• NIFTY 11,596.90  (-0.78% )  
  • SENSEX 38,897.46  (-0.81%)  
  • USDINR 69.03  (0.16%)  
  • GOLD 34,990.00  (-0.28%)
  •  
  • Go
Corporate Information
  •         DIRECTOR'S REPORT
Bharat Dynamics Ltd
Industry : Engineering
BSE Code:541143NSE Symbol:BDLP/E(TTM):13.17
ISIN Demat:INE171Z01018Div & Yield %:2.28EPS(TTM):23.06
Book Value (Rupee ):123.7737766Market Cap (Rupee Cr.):5567.17Face Value(Rupee):10
  • Change Company : 
  • Go

Dear Members,

Your Directors have pleasure in presenting the 47th Annual Report together with the audited financial statements of the Company for the year ended 31 March 2017.

2. HIGHLIGHTS OF OPERATIONS:

2.1 Your Company has achieved highest Sales Turnover of Rs.4,886.62 Crore (which includes deferred revenue of Rs.7.05 Crore) during the fiscal year under report surpassing the Moll target and registering an increase of 17.47% over that of Previous Year.

2.2 Your Company had successfully implemented IND-AS during the financial year and transformed into IND-AS compliant Company.

2.3 Implementation of ERP/SAP in all the Units has been completed and your Company is reaping the full benefits of the same.

3. FINANCIAL RESULTS AND PERFORMANCE HIGHLIGHTS

3.1 Performance of the Company in financial terms is summarized below:

Particulars

Rupees in Crore

% of Increase/ (Decrease)
2015-16* 2016-17
Value of Sales 4,159.97 4,886.62 17.47
Value of Production 4,297.83 5,011.00 16.59
Profit Before Tax 847.31 802.81 (5.25)
Profit After Tax 564.88 524.06 (7.23)
Value Added 1,677.53 1,885.77 12.41

3.2 Following data reflectthe financial position of the Company:

Particulars

Rupees in Crore

% of Increase/ (Decrease)
2015-16* 2016-17
Net Block 553.76 596.99 7.81
Working Capital 2,052.30 1,569.75 (23.52)
Capital Employed 2,746.15 2,327.85 (15.23)
Net Worth 1,800.02 2,194.98 21.94

*Regrouped figures as per IND-AS

3.3 During the year under report, Akash weapon and its support systems form part of the major chunk of orders that have been executed by the Company. Your Company has achieved a profit before tax of Rs.802.81 Crore as compared to Rs.847.31 Crore achieved in the previous year. Profit after tax is at Rs.524.06 Crore as against Rs.564.88 Crore in the previous year, the reduction is due to reduction in interest income.

3.4 Your Company has bagged its first major Export Order contract worth USD 21.5 Million for supply of Light Weight Torpedoes. Further a fresh order worth Rs. 1650 Crore for the supply of Anti-Tank Guided Missile(ATGM) has been received. Your Company has geared up for execution and timely delivery of goods against the said orders.

4. DIVIDEND & TRANSFER TO GENERAL RESERVE:

Your Company has a consistent track record of Dividend Payment. Your Board has recommended a sum of Rs. 157.22 Crore as final Dividend for the financial year 2016-17. Further, an amount of Rs 353 Crore is being transferred to General Reserve.

5. CAPITAL STRUCTURE:

During the year 2016-17, your Company had issued bonus shares in the ratio of 1:4 (one fully paid up equity share of Rs. 1000 each for every four equity shares held) to the Shareholder. As a consequence the paid up capital of the Company was increased from Rs.97.75 Crore to Rs. 122.19 Crore. The Authorized Capital of the Company stands at Rs. 125 Crore.

During the current financial year 2017-1 8, the Cabinet Committee on Economic Affairs in its meeting held on 12 April 2017, has conveyed its approval for listing of Shares of your Company in the stock exchanges by way of an offer for sale of a part of the Government holding through Initial Public Offer (IPO). '

In this process, the Ministry of Defence (MoD) had approved sub-division of the face value of shares from Rs. 1000/- per share to Rs. 10/- per share and also for conversion of the Company from Private Limited to Public Limited and consequent amendments to the Articles of Association of the Company. Accordingly, your Company in the 6th Extraordinary General Meeting held on 8 May, 2017 subdivided the face value of equity shares of the Company from Rs. 1000 per share to Rs. 10 per share and further the Board in its 238th Meeting held on 3 August 2017 approved the conversion of Company from Private Limited to Public Limited.

Apart from the above, your Board in its 238th Meeting also approved the buyback of 30546875 equity shares (representing 25% of paid up capital) of face value Rs. 10/- each in compliance with Clause 6 of the Guidelines on Capital Restructuring of CPSEs issued vide Office Memorandum No.F.No.5/2/2016 of Ministry of Finance, Govt of India dated 27 May, 2016.

6. PERFORMANCE AGAINST MoUs:

Your Company signs a Memorandum of Understanding (MoU) every year with the Ministry of Defence, Government of India.

The performance of the Company for the year 2015-16 has been rated "Excellent". The MoU rating for the year 2016-17 is under evaluation.

The MoU for the financial year 2017-18 was finalized with the Ministry, with a Net Sales target fixed at Rs.5300 Crore. Your Company is well poised to achieve the targets fixed in the MoU.

7. MODERNIZATION AND UPGRADATION:

Capacities of ATGMs and other products are being ramped up. Civil infrastructure is being created and modernization/upgradation of plant and machinery is under process. During the year an amount of Rs.49.45 Crore was spent towards the modernization/upgradation programme.

The following Key Technology Upgradation projects were taken up for implementation during the financialyear2016-17:

i. Automation of material handling of Surface to Air Missile (SAM) subsystem

ii. Establishment of automatic grain loading for Akash SAM

iii. Missile Simulation mode in R&D

iv. Spectro- Radiometer for R&D

8. RESEARCH & DEVELOPMENT

Your Company recognizes that Research & Development is a thrust area for design and development of various products for Indian Armed Forces. Your Company has developed Anti-Tank Guided Missile Launcher, Test Equipment, Outdoor Simulator, Infrared Interference Indicator (IRII), Counter Measures Dispensing System (CMDS) etc. as import substitutes.

Your Company has identified various products for the requirement of Indian Armed Forces and currently its research and development is in process. The Company is also working on the design and development of avionics systems such as Counter Measures Dispensing System (CMDS) for Indian Air Force. CMDS and its Test Equipment for various platforms are being developed as import substitutions. There is a substantial export market for CMDS.

The following table shows the recent trend in in-house R&D expenditure:

2013-14 2014-15 2015-16 2016-17
Sales Turnover (Gross) 1779.89 2799.68 4159.97 4886.62
R&D expenditure 19.89 22.72 29.43 34.71

In addition to the in-house R&D activities, your Company has entered into Molls with DRDO labs for codevelopment of various missiles with a substantial financial commitment and manpower support from the Company. This will further enhance the R&D expenditure to be incurred in the coming years.

9. PROCUREMENT FROM MSMEs

Your Company has been providing increased thrust on enhancing procurement from Micro, Small & Medium Enterprises (MSMEs) as per the guidelines/notifications issued by the Ministry of MSMEs.

Your Company being a weapons manufacturing Company has been granted certain exemptions under the policy. However, your Company would endeavour to procure general items from SMEs. A list of 358 items was reserved in the Company's IMM manual for procurement from SMEs.

As per Government of India guidelines issued from time to time your Company extends various facilities/concessions to vendors registered with NSIC under its Single Point Registration Scheme such as

a) Issue of Tender documents free of cost.

b) Exemption from payment of EMD.

c) Price Preference of 15% over the price quoted by large-scale units. In case the SME happens to be within 15% range above the LI price who is notan SME, SME unit shall be provided with a counter price to reduce to LI price. A quantity of up to 20% shall be ordered on SME on acceptance of LI price.

d) The condition of turnover and experience is relaxed for Startups (whether MSMEs or otherwise), as per guidelines of Govt, of India subject to the meeting of quality and technical specifications as per clarification given by Ministry of Finance, Department of Expenditure (DoE).

e) Interest free advance is also being paid to MSMEs and startups against Bank Guarantee for 110% of order value.

10. EXHIBITIONS:

Senior Executives and Directors participated in National and International Exhibitions during the year 2016-17. Such platforms are used to gain awareness in advanced technologies, interact with experts and share knowledge. Visiting the pavilions of other countries and understanding the systems available with them enables your Company to draw up its own future business plans effectively.

11. EXPORTS

With the recent changes in the Export policy of the Department of Defence Production, Ministry of Defence, Government of India, your Company is now focused more on tapping the export markets. Your Company is exploring the markets for potential exports. In this process your Company has bagged its first export order worth USD 21.5 Million for the supply of | Torpedoes.

Your Company is having regular interaction with the overseas customers. Offset implementation also offers a major opportunity to achieve our export targets. Your Company is interacting with aerospace majors in Europe and Russia to exploit opportunities arising out of offsets.

12. BOARD OF DIRECTORS:

Appointment of Independent Directors

Smt. Sushama.V.Dabak and Prof.Ajay Pandey were appointed as Independent Directors w.e.f 01 December 2015 for a period of three years. At present there is a requirement of three more independent directors (including filling up one vacant position), as the Company is in the process of listing of its shares on the stock exchanges. The appointments are in the process at our Administrative Ministry.

(i) Statement on declaration by Independent Directors:

Independent Directors have given declarations u/s 149 (7) of the Companies Act, 2013 that they meet the criteria of independence as laid down u/s 149 (6) of the said Act.

(ii) Change of Directors:

In terms of the Articles of Association of the Company, the President of India is vested with powers to appoint the Directors of the Company from time to time and also shall determine the terms of office of such Directors.

During the year, Shri.K.Divakar assumed the charge as Director (Technical) in place ofAVMN B Singh, w.e.f 01 July 2016.

AVM NB Singh ceased as Director (Technical) on 30 June 2016 upon his superannuation. Pursuant to MoD Lr.No.H-62011/7/2014-D(BDL) Dt.09 August, 2016, Lt.Gen.(Retd) Anil Chait, independent director of the Company ceased to be Director on the Board w.e.f 01 June 2016 on account of his resignation.

The Directors would like to place on record their appreciation for the services rendered by them during their tenure.

(iii) Number of Meetings of Board:

During the year 2016-17, Seven (7) Board Meetings were held on 16 May 2016, 30 June 2016, 10 August 2016, 27 September 2016, 25 November 2016, 24 January 2017 and 07 March 2017. Requirement on number and frequency of meetings, in terms of the provisions of the Companies Act and DPE Guidelines were complied with in full.

13. DIRECTORS' RESPONSIBILITY STATEMENT:

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

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

(ii) that the selected accounting policies have been applied consistently and judgements and estimates made are reasonable and prudent as to give a true and fair view of the state of affairs of the Company as at the end of the financial year and of the profit and loss of the Company for the year ended 31 March 2017.

(iii) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

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

(v) that the Company has devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

14. MANPOWER AND RESERVATION OF POSTS FOR SCs/STs:

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

Total manpower strength as on 31 March 2017 is at 3182 (including four functional directors) out of which the number of persons on temporary rolls is 72. Of the total strength, 96 are ex-servicemen, 592 are of Schedule Caste and 219 are of Scheduled Tribes. The percentage of Scheduled Caste and Scheduled Tribes in respect of Employees is at 1 8.60% and 6.88% respectively.

Number of persons on temporary rolls as on 31 March 2017 is 72, out of which 18 belong to Scheduled Caste and 02 belong to the Scheduled Tribes category.

The No. of Scheduled Caste and Scheduled Tribes in various categories of posts as on 31 March 2017 is given below:

Number of Employees

Category

Total Strength

Scheduled Castes

Scheduled Tribes

31-03-2016 31-03-2017 31-03-2016 31-03-2017 31-03-2016 31-03-2017
Group-A 770 829 126 138 76 84
Group-B 89 60 20 14 07 04
Group-C 1972 1940 356 348 110 110
Group-D 280 277 74 74 18 19
Temporary 17 72 2 18 1 2
Total 3128* 3178* 578 592 212 219

*excluding four functional directors.

Recruitment of employees in Scheduled Caste and Scheduled Tribes during 2016-17 is given below:

Classification of posts Total Vacancies Released Total Recruitment

Reservation of posts (out of Col.3)

Recruitment made during the year 2016-17

(1) (2) (3)

(4)

(5)

SC s STs SCs STs
Group-A 69 69 11 6 11 6
Group-B - - - - - -
Group-C 56 56 16 1 16 1
Group-D 1 1 - 1 - 1
Total 126 126 27 8 27 8

15. EMPLOYMENT OF WOMEN:

As per the recommendation No.51, Para (ii) (a) of the National Commission for Women (NCW) in its Annual Report for the year 1995-96, the employment position of Women as on 31 March 2017 is given below as directed by the Ministry of Defence, vide their letter Nos.39(6)/99/D(B&C), dated 27Augustl999.

I. EXECUTIVES

Grade No. of Employees Women Percentage
1 60 07 11.67%
II 208 35 16.83%
III 221 33 14.93%
IV 87 09 10.34%
V 98 11 11.22%
VI 163 6 3.68%
VII 37 0 0%
VIII 13 1 7.69%
IX 2 0 0%
Functional Directors 3 0 0%
CMD 1 0 0%
Total 893 102 11.42%

II. NON-EXECUTIVES

Grade No. of Employees Women Percentage
WG-0 2 0 0%
WG-1 71 13 18.30%
WG-2 250 30 12%
WG-3 245 28 11.42%
WG-4 316 54 17.09%
WG-5 146 22 15.07%
WG-6 168 22 13.10%
WG-7 35 3 8.57%
WG-8 130 7 5.38%
WG-9 15 0 0%
WG-10 169 6 3.55%
WG-11 113 15 13.27%
WG-12 629 47 7.47%
Total 2289 247 10.79%

16 PERSONS WITH DISABILITIES (PWD) AS ON 31 MARCH 2017:

The total number of Physically Challenged employees as on 31 March 2017 was 114 and its percentage to total employees works out to 3.21 %.

HI LD VI Total
Group-A 06 13 04 23
Group-B 0 02 01 03
Group-C 19 48 08 75
Group-D 04 05 04 13
Total 29 68 17 114

HI- Hearing Impaired, LD-Locomotive Disability, Vl-Visually Impaired.

17. HUMAN RESOURCE DEVELOPMENT:

During the year under report the Company has conducted training programmes for 1302 Executives and 1011 Non Executives to impart training on knowledge based, development oriented and need based topics. Such training programmes were organized in-house and at premises of external agencies to cover the present and future requirements of the Company.

Apart from regular training programmes, your Company organized the following activities/ programmes during the year:

(a) Management Development Programmes (MDPs):

26 senior Executives (DGM & above grade) were sponsored for the Management Development Programmes (MDPs) conducted by premier Institutes in India like IIM-Bangalore, IIM-Kozhikode, IIM- Lucknow, XLRI Jamshedpur and MDI Gurgaon during the financial year 2016-17.

(b) Advanced Management Programmes (AMP):

Three Principal Executives were sponsored for the Advance Management Programme conducted by ASCI, and one Board Member was sponsored for the AMP programme conducted by SCOPE.

(c) Project Management Professional (PMP) Programme:

To create awareness about Project Management concepts and transform your Company into a Project driven organization by institutionalizing the Project Management principle in the Company, Management has identified 31 Executives to undergo PMP Certification program conducted by PMI USA. Accordingly 35 Hrs mandatory Contact Programme for all the 31 Executives was conducted at the Institute of Systems, Technology and Management in 2 Batches.

59 Executives have registered themselves with PMI USA and 19 Executives have successfully cleared the PMP certification exam. 10 PMP Certified Executives were sent for a conference on Project Management in Hyderabad (PMIC).

18. PARTICULARS OF EMPLOYEES

There were no employees of the Company who received remuneration in excess of the limits prescribed under Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

19. FOREIGN VISITS:

Your Company incurred an expenditure of Rs.30.99 lakh during the year under report towards foreign travel for business trips and also for On the Job-Training of personnel.

20. INDUSTRIAL RELATIONS AND EMPLOYEE WELFARE:

Your Company continues to enjoy a cordial and harmonious Industrial relation with the cooperation and support of all sections of employees viz., registered Trade Unions and Associations such as SC,ST,OBC and officers Association. Statutory and non-statutory committees such as works, safety and welfare committees are contributing to work place discipline at all levels.

Statutory provisions on welfare are followed meticulously by Management and continues to extend non-statutory facilities such as school fee subsidy, uniform and shoes.

During the year, Union elections were held peacefully. In this regard election verification was conducted on 24 Dec 2016 by the Deputy Chief Labour Commissioner (C), Hyderabad to determine majority Union to represent the employees. Bharat Dynamics Employees Union emerged as majority union.

21. SECURITY:

Central Industrial Security Force (CISF) is providing Security and Fire Services in both Kanchanbagh and Bhanur Units. During the year under report, CISF has played a vital role in the Security and safeguarding the property of the Company. CISF team adopted robust security measures combining physical measures with technology to keep the highly sensitive installations secure.

The Plant Security Council is in place to review the security arrangements and implementation of IB guidelines. Regular Security review meetings are being conducted both by Management and CISF to beef up security.

Biometric Access Control System has been installed in addition to Computerized Photo Identity Cards to prevent unauthorized entry and CCTV Cameras have been installed all over the factory premises to cover more area under CCTV surveillance. Door Frames, Metal Detectors, X-ray baggage machines are also in use. Barricades, Boom Barriers and Morchas are provided to strengthen physical security measures.

Regular programmes on Security awareness were conducted besides observing Security Week/Fire Week. Employees are sensitized on the security threat and action to be taken in case of emergency and fire accidents.

On 9 September 2016 a joint mock drill exercise of Anti Terrorist Operation was conducted. A team of fifty members of OCTOPUS and fifty four members of CISF and eight officials of the Company have participated in the said programme.

On 22 October 2016 and 23 October 2016, counter terrorist exercise was conducted inside BDL, Kanchanbagh Campus by NSG Regional Hub, Hyderabad. In the exercise, One hundred and eighteen NSG personnel, including one Deputy Commandant, fifty two CISF personnel and eight officials of the Company have participated in the said programme.

In addition to the above, internal mock drill exercise was conducted twice in a month for effective security.

22. SAFETY:

Safety, Health and Environment (SHE) is strictly followed in your Company. The two Corporate Committees i.e. Industrial Safety Committee, which is statutory and Explosive Safety Committee are functioning to meet the needs of the Company. Safety committee meetings are held at regular intervals for monitoring Safety, Health and Environment as per the statutory requirement. The works are carried out in compliance with the Factories Act 1948 and Explosive safety strictly adhering to the Storage & Transport of Explosive Committee(STEC) regulations.

Annual explosive safety audit is conducted by Centre for Fire, Explosive & Environment safety (CFEES), New Delhi and the observations made by the audit team have been complied with. Regular medical check-ups are carried out for employees working in hazardous areas.

Training programmes are arranged by HRD through National Safety Council (NSC), Central Labour Institute (CLI), Regional Labour Institute(RLI) and Centre for Fire, Explosive & Environment Safety (CFEES), New Delhi to inculcate safety consciousness and to establish a safe working environment among the employees.

During the year, Safety officers of the BDL Safety Engineering Department conducted classes on both Industrial Safety and Explosive Safety as a part of an induction programme for new entrants in coordination with ISTM-HRD. Safety Engineering Department has organized guest lecture by persons with experience and expertise in the field of Explosive safety and Industrial Safety to educate the employees of the Company.

Fire mock drills were conducted at regular intervals to ensure firefighting Preparedness. 40 employees have undergone a certificate course on industrial safety through HRD and examination conducted by the State Board of Technical Education & Training (T.S). Successful candidates were awarded certificates.

Safety Day/Week was celebrated during the month of March, 2017. On this occasion Safety pledge was administered to all the employees and various competitions and programmes were conducted by Safety Engineering Department and employees were awarded to boost their interest towards safety.

23. ANNUAL RETURN:

In accordance with the provisions of the Companies Act, 2013, Company is required to attach an extract of Annual Return for the year under report and the same is placed as Annexure-I.

24. ENVIRONMENT AND POLLUTION CONTROL:

The Company contributes in all respects for the environment by maintaining a clean and green environment. Effluent Treatment Plant, Sewage Treatment Plant, Water Conservation, Tree Plantation,

Disposal of hazardous waste and scrap, planting of flower bearing trees and landscaping, utilizing treated effluent water have been carried out. Your Company is regularly reviewing the status of various types of pollutions. All the three Units are having valid consent for operation, which is obtained from the Pollution Control Boards.

The following steps have been taken for controlling and preventing of pollution in all respects:

i) WASTE MANAGEMENT:

All food waste generated from the canteen is being given for animal feeding and composting. The hazardous waste, e-waste and biomedical waste is being given to the agency registered with the pollution control board. The lead acid batteries are being given to the authorized recyclers/ dealers with buy back option. Metal scrap is being disposed through M/sMSTC (A Govt, of India Undertaking).

ii) TESTING OF ENVIRONMENTAL PARAMETERS:

The environment parameters like ambient air quality, wastewater from sewage treatment plant and effluent treatment plant, air quality of diesel generator set and Venturi scrubber are tested at all the three units through certified agency and results are within the prescribed limits of Pollution Control Board.

iii) CELEBRATION OF WORLD ENVIRONMENT DAY 2016

World Environment Day 2016 was celebrated at all the three units of the Company. On this occasion, with the theme "Fight against Illegal Trade in Wildlife" ba nners were put up in prominent locations complying with the United Nations Environment Programme (UNEP) recommendations.

Competitions like multi-lingual essay, slogan writing, quiz etc. were conducted and the winners have been awarded. Guest lectures were arranged on ecological, environmental issues being faced by the population. Plantation of Tree saplings has been organized in all the units.

25. QUALITY:

Your Company manufactures products which are single shot in nature. These products require stringent Quality standards and a high degree of reliability. In pursuit of this objective, your Company has been adopting International Quality Management practices by way of obtaining ISO certification for the past 21 years.

At present CP-IGMP, ITD, Electronics Division and D & E divisions have been certified with ISO 9001:2008 Quality Management System standard. Akash Division has been certified with AS 9001C; with this, all major divisions such as Milan, Bhanur Unit and Akash are certified with AS 9100C Aerospace Standards. Your Company is taking initiative to upgrade to AS 9100D (revised) standard and planning to complete upgradation by March 2018 for MILAN Division, AKASH Division and Bhanur unit. Remaining ISO certificated divisions are also planning to upgrade to AS 9100D during financial year 2018-19.

Electrical measured values have traceability to National or International standards which

are achieved through calibrating the Electronics equipment in ISO/IEC 17025:2005 (NABL) accredited Labs of Milan Division and Bhanur Unit.

All the three units of BDL at Kanchanbagh, Bhanur and Vizag have been certified with ISO 14001:2004 Environmental Management System (EMS). For all the Units periodical internal audits by internal auditors, surveillance audits by external agencies and Management Review meetings are being held.

Customer satisfaction is being measured for all major products manufactured in all the divisions. Your Company is continuously striving to improve customer satisfaction through customer meets and interaction with users. Corrective actions are being taken wherever necessary for improvement.

26. OFFICIAL LANGUAGE (OL) IMPLEMENTATION:

The provisions of OL Act-1963 (as amended in 1967) & Rules thereunder are implemented properly. Quarterly OLIC Meetings are held regularly under the Chairmanship of CMD and Directors. Similarly, the Quarterly progress reports on the use of OL are sent in time to the authorities concerned.

Under OL Act, 1963 and the Presidential Orders thereon, Annual Report of the Company, MoU with MoD and brief of the Company along with presentation for various delegations and Parliamentary Committees were prepared in bilingual form and submitted.

Hindi fortnight was celebrated from 01 to 16 September, 2016. On this occasion various competitions were organized at Kanchanbagh, Bhanur Unit and Vishakhapatnam Unit. Cash Awards were given to the winners of the competitions. On the occasion of Hindi Diwas, a Hasya Kavi Sammelan was also organized wherein the eminent poets from the twin cities were invited.

Town Official Language Implementation Committee (U) functioning is carried out by your Company Hindi Department for PSUs of twin cities consisting of 45 Organizations and was awarded NATIONAL RAJBHASHA KIRTI PURSKAR (first place) by Govt, of India in region 'C' for the year 2015- 16. The award consists of a Shield and a Certificate for outstanding contribution.

The award was presented by Hon'ble President of India Sri Pranab Mukherjee at a function held at Rashtrapati Bhavan on 14 September, 2016 on the occasion of HINDI DIWAS. CMD and Chairman of the Committee received the "RAJBHASHA KIRTI PURASKAR" in the form of a Shield and Senior Manager (OL) and Member Secretary of the Committee was awarded with the Commendation Certificate for outstanding contribution.

TOLIC (U) was also awarded "Dakshin Kshetriya Rajbhasha Puraskar" (First Place) on 21 December, 2016 in a glittering function of southern level OL conference held in IICT, Hyderabad. The award consists of a Shield and a certificate for outstanding contribution. The award was presented by the Hon'ble Governor of Telangana & Andhra Pradesh Shri G.S.L.Narsimhan. Shri V Udaya Bhaskar, CMD and Chairman of the Committee received the RAJBHASHA PURASKAR in the form of a Shield and Senior Manager (OL) & Member Secretary of the Committee was awarded with commendation certificate for outstanding contribution.

"Rajbhasha Sangoshti evam Samman Samaroh" was organized on 03 March, 2017 by TOLIC (U). In this Seminar, Prof. Arun Tiwari, Chairman of Care Foundation and Co-Author of 'Wings of Fire' was felicitated by TOLIC (U) for delivering a lecture on Dr. A.PJ. Abdul Kalam's Life & Karma in Hindi and Dr. Shrinarayan Singh, Director, Central Translation Bureau has delivered a Guest lecture on Technical Translation.

On the occasion of Vigilance Awareness Week, National Safety Week, Fire Safety Week, Environment Day and observance of Quami Ekata Diwas in the Company, various competitions were conducted in Hindi, English and Telugu to involve more and more employees of the Organization and bring awareness on these subjects among them.

The Website of the company prepared in Hindi was updated from time to time in compliance of the directives from Govt, of India in this regard.

As headquarters of TOLIC, the regular half yearly meetings consisting of 45 PSUs of twin cities were organized under the Chairmanship of CMD, BDL and the decisions taken therein are implemented at the twin cities level.

Employees and Officers of the organization took active participation in the Inter PSUs Competition conducted by TOLIC (U) and six participants won prizes.

With an objective to promote, propagate Hindi and inculcate Hindi reading habit among the officers and employees of the Company, various Hindi Magazines and News Papers such as (1) Hindi Milap (2) Anuvad (3) Sahitya Amruth (4) Avishkar (5) Yojna (6) Hindi Rozgar Samachar (7) Pratiyogita

Darpan (8) Meri Saheli (9) Dakshin Samachar (10) Golconda Darpan (11) Vaak (12) Milind Patrika (13) Naya Gyanoday (14) Swatantra Vaartha are subscribed regularly. Besides this, popular Hindi books on all subjects are also purchased annually with the same objective as per the directives of DOL.

27. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:

Your Company being a Defence PSU, the disclosure of information with respect to conservation of energy, technology absorption, foreign exchange earning and outgo under the provisions of Section 134(3)(m) read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is not required as the Ministry of Corporate Affairs vide Notification GSR No.680 (E) dated 4th September, 2015 has granted exemption to Defence Public Sector Undertakings.

Technology Conservation

Your Company has taken up indigenization which encompasses various nascent technologies like Thin Film Hybrid Technologies, manufacturing of HMX-based explosive compositions and optical devices like Photo Diodes, Lens, Filters, etc.,

The indigenization programme covers uncommon components which are not part of Technology transfer from Original Equipment Manufacturer (OEM). The equivalent indigenous materials were indentified and processed indigenously. The evaluation process was concluded successfully validating all the sub-systems. One of the ATGMs is made from these Indigenous parts. This has helped the Company to reduce the dependence on OEM and also bringing down production costs of missiles.

Renewable Energy Development

Sustainable development has become the national priority to channelize the development process in an environment friendly way with the optimum utilization of available natural resources. In its relentless pursuit of implementing sustainable development practices, your Company has unleashed various programmes to conserve energy thus promoting energy efficiency.

Solar energy is one of the most important renewable energy sources, which has been gaining increased attention in the recent past. Solar energy is clean and free of emissions, which is good for the environment, as it does not produce pollutants or byproducts harmful to the Nature.

Your Company under Green Energy commitment to the Hon'ble Prime Minister of India committed to set up 25 MW Grid connected Solar PV power plants in the units. Currently installation of 5 MW Grid connected Solar Power plant at Bhanur unit is in progress and which would be operational during financial year 2017-18. The generated solar power would be connected toTelangana state electrical power grid at Nandigama sub-station.

During the current year, your Board has also approved installation of 5 MW grid connected plant at Ibrahimpatnam Unit and its installation process would commence shortly.

28 VIGILANCE:

CMD of BDL inaugurated the Vigilance Awareness Week on 31 October 2016 at 14.30 hrs, at ISTM Auditorium, BDL- Kanchanbagh by lighting lamp along with the Chief Guest Shri K. Padmanabhaiah, IAS (Retd.), Chairman of ASCI, Hyderabad. & Ex-Home Secretary, Govt, of India and other Senior Executives. Chief Guest delivered a guest lecture on the theme of "Public participation in promoting integrity and eradicating Corruption"

Shri A.V.Y. Krishna, IPS, Joint Director, CBI- Hyderabad delivered a Guest Lecture and

participated in an interactive session with Senior Executives of BDL on 01 November 2016 at "Godavari" Conference Hall, D&E Building, BDL- Kanchanbagh, Hyderabad.

Shri Krishna Sastry Pendyala, Head-Fraud Mgt. & Digital Forensics of TCS delivered a guest lecture on 02 November 2016 at 10.00 hrs. at Auditorium, BDL- Bhanur, Telangana as part of Vigilance Awareness Week Celebrations of 2016. Vigilance Department conducted Interactive Session with Vendors and General Public on 02 November 2016 at 14.00 hrs. at Auditorium, BDL-Bhanur, wherein Vendors and General public participated and interacted with the CVO, BDL and Senior officials of BDL.

On 04 November 2016, Valedictory Function was organized wherein Justice L. Narasimha Reddy, Former Chief Justice of Patna High Court delivered a guest lecture on the theme of "Public participation in promoting integrity and eradicating Corruption". Further, Chief Guest released the Vigilance Newsletter "AWAKE", which is compiled by BDL-Vigilance Department. The News letter consists of "Ethics code as Tools of Vigilance, Seven Principles of Public Life, Checklists for Procurement cases along with Quotations, messages of the CMD and CVO".

"Integrity Pledge for Citizens" was administered on 04 November 2016 to all the employees of BDL- Kanchanbagh, Bhanur, Badamafi and Visakhapatnam and also to college students. "Pamphlets" were distributed in Visakhapatnam town on "Citizens Integrity Pledge" as per the directions of the CVC, as part of the sensitization programme during Vigilance Awareness Week-2016.

The main focus of the Vigilance department has been preventive/pro-active vigilance. System improvement suggestions were given to the Management on areas like e-tendering, recruitment and absorption of Management Trainees, Resignation, e-payment, e-procurement, departmental promotions, foreign visits, merit awards to employees, civil works, etc during the year under report. Online submission of Annual Property Returns was also implemented during the year.

29. CORPORATE SOCIAL RESPONSIBILITY AND SUSTAINABILITY DEVELOPMENT:

Pursuant to the provisions of Section 135 of the Companies Act, 2013 and The Companies (Corporate Social Responsibility) Rules, 2014 read with various clarifications / amendments issued by Ministry of Corporate Affairs & DPE guidelines, the Company has undertaken various activities as per the CSR Policy. The programmes/initiatives/projects are taken up in line with the Schedule-VII of the Companies Act, 2013, which are duly incorporated in CSR policy and forms the guiding principle for all our programmes.

The Board of Directors of your Company has constituted Committee on Corporate Social Responsibility and Sustainable Development (CSR & SD) (please refer Corporate Governance Report) in line with the provisions of Section 135 of the Companies Act, 2013. The Committee has formulated and recommended CSR Policy to the Board indicating the projects /activities to be undertaken by the Company as specified in Schedule VII of the Companies Act, 2013.

The CSR and SD activities are monitored periodically by the Committee and the annual report on CSR and SD activities undertaken during the year 2016-17 is enclosed at Annexure-ll.

During the year 2016-17, your Company spent an amount of Rs.l 3.18 Crore on CSR activities and achieved 100% CSR target amount required under the provisions of Companies Act, 2013.

CSR activities being undertaken are placed on Company's Web-link http://www.bdl-india.com .

30. AUDIT COMMITTEE:

An Audit Committee is in place as a part of good Corporate Governance. Six meetings have been held during the year 2016-17 to review internal control systems and their adequacy, including coverage of Audit Functions. Details of composition, terms of reference, etc. are covered in Report on Corporate Governance.

31. INTERNAL CONTROL SYSTEMS

Your Company had put in place all required internal controls and systems to meet the canons of financial propriety. External audit firms are appointed to ensure their adequacy and report thereon. A detailed analysis of reports of Internal Audit Firms as well as reports of Internal Audit Department of your Company are placed before the Audit Committee for its review and advice. The adequacy of internal control procedures are reviewed and reported by Statutory Auditors in their Audit Report. The necessary disclosures have been made in Notes to Accounts. Your Company being a Government Company is subject to C&AG Audit also.

32. AUDITORS:

M/s.S.R.Mohan &Co., Chartered Accountants, Hyderabad were appointed as Statutory Auditors of the Company for the financial Year 2016-17 by the Comptroller & Auditor General of India. The Auditors have audited the Accounts and their Report is placed as a part of the Annual Report.

33. COMMENTS OF THE COMPTROLLER & AUDITOR GENERAL OF INDIA

The Comments of Comptroller and Auditor General of India (C&AG) under Section 143 (5) of the Companies Act, 2013 on the accounts of the Company for the year ended 31 March 2017 are placed next to the Statutory Auditors Report.

34. COST AUDITORS

Your Company appointed M/s DZR & Co., Cost Accounts, Hyderabad as Cost Auditors for the FY 2016-17 in terms of Section 148 of the Companies Act, 2013, read with the Companies (Cost Records and Audit) Rules 2014.

35. CEO/CFO CERTIFICATION:

As per the requirements of DPE Guidelines, the CEO/CFO certificate has been obtained and placed before the Audit Committee and the Board.

36. CORPORATE GOVERNANCE:

Corporate Governance is about application of best management practices, compliance of laws and adherence to ethical standards to achieve Company's objective of enhancing stakeholders' value and discharge of social responsibility.

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

As per the guidelines on Corporate Governance for CPSEs issued by DPE vide its OM No. 18 (8J/2005-GM, dated 14 May 2010, the Management Discussion and Analysis Report (Annexure-lll), Report on Corporate Governance (Annexure-IV) along with Certificate on compliance of conditions on Corporate Governance from a Practicing Company Secretary (Annexure-V) as required under the said guidelines are attached to this report.

Quarterly and Yearly compliance reports on Corporate Governance are being forwarded to MoD in the prescribed format. During the year 2016-17 your Company received "Excellent" rating from MoD for compliance of Corporate Governance under DPE Guidelines.

37. RISK MANAGEMENT:

DPE guidelines on Corporate Governance for CPSEs - 2010 require that the Board of the Company should ensure integration and alignment of Risk Management Systems with Corporate and operational objectives and also that risk management is undertaken as a part of normal business practice and not as a separate task set at times.

In line with the above guidelines, your Company has framed Risk Management Policy of the Company which is applicable to all levels and all Units of the Company. One of the objectives of Risk Management Policy is to ensure that all current and future risk exposures of the Company are identified, assessed, quantified, appropriately mitigated and managed.

Divisional Level Committees have been formed to assess current status of Risk and identify measures to mitigate risks and also to evaluate mitigation measures so identified. Periodical Review meetings are taking place and a report being placed before the Board once in Six months.

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

In line with the provisions contained under "The Sexual Harassment of Women at the workplace (Prevention, Prohibition & Redressal) Act, 2013 your Company has put in place "Anti Sexual

Harassment Policy" in line with the requirements of the above Act. During the year 2016-17, your Company has not received any Sexual harassment complaints.

39. COMPLIANCE UNDER THE RIGHT TO INFORMATION ACT, 2005.

The information required to be provided to citizens under Section 4(1 )(b) of Right to Information Act, 2005 is placed on Company's Website www.bdl-india.com . It contains general information of the Company, functions, powers and duties of employees/officers, decision making process, rules, regulations, manuals and records held by the Company, directory of the Company's Officers, pay scales of officers/ employees and procedure for seeking information and inspection of records. The Company has nominated a Central Public Information Officer of Senior Manager level to attend to queries and appeals. Further, during the year 2016-17 the Company received 122 applications/queries and the same were disposed off.

40. VIGIL MECHANISM

Pursuant to the provisions of the Section 177(9) of the Companies Act, 2013 read with Rule (7) of the Companies (Meeting of the Board & its Power) Rules, 2014 and DPE Guidelines for CPSEs, the Board of Directors had approved the policy on Whistle Blower/Vigil Mechanism and the same was hosted on website of the Company. The policy inter-alia provides a direct access to the Chairman of the Audit Committee.

41. ACKNOWLEDGEMENT

Your Directors gratefully acknowledge the valuable support and assistance received from all Government Agencies, particularly Ministry of Defence, Ordnance Factories, Department of Defence Production, DRDO Laboratories, Central Government Departments, State Governments of Telangana and Andhra Pradesh, Quality Assurance Agencies of Government of India and other PSUs.

The Company wishes to place on record its appreciation for the cooperation extended and guidance provided by the Comptroller & Auditor General of India, the Principal Director of Commercial Audit & Ex-officio Member, Audit Board, Statutory Auditors, Bankers and Suppliers.

The Directors take this opportunity to place on record their deep appreciation for the valuable contribution made and co-operation extended by the employees at all levels to propel the Company to greater heights and to sustain its growth path in the years to come.

For and on behalf of the Board
V UDAYA BHASKAR
Place: New Delhi Chairman and Managing Director
Date : 03/08/2017 DIN: 06669311