1

1

ContentsChairman & Managing Directors Message 4

Message From Director (HR) 6

OVERVIEW OF THE REPORT

Key Opportunities And Threats 10

Positioning For The Future 11

ReportProfile 14

ORGANIZATIONAL PROFILE

About The Organisation 15

Primary Products And Services 21

Location Of Organization 23

Corporate Organization Structure 24

NatureOfOwnershipAndLegalForm 28

Awards&Accolades 28

CORPORATE GOVERNANCE

Management Approach 32

Governance Structure At BHEL 32

BoardLevelCommittees 32

AddressingConflictOfInterest(CoI) 33

Constitution Of Highest Governing Body 33

Code Of Business Conduct 33

Working Of The Board 35

Ethics,Transparency&Integrity 36

2

MechanismsToAnalyseCorruptionAndFraudulentPracticeRisks 37

MonitoringMechanismsInPlaceToAvoidIncidenceOfCorruption 38

MATERIALITY AND STAKEHOLDER ENGAGEMENT

StakeholderIdentification&Engagement 40

ProcessForDefiningReportContentAndAspectBoundaries 44

OUR ECONOMIC PERFORMANCE

Management Approach 46

ClimateChange-RiskAndOpportunity 46

FinancialPerformanceHighlights 48

ValueAdditionStatement 50

IndirectEconomicImpactOnSociety 50

SupportingMarginalSupplyChainPartners 51

OUR ENVIRONMENTAL PERFORMANCE

ManagementApproach-Sustainability 52

GovernanceForSustainability 52

SustainabilityFramework 53

ClosingTheMaterialLoop 53

Energy 55

EnergyEfficiency/ConservationEffortsAtOurUnits 58

Green Energy Generation 62

UtilisationOfWaterAndItsConservationWithinOurPremises 63

Biodiversity Conservation Within Our Premises 65

ManagingEmissionsAndCarbonFootprint 67

HandlingOurOperationalWastesResponsibly 71

InitiativesTakenToReduceEnvironmentalFootprintOfOurProductsAndServices 77

ManagementOfSignificantSpills 79

3

Compliance 79

EnvironmentalProtectionExpenditure 79

OUR SOCIAL PERFORMANCE

ManagementApproach-LabourPractices&DecentWork 80

ProfileOfTheEmployeeBase 80

Labour/ManagementRelations 81

OccupationalHealth&Safety 82

Training 85

PerformanceAndCareerDevelopmentReview 87

DiversityAndEqualOpportunity 89

SupplierAssessment 89

ManagementApproach-HumanRights&Anti-Corruption 89

ProtectingHumanRightsInSupplyChain 89

HumanRightsGrievanceMechanism 90

PERFORMANCE ON SOCIETAL IMPACT

ManagementApproachContributionTowardsOverallWellbeingOfTheSociety 91

MajorCSRInitiativesUndertaken 92

Compliance 97

ProductResponsibility 97

MarketingCommunication 99

CustomerOrientation 99

GRI CONTENT INDEX FOR IN ACCORDANCE COMPREHENSIVE

GeneralStandardDisclosures 100

SpecificStandardDisclosures-MaterialAspects 104

4

Chairman & Managing Directors

Message

Dear Stakeholders,ItgivesmeimmensepleasuretoplacebeforeyouBHELsAnnualSustainabilityReportcoveringtheperformanceofthecompanyforthereportingperiod2014-15.Thereportcapturesthesnapshotof the journeywhich our organization has undertakenwhile treading the path of SustainableDevelopmentduringthereportingperiod.

For BHEL, Sustainability is about preserving our natural environment which is the source ofoursurvival&well-beingwhilecreatingvalueforthestakeholdersinaresponsibleandsociallyacceptable manner. For almost fifty years of its existence, company has been leveragingtechnologyand innovation for providingproducts, systemsand services to its customersandenablingthemtouseresourceswithbetterefficiencyandproductivitywhichisalsoevidentfromitsMissionstatementProvidingsustainablebusinesssolutionsinthefieldsofenergy,industry&infrastructure.

Energy&infrastructure,beingthefulcrumofeconomicdevelopment,wouldcontinuetodepictarisingtrendtilldemand-supplydeficitisaddressedinitsentirety.Energysecurityandclimatechangeissuesaredeterminingthefuturecourseofdevelopment.Thisrepresentsahugeopportunitytobeleveragedbyourcompanywithitswiderangeofqualityproducts&services.Beingamajorpower plant equipmentmanufacturer, BHEL is quite aware of its huge responsibility towardsprovidingworldclassproductsandservicestoitscustomerssoastohelpthemgeneratepowerinasustainablemannerandminimiseenvironmental footprintover theentire lifecycleof theplant.Toaddressthisresponsibility,thecompanyhasadoptedR&Dandtechnologydevelopmentaskeydriverasapartofitsstrategy.WehavemaintainedR&Dexpenditureatplus2.5%ofthe

5

turnoverformorethan5years.Thecompanyfiled453patentsandcopyrightapplicationsduringtheyear2014-15,enhancingthecompanysintellectualcapitalto3010.Atotalof7,300Croreof thecompanys total turnoverhasbeenachieved from its in-housedevelopedproductsandservices.

BHELsresolvetofocusoncleancoaltechnologiesandchartaSustainablelowcarbongrowthpathismanifestedinseveraldimensions:

BHELmanufactured&commissionedIndiasfirst660MW(SG&TG)and800MW(SG)setswithsupercriticaltechnologyresultingin~11%reductioninCO2 emissions,lessfuelconsumption&ultimatelyleadingtolowercostforitscustomers.

In-housedevelopmentslikeFuelFlexibleBoiler,portfolioofmoreefficientUHVTransmissionsystems&productsandlowlifecyclecostofequipmentarefacilitatinguseofaffordableandenvironmentallysustainableenergysystems.

In the field of Photovoltaics, BHEL has generated expertise in the critical parts of thevaluechain,viz.,SiliconWafertoCell,CelltoPVModule,Erection,CommissioningandOperations&MaintenanceofMW-sizeSolarPVpowerplants.BHELhasinstalleda5MWP gridinteractivesolarpowerplantatitsBoilerAuxiliariesPlant,Ranipetwhichispoweringoperations & ensuring CO2 mitigation of around 5600 MT CO2-eperyear.Another1.5MWP PVplantisbeingcommissionedatitsHeavyPowerEquipmentPlant,Hyderabad.

ThecompanysetanewrecordinitsSolarPhotovoltaic(PV)businessinasingleyearbysupplying50MWPofSPVmodulesincludingsolarpowerplantscommissionedforNTPCTalcherandNTPCUnchaharfor10MWeach.

2014-15 marked turnaround in Indian Hydropower sector with addition of 736 MW toCentralutilities,highestinadecade.Thisentire736MWofHydroelectricprojectsweresuccessfullycommissionedbyBHEL.

Amidst the difficult external economic and business environment, BHEL continues to facechallenges in the current year also. Nevertheless, the company has developed considerableresilience to leverage its engineering strength and manufacturing prowess to regain growthmomentuminnextphaseofIndianeconomicgrowth.

ForBHEL,itisimperativetofocusonnewerareastomeetthechallengesofachangingbusinessscenariowhilecontinuingdevelopment in traditionalareasofbusinessand thus Creating theBHELoftomorrow.

(Atul Sobti)

6

Message From Director (HR)

Dear Stakeholders,Sustainability is about creatingwealth for its stakeholders through achieving growthwhich issustainable,attainedinamannerwhichissociallyacceptablewhileremainingwithintherealmsoftheassimilativecapacityofourecologicalenvironment.

Structuredapproachtowardssustainabilityisinitselfavaluepropositionwhichaddstothetriplebottom line.Thishelpsus in reducing -material,water&energy consumption, emissionandwastegeneration;providingmoreacceptabilityforouroperationsinthesociety;andmakingourproducts&servicesmoresustainableandprofitable. It alsoenablesus tocontribute towardsequitabledevelopmentasacentralthemesothatthebenefitsofeconomicandbusinessgrowthcanreachtothemaximumpopulace.

BHELhasingrainedthetriplebottomlineapproachforSustainableDevelopmentinitsBusinessprocesses.Ithasbeencreatingvalueforitsstakeholderssinceinception.ItsR&Deffortshavealways been directed towards development and diffusion of technologies which are havingreduced environmental footprints. BHEL has laid down an elaborate enabling framework forputtingconcertedeffortstowardsatstrategicaswellasgroundleveldaytodaywork.SustainableDevelopmentPolicyistheguidingforceforallourCSR&SustainabilityactivitiesandexecutionatunitlevelissteeredbyNodalofficerforSustainability.

To address the bottom line of Environment, key projects & initiatives are undertaken in theareasofRenewableenergygenerationthroughSolarPowerPlants&othersolarsystems,tree

7

plantation,waterconservation,energyefficiency,workplaceenvironmentimprovement,ResourceConservation,etc.tohelpachievetheecologicalsustainabilitythroughoutouroperations.Asapartofitsstrategicplan2017,BHELisenhancingtheuseofcleanenergyatourunits/sitesthroughusagesofPVbasedstreetlights&solarwaterheatingsystems,installationofroof-topandgridinteractivesolarpowerplants(KW&MWscale)andmanysuchsystemsarealreadythere inplace.A5MWPSolarPowerplantatBAPRanipetunitishallmarkinoureffortstowardsensuringEnvironmentalSustainabilityanda1.5MWPsolarpowerplantisshortlygoingtobecommissionedatHPEPHyderabadwhichwillfurtherboostoureffortsinmovingtowardssustainableenergymixinouroperations.

ToaddresssecondbottomlineofSociety,BHELhasastructuredCSRprogrammesteeredbyTheBoardofDirectorsofBHELwithmajorfocusofinclusivegrowthaimedatcapacitybuilding,empowermentofcommunities,environmentprotection,developmentofbackwardregions,andupliftmentofthemarginalized&under-privilegedsectionsofthesociety.

ThespecificeffortsmadetowardsaddressingthetenetsofSustainableDevelopmentparticularlyduring2014-15iscapturedandelaboratedinthisSustainabilityReportofBHEL.ThisreportistheresultofmanyconcentricanddedicatedeffortsofCorporateHSEteam&UnitlevelNodalOfficersforSustainability.IinviteyourfeedbackformakingourfutureSustainabilityReportmorerobust.

(D Bandyopadhyay)

8

9

10

With301billion tonnesofcoal reserves,yet,India has been struggling to increase coalsuppliestomeetthegrowingrequirementsofitspowerandotherindustries.Fuelavailabilityfor new projects is still a concern. E-auction/allocationof coalblocksandGovernmentsobjective todoubledomestic coalproductionby 2020 is likely to improve the prospect offuel availability for existing projects. Landacquisition remains a complex issue as theexistingandnewprojectsstillawaitclearancesaffecting take-off. Evacuation infrastructure,anotherissue,iscriticaltomeetthe1.5billiontonnesproductiontargetby2020.

The subdued growth of the core industries has remainedadragonindustrialproduction.Eightcore industries, constituting 38% in Index ofIndustrialProduction,havedeceleratedfurtherafterregisteringonly3.59%Y-o-Ygrowth,thelowestinthelastfiveyears,duetoadeclineincrudeoil,naturalgasproductionandsteel.

Further, Climate Change is going to beone of the foremost factors impacting the

Overview Of The Report

Key Opportunities And Threats The global economy continued to expandduring 2014 across major countries and regions at a moderate but an uneven pace andstillshroudedinuncertainty.Therecurringthemeisthattheglobaleconomyisstrugglingto generate the desired traction necessary formaintainingaconsistentgrowthtrajectory.Economy of United States, is expectedto improve in 2015 with real GDP growthprojectedat 3.6%aidedby improving labourand housing market conditions. EconomicconditioninEuroregionremainweakalthoughsomepick-upisexpectedsupportedbylowercrude prices and the depreciation in the euro aswellasincreasedbanklending.Japantoo,isstillstrugglingwithgrowthcontraction.

PotentialspilloversfromGeopoliticaltensionsandtheweaker-than-expectedperformanceofdeveloped economies and domestic supply-side constraints have impacted the emerging economies over the past year. Geopoliticaltensions in Iraq, Libya, Yemen, the SyrianArabRepublicandUkrainehavealreadyhadeconomic impacts at the national and sub-regional levels.Mostof theworldsmajoroil-producing countries are still grappling withinvestment decisions, and subdued output despite modest rebound after the almostcollapseininternationalcrudeoilprices.

In this context, even with increase in oilproduction by the United States to renderresilience to the global oil market, majordownside risk due to sudden and drastic stoppageofexportsbymajorsuppliercountriescannotberuledout.

11

Positioning For The Future Withasturdyfoundationof50illustriousyearsof engineering excellence, BHEL has beenthefore-bearerofIndiassuccessinachievingself-sufficiencyintheindigenousmanufactureof heavy electrical equipment. BHELs 55%share in Indias total installed capacity and62% share in the countrys total generationfrom thermal utility sets (coal based) as ofMarch31,2015standtestimonytoitsvaluablecontributiontowardsnationbuilding.

Amidst the difficult external economic andbusiness environment, BHEL continues to face challenges in the current year also.Nevertheless, the company has developedconsiderable resilience to leverage itsengineering strength and manufacturing prowess to regaingrowthmomentum innextphase of Indian economic growth. OverallbusinessscenarioisimprovingandtheMakein India initiative of Government of India ispoised to drive the manufacturing sector into a newphaseofgrowth.

industry in near future. With the spurt inunexpectedclimateeventsacross theworld,global population has started experiencingitsadverse impactwhichwill compel variouscountriestocommittoreductioninemissions.Further, acceptability of the fact that globalwarmingismajorlyhumaninducedwillprovidetheadditional thrust to reduce theemissionsfurther.ThistrendpresentsalotofopportunitiesforcompanieslikeBHELandatthesametime,presentsmanychallenges,particularlyrelatedtoGreentechnologydevelopment.

Buteconomyisexperiencingaturnaroundandthe initiatives initiated by the new government would act as enablers for resolution ofimpending issues. Allocation of Coal Blocksthrough e-auction, rationalization of gasprices, Single Window Concept, Coal BlockSwapping, etc. are likely to improve the fuelavailabilityforexistingpowerprojects.

Demandforelectricaltransmissionequipmentis expected to improve withmore andmoregeneration, transmission and distribution projects taking off aided by the Distribution reforms such as feeder segregation and separation of content and carriage in distribution. The Government has proposed100GWcapacityadditioninsolarand60GWinwindby2022.Transportationsectorislikelyto see a lot of traction in the days to come.The positive steps taken by the government are likely to translate into more businessopportunities and finalization of several newopportunities in the near and medium term.Moreover, the Make in India initiative bytheGovernment is poised to catapult IndianIndustryintoanewphaseofgrowthtrajectoryby strengthening business confidence andinvestmentclimate.

Theoverallbusinessscenarioisimprovingata moderate pace and BHEL would certainlyleverage the opportunities arising out of thenextphaseofeconomicgrowth.

12

15MWSPVPlantforNTPCSingraulicommissioned by BHEL

To enhance the share of business in power sector, company has been adopting two pronged strategy; focus on EPC business and enlargingscopeofoffer.BHELisexpandingitsportfolio by adding Flue-Gas Desulfurization(FGD), Water Management system, AirCooledCondenser,andotherBalanceofPlant(BoP) systems.Company is fully harnessingpotential in Spares & Services area andforging partnerships with other value chainpartners. Increasing levelof indigenization inSupercriticalTechnologyanddevelopmentofAdv.UltraSupercriticalTechnologyaremajorstrategiesinPowerSector.

Diversification of business has been thefocus of the Management in recent years so as to enhance share of IndustrySegmentin businessmix. BHEL has taken variousinitiatives in recent past to expand itspresence in Transportation (Rail), Solar,Defence and Transmission business areas, both by way of investments in existingfacilities and by exploring new businessmodelswithfocusoncollaborationwithvaluechainpartners.BHELhasdemonstrateditscapability to design and offer all variantsof 765 kV class Transformers and ShuntReactorsandiswellpositionedtocapitalizeonthepremium765kVvoltagesegment

BHELsproductsandsystemsaretechnologyintensive and thus, the company has adoptedR&Dandtechnologydevelopmentas the central driver for implementingits strategy. We have maintained R&Dexpenditureatplus2.5%oftheturnoverformore than5years.Recently thecompanyhas indigenouslydesignedanddevelopedFuel Flexible Boiler which is capable ofblending & firing any percentage mix ofimported & indigenous coals. BHEL hassuccessfullydeveloped,manufacturedandcommissioned Indias first Phase ShiftingTransformer(PST)at Kothagudem TPS in Telangana.ThePSTimprovestransmissionefficiency and is an outstanding solution

forsmartgridensuringmultiplebenefitsfortransmission networks

BHELwillcontinuetopursueitskeystrategyofacceleratingprojectexecution.Companyisalsofocusingonintermediatemilestones,

deliverycyclereduction,centralmonitoringsystemanddeploymentofadditionalTools& Plants. The significant achievementsin execution include commissioning offirst indigenously manufactured 660MW supercritical thermal set at NTPCBarh, commissioning of first indigenouslymanufactured 800MW supercritical boileratAPPDCLKrishnapatnam.Wehavealsocommissioned 736 MW of hydro projectsduring 2014-15. Notably, this is 100% ofhydroprojectscommissionedinIndiaduringthe year andalso the countrys highest inlast10years

To address prevailing pricing pressures,company is focusing on cost optimization measures in different areas of operations through competitive buying, increased localization, design/layout optimization,supply risk mitigation, IT applications,operations improvement and better employeeproductivity

BHELhasbeeninthefieldofPhotovoltaics,a strategically important area of non-conventional energy and has been

13

contributing to the national effort fordeveloping and promoting renewableenergybasedproductsonasustainedbasis.The company has generated expertise inthecriticalpartsof thesiliconvaluechain,viz.,SiliconWafertoCell,CelltoPVModuleand inEPC&O&MofMW-sizeSolarPVpowerplantsoffering turnkeysolutions forSolar PV plants. BHEL has a dedicatedR&D group in the area of semiconductor materials, Nano-and thin-film devices attheirplantsinHyderabadandGurgaon

In line with the growing aspirations ofmillennial generation of the company, thePeople Development strategy of BHELis focusing on developing each persons

competencies in alignment with businessplans through implementationof initiativeslike e- learning modules for developingLeadership competencies in association withHarvardBusinessSchool,performancelinkedpay,careerplanningandsuccessionplanning

BHELwillcontinuetobuildonitsstrengthsthroughfocusonCapabilityEnhancement,Project Execution, Cost Competitiveness& Quality, Diversification, Engineering &Technology, and People Development asenvisaged in 6-Point agenda to harnessthe opportunities arising out of improved economic and business conditions

14

Report Profile

This report is the 4th Annual Sustainabilityreport of Bharat Heavy Electricals Limited(BHEL) and has been prepared in line withthe latest versionofGRI framework i.e.GRIG4coveringtheactivitiesconductedin2014-15.Previousyearreportfor2013-14wasalsopreparedinlinewithGRI-G4guidelines.

BHELhasstarteditsjourneyofcompilationandpublication of its SustainabilityPerformance in the form of Environmental Sustainabilityreportin2011-12.Thefrequencyof the report is annual. Currentreport covers the Sustainabilityperformance of the company for the period fromApril 1, 2014 toMarch 31, 2015 and is an attempt togivethereaderaholisticviewofourSustainabilityPerformancefor2014-15andtheareasinwhichfurther improvement is desired.Data has been provided for multipleyearswhereveravailableforcomparisonpurpose.

ItmayalsobenotedthatdataforournewlyestablishedunitPPPUThirumayamisgettingcompiledbuttomaintaincomparabilitywiththelastreports,ithasnotbeenincludedinthepresentreport.Thedataforthisunitwillbeincludedinournextsustainabilityreportfor2015-16.

For the reporting purpose, data has been captured through SAP system wherever applicable.Otherwisethedatahavebeentakenfrom reliable sources, compiled at unit levelandsenttocorporateofficeforpreparationofthisreport.Whereverthedataisnotbasedonmeasurement the same has been arrived at usingappropriateestimationmethodology.

Allthecalculationshavebeendoneasperthestandard calculation methodology followedin UNFCCC protocol, Calculation tool forDirect emissions from Stationary Combustion -WRI/WBCSDGHGProtocol,CEAdataforgrid emission factor, etc. The content of thereport has beendevelopedon the principlesof materiality, stakeholder inclusivity andresponsiveness as applicable to BHELspresentsustainabilitycontext.

Therehasbeennosignificantchangefromthepreviousreportingperiod.Westronglybelievethatyourfeedbackonourreportwillprovetobe invaluable in improving the quality of ourfuture report. We shall be highly thankful toyouifyoucanprovideyourvaluablefeedbackon this report. Feedback can be e-mailed atajitshar@bhel.in

At present the report is not being externallyassured. The reporting principles andmethodology are in accordance with theComprehensiveoptionofGRIG4 reportingframework.

15

Organizational Profile

About The Organisation Forging ahead on the sturdy foundation of 50illustriousyearsofengineeringexcellenceand embracing the glorious next phase ofits growth, BHEL is an integrated power plant equipment manufacturing and one ofthe largest engineering and manufacturingcompany of its kind in India engaged inthe design, engineering, manufacturing, construction, testing, commissioning and servicing of a wide range of products and services for the core sectors of the economy,viz.Power,Transmission, Industry,Transportation(Railways),RenewableEnergy,Oil&GasandDefencewithover180productsofferingstomeettheneedsofthesesectors.BHEL has been the solid bedrock of Indias

4x500MWSimhadriSTPScommissionedbyBHEL

HeavyElectricalEquipmentindustrysinceitsevolutionin1964.

BHELs growth has been synchronous withachieving self-sufficiency in indigenousmanufacturingofheavyelectricalequipment.BHEL has a mammoth 20,000 MW per annum capacity for power plant equipmentmanufacturing in the country. Adding to itsachievements,BHELhasjoinedtheeliteclubof select global giants having an installedbase of over 150 GW of power generating equipment globally. BHELs 55% share inIndiastotalinstalledcapacityand62%shareinthecountrystotalgenerationfromthermalutilitysets(coalbased)asofMarch31,2015stand testimony to its valuable contributiontowardsnationbuilding.

16

BHELhasbeenadeptattransformingitselfinlinewiththemarketrequirementsthroughoutits

Thehighlevelofquality&reliabilityofBHELproducts isduetoadherenceto internationalstandards by acquiring and adapting some of thebesttechnologiesfromleadingcompaniesintheworldincludingGeneralElectricCompany,AlstomSA,SiemensAGandMitsubishiHeavyIndustries Ltd., together with technologiesdeveloped in its own R&D centres. Most ofits manufacturing units and other entities havebeenaccreditedtoQualityManagementSystems (ISO 9001:2008), EnvironmentalManagementSystems(ISO14001:2004)andOccupational Health & Safety ManagementSystems(OHSAS18001:2007).

2Unitsof200MWeachofKoldamHEPcommissioned by BHEL during the year

800MWTurboGeneratorrotorunderassemblyatHEEP,Haridwar

illustriousjourney.Rightfromitsincorporationin a protected market to facing the pressures of a liberalized economy and the currentslowdownintheeconomicenvironment,BHELhas evolved with transforming its strategiesfrom product manufacturing to market orientation; business excellence throughportfolio restructuring and the current roleof sustaining growth through diversification.BHELowesitsdexteritytothestrongcultureofstrategicplanninginitiatedin1970andtoday,the company is pursuing its seventh Corporate Planwith focus onCapability Enhancement,Project Execution, Cost Competitiveness& Quality, Diversification, Engineering &Technology,andPeopleDevelopment.

DiversificationinTransportation,Transmission,Defence,Water&Renewablesisthestrategyadopted to maintain a balanced portfolio ofofferings. This strategy of diversifying andcapitalizingnewbusinessopportunitiesstemsfromthecommitmenttoinnovationledgrowthwhich is an indispensable part of BHELsbusinessmodel.R&Dfocusoftheorganizationis quite diverse ranging from advance ultra-supercritical thermal power plants to IGCCpower plants and grid connected renewableenergysystems.

17

BHELs greatest strength is its highly skilledand committed workforce of about 45,000 employeeswhohavebeen the cornerstonesofBHELsjourneyensuringsuccess.Further,the concept of sustainable developmentis inculcated in the DNA of BHEL which isevidentfromitsmissionstatement-providingsustainablebusinesssolutionsinthefieldsofenergy, industry and infrastructure. BHEL isalsoengagingwith thesocietywith itssocialinitiativesaimedatCommunityDevelopment,Health & Hygiene, Education, EnvironmentProtection, Disaster Management, Promotion ofTalent,Skilldevelopment,etc.

BHEL offers sustainable solutions to itscustomers throughout the entire operationallifecycle of the power plants by offeringengineering and technology inputs forreducing greenhouse gas emissions, water consumption,lessauxiliarypowerconsumptionandlessfuelrequirement.BHELmanufactured&commissioned Indias first 660MW (SG&TG)and800MW(SG)setswithsupercriticaltechnology.

BHEL manufactures a wide range of products and systems for thermal, nuclear, gas andhydro-based utility power plants to meetcustomers power generation requirement.BHEL has proven turnkey capabilities forexecuting power projects from Concept toCommissioning and offers EPC services.

Power generation equipment includes boiler, turbines,generatorsofdifferentpowerratingsandotherauxiliaryproducts,etc.

TheCompanyhas provenexpertise inPlantPerformance Improvement and offer itsservices through Renovation, Modernization and Uprating of a variety of power plantequipment, besidesspecializedknow-howofresidual life assessment, health diagnosticsandlifeextensionofpowerplants.

For transmission of generated electricityto load centers, company manufacturestransformers,capacitors,insulatorsofdifferentratings,etc.forpowerutilitiesinTransmission&Distributionbusiness.ExecutesEHV&UHVsubstationsrangingfrom132kVto765kV&HVDCconverterstationsupto800kV.

Company also caters to different industrieslikefertilizers,cement,refineries,etc.fortheircapital goods requirement. BHEL suppliessystemandindividualproductincludingalargenumber of Captive power plants, Centrifugalcompressors,DriveTurbines,Industrialboilersand auxiliaries, waste heat recovery boilers,Gas turbines, Pumps, Heat exchangers,Electricalmachines(motors),Valves,Oilrigs,etc.toanumberofindustriesotherthanpowerutilities.

Most of the drives of the Railways, whetherconventionalDCorstate-of-the-artACordiesel

18

VisionA global engineering enterprise

providing solutions for a bet ter tomorrow

MissionProviding sustainable business solutions in the fields of Energy,

Industry & Infrastructure

The Gentle Giant

An Indian Maharatna CPSE

One of the largest engineering &

manufacturing companies in India

serving core sectors of economy viz.

Power

Industry

Transmission/Transportation/Oil &

Gas/Renewables/Water/Defence/

Industrial Products-E&M

Major Integrated Power Plant

Equipment Manufacturer in the

world with 20,000 MW pa

manufacturing capacity

17 Manufacturing Units,

1 Subsidiary, 6 Joint Ventures,

8 Service Centres & Infrastructure to + deal with 150 project sites

Sustainable PerformanceProfit Making Company

since 1971-72

Consistent Dividend Paying Company since 1976-77

First listed its equity shares on stock exchanges in 1992

Market capitalization crossed ` 100,000 Crore in 2007

Crossed Turnover mark ` 50,000 Crore in 2012-13

Did you know?

3 out of 5 houses in India are supplied power generated from BHEL sets

55% of India's nuclear power generating capacity (conventional island) installed by BHEL

All Indian satellites launched by ISRO are equipped with BHEL supplied solar panels

since 2002 & batteries since 2005

BHEL is largest supplier to Indian Railways for rolling stock propulsion equipment

Only domestic supplier (outside IR) to Indian Railways for Locomotives

BHEL is energizing India's Nor th-East with commissioning of highest rating (3X250 MW)

coal-based power plant in Assam

Indian Navy's INS Kolkata-D63 Missile Destroyer is equipped with BHEL's Super

Rapid Gun Mount and Auxiliary Control systems

World's largest 800 kV, 6000 MW Multi-terminal HVDC NE-Agra Transmission

project under execution by BHEL

All Power Stations awarded by Ministry of Power for early completion in 2013-14 were contracted on BHEL

Sudan's largest 500 MW Kosti Thermal Power Plant commissioned by BHEL

95% of hydroelectric generating capacity in Bhutan installed by BHEL

World of

BHELGlobal Footprints

References in 77 countries

Of fices in 6 countries

Contracted power plant equipment around 17,000 MW

Commissioned 4 power plants in four overseas markets for first time

in a single year

POWER

TRANSMISSION

INDUSTRY

TRANSPORTATION

RENEWABLES

OIL&

GAS

DEFENCE WATER

19

Powering the industry+500,000 MVA transmission equipment supplied

+30000 AC machines supplied,

largest Indian manufacturer+130 MW- cumulative shipments of

PV cells, modules and systems

360 Electric Locos Supplied to Indian Railways & other industries

+ +375 Compressors & 88 Oil drilling Rigs Supplied

+40 Oil Rigs- Refurbishment & Upgradation completed

+30 SRGMs supplied till date

Valuing peoplePar ticipative Management Culture through

JCM, Plant Council, Shop Council since 1973

~ 75% Engineers amongst Executives

~ 1500 female employees inducted in the last ten years

Less than 1% attrition rate +4 days of training accorded to an employee per year

1000 Executives undergoing leadership training by Harvard Manage Mentor,

an affiliate of Harvard Business School

Heralding the change towards climate

Supercritical technology resulting in ~11% reduction in CO emissions, less fuel 2

consumption & lower cost to customers

Developed Fuel Flexible Boiler for operational flexibility & uninterrupted generation of electricity

Developed more efficient UHV Transmission systems and products (765 kV AC, 800 kV DC

& 1200 kV AC)

Commissioned India's first 'Phase Shifting Transformer' (PST) at TSPGCL Kothagudem

improving transmission ef ficiency

Average ef ficiency of Solar Photovoltaic cell increased to 18.75%

5 MWp grid interactive solar power plant at BAP, Ranipet powering unit operations &

CO mitigation ~ 5600 MT CO -e per year2 2

Low lifecycle cost of equipment facilitating af fordable and environmentally sustainable

energy systems

Social onus

Committed to Principles of

UN Global Compact

Signatory to Integrity Pact of

Transparency International

Providing financial support for education

of more than 20,000 school children

'Vanavil'- 5 acres eco-friendly park

developed at BHEL Trichy having trees

with botanical value

More than 75,000 eye donation pledges

under "Vision to All-BHEL's Call"

Preserving Cultural heritage - Around

700 steel wheels supplied by BHEL for

temple chariots in Tamil Nadu &

Refurbishing Swatantrata Sangram

Sangrahalya in Red Fort, Delhi

InnovationR&D Expenditure >2.5% of Turnover-

highest in Indian engineering field

14 Centres of Excellence

More than 1 patent/copyright filed per day

Total intellectual capital: 3010

In-house R&D Centres of 12 Manufacturing units/Divisions recognized by DSIR

Energizing IndiaBuilt India's capability in power plant

equipment manufacturing+157 GW power generating equipment

installed till date+100 GW coal based utility installations

in the country

Commissioned country's first indigenously manufactured 800 MW boiler at

APPDCL Krishnapatnam-2

Commissioned country's first 660 MW indigenously manufactured supercritical set

at NTPC Barh-5

20

BHEL also executes power projects inInternational market. Company has awidespreadoverseasfootprintin76countrieswith cumulative overseas installed capacityofBHELmanufacturedpowerplantsnearing10,000MWincludingMalaysia,Oman,Libya,Iraq,UAE,Bhutan,Egypt,NewZealand,etc.

The future is filled with both excitingopportunities & gruelling challenges. BHELhas embraced the new business opportunities by expanding its offerings and enhancingcompetitiveness seeking to realize its longterm vision.Creating newbusiness avenuesand maximizing utilization of availableinfrastructurewillbe thekeyto futuregrowthandstakeholderswealthenhancement.

powered, are equipped with BHELs tractionpropulsionsystemandcontrols.Therangeofproducts supplied byBHEL includes tractionmotors, traction generators/alternators,transformers, substation equipment, vacuum circuitbreakers,locomotivebogies,smoothingreactors, exciters, converters, inverters,choppers and associated control equipment.Besides company also manufacturelocomotives, EMUs, IGBT based propulsiondrives,etc.

BHEL executes EPC projects for gridinteractiveandstandalonePVpowerplantsofapplications kW toMW rating, SpaceGradeSolar Panels and Space Grade Batteries.Company manufactures and supplies anumberofsolarwaterheatingsystems,solarphoto-voltaic(SPV)systemsforbothDomesticandIndustrialapplications.

Provides Turnkey Solutions for WaterTreatment Systems including ReverseOsmosis(RO),EffluentTreatment,Membranebased Sewage Treatment Plants & systemsforZeroLiquidDischarge,etc.

BHEL is supplier of strategic equipment toIndiandefence forces includingSuperRapidGunMount,IntegratedPlatformManagementSystem for Naval Ships, Thermo pressedcomponents,ATVPequipment,etc.

21

Primary Products and Services

BHEL offers end-to-end Systems, Productsand Engineering, Erection & Commissioning services for thermal power plantsencompassing steam turbines, generators, boilersandmatchingauxiliariesupto1000MWratingsandhassuppliedsetsof660/700/800MWbased on supercritical technology.Thekey products that the company manufactures are - Steam Turbines, Generators, Boilers

& accessories for Thermal power plant;Locomotives,propulsionequipments,tractionmotors/alternators, Transformers, VCBs forTransportation Sector; Power & instrument transformers, reactors, switchgear, capacitors, insulators, FACTS & HVDC system forTransmission segment. For detailed list ofproducts which is being made by BHEL, the readermay refer topage263-270ofAnnualreport2014-15availableonwww.bhel.com.

Offerswiderangeoftransmissionsystemsandproducts PresentinUHV,EHV,HVDCandGISsegmentsProducts: PowerTransformers(400kV,765kV,1200kV) InstrumentTransformers ShuntReactors SwitchgearsCapacitors Control&ProtectionEquipmentHVDCterminals FlexibleACTransmission

Offerssystemrangeincludingtractionmachines,ElectricLocomotive(AC/DC),EMUCoachesandtractiondrivesystemsBHELsIGBTpropulsionequipmentaccountsformajorityshareof IGBTbasedlocomotivesinIndianRailways

Morethan70%ofIndianRailwaysequippedwithtractionequipmentbuiltbyBHEL

Power Contributestoaround80%ofthetotalrevenuesProvencapabilitiestoexecutethermalpowerprojectsonEPCbasis Products: Thermal:Entirerangeupto800MWratingsincludingsupercriticalsetsof660/700/800MW

Gas:Advancedclassgasturbinesupto289MW(ISO)foropenandcombinedcycle. Hydro:Electro-mechanicalPackageupto250MW Nuclear:TGsets220/235/500/540/700MW

Transmission

Transportation

Products: LocosandEMU ElectricRollingStockAC&DC IGBTbasedpropulsiondrives ElectricsforUrbanTransportationSystem

22

Primary Products & Services

ContributingstrategicequipmentstoIndiandefenceforcesforover20 years

Products: SuperRapidGunMount IPMSforNavalShips TurretCastingforT72Tanks Equipmentsfornavalships

Designs,manufacturesandservicesvarioustypesofonshore rigssince1975

Capabilitytomanufactureonshoredeepdrillingrigsuptoadepth of9,000meters

86+oildrillingrigssupplied

Non-Conventional

Energy Source Water Management: Offersturnkeysolutionsforindustrialandpowerplantwater

systems

Solar PV:OffersEPCsolutionsfromconcepttocommissioningforPV PowerPlants

ManufacturespacegradesolarpanelsandspacegradebatteriesProducts: Solarcellsandmodules 500kVAPowerConditioningUnit(PCU)forSolarPVPlants

Defence

Industrial Products

& Systems

Products: OilRigs WellHead&XmasTrees FabricatedEquipments&BoilerFeedPumps Compressors ACMachines Valves

23

Location of Organization A widespread network of 17 ManufacturingDivisions,2RepairUnits,4RegionalOffices,8ServiceCentres,6OverseasOffices,6JointVentures, 15 Regional Marketing Centres

and current project execution at more than150 project sites across India and abroadcorroboratesthehumongousscaleandsizeofitsoperations.

24

Corporate Organization Structure(as on 04.07.2015)

25

26

BHELalsohasawidespreadoverseasfootprintin 77 countries with cumulative overseasinstalled capacity of BHEL manufacturedpower plants nearing 10,000 MW includingBelarus, Bhutan, Egypt, Indonesia, Iraq,Kazakhstan,Malaysia,NewZealand,Oman,

Rwanda,Sudan,TajikistanandUAE.BHELsheadquartersissituatedinNewDelhi.

BHEL make electric utilities installation anditsglobalfootprintsareshowninthefollowingfigures.

Therehavenotbeenanysignificantchangestooperationascomparedtopreviousyear.

27

AArialbd.ttfAArialn.ttfAArialnb.ttfAArialni.ttf

NAGPUR

KHARAGPURROURKELA

STATION RATING REGION STATE CUSTOMER

Sulzer Flovel Hydro Ltd.(Pvt)

Sulzer Flovel Hydro Ltd.(Pvt)

STATION RATING REGION STATE CUSTOMERCUSTOMER

Allain Duhangan (2 x 96 MW) NR Himachal ADHPL Almatti (1 x 15 MW & 5 x 55 MW) SR Karnataka KPCLA.P.Sahib (4 x 33.5 MW ) NR Punjab PSEBAndhra ( 3x 5.65 MW ) NR Himachal HPSEBBairasiul ( 3x 60 MW ) NR Himachal NHPCBansagar Tons ( 3x 105 MW ) WR M. Pradesh MPEBBansagar ( 2x 10 MW, 2x 15 MW & WR M. Pradesh MPEB 3x 20 MW) Bargi ( 2x 45 MW ) WR M. Pradesh MPEBBassi ( 4x 15 MW ) NR Himachal HPSEBBhabha ( 3x 40 MW ) NR Himachal HPSEBBhadra ( 1x 6 MW ) SR Karnataka KPCLBhandardhara ( 1x 10 MW & 1x 34 MW) WR Maharashtra Govt.of MaharashtraBhatgar ( 1x 16 MW ) WR Maharashtra Govt.of MaharashtraBhatsa ( 1x 15 MW ) WR Maharashtra Govt.of MaharashtraBhira Tailrace ( 2x 40 MW ) WR Maharashtra Govt.of MaharashtraBirsinghpur ( 1x 20 MW ) WR M. Pradesh MPEBChenani ( 2x 4.6 MW ) NR J & K Govt.of J&KChibro ( 4x 60 MW ) NR Uttarakhand UJVNLChilla ( 4x 36 MW ) NR Uttarakhand UJVNLChunchunkatte ( 2x 9 MW ) SR Karnataka Graphite India Ltd. (Pvt)Chutak ( 4x 11 MW) NR J & K NHPCDaudhar ( 3x 0.5 MW ) NR Punjab PSEBDehar ( 6x 165 MW ) NR Himachal BBMBDhupdal ( 2x 1.4 MW ) SR Karnataka Fores Gokak Mills(Pvt.)Dimbhe ( 1x 5 MW ) WR Maharashtra Govt.of MaharashtraDonkarai ( 1x 25 MW ) SR A. Pradesh APGENCODoyang ( 3x 25 MW ) ER Nagaland NEEPCODudhganga ( 2x 12 MW ) WR Maharashtra Govt.of MaharashtraGanekal ( 1x 0.35 MW ) SR Karnataka KPCLGanwi ( 2x 11.25 MW) NR Himachal HPSEBGerusoppa ( 4x 60 MW ) SR Karnataka KPCLGhatgar (1x125 MW ) WR Maharashtra GOMGhatprabha ( 2x 16 MW ) SR Karnataka KPCLGiribata ( 2x 30 MW ) NR Himachal HPSEBGumma ( 2x 1.5 MW ) NR Himachal HPSEBGumti ( 3x 5 MW ) ER Tripura Govt.of TripuraHarangi ( 2x 4.5 MW ) SR Karnataka Sulzer Flovel Hydro Ltd.(Pvt)Hasdeo Bango ( 3x 40 MW ) WR Chhattisgarh CH.SEBHemavati ( 4x 4 MW ) SR Karnataka Sulzer Flovel Hydro Ltd.(Pvt)Idamalayar ( 2x 37.5 MW ) SR Kerala KSEBIndira Sagar ( 8x 125 MW ) WR M. Pradesh NHDCKabini ( 2x 10 MW ) SR Karnataka PVT.Kadamparai ( 4x 100 MW ) SR Tamilnadu TNEBKadana ( 4x 60 MW ) WR Gujarat GEBKadra ( 3x 50 MW ) SR Karnataka KPCLKakatiya ( 3x 0.23 MW ) SR Telangana TSGENCOKakkad ( 2x 25 MW ) SR Kerala KSEBKakroi ( 1x 0.1 MW ) NR Haryana HSEBKalinadi ( 6x 135 MW ) SR Karnataka KPCLKallada ( 2x 7.5 MW ) SR Kerala KSEBKanher ( 1x 4 MW ) WR Maharashtra Govt.of MaharashtraKarnah ( 2x 1 MW ) NR J & K Govt.of J&KKhadakwasla ( 2x 8 MW ) WR Maharashtra Govt.of MaharashtraKhandong ( 2x 25 MW ) ER Assam NEEPCOKhara ( 3x 24 MW ) NR U. Pradesh UPJVNLKhodri ( 4x 30 MW ) NR Uttarakhand UJVNLKodasalli ( 3x 40 MW ) SR Karnataka KPCLKoldam ( 2x 200 MW ) NR Himachal NTPCKopili ( 1x25 MW & 4x 50 MW) ER Assam NEEPCOKoteshwar ( 4x 100 MW ) NR Uttarakhand THDC Koyna ( 4x 80 MW ) WR Maharashtra Govt.of MaharashtraKoyna Dam ( 2x 20 MW ) WR Maharashtra Govt.of MaharashtraKulhal ( 3x 10 MW ) NR Uttarakhand UJVNLKundah ( 1x 20 MW ) SR Tamilnadu TNEBKuttiyadi ( 2x 50 MW ) SR Kerala KSEBLarji ( 3x 42 MW) NR Himachal HPSEB Loktak ( 3x 35 MW ) ER Manipur NHPCLower Jhelum ( 3x 35 MW ) NR J & K Govt.of J&KLower Lagyap ( 2x 6 MW ) ER Sikkim Govt.of SikkimLower Periyar ( 3x 60 MW ) SR Kerala KSEBLower Sileru ( 2x 115 MW ) SR A. Pradesh APGENCOMadikheda ( 3x 20 MW ) WR M. Pradesh MPEBMahi ( 2x 25MW & 2x 45 MW ) NR Rajasthan RRVUNLMalana ( 2x 43 MW ) NR Himachal MPCL (Pvt)Maneri Bhali ( 3x 30 MW & 4X76 MW ) NR Uttarakhand UJVNLMangrol ( 3x 2 MW ) NR Rajasthan RRVUNLManikdoh ( 1x 6 MW ) WR Maharashtra Govt.of MaharashtraMukerian ( 6x15 MW & 6x19.5 MW) NR Punjab PSEBNagarjun Sagar ( 5x100 MW &1x110 MW) SR Telangana TSGENCONarayanpur ( 2x 5.8 MW ) SR Karnataka MPCL (Pvt)Nathpa Jhakri ( 1x 250 MW ) NR Himanchal SJVNLNidampur (2x 0.5 MW ) NR Punjab PSEBNimmo Bazgo (3 x 15 MW) NR J & K NHPC Obra ( 3x 33 MW ) NR U. Pradesh UPJVNLPenna Ahobilam (2 x 10 MW ) SR Telangana TSGENCOParbati (4 x 130 MW) NR Himachal NHPCPawna ( 1x 10 MW ) WR Maharashtra Govt.of MaharashtraPench ( 2x 80 MW ) WR M. Pradesh MPEBPochampad ( 3x 9 MW ) SR Telangana TSGENCOPong ( 6x 60 MW ) NR Himachal BBMBPoriangalkuthu ( 1x 16 MW ) SR Kerala KSEBPykara ( 3x 50 MW ) SR Tamilnadu TNEBRajghat ( 3x 15 MW ) WR M. Pradesh MPEBRamganga ( 3x 66 MW ) NR Uttarakhand UJVNLRammam (4x 12.5 MW ) ER W. Bengal WBSEBRampur (6 x 68.67 MW) NR Himachal SJVNL Ranganadi ( 3x 135 MW ) ER Arunachal NEEPCORangit ( 3x 20 MW ) ER Sikkim NHPCRanjit Sagar ( 4x 150 MW ) NR Punjab PSEBRengali ( 5x 50 MW ) ER Orissa OPGCLSalal ( 6x 115 MW ) NR J & K NHPCSardar Sarovar ( 5x 50 MW & 2x 200MW) WR Gujarat SSNNLServalar ( 1x 20 MW ) SR Tamilnadu TNEBSewa ( 3x 40 MW ) NR J & K NHPCShanan Extn. ( 1x 50 MW ) NR Punjab PSEBSharavathy ( 2x 89.1 MW ) SR Karnataka KPCLShivapur ( 2x 9 MW ) SR Karnataka BPCL (Pvt.)Singur ( 2x 7.5 MW ) SR Telangana TSGENCOSrisailam ( 7x 110 MW ) SR A. Pradesh APGENCOSrisailam ( 2x150MW) SR Telangana TSGENCOSone E Canal ( 2x 1.65 MW ) ER Bihar BSHPCSone W Canal ( 4x 1.65 MW ) ER Bihar BSHPCStakna ( 2x 2 MW ) NR J & K Govt.of J&KSubernrekha ( 2x 65 MW ) ER Bihar BSHPCSumbal Sindh ( 2x 11.3 MW ) NR J & K Govt.of J&KSupa ( 2x 50 MW ) SR Karnataka KPCLSuratgarh ( 2x 2 MW ) NR Rajasthan RRVUNLSurya ( 1x 6 MW ) WR Maharashtra Govt.of MaharashtraTago ( 3x 1.5 MW ) ER Arunachal Govt.of Arunachal Tanakpur ( 3x 40 MW ) NR Uttarakhand NHPCTawa ( 2x 6.75 MW ) WR M. Pradesh HEG (Pvt.)Teesta Canal ( 4x 7.5 MW ) ER W. Bengal WBSEBThirot ( 3x 1.5 MW ) NR Himachal HPSEBTillari ( 1x 60 MW ) WR Maharashtra Govt.of MaharashtraUBDC ( 6x 15 MW ) NR Punjab PSEBUkai ( 4x 75 MW ) WR Gujarat GEBUmium Umtru ( 4x 30 MW ) ER Meghalaya MeSEBUpper Kolab ( 4x 80 MW ) ER Orissa OPGCLUpper Sileru ( 2x 60 MW ) SR A. Pradesh APGENCOUpper Sindh ( 3x 35 MW ) NR J & K Govt.of J&KVaiterna ( 1x 60 MW ) WR Maharashtra Govt.of MaharashtraVaiterna Dam Toe ( 1x 1.5 MW ) WR Maharashtra Govt.of Maharashtra

JAMMU AND KASHMIR

AMBALA

BHAGALPUR

NEW BONGAIGAON

ALLEPPEYValantharvi

CHENNAI

COMMISSIONED AS ON 31.03.2015 (GEOGRAPHICAL LOCATION-WISE)

Monarchak ( 1x65.4 MW GT)

1x37.8 MW ST & 1x110 MW GT 1x50 MW ST)

ER Tripura NEEPCD

Adhunik (2 x 270 MW ) ER Jharkhand APNRLAmarkantak ( 2 x 120 MW & 1 x 210 MW ) WR M. Pradesh MPEBAmravati (5 x 270 MW ) WR Maharashtra Rattan India Power LimitedAnpara (3 x 210 MW ) NR U. Pradesh UPRVUNLAvantha Bhandar (1 x 600 MW) WR Chhattisgarh KWPCLBadarpur (3 x 100 MW & 2 x 210 MW ) NR Delhi NTPCBakreswar (5 x 210 MW ) ER W. Bengal WBPDCLBandel (1 x 210 MW ) ER W. Bengal WBSEB Barauni (2 x 110 MW ) ER Bihar BSEBBarh (2 x 660 MW) ER Bihar NTPCBarsingsar (2 x 125 MW ) NR Rajasthan NLCBasin Bridge (1 x 30 MW ) SR Tamilnadu TNEBBela (1 x 270 MW ) WR Maharashtra IEPLBellary (2 x 500 MW ) SR Karnataka KPCLBhatinda (GNDTP) (4 x 110 MW ) NR Punjab PSEBBhilai (2 x 250 MW ) WR Chhattisgarh BESCLBhusawal (2 x 210 MW & 2 x 500 MW ) WR Maharashtra MSEBBina (2 x 250 MW ) WR M. Pradesh BPSCLBirsinghpur (4 x 210 MW & 1 x 500 MW ) WR M. Pradesh MPEBBokaro (3 x 210 MW ) ER Jharkhand DVCBongaigaon (4 x 60 MW ) ER Assam ASEBBudge-Budge (1 x 250 MW ) ER W. Bengal CESC (Pvt.)CESC, Kolkata (2 x 67.5 MW ) ER W. Bengal CESC (Pvt.)Chandrapur-Extn. (1 x 30 MW ) ER Assam ASEBChandrapur (4 x 210 MW & 4 x 500 MW ) WR Maharashtra Chandrapura (3 x 120 MW & 2 x 250 MW ) ER Jharkhand DVCChhabra (4 x 250 MW ) NR Rajasthan RVUNLDadri (4 x 210 MW & 2 x 490 MW ) NR U. Pradesh NTPCDahanu (2 x 250 MW ) WR Maharashtra BSES (Pvt.)Derang (2 x 600 MW ) ER Orissa JITPLDurgapur (1 x 210 MW ) ER W. Bengal DVCDurgapur-DPL (1 x 110 MW & 1 x 250 MW) ER W. Bengal DPLDurgapur-Steel (2 x 500 MW ) ER W. Bengal DVCEnnore (2 x 60 MW & 1 x 110 MW ) SR Tamilnadu TNEBFarakka (3 x 200 MW & 3 x 500 MW ) ER W. Bengal NTPC Faridabad (3 x 60 MW ) NR Haryana HSEBGandhinagar (2 x 120 MW & 3 x 210 MW ) WR Gujarat GEBGiral (2 x 125 MW ) NR Rajasthan RRVUNLHarduaganj (4 x 60 MW, 1 x 110 MW NR U. Pradesh UPRVUNL & 2x 250 MW )Ib Valley (2 x 210 MW ) ER Orissa OPGCL I P Station (1 x 60 MW ) NR Delhi DVBJanjgir Champa (2 x 600 MW) WR Chhattisgarh DBPLJhajjar (3 x 500 MW ) NR Haryana APCPLJojobera (3 x 120 MW ) ER Jharkhand TATA (Pvt.)Kahalgaon (3 x 500 MW ) ER Bihar NTPCKakatiya (1 x 500 MW ) SR Telangana TSGENCOKhaperkheda (4 x 210 MW & 1 x 500 MW ) WR Maharashtra MSEBKoderma (2 x 500 MW) ER Jharkhand DVCKolaghat (6 x 210 MW ) ER W. Bengal WBPDCLKoradi (1 x 200 MW & 2 x 210 MW ) WR Maharashtra MSEBKorba (STPP) (3 x 200 MW & 4 x 500 MW ) WR Chhattisgarh NTPCKorba (East) (2 x 250 MW ) WR Chhattisgarh CH.SEBKorba (Extn) (2 x 120 MW ) WR Chhattisgarh CH.SEBKorba (Hasdeo) (4 x 210 MW ) WR Chhattisgarh CH.SEBKorba (West) (1 x 500 MW ) WR Chhattisgarh CSPGCLKota (2 x 110 MW, 2 x 195 MW & 3 x 210 MW ) NR Rajasthan RRVUNLKothagudem (4 x 110 MW, 2 x 250 MW SR Telangana TSGENCO & 1 x 500 MW )Kutch Lignite (2 x 70 MW & 1 x 75 MW ) WR Gujarat GEBLehra Mohabat (2 x 210 MW & 2 x 250 MW) NR Punjab PSEBMaithon (2 x 525 MW ) ER Jharkhand MPLMalwa (Shree Singaji) (2 x 600 MW) WR M. Pradesh MPPGCLMarwa (1 x 500 MW) WR Chhattisgarh CSPGCLMauda (2 x 500 MW ) WR Maharashtra NTPCMejia (4 x 210 MW, 2 x 250 MW & ER W. Bengal DVC 2 x 500 MW ) Mettur (4 x 210 MW ) SR Tamilnadu TNEBMuzzaffarpur (2 x 110 MW ) ER Bihar BSEBMuzzaffarpur (1 x 195 MW ) ER Bihar KBUNLNamrup (1 x 30 MW ) ER Assam ASEBNasik (3 x 210 MW ) WR Maharashtra MSEBNasik (1 x 270 MW) WR Maharashtra RattanIndia Ltd.Neyveli (4 x 210 MW & 2 x 250 MW ) SR Tamilnadu NLCNorth Chennai (3 x 210 MW & 2 x 600 MW ) SR Tamilnadu TANGEDCOObra (3 x 100 MW & 5 x 200 MW ) NR U. Pradesh UPRVUNLPanipat (4 x 110 MW & 2 x 210 MW & 2x 250 MW ) NR Haryana HSEBPanki (2 x 110 MW ) NR U. Pradesh UPRVUNLParas ( 2x 250 MW ) WR Maharashtra MSEBParicha ( 2 x 110 MW, 2 x 210 MW NR U. Pradesh UPRVUNL & 2 x 250 MW )Parli (2 x 30 MW, 3 x 210 MW & WR Maharashtra MSEB 2 x 250 MW)Patratu (4 x 110 MW ) ER Jharkhand JSEBRaichur (6 x 210 MW & 1 x 250 MW ) SR Karnataka KPCLRaigarh (4 x 250 MW & 4 x 600 MW) WR Chhattisgarh JPLRajghat ( 2x 67.5 MW ) NR Delhi DVBRamagundam (4 x 500 MW ) SR Telangana NTPCRayalseema (5 x 210 MW ) SR A. Pradesh APGENCORihand (4 x 500 MW ) NR U. Pradesh NTPCRopar (6 x 210 MW ) NR Punjab PSEBSabarmati (3 x 110 MW ) WR Gujarat AECOSantaldih (4 x 120 MW & 2 x 250 MW ) ER W. Bengal WBSEBSatpura (1 x 200 MW, 3 x 210 MW ) WR M. Pradesh MPEB & 2 x 250 MW )Sikka (2 x 120 MW & 1 x 250 MW) WR Gujarat GSECLSimhadri (4 x 500 MW ) SR A. Pradesh NTPCSingrauli (5 x 200 MW & 2 x 500 MW ) NR U. Pradesh NTPCSipat (2x 500 MW ) WR Chhattisgarh NTPCSurat Lignite (4 x 125 MW ) WR Gujarat GIPCLSuratgarh (6 x 250 MW ) NR Rajasthan RVUNLTalcher (2 x 110 MW & 4 x 500 MW ) ER Orissa NTPCTanda (4 x 110 MW ) NR U. Pradesh NTPCTenughat (2 x 210 MW ) ER Jharkhand TVNLTornagallu (2 x 130 MW ) SR Karnataka JTPCL(Pvt.)Trombay (1 x 250 MW & 2 x 500 MW) WR Maharashtra Tata(Pvt.)Tuticorin (5 x 210 MW ) SR Tamilnadu TNEBNTPL Tuticorin (1 x 500 MW ) SR Tamilnadu NTPLUkai (2 x 120 MW, 2 x 200 MW, WR Gujarat GEB 1 x 210 MW & 1 x 500 MW ) Unchahar (5 x 210 MW ) NR U. Pradesh NTPCVallur (3 x 500 MW ) SR Tamilnadu NTECLVijayawada (6 x 210 MW & 1 x 500 MW) SR A. Pradesh APGENCOVindhyachal ( 6x 500 MW ) WR M. Pradesh NTPCWanakbori ( 7x 210 MW ) WR Gujarat GEB

STATION RATING REGION STATE CUSTOMER STATION RATING REGION STATE CUSTOMER STATION RATING REGION STATE CUSTOMER

MSEB/MSPGCL

Koldam

54/3802.97

10/3455

17/961.5

2/130

10/3840 3/120

32/11880

16/4810

21/4240

24/7820

31/5225

46/13180

8/600.8

12/3940Telangana

TELANGANA

16/952.69

28/7320

14/1165

JITPL Derang

Monarchak

6/9.9

Uttrakhand

COMMISSIONED AS ON 31.03.2015 (GEOGRAPHICAL LOCATION-WISE)

28

Nature of ownership and legal form BHELisaMaharatnaPublicSectorUndertaking(PSU)with63.06%stakeheldbyGovernmentof India. It was established in 1964 underTheCompaniesAct,1956.Theshareholdingpattern of the company as on 31st March 2015 isshownintheFigurebelow.

TherehasbeennochangeintheshareholdingoftheGovernmentofIndiaduringthereportingyear.

Awards & Accolades

Continuing its tradition of winning prestigious national/international awards in diversearenas,BHELanditsemployeeswonseveralawards during the year 2014-15. Notableamongtheseinclude:

Business Excellence & Industry leadership

DSIJ Award 2014 for the Most EfficientMaharatnaPSUforthe6th year in succession

Recognition of excellence for completing50 years of Engineering Excellence fromDun & Bradstreet

44th EEPCAward for the Star performerfor2013-14intheproductgroupofprojectExports

GovernanceNowPSUAwards2014undercategory of Asset Utilization & StrategicTurnaround

29

CBIP Award for Best Power EquipmentManufacturingOrganisation

ICAINationalAwardforExcellenceinCostManagementfor9th consecutive year

National e-governance Gold Award for2014-15 in the category - Innovative useof ICT by Central Government PSUs, fortheprojectSAMPARKOnlineIntegratedEmployee Centric services Portal,developedbyBHEL,Bhopal

Skoch Order-of-Merit for IntegratedRealTimeQualityManagementSystematBHELBhopalasaqualityimprovementinitiative

6 National Safety Award to BHELs EPD, Bengaluru and Trichy units for outstanding achievements in termsof longestaccidentfreeperiodand lowestaccident frequencyrate at their works

Dainik Bhaskar India Pride Award 2014-15 for Excellence in Heavy Industriescategory for the 6th consecutive year

Innovation World Intellectual Property Organisation

(WIPO) Award for Innovative Enterprises for its strong involvement in use of thePatent system and its achievements in R&D

30

PSE Excellence Award 2014 for R&D & Technology Development in the Maharatna & Navratna CPSEs Category by theIndianChamberofCommerce(ICC)

India Today Best Maharatna PSU Awards for Global Presence & Innovation & R&D

National Intellectual Property Award 2014 forbeingtheTopIndianPublicLimitedCompanyinPatents

Corporate Social Responsibility Conferred Skoch Foundation Order of

Merit Awards for the best CSR project in thecountry-Vision toAll -BHELsCall foreradication of corneal blindness througheye donation

Pandit Madan Mohan Malaviya Bronze Award forBestCSRPracticesinthefieldofEducationbyCSRTimes

Silver Plate AwardbyHelpAgeIndia

Leadership Honour of Excellence award bestowed

by Honble President of India on Sh. B. Prasada Rao, CMD, BHEL.HonbleChiefJusticeofKolkataHighCourt,Mrs.JusticeManjulaChellur,gaveawaytheawardattheinaugural functionof theIndianInstituteofEngineeringScience&Technology(IIEST),Shibpur(WestBengal)

31

Sh.AtulSobti,Director(Power),BHEL,wasawardedtheIndiaPrideAward2014-15forExcellenceasHeadofDepartmentamongCentralPSUs.TheawardwasreceivedbySh.AtulSobti,Director(Power),BHEL,fromSh.ArunJaitley,HonbleUnionMinisterofFinance,CorporateAffairsandInformation& Broadcasting

BHELEmployeeswereawardedwithPrimeMinistersShram Awards whichincluded1 Shram Bhushan and 11 Vishwakarma Rashtriya Puraskars

Sh. P.K. Bajpai, Director (Finance) wasawarded with CFO 100 Roll of Honor 2015 in Funds Management Category

Ms. M Girija, an artisan in the weldertrade from BHEL Trichy received the All India Second Prize for the Best Woman Employee in nonexecutive categoryawardfromMr.AnantGeete,HonbleUnionMinisterforHI&PE

32

Corporate Governance

Management ApproachBHELhasestablishedasoundframeworkofCorporateGovernancewhichunderlinescommitmenttoqualityofgovernance,transparencydisclosures,consistentstakeholdersvalueenhancementandcorporatesocialresponsibility.BHELendeavourstotranscendmuchbeyondtheregulatoryframework and basic requirements of Corporate Governance focusing consistently towardsbuildingconfidenceof itsvariousstakeholders includingshareholders,customers,employees,suppliers and the society at large. The Company has developed a framework for ensuringtransparency,disclosureandfairnesstoall,especiallyminorityshareholders.

Governance structure at BHELThecompositionoftheBoardofDirectorsisasfollows:

Particulars Board Structure

Actual Strength as on 31.03.2015

Chairman & Managing Director 1 1

Whole-timeExecutive(Functional)Directors 5 5

Part-time Official Directors (Government Nominees)representing the Ministry of Heavy Industries & PublicEnterprises,GovernmentofIndia

2 2

Part-timeNon-official(Independent)Directors 8 2

TOTAL 16 10

As on 31st March, 2015, there existed six vacancies of Part-time Non-official (Independent)DirectorsontheBoardofBHEL.ThematteroffillingupofthesevacanciesisunderconsiderationofDepartmentofHeavyIndustry,MinistryofHeavyIndustries&PublicEnterprises,GovernmentofIndia.

Board Level CommitteesTherearenineBoardLevelCommitteesinBHEL.ThedetailsoftheCommitteesoftheBoardwithregardtotheircompositionandrespectiveTermsofReference(responsibilities/mandate)ason31.03.2015canbeseeninBHELsAnnualReport2014-15page116123.

TheBoardcomprisedofpersons(10)withintheagegroupof45-65years.ThereisoneWomanDirector on theBoard of BHELwith age of 62 years.Only onewomanDirector belonged toaminoritygroup.AllDirectorsareeminentpersonalitieshavingwideexperience inthefieldofManagement,Finance,Engineering,AdministrationandIndustry.TheChairofHighestGoverningbodyisalsoanexecutiveofficer(Chairman&ManagingDirector).

33

BHEL has a unitary board structure. As on31.03.2015,therewasonewomanindependent(non-executive) Director on the Board ofBHEL. BHEL defines Independent DirectorasperSection149(6)of theCompaniesAct,2013,Clause49oftheListingAgreementandDPEGuidelinesonCorporateGovernance.

Theshareholderscanproviderecommendationsand suggestions to any Director on the Board ofBHEL.Contactdetailsareavailableon thewebsite of the Company (www.bhel.com).Further,shareholdershaveadedicatedemail-idviz.shareholderquery@bhel.in to communicate withtheCompany.Shareholderscanalsoraisequeries, interact with Board members and providesuggestionsattheGeneralMeeting(s)oftheCompany.

Addressing Conflict of Interest (CoI)

All directors at the time of joining theBoardgiveacertificatestatingthatneither theynortheir relatives have any conflict of interest

with the companys business. Directors alsodisclosetheirinterestinothercompanies,bodycorporates and other entities to the Board at thetimeofjoiningandalsowheneverthereisany change in the interest.Directorsabstainfromanydiscussionsin/approvaloftheBoardpertaining to contracts or transactions with such interestedparties.Further, allDirectorsand Senior Management Personnel sign anaffirmationtoabidebytheCodeofBusinessConduct and Ethics of BHEL and ensure high standardofconduct.

Constitution of Highest Governing Body

As per Articles of Association of BHEL, thePresident of India through Department ofHeavy Industry, Ministry of Heavy Industries&PublicEnterprises, appoints theChairman& Managing Director, Functional DirectorsandPart-timeOfficialDirectorson theBoardof BHEL and also nominatesPart-timeNon-official (Independent)Directors on theBoardofBHEL.

34

Board of Directors (as on 24.07.2015)

Sitting from right to left: Ms. Harinder Hira, Part-timeNon-officialDirector

Shri B. Prasada Rao, Chairman & Managing Director

Shri S.K. Bahri, AdditionalSecretary&FinancialAdviser,DIPP

Standing from right to left: Shri Atul Sobti,Director(Power)Shri R. Krishnan,Director(HR)Shri A.N. Roy,Part-timeNon-officialDirectorShri Rajesh Kumar Singh, JointSecretary,DHIShri W.V.K. Krishna Shankar, Director(IndustrialSystems&Products)

Shri I.P. Singh, Company Secretary

TheappointmentofChairman&ManagingDirectorandFunctionalDirectorsisonsuchtermsandconditions,remunerationandtenureasthePresidentofIndiamayfromtimetotimedetermine.

TwoPart-timeOfficialDirectorsviz.AdditionalSecretary/JointSecretary,DepartmentofHeavyIndustry-MinistryofHeavyIndustries&PublicEnterprisesandAdditionalSecretary&FinancialAdvisor,MinistryofCommerceandIndustryarenominatedbytheGovernmentofIndiaontheBoardofBHEL.TheycontinuetobeontheBoardofBHELatthediscretionoftheGovernmentofIndia.

The IndependentDirectors are selected by theDepartment ofHeavy Industry in consultationwiththeSearchCommitteeoftheDepartmentofPublicEnterpriseswhichmaintainsapanelofeminentpersonalitieshavingwideexperienceinthefieldofManagement,Finance,Engineering,AdministrationandIndustry.

35

Code of Business ConductAspartofBHELspersistingendeavourtosetahighstandardofconductforitsemployees,aCodeofBusinessConductandEthicswaslaiddown forallBoardMembersandSeniorManagement personnel and the same wasrevisedin linewithchangesintheregulatoryframework & changing business dynamics and to incorporate other relevant provisionsto strengthen theCode. Pursuant to revisedClause49(II)(E)oftheListingAgreementwiththeStockExchanges, theBoardofDirectorsof BHEL in its 465th meeting held on 14th November, 2014 revised and approved the Code of Business Conduct & Ethics for Board MembersandSeniorManagementPersonneloftheCompany.

The Code of Business Conduct & Ethics encompasses:

General Moral Imperatives;

Specific Professional Responsibilities; and

Specific Additional Provisions for Board Members and Senior Management Personnel.

A copy of the said revised Code has been placed on the Companys website www.bhel.com. Additional suggestions / ideas toimprove thesaidCodearegladly invited.AllBoard members and Senior Management Personnel affirm compliance with BHELsCode of Business Conduct and Ethics at theendofeveryfinancialyear.Adeclarationto this effect is signed by the Chairman & Managing Director and given in the AnnualReport of the Company.All Boardmembersand Senior Management personnel haveaffirmed compliance with BHELs Code ofBusinessConductandEthicsforthefinancialyear2014-15.

Working of the BoardThe Boards mandate is to oversee theCompanys strategic direction, review and monitor corporate performance, ensure regulatory compliance and safeguard theinterestsof theshareholders.Suchoversightand monitoring is ensured through regularmeetings of the Board of Directors which are scheduledwellinadvance.Thisalsoensuresthat important decisions are taken and implemented in time. InFinancialyear2014-15,Boardmet9times.

TheCompanySecretary, inconsultationwiththe Chairman & Managing Director, sends a written notice of each Board meeting to each Director. The Board agenda is circulated totheDirectorsinadvance.ThemembersoftheBoard have access to all information of theCompanyandarefreetorecommendinclusionofanymatterinagendafordiscussion.Incaseof need, the senior management is invited to attendtheBoardMeetingstoprovideadditionalinputs relating to the items being discussedand/ or to give presentation to the Board.TheBoardmeetsatleastonceinaquartertoreview the quarterly results and other itemsontheagenda.Additionalmeetingsareheld,whennecessary.

Theinformationundertheheads(asshowninthebox)areusuallypresentedtotheBoardofDirectors of BHEL either as part of the agenda papers or are tabled/ presented during thecourseofBoardmeeting.

Inadditiontotheabove,theBoardofDirectorshas also constituted various statutory andtechnicalcommitteessuchastheBoardLevelAudit Committee, Stakeholders RelationshipCommittee, Share Transfer Committee, HR Committee, Board level Committee forCSR, Committee of Independent Directors,Nomination & Remuneration Committee and Board Level Risk Management Committeetoensure in-depthanalysis& reviewaswellas provide requisite guidance, advice and

36

recommendations on importantmatters. Theprocedures for conducting meetings of these Committees are also similar to that followedfortheBoardofDirectors.

Ethics, Transparency & IntegrityAlltheBoardMembersandSeniormanagementpersonnel have affirmed compliance withBHELs Code of Business Conduct andEthicsforthefinancialyear2014-15.

TheCompanyiscomplyingwiththeprovisionsof Companies Act, Listing Agreement and DPE Guidelines.

The Company believes that conductingbusiness inamanner that complieswith theCorporate Governance procedures and Code ofConduct,exemplifieseachofourcorevaluesandpositions us to deliver long-term returnsto our shareholders, favourable outcomes

Annual operating plans and budgetsandanyupdates.

Capitalbudgetsandanyupdates.

Quarterlyresultsforthecompanyandits operating divisions or business segments.

MinutesofmeetingsofAuditCommitteeandotherCommitteesoftheBoard.

MinutesofBoardMeetingsofunlistedsubsidiarycompanies.

Statementofallsignificanttransactionsand arrangements entered into by unlistedsubsidiarycompanies.

TheinformationonrecruitmentofseniorofficersjustbelowtheBoardlevel.

Details of any Joint Venture or R&Dproject or technical collaborationagreementrequiringapprovalofBoardof Directors

Significant labour problems and theirproposed solutions. Any significantdevelopment in Human Resources/Industrial Relations front like signingofwageagreement,implementationofVoluntaryRetirementScheme,etc.

Saleofmaterial,natureofinvestments,subsidiaries, assets, which is not in normalcourseofbusiness.

Quarterly details of foreign exchangeexposures and the steps taken bymanagement to limit the issues ofadverse exchange rate movement, ifmaterial.

ActionTakenReportonmattersdesiredbytheBoard.

Disclosure of Interest by Directorsabout directorships and Committee positions occupied by them in other companies.

Quarterly report on compliance ofvariouslaws.

Information relating to major legaldisputes.

StatusofArbitrationcases.

Shortterminvestmentofsurplusfunds.

Anycontract(s)inwhichDirector(s)aredeemedtobeinterested.

Statusofshareholdersgrievancesonquarterlybasis.

Significant Capital Investmentproposals.

Changes in significant accountingpolicies&practicesandreasonsforthesame.

Performanceofvariousunits/functions.

Any other information required tobe presented to the Board either for informationorapproval.

37

to our customers, attractive opportunities to ouremployeesandmaking thesuppliersourpartnersinprogress&enrichingthesociety.

BHELs Governance framework endeavourstotranscendmuchbeyondtheregulatoryandbasic requirements of Corporate Governance focusing consistently towards buildingconfidenceofitsvariousstakeholdersincludingshareholders, customers, employees,suppliers and the society at large. Theframework underlines commitment to qualityof governance, transparency disclosures,consistent stakeholders value enhancementand corporate social responsibility. Ourcorporate structure, business procedures and disclosure practices have attained a soundequilibrium with our Corporate GovernancePolicy resulting in achievement of goals aswellashighlevelofbusinessethics.

Principles of BHELs Corporate Governance policy

1 IndependenceandversatilityoftheBoard

2 Integrityandethicalbehaviourofallpersonnel

3 Recognitionofobligationstowardsallstakeholdersshareholders,customers,employees,suppliersandthesociety

4 Highdegreeofdisclosureandtransparencylevels

5 Totalcompliancewithlawsinallareasinwhich the company operates

6 Achievementofabovegoalswithcompassionforpeopleandenvironment

Performance of the Board is judged against benchmarks set within the company as wellastheMemorandumofUnderstandingsignedwith the Department of Heavy Industry. Theeffectiveness of the Board is seen with respect to theoverallvalueadditionby thedecisionstakenattheBoardMeetings.

Mechanisms to analyse corruption and fraudulent practice risks The company has a Board approved CodeforBusinessConduct&Ethics for all BoardMembersandSeniorManagementpersonnelwhichcanbeviewedthroughthefollowinglink:

http://www.bhel.com/investor_relations/p d f / C o d e % 2 0 o f % 2 0 B u s i n e s s % 2 0Conduct%20and%20Ethics.pdf

In addition, as part of BHELs persistingendeavour to set a high standard of conduct for itsemployees (other than thosegovernedby standing orders), the BHEL Conduct,DisciplineandAppealRules,1975areinplace.TheCompanyissubjecttoRTIAct,2005andauditbyStatutoryAuditors(underchapterXoftheCompaniesAct, 2013), CAG audit undersection143oftheCompaniesAct,2013.

BHEL is a front-runner in implementing theRight to Information (RTI)Act,2005andhasembraced theAct in true letter and spirit.ACentralPublicInformationOfficer(CPIO)andaCentralAssistantPublicOfficer(CAPIO)aidedbyaSeniorExecutive (Law)at thecompanylevel and 17 CPIOs at each of the majoradministrative units are functioning as part of theRight to InformationGroup.AnAppellateCommittee is functioning at the Company leveltodisposeofffirstappealsfiledundertheRTIAct.Toassistandfacilitatethecitizensinobtaininginformation,detailedguidelineshavebeenplacedonBHELswebsite,spellingouttheprocedure for securing access to information andfilingoffirstappealsundertheAct.

BHEL is an active member of Steering Committee on RTI constituted by StandingConference of Public Enterprises (SCOPE).BHELreceived1351RTIapplicationsand321appealsduringtheyear2014-2015whichweredealtwithaspertheprovisionsoftheAct.

The company has also signed a MoU withTransparency International toadopt Integrity

38

Pact to make public procurement andcontracting more transparent by binding both the parties to ethical conduct. Underdelegation of power of various functionaries,accountability is well defined. Works Policy,PurchasePolicyandotherpolicydocumentsfacilitate transparency in our working andcommitmentofhighestorderofintegrity.

Monitoring mechanisms in place to avoid incidence of corruption Thecompanyhasan in-house InternalAuditDepartment commensurate with its size of operations.IthasInternalAuditcells,locatedatmajormanufacturingunits,regionalofficesandcorporateofficeof thecompany,whichcarryout audits as per Annual Audit Programmeapproved by Board Level Audit Committee.The Internal Audit department reviews &evaluates theadequacyandeffectivenessofinternalcontrolsystemthroughregularaudits,system reviews and provides assurance on compliancetothelegal,regulatoryandinternalpoliciesandproceduresofthecompany.TheCompanyhaswellplacedproperandadequatesystems of internal control and documentedprocedurescoveringallfinancialandoperatingfunctions.Adequateinternalcontrolmeasuresare in the form of various codes, manualsand procedures issued by the management covering all critical and important activities.FunctioningofInternalAuditandInternalcontrolsystemsareperiodicallyreviewedbytheBoardLevelAuditCommittee,whichissupportedbyUnit LevelAudit Committees and necessarydirections are issued wherever required to furtherstrengthenthe internalcontrolsystemkeeping in view the dynamic environment in whichthecompanyisoperating.Thecompanycontinues itsefforts toalignall itsprocessesandcontrolswithglobalbestpractices.

BHEL has a strong vigilance mechanism inplace. The Vigilance organization of BHELis headed by a Chief Vigilance Officer(CVO) appointed by the Ministry. All majormanufacturingUnits/PowerSectorRegionof

BHELhavevigilancesetup, headed by senior vigilanceexecutivereportingtotheCVO.

PreventivevigilanceremainedthefocusareaofBHELVigilance,withspecialemphasisonsystemic improvements. To strengthen thevigilanceadministration,Whistle-blowerPolicyof the company was issued. Further, actionwasinitiatedforreviewofWorkspolicy,WorksAccountManualandHRManual.

PublicAwarenessisanimportantcornerstonefor good governance. An enlightenedemployeenotonlycancontributeinachievingtheorganizationalgoalbutalsocanimprovesystem. Training programmes / sessionswere conducted to update employees aboutCompanys policies, rules andprocedures invariousBHELUnitsandRegions.Inaddition,interactive sessions were held with lineexecutives representing different functionalareas to sensitize them about the risk prone areas. In this regard, 15.57% (1980 out of12712) management employees and 2.72%(871out of 32011) were trained in anti-corruptionduringtheyear.

With a view to create awareness about procurement and works policy, rulesand procedures, etc., to disseminate theinstructions/ guidelines issued by CVC andGovernment of India from time to time andto share best practices and case studies, a quarterly e-Newsletter DISHA is beingpublished byCorporate Vigilance. CorporateVigilanceteamsinspected9Units.Theissuesobserved during inspections were discussed ininteractivesessionswiththerespectiveUnitManagements.Itwasimpresseduponofficialsto focus on the aspects of estimation and price reasonability while dealing with procurementto remain competitive in the market. Theinteractive sessions helpedBHELofficials toappreciate the roleofVigilance in promotingastrong,viableandcompetitiveorganization.

With a view to increase competition and check cartel formation, critical review oftender conditions was also undertaken. DuetoproactiveactionofVigilance,savingstothe

39

tune of 37.03 Crore (approx.) have beenachieved.

BHELVigilancepreparedadetailedCorruptionMitigationActionPlan, in respectofpotentialareas of corruption, which has been taken up for implementationbyallUnits.Routine /SurpriseinspectionswerecarriedoutbyUnit/CorporateVigilancetoverifythecomplianceofrulesandprocedures.Instructions/Guidelineswere issued concerning following issues forfurtherimprovementinthesystem:

a. Deficiencies in Tendering Process ofTransportation Contracts

b. Clarificationonclause4.0ofGuidelinesonSuspension onBusinessDealingswithSuppliers/Contractors

c. PrequalificationCriteria(PQ)

d. Receipt and Opening of Tenders

e. DeficiencyinQualityInspections

f ReasonablenessofRates

Some specific areas of concern such asEstate Management, Stores Management, and Procurement were identified and Unitswereadvisedtoinitiateactionintheseareas:

a Recovery of outstanding dues on account of rent and allied chargesfromtheallotteesofquarters/shopsinTownships.

b Identification/ segregation of surplus /usablestores/scrapmaterialfromthestores lying outside theworkshops inthe premises of units and not used/disposedofforverylongtime.

c Installation of Bio-metric AttendanceSystemlinkedwithpaysystem.

d Procurement through open tender route particularly for high valuepackages and review of PMDs to weed outinactivesuppliers.

To improve record management, VigilanceDepartmentissuedon20.08.2014GuidelinesforRetention/WeedingoutofOldRecords.

To enhance the skills of Vigilance Officers,a workshop for Vigilance Officers wasorganized from 27.08.2014 to 29.08.2014 atBHEL, Bhopal. BHEL is committed to bringtransparency in day to day operations of the Company by leveraging technology. Theinformation regarding procurement relatedmatters such as status of purchase orders and Contracts, Vendor registration alongwith their current status is hosted on the Company website. In addition, e-tenderingroute is being promoted for procurement and e-paymentsystemhasbeen implemented toreduce vendor interface.Further, stepshavebeen taken topromotee-procurement in theCompany. The percentage of e-procurementincreasedfrom25%to37%andaround26%oftenders(valuewise)weredecidedthroughReverseAuctionduring2014-15.

Vigilance examined 144 complaints andinvestigated 30 complaints during the year.Punitiveactionswaretakenagainst64officials.Duringtheyearmajorpenaltywasimposedon8employees,minorpenaltyon33employeeswhereas23employeeswereissuedwarning/caution.

40

Subsidiary:BHELElectricalMachinesLimited

Joint Venture:BHEL-GEGasTurbineServicesPrivate

Limited

DadaDhuniwaleKhandwaPowerLtd.

RaichurPowerCorporationLtd.

NTPC-BHELPowerProjectsLimited

Materiality And Stakeholder Engagement

BHELs Annual accounts information hasbeen provided in page 165-266 of BHELsannual report for the year 2014-15. Itincludesstandaloneannualaccountsaswellas consolidated financial statement. Theconsolidated financial statement includes itssubsidiaryandjointventureaswell.Thelistofsuchentitiesisgiveninthetable:

However, for the purpose of preparation of Sustainability report of BHEL, the datapertaining to only BHEL has been reportedand subsidiaries and joints ventures are not beingconsidered.

Major activities of BHEL which has environmental impacts are being carried outin our manufacturing units and there robust systems have been developed over time fordatacapturingandreporting.

The data on Environmental aspect EN1: Materials includesmaterial use at site also.However, for all other aspects, the report islimited to the manufacturing units as showninthefigurebelowforreportingboundaryforEnvironmentalIndicators.Atprojectsites,ourprojectsareundervariousstagesofexecutionand as of now, except data capturing for

material,otherenvironmentalaspectsarenotbeing monitored and controlled in a robustmanner.

The data for the aspects other than EnvironmentincludesthedataforentireBHELsetup(excludingJVsandsubsidiaries).

Stakeholder Identification & EngagementBHELsidentifiedstakeholdersbroadlyfallintosix categories. These are the stakeholderswhich either affect the business of BHEL or are getting affected themselves by ourbusinessandthisrelationshipformsthebasison which these specific stakeholders havebeenidentifiedbytheorganization.

Stakeholderidentification

Activity Methodology ResultA. Brainstorming

session by NodalOfficersforSustainability

B. Feedbackfrom other stakeholders

1.Society,2.Employees,3.Shareholder,4.Customers,5.Suppliers,6.Government

41

With this identified stakeholder groups,meetingsare conductedandexpectationsofthestakeholdersarediscussed.Thesemeetingare structured way of engaging stakeholderandgaugetheirexpectations.Theframeworkfor stakeholder engagement is shown in thediagram.

Based on the stakeholder expectations,material issues are identified. These issuesare viewed in the Sustainability Context ofthe organization. Then finally the issueswhich are perceived as important to both, the key stakeholders and to the company, areprioritizedand reportedas keySustainabilityissues for the organization with regards to its sustainabilityperformance.

Someofthestakeholderengagementactivitiesundertakenduring2014-15aregiveninthetablebelow:

Modes of Stakeholder Engagement & Activities Stakeholder Group Mode of

EngagementTypical list of activities conducted in

2014-15

Customer Customers meet,surveys

Customer Satisfaction Surveys Continuous interaction and feedback by

CMD,FunctionalDirectorsandMarketingGroupsatCorporatelevel

Assessment of present and future needs by Unit/Regional Heads and concernedGeneral Manager once in 3 months foreverycustomerandalsoneedbased

Assessmentofshort/midtermneedsoncein two months for every customer by Head of Functions in manufacturing units

PlantexecutionschedulebySite-in-chargeeveryday

Annual customer meet by Top & seniorleaders

Suppliers Vendors Meet Vendor Satisfaction Surveys by units DailyMilestone reviewbyProjectSite In-

charge Short & midterm need assessment by

seniorleadersdaily

42

Contractexecutionbyheadoffunctionsasand when needed

Vendormeetsatunitlevel Forge Partnership through MoUs/Rate

Contractsbyseniorleaders

Government MoU,Reports ParliamentaryCommitteemeetings BHEL has Government of India as a

majority shareholder. Thus, apart fromtheabove,BHELhasseveralestablishedmechanismsinplacetocommunicatewithGovernment authorities

InteractionwithMinistryofHeavyIndustry&PublicEnterprisesatseniormost level,from day to day performance issues to GovernmentPolicyrelatedissues

Adherence to values/ processes in linewith guidelines given by Parliamentarycommittees,ChiefVigilanceCommissioner,Government Auditors, Ministry of Heavy Industry,etc.

Employees In-house magazine,Message from CMD, Employeeengagement survey, Joint Committee,Plant Council, ShopCouncil

EmployeesSatisfactionSurveys Top down communication through

Management Committee meetings, Monthly Communication meetings, Topmanagement BE meeting, Project review meeting

IT enabled communication e.g. Internetande-mails,Intranet,e-Map,etc.

DisplayBoards,PlasmaTVdisplays,etc. Bottom up communication through Joint

Committee, Plant Council, Shop Council,Generalcommunicationmeeting,etc.

Horizontal communication through dailycommunicationmeetingatsites/shopfloor,Video Conferencing, Audio Conferencing, IPphone,etc.

Shareholder AnnualReport,PressReleases

AnnualGeneralMeeting Conference calls/ One to one meeting

with Investorsandparticipating invariousinvestor conference in India and abroadby CMD/Functional Directors/ExecutiveDirector(P&D)andotherseniorofficers.

43

Someofthekeytopicsandconcernswhichhavebeenraisedbythestakeholdersduring2014-15and the steps being taken by the organization to address these concerns and risks are given in thetablebelow:

Material issues identified Strategic goals set to resolve these issuesOrder book reduction due to increasing competition,excessdomesticmanufacturingcapacitiesandlowbusinesssentiments.

Focus on EPC business Enhancingtechno-commercialcompetitiveness Increasingscopeofoffer Improvingperformanceparameters

Highmaterialcosttoturnoverratio Means are being explored to reduce the materialcontent of our product so as to reduce its environmentalfootprintoveritslifecycle

Diversificationofbusiness Capacity expansion, product development,collaboration with stakeholders, capabilitiesconsolidation and gaining execution experienceare being pursued in various business verticals toenhanceshareofIndustrySegmentinturnover-mix.

Sub-optimalcontributionofgreenenergy in our operations

At-least 2% of energy is to be sourced throughrenewableinouroperations

Safety performance at site Safety Performance review is being done more critically

Inordertoensuretransparency,a separate section on Corporate GovernanceisannexedeveryyearwiththeAnnualReportoftheCompany,whereinalldisclosuresaremadeasperthelistingrequirements

Disclosureofinformationontheinternet FilingofinformationwithStockexchanges NewsReleasesandPressconferences

Societyatlarge CSR Programme, BaselineSurvey/needidentification

CSR Projects, Interactionwithpeoplethroughsitevisitsfor

CSR,MeetingwithNGOsrepresentatives Society Satisfaction Surveys by units Continuous interaction with Local

administration/Districtauthoritiesbyseniorleadersatunits/projectsites

Medicalcamps/Blooddonationcampsatunits/Sites/adoptedvillages,etc.

Creation of educational infrastructure forlocalpeopleatmanufacturingunits

Othersocialwelfareinitiatives

44

Safety organization at project sites is being strengthen

Heightenedeffortsbeingmadetoinvolvealltheemployeesinimprovingsafetyperformance

Expectation of stakeholders in vicinityofourgeographicalfootprint

More focused CSR initiatives are being taken to meet theexpectationsof thestakeholders.Sustainabilityand scalability are the two important parametersidentifiedforsuchprojects

Indian business environment and stockmarket remained volatile during the year.Apprehensions were repeatedly raisedabout BHELs ability to consistently rewardits investors given the dwindling orderbook. In this backdrop, BHEL remains intouch with investors and analyst communitycommunicatingcompanyslong-termstrategicvision through face-to-face meetings,conferences calls, Investor conferences byuploading presentations and conference calltranscripts on companys website www.bhel.com.

BHEL Corporate Planning & Developmenthad more than 250 face-to-face interactionswith analysts, fund managers, and otherinvestors. Business&StrategyOverview ofBHELwaspresented&discussedinInvestorConferences.

Process for defining report content and aspect boundariesBHELs process of materiality analysis isbasicallyathreestageprocessandthesameis shown in the figure captioned MaterialityAnalysis.

Initially,gamutof issueswhicharesignificantfor the stakeholders of the company andwhichaffectorhaveapotential toaffect thesustainability of business of the organizationareidentified.Itisdonethroughbrainstormingaswellasstakeholderengagement.Nowinthenextstep,theseissuesidentifiedareanalysedin sustainability context which defines howimportant the issue is for BHELs Economic,EnvironmentalandSocialImpactandhowtheissue is going to influence the stakeholdersdecisionandassessmentofourorganization.

IDENTIFIED MATERIAL ISSUES

45

Then the relevant issues which arematerialto company aswell as the stakeholders areprioritisedthroughasimplematrixformwhichis shown in the figure captioned BHELsMaterialityMatrix.

As regards the boundary of the material aspects identified, the data reported for EconomicperformanceandmaterialconsumptionisforentireBHELwhichincludesourprojectsitesalso.However, the data pertaining to aspects of environment is limited to themanufacturing unitsas listed in the diagram titled reporting Boundary for Environmental Indicators as shown inpageno40.ItmayalsobenotedthatmajorimpactofourproductandservicesliesoutsideourboundaryduringthelifecycleofpowerplantwhichisbeyondthecontrolofBHEL.Tominimizetheenvironmentalimpactsofourproductsandservices,BHELiscontinuouslystrivingformoreefficientpowerplantequipmentanddevelopmentofgreenertechnologies.Also,emissionduringtransportationofourproductsacrossourpresenceissignificant,butisanareawhichisnotbeingtrackedasofnow.

Thereisnosignificantchangeinouroperationsorsupplychainfrompreviousreportingperiodsandtherearenochangesinthescopeandaspectboundaryoftheidentifiedmaterialissues.

InfluenceonStakeholderassessm

ent&

decisions

Significance of Issue for BHELs Economic, environmental & Social impactsMo

derat

eHigh

High

InfluencingPublicpolicy

LocalCommunityEngagement

Economic PerformanceClimateChangeEnergyOccupationalHealth

& Safety

ChildlabourIndigenousrights

Effluent&WasteDisposalLegalCompliances

MaterialWaterEmissionsBiodiversity

SupplierEnvironmentalAssessment

Training & EducationAnti-Corruption

Procurement PracticesFreedom of Association & CollectiveBargaining

Products & ServicesDiversity&Equal

opportunity

BHELs MATERIALITY MATRIX

Forthereportingperiod2014-15thefollowingissues have been found to be key materialissues for the company and the same are reportedinthisdocumentindetail:

Climate Change

Material consumption

Occupational Health & Safety

Energy Water

Effluent and Waste

Economic Performance

Identified Key Material Issues

46

Our Economic Performance

Management ApproachThe Company believes that conductingbusiness inamanner that complieswith theCorporate Governance procedures and Code ofConduct,exemplifieseachofourcorevaluesandpositions us to deliver long-term returnsto our shareholders, favourable outcomesto our customers, attractive opportunities to ouremployeesandmaking thesuppliersourpartners in progress& enriching the society.BHEL has exhibited sustainable growththroughout its journey so far, despite various challengesbeingfacedbythecompany.

Climate Change - risk and opportunityWorldwide there is a growing realisationamongst all the stakeholders that ClimateChangeandGHGEmissionarecorrelated.Ourcountryisfacingthechallengeforsustainingitsrapideconomicgrowthwhiledealingwiththeglobal threatof climatechange.Todealwiththeclimatechangeissueinaholisticway,ourcountry,in2009,launchedNationalActionPlanonClimateChange(NAPCC)whichenvisagesmeeting15%ofcountryspowerrequirementsfromrenewablesourcesby2020.JawaharlalNehruNationalSolarMission(JNNSM),oneoftheeightkeymissionsidentifiedunderNAPCChas set an ambitious target of adding 20 GW of grid connected & 2 GW of off grid capacity by 2022 in three phasesby creating favourableconditions for solarmanufacturing capability.Missionalsoaimsatreducingthecostofsolarpowergenerationinthecountrythroughlongterm policy, large scale deployment goals,aggressive R&D and domestic production of critical raw materials, components andproducts.

Now the Government of India has steppedup Indias solar power capacity target undertheJawaharlalNehruNationalSolarMission(JNNSM)byfivetimes,reaching1,00,000MWby2022.Thetargetwillprincipallycompriseof40 GW Rooftop and 60 GW through Large and Medium Scale Grid Connected Solar PowerProjects. With this ambitious target, IndiawillbecomeoneofthelargestGreenEnergyproducers in the world, surpassing severaldevelopedcountries.

In line with the concern being shown bystakeholdersworldwideandtheGovernmentofIndiainparticular,BHEListakingallmeasurestoreducetheGHGemissioninitsoperations.Tomitigatetherisksofclimatechange,BHELisprogressivelyreducingthecarbonfootprintofitsproducts&servicesaswellasitsinternalprocesses across the organization. Theseeffortsincludeswitchingovertocleanerfuels,energy conservation / efficiency measures,renewableenergymeasureslike