Bharat Electronics Ltd Management Discussions

(A Industry Structure and Developments, Strengths, Weaknesses, Opportunities and Threats, Major Initiatives undertaken and planned to ensure sustained Performance and Growth:

(a) General outlook of the economy, industry in which the Company operates, Government Budget, particularly the Defence Budget, market conditions and how these impact the Company, measures taken / action plan to protect the interest of the Company Global economic growth remains steady but weak, with heightened policy uncertainty, tariffs and geopolitical situation creating significant headwinds in FY 2024-25, India progressing with steady economic growth. As per estimates, in the year 2026, Indias real GDP is estimated to grow by 7.6%. India is confident of becoming the third largest economy in the next two years with a GDP of USD 5 trillion. India is ranked as the worlds fastest- growing major economy.

The Indian economy is primarily driven by the services sector (55% of GDP), manufacturing and strong public infrastructure spending. Key contributors include booming electronic/engineering exports, a strong digital economy, high GST collections and a robust financial sector with record-low NPA levels. Strong growth in the export of engineering goods, electronic goods and marine products is a major achievement. Export of services surged with India solidifying its position as a global technology hub.

Defence

In the budget for FY 2026-27, the Government allocated 7.85 Lakhs Crore to MoD, an increase of 15.19% over the previous year. Budgetary allocation under capital head to the Defence Forces is over 2.19 Lakhs Crore which is 21.84% more than the previous year. Out of the 2.19 Lakhs Crore, 1.85 Lakhs Crore has been earmarked for capital acquisition (an increase of 24% over the previous year).

The budget gives a strong thrust to Aatmanirbhar Bharat by promoting indigenous manufacturing and reducing import dependence (Self Reliant India). 1.39 Lakhs Crore (over 75%) has been allocated for procurement from domestic private and public sector industries.

The forthcoming Capital Acquisition projects will equip the Armed Forces with next generation Fighter Aircraft, Advanced Weapons, Ships and Submarines, Unmanned Aerial Vehicles, Drones, etc.

Raw material imported for Aircraft manufacturing, repair, maintenance and overhaul requirements in defence sector to be exempted from basic customs duty. This measures support domestic production, investment and job creation.

The budgetary allocation to the Defence Research and Development Organisation (DRDO) has been increased to 29,100 Crore from 26,817 Crore in the previous year. Out of this, the majority share of 17,250 Crore is allocated for capital expenditure. To promote R&D in defence manufacturing, the Government has implemented a range of measures which include: 25% of the Defence R&D budget has been opened to industry, start-ups and academia based on the budget 2025-26 announcements. Fifteen DRDO-Industry-Academia Centres of Excellence (CoE) have been established. DRDO has built a network of around 2,000 industries to manufacture equipment with ToT at zero ToT fee to Indian partners to empower innovation.

The Union Budget 2026-27, the first Union Budget after the historic success of Operation Sindoor, reflects the Governments sustained focus on strengthening national security through modernisation, self-reliance and innovation. With a strong push for indigenous defence manufacturing, focussed investments in research and infrastructure. The budget for the Defence Sector promises a more secure and resilient India, aligned with the long-term vision of Viksit Bharat-2047.

Non-Defence

Apart from its core Defence business, BEL has ventured into several non-defence areas like Homeland Security, Space Electronics, Network & Cyber Security, Rail & Metro Solutions, Civil Aviation, Medical-Electronics & Healthcare Solutions and Software Solutions, etc.

Homeland Security

The Homeland Security market in India is spread across Central / State Governments, entities including PSUs and Private Sector Organisations. The Indian security

market is poised for rapid growth, with biometrics and smart surveillance emerging as significant segments. A significant market opportunity exists in police modernisation, critical infrastructure protection, border management, counter terrorism activities, urban area security, ground transportation, port & maritime security, etc. Prevailing internal security concerns due to terrorism, cybercrime and natural disasters, growth in public infrastructure, increased IT spending, increase in security spending are boosting demand for the Homeland Security market in India. The future growth and improved security measures will be driven by emphasis on AI, machine learning, IoT, big data analytics and advanced sensor systems.

The Ministry of Home Affairs (MHA) has been allocated 2.55 Lakhs Crore in the Union Budget 2026-27, marking a 9.44% increase from the previous year. This allocation represents roughly 5% of the total Union Budget. Key focus areas include 1.73 Lakhs Crore allocated for police-related expenses, covering central armed police forces (CAPFs), intelligence, and forensics, approx. 27% of the budget is allocated to Union Territories with a significant share for Jammu and Kashmir, 6,000 Crore for conducting Census & Statistics, funding for refugee relief, disaster response, and rehabilitation.

During FY 2025-26, BEL has successfully completed the Rourkela and Port Blair Smart City projects with Go-Live milestone achievement.

Energy Storage Products

The Union Budget for FY 2026-27 reinforces Indias transition toward a high-growth, low-carbon economy, positioning the nation as a global hub for Energy Storage Systems (ESS). With the increasing integration of renewables into the national grid, the government has intensified its focus on Battery Energy Storage Systems (BESS) and Advanced Chemistry Cell (ACC) manufacturing to ensure energy security and grid stability. Indias emphasis on energy storage is expected to enhance grid stability, reduce reliance on imports, and accelerate renewable adoption.

FY 2026-27 Budget strengthens Indias energy storage ecosystem with customs duty exemptions, financing reforms, and CCUS (Carbon Capture, Utilisation and Storage) initiatives. The global BESS market is projected to grow from USD 51 Billion in 2025 to USD 106 Billion by 2032, at a CAGR of 16%.

The Government approved the Production Linked Incentive (PLI) Scheme, National Programme on ACC

Battery Storage continues with a target of 50 GWh manufacturing capacity, supported by a budgetary outlay of 18,100 Crore. The new PM E-DRIVE Scheme, the primary driver for FY 2026-27, with a total outlay of 10,900 Crore acts as a demand pull mechanism by creating a massive, predictable market for the batteries that powers them.

BEL is addressing the energy storage system (ESP) requirement for strategic applications and EV segment among its focussed markets. BEL has acquired technology from DRDO for high-capacity Lithium-ion cells for strategic applications and has set up required R&D facility. BEL is also exploring the adoption of fuel cell based technologies for commercial manufacturing in partnership with a technology partner.

Space Electronics

ISRO continues to expand opportunities for the Indian industry, focussing on the manufacturing of Launch Vehicles as well as small and micro-satellites. In line with ISROs ambitious roadmap to scale the frequency of satellite launches, the Department of Space has been allocated a projected budget of 14,250 Crore for FY 2026-27.

This represents an increase of approximately 6.22% compared to the 13,416 Crore allocated in FY 2025-26. Of this total outlay, 6,800 Crore has been earmarked specifically for capital expenditure, signalling an intensified push toward advanced satellite technology development, deep-space exploration and the Gaganyaan mission ecosystem.

Indias liberalised Foreign Direct Investment (FDI) policy remains a cornerstone of this growth, continuing to allow up to 100% FDI under the automatic route for "manufacturing of components and systems/sub- systems for satellite & ground/user segments, and 74% for satellite manufacturing & operation and 49% for launch vehicles and spaceports.

BEL is one of the major players in the ground segment of Satellite Communication and desires to enter into Space Electronic Systems, manufacture of Small & Micro Satellites, Payloads for Satellites and Satellite Communication Services jointly with the Indian private industry. BEL has long term objective of becoming a prominent player in Space-Based Assets and Payloads.

BEL is a qualified industry partner of ISRO for Assembly, Integration and Testing (AIT) of satellites. It has completed Satellite AIT of three RISAT satellites

at ISRO premises. BEL has collaborated with ISRO and has come out with new products like variants of Indigenous Receivers for Positioning and Navigation, Satcom Terminals, LTCC-based Substrates and high power space TWTAs, which have usage in Defence, Government services and paramilitary applications. Also, BEL is jointly working with ISRO for supply and commissioning of various types of Satellite networks and HUBs for satellite communication applications. BEL has plans to establish manufacturing facilities for LEO Satellites as well as Space based payloads for Defence space related projects. BEL has collaborated with M/s Arquimea in development of satellite bus. BEL has also collaborated with M/s Bellatrix for satellites, LEO/ MEO/VLEO constellation and related space & ground electronics for various Customer Segments

Network and Cyber Security

Indias cyber-security market is emerging as a global hub for innovation and cyber-security. The cybersecurity market in India which is driven by investments by organisations to safeguard against cyber threats is expected to grow at a CAGR of 18.33% and reach 1 Lakh Crore (USD 12.9 Billion) by 2030.

In order to address opportunities in cyber-security market in a focussed manner, a dedicated Strategic Business Unit (SBU) at BEL Bangalore has made significant progress in implementing a considerable amount of cyber-security business such as the Security Analytics Centre (SAC) for Govt. agencies, Data-Diode Solutions, PKI and associated services for the Defence forces, Security services for Banking/Govt. Agencies, Secure Rugged Laptops, Next Generation Firewall Systems, Security Operation Centre (SOC) for PSUs, etc. Besides, an AI powered Adaptive Cyber Defence System (ACDS) test bed has been established in BEL Datacentre. BEL has successfully ventured into the Health Sector Security Solution, with sizeable order from AIIMS. It is noteworthy to mention here that BEL has also initiated research in advanced technology domains such as Cyber Forensics, I-TOSS (Indigenous Trusted Operating System Secure) and High Computing Infrastructure (HCI), gaining domain expertise and developing solutions. Various MoUs with technology partners have been signed for pursuing opportunities in the near future.

In the cyber domain, the High Performance Computing (HPC) sector is witnessing robust growth, fuelled by the escalating demand for sophisticated data processing across diverse industries. The global HPC market is predicted to reach USD 71 Billion and the Indian HPC market is expected to reach USD 4.3 Billion by 2030.

The setting up of HPC facility has been initiated at BEL Bangalore to address the business in the HPC segment.

BEL is vigorously pursuing current technologies like Quantum Key Distribution, Block-chain, Digital Forensics, Remote Voting, IoT security, etc., in collaboration with several Start-ups, OEMs, Channel Partners and Academia.

BEL has been empanelled by CERT-In for providing information security auditing services. BEL Network and Cyber-security is an ISO 27001 Information security management systems-certified division. Various Cyber Security certifications have been obtained by this group, including CEH, GSEC, Lead Auditor for ISO 27001, CISSP, CSQE, CHFI, CCNA, etc. certification to qualify in domestic and global tenders. During the year, BEL acquired Cyber-security projects from customers like ICMR, AIIMS, etc.

Railways and Metro

Indias railway sector is undergoing massive transformation with a focus on modernisation, highspeed rails (bullet trains) and electrification. There is a rapid growth in the Rail and Metro business driven by factors like new Metro Rail Policy, smart mobility initiatives, increasing urbanisation and rising costs of conventional energy sources. Further, Metro is being expanded in tier-2 and tier-3 cities. With growing demand for green transportation and sustainability goals, the global rail and metro market is expanding rapidly at 7.5% CAGR through 2032.

For FY 2026-27, Indian Railways has received its highest-ever capital expenditure allocation of 2.93 Lakhs Crore. As a part of this vision, the government has announced the development of seven new intercity high-speed rail corridors described as growth connectors aimed at promoting environmentally sustainable passenger transport.

BEL has developed and delivered a wide range of indigenous products for the Rail & Metro segment. BEL has planned to address emerging opportunities through indigenous products in this segment, countering competition. To address the huge opportunities, Rail and Metro Micro SBU has been formed by BEL in Ghaziabad Complex, which is in proximity to customers like DMRC, MOHUA, RDSO and NCRTC. A dedicated Micro SBU will enable enhanced focus in providing the solutions to the customer in time, acquiring the orders, supplying the deliverables and completion of services.

Civil Aviation

The global aviation market is valued at USD 1,042 Billion in 2025 and is projected to grow at a CAGR of 8.1% between 2026 and 2034. The aircraft passenger traffic in India is estimated to reach 1.1 Billion by 2040, and the number of airports will increase to 350-400 by 2047 from the existing 163 in the country. With 300 million domestic air passengers a year in 2030, Indias aviation penetration would be at 10-15% by 2030. Domestic air passenger traffic witnessed 10-12% growth while international air passenger traffic was 5% in the last decade. The budget allocation for the civil aviation ministry for FY 2026-27 stood at 2,102.87 Crore focussing on regional connectivity, safety, and infrastructure development.

The Airports Authority of India (AAI) has earmarked a sum of 25,000 Crore. Capital expenditure plan for expansion and modernisation, covering new terminals and runway strengthening during FY 2024-25 to 2028-29. AAI has separately earmarked 3,490 Crore for modernising Communication, Navigation and Surveillance / Air Traffic Management (CNS/ATM) system across its network.

BEL is collaborating with AAI and global OEMs for modernisation of Airports and ground infrastructures, providing solutions for Air traffic management and Radar based Air Surveillance Radar Solutions, Advanced Surface Movement & Guidance Control System Solutions and other ground & navigation solutions, etc.

BEL has successfully developed indigenous Airport Surveillance Radar (ASR) solutions for seamless air traffic control meeting global ATC compliances. With indigenisation efforts, BEL has started acquiring orders of ASR solutions and is actively pursuing domestic and export business opportunities in this segment.

Software

Government has allocated 1,000 Crore in FY 202627 budgets to the IndiaAI Mission to further strengthen the countrys artificial intelligence ecosystem and build national AI capabilities. The Indian IT industry, comprising software products, IT services, engineering and R&D services, ITeS/BPO, hardware and e-commerce is expected to reach USD 315 Billion in revenue by 2026, growing at 6.1%, and is expected to reach to USD 400 Billion by 2030, driven by AI-led services, cloud migration and expanding Global Capacity Centres (GCCs), contributing over 7% towards the countrys GDP.

Emerging technologies such as real-time battlefield data analytics, autonomous decision making, enhanced

situational awareness, Artificial Intelligence (AI) and automation, Geo Analytics, Block chain and embedded software play a vital role in modern warfare and transforming every aspect of the product offerings.

BEL is handling multi-disciplinary projects catering to the in-house software requirements and is also exploring opportunities in both domestic and export markets through strategic partnerships with industry leaders in areas of Homeland security, e-Governance, smart cities, digital transformation, finance management, healthcare, simulators, software assurance services, ERP, Hybrid QA and Industry 4.0 Solutions, digital Agriculture, AI/ML, etc. BEL operates its Software Development Centres (SDCs) in Vizag, Delhi & Indore dedicated to software development. To further expand software development, services and support endeavours, BEL is also planning to establish additional SDCs at different locations across India.

Medical Electronics & Healthcare Solutions

Indian medical electronics market is expected to grow to USD 50 Billion by 2030 symbolising Indias transformation from a major importer to a global hub of medical technology innovation and manufacturing, aligning perfectly with the global MedTech markets trajectory toward USD 900 Billion by 2030. Emerging focus on AI and lifestyle science in India is building the next generation of longevity and human performance ecosystems, indicating growth in tech-enabled medical devices.

After successfully manufacturing 30,000 ICU ventilators and around 18,000 Oxygen Concentrators, during the pandemic, BEL has taken firm steps towards diversifying into the medical electronics and healthcare segment. One of the objectives of your company is to tap the opportunities in medical electronic equipment segment, which covers 56% of the MedTech market share and introduce affordable healthcare products/solutions to urban & rural populations in India and achieve Aatmanirbharta in the Healthcare segment.

To quickly grow in this segment, a few niche products, indigenously designed by Indian companies, have been identified which can be manufactured at BEL through ToT. Your Company is also planning to come out with products for futuristic markets, either through an inhouse effort or through a collaborative R&D approach. With these approaches, BEL has obtained the licence to manufacture (for sales/distribution) its indigenously developed Haemodialysis machine, a significant milestone for Indias MedTech sector. Also, BEL is

planning to produce patient monitoring system for ICUs, turbine-based ventilator, etc.

Focussed approach for new areas in Defence

BEL stands at a critical juncture in Indias evolving defence landscape. As India accelerates its defence indigenisation agenda under Aatmanirbhar Bharat, BEL has a strategic imperative to proactively expand its footprint into high-growth, next-generation defence domains beyond its traditional core segments.

The Union budget 2026-27 provided a record 7.85 Lakhs Crore for defence, focusing heavily on modernisations, capital acquisitions and indigenous production. The allocation aims to strengthen national security, upgrade military capabilities to global standards, and support emergency procurement. To give a focussed approach to upcoming areas in the Defence & Aerospace sector, BEL has ventured into Space & Satellite Systems, Artificial Intelligence, Unmanned Autonomous Platforms, Directed Energy Weapons, Quantum Technologies, Advanced Cyber & Electronic Warfare, RF and IR Seekers, Missiles, Rockets, Glide Bombs, Arms & Ammunitions, etc. The strategy is underpinned by robust investments in R&D, strategic partnerships, capability building, and leveraging Indias evolving defence procurement policies.

Unmanned Systems

The unmanned systems sector encompassing Unmanned Aerial Vehicles (UAVs), Unmanned Ground Vehicles (UGVs), Unmanned Surface Vessels (USVs), and Unmanned Underwater Vehicles (UUVs) has emerged as one of the most impactful domains in modern defence warfare. Operation Sindoor marked a doctrinal inflection point for Indias armed forces and defence industrial base. For the first time in Indias military history, unmanned systems were deployed at scale across all three services in a live, multi-domain conflict environment spanning ISR, precision strike, electronic warfare, counter-drone, and target acquisition missions. Operation Sindoor not only validated the operational supremacy of autonomous platforms in high-intensity conflict but also catalysed the most significant acceleration of defence procurement spending in India in the coming years.The global Unmanned Systems market is projected to grow to USD 43 Billion approximately, at a CAGR of 10% by 2030. The Indian Unmanned Systems market is expected to grow to USD 4 Billion approximately, at a CAGR of 20% by 2030.

BEL has been addressing the UAV/UGV/UUV/USV requirements of the Indian Defence/Non-Defence segments by partnering with DRDO/foreign OEMs/Indian Academia/Start-ups, etc. BEL has also been working on the Payloads (like EO, Communication, ESM, etc.), Data Links and Ground Control Station requirements of the UAVs. BEL has also developed and has been supplying Anti Drone Systems for armed forces. BEL is planning to reallocate the Anti-Drone System business internally for sustained business growth. To address the Unmanned Systems business opportunities in a focussed manner with committed resources, a dedicated Strategic Business Unit (SBU) at BEL, Bangalore has been doing strategic partnerships and addressing requirements of the customers.

BEL has achieved significant milestones across its Unmanned Aerial Vehicle (UAV) and Autonomous Systems portfolio during FY 2025-26. Many strategic UAV programmes (High Altitude Logistics Drone, Loitering Munitions UAV, etc) has progressed through successful trial phases.

RF and IR Seekers

The global missile seekers market was valued at USD 7.3 Billion in 2025 and is projected to grow at a CAGR of 6.5 % between 2026 and 2035.

Investments in missile defence systems is further enhanced by escalated geopolitical tensions among major nations, the need for enhancing the military capabilities through modernisation and ensuring the security and sovereignty of the nations. Government is focussing on upgrading its existing weaponry to ensure national security, which continues to create a robust demand for advanced missile seekers.

The key drivers for the global growth of this segment continues to be increased geopolitical instabilities, the change in nature of the warfare strategies, continuous advancements in missile seeker technologies with increased R&D, increasing defence budgets of emerging economies, European countries, West Asia and other countries in the need for securing their nation, etc.

In recent times, the missile seeker market has witnessed notable trends, including a shift towards multi-mode seekers that can operate across various environments and mission profiles. This flexibility allows for enhanced operational capabilities, ensuring effectiveness in diverse combat scenarios. The domestic demand for

this segment is driven by Govt. of Indias policy initiative for development and procurement of strategic missiles primarily from domestic market.

The indigenous R&D in the segment is led by DRDO and major milestones have been achieved, paving the way for commercial production of these Seeker based Missile systems. Based on advanced Seeker technologies, some of the major missile programs have completed their development and reached commercial production phase and are going to contribute to the growth of domestic seekers market. BEL is associated with DRDO in various phases of development for technology absorption, engineering and productionisation of various seekers which are at advanced stages for commencement of commercial production. BEL continues to invest for further capacity enhancement to cater to the demand for supply of seekers for upcoming Missile programs.

Arms & Ammunition

Global geo-political environment is leading to disruption in ammunition sector. Conflict around the world is driving the need for stockpile of ammunition. Wars are fought not on the battlefield but at ammunition production facilities. The global ammunition industry continues to play a vital role in the modern battlefield and remains a strategic asset for any country. Increasing geopolitical uncertainties and supply chain disruptions started exposing opportunities for Indian companies to explore the global ammunition market and supply chains.

Arms & Ammunition including Smart Weapons and Precision Guided Munitions are critical for the strategic needs of the country for which self-reliance has to be ensured. Historically, the Services were dependent on imported Arms/Weapons. GoI/MoD through major policy initiatives for Make-in-India such as Indigenisation of Ammunitions, Positive Indigenisation list, Make-II, etc., is offering huge opportunity to domestic defence manufactures including BEL.

The global ammunition market is experiencing substantial growth, both in terms of volume and value and is valued at USD 26 Billion in 2025 and is projected to grow at a CAGR of 4% between 2026 and 2035.

In order to address opportunities and to effectively compete in this segment, a dedicated Strategic Business Unit (SBU) at BEL Bangalore is executing supply order for Development cum Production Partner (DcPP) for realisation of strategic Missiles programs for DRDO.

BEL is also exploring strategic international partnership with OEMs for joint development, co-production and collaborative R&D projects for advanced technologies in the domain of Smart Munition/Weapons /Ammunition. In addition, BEL is engaged with DRDO, Academia and Start-ups. BEL has made substantial investment for creating Hot integration and Storage magazine facilities with all the necessary regulatory licence and approvals.

(b) Industry Structure and Developments

Government declared the year 2025 as the "Year of Defence Reforms", the Indian Defence industry is undergoing a major transformation. The structure is shifting from the reliance on imports to a self-reliant (Aatmanirbhar Bharat) ecosystem, focussing on rapid indigenisation, increased private sector participation and record-setting production and exports. The Defence acquisition plan (DAP) 2026, being developed as a revision to DAP 2020, focusses on simplifying procurement, reducing timelines and enhancing selfreliance.

The MoD has fully utilised its earmarked capital outlay of 1.86 Lakhs Crore towards Defence Services. In FY 2025-26, AoN for 109 proposals amounting to 6.81 Lakhs Crore has been accorded by MoD, compared to 56 proposals worth 1.76 Lakhs Crore approved in FY 2024-25. Also Capital procurement contracts for the total 503 proposals amounting to 2.28 Lakhs Crore were signed by MoD in FY 2025-26.

Defence exports skyrocket to an all-time high figure of 38,424 Crore in FY 2025-26. A massive rise of 14,804 Crore or 62.66% was registered over the defence exports figures of FY 2024-25, which were 23,622 crore. The private sector and DPSUs contributed with 17,353 Crore and 21,071 Crore respectively, whereas the corresponding figures for FY 2024-25 were 15,233 Crore and 8,389 Crore respectively. DPSUs and other PSUs accounted for 151%, while the private sector contributed 14% growth in exports. Apart from being a successful global partner for systems/sub-systems, India is exporting defence equipment to more than 80 countries as of FY 2025-26. The number of exporters underwent a surge to 145 from 128, a 13.3% rise from the previous fiscal.

Record Defence Budget

Ministry of Defence has been allocated 7.85 Lakhs Crore in the Union Budget 2026-27, in pursuance of Governments vision of Viksit Bharat @ 2047 with a technologically-advanced and Atmanirbhar Armed Forces.

MoD is in the process of finalising the Defence Acquisition Procedure (DAP) 2026 to align with the Governments policies and initiatives to meet the operational requirements and modernisation of the Armed Forces in a timely manner to ensure national security. The main objective of this DAP revision is to establish India as a global defence manufacturing and maintenance, repair, and overhaul hub; and promote Design & Development in both public and private sectors, with a focus on startups, innovators, and the private industry.

During the year, DAC has cleared various capital acquisition proposals to enhance the capabilities of the Armed Forces covering major segment being Loiter Munition System for Artillery Regiments, Low Level Light Weight Radars, Long Range Guided Rocket Ammunition for Pinaka Multiple Launch Rocket System & Counter drone Systems, High Frequency SDRs(Manpack), High Altitude Long Range Remotely Piloted Aircraft System, Automatic Take-off Landing Recording System, Astra Mk-II Missiles, Full Mission Simulator and SPICE-1000 Long Range Guidance Kits, Nag Missile System (Tracked) Mk-II, Ground Based Mobile ELINT System, 30mm Naval Surface Gun, Advanced Light Weight Torpedoes, Electro Optical Infra-Red Search and Track System, Smart Ammunition for 76mm Super Rapid Gun Mount for Indian Navy, Collaborative Long Range Target Saturation/Destruction System and other proposals for Indian Armed forces.

In consideration of the on-going operational concerns, sanction for emergency procurement in the niche technology domains of Drone/ Counter Drone, Weapon Systems, Precision Ammunition, Electronic Warfare Systems and Surveillance Systems etc. was accorded. A total of 29 capability development schemes have already been contracted and another 15+ schemes are likely to be awarded.

Several variants of ammunition worth 16,000 Crore have been offered to the Indian Industry for long-term contracts under the Manufacturing of Ammunition for Indian Army by Indian Industry, a Government of India Initiative.

Digitisation and Automation: Towards enhancing operational efficiency through real-time data analysis and autonomous systems, MoD is making headway in AI driven decision-making tools such as AI based preventive maintenance of Equipment and demand forecast of spares, AI model in Transport and Road Space Management and AI based supply chain mapping system.

Next Generation Aircraft Program

In a significant push towards enhancing Indias indigenous defence capabilities and fostering a robust domestic aerospace industrial ecosystem, Defence Ministry has approved the Advanced Medium Combat Aircraft (AMCA) Program execution model. This is an important step towards harnessing the indigenous expertise, capability and capacity to develop the AMCA prototype, which will be a major milestone towards Aatmanirbharta in the aerospace sector. BEL is participating in this prestigious program in consortium mode.

Implementation of GoI Initiative - Digital India

Armed Forces Secure Access Card is a tri-Services project, with the Indian Navy as the Lead Service. It is aimed at replacing the existing paper-based I-Cards being used by the three Services. The goal of the project is to establish a robust and technology-driven physical security infrastructure at defence establishments. More than 90,000 Service/ DSC personnel and Defence civilians pan-Navy have already been enrolled for AFSAC.

Under the Mission Karmayogi of GoI, online training modules on the i-GOT platform have been implemented for all Central Government employees. As a step further, Naval Headquarters/DCP in coordination with Karmayogi Bharat is in the process of uploading customised domain specific e-learning courses specifically for Naval Civilians.

Tri-service Integration

Inspection and Safety branch of the IAF is spearheading the adoption of common aviation standards for all the three Services. It achieved a significant milestone by publishing the first ever framework for common aviation standards in the form of common Tri-service Order on Categorisation and Instrument Rating Scheme for Aircrew.

Technology Perspective and Capability Roadmap 2025

TPCR-2025 is released outlining the technological requirements and capability roadmap of the Services covering a period of 15 years. The document facilitates Indian defence industry to plan allocation of resources for R&D, manpower and infrastructure development in key technology areas.

Civil Military Fusion

Operation Sindoor not only showcased how victory was possible through jointness but also illustrated the need for a robust civil-military fusion for strengthening national security, imbibe niche technology and thus effectively

face future challenges. A detailed study on civil military fusion has been carried out in conjunction with Think Tanks, Service HQs and concerned MoD departments.

DPSU Bhawan

On November 10, 2025, Raksha Mantri Shri Rajnath Singh inaugurated the Defence Public Sector Undertakings (DPSUs) Bhawan at World Trade Centre, Naoroji Nagar, New Delhi. Developed by the Department of Defence Production, it serves as a common platform for all 16 DPSUs, including BEL, to foster collaboration, innovation and synergy under the motto "Sangacchadhvam Samvadadhvam" (Move together, dialogue together).

(c) SWOT Analysis Strengths

• Leader in Defence Electronics in India.

• Strong multi-layered in-house R&D, skilled workforce with competent domain knowledge.

• Wide product range with a strong Product support network.

• Trusted and strong relationship with Customers & other key stakeholders.

• Sustainable business growth.

• Healthy Order Book position with robust pipeline.

Weaknesses

• Gaps in critical technology areas.

• Higher dependence on Defence market.

• High lead time to market.

• Regulatory requirements impacting agility.

Opportunities

• Significant rise in Indian defence budget.

• Surge in substantial defence modernisation / upgrade plans.

• Growing defence needs due to global security concerns.

• Strategic partnerships with friendly countries.

• Growing diversification/emerging technology domains.

• Introduction of IDDM category in DAP.

• Positive Indigenisation List & Make-II projects.

Threats

• Increased competition from Indian private and Global companies.

• DRDOs Policy for DcPP and PA.

• Changing Customer procurement philosophy.

• Disruptive technologies.

• Sourcing of few critical and denied technologies.

(d) Major initiatives undertaken/planned, including strategy, goals and targets set by the top management, to ensure sustained performance and growth of the Company

The Company has undertaken the following major initiatives to ensure sustained performance and growth of the Company:

(i) Strategic alliances in emerging businesses through Codevelopment, Co-production and Manufacturing ToT: BEL is working in many strategic and other areas of national importance such as Weapon systems, Surveillance, tracking and multifunction state-of-the-art radars, naval & airborne applications, Next Generation Electronic Warfare Suites and Counter Measure Systems, Air Defence Systems including Seekers & Missiles, Unmanned Systems for Land, Air, Surface & Underwater Applications, Anti-Submarine Warfare Systems, Software Defined Radios for Tactical Applications, Network Centric Systems, Multi-sensor Stabilization Systems, Arms and Ammunitions, Transportation Solutions for Railways and Metros, Artificial Intelligence & Robotics, Space/Satellite Systems, etc.

Strategic alliances have been forged and other select partnerships are being pursued with Defence laboratories, reputed global OEMs, DPSUs, Academia, Start-ups, niche technology companies and Indian companies / agencies for addressing the emerging Defence and Non-Defence businesses and exports.

Some of the products & systems identified and being pursued for alliances for co-development, co-production and manufacturing ToT and for Lifecycle Support include Surface-to-Air Missile (SAM) Systems, RF / IIR Seekers, Air Defence Radars (Land and Naval based), Navigational Complex System, Sonar Systems, Next Generation Night Vision Devices, Gun Upgrades / New Gun Programmes, Small Arms for Defence, Electronic Fuzes, Navigation Receivers, Ammunitions, Inertial Navigation Systems, High Power Lasers, UAVs, Remotely Operated Vehicles (RoVs), Counter Measure Systems, Electronics Systems

for Futuristic AFV platforms FICV etc., Satcom Terminals, Rail & Metro Solutions, etc.

Significant number or MoUs/Agreements have been signed with Indian and foreign OEMs to boost BELs strategic growth including diversification initiatives; for joint development/production, collaboration of new business opportunities, emerging technologies etc. Joint Ventures (for existing/emerging business areas).

BEL has been continuously exploring opportunities for establishing joint ventures/special purpose vehicles with reputed companies with complementary technologies/ strength to bridge technology gaps, for business expansion as well as to enter into new and emerging business areas.

The Joint Venture BEL-THALES Systems Limited (BTSL) achieved a milestone turnover of 146.4 Crore for the Year 2025-26 experiencing a strong growth of 24% from the previous years 118 Crore and the highest ever Order book position of 270 Crore.

The Order book position of Bharat Electronics Limited (BEL) and Israel Aerospace Industries (IAI) formed a joint venture company "BEL IAI AeroSystems Private Limited (BIA)" stands at 153 Crore, for providing post warranty product life cycle support for MRSAM Weapon Systems in India.

BEL has entered into a Joint Venture Agreement (JVA) with Safran Electronics and Defence (SED), France for manufacturing HAMMER Weapon System in India.

(ii) Restructuring (for concerted focus):

For dedicated focus and to take advantage of business opportunities arising out of National Rail Plan (NRP) 2030 and various other mobility initiatives of GoI, a Micro Strategic Business Unit (SBU) is formed at Ghaziabad Complex.

In order to have a concerted and focussed approach towards the future business of the airborne segment, a Strategic Avionics Systems (SAS) SBU has been created at Bangalore Complex.

Four new Regional Product Support Centres (RPSCs) at Kolkata, Pathankot, Jodhpur and Chabua have been established to enhance the product support to our esteemed customers.

Technology Upgradation and R&D Challenges

Core technologies required for developing state-of-the- art products and solutions are often not readily available. R&D on core technologies requires constant upgrade for realising solutions with a competitive edge. While it is inevitable to use proprietary technologies, getting locked to a single source for technologies/solutions is a major challenge.

The demands for reduced Size, Weight and Power (SWaP) along with quality requirements always push R&D efforts to the edge. At the component level, R&D efforts are steered towards meeting newer requirements of SoCs, MMICs, highly integrated processor ICs, microwave Super Components, etc. At the product level, R&D efforts are towards creating modular, configurable, multi-function and fault-tolerant products. Realising Systems of Systems needs expertise in systems engineering, project management along with system integration expertise. Obsolescence of critical components, continued dependency on foreign OEMs and requirement to support the entire product life cycle are the other critical challenges.

Measures

To overcome the challenge of continuous upgrade of underlying core technologies for all products and solutions across BEL, a 3-tier R&D structure is put in place. The Central Research Laboratories (CRLs), one each located at Bengaluru and at Ghaziabad, are engaged in blue sky research and applied research in core technology areas of Communication, C4I, Big Data, Network Centric Software, Electronic Warfare, Radio Frequency, Microwaves, Power Amplifiers, Antennas, Radar Signal and Data Processing, Image Processing, Electro-Optics and Lasers, Embedded Smart Computing, Sensors, Networking, Navigation, Artificial Intelligence, Cyber & Network Security, Crypto, Switching, Cloud and Data Analytics, Machine Intelligence, Robotics, Unmanned Vehicles, Network Management Systems, Decision Support Systems, Multi Sensor Tracking and Data Fusion, GIS, Simulation, Wargaming, Tactical Algorithms, Cognitive Computing, Sensor-System Integration, Web Technologies, Software Engineering, etc.

A centralised Product Development and Innovation Centre (PDIC) and the 3 Centres of Excellence (CoEs) in the areas of Electronic Warfare & Photonics (EW&P), Military Communication Systems (MCS) and Radar &

Weapon Systems (R&WS), located at Bengaluru, focus on engineering of core technology modules into products/ systems. The core areas of PDIC are Automation Solutions, Antennas, Crypto Solutions, Embedded Systems, Energy Systems, Engineering Solutions, RF and Microwaves, MMICs, SoCs, Sonar Systems, Super Components, Navigation and Stabilisation, etc.

The Development and Engineering (D&E) divisions, operating at all the Strategic Business Units (SBUs) and Units, liaison with end customers for understanding their requirements, map them to technical specifications and develop products/solutions incorporating the core technology modules developed through the other tiers,

i.e. CRLs and PDIC/CoEs.

The D&E of Software SBU, at Bangalore, addresses all requirements related to software modules either directly to the customers or through respective D&Es of SBUs/ Units. In addition, Software Development Centres (SDCs) have been established at Visakhapatnam and New Delhi. A new Software Development Centre is being established at Indore. The Software SBU is supported ably by the CRL scientists at Bengaluru & Ghaziabad.

In BEL, the challenges are further being addressed through planned R&D initiatives, systems engineering, technology training for R&D manpower, data driven obsolescence management and by leveraging expertise through suitable collaborative R&D partners and Subject Matter Experts (SMEs).

To overcome the challenge of lock-in to proprietary technologies, in feasible areas, the Company develops technology modules / solutions based on alternate technologies and standard protocols with modular designs which can be evaluated using standard test and measuring instruments. Even when Technology Modules / Products / Solutions are Built to Specifications (tailor- made for the Defence forces), they are developed with standard interfaces so that they can be used as plug and play modules in larger systems to ensure modularity and scalability. This safeguards against the single-vendor / proprietary lock-in situations and ensures that the products / systems developed are easily maintainable.

Further, wherever a subsystem or a component is procured, multiple sources for this subsystem/component are identified to safeguard the Company from getting locked in to a single source. The ever-increasing need for low size, weight, & power is being addressed through the development of a series of miniaturised platforms / products / solutions by optimising processing

performance, packaging and thermal management based on a standards-driven approach. Obsolescence is being addressed through obsolescence management plans, tools & actions, which help identify/create alternate sources and move towards indigenisation.

R&D Initiatives and Achievements

BEL has been vigorously pursuing IPR related activities year after year. Concerted efforts put in have resulted in the grant of 72 IPRs including 51 patents during FY 202526. Some of the key Granted patents are:

• X-Band Up-Down Converter

• Dual Channel Radio Frequency (RF) Transceiver Architecture and Method for Cognitive Radio Communication

• Design Framework for Radar Target Tracking

• Automatic Health Monitoring for Phase Control Module (PCM)

• Temperature Sensitive Laser Based Photo Reflective Sensor and Compensation Method Thereof

• Enhanced Software-Defined Network (SDN) Controller for Ad-Hoc Networks

• A Ku-Band Self-Interference Cancellation Circuit for Simultaneous Transmit and Receive Systems and Method Thereof

• High Gain Cavity Enclosed Slotted Waveguide Antenna

• Improved Graphical User Interface Widgets

• Spherical Apparatus

• A Method for Single Object Tracking in the Presence of Same Profile of Multiple Objects

• Robust Automatic Method for Radar to ESM Association using Remote ESM

• A Switching Driver Circuit for High Power Radio Frequency Switches

• Calibration of Active Phased Array Antenna in a Radar System

As on 31 March 2026, the cumulative IPRs filed by BEL are 1,502 (including 844 filed Patents) and granted/ registered with 917 IPRs (including 344 granted patens).

R&D/D&E scientists/engineers have presented and published 101 papers in reputed Seminars /Journals/ Conferences in the year 2025-26.

BEL has empanelled 37 new Collaborative R&D partners in the year 2025-26. As on 31 March 2026, cumulative Collaborative R&D partners empanelled are 396 (including 211 MSMEs). The partners are categorised under R&D Solution Providers: 42, Design Service Providers: 264, Consultants: 44 and Production Service Providers: 46, of which 12 partners are empanelled under two categories.

BEL supported and participated in many Conferences during the year 2025-26, including:

a. Advanced Design & Manufacturing of Aerospace Systems for Bharat by AeSI HMA-HAL Bangalore

b. Emerging Microelectronics & Interconnect Technologies 2026, jointly by BEL & IMAPS at BAE

c. Society for Microwaves, Antennas, and Radar Technologies (SMART) by LRDE, DRDO at Bangalore

d. MAPCON 2025 by IEEE MTT-S: IEEE Microwave Conference at Grand Hyatt Bolgatty, Kochi, Kerala

e. SACAD 2025 by IISE at IIT Hyderabad

f. Super Computing India (SCI 2025) by C-DAC at Manipal Institute of Technology, Bangalore

g. NavIC - the Game Changer 2025, jointly at IIT Tirupati

h. INDOCRYPT 2025 by SETS at IIIT Bhubaneswar, Odisha

i. DRDO-Industry-Academia Conclave DIAC-2026 at New Delhi

j. Emerging Trends in Vacuum Electronic Devices (VEDA-2025) by MTRDC, DRDO & BEL at BAE, BEL

k. Shaastra 2026 by & at IIT Madras

l. Surya Drona Tech 2025 by Central Command & SIDM at Dehradun

m. Computer Vision, Graphic and Image Processing (ICVGIP 2025) by ISSE at IIT Hyderabad

n. IEEE-ANTS by IEEE AP-S at IIIT, Delhi

o. Kshitij 2026 by & at IIT Kharagpur

p. India Mobile Congress 25 by DoT at New Delhi

q. OJASS-2026 by & at NIT Jamshedpur

r. AI in Defence & Aerospace 2026, jointly by BEL & Globals at BAE

Some of the new initiatives undertaken by BEL in technology/R&D areas are:

a. AI Policy - 2026: For Defence & Civil Applications

b. Revised R&D Awards Scheme

c. Marketing - R&D Summit

d. Conferences with DRDO & Industry: VEDA-2026, Silicon Sovereignty - EMIT 2026 & AI Summit

e. Indigenisation Cell at PDIC

f. iDEX-DIO framework

g. DRISHTI Challenges: DPSU Corporate Innovation

h. Established Incubation Centres AARIC (Army) & INICAI (Navy)

i. Formation of Centres of Excellence in AI

(e) Diversification / Expansion Plans:

As a diversification strategy, the Company has been exploring opportunities in allied defence and nondefence areas for growth, leveraging its strengths & capabilities acquired in the defence electronics domain and capitalising on the conducive policy environment encouraging indigenous solutions. During the past 5 years the non-defence segment on an average has contributed about 10-15% to the companys turnover. This year, the company has achieved about 93% of turnover from non-defence segment. The company aims to achieve growth and sustain the revenues from the non-defence business in the coming years to about 20% of companys turnover.

The Company has been putting continuous efforts and focus to enter and address several new areas in both defence & non-defence for further expanding its business in new markets for sustainable growth. Some of the areas being focused upon in defence include: Next Generation Indigenous Missile Systems, RF Seekers, Imaging InfraRed (IIR) Seekers, Arms & Ammunition including Precision Guided Munitions, Smart Weapons, Missile Electronics, Unmanned Systems, Airborne Radars, Navigation Receivers, Next Gen Image Intensifiers and Thermal Imaging Solutions for Night Vision Devices, Indian Regional Navigation Satellite System (IRNSS) based solutions, Directed Energy Weapons, Countermeasure Systems for Air Platforms, Avionics & EW Suite for next generation Aircraft/Helicopters, Software as a Service, Network & Cyber Security, etc.

Some of the areas being focused in the non-defence include: Solutions for Civil Aviation sector, including Air Traffic Flow Management Solutions, Advance Ground Control Surface Movement Radar, Air Surveillance Radar, Monopulse Secondary Surveillance Radar, Voice Communication Control System, Space/Satellite Electronics, Satellite Communication Services, Railway and Metro Solutions, Software as a Service, Cyber Security Solutions, Homeland Security Businesses, etc.

BEL has successfully diversified into Electronic Ammunition Fuzes, Missile Seekers, Homeland Security, Network & Cyber Security, Rail & Metro Solutions, Energy Storage Products, Medical Electronics, Digital Transformation Solutions, Satellite Assembly & Integration, etc.

BEL is also having bigger and more business opportunities on account of GoIs initiatives such as Aatmanirbhar Bharat, Positive Indigenisation Lists, Make-II projects, Preference to Make in India, Export Promotion Schemes etc.

BEL also continuously strives to expand its business by capturing new customers in the existing geographical markets as well as new geographies for its proven products, systems & solutions. BEL has ventured into new business models like Government-owned Company Operated (GOCO), OPEX Model, etc. (e.g. Class Room Jammers, Software as a service, etc.) to expand its business by capturing new customer segments. BEL is striving to exploit its dual-use technologies (e.g. SDR, Satcom solutions, Cyber security solutions, Software solutions, etc.) for expanding the market as well as customisation of its products/solutions to meet the new customer segments/geographical areas, especially in the export markets.

BEL is leveraging on its new International Marketing offices to expand the reach of its products & services to the new markets and also explore offset opportunities. BEL is also forging partnerships with other PSUs/industry players for quickly expanding the geo spatial reach through resource sharing.

Considering the present order book and expected growth of BEL due to continuous demand of defence equipment across the globe and growth of non-defence electronics applications complimented by significant opportunities, a dedicated Supply Chain Management (SCM) vertical setup at corporate level has started its function effectively aimed at streamlining policies and procedures for strengthening BELs supply chain

network, bring in best practices and contribute to improved operational effectiveness and overall project management for timely execution.

(f) Specific Measures on Risk Management, Cost Reduction and Indigenisation:

1. Risk Management:

Your company has an established Enterprise Risk Management (ERM) deployed across the company, covering all business units and functional areas. ERM is also deployed in the newly formed strategic business units. The deployment of ERM is based on the Risk Management (RM) Policy of the Company, approved by the Board, and the recommendation of the Risk Management Committee (RMC) of the Board.

The Risk Management Policy is reviewed and revised periodically, taking into account the changes in the external business environment and internal business organisation structure. Risks related to the new business and diversification areas are also identified, and appropriate mitigation measures are being deployed.

The Risk Management Policy outlines the risk management structure, scope and objectives, areas of risks, roles and responsibilities of risk management committees at various levels, roles and functions of risk champions and other concerned personnel in the company in respect of ERM implementation.

The Risk Management framework of the Company has a three-tier structure, with the Board of Directors through RMC at the Apex level; Corporate Risk Management Committee (CRMC) at the Corporate level and Unit Risk Management Committees (URMCs) at the Strategic Business Units (SBUs)/Units/R&D centres, etc.

A comprehensive framework for risk identification, evaluation, prioritisation and mitigation of various risks associated with different areas such as technology, market, product, cyber security, Environmental Social and Governance (ESG), operations, finance, human resources, etc. are also defined in the policy.

Based on the analysis of the risks reported by the URMCs, risks which have potential impact across the company and necessitate the expert advice and direction of the RMC are identified by the CRMC in various areas like technology, marketing, operations, finance, cyber security, HR, ESG, etc. Based on the review by the RMC and its recommendations these risks are addressed by introducing suitable mitigation measures including policy and/or business process improvements, as required.

The implementation of mitigation measures is further reviewed by the RMC for compliance and the implementation status is reported to the Board.

Risks which may have significant impact on the operations of the company or wherever deemed necessary, are reported to RMC. The RMC reviews the risks and recommends to the Board for further deliberations and approval of mitigation measures. The RMC also gives necessary directions, from time to time for effective ERM implementation in the company.

2. Cost Reduction:

In the competitive business environment with the Government focus on Atma-Nirbhar Bharat (Self Reliance), Cost Competitiveness has become a key differentiator in the market. BEL has adopted cost reduction as one of the thrust areas in its business processes. "Cost Reduction" Task Forces are set up in all the Units/SBUs with members from Cross Functional Areas (Design, sourcing, quality, manufacturing, etc). The Task Forces identify and take up projects and set targets for achieving cost reduction with focus on both manufacturing & non-manufacturing areas and encompass all facets of business. Guidelines for Cost Reduction are modified from time to time to cater to the business requirements across the company.

3. Indigenisation:

Developing indigenous technologies and leveraging strategic partnerships has become essential amidst the rapidly evolving technological landscape. BEL ensures its position as a market leader by embracing innovation across the entire value chain. The cornerstone of BELs innovation and technological advancement is its robust R&D competencies and decades of accumulated knowledge across a wide spectrum. This enables breakthrough innovations, positioning BEL as a frontrunner in defence indigenisation, and also contributes towards exports. BELs dedicated team of skilled professionals ensure we meet global customer requirements, maintain a competitive edge and contribute to sustainable success.

BEL continued its thrust on Indigenisation and Make in India in a significant way throughout the year. A Separate Indigenisation Cell has been formed under the chairmanship of Director (R&D). The Indigenisation cell drives the indigenisation efforts across the company in line with the Gols Atmanirbhar Bharat mission.

Towards strengthening Indian vendor base including MSMEs, BEL organised MSME conclaves and participated

in Vendor development programmes across the country at various events organised by Industry associations and Ministry bodies. During the year 2025-26, around 20 Vendor development programmes have been conducted by BEL. Opportunities for indigenisation of various types of items and methods of participating in the indigenisation programmes, support extended by BEL in this regard are highlighted during the conclaves.

Some of the major Indigenisation achievements during the year include Indigenisation of Vertical Launching Unit (VLU) for LRSAM, MSEOP for NAMICA, Network Accelerator for QRSAM, SCA Compliant waveforms for Radios, High gain flat panel arrays for MFCR, Airborne Electro Optical Surveillance System (AESS), Curved Combiner HUD, IR Jammer, 2.4m Ku Band Antenna with De-icing, WDTE CC, DMR secure Handheld and IMM Radio etc.

(B) Internal Control System and its Adequacy:

BEL has a robust system of internal controls in place. It has documented policies and procedures on Purchase, Sub-contract, Works contract, Accounting, HR, IT and Security, Sub-delegation of Powers, etc. covering all financial and operating functions, and revised in tune with the changing times. These controls have been designed to provide a reasonable assurance with regard to maintaining of proper accounting controls for ensuring reliability of financial reporting, monitoring of operations, and protecting assets from unauthorised use or losses, compliance with regulations, etc. BEL has implemented File Life Cycle Management System (FLM) for online processing and approvals of procurement and other proposals, which facilitates complete transparency, accountability, protection and security of the information/ files. Elaborate guidelines for preparation of accounts are followed consistently for compliance with Indian Accounting Standards (Ind AS) and the Companies Act, 2013.

BEL has implemented company-wide ERP system (SAP) with centralised deployment. Governance Risks and Compliance (GRC) Access Control module has been implemented as the primary means of addressing user access risks by embedding preventive rule based checks while assigning authorisations to business transactions.

Authorisations to users are given based on principles of Segregation of Duties and Least Privilege. Risk rules have been configured in the system in several business processes like Finance, Procure to Pay, Order to Cash, Material Management, HR and Payrolls. Risk analysis is regularly done to ensure that processes are under

control. Additional control in the form of biometric fingerprint authentication for critical transactions is also in place. Audit logs for all changes in roles and authorisations are maintained.

BEL has its own Internal Audit Department commensurate with the size and nature of its operations, with teams of professionally qualified personnel who conduct regular and comprehensive internal audits to ensure that all checks and internal control systems are in place. Services of external professional audit firms are being utilised to carry out 100% vouching of vendor payments (including travel/medical claims reimbursements) in nine Units, BEL Corporate Office, CRL Bangalore Complex, CRL Ghaziabad and PDIC during 2025-26. The Company has sub-committee of the Board viz. Audit Committee (AC) to keep a close watch on compliance with Internal Control Systems. Also, being a Government Company, BEL is subject to Audit by Comptroller & Auditor General of India (C&AG).

The BEL Internal Audit Manual outlines the internal audit process in line with the changes that are taking place in the business world with respect to the business process, statutory compliances and the expectations of the stakeholders. It addresses the areas relevant to the auditors information and knowledge for conducting the audit in a meaningful way. Internal Audit Manual serves as a professional guide for the conduct of audit and to improve the professional approach for an effective internal audit function.

BELs Internal Audit checks the adequacy and effectiveness of the internal control system through regular audits, system reviews, process reviews, data analytics, etc. and provides assurance on compliance with the legal and regulatory requirements, internal policies and procedures of the Company. The state-of- the-art Data Analytical Tool is also being used in Internal Audit for data analytics for identification of outliers.

Internal Audit issues reports to the Auditees and after considering the Auditees replies / action taken reports, IA Centres submit reports of significant issues observed during audit to the Head of Internal Audit on a periodical basis. Head of Internal Audit submits his/ her reports to the Companys Management at various levels for corrective actions and submits report to the Audit Committee of Board indicating the status

of compliance with well-established internal control systems of the Company and a plan for mitigating the key risks associated with major activities of the Company.

BELs Internal Audit teams are located at major manufacturing units and Corporate Office of the Company which carry out audits as per risk-based Annual Audit Programme approved by the Audit Committee of the Board. The Audit Committee of the Board of Directors, comprising Independent Directors, regularly reviews the significant audit findings, adequacy of internal controls, and compliance with accounting standards and policies from time to time and issues directives for compliance to further strengthen the internal control system keeping in view the dynamic environment in which the Company is operating.

The Company continues its efforts to align all its processes and controls with global best practices, to assure the highest level of Corporate Governance.

(C) Financial/Operational Performance:

(1) Strategy & Objectives:

The main objectives of the financing strategy of your Company are to generate adequate internal resources for profitable growth, to give value for money and create wealth for shareholders, to maintain the highest credit rating and to build in risk mitigation strategies in the business processes to minimise exposure to financial risks.

(2) Performance Highlights:

( in Lakh)

Particulars	31 March 2026	31 March 2025
Revenue from Operations	27,47,963	23,65,801
Earnings before Interest, Tax, Depreciation and Amortisation (ebitda)	8,01,530	6,76,759
EBITDA Margin (EBITDA/Revenue from operations [Net])	29.17%	28.61%
Profit After Tax	6,04,848	5,28,825
No. of Days Inventory/Value of Production	135	139
No. of Days Trade Receivables/ Turnover	176	144
Current Ratio	1.97	1.76
Debt Equity Ratio	-	-

(3) Analysis of Financial Performance of FY 202526:

• Turnover registered a growth of 15.88% from 23,02,410 Lakhs in 2024-25 to 26,67,958 Lakhs in 2025-26.

• Value of Production has increased from 23,83,493 Lakhs in 2024-25 to 27,25,432 Lakhs in 2025-26, an increase of 14.35%

• 14.38% increase in Profit After Tax, from 5,28,825 Lakhs in 2024-25 to 6,04,848 Lakhs in 2025-26.

• Decrease of PAT to Turnover Ratio from 22.97% in 2024-25 to 22.67% in 2025-26.

• Turnover per Employee has increased from 260.34 Lakhs in 2024-25 to 283.22 Lakhs in 2025-26.

• Earnings Per Share has increased from 7.23 in 2024-25 to 8.27 in 2025-26.

• Book Value Per Share has increased from 26.95 in 2024-25 to 32.42 in 2025-26.

• Net Worth has increased from 19,69,768 Lakhs in 2024-25 to 23,69,756 Lakhs in 2025-26.

• Return on Net Worth has decreased from 26.85% in 2024-25 to 25.52% in 2025-26. The main reason for decrease is due to increase in other expenses and decrease in other income.

(D) Corporate Social Responsibility:

Bharat Electronics Limited remains committed to its Corporate Social Responsibility and undertakes the CSR activities that benefit the rural and marginalised sections of the society. The key CSR interventions are in the sectors of Health care, Education, Skill Development, Rural Development & Environment Sustainability. The total prescribed CSR expenditure for FY 2025-26 is 10,778.79 Lakhs. During FY 202526, Health care related projects were taken up with a budget of 6,665.88 Lakhs augmenting the health care infrastructure in rural and remote areas with state-of- the-art medical equipment. Other sectors addressed during FY 2025-26 are Education, Skill Development, Environment Sustainability and Rural Development.

BELs CSR interventions reflect its commitment to uplift the underprivileged part of the society, contributing to its overall development thus creating a value for its stakeholders.

(E) Development in Human Resources:

Strategic Impact & Outreach for FY 2025-26

At BEL, continuous learning is positioned as a strategic lever to build a future-ready workforce. Leveraging internal expertise, industry professionals, and premier academic partnerships, HRD initiatives are aligned to three core priorities: leadership capability building, technological advancement, and quality excellence.

During FY 2025-26, BEL recorded 80,611 training mandays (up from 76,941), with an investment of 9.83 Crore and a per capita average of 8.55 mandays. Over 180 programmes were delivered across Leadership, Technology, and Quality domains, reinforcing a strong culture of continuous capability development.

Institutional capacity building is anchored through:

i. BEL Academy for Excellence (BAE) - for Executives

ii. Abhyudaya Centre for Learning (ACL) - for NonExecutives

An Annual Capacity Building Plan (ACBP) ensures structured and need-based learning interventions across levels.

A. BEL Academy for Excellence (BAE) & Corporate HRD

(i) Leadership & Management Development

Leadership programmes focussed on building strategic, agile, and future-ready leaders across levels:

• MDPs & Leadership Workshops: Covering strategic thinking, business acumen, financial management, and executive presence.

• Competency Enhancement Programs: Emphasising emotional intelligence, change management, risk management, and conflict resolution.

• Functional Excellence: Specialised programs in Supply Chain, Finance, HR, Marketing, and crossfunctional capabilities.

• Women Leadership Initiatives: Strengthening women leadership pipeline through focussed programmes on executive presence and decisionmaking.

• Executive Coaching: Initiative for General Managers to enhance leadership effectiveness and personal impact.

• Innovation Programs: Promoting design thinking, lateral thinking, and innovation leadership.

• Well-being Initiatives: Covering stress management, mindfulness, and retirement planning.

• Structured Induction: Ensuring alignment of new recruits (Probationary Engineers /Probationary Officers) with organisational values, work ethics, business processes, standards and overall culture.

(ii) Technology Enhancement

Focussed on strengthening core and emerging

technology capabilities:

• Short-Term Technical Programs: Covering key technology areas such as Radars, RF systems, Communication, Electronic Warfare, and Advanced Simulation Tools.

• Workshops & Seminars: On AI/ML, IoT, FPGA Technologies, and Advanced Engineering processes.

• M.Tech. Programs: In collaboration with premier institutes (IIT-Madras, DIAT-Pune) to build deep- domain expertise.

• AI/ML Certification: One-year certification

program in collaboration with 11 Sc to drive digital transformation.

• Global Certifications: Certifications such as CCNA, CISSP to strengthen information security and risk management.

(iii) Quality & Operational Excellence

Strengthening quality systems and process excellence:

• Global Certifications: CQE, CRE, PMP and other international credentials.

• Lean Six Sigma & DFSS: Driving data-based problem solving and process improvement.

• Standards & Audit Readiness: Training on ISO and aerospace standards.

• Industry 5.0 Readiness: Focus on TPM, operations excellence, and innovation in manufacturing.

• Data Analytics: Building analytical capabilities for decision-making and process control.

B. Abhyudaya Centre for Learning (ACL)

• Technical & Functional Capability Building: Programmes covered core electronics, mechanical systems, manufacturing techniques, and

digital tools (SAP, MS Office), along with crossfunctional awareness.

• Behavioural Development: Focussed on team effectiveness, communication, emotional intelligence, and transition to supervisory roles.

• Quality Improvement: Training on quality tools, lean methodologies, and productivity enhancement to drive operational excellence.

• Certifications & Standards: IPC certifications and training on global standards to ensure high- reliability manufacturing.

• Compliance, Safety & Ethics: Mandatory

programmes on POSH, cyber security, vigilance, safety, and workplace ethics to reinforce governance.

• Holistic Development: Wellness initiatives, stress management, and financial planning programmes, including pre-retirement support.

• Induction Programmes: Structured on-boarding of Non-Executives for cultural integration and organisational alignment.

C. Major Highlights of the Year in Learning & Development

• Entered into an MoU with IIM Kozhikode to launch Professional Post-Graduate Diploma programmes in Supply Chain Management, Marketing Management, and General Management.

• Nominated six executives to the one-year Executive PG Diploma in Management (EPGDPM) by IIM Visakhapatnam (hybrid mode) to strengthen strategic, operational, and leadership capabilities.

• Nominated General Managers to the DAKSH Leadership Development Program (Capacity Building Commission & SCOPE) to build a robust pipeline for Board-level leadership roles.

• Introduced Holistic Assessment Centre with psychometric evaluation for senior executives (E-VI to E-VII), enhancing the rigor and effectiveness of potential assessment.

• Rolled out micro-learning modules on compliance aligned with the BRSR framework and NGRBC guidelines, with mandatory completion and assessment for all employees.

• Sponsored 500 executives for the Harvard Manage Mentor (HMM) program (SCOPE & Harvard Business School Publishing), comprising 42 modules across Leading Self, Leading Teams, and Leading Business.

• Expanded cross-learning initiatives through programs on "Use of Artificial Intelligence" and "Industry 4.0" for officers from DPSUs and representatives from DGAQA.

• BEL Academy for Excellence (BAE) became the first PSU to get accreditation under the Capacity Building Commissions National Standards for Civil Services Training Institutions (NSCSTI) framework with a rating of "Very Good" (3-Star).

• Organised the maiden Project Management Conference in FY 2025-26 to promote and recognise excellence in project management practices.

• Launched the revised Functional Competency Dictionary, aligned to evolving business needs and technological advancements, to strengthen capability development across functional areas

Bengaluru 1 August 2026

For and on behalf of the Board

Manoj Jain

Chairman & Managing Director