Boards' Report To the Members, I have great pleasure in presenting to you, on behalf of the Board of Directors, the 61st Annual Report of Bharat Electronics Limited and the Audited Accounts for the financial year ended 31 March 2015 together with the reports of the Statutory Auditors and the Comptroller and Auditor General of India thereon. Dividend The Board has recommended a Final Dividend of 232% (Rs. 23.20 per share), Rs. 18,560 Lakhs for the year 2014-15. An interim dividend of 60% (Rs. 6 per share), Rs. 4,800 Lakhs has already been paid for the year 2014-15. Thus, the total dividend for the year 2014-15 is 292% (Rs. 29.20 per share), Rs. 23,360 Lakhs (excluding corporate dividend tax) as against 233% (Rs. 23.30 per share), Rs. 18,640 Lakhs paid in the previous year. Provision of Rs. 3,778.38 Lakhs has been made for corporate dividend tax on the final dividend proposed. Corporate dividend tax of Rs. 959.72 Lakhs has already been paid on the interim dividend paid for the year 2014-15. Amount Transferred to Reserves An amount of Rs. 40,000 Lakhs is transferred to General Reserves for the financial year 2014-15. Major Orders Executed Major projects executed during the year for tri services & non - defence customers include : Akash Missile Systems (Army, Airforce), Schilka Gun Tank Upgrade to Army, Passive Night Vision Devices (PNVD) to Army, 3 Dimensional Tactical Control Radar to Army, Communication sets, Combat Management System to Navy, Stabilized Optronic Pedestal to OFB, Mobile Communication Terminal to NTRO, Missile Warning System to Army, Laser Range Finder to Army, New generation Sonars to Navy & exports, Shipborne EW systems - Sanket variants to Navy / Shipyards, Advanced Composite Communication Systems to Navy, Radar for Air Warning in L-band, Fire Control Systems to Navy, Central Acquisition Radar to Airforce, Low Level Light Weight Radar (Bharani / Aslesha) to Army / Airforce, Electronic Voting machines (EVMs) to ECI, Simulators to Army, RAWL 02 MK II, Lynx U1 MOD, HUMSA X etc. Some of the significant achievements during the year : • Successful test firing of Akash Missile System, an Air-Defence Weapon System to defend Vulnerable Area / Vulnerable Point against medium range targets penetrating from low, medium and high altitudes. • Handing over of Schilka Air Defence Weapon System with an upgraded Display system, engine automotive & air conditioning, NBC protection, Integrated Fire Suppression System & totally electronically modernised drives, etc. • Commissioning of NC3I an independent network which would interlink the Coastal Stations of Indian Navy & Coast Guard with the Joint Maritime Operation Centres and the Headquarters. • Inauguration of Chain of Static Sensors (CSS) at Seychelles by Hon'ble Prime Minister of India. • Installation of 1st L Band Radar and new generation sonar for Myanmar Navy completed. • Incorporation of JV with Thales for Civilian Radars & select Defence Radars. • Inauguration of newly built Software Development Center by Hon'ble Vice President of India. • Akash Simulator successfully developed & supplied. Exports Your Company has been giving an increased thrust towards harnessing the export potential of defence electronics products and systems, which represent its core area of business. BEL has been exporting various products and systems to potential friendly countries of India. Apart from this, BEL is interacting with electoral commissions of various democratic countries to market Electronic Voting Machines. BEL achieved an all time high export sales of US$ 57.85 Million registering a growth of 37.7% over the previous year's export turnover of US$ 42.0 million. BEL has an export order book of US$ 200 million as on 1 April 2015 which includes offset order book of US$ 45 million. The targeted export sales for the year 2015-16 is US$ 65 million. The long term export plan of BEL is to reach sustained export sales to total sales turnover ratio of 10% from the current level of 5.3%. BEL for the first time exported indigenously developed Unit Level Switch Board ULSB MK-III. Customised EVMs supplied by BEL were successfully used in presidential and national Assembly elections in Namibia. Indigenously developed Directing Gear and Dome, which are part of Sonar system were exported and were successfully installed. Other major range of products exported during the year includes Ship Sonar, Surveillance Radar, Radar Warning Systems, Radar Finger Printing Systems, Communication equipment, Casings, Stators, Electro Mechanical parts etc. BEL is also anticipating sizable export orders on account of the "Offset" policy in Defence Procurements. In this regard BEL is interacting with all the major foreign companies for possible offset business arising out of various RFPs issued by MoD India. BEL has already signed MoUs with these companies. BEL participated in four International Exhibitions in the year 2014-15 to showcase its products & capabilities. Having established a coastal surveillance radar system for a couple of countries, BEL is interacting with Ministry of External affairs on a regular basis for supply of these systems to other friendly countries of India. BEL has been receiving awards for Excellence in Exports under the category "Electronics & Communication (excluding IT / BT) - Medium and Large" from the Government of Karnataka during the last 5 consecutive years. MoU with Government Your Company has been signing a Memorandum of Understanding (MoU) every year with the Government of India, Ministry of Defence. Performance of BEL for the year 2013-14 has been rated as "Excellent" in terms of the MoU with the Government. The MoU rating for 2014-15 is under review by the Government. Order Book Position The order book of Company as on 01 April 2015 is around X 2,161,699 Lakhs. The order book comprises mainly major programs like Weapon Systems for Air Force & Army, Battlefield Surveillance System, Command Information Decision Support System, Fire Control System, Gun / Tank Upgrades Communication Sets, New Generation Radars, Electronic Warfare Systems, etc. Finance During the Financial Year 2014-15, your Company has been able to meet the incremental working capital requirements and additional investments on Capital equipments out of internal resources. Borrowing has been avoided scrupulously through close monitoring of cash flows. The effective and efficient cash management and healthy cash balances has helped your Company to retain the highest rating by ICRA for both short term and long term sanctioned bank limits. This rating will help in retaining the best rates for the various services availed from the Consortium Banks. The Inventory position (net) of the Company as on 31 March 2015 was Rs. 342,687.83 Lakhs as against Rs. 337,014.08 Lakhs as on 31 March 2014, this works out to 188 days of the value of production (DPE) as on 31 March 2015 as against to 202 days as on 31 March 2014. The position of Trade Receivables (net) as on 31 March 2015 was Rs. 378,614.33 Lakhs as against Rs. 412,853.69 Lakhs as on 31 March 2014, this works out to 206 days of turnover for the year 2014-15 with the corresponding position at 244 days as at the end of the previous year. This has been possible due to meticulous follow up of collection and receivables throughout the year. Deposits The Company does not have any Public Deposit Scheme at present. However, the matured past Public Deposit amount with the Company was Rs. 36.95 Lakhs as on 31 March 2015. Out of these 34 deposits amounting to Rs. 36.50 Lakhs are not claimed or not paid as these accounts are frozen on advice by Karnataka Lokayukta, remaining mature deposits of Rs. 0.45 lakh as on 31 March 2015 is unpaid due to in-sufficient documents / records produced by Depositors. The entire amount of Public Deposit outstanding as on 31 March 2015 is included in the Current Liability Note of the Balance Sheet. Research & Development Research and Development has been the core strength of BEL and continued to receive focused attention during the year for planning and reviewing of development of Technology modules and products. Apart from in-house efforts, BEL R&D engineers had close co-operation with DRDO, other National Research and Development agencies and academic institutes. The R&D activities have been carried out in all the business segments namely Radars, Military Communication, Naval Systems, Missile Systems, Electronic Warfare, Avionics, C4I systems, Electro-optics, Tank Electronics, Gun up-grades, Civilian Equipments & Systems and Components during the year 2014-15. Development & Engineering (D&E) Divisions attached to all the Strategic Business Units (SBUs) of Bengaluru and Other Units, located outside Bengaluru concentrated on the development of Products and Systems in their respective areas of business segments. Central-D&E and two Central Research Laboratories (CRLs) of the company supported the D&E Divisions of all the units by way of developing core technology modules and software required for the development of Products and Systems. The analysis of turnover of the company for the year 2014-15 indicates that 38% of the turnover is from BEL developed products, 42% of the turnover is from products, developed in association with DRDO and other National Labs and remaining 20% is from products for which technologies were acquired through foreign ToTs. Development of New Products During 2014-15, the R&D Divisions of BEL have completed development of several new products / systems / technology modules. Some of such new products / systems introduced during the year include the following : • Surface Surveillance Radar Surface Surveillance Radar is a Surveillance Radar for detection and tracking of sea surface targets. This radar provides target Designation data to Surface to Surface Missile (SSM) System. • Lynx U1-MOD It is a Naval Fire Control System designed to acquire, track and engage low flying high speed targets. It is capable of tracking accurately air / surface targets. The system has been configured to meet requirement of P16A, P1241 RE and P25 class of ships. It controls SRGM & AK630 gun mounts. • Export Version of ULSB MKIII Unit Level Switch Board MKIII is an Automatic Telephone Exchange designed to meet the communication requirements of Army at unit level. It employs TDM Switching concept and it is of non-blocking type. • SMARTPLUS SMARTPLUS is a secure data communication terminal used for data over voice links of HF, VHF, UHF / analogue telephone lines. • ACCS for Submarine Advanced Composite Communication System (ACCS) is fourth generation voice and data integrated system for fulfilling external communication needs of Modern submarine in VLF / HF / V / UHF frequency bands. • Test bed for ADC & RS Test Bed for Air Defence Control and Reporting System integrates various components viz sensors, Fire control Radars and Tactical control Radars to detect and provide all aerial activity as Air Situation Pictures (ASP) to Control Centre. • Ground Control Station Ground Control Station is a Shelter based System that facilitate the control and monitoring of the UAV and the exploitation of the information provided by the RUSTOM UAV. • X band TR module A Transreceive module in this band is designed for use in high power Active Electronically steered array Radars. • Simulator for Akash Missile System This simulator is developed for training Army personnel on the usage of operational sequence of Akash Weapon System. Two Versions viz., 1) Vehicle Version and 2) Class Room Version have been developed. • Secure Phone Secure Phone without camera is designed as per Army requirement for making secure calls and SMS. • Hand held Digital Compass Compass provides stable heading information for infantry soldier. It gives the user an accurate bearing information of the targets, storing and recalling of target angles. • Commander TI Sights for AFV Commander TI Sights for AFV for T72 & T90. It is also provided with LRF for accurate ballistic estimation. • EO system for Integrated Coastal Surveillance System EO System is developed with indigenous TI and CCD mounted on Pan and Tilt for effective surveillance in azimuth and elevation for Coastal Surveillance System. • Under Vehicle Scanning System Under Vehicle Scanning System scans / inspects and digitally records the underside image of any four wheelers in real time. Scientists from Central Research Laboratories and other R&D divisions of BEL have contributed 52 Technical Papers in the National and International journals during the year. 64 papers have been published in in-house journals. Following awards have been received by R&D teams during the year : • SODET GOLD Award for R&D in Innovation category for the project 'Radar VEXT (Video Extractor and Tracker) for the year 2013-14. • Young Scientist Award for one CRL Scientist from IETE for the year 2014. • Two Young Engineers Awards for two engineers from Institute of Engineers, India (IEI) for the year 2014. • Best contributor Awards in EW from Indian public sector units for Two Senior executives have been awarded by AoC India Chapter. • Award for Indigenisation of Aeronautical Equipment from Aeronautical society of India for EW&A SBU for the year 2014-15. • Two projects, EVM and Table PC were shortlisted for Common wealth Association of Public Administration and Management (CAPAM) international awards. New facilities established during the year Company has been continuously modernizing its infrastructure to be in tune with the changing needs of the technology / products. Specific groups in all the units scan the technology changes that are taking place and identify new processes in the world market for acquisition. This enables the company to maintain its infrastructure on par with international standards. During the year 2014-15, company has spent Rs. 282.26 Crores as part of CAPEX investment towards Modernisation of Plant & Machinery, Test Instruments, R&D investments, infrastructure up-gradation etc. The expenditure is fully met through internal accruals. Following are some of the major facilities established during the year. • State-of-the-art production Infrastructure for Airborne Applications at Bengaluru Unit. The facility has SMT line designed to suit the Airborne applications which is established by replacing the Manual / Semi-Automatic SMT facility with Automatic SMT facility. • Optical Transmission Measurement System at Machilipatnam Unit used in production of Electro Optic systems such as Passive Night Vision Devices (PNVD), Hand Held Thermal Imagers (HHTI) etc. Transmittance Measurement is one of the prime requirement to test the transmission parameters of Optical elements & Optical assemblies. • EMI receiver for EMI / EMC Applications at Bengaluru Unit for testing of Electronic Equipments as per MIL-STD-461 C, D, E & F. • Implemented Cyber Security components viz., IPS (Intrusion Prevention Systems) and SIEM (Security Incident Event Management) tool etc., at Intranet Gateways of all Units of the Company to improve the Wide Area Network (WAN) gateway security. • Civil Works for Transducer Manufacturing Facility at Bengaluru Unit, an Integrated facility for Transducer Production and Calibration to Enhance the Production of various types of Ship and Submarine transducer items. • EMI / EMC Chamber for Electronic Warfare applications at Hyderabad Unit to Test / Evaluate various types of subsystems / LRUs / Equipment of Electronic Warfare (EW) applications. • Communication Chip evaluation facility at Kotdwara unit used for achieving telephony functionality like transcoding, packetisation / depacketisation, echo cancellation, noise suppression etc • Compact Environmental Stress Screening Test Station installed at Chennai Unit to carry out vibration and thermal cycling tests for CoMPASS project. • New Transit Accommodation consisting of 12 Rooms (Eight rooms in Ground floor & Four rooms in first floor), Dining Hall & Recreation Hall facility established at Chennai Unit. Quality The Company's Vision of becoming a "World-class Company in Professional Electronics" is being achieved by giving thrust on three attributes - Quality, Technology and Innovation. Corporate Quality takes initiatives which encompass control and monitoring of all critical operational and business performance parameters like On Time Delivery, Process Cycle Time, Manufacturing Yield, Statistical Process Control, Complaint Resolution, Reliability -resulting in enhancement of product quality and in exceeding customer needs and expectations. These factors are monitored through well established 'SAP' enterprise resource planning system across all Strategic Business Units, regional, marketing and purchase offices of the company in India and abroad. The dedicated CRM (Customer Relation Module) and SRM (Supplier Relation Module) in SAP are able to enhance customer services and improvement in procurement efficiency of the company respectively. The Company is committed to establish internationally recognised systems through process approach. All Units / Strategic Business Units / Common Services Groups are accredited to ISO 9001 to its latest versions of Quality Management System (QMS) since early nineties. Seven Units / SBUs - Ghaziabad, Panchkula, Kotdwara, Hyderabad, Military Communication, Electronics Warfare & Avionics, Export Manufacturing, have upgraded their QMS to Aerospace standard, AS 9100. Calibration and maintenance departments of Bengaluru Complex, Ghaziabad and Panchkula Units are accredited by NABL to ISO 17025 standards. The Pune unit manufacturing X-ray tubes is certified for ISO 13485 standard for medical devices. The Central Software Department Group at Bengaluru is CMMi level 5 certified. All Units of Company are committed to Environment Management System through ISO 14001 Certification. The Ghaziabad Unit and Engineering Services of Bengaluru Unit are accredited to Occupational Health Safety and Assessment Series, OHSAS 18001. The EFQM (European Foundation of Quality Management) model for Business Excellence is being followed since year 2002 in BEL as another process approach for overall strategic and operational excellence leading to enhancement in competitiveness in meeting and exceeding needs & expectations of stakeholders. Its deployment status is assessed through participation in 'CII-EXIM Bank Award for Business Excellence'. Every year BEL Units are participating for this award in phased manner. In year 2014, Ghaziabad Unit participated for this award and were conferred for 'Commendation for Significant Achievement' (Level - II). In year 2015, Ghaziabad unit again participated for CII-EXIM Bank Award for Business Excellence and were conferred with next higher level i.e. "Significant Achievement". At present all Units / SBU are at 'Commendation for strong commitment to Excel' (Level - I) except Bengaluru Unit and Ghaziabad, which is at next higher level of Award i.e. 'Commendation for Significant Achievement' (Level - II). The continual improvements in product and processes are brought out through various approaches. Middle and senior level executives select Six Sigma projects from different areas of concern related to product and processes and bring about breakthrough improvements. In order to effectively implement six-sigma methodology and to bring culture of improvement through analytical approach, 10 Black Belts were trained and certified by ISI, Bengaluru during the year. A total of 311 Six Sigma projects have been completed. 17 six sigma projects were nominated for national level competitions. One of the case studies represented the organisation at the international competition, ICQCC 2014, held at Sri Lanka. All Six sigma case studies were adjudged either in Excellence or in Par Excellence in their respective categories. Through another approach employees (all non-executives and executives up to the level of managers) bring about improvement through Suggestion Scheme. A total of 1,571 suggestions have been implemented by respective individuals under the suggestion scheme and have been suitably recognised for their contribution. The organisation creates impetus towards involvement of non-executives in the quality movement through Quality Control Circles. In year 2014-15, 745 presentations for improvement in product and processes were made by various Quality Control Circles. Twenty Five QC circles were nominated to participate in national competition / conventions and all were adjudged for higher category awards. One circle represented the organisation in international convention, ICQCC 2014, held at Sri Lanka and bagged excellence award in its category. BEL has nominated its D&E engineers for Certified Reliability Engineer (CRE) program conducted by American Society for Quality (ASQ). The CRE certification is a training program followed by stringent exam to ensure proper grasping of the subject. 41 D&E engineers were professionally certified for CRE in year 2014-15. The operating level Quality engineers in respective SBUs / Units were certified for "Certified Quality Engineers" (CQE) programs by the American Society for Quality (ASQ). 29 CQE have been certified. Awareness program on Reliability and Maintainability by developing in-house faculty was also conducted. 107 D&E engineers were covered under this program. Revision of existing BEL Quality Manual to latest quality standard including Business Excellence and also covering topics like Evaluation of Vendors, Corporate Quality Audit of all Units / SBUs, and determination of Quality Index were also taken up during the year 2014-15. A Customer Satisfaction Survey was organised by BEL through external agency, Indian Market Research Bureau (IMRB), to capture the customers' perception on quality of BEL product. Sixteen products from various Units / SBUs were offered for survey. Human Resources Your Company employed 9,703 persons as on 31 March 2015 as against 9,952 persons as on 31 March 2014. Of these employees, 4,045 were engineers / scientists and 1,997 were women employees on 31 March 2015. A total of 212 engineers, scientists and other professionals were inducted during the year. 55 employees belonging to SC, 15 employees belonging to ST, 114 employees belonging to OBC and 12 employees belonging to the minority community were recruited during the year. Various Training programs were conducted during the year to enhance competencies in Technical, Functional, Managerial and leadership areas. Structured Executive Development Programs were conducted regularly with premier Institutes to meet the evolving training needs of executives as they progress through various grades. Apart from this, 360-degree feedback and leadership Development programs were conducted to equip our senior managers with Leadership competencies. Four batches of senior executives underwent the program during the year. "Strategy Building and Competitive Intelligence" program was organised through the faculty of premier Management Institute and forty four senior executives attended the program. The training programs are designed to enhance competencies in various areas like Technical, Functional and Managerial / Leadership. A detailed write up on Company's HR philosophy and specific HR initiatives during the year is provided separately in the Management Discussion and Analysis Report. Awards and Recognitions Your Company continues to be a highly trusted for the quality and innovation of its products based on strong consumer insights and the ability to engage with consumers across the country. During the year your Company and its employees have received various Awards and Recognitions. Some of the important accolades received during the year by your Company and its employees include : • SCOPE Meritorious Award for the year 2012-13 for Best Practices in Human Resources Management from Hon'ble President of India. • Prime Minister Shram Shree Award for BEL employee for the year 2013. • India Today Group PSU Awards contest for the 'Most Eco-Friendly Company' and 'Best in R&D Innovation'. • Mentor Graphics Silicon India Leadership Award 2014 for Best VLSI / Embedded Design in Defence / Aerospace Sector. • BEL Ghaziabad Unit was accredited with the 2nd Level of recognition in CII-EXIM Award for Business Excellence -"Commendation for Significant Achievement". • SODET Gold Award for the year 2013-14 in 'Technology Innovation' category for the project 'VEXT for Coastal Surveillance Application'. • 'IETE - IRSI Young Scientist' Award for two BEL Engineers for the year 2014 and 'IEI Young Engineers' Award for the year 2014-15 in Electronics and Telecommunication Engineering. Environment Management Bharat Electronics Ltd has long been integrating sustainability in its operations systematically with best practices. On the lookout for sustainable development, sets in clean and green surroundings. All the Units of BEL have committed for maintaining an environmental friendly work processes and strongly believes that environmental sustainability results in designing economically viable and reliable products. BEL sets objectives in compliance to DPE guidelines, further approaches towards adopting breakthrough technology for enhancing environmental performances of the products right from design to disposal. Looks beyond its boundary for compliance to environmental impacts. In all the Units of BEL, practicing of conservation of natural resources like energy conservation, water conservation and reduction in waste generation is inculcated as a routine approach. BEL looks beyond obvious opportunities available for improvising the performance against environmental commitments. The Sustainability Report annexed to this report contains further details on environment management and sustainable development initiatives. Subsidiaries and Joint Ventures Your Company's subsidiary at Pune, BEL Optronic Devices Ltd. (BELOP) manufactures Image Intensifier Tubes (I.I. Tubes). These Tubes are supplied to the Defence customers and also used in the Night Vision Devices manufactured by BEL. BELOP achieved a turnover of Rs. 10,264.93 Lakhs as against Rs. 17,147.34 Lakhs in the previous year. The Profit After Tax for the year was Rs. 366.69 Lakhs as against Rs. 496.19 Lakhs in the previous year. The Joint Venture Company (JVC) with General Electric, USA, viz., GE BE Pvt Ltd., continues to perform well. This JVC manufactures CT Max and other latest version X-Ray Tubes. BEL supplies some parts required for the products manufactured by this JVC. GE BE Pvt Ltd recorded a turnover of Rs. 72,564 Lakhs as against Rs. 60,685 Lakhs in the previous year. The Profit After Tax was Rs. 11,752 Lakhs as against Rs. 6,268 Lakhs in the previous year. The JVC declared 150% dividend for the year 2014-15 and BEL received Rs. 390 Lakhs as dividend from this JVC on BEL's share of investment for the financial year 2014-15. The other JVC, viz., BEL Multitone Pvt Ltd., jointly promoted by BEL and Multitone Electronics plc, UK was set up to supply, install and service Private Paging Systems and Pagers. As this JVC was not performing well, it was decided to wind up this company. The JVC Board and the shareholders passed the voluntary winding up resolutions and appointed a Liquidator. As on 31 March 2015, all the assets of the Company have been disposed of and all dues settled. Approval for closure of winding up procedure has been accorded by its Members at General Meeting held on 31 March 2015. The liquidator has sent the report to Registrar of Companies & Official Liquidator for issuance of winding up order. BEL formed a Joint Venture Company (JVC) with Thales Air Systems SAS, France and Thales India Pvt Ltd (TIPL) for design, development, marketing, supply and support of civilian and select defence radars for Indian and global markets. The JVC has been incorporated on 28 August 2014 with the name BEL-THALES Systems Limited (BTSL), with an authorised capital of X 8,000 Lakhs and with a subscribed capital of X 960 Lakhs. The Company has been operating from Bengaluru and has its registered office at CNP Area, BEL Industrial Estate, Jalahalli, Bengaluru - 560013 (premises on lease from BEL). Since BEL is holding 74% of the equity capital in the JVC, it becomes a subsidiary company of BEL and is a Government Company as defined in the Companies Act, 2013. During the first year of its operation, it incurred a loss of Rs. 162.45 Lakhs. In pursuant to provisions of section 129(3) of the Companies Act, read with Rule 5 of Companies (Accounts) Rules, 2014, the statement containing salient features of the financials statement of Subsidiaries / Associate / Joint Ventures is attached to the financial statements. Consolidated Financial Statements Consolidated Financial Statements of your Company and its Subsidiary and Joint Venture Companies are attached to this Report. Vigilance Your Company's vigilance Organisation is headed by an Independent Chief Vigilance Officer (CVO). During the year, separate preventive, inspection and technical wing were established in Corporate Vigilance with posting of Vigilance Officers, who assists the CVO in Preventive Vigilance and the technical aspects in the investigation process. Permanent Vigilance Officers are posted in each of the Units and in the SBUs. Vigilance Committees are formed in the each of the Units and SBUs and the Unit / SBU heads are also designated as Chairman of the vigilance Committee. Apart from this, there exists a Vigilance Committee at the Corporate, where Chairman and Managing Director is the Chairman of the Committee and the CVO is the Member Secretary. Preventive Vigilance has been the thrust area of the Vigilance Organisation and the same received focused attention during the year. The Vigilance Department examines procurements, contracts and processes on continual basis, conducts regular and surprise inspections and investigates instances of any suspected transactions referred to it. Any employee or third parties can refer any suspected transaction to the notice of CVO for investigation. Online complaint management system has been made operational. Online complaints can be filed by logging on to BEL web site. Important activities of Vigilance Department during the year includes : 1,700 Purchase Orders / Contracts and 648 high value Orders / Contracts have been reviewed. CTE Type intensive examination has been restructured with the formation of 5 IE teams. 47 High value procurement and works contracts has been taken up for Intensive examination. Regular and surprise checks / i nspection has also been conducted by the field Vigilance Officers. During the year, 40 Complaints, including the complaints referred by CVC / MOD / CBI were disposed. Disciplinary action and System/process Improvement has been recommended in some cases where lapses were observed. One case is pending with CBI for investigation. 22 Executives have been trained on the Principles of Natural Justice & Domestic Enquiry Training Programme (for Dy. Mgrs. & above). 291 Executives and 329 Non-Executives have taken part in Vigilance Awareness Training Programme. 74 Executives & 54 Non Executives working in sensitive areas for more than 3 years have been job rotated and the percentage coverage is 95.5%. In terms of CVC's guidelines on Leveraging Technology to ensure transparency through effective use of website, the following information has been made available on BEL website : • E-Procurement percentage improved to 95%. • Online registration of Sub-contractors / Vendors. • Details of awarded contracts / Purchase Orders valuing more than Rs. 10 Lakhs in respect of works contracts, service contracts, capital items and non-production items. • Details of awarded Contracts / Purchase Orders issued on nomination / single tender basis value exceeding Rs. 5 Lakhs. • Vendor Payments Information System. • Purchase Procedures, Sub Contract Procedures and Works Manual. • Complaint Handling Policy and Whistle Blower Policy. • Corruption Risk Management Policy. • Vendors' Directory, after removing defunct vendors. • File Life cycle Management System has been implemented across the company and about 8,000 files has been created in the System as on 31 March 2015. • On-line filing APRs has been developed and demonstrated to the users and planned to be implemented from 01 April 2015. Vigilance setup is continuously endeavouring to bring transparency, fairness and equity in all transactions and processes of the company. Some of the key activities that has been carried out during the year are : 1) Vigilance Awareness Week was marked with special address by former Justice N. Santhosh Hegde on 30 October 2014. 2) Vigilance awareness week were observed during November 2014, with Cycle rally by BEL School Students, Tree plantations, Friendly Cricket Match between the Senior Executives of BEL and series of lecture programs. 3) Training programs were organised for Vigilance Officers through Guest lectures by faculties from CBI, Acadamy. Director (Vigilance) / MoD / DDP and CVO and Senior executives from other PSUs and organisations. 4) Bharat Electronics Limited, Bengaluru in association with MSME Development Institute, Bengaluru organised National Vendor Development Programme - 2014 (MSME Sector) and Industrial Exhibition on 27 & 28, December 2014 at BEL Kalakshetra, Bengaluru. Shri B. H. Anil Kumar, IAS, Joint Secretary, Ministry of MSME, New Delhi was the Chief Guest for Inauguration Function. 5) Vigilance training programs were organised for two batches of Probationary Engineers and one batch of newly joined Accounts Officers. 6) Manual for Intensive examination of Contracts has been drafted and released for the benefit of the Intensive Examination teams which has been carrying out the intensive examination of high value contracts. Diversification In August 2014 BEL established a Joint Venture Company with Thales, France to address business of Civilian and select defence Radars. BEL entered into selective IT and Networking businesses in the Non-Defence sector and successfully implemented projects like Wide Area Network for Cabinet Secretariat and LAN-WAN Project for BSF (multiple phases). Though supplies to Defence constitute a majority share in BEL's turnover, company realizes that, to grow in the years to come, it has to diversify into other areas. Some of the major areas of diversification are Homeland Security, Telecommunication, Smart cards, etc. Integrity Pact One of the recent initiatives of the Central Vigilance Commission (CVC) to eradicate corruption in procurement activity is introduction of the Integrity Pact in large value contracts in Government Organisations. In line with the directives from Ministry of Defence and the Central Vigilance Commission, your Company has adopted Integrity Pact with all vendors / suppliers / contractors / service providers for all Orders / Contracts of value Rs. 2,000 Lakhs and above, initially. This threshold value was reduced to Rs. 1,000 Lakhs from March 2013 and further reduced to Rs. 500 Lakhs from May, 2014. The Pact essentially envisages an agreement between the prospective vendors / bidders and the Principal (BEL), committing the Persons / officials of both sides, not to resort to any corrupt practices in any aspect / stage of the contract. Only those vendors / bidders, who commit themselves to such a Pact with the Principal, would be considered competent to participate in the bidding process. Integrity Pact, in respect of a particular contract, would be operative from the stage of invitation of bids till the final completion of the contract. Any violation of the same would entail disqualification of the bidders and exclusion from future business dealings. As recommended by the CVC, the Company has appointed Mr N K Sinha, IAS (Retd), former Secretary, Planning Commission and former Chairman, PESB as an Independent External Monitor (IEM) for monitoring implementation of Integrity Pact in the Company. During the financial year 2014-15 the IEM reviewed 25 contracts and held structured meetings with the Chairman & Managing Director. Procurement from MSMEs Your Company has been providing increased thrust on enhancing procurement from MSMEs and is implementing Public Procurement Policy for Micro, Small & Medium Enterprises (MSMEs) as per the guidelines / notification issued by the Ministry of MSMEs. Company is in the process of broadening the vendor base. In order to facilitate MSMEs, the company is deploying all efforts to classify the existing vendors into Micro, Small & Medium Enterprises in the company's procurement system through web-based realtime centralised ERP System (SAP). Vendor registration forms are available in the Company's official website (www.bel-india.com ). Industry Promotion Officer is nominated to assist vendors regarding Procedure for Registration, understanding the requirements of BEL, report grievances, if any, etc. Some of the other initiatives include uploading of company's procurement plan for MSMEs based on the production plan, with periodic update and details of Unit / SBU specific Industry Promotion Officers in the company's official website, participation in various vendor development programmes like exhibitions, workshops, establishment of industrial estate to give maximum encouragement to ancillaries etc. BEL participated in the National Vendor Development Programs organised by Ministry of MSME at Bengaluru on 12th and 24 March 2015. BEL also showcased some of the input materials viz., Electronic, Electro-mechanical, Mechanical parts for procurement from MSMEs. Implementation of Official Language Policy Your Company is committed to adhere to the OL policies of the Government of India. During 2014-15, efforts made towards implementation of Official Languages include : OL inspection of Ghaziabad Unit was conducted on 9 May 2014 by the officials of Dept. of OL, MHA. During the year under review, Corporate OL Audit team conducted OL inspections at Ghaziabad, Kotdwara Units, CRL-Ghaziabad and RO Delhi. Incentive Schemes for working in Hindi has been extended to the children of employees and to the society as a whole. These attractive and innovative schemes have been named after famous authors of Hindi Literature. Corporate Panel for English to Hindi translation has been extended. Hindi Month was observed in all the Units and Offices of the Company. During Hindi month, employees and officers participated enthusiastically in various programs / competitions. Employees of various Units / Offices and Corporate Office bagged prizes in the Inter Organisation TOLIC Competitions. Hindi workshops for those having working knowledge in Hindi were conducted during the year. Training on Unicode is being imparted for all Executives and Employees. 13 Units / Offices have been notified under rule 10(4) of OL rules indicating that 80% or more staff have working knowledge in Hindi in these Units / Offices and orders have been issued under rule 8(4) of OL Rules for those having proficiency in Hindi to do their Official work in Hindi. Govt. of India notified CRL-Ghaziabad under Rule 10(4) of OL rules during the year. OL Portal is in place to facilitate OL implementation across the company and to provide latest inputs pertaining to OL and is being updated. Hindi language has been enabled in SAP. Most of the Units have uploaded data pertaining to OL Training Roster on SAP. Company's website is available in Hindi and English and efforts are on to progressively have the entire website in bilingual. Efforts are on to ensure the progressive use of Hindi in all spheres of activities of the Company. Implementation of RTI Act The information required to be provided as per Section 4(1) (b) of the Right to Information Act, 2005 has been posted on the website of the Company www.bel-india.com . The Information posted on the website contains general information about the Company, powers and duties of employees, decision making process, rules, regulations, manuals and records held by BEL, a directory of the Company's officers, pay scales, procedure for requesting additional information about the Company by citizens and associated request formats. During the year 2014-15 the Company received and attended 874 requests for information under RTI Act. Most of the requests were for information related to recruitment, service related matters, third party and commercial secrets information. Board Meetings/ Change in Directors and Key Managerial Personnel During the year 5 Board meetings were held, the details of which form part of the Corporate Governance Report. Mr P R Acharya, Director (Finance) & Lt Gen C A Krishnan, Government Director, retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. Mr J Rama Krishna Rao, Additional Director is being appointed as Director on the terms as set-out in the Notice of the Annual General Meeting. Directors' Responsibility Statement : To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors in terms of Section 134(3)(c) of the Companies Act, 2013 state that : a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as at 31 March 2015 and of the profit of the Company for the year ended on that date; c) directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; d) the directors have prepared the annual accounts on a going concern basis; e) proper internal financial controls were in place and such financial controls were adequate and were operating effectively; f) systems to ensure compliance with the provisions of all applicable laws were in place and same were adequate and operating effectively. Significant and material orders There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company's operations in future. Events Subsequent to the Date of Financial Statements : Material changes and commitments affecting the financial position of the Company which have occurred between 31 March 2015 and date of signing of this report are nil. Changes to Authorised Share Capital and Bonus Issue The Board of the Company has in its meeting held on 24 July 2015, approved the proposal for : a) increase in the authorised share capital from Rs. 100 Crores to Rs. 250 Crores. b) Issue of 2 bonus shares for every share held by the existing shareholders of the Company. The said proposals are subject to approval of the Members at the ensuing Annual General Meeting of the Company. Corporate Social Responsibility Pursuant to the provisions of Section 135 of the Companies Act, 2013 and The Companies (Corporate Social Responsibility) Rules, 2014 read with various clarifications issued by Ministry of Corporate Affairs & DPE Guidelines the Company has undertaken various activities as per the CSR Policy. The programmes / initiatives / projects are taken up in line with the Schedule-VII of the Companies Act, 2013, which are duly incorporated in our revised CSR policy and forms the guiding principle for all our programmes. The Corporate Social Responsibility policy of the Company is posted on the Company's website, www.bel-india.com . Pursuant to the Rule 8 of The Companies (Corporate Social Responsibility) Rules, 2014 a report on CSR activities for financial year 2014-15 is annexed herewith as "Annexure 1". Auditors Statutory Auditors Pursuant to Section 139(5) of the Companies Act, 2013, the Comptroller and Auditor General of India appointed M/s Badari, Madhusudhan & Srinivasan, Chartered Accountants, Bengaluru, as Statutory Auditors for the financial year 2014-15 for audit of accounts of Bengaluru, Hyderabad, Chennai Units and Corporate Office. M/s Ved & Company, Chartered Accountants, Ghaziabad, were appointed as Branch Auditors of Ghaziabad, Panchkula and Kotdwara Units for the financial year 2014-15. M/s Malani Somani Chandak & Associates, Chartered Accountants, Pune were appointed as Branch Auditors for Pune and Navi Mumbai Units for the financial year 2014-15. M/s Rao & Narayan, Chartered Accountants, Vijayawada were re-appointed as Branch Auditors for Machilipatnam Unit for financial year 2014-15. Cost Auditors Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014 (as amended), the cost records maintained by the Company in respect of its manufacturing activities are required to be audited by the Cost Auditor. Your Directors had, on the recommendation of the Audit Committee, appointed M/s PSV & Associates, Bengaluru, as Cost Auditors of the Company for the financial year 2014-15 for conducting the audit of cost records of the Company. Secretarial Audit Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr Thirupal Gorige, Practicing Company Secretary (PCS Registration No. 6424) for the financial year 2014-15 to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed herewith as "Annexure 2". The Secretarial Auditor in his Report observed that Company is yet to appoint adequate number of Independent Directors and Woman Director on the Board. Your Directors state that the Company being a Government Company, the appointment of the Directors on the Board of the Company is made by the Government of India and same is under consideration of the Government. Auditors' Report Auditors' Report on the Annual Accounts for the financial year 2014-15 and "Nil" Comments of the Comptroller & Auditor General of India under Section 143(5) of the Companies Act, 2013 on the Annual Accounts are appended to this report. Extract of Annual Return In accordance with Section 134(3)(a) of the Companies Act, 2013, an extract of the annual return in the form MGT-9 is annexed herewith as "Annexure 3". Risk Management Pursuant to the requirement of Clause 49 of the Listing Agreement, the Company has constituted a Risk Management Committee. The details of Committee and its terms of reference, risk management policy etc. are set out in the Corporate Governance Report. Remuneration Policy and Board Evaluation The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration, Board Evaluation etc. The details are set out in the Corporate Governance Report. Vigil Mechanism / Whistle Blower Policy The Company has a vigil mechanism named Whistle Blower Policy to deal with instance of fraud and mismanagement, if any. The details of the policy are set out in the Corporate Governance Report. Declaration from Independent Directors The Company has received necessary declaration from each Independent Director of the Company under Section 149(7) of the Companies Act, 2013 that the Independent Directors of the Company meet with the criteria of their Independence laid down in Section 149(6) of the Companies Act, 2013. Management Discussion and Analysis Report Management Discussion and Analysis Report required under the Listing Agreements with the Stock Exchanges on which BEL's shares are listed as also under the Government (DPE) Guidelines on Corporate Governance for Central Public Sector Enterprises (CPSEs), is attached to this Report as "Annexure 4". Related Party Transactions There were no materially significant related party transactions with the Company's Promoters, Directors, Management or their relatives, which could have had a potential conflict with the interests of the Company. Transactions with related parties that were entered into during the financial year were on an arm's length basis and were in the ordinary course of business. All Related Party Transactions are placed before the Audit Committee as also the Board for approval, if required. Members may refer to the notes to the accounts for details of related party transactions. The Board of Directors of the Company has, on the recommendation of the Audit Committee, adopted a policy to regulate transactions between the Company and its Related Parties, in compliance with the applicable provisions of the Companies Act 2013, the Rules thereunder and the Listing Agreement. This Policy was considered and approved by the Board at its Meeting held on 23 January 2015. The policy has also been uploaded on the Company's website www.bel-india.com . Particulars of Employees During the financial year there were no employees in the Company who were employed throughout the financial year and were in receipt of the remuneration, in aggregate of more than Rs. 60 Lakhs per annum or employed for part of the financial year and were in receipt of the remuneration, in aggregate of more than Rs. 5 Lakhs per month. Information required pursuant to Section 197 read with Rule, 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, is attached to this Report as "Annexure 5". Loans / Guarantees / Investments Particulars of loans, guarantees and investments under section 186 of the Companies Act, 2013 are nil. Internal Financial Controls The Company has in place adequate internal financial controls with reference to financial statements. Composition of Audit Committee The Audit Committee comprises of Independent Directors viz., Mr S M Acharya, Chairman of the Committee, Mr Vikram Shrivastava, Mr V K Mehta and Government Director Mr J Ramakrishna Rao as its members. All the recommendations made by the Audit Committee were accepted by the Board. Corporate Governance Report DPE guidelines on Corporate Governance for CPSEs provide that CPSEs would be graded on the basis of their compliance with the guidelines. DPE has graded BEL as "Excellent" for 2013-14. A report on Corporate Governance along with a Compliance Certificate from the Auditors as prescribed under the Listing Agreements with the Stock Exchanges as well as the DPE Guidelines is attached to this Report as "Annexure 6". Sustainability Report The DPE guidelines on Sustainable Development for CPSEs mandates CPSEs to disclose their Sustainable Development efforts in a 'Stand Alone Report' or as a separate chapter in the Annual Report. Pursuant to this requirement, a Report on your Company's efforts on "Sustainable Development" is attached to this Report as "Annexure 7". Business Responsibility Report The Securities and Exchange Board of India (SEBI) has mandated inclusion of Business Responsibility Report ("BR report") as part of the Annual Report for listed entities. This SEBI mandate is also inserted as Clause 55 in the Stock Exchange Listing Agreement. The SEBI guidelines / Clause 55 of Listing Agreement provide a format for BR report. It also contains a list of nine Key Principles and various core elements under each principle to assess compliance with Environmental, Social and Governance norms. Listed Companies are required to prepare policies based on these nine Key principles and core elements, put in place a framework to integrate and embed the policies into business activities and a mechanism to measure and report the achievements as BR report. Your Company has prepared a comprehensive policy framework for BR report, after studying the SEBI guidelines and keeping in view the business and governance environment in which BEL as a Defence PSU operates. Highlights of this policy are posted on the Company's website www.bel-india.com . The Company's BR report for the year is attached to this Report as "Annexure 8". Other Disclosures Information required to be disclosed in accordance with Section 134(3)(m) of the Companies Act 2013 read with Rule 8(3) of the Companies (Accounts) rules, 2014 regarding conservation of energy, technology absorption and foreign exchange earnings and outgo, is given at "Annexure 9". Acknowledgement Your Directors place on record their deep appreciation and gratitude for the valuable support received from all the customers, particularly the Defence Services and the para-military forces and look forward to their continued support and co-operation in future. Your Directors also place on record their gratitude for the support received from various Ministries of the Government of India, especially the Ministry of Defence, Department of Defence Production. Your Directors express their gratitude to the Defence Research and Development Organisation and the various Research Laboratories under DRDO for the support it received, particularly in the joint development programmes and new products brought out with the help of them. Your Directors express their sincere thanks to the Comptroller and Auditor General of India, Chairman, Members and employees of the Audit Board, Statutory Auditors, Branch Auditors, Cost Auditors, Secretarial Auditor, Company's Bankers, collaborators and vendors. Your Directors appreciate the sincere efforts put in by the employees at all levels, which enabled the Company to achieve the good performance during the year. Your Directors express their appreciation and gratitude to all the shareholders / i nvestors for the trust and confidence reposed in the Company and look forward to their continued support and participation in sustaining the growth of the Company in the coming years. For and on behalf of the Board Sunil Kumar Sharma Chairman & Managing Director Bengaluru 24 July 2015 |