/DividendDistributionPolicy_1.pdf.

48 ACKNOWLEDGEMENT:

48.1 Your directors gratefully acknowledge and express their appreciation for the cooperation extended and guidance provided by various Government Agencies, including the Ministry of Defence, DPSUs, Department of Defence Production, DRDO Laboratories, Central Government Departments, State Governments of Telangana and Andhra Pradesh, Quality Assurance Agencies of the Government of India, and other PSUs. Their support has been invaluable to the company, and your directors are grateful for the assistance received from them on various occasions.

48.2 The company would like to extend its sincere appreciation to the Comptroller & Auditor General of India, the Principal Director of Commercial Audit & Ex-officio Member, Audit Board, Statutory Auditors, Bankers, and Suppliers for their cooperation, support, and guidance. Their contributions have been instrumental in ensuring the smooth functioning and financial integrity of the company.

48.3 The directors take this opportunity to express their deep appreciation for the valuable contributions and cooperation of the employees at all levels. Their dedication, hard work, and commitment have played a crucial role in propelling the company to greater heights and sustaining its growth trajectory. The directors recognise and acknowledge the employees efforts and extend their gratitude for their continued support in the future.

For and on behalf of the Board

D.V. Srinivas Rao
Director (Technical) and
Chairman & Managing Director (Addl. Charge)
DIN : 10652125