bharat heavy electricals ltd share price Directors report

Dear Members,

The Board of Directors has pleasure in presenting the 58th Annual Report on the business and operations of your Company and the Audited Financial Statements for the year ended March 31, 2022.

Financial Results

(Rs. Crore)

For the year ended

March 31, 2022 March 31, 2021
Revenue 20153 16296
Revenue from operations 21211 17308
Profit/(loss) after tax 410 (2717)
Total comprehensive income / (loss) 487 (2697)
EPS (in Rs.) 1.18 (7.80)

Note: Figures in () represent negative values.

State of Company Affairs

Sustained efforts made by the company over the past two years towards Project Centric operations, business diversification, and prudent financial management, have started yielding results. The company has made a profit after tax of 410 Crore (PY loss of 2,717 Crore), after two consecutive loss years. This marks the initial successes in resolving numerous legacy issues faced by the company in addition to the challenges posed by a declining thermal market and a volatile business scenario.

The Revenue of the company increased by approx. 24% to 20,153 Crore as compared to 16,296 Crore in the previous year, largely on the back of sustained improvement in execution even in the face of the devastating second wave of COVID-19 at the beginning of FY 2021-22. The reorientation of the companys operational ideology, from being Revenue Centric to Project Centric, resulted in the highest erection tonnage at project sites in the past five years, highest ever project closures and lowest number of outstanding punch points.

The companys efforts at expanding its coal business as well as diversification into non-coal business have started bearing fruits with the maiden order booked for flexible operation of thermal power plant (huge requirement in future years for grid stabilization considering the increasing integration/ share of renewables in the energy mix), signing of highest ever 8 nos. of long term spares supply as well as service agreements, highest ever order booking in nuclear power business of more than 12,000 Crore, highest ever order booking of 1,552 Crore in defence & aerospace business (previous year 239 Crores), and maiden order for propulsion equipment for Vande Bharat trainsets. The company also established a firm foothold in the upcoming coal gasification area with inauguration of the countrys first Coal to Methanol demonstration plant based on in-house technology for gasification of high ash Indian coal, which is being pursued as a major business area in the years to come.

Economic and Environmental Challenges

The year was severely impacted by supply chain disruptions emanating from COVID-19 restrictions, even from neighboring countries, as well as from recent geopolitical developments. This directly impacted the bottom lines of Indian manufacturing companies, besides causing operational challenges in arranging man and material, especially in first two quarters of the year. Your companys continued and concerted efforts on project execution at project sites as well as shop floors, enabled BHEL to overcome these operational challenges.

During the year, global prices of various commodities increased drastically (particularly Steel, CRGO, CRNGO, amongst others) which impacted margins significantly. Supply chain disruptions created severe issues affecting timely availability of critical raw material for shop production. Global shortage of critical inputs viz., Semiconductor Chips, CRGO and CRNGO also impacted BHELs product deliveries. The cost of erection activities, including civil construction, also witnessed an upswing during the year.

Overcoming these hurdles, your company achieved a 23% increase in Revenue from Operations in FY 2021-22 vis-a-vis the previous year. The focused efforts on project execution have significantly contributed to the improvement in the financial performance. Project performance data on many fronts showed up as the best in the last five years, including erection of more than 4.5 lakh tonnes of steel, highest ever project closures and lowest ever number of outstanding punch points.

A significant cost reduction drive within the company led to reduction in the manufacturing, administrative and sales & distribution (S&D) expenses to less than 7% of revenues from a level of more than 9% last year. Targeted focus on improving other operational income also contributed significantly to the bottom line. It is pertinent to mention that the company has achieved the highest Other Operational Income of 1,058 Crore.

Overall, the company achieved an EBITDA of 1,106 Crore despite significant pressure on margins due to sharp spike in metal prices and increase in fuel costs. Profit After Tax for FY 2021-22 stands at 410 Crore. The companys focus on improving its quality of assets, specifically receivables, in the balance sheet over the last two years resulted in lowering the provision cost for FY 2021-22, which has also contributed to the improved bottom line of the company. Positive efforts made in the taxation area helped the company receive Income Tax refunds totaling 667 Crore, which significantly contributed to net cash generation.

Traditionally, with higher revenues, the company has seen higher investments in working capital. In FY 2021-22, there is a working capital release of 586 Crore, despite revenues increasing by about 24%. Overall, there is net positive cash generation of 660 Crore from operations, as against 560 Crore last year. The Company had cash & bank balances (net of short term borrowings) of 2,409 Crore, as at the end of FY 2021-22, which is 29% higher than the balance of 1,868 Crore at the end of FY 2020-21.

The total receivables are at 33,169 Crore, which are only marginally higher than Mar21 levels (31,292 Crore), despite annual revenues rising by 24%. The trade receivables are at their lowest in the last 10 years, at 6,229 Crore, (previous year 7,213 Crore). Though contract assets are marginally higher, however, with better pace of project executions, which should aid achievement of intermediate milestones, the contract assets should also tend towards lower trajectories.

The Company secured Orders worth 23,693 Crore in FY 2021-22. This comprises orders worth 17,931 Crore in the Power Sector*, 5,660 Crore in the Industry Sector* and 102 Crore in International Operations. The Order Book outstanding at the end of 31st March 2022 was 1,02,542 Crore against 1,02,090 Crore as on 31st March 2021. The Order book figures are inclusive of applicable taxes.

Transfer to Reserve

The company has not transferred any amount to the Reserves during FY 2021-22.


The Board of Directors, in its meeting held on May 21, 2022 has recommended a final dividend @20% (0.40 per share of 2 each), amounting to 139.28 Crore, out of profit for FY 2021-22, subject to your approval.

The Company has a dividend distribution policy in place in pursuance of the requirements of Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("LODR"). Dividend distribution policy is available on the Companys website at https:// policy-bhel-0


The Company has not accepted deposits from the public falling within the ambit of Section 73 of the Companies Act, 2013 during FY 2021-22.

Capital & Finance

During FY 2021-22, the company has met its CAPEX and operating fund requirements through internal accruals. The company invests any available surplus funds to maximise the interest income to the company. To meet any intermittent operational fund requirement, short term borrowing options used by the company include WCDL, Commercial Papers (listed on NSE and BSE), PCFC, etc. PCFC borrowings provide a natural forex hedge to the company. Prudent treasury management led to the closing cash & bank balance (net of short term borrowings) rising by 29% in the current financial year as compared to the previous period. The company continues to retain its status as Zero Debt Company.

Loans and Investments

Details of loans and investments covered under the provisions of Section 186 of the Companies Act, 2013 form part of financial statement. Loan of 3 Crore towards working capital given during 2015-16 to M/s BHEL EML, BHELs subsidiary company, already provided for impairment, has been written off this year consequent to transfer of our full stake to the Govt. of Kerala. There are no instances of investments by the loanee in the company or its subsidiary.

Credit Rating

The credit ratings of your Company are as follows:

Rating Agency Date of Rating Long Term Rating Outlook Short Term Rating
24-07-2020 CRISIL AA Negative CRISIL A1+
CRISIL 18-06-2021 CRISIL AA- Negative CRISIL A1+
INDIA 06-07-2020 Ind AA Negative Ind A1+
RATINGS & RESEARCH 01-07-2021 Ind AA- Negative Ind A1+
27-06-2020 CARE AA Stable CARE A1+
CARE 24-06-2021 CARE AA- Stable CARE A1+

N.B. The above ratings have been reaffirmed by M/s CARE & M/s India Ratings & Research in the month of June 22 and M/s CRISIL in the month of July 22.

During FY 2021-22, the Company has worked relentlessly towards improving key performance indicators to strengthen its financial position and has been able to turn around after two years in a persistently challenging business environment.

The Company is continuously taking firm measures to cut down expenses, so as to improve the bottom-line which is also helping in cash conservation.

Cash release from working capital, lowest current ratio in last ten years, and improved quality of assets in the balance sheet are testament to the success of the companys overall treasury management strategies.

Material Changes and Commitments affecting the Financial Position

There are no material changes and commitments affecting the financial position of the Company between the end of the FY 2021-22 and the date of this report. 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.

Suspension of Trading

The Equity Shares of the company are listed on NSE & BSE. The shares of the Company were not suspended from trading during the FY 2021-22.

Directors Responsibility Statement

Pursuant to section 134(5) of the Companies Act, 2013, the Board of Directors confirm that:

a) In the preparation of the Annual Accounts, the applicable Accounting Standards (Ind AS) have been followed along with proper explanations relating to material departures;

b) The Directors have selected such accounting policies & applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of financial year and of the profit of the Company for that period;

c) The Directors have taken proper and sufficient care for maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) The Directors have prepared the Annual Accounts on a going concern basis;

e) The Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and operating effectively;

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

Management Discussion & Analysis

This report conveys the Managements perspective on the external environment, companys strategy for the future, operating and financial performance, risks and concerns, and various initiatives taken in various areas such as diversification of business areas, revamping project execution, cost optimization, digitalization, quality, and development of futuristic technologies etc., during FY 2021-22.

In the midst of a continuously challenging business and economic environment, your company has continued to focus on regaining growth. Strengthening the core business, focus on execution, and determined efforts towards increasing business in non-coal areas are critical enablers for sustainable growth. For further details, please refer Annexure-I to the Boards report.

Aatma Nirbhar Bharat

To capitalize on the opportunities arising out of Honble Prime Ministers vision of an AatmaNirbhar Bharat, BHEL has undetaken several "Make in India" initiatives. Technology leadership and self-sufficiency in its areas of operations is a major focus for the company.

The Government of Indias National Coal Gasification Mission, which aims at gasification of 100 Million Tonnes of coal by 2030 provides a new opportunity for cleaner use of coal for indigenous manufacturing of many chemicals such as methanol, ammonia, ammonium nitrate, etc. BHEL has been a pioneer in the coal gasification in the country since the 1990s. In September 2021, a 0.25 TPD Coal to Methanol plant at Hyderabad funded by DST was successfully commissioned. The complete technology for this project has been developed by BHELs R&D engineers. Earlier experience in gasification, coupled with the latest R&D efforts has helped BHEL in developing a completely indigenous commercial level gasification technology for handling high ash Indian coals. Your company is targeting this upcoming business avenue in a major way and is working to collaborate with other PSUs as well, to achieve Aatmanirbharta in manufacturing of many chemicals which presently are largely imported.

The Advanced Ultra Supercritical Technology (AUSC), indigenously developed by BHEL along with NTPC and IGCAR, is another promising technology advancement to establish energy security for our country. Many of the aging and comparatively inefficient power generating units can be replaced with AUSC sets, which will also help the environment with substantially reduced atmospheric emissions.

Your company is indigenously developing numerous equipment hitherto being imported such as valves and turbine blades used in power plants, boiler water feed pump for nuclear application, Flue Gas Desulphurization components, amongst others. Developmental orders have also been received for some products like Surface Unit of Sucker Rod Pump, 15000 psi Well Head and X-MAS Tree Valves, etc.

Concerted efforts towards indigenization resulted in highest ever order booking in Defence & Aerospace and Nuclear sectors as well as maiden order for underslung propulsion for Vande Bharat train sets. More than 21% of the companys revenue has been achieved from in-house developed products, systems and services.



BHELs efforts continued on multiple levels to respond to challenges of COVID-19 since the first wave, for its own employees, stakeholders as well as society at large. When the devastating second wave of COVID-19 hit the country in April 2021, TEAM BHEL responded with all resources at its command for taking care of its people as well as supplementing national efforts. This interalia included:

• Within BHEL, detailed SOPs duly incorporating Government directives were put in place and strict implementation of the same was ensured. Conducted regular fumigation, sanitization, etc., at factories, offices, townships and nearby areas and facilitated Work from Home to control the spread of COVID-19

• Augmented hospital infrastructure within units/ townships and support groups were formed for taking care of employees and their families at units as well as project sites

• Assisted national efforts with all its resources for dealing with the acute shortage of oxygen for saving precious lives. The manufacturing and piping facilities at various plants were quickly converted into oxygen cylinder filling facilities with BHEL Haridwar and Bhopal units supporting almost the entire Uttarakhand, western UP, parts of NCR as well as city of Bhopal during the critical time. Over 80,000 cylinders (~5,75,000 cubic meters) of medical oxygen were filled and supplied and many emergency situations responded to, resulting in saving of countless lives

• Revived 40-year-old oxygen plant at HPEP Hyderabad (shut down for more than 10 years), for supplying oxygen for medical use

• Developed prototype for oxygen generating plant of 500 LPM (based CSIR-IIP, Dehradun technology) in a record time of 40 days, from signing of Transfer of Technology, and delivered the first order within 35 days from receipt of the order

• Set-up vaccination centers across the manufacturing units, project sites as well as corporate office/ service centers to ensure vaccination of not just its employees, but also their family members, labours deployed by contractors and the society at large (more than 1,30,000 doses administered)

• BHEL vaccination efforts continued not just within the country but also at overseas project site at Maitree, Bangladesh, by taking special permission from government for export of vaccines from India

Despite all efforts to minimize the impact of COVID-19 on the employees and their families, the company lost 155 employees due to the pandemic. The Directors of your company deeply regret this loss and are grateful to each and every employee and his/her family for putting in efforts to fight this pandemic. Continuing with the ethos of being a caring company, an Assistance Scheme has been launched for providing monetary, housing and medical assistance to the dependents of employees who succumbed to COVID-19

Corporate Governance

Pursuant to Regulation 34 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, a report on Corporate Governance (including Board & Committee Meetings details) is given at Annexure-II to the Board Report together with the following,

(i) Certificate of Non-Disqualification of Directors under Schedule V of the SEBI Listing Regulations.

(ii) Auditors certificate on Corporate Governance under SEBI Listing Regulations & Department of Public Enterprises (DPE) guidelines on Corporate Governance.

(iii) Secretarial Audit Report under Section 204 (1) of the Companies Act, 2013.

Declaration of Independence

Declaration under Section 149(6) of the Companies Act, 2013 pertaining to criteria of independence has been given by the Independent Directors to the Board of Directors. All the Independent Directors have registered themselves on the online database of the Indian Institute of Corporate Affairs (IICA), notified under Section 150 of the Companies Act, 2013.

Shri Raj Kamal Bindal and Shri Manish Kapoor have qualified the online proficiency self-assessment test conducted by IICA, while Shri Raj K. Agarwal is exempted from the said test (exemption certificate received from IICA). In the opinion of the Board, the Independent Directors possess integrity and necessary expertise and experience.


In addition to focus on many other areas, the company continuously reviews and strengthens its compliance of systems and processes.

• The Company considers sound Corporate Governance as one of its core values committing itself to maintaining high degree of transparency in disclosures.

• To strengthen compliance mechanism across various laws, a quarterly legal compliance report on the Applicable laws/ Acts is reviewed by the Board of Directors.

• Being a listed company, compliance with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is ensured. There is no adverse comment from SEBI for the FY 2021-22 on any financial matter.

• The Company has complied with the applicable secretarial standards.

• For preparation of financial statements, the company ensures compliance to the Indian Accounting Standards (Ind AS), Guidance Notes and other authoritative literature issued by the ICAI, Companies Act, 2013 and other applicable statutes. The quality of financial reporting and disclosures have also been recognized by the Institute of Chartered Accountants of India

The company endeavours to constantly improve its disclosures and transparency standards in the Financial Statements.

Contribution to the Exchequer

The Company, over the years, has been consistently making significant contribution to the Exchequer, and maintaining high standards of integrity with respect to tax compliances. During the current year, the Companys contribution to exchequer stood at over 3,050 Crore.

The company has also received a Certificate of appreciation from Ministry of Finance, Government of India, for the second year in succession, for sizeable contribution in cash, prompt filing of return and timely payment of Goods and Services Tax to Government (in respect of multiple states), thereby contributing in building a strong and resilient nation.

Audit Committee

The Company has in place a Board Level Audit Committee in terms of the requirements of the Companies Act, 2013 read with rules made thereunder and Regulation 18 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015, the details in respect of which are given in the Corporate Governance Report. All the issues are fairly and transparently deliberated in the meetings which are held at regular intervals. The views and suggestions of the Board Level Audit Committee members are taken into account and imbibed into the Companys processes. Further, there has been no instance where the Board of Directors have not accepted the recommendations of the Board Level Audit Committee.

Details of changes in Directors & Key Managerial Personnel


Dr. Raj K. Agarwal, Dr. K. Sivaprasad and Dr. Lekhasri Samantsinghar have been appointed as Part-time NonOfficial (Independent) Directors w.e.f. November 9, 2021.

Shri Upinder Singh Matharu has been appointed as Whole Time (Functional) Director w.e.f. March 21, 2022 and has taken charge as Director (Power).

Shri Vijay Mittal, Joint Secretary, Ministry of Heavy Industries, has been appointed as Part-time Official Director w.e.f. March 25, 2022.

Shri Jai Prakash Srivastava has been appointed as the Whole Time (Functional) Director w.e.f. August 12, 2022 and has taken charge as Director (Engineering, R&D).

In line with Regulation 17 (1C) of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 and Article 67(iv) of the Articles of Association of the Company, Shri Upinder Singh Matharu and Shri Vijay Mittal who were appointed as additional directors to hold directorship upto the next general meeting or within a time period of three months, whichever is earlier, were appointed as Directors by the shareholders of the Company on June 15, 2022, through postal ballot.

In accordance with applicable statutory provisions and Article 67(iv) of the Articles of Association of the Company, Dr. Raj K. Agarwal, Dr. K. Sivaprasad, Dr. Lekhasri Samantsinghar and Shri Jai Prakash Srivastava having been appointed as additional directors, shall hold directorship upto the 58th Annual General Meeting of the Company and are eligible for appointment as Directors at the Meeting.

Further, pursuant to Section 152 of the Companies Act, 2013 and Article 67(i) of the Articles of Association of the Company, Ms. Renuka Gera and Shri Subodh Gupta will retire by rotation at the Annual General Meeting and being eligible, offers themselves for re-appointment.


Shri Anil Kapoor, who was appointed as Director (HR) on October 15, 2019, ceased to be a Director of the Company on attaining the age of superannuation on January 31, 2022.

Shri Rajesh Sharma, who was appointed as Part-time Nonofficial (Independent) Director on February 20, 2019, ceased to be a Director of the Company on completion of his tenure on February 13, 2022.

Shri Jeetendra Singh, Joint Secretary, Ministry of Heavy Industries, who was appointed as Part-time Official Director on June 18, 2021, ceased to be Part-time Official Director on March 25, 2022.

Shri Aditya Prasad Sahu, who was appointed as Part-time NonOfficial (Independent) Director w.e.f. December 29, 2021, ceased to be a Director of the Company consequent to his resignation on May 30, 2022 from BHELs Board of Directors. Shri Sahu tendered his resignation as he was contesting the Rajya Sabha Elections from Jharkhand. Further, he also confirmed that there are no other reasons other than those provided by him for resignation.

The Board of Directors place on record their deep appreciation for the valuable services rendered as well as advice and guidance provided by S/Shri Anil Kapoor, Rajesh Sharma, Jeetendra Singh and Aditya Prasad Sahu during their respective tenures.

In compliance with Regulation 36(3) of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, brief resume of the Directors proposed for appointment and re-appointment along with the nature of their expertise in specific functional areas and names of companies in which the person holds directorship along with the membership of the Committees of the Board are given in the explanatory statement/ annexure to the Notice.

CEO/CFO Certificate

CEO/CFO certificate as per Regulation 17(8) of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 is placed at Annexure- III to the Boards Report. Consolidated Financial Statements

The brief on consolidated financial statements prepared pursuant to section 129 (3) of the Companies Act, 2013 and Regulation 34 of the SEBI (Listing Obligations & Disclosure Requirement) Regulations 2015, is given in para 1.5.4 under Management Discussion & Analysis.

Sustainable Development

Sustainability is a continuous journey ingrained in our business processes & activities, and is evident from our mission statement - Providing sustainable business solutions in the fields of Energy, Industry & Infrastructure.

Sustainable development at BHEL addresses the three pillars of sustainability, namely, Environmental, Economic and Social. With a vision to create a responsible and sustainable organization, BHEL strives towards the integration of environment, health, social equity and economic vitality within the organization and beyond. The manifestation of this vision is evident in our approach towards development of greener products, increased renewable energy generation, efficient water management, enhanced green cover, optimization of usage of natural resources and improved energy efficiency and conservation.

The brief of some of these activities are given in Annexure-IV to the Boards Report.

Business Responsibility and Sustainability Report

In line with the requirement of the listing regulations, Business Responsibility and Sustainability Report describing the initiatives taken by the company from environmental, social and governance perspectives is enclosed at Annexure-V to the Boards Report.

Achievements of R & D and Technological Development

BHEL has a robust innovation and R&D framework in place to address the challenging technological environment, both in existing business areas and emerging technology areas. R&D expenditure of the company for FY 2021-22 was approx. 700 Crores, approx. 3.5% of revenue. This includes expenditure incurred on R&D efforts made at manufacturing units for modifications and improvements in products and designs against customer requirements, apart from other R&D projects. The company filed 516 patent and copyrights applications during the year, enhancing the companys intellectual capital to more than 5000. These in-house developed products, systems and services have significantly contributed to the companys yearly revenue.

Further details have been provided in Annexure-VI to the Boards Report.

Implementation of Official Language

Official Language Implementation Committees are constituted in all the Units/Divisions to give impetus to the implementation of Official Language in BHEL. Quarterly meetings are being held regularly in all units/divisions including Corporate Office. To further accelerate the pace of Official Language implementation in the Company, more than 100 Rajbhasha Chakras were formed across the Company. Various activities / programmes were organized during the year for effective implementation of Official Language. The company has received many Rajbhasha Awards for its excellent efforts towards implementation of Official Language. Further details have been provided in Annexure-VIII to the Boards Report

Vigil Mechanism

Transparency, fairness and objectivity form the basis for all decision making processes for the company.

The Company has in place a full-fledged Vigil Mechanism consisting of Vigilance Department, Internal Audit, Whistleblower Policy mechanism, Independent External Monitor(s), as well as Board Level Audit Committee.

The Vigilance function of BHEL is headed by Chief Vigilance Officer (CVO) who acts as an extended arm of Central Vigilance Commission (CVC) in the Company. All units & divisions of BHEL have a Vigilance set-up headed by a Senior Officer reporting to the CVO.

Preventive Vigilance has been the focus area of BHEL as proactive vigilance is better to reduce the chances of corruption. The main objective is to progressively reduce ambiguity and discretion in the process by plugging the loopholes in the system, thereby making decision making process more and more objective & transparent and also reducing the scope for engaging in malpractices. The audit reports (internal, statutory and CAG reports) relating to BHEL are regularly scrutinized so as to determine whether there is any vigilance angle involved in respect of the irregularities brought out in such reports.

A panel of two Independent External Monitors (IEMs) is in place to oversee implementation of Integrity Pact and address any concerns related to the same.

The company encourages reporting of unfair and unethical practices and has a Whistle-blower Policy mechanism which provides adequate safeguard against victimization to the complainant.

The Board Level Audit Committee reviews the functioning of the Whistle Blower/ Vigil mechanism and annual review of the Vigilance function is also done by the Board of Directors. Further details have been provided in Annexure-VIII to the Boards Report.

Health, Safety & Environment (HSE)

BHEL focusses on developing sustainable practices for ensuring the safety & health of its workforce as well as protecting the planet from various environmental impacts of its operations. We believe that good health, safety and environmental performance will result in long-term benefits, in terms of enhanced customer loyalty, valuable partnerships & collaborations and sustainable development.

BHEL, in its pursuit of achieving the highest levels of Occupational, Health & Safety and Environmental performance, has its manufacturing units and Power Sector regions certified under Occupational Health and Safety Certification (ISO 45001:2018) and Environmental Management Systems Certification (ISO 14001:2015). To enhance regular compliance, internal audits of manufacturing units and project sites are also carried out by a team of HSE experts within the organisation.

Further details are provided in Annexure-VIII to the Boards Report.

Data and Cyber Security

BHEL deploys multi-layered protection with state-of-the- art features for its IT assets and data. Security tools with centralized controls cover all IT assets from the perimeter to end user devices. Cyber Security Operations Centre (C-SOC) integrated with Global Threat Intelligence is in place to monitor all incoming / outgoing Internet traffic. Timely action in compliance to cyber security advisories from various government agencies is ensured.

Your company believes in educating and training not only the IT experts, but also employees to help protect BHEL against cybercrimes, including social-engineering attacks. User awareness and sensitization is continuously ensured through interventions like simulation exercises, training programmes, and communications across the company.

The overarching initiative in the field of information security in BHEL is the implementation of the Information Security Management System (ISMS) since 2005 to ensure the Confidentiality, Integrity and Availability of its information systems. Auditors from the Standardisation, Testing and Quality Certification (STQC) Directorate, an organization under the Ministry of Electronics and Information Technology, Government of India, audit the information security infrastructure of the organization and certifies for ISO 27001:2013 periodically. In 2021-22, BHEL has successfully integrated 23 different ISMS certificates awarded to different BHEL units into a single ISMS Certificate for the entire organisation.

The Covid-19 pandemic and the consequent lockdowns required employees to Work from Home which added a new dimension to the cyber threat landscape. BHEL adapted quickly to the changed scenario to ensure security of the entire gamut of IT operations. The learnings from the process have helped further strengthening of BHELs cyber security profile.

Other disclosures

Information in accordance with the provisions of Section 134(3)(m) of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 regarding conservation of energy, technology absorption and foreign exchange earnings and outgo is given at Annexure-VII to the Boards Report.

As per provisions of section 197 of the Companies Act, 2013 read with the Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, every listed company is required to disclose the details of the remuneration of the Directors etc. in the Board report. However as per Notification No. GSR 463(E) dated June 5, 2015 issued by the Ministry of Corporate Affairs, Government Companies are exempted from complying with provisions of section 197 of the Companies Act, 2013. BHEL being a Government Company, such particulars are not included as part of Boards Report.

Statement pursuant to Section 129 of the Companies Act, 2013 (Form AOC-1) relating to subsidiary companies & joint ventures and Form AOC-2 pursuant to section 134(3)(h) of the Companies Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014 is given at Annexure-IX to the Boards Report.


The Statutory Auditors of your Company are appointed by the Comptroller and Auditor General of India. Three firms of statutory auditors were appointed as joint statutory auditors and four firms were appointed as branch auditors. The names of audit firms appointed for FY 2021-22 are given separately in the Annual Report.

Auditors Report on the Accounts

The Auditors Report on Standalone and Consolidated Financial Statements for FY 2021-22 of the Company are given at Annexure- X to the Boards Report. There is no qualification in the Auditors report on the Financial Statements of the Company. During FY 2021-22, there has not been any fraud reported by the Auditors of the company. The Supplementary Audit report under section 143(6) read with section 129(4) of the Companies Act, 2013 issued by the Comptroller & Auditor General of India also forms part of Annexure-X.

Secretarial Audit

In terms of section 204(1) of the Companies Act, 2013, the Company engaged M/s Agarwal S. & Associates, Company Secretaries in whole-time practice, as Secretarial Auditors for conducting Secretarial Audit for FY 2021-22 and their report forms part of Corporate Governance section.

Secretarial Auditor in their Audit report have observed noncompliance in composition of the Board of Directors as per Regulation 17 (1) (a) & (b) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Para 3.1.4 of the DPE Guidelines on Corporate Governance during the period from 01.04.2021 to 08.11.2021, as the Company did not have requisite number of independent directors (including at least one independent woman director) on its Board.

The Management noted the observation and explained that BHEL, being a Government Company, the independent directors are appointed by Government of India. The Company was in constant communication for the appointment of requisite number of independent directors (including at least one independent woman director) on its Board. Pursuant to the appointment of three independent directors (including one independent woman director), the Company has complied with the provisions of the applicable SEBI Listing Regulations and DPE Guidelines w.e.f. 09.11.2021.

Cost Auditors

In terms of provisions of Section 148 of the Companies Act, 2013 and as per the Companies (Cost Records and Audit) Rules, 2014 and amendments thereof, the Board, on the recommendation of the Audit Committee, approved the appointment of seven firms of Cost Accountants as Cost Auditors for auditing the cost accounts of your Company for FY 2021-22. Cost accounts and records as specified by the Central Government under sub-section (1) of section 148 of the Companies Act, 2013 have been properly maintained and complied with.

The detail of cost auditors appointed for FY 2021-22 are given separately in the Annual Report. The Cost Audit Report for FY 2020-21 has been filed under XBRL mode on August 27, 2021, well within the due date of filing and there was no qualification in the cost audit report.

Appreciation and Acknowledgement

Your Directors gratefully acknowledge with deep sense of appreciation, the co-operation and guidance received from Government of India, particularly the Ministry of Heavy Industries in various spheres of Companys operations and strategic initiatives.

We are deeply appreciative of and thankful to Ministry of Power, Ministry of Railways, Ministry of Coal, Ministry of Finance and statutory authorities/ departments of the Government of India for their valuable support and continuous cooperation.

The Directors place on record their sincere appreciation towards the Companys valued customers in India and abroad for their co-operation in addressing various issues faced in complex long gestation construction contracts, especially during COVID times.

The Directors also express their gratitude to the Comptroller and Auditor General of India, professional bodies, Statutory Auditors, Branch Auditors, Secretarial Auditor and Cost Auditors for their constructive suggestions and continuous cooperation. The Directors place on record their sincere appreciation towards the Companys esteemed shareholders for the support and confidence reposed by them in the management of the Company and look forward to the continuance of this mutually supportive relationship in future.

The Directors also wish to place on record their appreciation for the continued cooperation received from all the technology collaborators, suppliers and contractors. The support provided by the financial institutions, bankers and stock exchanges are also acknowledged and appreciated.

Last but not the least, your Directors wish to place on record their sincere appreciation for the diligent efforts, hard work and commitment put in by all BHEL employees, who have worked day and night, in these trying times, to meet the companys commitments.

For and on behalf of the Board of Directors of
Dr. Nalin Shinghal
Chairman & Managing Director
Place: New Delhi
Dated: 04.09.2022