bharat heavy electricals ltd share price Management discussions


MANAGEMENT DISCUSSION AND ANALYSIS

1.1 Economic & Business Overview

Indias economic activity is on the recovery path since the subsidence of the second wave of COVID-19, with GDP growth of 8.7% during FY 2021-22. Sustained demand from both private and government as well as improved industrial production activity has helped the economic recovery.

The pandemic induced lockdowns have caused massive disruptions in global supply chains, especially from neighboring countries. Geo-political instability has further aggravated the supply chain disruptions across industries, leading to unprecedented rise in raw material and crude oil prices. To combat the slowdown induced by the pandemic, most of the central banks infused liquidity, adding to inflationary pressure across economies. All these factors have impacted the profitability of manufacturing companies.

Electricity demand has picked up in the past year with increased economic activity and Governments push for domestic manufacturing. Power deficit in the recent months has led central as well as state utilities to expedite the process of setting up new coal based power plants—mainstay of Indian power sector—in the short and medium term. In the long run, the ongoing energy transition coupled with the countrys commitments to combat climate change, is expected to affect the demand for thermal power plants.

During the past few years, the tendering for coal based power plants has remained muted, while business activity in hydro and nuclear segment has improved. Demand for emission control equipment continued to be steady from both central as well as state sectors. Under these market conditions, BHEL maintained its leadership position by winning the highest ever orders in nuclear sector, and prominent orders in the hydro sector and emission control equipment segment. Going forward order pipeline for thermal sector is expected to improve along with increased ordering in hydro and nuclear segment to assist GoIs push for manufacturing and AatmaNirbhar Bharat.

In transportation segment, Indian Railways continue to move ahead with initiatives to decarbonize its operation and upgrade & modernize the infrastructure. Along with the Mumbai-Ahmedabad High-Speed Rail (HSR) corridor, country is now progressing for seven more HSR corridors. Several new opportunities in Urban transportation are coming up including semi high-speed trains like Vande Bharat (Trainsets), high HP locomotives for freight hauling, Metrolite, amongst others.

The ongoing geo-political situation has given renewed impetus to the domestic Defence & Aerospace business and the Government is endeavoring to meet defence needs through Make in India and AatmaNirbhar Bharat initiatives. New opportunities for indigenous Defence technology platforms and products are emerging for domestic manufacturing entities.

Many industries in the core sectors of economy are firming up their capacity expansion plans, presenting good business prospects in these areas.

There is renewed focus on clean coal technologies for the utilization of Indias vast coal reserves. Under the National Coal Gasification Mission, the Government has identified projects for cleaner use of coal to produce syngas which can be converted into a number of chemicals. This impetus on Coal-to-Chemical business based on indigenous technology will open opportunities for commercialization of coal gasification, especially for companies which can gasify high ash Indian coal.

1.2 Opportunities &Threats

The ongoing challenges have at the same time brought multiple opportunities for the Indian industry. The pandemic resulted in many global companies exploring manufacturing bases outside China. India being one of the major markets and a potent destination, many elements of the supply chains are expected to be relocated to India. Also, current geopolitical events have highlighted the importance of self-reliance, especially in strategic sectors like Defence and Energy which can provide good business opportunities to Indian manufacturing companies. The ongoing energy transition as well as AatmaNirbhar Bharat Abhiyaan are also expected to present opportunities in new areas such as Coal to Chemicals,Hydrogen economy value chain, etc., besides opportunities in traditional areas of solar, hydro, coal and nuclear segments.

Prolonged Russia-Ukraine crisis or emergence of any other destabilizing geo-political event will lead to continued increase in input material and crude oil prices, and will negatively impact profitability of Indian Industries. Continued high inflation may impact capital support for planned and upcoming infrastructure projects. Lastly, resurgence of COVID in form of another wave or any other pandemic can also not be ruled out.

Team BHEL continues to strive to make all efforts to grasp the upcoming opportunities that the challenges are throwing up, with the firm belief that the trying circumstances bring out the best in us.

1.3 Business initiatives

1.3.1 Retaining leadership in Traditional Business

BHEL continues to assert leadership in its core business areas and is well placed to capitalize opportunities arising in thermal segment.

BHELs focus on nuclear and hydro sectors has resulted in strong order booking in these areas. During 2021-22, BHEL received major orders in nuclear segment including largest ever order for EPC of Turbine Island package for 6x700 MWe Pressurized Heavy Water Reactors and first ever order for supply of Reactor Header Assemblies as well as for Steam Generators from NPCIL under the fleet mode. BHEL continued its dominance in Hydro Segment, winning key orders for Electro mechanical works and Renovation, Modernization & Upgradation, among others.

Company maintained its leadership in domestic emission control business with a portfolio of 66 flue gas desulphurisation sets & 11 selective catalytic reduction sets. Focusing on execution of these projects, companys first FGD plant at Dadri was successfully commissioned during the year.

BHEL is now looking forward to capitalize on the opportunities arising in thermal sector by offering AUSC technology having best-in-class efficiency, lower rating supercritical plants and indigenously developed clean coal technologies such as coal gasification and is working towards process development for synthesis of chemicals from coal. Additionally, the company is providing comprehensive solutions for emission control and is expanding current offerings in Nuclear segment. Spares & Services business is a major focus area with revamp of the business model, which would be more responsive to customer requirements as well as cater to BHEL and non- BHEL sets. Efforts are also underway to expand the range of IT enabled/ IoT based services offered by the company in this segment. Your company is also working with customers for signing long term spares supply as well as service agreements, which will provide quick availability of spares and services to customers as well as larger market share and regular revenues for BHEL. BHEL is also offering customized solutions for flexible operation of power plants considering the increasing integration/ share of renewables in the energy mix. With concerted efforts, maiden order for Flexible operations study has been received during the year, opening up newer avenues for providing engineering services.

1.3.2 Diversification initiatives

The company is well on its way to transform itself from primarily a Thermal Power Equipment& EPC Company to an Engineering Company covering a wide spectrum of products & services for various sectors of the economy. Resolute focus on growth in Rail transportation, Defence, Aerospace, Oil & Gas sectors has resulted in addressing a range of opportunities as well as expansion of companys role and presence in these sectors. A range of new products, systems and solutions including urban mobility, new defence programs, ISRO related opportunities, LSTK opportunities in oil & gas business, energy storage solutions, among others, are being developed as new drivers of growth. Efforts are also underway to enter into strategic partnerships with Global OEMs, to leverage the upcoming opportunities in these areas.

BHEL received its first order for supply of 3-phase IGBT based propulsion systems for Vande Bharat Express Trains from ICF Chennai, marking its entry into domestic semi high-speed mobility segment. BHEL is geared to address the upcoming opportunities in rail transportation, especially the upcoming requirements of semi high speed trainsets as well as higher rating electric locomotives.

Strong focus on defence and aerospace business in the recent years resulted in highest order booking for the segment. This includes order for Upgraded SRGM, the main gun on Indian warships, for which BHEL is the sole supplier; and strategic equipment/ engineering orders from Ministry of Defence, amongst others.

Implementation of cross cutting enablers for these adjacent business areas, including resource augmentation, enabling organization structure, forging partnerships, technology development, among others is a key focus area.

1.4 Operational excellence

1.4.1 Revamping Project Execution

Your companys change in operational ideology from being Revenue Centric to Project Centric has led to successful closure of long pending projects, resolution of performance issues, arresting continuous project delays, reduction in damages & rework for material/ equipment lying at sites for long periods and improving quality of material/ equipment available for Erection & Commissioning. As a result of this, the past year saw the highest ever liquidation of current year billing (86% in FY 2021-22). Successful implementation of Integrated Project Management System (IPMS) coupled with ongoing work on Site Data Digitization (SDD) has enabled real time monitoring of project progress as well as quick intervention in case of issues. All these efforts has also resulted in savings due to reduction in project timelines. During the year despite COVID related impediments, work continued uninterrupted at site largely due to the various initiatives taken by your company such as vaccination drives for labour deployed by contractors, channelizing sufficient liquidity to vendors at site, etc.

1.4.2 Cost Optimization

With a view to control the rapidly rising input costs as well as to maintain competitiveness, a "Cost Optimisation Cell" had been formed in the company in February 2021. The group focused on review and optimization of design of various projects & products, review of system/ civil designs to reduce cost during execution, amongst other initiatives. These efforts helped your company to cushion the abnormal rise in raw material costs during the year.

The group is focusing on extensive use of latest design techniques as well as use of advanced softwares such as advanced 3D Structural analysis for offering optimum designs to our valued customers. Make or Buy decision, utilization of surplus materials, smart project execution, timely closure of project sites and efficient energy management & assets utilisation are some other focus areas which are expected to bring long term sustained cost benefits.

1.4.3 Receivables Management

Maintaining liquidity and improvement in cash position of the company continues to be a top priority. Concerted efforts on quality billing and resolution of long standing issues with customers resulted in reduction of Trade Receivables to 6,229 crore in FY 2021-22, lowest in the last ten years as against 7,213 crore in FY 2020-21.

However, some of the major projects under execution by the Company have skewed payment terms in the form of supply payments partly getting linked to achievement of intermediary milestones, increased proportion of payments linked to completion activities etc., resulting in increase in contract assets.

Despite above, the Company has been making efforts to liquidate the old as well as current year outstanding in a timely manner. The outcome of these efforts is visible in the form of improvement of liquidation of Current Year billing to 86% in FY 2021-22 as against 82% in FY 2020-21.

Focus on realizing old debts through closure of punch points, completion of performance guarantee tests as well as settlement of long pending time extension cases are helping garner cash from commissioned projects.

1.4.4 Quality focus

The Quality First initiative launched earlier, has been implemented in mission mode across the entire organization, and has started yielding results. Initiatives have been taken for enhancing Quality system maturity as per "Quality 360" model, reviving Business Excellence journey as per EFQM2020, revitalizing Quality Health through "QHI (Quality Health Index)", digitization of Quality systems, best practices sharing through Quality Conversation "Qonverse" and rigorous preinstallation inspections. As a result, HEEP Haridwar and HEP Bhopal received coveted Platinum recognition while HPBP Trichy and HPEP Hyderabad received Gold Plus recognition under "CII EXIM Bank award for Business Excellence 2021". Further details are included in Section 1.11.

1.4.5 Digital Transformation

BHEL continues on its journey to become an IT enabled organization to improve operational efficiencies and provide state-of-the-art customer centric solutions to enhance customer satisfaction. Integrated Project Management System (IPMS) for real time monitoring of projects has been successfully implemented for the major projects under execution by the company. This coupled with the ongoing work for Site Data Digitisation for capturing data directly from sites will further strengthen companys ideology of being Project Centric and is transforming the decades old methodology for project monitoring.

For manufacturing units, centralized data centres as well as data warehousing solutions are being implemented. As part of companys commitments to handle technological challenges, several skill enhancement programs have been incorporated in key areas like Artificial Intelligence, Machine Learning, Internet of Things, Industry 4.0, and Augmented and Virtual Reality.

1.5 Employee Development & Engagement

Success of any organization is due to its dedicated and motivated workforce. In line with its ethos of being an employee centric organization, your company has been continuously revamping its policies and implementing structural changes for ensuing continual employee development. During the year, the Performance Management System has been comprehensively reviewed and revamped to link individual performance with the performance of the Company/ Unit. Several initiatives including focus on manpower development for reskilling the workforce (executives, supervisors as well as workers) in this dynamic business environment, leadership development, strengthening of internal communication, development of e-Modules for continual online training, strengthening processes for knowledge sharing, etc. have been implement. Further details are included in Section 1.12.

1.6 Technology development

Technology development is an integral part of growth in core areas and new businesses. BHELs technology focus in growth areas including clean coal, transportation, defence, aerospace, energy storage, and emerging technologies will yield results in the years to come.

Your company has indigenously developed coal gasification technology suitable for high-ash Indian coal and has recently commissioned indigenously designed 0.25 TPD coal to methanol pilot plant using 1.2 TPD Fluidized bed gasifier plant at Hyderabad.

BHEL is also working towards development of critical technologies in the areas of underslung propulsion for trains, high speed locomotives, urban mobility solutions, strategic equipment for defence applications, fuel cell technology for green power generation, PERC solar cells, electric vehicle chargers, electrolyser for hydrogen generation, etc. Indigenization initiatives are also being implemented for critical components like propulsion equipment for higher rating locomotives, Heat Exchangers for fighter aircrafts & helicopters, blast furnace components in steel sector, and FGD components, amongst others. Ethernet based communication system has also been developed and installed in MEMU by BHEL for the first time in the country, enabling deployment of futuristic technologies requiring high bandwidth connectivity throughout the train.

Dedicated business group has been constituted to explore new areas, design suitable business models, support development of indigenous technology, build partnerships and provide research support to government for effective policy making in these relatively nascent areas.

Multiple such initiatives are laying the foundation for achieving long term growth.

1.7 Profile and Performance of Business Segments

The company has two business segments i.e. Power & Industry. These segments are driven by the three business sectors i.e. Power Sector, Industry sector, International Operations.

The Power segment comprises thermal, gas, hydro and nuclear power plant businesses, spares & services business apart from new businesses of coal to chemicals, emission control equipment and spares for Non-BHEL sets. BHEL has been in this business for more than five decades, having commissioned its first coal-based set in 1969.

The Industry segment caters to major equipment supplies and EPC works for a variety of sectors including transportation, transmission, defence & aerospace, captive power, renewables, downstream oil & gas, energy storage, and electric mobility, among others.

Profile & Performance of Business Segments

POWER SECTOR

1.7.1 Power Sector Overview

India aims to continue on its strong economic growth journey, and the AatmaNirbhar Bharat Abhiyaan along with large scale infrastructure development will play pivotal role in creating the base for the same. The nations energy sector growth continues to remain strongly correlated with the economic growth of the country. Accordingly, availability of reliable and quality energy for all at affordable rates becomes vital for sustained economic growth. India currently possesses an installed capacity base of ~399 GW and has an annual electricity generation of ~1,492 Billion Units (BUs) (as on 31st March 2022). The country has witnessed a capacity addition of approximately ~4.9 GW from conventional sources in the year mainly from thermal power plants (TPPs). On the other hand, the capacity addition from Renewable Energy Sources (excl. Hydro) was ~15.5 GW in the year, with solar power capacity addition contributing ~13.9 GW to it. This is a testament of the marked shift in countrys policies towards supply of greener electricity.

Current Business Environment

The Power Sector is in the midst of a major energy transition, with growing international focus on sustainable development for climate change mitigation. India has also made major commitments towards decarbonisation in COP 26, in the form of the five elements for climate change mitigation, the Panchamrit. At the same time, the nation is balancing these requirements of sustainable development with those of economic development. There has been a significant focus on industrial development and infrastructure creation, making capacity addition in power sector imperative.

As a result of various issues faced by the Power Sector, significantly muted ordering levels have been witnessed in the past few years, with ordering of only ~16.3 GW (average ~3.3 GW p.a.) taking place across the conventional power sector in 2017-22, including ordering for only ~8.3 GW in thermal segment as against projections of ~46 GW.

The lower ordering in the thermal power segment (less than 20% of projections), the core part of BHEL operations resulted in underutilization of manufacturing capacity, and impacted the revenue generation adversely.

Despite the challenging market scenario, BHEL has made all-out efforts to maintain its market leadership in the power sector and has secured orders for ~12.2 GW (~75%) out of these limited opportunities in the sector.

Power Sector Ordering (2017-22): 16,320 MW BHEL Ordering (2017-22): 12,180 MW (~75% Market Share)

Recent Government policies have displayed a marked shift towards Renewable Energy Sources (RES) based power. While substantial opportunities are expected to emerge in the Renewables, Hydro and Nuclear segments, coal based power plants are expected to remain the mainstay of Indias power generating capacity in the coming years, in view of their suitability for continuous, round-the-year operation, availability of indigenous technology and the large domestic reserves of coal. In order to meet the demand for power in the future, especially the baseload of the grid, coal based high- efficiency supercritical power plants are expected to play a crucial role. Though the ordering levels in the thermal sector have remained muted in recent years (~1.7 GW annual ordering levels in 2017-22), company is witnessing green shoots in the thermal segment. Consequent to various cost optimization measures and competitive pricing strategy, BHEL is favorably placed in a major tender for an upcoming thermal power plant. There is also a good order pipeline of coal-based power plants which are expected to fructify in the near future.

As a result of the Governments focus on lower emissions from thermal power plants, opportunities are expected to continue from emission control equipment business and Renovation & Modernization (R&M) Business.

Capacity addition of RES based power generating systems also calls for enhancement of hydro-electric capacity, from both conventional (large & small hydro plants) as well as pump storage generating stations, to meet the grid balancing and stabilization requirements necessitated by the inherent variability of RES based power systems. Around 36% of Indias huge hydropower potential of 145 GW has been harnessed till date, with future potential of approx. 93 GW yet to be utilized. The Hydro policy approved by Cabinet in Mar19 is likely to give impetus in medium term to hydropower development. Further, over 30% of Indias hydropower plants have completed 30 - 35 years, providing potential for Renovation & Modernization (R&M) for life extension and performance & efficiency upgrades. Your company is strategically placed to address these upcoming opportunities.

Nuclear power continues to form an essential part of countrys overall power mix and is poised to grow substantially in the future. In addition to the 2x700 MWe project at Gorakhpur Haryana Anu Vidyut Pariyojna (GHAVP 1&2), the government has sanctioned 10x700 MWe Nuclear Power Projects (GHAVP Unit 3&4, Kaiga Unit 5&6, Mahi Banswara and Chutka) in 2017 for installation under the "Fleet Mode" implementation. Major packages for first phase of these Fleet Mode Projects have been finalised by NPCIL. As a result of its endeavours to improve its offerings, including design and cost optimization, BHEL has been able to successfully secure orders for over 12,000 Crore in the last year itself. BHEL maintains the distinction of being the sole Indian supplier for nuclear turbine and generators and is associated with all three stages of the countrys nuclear power program.

Offerings

BHEL is one of the few companies in the world that manufactures & supplies equipment to the entire range of power plants, with proven capabilities for executing thermal, gas, hydro and nuclear power projects.

In thermal power segment, BHEL has the capability from concept to commissioning of thermal power plants, encompassing steam turbines, generators, boilers and associated auxiliaries up to 1,000 MW ratings. The Company has the experience of executing numerous projects with supercritical thermal sets of 660/700/800 MW ratings on EPC basis.

BHEL offers gas turbines and matching generators upto 299 MW (ISO) rating, tailored to meet specific needs, for both open and combined cycle operation. BHEL also supplies and executes Circulating Fluidized Bed Combustion (CFBC) boilers for thermal plants, suitable for wide range of low- calorific fuels like pet-coke, lignite, etc.

In nuclear power segment, BHEL is amongst the few organizations which are associated with all the stages of indigenous nuclear power programme of the country, both on primary and secondary side (220/235/500/540/700MWe). BHELs sets comprise a majority of the PHWRs (Pressurized Heavy Water Reactors) forming the base of Indigenous Indian nuclear power programme. BHELs offerings include equipment in the primary as well as secondary sides of nuclear power plant, such as Steam Generators, Reactor Headers, Turbine Generators Sets, MSRs, Heat Exchangers, Condensers, etc. and EPC of TG Island.

In hydro power segment, BHEL has the capability for engineering, manufacturing, installation and commissioning of custom-made conventional hydro turbines of Kaplan types upto 100 MW, Francis and Pelton types upto 400 MW, custom- made salient pole vertical synchronous hydro generator upto 400 MW, Bulb turbine and generator upto 10 MW, horizontal generator upto 20 MW along with matching static excitation system/Brushless excitation system, Pump turbines upto 250 MW, high capacity pumps for Lift Irrigation Schemes upto 200 MW, fixed speed generator-motor upto 300 MW and turbines for small hydro power plants.

In the emission control equipment business, BHEL offers customized equipment for controlling emissions from thermal power plants and has the capability to provide retrofit solutions of ESP, FGD, NOx control equipment and furnace modification.

The company has proven expertise in plant performance improvement through renovation, modernization and uprating of a variety of power plant equipment, besides specialized know-how of residual life assessment, diagnostics and life extension of plants. Retrofit packages for ESP and C&I with state-of-the-art technologies are also being offered by BHEL.

Achievements during the Year Order Booking

In 2021-22, BHEL has secured orders for 4,700 MW, aggregating to 17,931 Crore, amidst intense competition and a limited pipeline of orders. This includes orders for 2,942 Crore from the Spares and Services Business.*

Significant utility orders received in the year are:

Customer Project(s) Scope
NPCIL GHAVP (Unit 1-4) and Kaiga (Unit 5 & 6) TG Island Pkg on EPC Basis
NPCIL Fleet Mode Procurement for PHWRs Supply of 12 Steam Generators
DVC Panchet R&M Works
NHPC Loktak R&M Works
Prathima Infrastructure Kaleshwaram Project-Link-IV- Pkg-1 Pump-Motor works for LIS Pkg
NTPC Sipat FGD Pkg

*For FY 2021-22, BGGTS orders considered in Industry Sector.

WBPDCL Sagardighi 5 Chimney Pkg
NTPL Tuticorin Chimney Pkg for FGDs
THDCIL Khurja Cooling water System Civil works package
TANGEDCO North Chennai Stage-II Procurement of HP Turbine Module, IP Bladed Rotor & IP Inner Casing
RRVUNL Chhabra ESP Restoration (Pass-A & B) along with civil works

BHEL has taken various steps for improving its competitiveness in the power sector, and as a result, has been able to reaffirm its market leadership in the Indian nuclear power industry. BHEL has bagged its largest-ever nuclear order from Nuclear Power Corporation of India Limited (NPCIL) for 6x700 MW Turbine Island Package Projects under fleet procurement mode, being set up at GHAVP (Unit 1-4) and Kaiga Unit 5&6. With this order, BHEL has retained its market leadership position of being the sole Indian supplier of nuclear steam turbines and generators.

BHEL has also received a major order for supply of 12 Steam Generators for NPCILs 700 MWe Pressurized Heavy Water Reactors (PHWRs) to be installed in fleet mode at various locations within the country.

In the spares and services segment, BHEL has been registered as seller in GeM, which has helped in securing orders from the portal worth 123 Crore during the year (against 14 Crore in FY 2020-21).

Further, BHEL has secured maiden orders for:

• Flexible operation study and services for thermal power project.

• Monitoring the performance of boiler during trial co-firing of biomass (straw) based torrefied pellets.

• Root cause analysis of PCP (Power Cycle Piping)/ hangers vibration issue in turbine area for non-BHEL set.

Such orders showcase the faith reposed by customers on BHELs engineering expertise and capabilities and shall be helpful in opening up newer avenues for engineering services.

BHEL has also taken various initiatives for securing business opportunities through Long Term Spares Supply Agreement (LTSSAs) and Long Term Service Agreement (LTSAs):

• 08 new LTSSA proposals finalized with NTPC (approx. 5000 items) in for the year for spares procurement.

• 1st ever LTSA has been finalized with NTPC for Generator overhauling works. In addition, LTSA finalized with IOCL for major & minor overhauling works of BHEL make equipment installed at various IOCL projects.

Project Execution

Since its inception in 1964, BHEL has added 461 coal based utility sets, 422 hydro utility sets, 103 gas based utility sets and 12 nuclear based utility sets in India upto FY 2021-22. Through its concerted efforts, BHEL achieved a capacity addition/ synchronization of 3,305 MW

** in FY 2021-22 in utility power projects (Capacity Addition: 1,705 MW, Synchronization: 1,600 MW). In addition, capacity addition has been achieved for projects having limited BHEL scope (viz. SG/ESP/PCP), which aggregate to 2,120 MW.

**- 1 Unit of 1x250 MW NSPCL/ Rourkela TPS considered as captive power plant by CEA, hence not considered in Installed capacity of utility power projects.

In the supercritical thermal power segment, BHEL has commissioned 28 Supercritical SGs and 21 Supercritical TGs till March 31, 2022. Achieving a major project execution milestone, BHEL dispatched its 42nd Nuclear Steam Generator, for Rawatbhata Atomic Power Project, from its Trichy manufacturing unit.

Recent focus on resolving long standing customer issues, has started bearing fruit and a number of such issues have been closed/ reaching closure resulting in release of bank guarantees as well as payments linked to such milestones.

With this, BHEL maintained its lions share of 53% in the countrys total installed capacity of Utility power projects:

Performance of Equipment

59.4% of the countrys total generation of 1,078.5 BUs from Coal & Lignite based utility sets has been contributed by BHEL supplied sets.

Among BHEL supplied supercritical sets, Kothagudem-12 achieved highest Plant Load Factor (PLF) of 83.6% and Operating Availability (OA) of 89.1%. Further, BHELs first supercritical unit Barh-4 (660 MW) has clocked around 58,009 hours of operation and achieved PLF of 71.2% and OA of 98.5%. BHEL supplied 38 years old subcritical unit Korba STPS 3 (200 MW) has clocked around 2,98,139 hours of operation and achieved PLF 101.1% and OA of 99.8%. In fact, 7 nos. of more than 38 years old BHEL supplied subcritical units, achieved PLF of more than 90% (Korba STPS 1, 2, 3; Singrauli 1, 2, 4, 5). Two BHEL supplied thermal sets clocked uninterrupted operation for more than 365 days in Korba STPS Unit 3 (418 days) and Vindhyachal 12 (366 days) demonstrating remarkable performance of BHEL supplied sets. In Nuclear Segment, BHEL sets registered OA of 83.3% and five BHEL supplied Nuclear sets achieved PLF of more than 90% and out of these, Tarapur Unit 4 operated at PLF of more than 100%. BHEL supplied nuclear sets clocked uninterrupted operation for more than 365 days in RAPS 4 (643 days) and Kaiga 1 (450 days)

Power plants with BHEL supplied equipment continue to exhibit above par performance in respect of OA, PLF, and outages. BHEL supplied thermal sets generated 6,40,843 MUs in FY 2021-22, ~18% more than previous years generation (5,44,195 MUs).

Performance Guarantee Tests:

During the year, focused approach and coordination have paid rich dividends to BHEL in completion of Performance Guarantee (PG) Tests:

• Completed PG tests of total 75 packages (Power Sector: 43; SSBG R&M: 15; Industry Sector: 15 and HBG: 2), is an increase of 37% vis-a-vis last year. This even includes project commissioned five years back as well as Performance Equipment Test (PET) on highest rating (139 MW) BHEL motor-pump set.

• PG Tests for complete main plant package (Turbine, Boiler, ESP & Mills as applicable) were completed for 11 Units (including R&M).

? PG test on all packages (SG, TG & ESP) of Rayalseema U-6 completed within a short span of 3 days.

Renovation & Modernization (R&M)

During the year, BHEL completed Renovation & Modernization of various projects for ESPs, De-NOx System (Combustion Modification), and C&I Pkgs.

Acknowledgements & Recognition of Excellence

BHELs efforts for providing higher value to customers through timely project completion, improvement in equipment performance and Service After Sales (SAS) support have been appreciated by various customers and other agencies:

Customer Appreciated BHEL for
• Best safety Performance at Nabinagar (660 MW)
• Retrofitting Works of Boiler pressure parts of Barh Unit-5
NTPC • Floating & Set Pressure Setting of Main Steam Safety Valve for Boiler Unit-1 of 660 MW Barh
NTPC and its JVs/ Subsidiaries • Resolving High vibration problem in Turbo Generator and Overhauling of Generator of Rihand Unit- 4
• Completing Overhauling of Turbo Generator at Unchahar U#4
A MAHA MAHAGENCO Outstanding performance in field of Safety at Bhusawal Project
MPPGCL Completion of IPBD work of Unit #5 of Birsinghpur (1x500 MW)
WBPDCL Troubleshooting, which resulted in significant reduction of Hydrogen consumption in Generator at Bakreswar Unit-5

Future perspective

While a pipeline of thermal orders is again becoming visible in the short run on account of emerging energy security issues in recent times, the company is working to strengthen its base through efforts in areas like enhancing EPC capabilities, emission reduction solutions (FGD, SCR systems as well as AUSC technology based power plants), increasing spares and services business including customized solutions for R&M of BHEL and non-BHEL sets, coal to chemicals and carbon capture & its utilization and sequestration technologies.

It has taken proactive steps, as already brought out earlier, for increase in spares and services business through long term (LTSA) agreements with customers, coupled with advance procurement & manufacturing action for faster supply of spares, offering flexiblisation solutions for BHEL and non-BHEL sets for dealing with grid stability issues due to fluctuations in renewable power generation, in-house manufacture of DeNOx (SCR) systems as well as indigenization of several equipment required for flue gas desulphurisation systems.

The Advanced Ultra Super Critical (AUSC) technology developed jointly by BHEL, NTPC and Indira Gandhi Centre for Atomic Research (IGCAR) has a potential to replace old and higher pollution emitting sets of more than 50 GW (thermal power plants which will be at least 30 years old by 2030) with highest efficiency and lowest emissions thermal power plants. This will further aid in the countrys efforts to achieve the Honble Prime Ministers Panchamrit goals.

Given Indias reserves of around 300 billion tonnes of coal and the fact that international technologies are not available for high ash coals, the recent development of indigenous technology by BHEL for gasification of Indian high ash coal is a major step forward and is expected to open up a major business potential for conversion of coal to chemicals. This technology can also be used for greener electricity production through Integrated Coal Gasification Combined Cycle technology.Your company is working to capitalize opportunities in these areas in a time bound and focussed manner.

The usage of coal along with the imperatives of sustainability, will create a huge requirement of technologies for Carbon Capture and its utilisation as well as sequestration. This is another major futuristic area identified by your company, where it aspires to be a leading player.

Ministry of Power has framed a policy for Biomass co-firing in thermal power plants. The first successful demonstration of biomass co-firing at NTPC Dadri thermal power plant by BHEL has been followed by implementation of biomass co-firing at many BHEL supplied boilers. Your company aims to further support the countrys utilities in reducing their green-house emissions through its engineering services and solutions for biomass co-firing.

Nuclear power is likely to play an important role in catering to base loads in the coming decades. Your company has already secured its biggest order worth over 12,000 Crore to supply nuclear steam generators, turbines and generators, reactor headers, etc, for NPCIL projects being implemented in fleet mode. Your company continues to remain the only Indian supplier for nuclear steam turbines and generators as well as associated with the countrys three stage nuclear programme. Your company is executing works at Kudankulam 2x1000 MW Units 3&4, being setup with Russian co-operation and further working with various stakeholders to indigenize and increase its offerings in the sector.

Hydro power will play a key role for management of peak power requirements due to the variability of renewable energy production. BHEL with an experience of over 5 decades in this sector, offers customized solutions of various types and sizes of hydro turbines and generators of upto 400 MW. The company has developed efficient runner profiles and has reduced weights of hydro turbines, which is reflected in recent successes in this segment. With its own NABL accredited hydro lab for developing in-house hydro profiles, BHEL is the undisputed market leader in E&M packages for green field hydro projects and is a lead player for R&M of old hydro sets. Your company is the ideal partner of hydropower producers for achieving an efficient upgradation of turbine profiles (for BHEL as well as non-BHEL make), increasing their lifespan as well as reliability. BHEL is a leading player in large size pump- motors required in Lift Irrigation Scheme projects.

BHELs Electric Utility Installed Base

(Coal, Gas, Nuclear, Diesel & Hydro projects)

Type Sets MW
Coal 461 132130
Gas & CCP 103 7659
Diesel 23 199
Nuclear 12 3340
Hydro 422 21297
Total 1021 164625

MW scale Solar Installations in India

Projects MW
58 990

Accelerating Transportation System to Smarter, Safer & Greener solutions!

BHEL has been a pioneer in the growth journey of Indias transportation sector and has been partnering with Indian Railways to meet their rolling stock requirements through innovative solutions and supply of Made in India systems & equipment.

The first 3-phase Ethernet based AC Mainline Electric Multiple Unit (MEMU) with BHEL manufactured IGBT based electrics has been rolled out from Indian Railways production unit during the year. Indian

Railways has shown confidence on BHELs technical capability and placed prestigious maiden order for electrics of Vande Bharat (Trainsets).

BHEL is preparing to play a major role in the upcoming requirements of Vande Bharat trainsets as well as high HP locos, besides new opportunities like Metro/ Metrolite, Battery Powered Locomotives, High Speed Rail and Signalling.

Profile & Performance of Business Segments

INDUSTRY

SECTOR

1.7.2 Industry Sector

Industry Sector offers a broad range of industrial systems and products for the major sectors of the Indian economy. With focus on growth of non-coal based businesses of the company, Industry Sector comprising of market-focused groups, is offering comprehensive solutions for transportation, defence & aerospace, transmission, renewables, oil & gas, captive power plants, industrial products, energy storage, e-Mobility, and new business areas. During FY 2021-22, Industry Sector* secured orders worth 5,660 Crore as compared to 4,283 Crore in the previous year, in a challenging business environment.

1.7.2.1 Transportation

BHEL has been a key player in the growth journey of Indias rail transportation segment for the last six decades and has been meeting Indian Railways rolling stock requirements by offering innovative solutions and supplying Made in India systems & equipment. Significant numbers of locomotives & EMUs of Indian Railways carry traction equipment manufactured by BHEL.

Indian Railways has embarked on an ambitious modernization plan, which is creating several opportunities in the sector. As a part of this, Indian Railways is projecting a requirement of around 62,000 coaches of various types including MEMU, EMU and Trainsets, 11,000 locos and signaling for approx. 17,000km track length. The total associated expenditure expected in the next 10 years is of the order of 2.8 Lakh Crore. In the urban mobility segment, states are pursuing mass rapid transit projects in cities having a population of over two million and light rail/ monorail solutions are being explored for smaller cities. All these along with metro/ metrolite announcements in 50 cities are expected to offer multiple opportunities in the transportation segment in the years to come.

Current range of offerings

• Rolling Stock

? Complete Electric locomotives up to 6000 HP (electrics upto 9000 HP)

? Diesel-Electric locomotives up to 3000 HP ? Diesel Electric Tower Cars (DETCs)

• Traction Machines

Traction Motors and Alternators

• Traction Drive System & Controls

Insulated-Gate Bipolar Transistor (IGBT) based propulsion systems for rolling stock

Train control management system & vehicle control unit

Hotel load converter and composite converter

Control gear equipment for conventional rolling stock

Regenerative braking system for conventional rolling stock

• Traction Transformers

• Conventional Traction Electrics for Rolling Stock Achievements during the year:

• Mainline Electric Multiple Unit (MEMU) equipped with BHEL manufactured IGBT based electrics has rolled out from RCF Kapurthala. For the first time in India, Ethernet based communication system was developed and installed in this train which enables deployment of futuristic technologies requiring high bandwidth connectivity throughout the train.

• Maiden order received for propulsion electrics of Vande Bharat Express (Trainsets) from ICF, Chennai; marking BHELs entry into Indian semi high-speed mobility segment.

• BHEL manufactured & supplied environment friendly 1350 HP Diesel Electric Shunting Locomotive (DESL) meeting US EPA Tier-II standards to M/s JSW, Dolvi.

• Order received for six 6000 HP Electric Locomotives from NTPC for material handling operations replacing the Diesel Electric Locomotives.

Future perspective

As per National Rail Plan, Railways plans to increase the share in freight transportation from 30% to 45% by year 2030, while also focusing on increasing average speed of goods trains by 50% through introduction of high HP locos. For passenger traffic, it is introducing semi high-speed trainsets to reduce travel time and improve passenger comfort. Indian Railways has already released orders for train electrics for 44 semi high speed trainsets and is going ahead with big-ticket procurement using novel business models for state-of-the- art Vande Bharat trainsets for passenger operations and high HP electric locomotives of 9000 HP/ 12000 HP power capacity for freight duties.

Leveraging its manufacturing experience, technological competence and pan India presence, BHEL is working to develop technology self-sufficiency and strengthen inhouse capability for design & manufacturing of advanced mechanical and electric systems for all types of rolling stock. Your company is also working with OEMs/ collaborators to address upcoming businesses, especially of high HP locos, Metro/Metrolite, Monorail, Maglev, Battery and Alternate Fuel Powered Locomotives, High Speed Rail and Signaling.

1.7.2.2 Transmission

India is the third largest power producer and second largest power consumer in the world. An efficient and reliable Power transmission system is key to the ever increasing demand of a growing nation like India. While there may be transition in the source of electricity generation from fossil fuels to renewables, hydro, nuclear, etc., at the same time, enhancement of transmission sector will play a key role in quality delivery of electricity across the country. Ministry of Power has accordingly planned for scaling up of transmission sector. There is an urgent need for up-gradation of the existing transmission networks and addition of new Extra High Voltage (EHV) systems & associated lines to cater to the evacuation and transmission of power to load centres. Gas Insulated Substation (GIS) projects shall continue to see robust demand due to optimized land requirements and reduced O&M expenditures.

Multiple HVDC projects are in various stages of planning for power evacuation from far flung generation centers.

Current range of offerings

Turnkey transmission solutions including Extra High Voltage Substations (both Air Insulated Substation (AIS) & Gas Insulated Substation (GIS) types) upto 765 kV and High Voltage Direct Current (HVDC) converter stations upto ?800 kV on EPC basis

Power Transformers upto 1200 kV & Shunt reactors

upto 765 kV, Capacitive Voltage Transformers (CVT) upto 1200 kV, Instrument transformers (CT, PT) upto 400kV, traction power transformers, dry type transformers, vacuum switchgear, capacitor banks, control & protection equipment, HVDC Converter Transformers upto 800kV, thyristor valves, etc.

Gas Insulated Switchgear (GIS) upto 420 kV

Insulators

Flexible AC Transmission System (FACTS) Solution:

Fixed Series Compensation for 400 kV lines, Controlled Shunt Reactor (CSR) and Phase Shifting Transformer (PST) for controlling and balancing power flow upto 400 kV applications.

Achievements during the year

• Secured order for supply of 17 Transformers for RUMS (Rewa Ultra Mega Solar).

• Secured order for supply of 33 Transformers and Shunt Reactors from POWERGRID for their multiple RE power evacuation and system strengthening projects.

• Successfully developed and tested On Load Tap changer for 765 kV 500 MVA Auto Transformer.

• Carried out Short Circuit testing of 765 kV 330 MVA Single Ph Generator Transformer at NHPTL, Bina. This is the highest rated 765 kV Generator Transformer which has successfully passed short circuit test, in the world.

• Successfully completed short circuit testing for 500 MVA 400/220/33 kV Auto transformer—Indias highest rated auto transformer

• Successfully carried out short circuit test (SCT) on 42 MVA 220/27 kV traction power transformer for Indian Railways. This would help BHEL in targeting opportunities in higher capacity traction transformers.

• Commercial operation declared for ?800 kV, 6000 MW, Raigarh - Pugalur HVDC Line

Future perspective

In recent years, a sharp increase in the CAPEX related to Transmission equipment & projects (substations and transmission Lines) has been witnessed. Ministry of Power in December 2021, has approved setting up of 23 new Interstate Transmission System (ISTS) projects at an outlay of 115,900 crore.

BHEL has been the front runner in transmission segment through its in-house R&D efforts, developing new products/ systems and making continuous improvement in the existing ones to cater to the varied need of Utilities.

With the renewed focus on digitalization, the company has successfully commissioned a digital substation as a collaborative project with POWERGRID wherein in-house developed products have been deployed. BHEL is now fully geared-up to offer complete EPC solutions in this segment.

With a wide exposure to industrys best practices and intent to serve customers, the company has established itself as a reliable partner and reputed industry player.

1.7.2.3 Defence & Aerospace

Ministry of Defence (MoD) is focusing on Make in India and Aatmanirbhar Bharat Abhiyan in defence which will promote Indian industryin this sector. Defence spending and investments are expected to increase as India fast-tracks its military modernization, especially considering the current geopolitical developments. Release of positive indigenisation lists of defence equipment to be manufactured locally, reflects the growing confidence of the Government in the capabilities of domestic industry.

Over the years, BHEL has upgraded its facilities to cover a wide spectrum of precision manufacturing, heavy forging, special purpose welding and advanced CNC machining activities which will be utilized for indigenous manufacturing of these defence equipment and systems. Most of these complex and special purpose machines and equipment are one of their kind in the country, and comparable to the best available in the world. Your company has also acquired certifications such as Approval of Firm & its Quality Management System (AFQMS), AS9100D & CEMILAC which demonstrates the highest quality standards of the goods and services offered.

Current range of offerings

• Super Rapid Gun Mount (SRGM), including the Upgraded SRGM, the main gun for Indian Navy warships, and its life time product support including overhauling, health audit and training etc.

• IPMS (Integrated Platform Management System)

• Compact Heat Exchangers & Pump modules for aerospace applications

• Equipment & Systems for Strategic Vessels

• Capability for hot forming of Titanium Shell/Domes for spacecraft tanks

• Capability for precision machining & welding of Titanium sheets and tubes.

• Assembly and testing of Space Grade Solar Panels & Batteries of Satellites

• Precision machining of Titanium based Propellant tank parts for Satellites

• Space grade Lithium ion cells.

Achievements during the year

• Received first order for 2 nos. Upgraded SRGM along with accessories - BHEL is the sole supplier in the country

• First ever contract for service life extension cum major overhaul of SRGM from Indian Navy completed within contractual timelines.

• Order for Compact Heat Exchanger for LCA Tejas received from HAL

• Order for Strategic equipment received from Ministry of Defence

• Successfully designed and supplied DC-AC & AC-AC Permanent Magnet based Rotary Frequency Converter.

Future perspective

BHEL has a five-decade long track record of supporting the countrys defence forces which began with the indigenization of main turbines for the Leander class frigates in the 1970s. Since then, significant progress and contribution has been made by BHEL in design and development of a wide range of specialized equipment and systems for Defence applications, including the SRGM for warships, wide variety of equipment for the strategic vessel program, Heat Exchangers for Fighter Aircraft, Integrated Platform Management System for the INS Vikrant- Indigenous Aircraft Carrier, Missile Launchers, Pump Modules for aerospace application, Gun Control System, Antenna Control System, amongst others.

The company is now offering upgraded state-of-the-art SRGM and is also augmenting its capacities in line with the requirement of Indian Navy. BHEL has proven expertise in permanent magnent motor technology and is fully geared up for the indigenous design and development of propulsion systems for vessel and warships. Your company is also offering its experience in Renovation & Modernization and Life Extension services for various equipments to Indian Navy. BHEL is one of the select few firms in the world having the capability to design and manufacture compact heat exchangers and pump modules for military aircraft/ helicopters and is currently developing variety of compact heat exchangers and pump modules. The company is also working in close coordination with customers such as DARE, HAL, ISRO, ADA, etc. for a diverse range of equipment and services for the defence and aerospace sectors.

In the current international scenario, BHEL with its wide range of design, engineering & manufacturing capabilities, is well placed to play a much wider role in indigenization of critical national defence requirements.

1.7.2.4 Renewable Energy

Indias recently updated Nationally Determined Contribution (NDC) to the United Nations Framework Convention on Climate Change (UNFCCC) suggests for about 50% cumulative electric power installed capacity from non-fossil fuel-based energy resources by 2030. The majority of this is expected to be solar capacities.

Current range of offerings

• EPC solutions from concept to commissioning of Solar PV Power Plants with or without BESS (Battery Energy Storage System).

• Ground mounted, Roof Top, Canal top and Floating solar power plants.

• Solar Inverters for utility as well as traction applications

• Loose Multi Crystalline Solar PV Cells meeting Domestic Content Requirement (DCR)

• Mono-PERC Solar PV Modules (up to 400 Wp)

Achievements during the year

• Successful commissioning of some of the largest floating solar power projects of the country. 80 MW of the 100 MW NTPC Ramagundam floating Solar PV - countrys largest floating solar SPV plant, was commissioned by BHEL as on 31st March 2022 and the entire 100 MW has been commissioned thereafter.

• BHEL commissioned around 270 MW capacity in FY 202122, the highest capacity addition of solar executed by BHEL in a financial year.

• In house upgradation of SPV Module manufacturing plant enabling manufacturing of higher size cell modules (up to 400 Wp) using advanced mono PERC cells.

Future perspective

Indias recently updated NDC is expected to give impetus to expansion of solar capacities. As an established EPC player in domestic solar energy market with a portfolio of 1.2 GW, indigenous manufacturing assets of solar PV cells (105 MW/ annum) and PV modules (226 MW/annum) and imposition of Basic Custom Duty on imported Solar PV cells & modules w.e.f. 01st April 2022, BHEL is strategically placed to address these opportunities.

1.7.2.5 Captive Power & Process Plant

Govt. of Indias thrust for stringent environment norms/ compliances has led secondary steel plants for gainfully utilizing the waste heat generated from process. The waste heat generated is being used to generate captive power at a very economical rate. This is expected to drive the demand of CPP in secondary steel and other process industries.

GoI push for infrastructure growth will drive the demand of steel, aluminium and cement. Expected capacity expansion in various industries viz. Aluminium, Steel, Cement, Oil & Gas, Chemical, Fertilizers, Paper, Textiles etc. is likely to generate demand of 5,000 MW of captive power in next 5 years.

With regard to Oil & Gas segment, BHEL is the only OEM having 230 gas turbines successfully operating in the country. Planned capacity expansion of Indian refineries would catalyze the demand for gas turbines.

Current range of offerings

• Standalone Steam Turbine Generator (STG) sets

• Boiler Turbine Generator (BTG) package, Pulverized Fuel (PF), Circulating Fluidized Bed Combustion (CFBC), Atmospheric Fluidized Bed Combustion (AFBC), Utility Boiler (UB) /gas fired boilers

• Gas Turbine based Open, Cogeneration and Combined Cycle Captive Power Plants

• Process packages and equipment of Downstream Oil and Gas sector (DSOG)

Achievements during the year

Orders for nine STGs booked in FY 2021-22 including repeat orders from Rashmi Group, Shyam Group and Shree Cement.

Future perspective

Indian refineries have expansion plans calling for substantial investments. Besides CPP business, the successful execution of IOCL Paradip SRU project (maiden order in DSOG segment) shall open up avenues for BHEL to address various other downstream Oil & Gas EPC packages in future.

The capability of CFBC boiler to operate on multiple low grade fuels available as by-product from secondary steel and other process industries would continue to drive the demand of CFBC based CPP projects.

1.7.2.6 Industrial Products (including Oil & Gas and Electrical Machines)

BHEL has been serving Oil & Gas sector for more than five decades and most of the refineries & petro - chemicals industries in India utilize BHEL supplied static & rotating equipment. Further, as the existing refining capacity of 249 Million Metric Ton Per Annum (MMTPA) in India is expected to reach 298 MMTPA by 2025 (as per Ministry of Petroleum & Natural Gas); enhanced business opportunities are envisaged for centrifugal compressors, fired heaters, heat exchangers, high tonnage columns & vessels etc.

Current range of offerings

Oil Rigs - A variety of on-shore drilling rigs with AC-VFD (Variable Frequency Drive) and AC-SCR (Silicon-controlled Rectifier) technology for drilling up to depths of 9,000 metres (3000 HP), work-over rigs for servicing up to depths of 6,100 metres (650 HP).

Well heads and X-mas Trees - Up to 10,000 psi, Mud Line Suspension System, Choke and Kill manifold, Coalbed methane (CBM) Wellheads, DSPM H- Manifold Assembly, Mud valves, etc

Centrifugal Compressors - Multi-stage Centrifugal Compressors as per API 617 Chapter-2 up to 3,00,000 m3/hr for application in Fertilizers, Refineries, Petrochemicals, Pipelines, Gas processing, Steel industries etc.

Mechanical Packages - Fired Heaters, Columns, Reactors, Pressure Vessels, Heat Exchangers and Purge Gas Recovery Unit.

Electrical Machines- AC squirrel cage, slip ring, synchronous motors for safe and hazardous area applications, variable speed motors, industrial alternators, special purpose machines and LT VFD.

Achievements during the year

• First ever order for 11 standalone Heat Exchangers received for IOCL Barauni from CB&I Limited.

• First ever order received from CB&I India Limited for 2.5

MW Centrifugal Compressor for IOCL Barauni DHDT Project.

• Order of highest flameproof motor rating (1285 kW, 6.6 kV, 2P Ex-d SCIM) received from Oil and Petroleum segment.

• Successfully manufactured and delivered BHELs highest rating 14425 KW, 11 KV, 8 pole ID Fan motor in 2000 mm Outer Dia (OD) frame.

Future perspective

BHEL is working towards indigenisation of various imported items required for centrifugal compressor packages as a contribution towards "Aatmanirbhar Bharat Abhiyan". BHEL is also working to increase its offerings for petro-chemicals segment. Next five years will witness increased CAPEX in key core sectors of the country and BHEL is well prepared to address opportunities emerging out of these investments.

1.7.2.7 Energy Storage Solutions and New Business Areas

Electric Mobility

Under the National Electric Mobility Mission Plan (NEMMP), Ministry of Heavy Industries (MHI) launched Faster Adoption and Manufacturing of Electric and Hybrid Vehicles (FAME) scheme in India. After the success of FAME-I scheme, MHI notified FAME-II scheme which has now been extended to March 31, 2024.

The 4W-EV penetration is expected to increase from less than 1% presently to 30% by 2030 (CEEW COP26 working paper). This increased penetration will necessarily require a pan India network for EV chargers which your company is well placed to address with its own design, engineering and manufacturing capabilities. The outlook for this business looks promising with MHI under FAME-II scheme sanctioning EV Charging Stations for cities across States/UTs and along Expressways/ Highways. Further Oil PSUs like BPCL/HPCL/IOCL have plans to setup 22,000 EV charging stations at their retail outlets.

Current range of offerings

• Supply of EV Chargers and associated electrical system

• EPC solution for setting up of EV Charging Stations with upstream electrical system

Achievements during the year

• In-house developed 122 KW EV charger compliant to CCS/ CHAdeMO/Type-II charging protocol has been certified at ARAI, Pune.

• Solar based EV-charging stations have been setup at 20 strategic locations along Delhi-Chandigarh Highway making it the first e-mobility friendly highway in the country.

Future Perspective

With its commitment to the nations e-Mobility mission, BHEL has taken up several in-house developments. With successful development and certification of 122 kW charger, BHEL is geared up to address the requirements of EV charging stations by offering EPC solutions in the segment. Also, initiatives to develop and manufacture other ratings of EV chargers are being undertaken.

Battery Energy Storage Systems (BESS)

By 2030, solar power installed capacity will have significiant share out of total installed power generation capacity in India. The penetration of solar power poses challange of grid stability due to fluctuations in power generation. Energy storage technologies is set to become an integral part of the power system to ensure grid stability and enable large scale integration of renewable power into the grid. As per CEA Report on optimal generation capacity mix, the expected market for BESS is likely to be 108 GWh by 2030.

Current range of offerings

• Complete EPC solutions for BESS

• Energy Management Systems

Achievements during the year

BHEL is executing its maiden BESS project of TERI having a cumulative rating of 410 kWh, located at three different sites in the NCT of Delhi. This will be one of its kind project in India as it caters to multiple applications including energy time shifting, power backup, DT overload management, peak shifting & energy arbitrage. The batteries under this BESS project are also equipped to handle the high discharge rates.

Future perspective

BHEL is actively pursuing Battery Energy Storage business opportunities in EPC Mode and is in discussions with various developers to offer BESS.

Rail Track Electrification

BHEL offers complete EPC solution for Rail Track Electrification and is executing 440 Track kilometers (TKM) railway line electrification project in three sections. Train operations with Electric Locomotives have started on these sections.

Medical Oxygen Generation Plants

To supplement the Nations efforts of battling the COVID-19 pandemic, BHEL has manufactured and supplied 7 nos of Pressure Vacuum Swing adsorption (PVSA) based Oxygen Generation Plants (500 LPM & 1000 LPM) based on CSIR (IIP- Dehradun) technology.

Recent efforts for AatmaNirbhar Bharat

In the Oil & Gas sector, your company has bagged developmental orders for Surface Units of Sucker Rod Pump, 15000 psi Wellheads and X-Mas Tree valves. Additionally, your company is working on indigenization of various items including valves, turbine blades of all variants for turbines of rating 800 MW & 660 MW, boiler water feed pump for nuclear power plant application, items of Flue Gas Desulphurization (FGD), etc. BHEL is also working with global OEMs for manufacturing items/sub-assemblies for India as well as for exports.

Aatmanirbhar in Defence & Aerospace!

BHEL has been a reliable supplier of critical equipment and services in the Defence and Aerospace sector for over three decades. Companys dedicated engineering group, specialised manufacturing facilities and capabilities has enabled BHEL become a major contributor towards Indias self-reliance in Defence equipment production.

BHEL is one of the few firms worldwide with capability to design and manufacture Heat Exchangers for military aircraft and is supplying Heat Exchangers for TEJAS. Company is rapidly expanding its offering in the aerospace segment and contributing strongly to Nations space programme. BHEL is one of the long-standing partners of Indian Space Research organisation

(ISRO), since 1992. BHEL takes immense pride in its association with major space programmes of ISRO. Most of the Indian Satellites launched by ISRO are equipped with BHEL supplied solar panels & Li-ion batteries. A dedicated facility has also been established to manufacture prismatic Li- ion cells for aerospace applications. BHEL has also been supplying Titanium alloy based propellant tank components for spacecraft.

Achieving new milestones in 2021-22, BHEL bagged first order for two nos. Upgraded SRGM along with accessories, first ever contract for service life extension cum major overhaul of SRGM from Indian Navy, order for the supply of Compact Heat Exchanger for LCA Tejas and equipment/ systems for Strategic Vessel.

Profile & Performance of Business Segments

INTERNATIONAL OPERATIONS

1.7.3 International Operations Overview

BHEL has been the flag-bearer of Indian capital goods exports across the globe for over four decades. The companys international references encompass almost the entire range of BHELs products and services, covering thermal, hydro and gas-based turnkey power projects, solar PV based projects, substation projects, R&M projects, besides a wide variety of products like transformers, compressors, motors, valves, oil field equipment, electrostatic precipitators, photovoltaic equipment, insulators, heat exchangers, switchgears, castings and forgings, etc. Today our global footprints stand at 88 countries across all 6 inhabited continents of the world. The cumulative portfolio of BHELs overseas power project stands at 17 GW out of which 11 GW have already been commissioned.

Currently, the company is executing several major projects, including 2x660 MW Maitree thermal power project in Bangladesh, 6x200 MW Punatsangchhu-I and 6x170 MW Punatsangchhu-II hydro projects in Bhutan, 2 x 200 MW Tishreen Thermal in Syria, 26 MW Calabar Gas based power project and 1.3 MW Kaduna Solar Mini grid projects in Nigeria, 4x225 MW Arun-3 hydro project and 40 MW Rahughat hydro project in Nepal. The company has also been providing after sales support to its international customers in the form of spares and services.

Last two years have been difficult for the world economy on account of the COVID-19 pandemic. Supply chain disruptions and more recently, global inflation with surge in energy prices, non-food commodity prices and rising freight costs have created challenging times for most of the economies. Despite these challenging circumstances, BHEL has been able to expand its global footprints by making an entry in Brunei Darussalam and Mexico.

Order Booking

• Maiden order for Grid connected Solar PV power plant in overseas market, 8 MWac Heneritta Solar Photovoltaic (PV) Power Plant in Mauritius.

• Re-entry in international compressor market - Order received for electric motor driven Recycle Gas Centrifugal Compressor from Northern Refineries Company (NRC), Iraq. The new compressor will replace the existing compressor, also supplied by BHEL in the year 2000, which was damaged due to the war in Iraq.

• Entry into new markets - Brunei Darussalam and Mexico: Secured maiden orders from Brunei Darussalam (AfterSales support for Supply of Fr-5 and Fr-6B Un-Bucketed Rotors for non BHEL make GT sets) and Mexico (supply of motor).

• Products & after sales assistance - Focused efforts on product sales and after-sales support has led to securing orders for spares, services & other products from 20 countries including Bangladesh, Bhutan, Brunei Darussalam, Ethiopia, France, Georgia, Indonesia, Kenya, Kuwait, Mexico, New Caledonia, Nigeria, Oman, Saudi Arabia, Senegal, Sri Lanka, Turkey, Uganda, UAE & Vietnam.

Project Execution

Currently, the company is executing several major projects, including the prestigious 2x660 MW Maitree thermal power project in Bangladesh, 4x225 MW Arun-3 hydro project and 40 MW Rahughat hydro project in Nepal, 6x200 MW Punatsangchhu-I and 6x170 MW Punatsangchhu-II hydro projects in Bhutan, 8 MW Solar PV Project in Mauritius, 2 x 200 MW Tishreen Thermal in Syria, & 26 MW Calabar Gas based power project and 1.3 MW Kaduna Solar Mini grid projects in Nigeria.

During the year, restoration of Generating Unit #3 (180 MW) of Mangdechhu hydroelectric project, Bhutan was successfully completed and the unit synchronized ahead of the schedule.

The 2 x 660 MW Maitree project also saw the completion of major milestones:

• Non-Drainable Hydro Test and Chemical Cleaning of Unit-1 boiler

• 230 kV Start-up Power through GIS Charged

• Auxiliary Boiler Light-up

To ensure continuity of work during the devastating second wave of COVID-19, nearly 2000 doses of COVID-19 vaccine were administered at Maitree Bangladesh site after obtaining special permission for export of vaccine.

Recognition

BHEL has won the prestigious EEPC India Northern Region Award for Engineering Export Excellence in the category of Top Exporter for the year 2017-18 - "Top exporters for the year 2017-18, Silver Trophy - Large Enterprise."

Future perspective

Global economy is gradually coming out of the shadows of COVID-19 pandemic and the world energy landscape is evolving with transitions driven by COP 26. The Russia- Ukraine conflict has forced the world to choose between green energy and energy security & the collapse of Sri Lankan economy has forced developing nations to relook at their debt strategy.

To ensure energy security, several countries still intend to build thermal power plants in the short and medium term. Meanwhile, major power-plant equipment manufacturers have announced plans to drop coal from their portfolio. BHEL, offering the complete range of thermal power plants (PF, CFBC, oil-fired, etc) is well-positioned to address these requirements and is working on CFBC- based opportunities in Africa and South East Asia and expects to expand its footprints in these regions.

Due to climate considerations, hydropower is expected to create an additional market opportunities. BHEL has been a competitive player in the neighbouring countries region and your company is geared for opportunties arising in this region. Apart from these, your company is also prepared to address upcoming hydro projects in Africa and South East Asia.

1.8 Comprehensive Analysis of Financial Performance

(Based on Financial Statements prepared in compliance with Ind AS, Guidance Notes, Companies Act 2013 and other applicable statutes.)

1.8.1 BHEL Standalone A. Financial Results

1. Total Income

(Rs. Crore)
Particulars 2021-22 2020-21
Revenue from contract with customers 20153 16296
Other operational Income 1058 1013
Other Income 368 370
Total Income 21579 17679

Total income in FY 2021-22 has increased by about 22% as compared to previous financial year. Item wise explanation for each element of total income is given below:

1.1 Revenue from contracts with customers

(Rs. Crore)
Particulars 2021-22 2020-21
Revenue from construction and project related activity 14107 10581
Sale of Product & Other Services 6046 5715
Total Revenue from contract with customers (as per Ind AS 115) 20153 16296

Continuous focus and concerted efforts on execution at project sites as well as our shopfloors enabled us to overcome numerous operational challenges such as severe impact of the devastating second wave of COVID in the first quarter of the year, Q121-22, extended supply chain disruptions, and higher input cost pressures owing to abnormal increase in the prices of key commodities, and achieve break even during the year

The overall growth in topline in the current year is 24% as compared to previous year, with a Revenue of 20,153 Crore as compared to 16,296 Crore for the previous year. This has been achieved despite a lower order book due to nil thermal ordering over the past couple of years. Sustained efforts made over the past couple of years, towards change in ideology for being Project Centric, increased pace of project closures, business diversification, prudent treasury management, etc., have yielded significant results. This has been achieved despite:

a) FY 2021-22 witnessed the devastating 2nd COVID-19 wave as well as widespread 3rd wave in the fourth quarter of the year. Pandemic induced lockdown, disruption of supply chains and shortage of industrial oxygen severely hampered the operations of the company in Q-1/21-22 across the project sites, units and vendors works. The normal supply of Industrial oxygen could be restored only by Q-2 FY22, hampering the fabrication activities not only at most of the manufacturing units and erection work at project sites, but also at vendors & ancillary works.

b) The global supply chain constraints also affected timely availability of critical raw material for shop production. Continued increase in global prices of various key commodities coupled with global shortage of critical inputs viz, Semiconductor Chips, CRGO and CRNGO further impacted deliveries.

1.2 Other operational income

(Rs. Crore)
Particulars 2021-22 2020-21
Other operational income 1058 1013

The Company has achieved its highest Other operational income of 1058 Crore during the year.

1.3 Other income

(Rs. Crore)
Particulars 2021-22 2020-21
Interest income 303 321
Dividend on investment in joint venture - BGGTS 30 21
Profit on sale of units of Mutual Fund / items of PPE, Govt. grants & others 35 28
Total 368 370

The decline in the interest income is due to lower rate of interest on Fixed Deposits caused by general decline in the interest rates in the economy in FY 2021-22. However, BHELs treasury operations have yielded higher returns on investments as compared to the cost of borrowings.

2 Expenses

2.1 Material consumption, erection and engineering expenses

(Rs. Crore)
Particulars 2021-22 2020-21
Cost of Raw Materials consumed 5055 4347
Purchases of Bought Out Items 4142 3812
Civil, erection & engineering expenses 4793 2912
Sub total 13990 11071
Changes in inventories of finished goods, work in progress and scrap 532 511
Total 14522 11582
Material cost % of revenue 72% 71%

Elevated levels of above 70% material cost has emerged as the biggest challenge in improving gross margins. The global geo political developments have a tendency to further escalate the prices of various commodities. The cost of civil construction, structural fabrication and erection activities also continued to be at elevated levels during the year.

The company is chalking out various strategies including cost optimization in design, indigenization, etc., to mitigate the impact of significantly higher metal prices to some extent. Your company is also focusing on garnering orders from strategic sectors such as Nuclear, defence, aerospace, etc.

2.2 Employee benefits expenses

(Rs. Crore)
Particulars 2021-22 2020-21
Employee benefits expenses 5517 5372
No. of Employees 30758 32131

The overall employee benefit expenses, though appearing to be marginally higher in FY 21-22, are lower than the long term average. Strict control is also being exercised on all variable elements.

2.3 Other expenses

(Rs. Crore)
Particulars 2021-22 2020-21
(a) Other expenses of Mfg., Admn., Selling & Distribution 1355 1481
(b) Power & Fuel 415 319
(c) Provisions (net) (1526) 1467
(d) Exchange Rate Variations (82) (66)
Total 162 3201

Stringent control on other expenses such as manufacturing, administrative and sales & distribution (S&D) expenses

(especially expenses not directly linked to production) continues to remain an area of focus within the company. This has resulted in such expenditure being curtailed to less than 7% of the revenues in FY 2021-22 as against more than 9% in the previous financial year, adding up to the margins by more than 200 basis points. Higher fuel prices have also been a matter of concern during the year, which has negatively impacted the bottom-line by ~80 Crore

Details of Provisions (net) as under:

(Rs. Crore)
Particulars 2021-22 2020-21
Doubtful debts, liquidated damages, loans, advances & deposits and others (1345) 2141
Bad debts, LD, Investment & losses written off 350 278
Provision for expected credit loss (Time value) (157) (691)
Contractual obligations (374) (261)
Total (1526) 1467

Over the last couple of years, the company has been focusing to improve the quality of its assets (specifically, receivables) in the balance sheet. Concerted efforts has resulted in resolution of disputes and has contributed to reduction in provision cost, which has helped in improving the bottom-line of the company. Closure of old contractual issues and settlement of old time extension cases with customers, enabled better cash realization from old dues and higher vacation of provisions during the year.

With persistent efforts towards improving the quality of Assets in the Balance Sheet (especially Receivables), there has been reduction in provision cost during the year, contributing to the bottom-line of the company.

The Company recognizes provision for expected credit loss (time value of money) in line with the requirements of Ind AS

3. Finance costs

(Rs. Crore)
Particulars 2021-22 2020-21
Discount & other expenses on commercial papers 139 164
Interest expense 60 67
Un- winding of provisions 156 142
Total 355 373

The company managed its treasury operations effectively, minimising interest cost as well as earning higher returns on the cash surplus invested during the year. During FY 2021-22, the company had been able to raise Commercial paper /WCDL, at a lower rate due to which there is reduction in overall finance cost. Borrowing at the current year-end is 4,745 Crore as compared to 4,834 Crore as on 31st March 2021.

4. Depreciation & amortisation expenses

(Rs. Crore)
Particulars 2021-22 2020-21
Depreciation & amortisation expenses 314 473

During FY 21-22, a periodic review of the estimated useful life of certain items of PPE have been carried out, in line with para 51 of IND AS 16. This resulted in reduction of depreciation & amortization cost by about 126 Crore as compared to last year.

5. Tax expenses

(Rs. Crore)
Particulars 2021-22 2020-21
Current tax - current year 49 33
-Earlier years (126) (17)
Deferred tax -current year 109 (908)
-Earlier years (5) (2)
Total 27 (894)

The tax expense for the year is 27 Crore mainly due to reversal of current tax expense for the adjustment of refunds pertaining to earlier assessment years. Deferred tax liabilities (Net) represent the tax impact of items considered in tax computation for which Deferred Tax Assets has been reversed or on which income tax shall be payable in the future periods.

There have been major achievements in the taxation area and the company received Income Tax refund of 667 Crore in FY 21-22, which contributed positively not only in Cash flows but also in profitability. Interest income of 47 Crore was also received during the year as part of refunds.

6. Profitability

Material cost has been a challenge across the industry spectrum, domestically as well as globally and also for BHEL. The spike in metal prices not only impacted the material cost but also the revenues of the company.

Pressures on operational budgets due to inflation are being dealt through stringent budgetary controls. The companys change in operational ideology from being Turnover Centric to Project Centric, with focus on expedited project execution and prudent financial management have resulted in a profit after tax of 410 Crore (PY loss of 2,717 Crore), after two consecutive loss years.

Overall, the company achieved EBITDA of 1,106 Crore, which is more than 5% of the total income.

7. Other comprehensive income

(Rs. Crore)
Particulars 2021-22 2020-21
Re-measurement of defined employee benefits gain/(loss) 103 27
Less: Income tax related to above item 26 7
Total 77 20

Other Comprehensive income represents re-measurement gain/ (loss) on defined benefit plans such as gratuity, PF, PostRetirement Medical Benefit (PRMB), etc.

B. Financial position

8. Property, plant and equipment (PPE), intangible assets and capital WIP

(Rs. Crore)

March 31, 2022

March 31, 2021

PPE Intangible Total PPE Intangible Total
Gross carrying value 6331 309 6640 6172 291 6463
Less: Accumulated depreciation / amortisation 3995 247 4242 3746 229 3975
Net carrying value (net block) 2336 62 2398 2426 62 2488
CWIP & intangible assets under development 422 9 431 403 17 420
Total 2829 2908

In line with applicable Ind AS, the company annually assesses and modifies the useful life of PPE, and depreciation is calculated accordingly. The financial impact of change in useful life is disclosed as part of notes to accounts. Properties

(i) 2nd Floor office in Chatterjee International Centre, Kolkata

(ii) Indora Residential flats, Nagpur - Land & buildings and

(iii) Vadodra Township - Land & buildings, having a net block value of 1.42 Crore, have been identified for sale under asset monetisation drive, subject to requisite approvals.

9. Equity investments

(Rs. Crore)

March 31, 2022

March 31, 2021

Particulars Investment Impairment Net Investment Impairment Net
Investment in joint ventures 718 (52) 666 718 (52) 666
Investment in subsidiary Company - - - 5 (5) -
Investment in other equity instruments 6 (2) 4 6 (2) 4
Total 729 (59) 670 729 (59) 670

Investment in joint ventures (JVs) and subsidiary company were accounted at cost after considering impairment loss, if any, in line with Ind AS. Investment in other equity are accounted at fair value through profit and loss account and changes in carrying value have been made based on fair value on the reporting date.

During the year, BHELs entire stake (51%) in its subsidiary BHEL - EML has been transferred to Government of Kerala on 11th August, 2021 at a consideration of 1.

Regarding investment in Neelanchal Ispat Nigam Limited (NINL), subsequent to Board approval of strategic disinvestment of equity in NINL, a strategic buyer was

March 31, 2022

March 31, 2021

Particulars Non current Current Total Non current Current Total
Gross Receivables 15137 3618 18755 16134 4911 21045
Less: Allowances for Bad & doubtful debts 11933 593 12526 12955 877 13832
Trade receivables (net) 3204 3025 6229 3179 4034 7213

 

Trade Receivables (net) are at their lowest level in last 10years at K6229 Crore. With continuous focus on cash realisation, the company improved liquidation of current year billing to highest levels.

Net Trade Receivables in number of days of Revenue from Operations (Gross) reduced to 94 days in FY 21-22 from 134 days in PY.

Concerted efforts in the company resulted in reduction of Net Trade Receivables by 984 Crore (14% from the level of March 2021), despite increase in volume of operations. Improved focus on quality of billing, sequential dispatches, closure of pending issues with customers, prioritizing projects where cash is realizable, etc., were some strategies adopted, resulting in improved liquidation of Current year billing to its highest levels (86%). With continuous focus on cash realization, Trade Receivables (net) are at their lowest level in last 10 years at 6,229 Crore.

Net Trade Receivables in number of days of Revenue from Operations (Gross) has reduced to 94 days in FY 21-22 from 134 days in PY.

11. Cash & cash equivalents and bank balances

(Rs. Crore)
Particulars March 31, 2022 March 31, 2021
Cash & cash equivalents 733 1527
Deposits having maturity more than 3 months but not more than 12 months 6411 5160
Earmarked bank balances & FD against margin money 10 14
Total 7154 6701

Cash generation & conservation continues to remain a critical success factor for the company. The overall cash & bank balance was higher by 453 Crore at the end of FY 21-22 as compared to the previous year. The company generated 660 Crore cash from operating activities during FY 21-22 (560 Crore during FY 20-21).

There has been improvement in cash collection ratios also. Project-centric approach & sequential dispatches has resulted in 86% liquidation of current year billing, the highest in last 10 years, against 82% in FY 20-21.

12. Deferred tax assets (net)

(Rs. Crore)
Particulars March 31, 2022 March 31, 2021
Deferred tax assets (net) 3530 3660

Deferred tax asset is created mainly on account of items for which benefit is not available in the current years taxable income but shall be adjustable against future taxable income on meeting certain conditions in line with the provisions of the Income Tax Act. Such items include carry forward of losses, provision for doubtful debts, dues allowable on payment basis etc. The reduction in Deferred Tax Assets represent the tax impact of items considered in tax computation for which Deferred Tax Assets created in earlier assessment years has been reversed.

13. Other assets

March 31, 2022

March 31, 2021

Particulars Non Current Current Total Non Current Current Total
Contract assets (Net) 18248 8692 26940 16585 7494 24079
Input tax credit receivable - 964 964 - 1031 1031
Claim recoverable 189 755 944 65 731 796
Deposit with tax authorities & others 110 533 643 119 577 696
Advances & others 76 92 168 136 159 295
Less: Provision 96 243 339 53 216 269
Total 18527 10793 29320 16852 9776 26628

Contract assets represent unbilled revenue not yet due for payment as per contract terms. Increase in contract assets is mainly on account of stringent and skewed payment terms of many projects currently under execution. These orders were obtained under stiff competitive bidding with zero deviation where higher proportion of receivables are linked to milestone achievement / final completion.

14. Inventories

(Rs. Crore)
Particulars March 31, 2022 March 31, 2021
Raw material & components 2929 3010
WIP 3335 3778
FG 608 693
Stores & spare parts 208 220
Other inventory 228 210
Sub total 7307 7911
Less: Provision for non-moving inventory 747 720
Total 6560 7191

During the year, efforts were made to streamline the procurement process, strengthening internal controls for usage of available inventory, synchronizing delivery of items with site requirements & manufacturing lead time, and ensuring alternate usage of available inventory to the extent feasible. This resulted in reduction in inventory levels by around 9%.

Such measures contributed to improved working capital management and also helped in avoiding obsolescence and wastage of materials.

15. Current tax assets /(liabilities) - Net

(Rs. Crore)
Particulars March 31, 2022 March 31, 2021
Current tax assets / (liabilities) -net of provisions 119 404

The amount mainly represents TDS (net of provision for tax), which is due for refund in near future.

16. Share Capital

(Rs. Crore)
Particulars March 31, 2022 March 31, 2021
Authorised share capital 2000 2000
Issued, subscribed & paid up share capital 696 696

There has been no change in the share capital during the current financial year. The shareholding of promoter [GOI] stands unchanged at 63.17%.

17. Other equity

(Rs. Crore)
Particulars March 31, 2022 March 31, 2021
Opening balance 25788 28485
Add: Reinstatement due to change in policies - -
Total comprehensive income/(loss) for the year 487 (2697)
Less : Dividend (incl. interim dividend) paid during the year - -
Closing balance 26275 25788

The other equity includes capital reserve of 35 Crore (PY 35 Crore) and capital redemption reserve of 38 Crore (PY 38 Crore)

The increase in net worth is due to post tax profit during the year. In line with the dividend distribution policy of the company, the Board has recommended 20% dividend for FY 2021-22, subject to approval of shareholders.

18. Borrowings & Lease Liabilities

(Rs. Crore)

March 31, 2022

March 31, 2021

Particulars Non Current Current Total Non Current Current Total
Borrowings - 4745 4745 - 4834 4834
Lease Liabilities 35 50 85 53 48 101
Total 35 4795 4830 53 4882 4935

The company resorted to intermittent short term borrowings to bridge the temporary gaps in cash inflows/outflows. Short term borrowings in the form of WCDL, PCFC loan, and commercial paper were availed at optimal interest rates. Despite pandemic induced liquidity challenges across sectors, the company remained zero debt and has no long term borrowings.

The company had positive net cash & bank balance (net of short term borrowings) of 2,409 Crore as at March 31,2022 as against 1,868 Crore as at March 31,2021, an increase of 29%.

The company has continued to ensure repayment of its borrowings on or before the due date.

19. Financial liabilities

March 31, 2022

March 31, 2021

Particulars Non current current Total Non current current Total
Trade payables 2132 7750 9882 1884 6675 8559
Other financial liabilities 215 1124 1339 217 917 1134
Total 2347 8874 11221 2101 7592 9693

The company continued to pro- actively engage with the vendors/sub-contractors and release timely payments to them. A significant part of the trade payables is due to retention money not due as per contractual terms, and some cases being under litigation /arbitral settlement.

20. Provisions

(Rs. Crore)

March 31, 2022

March 31, 2021

Particulars Non current current Total Non current current Total
Provision for contractual obligation 2620 1235 3855 2506 1486 3992
Provision for employee benefits 857 1061 1918 1093 827 1920
Other provisions 293 760 1053 312 832 1144
Provision for CSR 2 10 12 2 19 21
Total 3771 3067 6838 3913 3164 7077

The provision for employee benefits is based on actuarial valuation of leave, medical and gratuity benefits.

Other provisions mainly include provisions for loss making contracts. The CSR provision of 12 Crore represents unspent amount on ongoing projects, transferred to a separate bank account last year as per Companies Amendment Rules 2021.

21. Other liabilities

(Rs. Crore)

March 31, 2022

March 31, 2021

Particulars Non current Current Total Non current Current Total
Advances from customers (incl. valuation adjustments) 2194 3854 6048 2807 4057 6864
Statutory dues - 776 776 - 617 617
Govt. grants 19 6 25 25 6 31
Total 2213 4636 6849 2832 4680 7512

Advances from customers get adjusted progressively during execution of the projects. Statutory dues are primarily GST liability, to be discharged on due dates after adjustment of input tax credit disclosed under "other assets" (Refer Sl No. 13 above). The company has been discharging all its GST and other dues on time.

C. Fund Position

22. Fund flow position and liquidity

(Rs. Crore)
Particulars 2021-22 2020-21
Cash generated from Operations before working capital changes (335) (1870)
Net cash inflow / (outflow) from working capital changes 586 2620
Net cash inflow / (outflow) from operating activities 660 560
Net cash inflow / (outflow) from investing activities (1125) (43)
Net cash inflow / (outflow) from financing activities (330) (393)

have been provided in Note[44] of the financial statements.

Profitability Ratios 2021-22 2020-21
Operating Profit/(loss) Margin (%) 3.48 (18.11)
Net Profit /(loss) Margin (%) 1.93 (15.70)
Return on Net Worth 1.51 (9.62)

The efforts of the company in the past couple of years resulted in the company achieving an operating profit margin and net profit margin of 3.48% and 1.93% respectively. The qualitative net worth is also now better aligned to the market capitalisation of the company.

Other Key Ratios 2021-22 2020-21
Trade receivable Turnover 3.00 1.73
Inventory Turnover 2.93 2.02
Interest Coverage Ratio

NA

Debt Equity Ratio

[Zero Debt company]

Liquidation % out of current year Net Billing* 86% 82%
Current Ratio* 1.30 1.39

* Best performance in Last 10 years

The current ratio at 1.30 is the lowest in the last ten years and is a reflection of effective working capital management.

E. Segment performance

The Company has two operating segments, power and industry. The performance of segments is given below:

(Rs. Crore)

2021-22

2020-21

Power Industry Power Industry
Segment revenue 15361 4792 11386 4910
Segment results 1949 (39) (1246) (850)
Segment capital employed 17100 3440 16733 3973

D. Key Financial Ratios

In compliance with the requirement of listing regulations, the key financial ratios along with explanations, wherever required,

1.8.2 Financial Review of Subsidiary Company BHEL Electrical Machines Ltd.

BHEL has transferred its stake in BHEL-EML to Govt. of Kerala on 11th August, 2021.

Brief financials of BHEL -EML are tabulated below:

(Rs. Crore)
Particulars 2021-22* 2020-21*
BHEL Share (%) - 51%
BHELs Investment in Equity - 5.36
Revenue from Operations - 0.25
Profit/ (Loss) for the year (2.69) (5.28)

* based on provisional unaudited figures

1.8.3 Financial Review of Joint Venture Companies

a. BHEL-GE Gas Turbine Services Private Limited (BGGTS):

BHEL-GE Gas Turbine Services Private Limited (BGGTS) is a Joint Venture Company of BHEL and GE, USA formed to take up repair & servicing of GE designed gas turbines. The financials in brief are as below:

(Rs. Crore)
Particulars 2021-22 2020-21
BHEL share (%) One share less than 50% One share less than 50%
BHELs investment in equity 2.38 2.38
Revenue from operations 801.18 791.76
Profit/(loss) after tax 100.84 88.29
Net worth 403.21 362.99

In FY 2021-22, BGGTS paid final dividend of 400% (for FY 20-21) and interim dividend of 875% on the equity share capital of 4.76 Crore.

b. NTPC BHEL Power Projects Private Limited (NBPPL):

NTPC BHEL Power Projects Private Limited (NBPPL) is a Joint Venture Company of BHEL and NTPC Limited promoted to execute EPC contracts for Power Plants and manufacture power plant equipment. The JVC has a manufacturing facility for Balance of Plant (BoP) equipment at Mannavaram in Andhra Pradesh. The brief financials are tabulated below:

(Rs. Crore)
Particulars 2021-22* 2020-21
BHEL share (%) 50% 50%
BHELs investment in equity 50.00 50.00
Revenue from operations 24.06 42.93
Profit/(Loss) for the year (40.52) (12.61)

* based on provisional unaudited figures

In-principle approval for pursuing winding up of NBPPL has been accorded by the Board of Directors in its meeting held on February 8, 2018. Ministry of Power, Government of India vide letter dated 23.08.2019 advised NTPC Ltd. to consider buying out the stake of BHEL and thereafter decide either to continue it as an in-house EPC arm or close it after completion of present work.

c. Raichur Power Corporation Limited (RPCL):

Raichur Power Corporation Limited (RPCL) is a Joint Venture Company of BHEL and Karnataka Power Corporation Limited (KPCL) promoted for setting up of 2x800 MW supercritical thermal power plant at Yeramarus, Raichur, Karnataka and 1x800 MW supercritical thermal power plant at Edlapur, Raichur, Karnataka on build, own and operate basis. The paid- up equity capital as on March 31, 2022 was 2999.76 Crore with contribution of 2335.72 Crore from KPCL and 664.04 Crore from BHEL. The financials of the Company are as under:

(Rs. Crore)
Particulars 2021-22* 2020-21
BHEL share (%) 22.14% 27.97%
BHELs investment in equity 664.04 664.04
Revenue from operations 3027.00 2029.79
EBITDA 1555.19 982.25
Profit/(Loss) for the year (565.00) (1431.84)
Cash generated from Operations 19.20 (1645.77)

* based on provisional unaudited figures

In FY 2021-22 due to improved plant operations, the company generated higher level of revenues which resulted in substantial growth in EBITDA and also positive cash flow from operations. Going ahead, the company is expected to further improve its performance. Reduction in percentage of ownership in RPCL is due to subscription of Rights issue by the other shareholder M/s KPCL.

d. Power plant Performance Improvement Private Limited (PPIL)

Power plant Performance Improvement Private Limited (PPIL) is a Joint Venture Company of BHEL and Siemens AG, Germany promoted for performance improvement of old fossil fuel power plants.

Since sufficient business to ensure viability of the Company was not forthcoming, the promoter partners mutually agreed to gradually wind up the Company. All the pending contracts of the JVC were closed and the process of winding up was initiated during FY 2018-19. The JVC is under liquidation.

Investment in PPIL is 2 Crore which has been fully provided for.

1.8.4 Consolidated Financial Statement (CFS)

Consolidated Financial Statements have been prepared in accordance with Ind AS -110 on "Consolidated Financial Statements" and Ind AS 28 "Investments in Associates and Joint Ventures".

The financial statements of subsidiary Company is combined on a line by line basis after fully eliminating the intra group balances and intra-group transactions and for joint ventures,

Equity method is adopted in line with Ind AS. M/s PPIL was not considered for CFS as it is under liquidation.

A summary of the results on financial performance, in line with the afore-mentioned Ind AS are as under:

Financial performance

(Rs. Crore)

For the year ended

Particulars March 31, 2022 March 31, 2021
Revenue from operations 21211 17309
Profit /(loss) before tax 470 (3596)
Profit /(loss) after tax 445 (2700)
Other comprehensive income/(loss) 77 20
Total comprehensive income / (loss) 522 (2680)

The share of profit in respect of joint venture - BGGTS was 50.42 Crore in FY 2021-22 as against profit of 44.14 Crore in FY 2020-21. The joint venture companies (NBPPL and RPCL) have incurred losses in FY 2021-22. The accumulated losses equal to the cost of investment in these two JVs have already been recognized in the consolidated financial results, in FY 2018-19.

Financial position

(Rs. Crore)
Particulars March 31, 2022 March 31, 2021
Assets
Property, plant and equipment, intangible assets and CWIP (net carrying value) 2829 2911
Investment accounted for using equity method 202 182
Non-current financial assets 3294 3281
Deferred tax assets (net) 3530 3671
Non-current other assets 18527 16852
Current assets 27862 28343
Total 56244 55240
Equity and Liabilities
Equity share capital 696 696
Other equity 25810 25287
Non-controlling interest - (12)
Non-current liabilities 8366 8911
Current liabilities 21372 20358
Total 56244 55240

1. 9 Capital Investment

During the FY 2021-22, BHEL has incurred a Capital Expenditure of 231 Crore. for modernizing and upgrading its existing facilities, debottlenecking production processes, strengthening the Companys infrastructure and for welfare measures. Towards growth and development, BHEL has undertaken investments in building and augmenting manufacturing capability in diversified segments such as Defence, Aerospace, Nuclear, and Transmission.

To meet the challenge posed by the pandemic, your Company set up three on-site Oxygen Generations Plants for BHEL Hospitals at various units, apart from five Oxygen Generation Plants for factory/ industrial use during the year.

1. 10 Internal Financial Control System

The Internal Financial Control (IFC) of BHEL is designed in the form of well documented policies and procedures for ensuring orderly and efficient conduct of its business, including adherence to Companys policies, safeguarding of assets, prevention & detection of frauds and errors, accuracy & completeness of the accounting records, and timely preparation of reliable financial information.

The source of implementation and maintenance of IFC are Manuals, Guidelines, Delegation of Powers and IT system & controls, and are effected through well-defined organizational structure i.e. people operating in various departments within the Company at different levels at each stage of the processes.

BHEL has an in-house Internal Audit Department commensurate with its size of operations and nature of its business. In addition to Corporate Internal Audit department, 12 Internal Audit Cells are set up across BHEL to cover internal audit activities at all locations of BHEL. With a view to assess the adequacy and effectiveness of IFC, Internal Audit carries out continuous audit of risk focussed areas and critical appraisal of the functioning of the processes and systems designed at respective locations. Based on the report of internal audit function, process owners undertake corrective action(s) in their respective area(s), thereby strengthening controls.

Audit assignments are conducted as per Annual Audit Programme approved by Board Level Audit Committee (BLAC). Results of Internal Audit activities are shared with all Units and Regions. BLAC also reviews major Internal Audit observations and CAG audit findings, and issues directions, wherever required, to strengthen the IFC, keeping in view the dynamic environment in which the Company is operating.

Internal Financial Controls in BHEL has been evaluated at all locations by the Internal Audit during the year by applying test of controls and the controls tested have been found in place and operating effectively within the company.

Independent Auditors Report on the Internal Financial controls of the company in terms of Clause (i) of sub-section 3 of section 143 of the Companies Act, 2013 by the Statutory Auditors is placed along with the Financial statements. Statutory Auditors in its report expressed an unmodified opinion on the adequacy and operating effectiveness of the Companys internal financial controls over financial reporting.

1.11 Quality Performance

BHEL pioneered the development of Quality management systems in India as early as the 1970s, with the adoption of the then prevalent state-of-the-art technology and Quality processes and systems. Since then, the company has worked towards continual improvement in the Quality of its products, services and internal systems. The company is known for introducing the concept of Quality Circles in India, launching Quality maturity model called Quality Management Effectiveness Review (QMER - a copyright of BHEL), adopting Total Quality Management and other major Quality initiatives.

BHEL is implementing a company wide Quality First initiative to put in place state-of-the-art systems to make quality a hallmark of the companys products and services as part of its efforts to turn the firm into a Future-Ready Global Engineering Organization. Initiatives have also been taken for enhancing maturity of the Quality systems as per "Quality 360" model, reviving Business Excellence journey as per EFQM2020, and revitalizing Quality Health through "QHI (Quality Health Index)" measurement. HEEP Haridwar and HEP Bhopal received the coveted Platinum recognition whereas HPBP Trichy and HPEP Hyderabad received Gold Plus recognition under "CII EXIM Bank award for Business Excellence 2021".

A comprehensive Quality Roadmap has been developed and implemented across the organization for overall improvement in Product, Process and People Quality.

Periodic Quality Audits, Quality Management Effectiveness Review and Total Quality Management (TQM) assessment by CII/ CQ & BE are being conducted to strengthen the existing Quality Systems in Manufacturing Units, Engineering Centers, and Power Sector project sites. Twenty-three BHEL divisions were subjected to Quality360 review and TQM assessment as per EFQM 2020 model in 2021-22.

Integrated Quality Health Index (QHI) is implemented across the Organization covering 23 divisions considering Quality Performance Indicators, Quality Management System maturity, overall Business Excellence and Quality Image. HEEP Haridwar, HPEP Hyderabad and EDN Bangalore are the top three units based on QHI score 2021-22 with an overall increase across the organization of over 13% (Y-o-Y).

BHEL was the first organization in India to introduce the concept of Quality Circle (QC) movement in 1981. There are 1157 Quality Circles in the company and every year an interunit annual QC summit is held in BHEL where Quality Circles showcase their case studies.

Conversation on Quality "Qonverse" deliberation/ workshop with all Quality Heads of MUs, Regions & Engineering Centers has been in practice since 2020-21 which encourages units to adapt best & unique practices followed in other BHEL units. This platform for best practices is now being used by other functions like Production, Erection & Commissioning and HR as well.

Major focus is given to training in which Quality Management training programs are conducted at different centres of BHEL in addition to trainings conducted by Human Resource Development (HRD) Centres of units for capability building of employees in the field of Quality.

With diversification of BHEL into new areas, major thrust is being given to establishing Quality Management Systems for new products.

In 2021-22, BAP Ranipet was certified for AS 9100 Standard with the scope "Manufacturing and Supply of Aerospace Components".

1.12 Human Resource

People are the greatest asset for an engineering organization and BHEL takes pride in its motivated and competent workforce. Towards continuous development of its people, initiatives like training/retraining of the workforce, use of e-Modules for ensuring continual training, leadership development programs, strengthening of internal communication, simplifying policies for making them employee centric, etc. were taken during the year.

During the COVID-19 pandemic, multiple initiatives were undertaken to tackle the dynamic situation as enumerated earlier. COVID Assistance Scheme was also launched in July 2021 for providing succour to dependents of employees who succumbed to COVID-19.

Recognizing the efforts of the company, BHEL was conferred with Global HR Excellence Award for the categories of Best Workplace practices and Excellence in Learning and Development, and Business Innovation Awards 2021 for the categories Organization With Innovative Practices in HR & Best Digital PSU during FY 21-22.

1.12.1 Learning and Development

Learning & Development is extremely important to prepare a future ready workforce, especially considering companys focus on diversified businesses.

Towards this endeavour, Corporate Learning and Development (CLD) division worked on three focus areas: a) Technical and Functional Training b) e-Learning through UNNAYAN portal

c) Managerial and Behavioural Training. On the one hand, programmes for specialized and high-end technical inputs on emerging technologies in New Growth Areas were developed, and on the other hand, training programmes to enhance skilling of artisans were introduced. 76 e-learning modules have been developed, which are widely used by all employees. Focused efforts are being made towards knowledge sharing sessions and sharing of best practices across units. In order to capture the tacit knowledge of superannuating employees, there is concerted effort to organize and facilitate sessions in their respective areas as well.

Various programs on internal capability development for technical/functional trainings have also been designed and conducted, including a 3-month long engagement named "Faculty Development Program". A program titled "The Art & Science of Coaching" was completed, aimed at developing the Coaching acumen of employees in middle as well as senior management grades.

BHELs 6th Learning Week was celebrated across units and regions from 5th to 11th September 2021, with theme, Creating a Future Ready Workforce to Achieve BHEL Vision.

To improve communication across the company, 3C (Connect-Collaborate-Create) initiative, launched in January 2021, has continued to gain impetus. As part of the initiative, a large section of employees across BHEL shared organizational issues, concerns as well as ideas and suggestions for improvement of the company. Around 10,000 views were gathered of which 1,174 ideas have been taken up as projects for implementation. The success stories emerging out of this initiative are regularly being published in companys monthly online magazine EKAM.

1.12.2 Performance and Career Development

Succession planning and revamp of Performance Management System have been focus areas for your company.

Special programs in collaboration with leading management institutes are being implemented for developing leadership at all levels. Focused training programs to develop technical and behavioral skills in sync with the organization needs/ ethos have been designed and implemented.

These interventions in Performance and Career Development have helped in improved Employee Engagement.

PCMM Level 3

Concerted efforts in the past year resulted in certification of BHEL operations at Maturity Level 3 in the People Capability Maturity Model (PCMM) from Maturity level 2 earlier.

Employee Satisfaction and Engagement Survey 2021-22

An Employee Satisfaction and Engagement Survey at an organization level is conducted every alternate year. The drivers of Engagement and Satisfaction are dependent on parameters like Learning & Development, Communication, Career & Performance Management, Rewards & Recognition and Health, Safety, Environment, Compensation and Physical Work Environment. The Employee Satisfaction & Engagement index ESEI for 2021-22 stands at 7.88 (on a scale of ten).

Disclosure under section 134 (3)(p) of the Companies Act

As per Section 134 (3) (p) of the Companies Act 2013, the Boards Report of a Listed Company shall include a statement indicating the manner of formal annual evaluation of Board, individual directors etc. Ministry of Corporate Affairs has, vide its notification dated 5th June, 2015, notified the exemptions to Government Companies from the provisions of the Companies Act, 2013 which inter-alia provides that Sec. 134(3) (p) regarding statement on formal annual evaluation shall not apply to Government Companies in case the directors are evaluated by the Ministry which is administratively in-charge of the company as per its own evaluation methodology. Further, in line with above exemptions, Sub-Sections (2), (3) & (4) of Sec. 178 regarding appointment, performance evaluation and remuneration shall not apply to Directors of Government Companies.

In a CPSE, the MoU signed between the Company and the Govt. of India details out the parameters and initiatives that the Company is required to undertake during that financial year. This MoU is evaluated at the end of the year by the Govt. and a performance rating is assigned based on the CPSEs performance. There is a well laid down procedure for performance evaluation of CMD and Functional Directors Based on Department of Public Enterprises (DPE) format and procedure for evaluation of Functional Directors performance. The tenure of Functional Directors as spelt out in their Terms and Conditions of Appointment is five years or the date of their superannuation, whichever is earlier. The terms of reference of Board Level Committees are approved by the Board. The minutes of Board Level Committees are placed before the Board for its perusal.

Appointment of Independent Directors and tenure (normally three years) is decided by the Government of India. DPE, through BHELs Administrative Ministry (MHI), has been evaluating/ assessing the performance of Independent Directors on the Board of the Company.

1.12.3 Industrial Relations

All round Development through Participation of All, ensured by way of BHELs policy of open and continuous communication with all sections of employees, has been the driving mantra of our Industrial Relations journey.

The impetus given to participatory culture by the Management in close collaboration with various employee groups has been instrumental in maintaining and building up a congenial harmonious Industrial Relations climate in the organization.

Industrial Relations in various manufacturing units, divisions and offices of the Company remained harmonious and peaceful during FY 2021-22. NIL man days were lost during the year on account of strike against Company policies, which bears testimony to the concerted efforts undertaken by the Management as well as the employee groups to work jointly towards the organisations goals.

One meeting of the apex level bipartite forum, was held during the year. 37 meetings of Plant Councils and 220 meetings of Shop Councils were held at various manufacturing units. In addition, meetings were also held with the representatives of executives and supervisors on business prospects & challenges, company level issues, etc. The focus of discussions in the various bipartite forums centred on improvement in the overall performance of the Company by way of increase in productivity, improvement in quality, safety and delivery in order to meet customer commitments and adopting various cost reduction measures for betterment of the financial health of the Company, eventually benefitting different stakeholders including employees.

1.12.4 Manpower Strength

The Manpower Strength of BHEL as on 31st March 2022 is 30,758 consisting of 10,280 Executives, 4,758 Supervisors and 15,720 Workers.

1.12.5 Status on Presidential Directives

No Presidential Directives have been received w.r.t (A) Reservation policy for reserved category persons (B) Safeguard of Women at Workplace during the years 2019-20, 2020-21 and 2021-22.

1.12.5.1 Directives on Reservation Policy for Reserved Category Persons

Presidential Directives on reservation policy issued by Central Government from time to time provide for certain percentages of reservation in direct recruitment as well as promotion in specified posts and for specified reserved category of candidates, i.e. SCs, STs, OBCs and Persons with Disabilities (PwD). Besides, the Directives also contain provision for certain concessions and relaxations for specified category of employees in direct recruitment and promotion. The Presidential Directives are being strictly complied with and reservation percentages are ensured through maintenance of Post Based Roster system as prescribed by Govt.

Other relevant information on the subject is furnished below:

i. Representation of SC/ST/OBC /EWS employees

The overall representation of SC/ST/OBC employees in total manpower as on 31st December, 2021 was 20.81%, 7.48% and 36.03% for SCs, STs and OBCs respectively. During the year 2021, 30 candidates were directly recruited and 4 Chief Security Officers were taken on deputation basis.

The Annual Statement in the prescribed format showing the representation of SCs, STs, OBCs and EWS as on 31st Decemeber2021 and number of appointments made during the calendar year, as furnished to the Government, is given at Annexure - A.

ii Manpower strength of PwD employees as on 31st December, 2021

Total number of PwD employees as on 31st December, 2021 was 843. During the year, one recruitment took place in OH Category in Group C. The group wise manpower strength of PwD employees in the Company as on 31st Decemeber, 2021 is given at Annexure - B.

1.12.5.2 Safeguard of Women at Workplace

The provisions of the "The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Rules, 2013" thereon are being strictly complied with. In accordance with the Act, Internal Complaints Committee exists in all units of BHEL and their constitution and contact details are hosted on the units website. Posters highlighting the key provisions of the Act, Duties of the Employer, Complaints Redressal Mechanism, Action for Malicious Complaints & various misconceptions about Sexual Harassment have been displayed at conspicuous places in all units in Hindi, English and Regional languages. At unit level, ten Workshops /awareness programmes were conducted on Sexual Harassment of Women at Workplace Act and Gender Sensitization.

The Annual Report showing details on number of complaints of sexual harassment received during the year 2021-22 and status thereof as on 31st March 2022 is given at Annexure - C.

Annexure A

Representation of SCs/STs/OBCs/EWS N?. of appointments made during the calendar year 2021

(As on December 31,2021) By Direct Recruitment

By Promotion*

By Deputation/ Absorption

Groups Total No. of Employees SCs STs OBCs EWS Total SCs STs OBCs EWS Total SCs STs Total SCs STs OBCs
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
GroupA 10321 1866 871 2761 2 0 0 0 0 0 4 0 0 2
Group B 6259 1248 628 1605 0 0 0 0 0 0 0 0 0 0
Group C 14229 3273 816 6733 2 30 1 0 11 2 0 0 0 0
Group D (Excl. SW) 193 25 1 0 0 0 0 0 0 0 N/A 0 0 0 0
Group D (SW) 27 44 4 83 0 0 0 0 0 0 0 0 0 0
Total 31029 6456 2320 11182 4 30 1 0 11 2 0 0 0 4 0 0 2

* In BHEL, no appointments are made at induction level by promotion

Annexure B

Statement showing number of persons with disabilities appointed during the calendar year 2021

Number of Employees

Direct Recruitment

Promotion*

Group Total number of employees VH HH OH

No. of vacancies reserved

Total

No. of appointments made

No. of Vacancies reserved

Total

No. of appointments made

VH HH OH VH HH OH VH OH HH VH HH OH
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19
Group A 10321 5 15 247 0 0 0 0 0 0 0
Group B 6259 1 10 171 0 0 0 0 0 0 0
Group C 14229 16 24 347 0 1 1 2 0 0 1 --NA-
Group D 220 1 4 2 0 0 0 0 0 0 0
Total 31029 23 53 767 0 1 1 2 0 0 1

Note:

(i) VH stands for Visually Handicapped (persons suffering from blindness or low version)

(ii) HH stands for Hearing Handicapped (persons suffering from hearing impairment)

(iii) OH stands for Orthopaedically Handicapped (persons suffering from locomotor disability or cerebral palsy)

*As per RPwD Act 2016, there is no reservation in Promotion for PwD employees in the year 2021

Annexure- C

Annual Report on Safeguard of Women at Workplace

1 No. of complaints received during the year 2021-22 (inct complaints C/F from previous year) 3
2 Number of complaints disposed off during the year 2021-22 (incl. complaints C/F from previous year) 1
3 Number of complaints pending as on 31.03.2022 2
4 Number of cases pending for more than ninety days 2
5 Number of workshops or awareness programme against sexual harassment carried out 10

Nature of action taken by the employer on recommendation of ICC

Out of the three cases, one case was not found to be a case of sexual harassment at workplace and the same has been disposed off and other 2 cases are in the process of disposal.

1.13 Right to Information Act, 2005

In consonance with the provisions of the Right to Information Act, 2005 (the Act), BHEL works towards promoting transparency and accountability. A Central Public Information Officer (CPIO) at Corporate Office, along with 24 other CPIOs at each of the major administrative units are functioning in the Company. 25 First Appellate Authorities also function in the Company to dispose off first appeals filed against the orders of the CPIO (s), as provided under the Act.

As a measure to facilitate citizens in filing their RTI applications and first appeals online, BHEL has adopted the Online RTI web portal (https:// rtionline.gov.in) launched by Department of Personnel & Training. Consequently, RTI applications and RTI first appeals filed on the portal are being replied through online mode. Section 4 (1) (b) disclosures have been made available on BHELs website. In addition, certain guidelines & proforma(s) indicating procedure for obtaining information and for filing RTI first appeals under the Act have been placed on BHELs website.

The CPIOs and other internal stakeholders involved are sensitized about their obligations under the Act through training and workshops.

BHEL being a member of Steering Committee on RTI constituted by Standing Conference of Public Enterprise (SCOPE) actively participates in its meetings and discussions related to RTI matters organized by SCOPE. Quarterly RTI Returns for all the four quarters have been submitted to the Central Information Commission. During 2021-22, 806 applications and 88 appeals were received, and 732 applications and 72 appeals were disposed off.

1.14 Risks and Concerns

BHELs business have exposure to various types of internal and external risks related to financial, operational, sectoral, ESG specific, and cyber security. Changing business environment, dynamic customer requirements, technology considerations, long duration of contracts, and timely on-site product support requirements in adverse conditions, are some risks specific to the working of BHEL.

Considering the pervasiveness of industry risks, diversity of the companys business portfolio and geographical locations of operations, BHEL has in place a robust Risk Management Policy. The process for risk identification is consciously guided by the Companys objectives, external environment, Industry reports as well as internal and external stakeholders, amongst others.

BHEL has in place a Board approved Risk Management Charter & Policy to implement a structured and comprehensive enterprise risk management system. The charter is intended to establish a common understanding, language and methodology for identifying, assessing, responding, monitoring and reporting risks and to provide assurance to the management that key risks are being properly identified and effectively managed in the company.

The Risk Management framework of BHEL has three tier Structure, with the Board of Directors (BoD), represented by Board Level Risk Management Committee (BLRMC) at the

Apex Level, the Risk Management Steering Committee (RMSC) at Corporate Level and Unit Risk Management Committees (URMCs) at the Regions/ Units/ Business Sectors.

The Board Level Risk Management Committee (BLRMC) is assigned the responsibility of reviewing the companys Risk Governance structure, Risk Assessment & Risk Management framework, Guidelines, Policies and Processes. The Board / BLRMC regularly reviews top risk areas.

Chief Risk Officer (CRO), the convener of BLRMC & RMSC is responsible for periodic reporting on risk management to Board/ BLRMC. Key risks faced by the company are analysed in detail by the Risk Management Steering Committee, which is responsible for adopting & implementing the risk management framework and leading the risk management initiative across the company.

RMSC revisits risk parameters & their measuring parameters to ensure their relevance and accordingly recommends amendment/ deletion/ addition to the same. In this year, RMSC recommended changes in the methodology of risk measurement for the risk statement of Technology Readiness so as to closely evaluate and quantify the Companys readiness in meeting current/future market requirements enabling it to formulate strategies to effectively address the associated risk. The RMSC also reviewed and recommended the adoption of revised Risk Management Charter and Policy incorporating changes in line with the SEBI LODR amendments dtd. 5 May 2021. The same has been finally adopted and is in-force.

Risk management committees at unit level analyse the risks concerned to their respective areas, prepare mitigation plans, ensure their implementation and also inform the top management, if required.

Top six key risks which the company faces and corresponding strategies for mitigation are mentioned in the table below:

Risk Statement Mitigation Strategies
Excess domestic manufacturing capacities, Changes in business mix • Thrust on Strategic tie ups for venturing into new areas
due to policy changes and Increasing Competition leading to lower Order Book • Exploration of business opportunities in Emerging technologies viz. coal to chemical and hydrogen economy.
• Cater to opportunities arising out of AatmaNirbhar Bharat, Make in India missions and PLI Scheme
• Increasing non-coal based and spares business
Delayed delivery of projects leading to LDs, penalties, customer dissatisfaction and impacting company image • Focus on Project centric operations reviews by Senior Management.
• Activities like engineering etc., to commence at pre-award stage for faster execution of projects.
• Implementation of Integrated Project Management Software (I PMS) in projects for faster execution.
• Implementing concept of Project Director for faster decision making to ensure timely execution of Projects.
• Inclusion of Bonus clause to encourage and incentivize contractors performance.
Rising Debtors • Constitution of Cross Functional Teams for improved efficacy of Cash realization from every element of debtors against Ongoing as well as Commissioned projects.
• Vigorous monitoring of billing / cash collection process through separate focus on liquidation of old bills and current year bills.
• Action against defaulting customers in line with the Trade Receivables policy of the company including Arbitration/ NCLT/ AMRCD proceedings.
Rising direct material cost affecting profitability • Focused approach for cost reduction in the direction of design optimization, engineering excellence and judicious procurement right from customer ordering till execution stage.
• Products of same generic type made in more than one-unit design /manufacturing practices are being unified & optimized.
• Surplus material identification and its utilization at sites/units is being done through in-house developed online portal.
Non- availability of technology in core products to meet current/future market requirements may lead to loss of business • Development and upgradation of technologies through in-house efforts.
• Technology collaboration agreement with suitable partners
• Pursuing for entering into MoUs for commercializing Coal to Chemical
Online data & information security breach leading to loss and critical information infrastructure breakdown • All Internet traffic is monitored 24x7 through the Cyber SOC (Security Operations Center) integrated with the Global Threat Intelligence (GTI) database.
• Integration of all the internet routers of BHEL with "Cyber Swachhta Kendra" (Botnet Cleaning and Malware Analysis Centre of CERT-In, MeitY)
• Integration of Information Security Management System (ISMS) across all the ISO 27001 certified BHEL units.
• Creating awareness among employees to sensitize them about phishing mail risks, Phishing simulation exercise is conducted at periodic intervals.

 

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