1

TO

ALL SHAREHOLDERS

NOTICE IS HEREBY GIVEN THAT the fifty sixth Annual General Meeting of the

Shareholders of Bharat Electronics Limited will be held on Tuesday, the 28th of

September 2010, at 2.30. p.m. at Kalinga Hall, The Lalit Ashok Hotel, Kumara

Park High Grounds, Bangalore - 560 001, to transact the following business:-

ORDINARY BUSINESS

1. To receive, consider and adopt the Profit & Loss Account for the year

ended 31 March 2010 and the Balance Sheet as at that date and the

Reports of the Directors and the Auditors thereon.

2. To confirm the Interim Dividend and declare Final Dividend on Equity

Shares.

3. To appoint a Director in place of Mr M L Shanmukh, who

retires by rotation and being eligible, offers himself for

re-appointment.

4. To appoint a Director in place of Lt Gen P Mohapatra, AVSM,

who retires by rotation and being eligible, offers himself for

re-appointment.

SPECIAL BUSINESS

ORDINARY RESOLUTION

5. To consider and if thought fit, to pass, with or without modifications, the

following resolution as Ordinary Resolution:

"RESOLVED THAT Mr Anil Razdan who was appointed as Additional

Director by the Board of Directors of the Company in its meeting held

on 29th of January, 2010, to hold office upto the date of this Annual

General Meeting and for the appointment of whom the Company has

received a notice under Section 257 of the Companies Act, 1956 from

a member proposing his candidacy for the office of Director, be and is

hereby appointed as a Director of the Company whose period of office

shall be liable to determination by retirement by rotation."

6. To consider and if thought fit, to pass, with or without modifications, the

following resolution as Ordinary Resolution:

"RESOLVED THAT Prof Vinod Kumar Bhalla who was appointed as

Additional Director by the Board of Directors of the Company in its

meeting held on 29th of January, 2010, to hold office upto the date of

this Annual General Meeting and for the appointment of whom the

³ÖÖ¸üŸÖ ‡»ÖꌙÒüÖò× −ÖŒÃÖ ×»Ö×´Ö™êü›üBHARAT ELECTRONICS LIMITED

(^maV gaH$ma H$m CÚ_)(A Government of India Enterprise)

¯ÖÓ•Öß�éúŸÖ ¾Ö �úÖ¸ü¯ÖÖê¸êü™ü �úÖµÖÖÔ»ÖµÖ - †Öˆ™ü¸ü ظü�Ö ¸üÖê›ü, −ÖÖ�Ö¾ÖÖ¸üÖ, ²Öë�Ö»Öæ¸ü - 560 045Registered & Corporate Office: Outer Ring Road, Nagavara, Bangalore – 560 045

ÃÖæ“Ö−ÖÖ / N O T I C E

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2

Company has received a notice under Section 257 of the Companies Act,

1956 from a member proposing his candidacy for the office of Director,

be and is hereby appointed as a Director of the Company whose period

of office shall be liable to determination by retirement by rotation."

7. To consider and if thought fit, to pass, with or without modifications, the

following resolution as Ordinary Resolution:

"RESOLVED THAT Mr M S Ramachandran who was appointed as

Additional Director by the Board of Directors of the Company in its

meeting held on 29th of January, 2010, to hold office upto the date of

this Annual General Meeting and for the appointment of whom the

Company has received a notice under Section 257 of the Companies Act,

1956 from a member proposing his candidacy for the office of Director,

be and is hereby appointed as a Director of the Company whose period

of office shall be liable to determination by retirement by rotation."

8. To consider and if thought fit, to pass, with or without modifications, the

following resolution as Ordinary Resolution:

"RESOLVED THAT Mr Satyajeet Rajan who was appointed as Additional

Director by the Board of Directors of the Company in its meeting held

on 29th of January, 2010, to hold office upto the date of this Annual

General Meeting and for the appointment of whom the Company has

received a notice under Section 257 of the Companies Act, 1956 from

a member proposing his candidacy for the office of Director, be and is

hereby appointed as a Director of the Company whose period of office

shall be liable to determination by retirement by rotation."

By order of the Board,

For Bharat Electronics Limited

Bangalore C R Prakash

25 August 2010 Company Secretary

NOTE

1. Relevant Explanatory Statement pursuant to Section 173(2) of the

Companies Act, 1956 (the Act), in respect of Special Business as set out

above is annexed hereto and forms part of the Notice.

2. A member entitled to attend and vote at the Annual General Meeting

(the “meeting”) is entitled to appoint a proxy to attend and vote on

a poll instead of himself and the proxy need not be a member of the

Company. The instrument appointing a proxy should, however, be

deposited at the Registered Office of the Company duly completed, not

less than 48 hours before the commencement of the meeting.

3. Corporate members intending to send their authorised representatives

to attend the Meeting are requested to send to the Company a certified

copy of the Board Resolution authorising their representative to attend

and vote on their behalf at the Meeting.

4. The Company has already notified closure of Register of Members

and Share Transfer Books from 15/09/2010 to 28/09/2010 (both days

inclusive) for determining the names of members eligible for dividend on

Equity shares, if declared at the Meeting.

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3

5. The Final Dividend for the year 2009-10, if declared at the Meeting,

will be payable within 30 days from the date of declaration, to those

members whose names shall appear on the Company’s Register of

Members as on 14 September, 2010.

Company will be making the dividend payment by ECS (Electronic

Clearing System), wherever possible and by dividend warrant / Bank

demand drafts in other cases. In respect of shares held in electronic

form, the dividend will be paid on the basis of beneficial ownership

details furnished by the Depositories (NSDL & CDSL), as at the close

of business hours on 14 September, 2010, for this purpose. Members

holding shares in electronic form may note that bank particulars

registered against their respective depository accounts will be

used by the Company for payment of dividend. The Company or

its Registrars cannot act on any request received directly from the

members holding shares in electronic form for any change of bank

particulars or bank mandate. Such changes are to be advised only

to the Depository Participant of the Members. Members who have

changed their bank account after opening the Depository Account and

want to receive dividend in an account other than the one specified

while opening the Depository Account, are requested to change /

correct their bank account details (including the nine digit Bank code)

with their Depository Participant, before 14th of September, 2010.

6. Under Section 205A(5) of the Act, companies are required to transfer to

the Investor Education and Protection Fund (the Fund) established by

the Government under Section 205C of the Act the money transferred

by the companies to the Unpaid Dividend Account and which remain

unclaimed / unpaid for a period of seven years. As per Section 205C of

the Act no claims shall lay against the Fund or the Company in respect of

individual amounts thus transferred to the Fund and no payment shall

be made in respect of any such claims. During the year 2009-10 the

Company transferred to the Fund an amount of Rs. 195,711 / - from the

unpaid Dividend Account for the year 2001-02. The unclaimed / unpaid

dividend for the year 2002-03 is due for transfer to the Fund in 2010.

Notices to this effect have been sent to the respective shareholders to

enable them to claim and receive the amount. Company has posted

on its website www.bel-india.com in a separate page titled “Information

for Investors” the details of dividend payment since 2002-03 onwards

and guidance information for claiming unpaid dividend. Members are

requested to make use of the claim form provided therein to claim

unpaid / unclaimed dividend.

7. Members desirous of getting any information in respect of Accounts

of the Company are requested to send their queries, in writing, to the

Company at the Registered Office so as to reach at least 7 days before

the meeting so that the required information can be made available at

the meeting.

8. Members are requested to bring their copies of the Annual Report and

the Notice to the meeting.

9. Members / Proxies attending the meeting are requested to complete

the enclosed Attendance Slip and deliver the same at the entrance of

the meeting venue.

5. ¾ÖÂÖÔ 2009-10 ÆêüŸÖã †Ó×ŸÖ´Ö »ÖÖ³ÖÖÓ¿Ö, µÖפü ¾ÖÖÙÂÖ�ú ÃÖÖ´ÖÖ −µÖ ²Öîšü�ú ´Öë ‘ÖÖê×ÂÖŸÖ ÆüÖê, »ÖÖ³ÖÖÓ¿Ö �úß ‘ÖÖêÂÖ�ÖÖ �úß ×ŸÖ×£Ö ÃÖê 30 פü −ÖÖë �êú ³Öߟָü ˆ −Ö ÃÖ¤üõÖÖë �úÖê ¯ÖϤüêµÖ ÆüÖê�ÖÖ ×•Ö −Ö�ê −ÖÖ´Ö µÖ£ÖÖ 14 ×ÃÖŸÖÓ²Ö¸ü, 2010 �úÖê �Óú¯Ö −Öß �êú ÃÖ¤üõÖÖë �úß ¯ÖÓ•Öß ´Öë ¯ÖÏ�ú™ü ÆüÖêŸÖê Æîë …

�Óú¯Ö −Öß •ÖÆüÖÑ �úÆüà ÃÖÓ³Ö¾Ö ÆüÖê, »ÖÖ³ÖÖÓ¿Ö ³Öã�ÖŸÖÖ −Ö ‡ÔÃÖß‹ÃÖ (‡»ÖꌙÒüÖò× −Ö�ú ÛŒ»ÖµÖظü�Ö ×ÃÖÙü´Ö) «üÖ¸üÖ ŸÖ£ÖÖ † ü −µÖ ´ÖÖ´Ö»ÖÖë ´Öë »ÖÖ³ÖÖÓ¿Ö ¾ÖÖ¸Óü™ü / ²Öï�ú ´ÖÖÓ�Ö ¯Ö¡Ö «üÖ¸üÖ �ú¸êü�Öß … ‡»ÖꌙÒüÖò× ü −Ö�ú ºþ¯Ö ´Öë ¬ÖÖ׸üŸÖ ¿ÖêµÖ¸üÖë �êú ´ÖÖ´Ö»Öê ´Öë, »ÖÖ³ÖÖÓ¿Ö �úÖ ³Öã�ÖŸÖÖ ü −Ö µÖ£ÖÖ 14 ×ÃÖŸÖÓ²Ö¸ü, 2010 �úÖê �úÖ¸üÖê²ÖÖ¸üß ‘Ö�™üÖë �úß ÃÖ´ÖÖÛ¯ŸÖ ¯Ö¸ü ‡ÃÖ ¯ÖϵÖÖê•Ö ü −Ö ÆêüŸÖã × ü −Ö�Öê¯Ö�úŸÖÖÔ†Öë (‹ ü −Ö ‹ÃÖ ›üß ‹»Ö ŸÖ£ÖÖ ÃÖß ›üß ‹ÃÖ ‹»Ö) «üÖ¸üÖ ×¤ü‹ �Ö‹ ×ÆüŸÖÖ׬Ö�úÖ¸üß Ã¾ÖÖ×´ÖŸ¾Ö ²µÖÖî¸üÖë �êú †Ö¬ÖÖ¸ü ¯Ö¸ü ×�úµÖÖ •ÖÖ‹�ÖÖ … ‡»ÖꌙÒüÖò×­ü­−Ö�ú­ ºþ¯Ö­ ´Öë­ ¿ÖêµÖ¸ü­ ¬ÖÖ׸üŸÖ­ �ú¸ü−Öê­ ¾ÖÖ»Öê­ ÃÖ¤üõ֭ ­ü­−ÖÖê™ü­ �ú¸ëü­ ×�ú­ ˆ­ü­−Ö�êú­ ÃÖÓ²ÖÓ׬֭֟ ×­ü­−Ö�Öê¯ÖÖ�ÖÖ¸ü­ �ÖÖŸÖÖë­ �êú­ ÃÖ´Ö�Ö­ ¤ü•ÖÔ­ ²Öï�ú­ ×¾Ö¾Ö¸ü�ÖÖë­ �úÖ­ ¯ÖϵÖÖê�Ö­ �Óú¯Ö­ü­−Öß­ «üÖ¸üÖ­ »ÖÖ³ÖÖÓ¿Ö­ �êú­ ³Öã�ÖŸÖÖ­ü­−Ö­ ÆêüŸÖã­ ×�úµÖÖ­ •ÖÖ‹�ÖÖ­ …­ ­ �Óú¯Ö­ü­−Öß­ µÖÖ­‡ÃÖ�êú­ ¯ÖÓ•ÖßµÖ�ú­²Öï�ú­ÃÖÓ²ÖÓ¬Öß­ ×¾Ö¾Ö¸ü�ÖÖë­ µÖÖ­²Öï�ú­†Ö–ÖÖ­´Öë­ ×�úÃÖß­¯Ö׸ü¾ÖŸÖÔ­ü­−Ö­�êú­ ×»Ö‹­ ‡»ÖꌙÒüÖò×­ü­−Ö�ú­ ºþ¯Ö­ ´Öë­ ¿ÖêµÖ¸ü­ ¬ÖÖ׸üŸÖ­ �ú¸ü­ü­−Öê­ ¾ÖÖ»Öê­ ÃÖ¤üõÖÖë­ ÃÖê­ ÃÖ߬Öê­ ¯ÖÏÖ¯ŸÖ­ ×�úÃÖß­ †­ü­−Öã¸üÖê¬Ö­ ¯Ö¸ü­ �úÖ¸Ôü¾ÖÖ‡Ô­ ­ü­−ÖÆüà­ �ú¸ü­ ÃÖ�úŸÖê­ Æïü…­ ‹êÃÖê­ ¯Ö׸ü¾ÖŸÖÔ­ü­−ÖÖë­ �úÖê­ ÃÖ¤üõÖÖë­ �êú­ ×­ü­−Ö�Öê¯ÖÖ�ÖÖ¸ü­ ÃÖÆü³ÖÖ�Öß­ �úÖê­ Æüß­ ÃÖæד֭֟ ×�úµÖÖ­ •ÖÖ­ü­−ÖÖ­ Æîü… ×•Ö ü −Ö ÃÖ¤üõÖÖë ü −Öê × ü −Ö�Öê¯ÖÖ�ÖÖ¸ü �ÖÖŸÖÖ �ÖÖê»Ö ü −Öê �êú ²ÖÖ¤ü †¯Ö ü −ÖÖ ²Öï�ú �ÖÖŸÖÖ ¯Ö׸ü¾ÖÙŸÖŸÖ ×�úµÖÖ Æî †Öî¸ü × ü −Ö�Öê¯ÖÖ�ÖÖ¸ü �ÖÖŸÖÖ �ÖÖê»ÖŸÖê ÃÖ´ÖµÖ ×¾Ö× ü −ÖÙ¤ü™ü �ÖÖŸÖê �êú †»ÖÖ¾ÖÖ �ÖÖŸÖê ´Öë »ÖÖ³ÖÖÓ¿Ö ¯ÖÏÖ¯ŸÖ �ú¸ü ü −ÖÖ “ÖÖÆüŸÖê Æïü, ‹êÃÖê ÃÖ¤üõÖÖë ÃÖê † ü −Öã¸üÖê¬Ö Æîü ×�ú ¾Öê 14 ×ÃÖŸÖÓ²Ö¸ü, 2010 ÃÖê ¯ÖÆü»Öê †¯Ö ü −Öê × ü −Ö�Öê¯ÖÖ�ÖÖ¸ü ÃÖÆü³ÖÖ�Öß ÃÖê †¯Ö ü −Öê ²Öï�ú �ÖÖŸÖê �êú ²µÖÖî¸êü ( ü −ÖÖî †Ó�úÖë �êú ²Öï�ú �æú™ü ÃÖ×ÆüŸÖ) ´Öë ¯Ö׸ü¾ÖŸÖÔ ü −Ö / ÃÖã¬ÖÖ¸ü �ú¸ü »Öë …

6. �Óú¯Ö ü −Öß †×¬Ö× ü −ÖµÖ´Ö, �úß ¬ÖÖ¸üÖ 205‹ (5) �êú ŸÖÆüŸÖ �Óú¯Ö× ü −ÖµÖÖë �úÖê †¤ü¢Ö »ÖÖ³ÖÖÓ¿Ö �ÖÖŸÖê ´Öë �Óú¯Ö× ü −ÖµÖÖë «üÖ¸üÖ †ÓŸÖ׸üŸÖ ‹êÃÖß ¸üÖ×¿Ö •ÖÖê ÃÖÖŸÖ ¾ÖÂÖÖí �úß †¾Ö×¬Ö ÆêüŸÖã ¤üÖ¾ÖÖ ü −Ö �úß �Ö‡Ô / †¤ü¢Ö ¸üÆüŸÖß Æîü, �úÖê †×¬Ö× ü −ÖµÖ´Ö �úß ¬ÖÖ¸üÖ 205 ÃÖß �êú ŸÖÆüŸÖ ÃÖ¸ü�úÖ¸ü «üÖ¸üÖ Ã£ÖÖ×¯ÖŸÖ × ü −Ö¾Öê¿Ö�ú ׿Ö�ÖÖ ¾Ö ÃÖÓ¸ü�ÖÖ �úÖêÂÖ (�úÖêÂÖ) ´Öë †ÓŸÖ׸üŸÖ �ú¸ü ü −ÖÖ †Ö¾Ö¿µÖ�ú Æî … ‡ÃÖ †×¬Ö× ü −ÖµÖ´Ö �úß ¬ÖÖ¸üÖ 205 ÃÖß �êú † ü −ÖãÃÖÖ¸ü, �úÖêÂÖ �úÖê ‡ÃÖ ¯ÖÏ�úÖ¸ü †ÓŸÖ׸üŸÖ †»Ö�Ö-†»Ö�Ö ¸üÖ׿ֵÖÖë �êú ÃÖÓ²ÖÓ¬Ö ´Öë �úÖêÂÖ µÖÖ �Óú¯Ö ü −Öß �êú ÃÖ´Ö�Ö �úÖê‡Ô ¤üÖ¾Öê ü −ÖÆüà ÆüÖê ü −Öê “ÖÖ×Æü‹ ŸÖ£ÖÖ ‹êÃÖê ×�úÃÖß ³Öß ¤üÖ¾Öê �êú ÃÖÓ²ÖÓ¬Ö ´Öë �úÖê‡Ô ³Öã�ÖŸÖÖ ü −Ö ü −ÖÆüà ×�úµÖÖ •ÖÖ‹�ÖÖ … ¾ÖÂÖÔ 2009-10 �êú ¤üÖî¸üÖ −Ö, �Óú¯Ö −Öß −Öê ¾ÖÂÖÔ 2001-2002 ÆêüŸÖã †¤ü¢Ö »ÖÖ³ÖÖÓ¿Ö �ÖÖŸÖê ÃÖê 195,711/- ¸. �úß ¸üÖ×¿Ö �úÖê �úÖêÂÖ ´Öë †ÓŸÖ׸üŸÖ ×�úµÖÖ Æîü … ¾ÖÂÖÔ 2002-2003 �êú ×»Ö‹ ¤üÖ¾ÖÖ −Ö ×�ú‹ �Ö‹ / †¤ü¢Ö »ÖÖ³ÖÖÓ¿Ö 2010 ´Öë × −Ö×¬Ö ´Öë †ÓŸÖ׸üŸÖ �ú¸ü −Öê ÆêüŸÖã × −ÖµÖŸÖ Æîü … ‡ÃÖê �úÖµÖÖÔÛ− ¾ÖŸÖ �ú¸ü −Öê �êú ×»Ö‹ ÃÖÓ²ÖÓ×¬ÖŸÖ ¿ÖêµÖ¸ü¬ÖÖ¸ü�úÖë �úÖê ÃÖæ“Ö −ÖÖ‹Ñ ³Öê•Ö ¤üß �Ö‡Ô Æïü ŸÖÖ×�ú ¾Öê ¤üÖ¾ÖÖ �ú¸ü ¸üÖ×¿Ö ¯ÖÏÖ¯ŸÖ �ú¸ü ÃÖ�ëú … �Óú¯Ö −Öß −Öê †¯Ö −Öß ¾Öê²ÖÃÖÖ‡™ü www.bel-india.com ´Öë 2002-2003 ÃÖê »Öê�ú¸ü †²Ö ŸÖ�ú �êú »ÖÖ³ÖÖÓ¿Ö ³Öã�ÖŸÖÖ −Ö �êú ²µÖÖî¸êü “× −Ö¾Öê¿Ö�úÖë �êú ×»Ö‹ ÃÖæ“Ö −ÖÖ” −ÖÖ´Ö�ú ‹�ú ¯Öé£Ö�ú ¯Öéšü ´Öë ŸÖ£ÖÖ †¤ü¢Ö »ÖÖ³ÖÖÓ¿Ö �úÖ ¤üÖ¾ÖÖ �ú¸ü −Öê �úß ´ÖÖ�ÖÔ¤ü¿Öá ÃÖæ“Ö −ÖÖ »Ö�ÖÖ‡Ô Æîü … ¿ÖêµÖ¸ü¬ÖÖ¸ü�úÖë ÃÖê × −Ö¾Öê¤ü−Ö Æîü ×�ú ¾Öê †¤ü¢Ö / ¤üÖ¾ÖÖ −Ö ×�ú‹ �Ö‹ »ÖÖ³ÖÖÓ¿Ö �úÖ ¤üÖ¾ÖÖ �ú¸ü −Öê �êú ×»Ö‹ ‡ÃÖ´Öë פü‹ �Ö‹ ±úÖ´ÖÔ �úÖ ¯ÖϵÖÖê�Ö �ú¸ëü …

7. �Óú¯Ö −Öß �êú »Öê�ÖÖë �êú ÃÖÓ²ÖÓ¬Ö ´Öë �úÖê‡Ô ³Öß ÃÖæ“Ö −ÖÖ ¯ÖÏÖ¯ŸÖ �ú¸ü −Öê �êú ‡“”ãû�ú ÃÖ¤üõÖÖë ÃÖê † −Öã¸üÖê¬Ö Æî ×�ú ¾Öê †¯Ö −Öê ¯ÖÏ¿ −Ö, ×»Ö×�ÖŸÖ ´Öë, �Óú¯Ö −Öß �êú ¯ÖÓ•Öß�éúŸÖ �úÖµÖÖÔ»ÖµÖ ´Öë ‹êÃÖê ³Öê•Öë ×�ú ¾Öê ²Öîšü�ú ÃÖê �ú´Ö ÃÖê �ú´Ö 7 פü −ÖÖë ÃÖê ¯ÖÆü»Öê ¯ÖÆãÑü“Ö •ÖÖ‹Ñ ŸÖÖ×�ú †¯Öê×�ÖŸÖ ÃÖæ“Ö −ÖÖ ²Öîšü�ú ´Öë ˆ¯Ö»Ö²¬Ö ÆüÖê ÃÖ�êú …

8. ÃÖ¤üõÖÖë ÃÖê † −Öã¸üÖê¬Ö Æî ×�ú ¾Öê ¾ÖÖÙÂÖ�ú ¯ÖÏן־Öê¤ü −Ö †Öî¸ü ÃÖæ“Ö −ÖÖ �úß †¯Ö −Öß ¯ÖÏןֵÖÖÑ ²Öîšü�ú ´Öë ÃÖÖ£Ö »Öê †Ö‹Ñ …

9. ²Öîšü�ú ´Öë ÃÖÛ´´Ö×»ÖŸÖ ÆüÖê ¸üÆêü ÃÖ¤üõÖÖë / ¯Ö¸üÖê×�ÖµÖÖë ÃÖê † −Öã¸üÖê¬Ö Æîü ×�ú ¾Öê ÃÖÓ»Ö� −Ö ˆ¯ÖÛãÖ×ŸÖ ¯Ö“Öá ³Ö¸ü�ú¸ü ˆÃÖê ²Öîšü�ú �êú ¯ÖϾÖê¿Ö Ã£Ö»Ö ¯Ö¸ü ÃÖã¯Öã¤Ôü �ú¸ë …

4

10. In case of joint holders attending the Meeting, only such joint holder

who is higher in the order of names will be entitled to vote.

11. Members holding shares in physical form are requested to notify to

the Company’s Registrars and Transfer Agent, M/s Alpha Systems

Pvt. Ltd., 30, Ramana Residency, Ground Floor, 4th Cross, Sampige

Road, Malleswaram, Bangalore – 560003, Tel. 080-23460815-18,

Fax : 080-23460819 immediately any change in their address, by sending

a written communication. Members who are holding shares in demat

form are requested to contact the respective Depository Participants

with whom they have opened the Demat Account and get the change

of address recorded.

12. Members still holding shares in physical form are advised to dematerialise

the shares in their own interest to avoid difficulties arising from

loss / misplacement / theft / forgery of share certificates. Company has

entered into agreements with both the depositories, viz. NSDL and CDSL

to enable the shareholders to dematerialise BEL shares. Members may

please contact the Registrar and Transfer Agent, M/s Alpha Systems Pvt.

Ltd. in this connection.

ANNEXURE TO THE NOTICE

EXPLANATORY STATEMENT PURSUANT TO SECTION 173(2) OF THE COMPANIES ACT, 1956.

In respect of item No. 5 - 8

Your Company being a Government Company, the Directors on the Board are appointed by the Government of India (Government). Government has appointed following Directors on the Board of Directors of the Company:

1. Mr Anil Razdan2. Prof Vinod Kumar Bhalla3. Mr M S Ramachandran4. Mr Satyajeet Rajan

Pursuant to Section 260 of the Companies Act, 1956 and Article 71C of the Articles of Association of the Company, the Board of Directors at Board meeting held on 29-01-2010 appointed above persons as Additional Directors to hold office upto the date of the next Annual General Meeting.

Subsequently, the Company has received four notices in writing under Section 257 of the Act from members signifying their intention to propose the appointment of above persons as Directors of the Company and a deposit of Rs. 500/- each has been received along with notices.

Brief resume of the above new directors including the details required to be forwarded to the Shareholders as per Listing Agreement with Stock Exchanges, enclosed. Your Directors feel that the Company would immensely benefit from the knowledge and rich experience possessed by these persons and accordingly recommend the passing of the resolutions proposed at Items No. 5 - 8 of the Notice.

No Director other than the Additional Directors (the persons proposed to be appointed as Directors in these resolutions) is in any way concerned or

interested in the resolutions set out at Items No. 5 - 8.

10. ²Öîšü�ú ´Öë ³ÖÖ�Ö »Öê −Öê ¾ÖÖ»Öê ÃÖÓµÖãŒŸÖ ¬ÖÖ¸ü�úÖë �êú ´ÖÖ´Ö»Öê ´Öë, �êú¾Ö»Ö ‹êÃÖê ÃÖÓµÖãŒŸÖ ¬ÖÖ¸ü�ú •ÖÖê −ÖÖ´ÖÖë �êú �Îú´Ö ´Öë ‰ú¯Ö¸ü ÆüÖë�Öê, ´ÖŸÖ¤üÖ −Ö �ú¸ü −Öê �êú Æü�ú¤üÖ¸ü ÆüÖë�Öê …

11. ¿ÖêµÖ¸üÖë �úÖê ³ÖÖîןÖ�ú ºþ¯Ö ´Öë ¬ÖÖ׸üŸÖ �ú¸ü −Öê ¾ÖÖ»Öê ÃÖ¤üõÖÖë ÃÖê † −Öã¸üÖê¬Ö Æîü ×�ú ¾Öê †¯Ö −Öê ¯ÖŸÖê ´Öë Æãü‹ ×�úÃÖß ³Öß ¯Ö׸ü¾ÖŸÖÔ −Ö �êú ²ÖÖ¸êü ´Öë �Óú¯Ö −Öß �êú ¯ÖÓ•ÖßµÖ�ú ¾Ö †ÓŸÖ¸ü�Ö ‹•Öê −™ü ´ÖêÃÖÃÖÔ †»±úÖ ×ÃÖÙü´ÃÖ ¯ÖÏÖ.×»Ö., 30, ¸ü´Ö�ÖÖ ¸êü×ÃÖ›êü− ÃÖß, ³ÖæŸÖ»Ö, 4£ÖÖ �ÎúÖÃÖ, ÃÖÜ´¯Ö�Öê ¸üÖê›ü, ´Ö»»ÖêÀ¾Ö¸ü´Ö, ²Öë�Ö»Öæ¸ü - 560003, ¤æü¸ü³ÖÖÂÖ 080-23460815-18, ±îúŒÃÖ 080-23460819 �úÖê ×»Ö×�ÖŸÖ ÃÖæ“Ö −ÖÖ ³Öê•ÖüŸÖê Æãü‹ ŸÖã¸ÓüŸÖ ÃÖæ×“ÖŸÖ �ú¸ë … ¿ÖêµÖ¸üÖë �úÖê ›ß´Öî™ü ºþ¯Ö ´Öë ¬ÖÖ׸üŸÖ �ú¸ü −Öê ¾ÖÖ»Öê ÃÖ¤üõÖÖë ÃÖê † −Öã¸üÖê¬Ö Æîü ×�ú ¾Öê ÃÖÓ²ÖÓ×¬ÖŸÖ × −Ö�Öê¯ÖÖ�ÖÖ¸ü ÃÖÆü³ÖÖ×�ÖµÖÖë ÃÖê ÃÖÓ¯Ö�Ôú �ú¸ëü ×•Ö −Ö�êú ÃÖÖ£Ö ˆ− ÆüÖë −Öê ›üß´Öî™ü �ÖÖŸÖÖ �ÖÖê»ÖÖ Æîü †Öî¸ü ¯ÖŸÖê ´Öë Æãü‹ ¯Ö׸ü¾ÖŸÖÔ −Ö �úÖê ¤ü•ÖÔ �ú¸üÖ‹Ñü …

12. ¿ÖêµÖ¸üÖë �úÖê †²Ö ³Öß ³ÖÖîןÖ�ú ºþ¯Ö ´Öë ¬ÖÖ׸üŸÖ �ú¸ü −Öê ¾ÖÖ»Öê ¿ÖêµÖ¸ü¬ÖÖ¸ü�úÖë �úÖê ¯Ö¸üÖ´Ö¿ÖÔ ×¤üµÖÖ •ÖÖŸÖÖ Æîü ×�ú ¾Öê ¿ÖêµÖ¸ü ¯ÖÏ´ÖÖ�Ö-¯Ö¡ÖÖë �êú �ÖÖê •ÖÖ −Öê / �Ö»ÖŸÖ Ã£ÖÖ −Ö ¯Ö¸ü ¸ü�Öê •ÖÖ −Öê / “ÖÖê¸üß / •ÖÖ»ÖÃÖÖ•ÖÌß ÃÖê ¯Öî¤üÖ ÆüÖê −Öê ¾ÖÖ»Öß ¯Ö¸êü¿ÖÖ× −ÖµÖÖë ÃÖê ²Ö“Ö −Öê �êú ×»Ö‹ †¯Ö −Öê ×ÆüŸÖ ´Öë ¿ÖêµÖ¸üÖë �úÖê ›üß´Öî™ü �ú¸üÖ »Öë … �Óú¯Ö −Öß −Öê ¿ÖêµÖ¸ü¬ÖÖ¸ü�úÖë �úÖê ²Öß ‡Ô ‹»Ö �êú ¿ÖêµÖ¸üÖë �úÖê ›üß´Öî™ü �ú¸üÖ −Öê ÆêüŸÖã ¤üÖê −ÖÖë × −Ö�Öê¯ÖÖ�ÖÖ¸üÖë †£ÖÖÔŸÖË ‹ −Ö ‹ÃÖ ›üß ‹»Ö †Öî¸ü ÃÖß ›üß ‹ÃÖ ‹»Ö �êú ÃÖÖ£Ö �ú¸üÖ¸ü ×�ú‹ Æïü … ÃÖ¤üÃµÖ ‡ÃÖ ÃÖÓ²ÖÓ¬Ö ´Öë �éú¯ÖµÖÖ ¯ÖÓ•ÖßµÖ�ú ¾Ö †ÓŸÖ¸ü�Ö ‹•Öê− ™ü, ´ÖêÃÖÃÖÔ †»±úÖ ×ÃÖÙü´ÃÖ ¯ÖÏÖ.×»Ö. ÃÖê ÃÖÓ¯Ö�Ôú �ú¸ëü …

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5

Brief Resume of Directors Proposed to be Reappointed/Appointed

Directors Proposed to be Reappointed

Mr M L Shanmukh joined BEL as Director (Human Resources) on 14 August

2004. He holds a BA in Economics, LLB and Post Graduate Diploma in

Personnel and Industrial Relations. Before being elevated to the BEL Board,

Mr Shanmukh was Group General Manager (HRD) at Container Corporation

of India, a blue chip PSU under the Ministry of Railways. Prior to that, he had

worked in the Kerala State Electronics Development Corporation Limited.

He brings with him a wealth of experience in the fields of Human Resources

Management, Industrial Relations and Employee Welfare.

Mr M L Shanmukh is a BEL nominee Director on the Board of BEL’s subsidiary

Company, BEL Optronic Devices Ltd. (BELOP). He is also the Chairman of

the Audit Committee in BELOP. He is a member of Shareholders / Investors

Grievance Committee in BEL. He does not hold any shares in BEL.

Lt Gen P Mohapatra was appointed as a part-time official Director on the

Board of Directors of the Company in September, 2008. He is the Signal

Offier-in-Chief and Colonel Commandant of the Corps of Signals in the

Indian Army. An alumnus of NDA and DSSC, he has done the prestigious

Higher Command Course and also attended the ‘National Security and

Strategic Studies Course’ at the NDC. During Higher Command Course,

he was awarded the Commandant’s medal for best Research Study. The

General Officer has had an illustrious career spanning over three decades

and tenanted some very prestigious Command and Staff appointments.

Lt Gen P Mohapatra is a Director on the Boards of two other Public Sector

Enterprises, viz., ITI Limited and Electronics Corporation of India Ltd. He

does not hold any shares in BEL.

Directors proposed to be appointed

Mr Anil Razdan was appointed as an Independent Director on BEL Board

on 23 November 2009 for a period of three years. He was borne on the

Haryana cadre of the Indian Administrative Service. He is an alumnus of St.

Stephen’s College, Delhi for B.Sc. (Hons.), Physics and Faculty of Law, Delhi

University for LL.B. Mr Razdan was Secretary to the Government of India,

Ministry of Power. He held various significant assignments in the energy sector

in the Government of India and the Government of Haryana. He has been

Director / Joint Secretary with the Department of Atomic Energy and Joint

Secretary, Ministry of Power, Additional Secretary and Special Secretary with

the Ministry of Petroleum and Natural Gas in the Government of India. He

has also been Financial Commissioner and Principal Secretary, Government. of

Haryana in the Power, Irrigation and Public Works Departments.

Mr Anil Razdan is not on the Board of any other Company. He is a member of

BEL Audit Committee. He does not hold any shares in BEL.

Prof Vinod Kumar Bhalla was appointed as an Independent Director on BEL

Board on 23 November 2009 for a period of three years. He is a Professor

at the Faculty of Management Studies in the University of Delhi. He is

M.A. Economics from Punjab University and he did his Ph.D at Delhi School

of Economics, University of Delhi. His expertise is in the field of Finance

[Corporate Finance; International Finance, Security Analysis & Portfolio

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6

Management; Risk Management; International Business]. He has total

experience of more than 35 years and as Professor for more than 17 years.

Prof Bhalla has published more than 100 research papers. He has also written

a number of books and articles in various journals in the field of Financial

Management and Policy, Foreign Direct Investment, etc.

Prof Vinod Kumar Bhalla is a Director on the Boards of 4 companies other

than BEL: (1) Northern Coalfields Ltd. (NCFL), (2) Rico Auto Industries Ltd.

(RAIL), (3) IFCI Financial Services Ltd (IFSL) and (4) Sanlam Trustee Company

(India) Ltd. He is a member of BEL Audit Committee. He is the Chairman of

the Audit Committee in IFSL. He is also a member of Audit Committees in: RAIL

and NCFL and a member of the Grievance Committee in RAIL. He does not

hold any shares in BEL.

Mr M S Ramachandran is the former Chairman of the Indian Oil Corporation

Ltd. He graduated in Mechanical Engineering from the College of Engineering,

Guindy, Chennai in 1966. After working for about 4 years in Ashok Leyland he

joined IOC in the year 1969. He worked with IOC for about 36 years till 2005.

During these 36 years he held various responsible positions including that of

Executive Director, Director (Planning & Business Development) and finally

as Chairman. During 1998-2000 he was Executive Director, Oil Co-ordination

Committee. As head of the de facto regulatory body and an extended arm

of the Ministry of Petroleum and Natural Gas, led industry-wide supply and

logistics planning including imports, inventory, management and eco-friendly

product introduction. He also oversaw the phased deregulation of this sector,

including dismantling of the administered pricing mechanism and introduction

of market linked pricing.

Mr M S Ramachandran is a Director on the Boards of 5 companies other

than BEL: (1) Supreme Petrochemicals Ltd., (2) Ester Industries Ltd.,

(3) CALS Refineries Ltd. [Director (Chairman)], (4) Gulf Oil Corporation Ltd.

and (5) ICICI Bank Ltd. He is a member of BEL Audit Committee. He does not

hold any shares in BEL.

Mr Satyajeet Rajan was appointed as Government Director on BEL Board

of Directors w.e.f. 27th January, 2010. He is a graduate in Physics from IIT,

Kharagpur and a postgraduate in management from IIM, Calcutta is an IAS

Officer of Kerala Cadre. Mr Rajan has been exposed to an array of

developmental, administrative, legal experiences, magisterial and quasi-

judicial experiences as District Collector, both in the most advanced district

of Kottayam and the most backward district of Kasaragod of Kerala. He

contributed in various capacities to the industries, agriculture, fisheries and

welfare sectors in Kerala. He worked for 5 years in the Ministry of Coal & Mines

and in the Ministry of Information & Broadcasting in his earlier deputation to

the post of JS. He has been handling exports division in the department of

defence production since he joined the federal government after working for

3 years in Kerala House. He has been on the Board of BEML since October

2007. After restructuring of the departmental functions recently, he has been

assigned the task of coordinating electronics segment of the defence sector.

Mr Satyajeet Rajan is not on the Board of any other Company. He is a member

of BEL Audit Committee. He does not hold any shares in BEL in his personal

capacity. However, he holds 100 shares on behalf of the Government of

India.

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ANNUAL REPORT 2009 - 10

Contents

Description PageNo.

Chairman’s Letter 1

Corporate Vision, Mission, Values and Objectives 3

Board of Directors 4

Principal Executives, Bankers, Auditors 5

The Past Decade 6

Directors’ Report 7

Statement pursuant to Section 212 of the Companies Act 1956 17

Management Discussion and Analysis Report 21

Corporate Governance Report 28

Auditors’ Report 38

Comments of the C&AG 42

Significant Accounting Policies 44

Balance Sheet 48

Profit and Loss Account 49

Schedules to Financial Statements (1-22) 50

Cash Flow Statement 68

Auditors’ Report on the Consolidated Financial Statements 69

Consolidated Financial Statements 74

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ANNUAL REPORT 2009 - 10ANNUAL REPORT 2009 - 10

Chairman’sLetter

Dear Shareholders,

It gives me immense pleasure to communicate to you directly through this letter about the achievements of your Company during the past one year and the future outlook for the Company.

Highlightsoftheyear

Your Company achieved a record turnover of Rs. 521,977 lakhs during the year 2009-10 as against Rs. 462,369 lakhs in 2008-09, registering a growth of 12.89%. Export sales has increased from Rs. 8,243 lakhs in 2008-09 to Rs. 10,669 lakhs in 2009-10, an increase of 29.43%. Turnover per employee has increased from Rs. 38.66 lakhs in 2008-09 to Rs. 45.21 lakhs in 2009-10. All the 9 manufacturing Units of the Company have performed well and earned profits during the year.

The Profit After Tax for 2009-10 was Rs. 72,087 lakhs as against Rs. 74,576 lakhs last year, a decrease of 3.34%. Networth of the Company has increased from Rs. 378,368 lakhs in 2008-09 to Rs. 432,526 lakhs in 2009-10. R&D expenditure as a percentage of sales has increased from 5.26% in 2008-09 to 6.05% in 2009-10.

Supplies to the Defence Sector constituted 83.44% of the sales, balance 16.56% being supplies to the civilian sector. Turnover from indigenously developed products is 75%, balance 25% is from products developed with foreign technology.

Some of the other highlights during 2009-10 are:

• The Defence Minister inaugurated the state-of-the-art manufacturing facility dedicated to the manufacture of

the Digital Flight Control Computer of the LCA (Tejas) on 2 Feb 2010. On the occasion, the Advanced Gun Fire Control System for P-28 class of ships was also handed over.

• The Artillery Combat Command & Control System developed by BEL in association with DRDO was dedicated to the Indian Army.

• BEL Software Technology Centre certified for SEI CMMI Level 5.

• BEL is the lead technology provider for the 2010 Common wealth Games Queen’s Baton. BEL has conceptualized, designed, engineered and manufactured all electronic subsystems of the Baton including software development.

Futureoutlook

As you may be aware, BEL is the only company that has equal business presence in all the 3 defence sectors of Army, Navy and Air Force. BEL is planning to achieve a turnover of Rs. 10,000 crores by 2012-13. Segments like radar, communications and electronic warfare will drive the Company’s growth.

BEL is considering foray into new business areas like nuclear power instrumentation, railway instrumentation, solar/clean energy solutions and homeland security. Our internal teams are analyzing these sectors. The idea is to get into these fields in the next 3 to 4 years and generate an additional Rs. 500 crores business annually. We have chalked out a plan to expand our product portfolio without making large investments, but by utilizing the existing infrastructure available in the 9 Units of the Company across the country.

We are keen to forge joint ventures in areas such as missiles, electro-optics and sub-systems / category of radars, like radars for civilian areas. We are already progressing work in this regard.

The ratio of defence and non-defence business is likely to be in the range of 80% defence and 20% civil in future as well. Though there won’t be much change in this ratio compared to the present mix, we are hoping to increase volume within this proportion. Currently, BEL is the sole manufacturer of radar systems in India. Radars will be one of our primary segments in future as well. Defence Communication equipment and systems will continue to be our other major business segment. Command and control systems, electronic warfare and electro-optics are going to grow in a big way in the coming years.

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ANNUAL REPORT 2009 - 10

It is important for BEL to continue to focus on technology and new product development and provide R&D thrust across the Company. We are initiating projects and programmes to further strengthen our R&D base in the field of Defence electronics in which technology changes at a rapid pace.

The year 2010-11 is full of promise and challenge. The opening of the defence sector to private participation and DPP 2008 have impelled the Company to be far more competitive and productive. The Company has strengthened its in-house R&D and works closely with DRDO labs, other research and academic institutions at the initial stages of development itself to introduce new products and systems.

This year, the Company will work for strategically important projects like the Battle Field Surveillance System, next generation Electronic Warfare Systems and 3D Tactical Control Radar. The Company will launch many new systems including the Akash Missile System and the Coastal Surveillance System. The Company will achieve growth in offset business and exports.

Governanceandsustainability

BEL endeavours to uphold the best practices in corporate governance. By doing this, BEL provides the structure through which the company objectives are set, and the means of attaining those objectives and monitoring performance. A detailed report on compliance of the guidelines on Corporate Governance as per the Listing Agreement with Stock Exchanges and the guidelines issued by the Department of Public Enterprises for CPSEs forms part of the Directors’ Report.

The corporate performance of BEL measured in terms of the triple bottom line – economic, environmental and social – augurs well to reinforce the image of BEL as a socially responsible organisation. Sustainability in BEL is the continuing commitment to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as the local community and society at large.

Acknowledgements

I am grateful to the Board of Directors for their unwavering support and guidance. I also take this opportunity to express gratitude to all our stakeholders, who have reposed trust in us and extended their constant support, especially our customers, business associates, Ministry of Defence, Defence Services and shareholders. The dedication and commitment of our employees and officers at all level continues to be the major strength of the Company. We shall make continuous efforts to build on these strengths to face future challenges and sustain the momentum for profitable growth.

Best wishes,Sincerely,

Bangalore AshwaniKumarDatt20 August 2010 Chairman & Managing Director

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ANNUAL REPORT 2009 - 10

CorporateVision,Mission,ValuesandObjectives

Vision

To be a world-class enterprise in professional electronics.

Mission

To be a customer focused, globally competitive company in defence electronics and in other chosen areas of professional electronics, through quality, technology and innovation.

Values

* Putting customers first.

* Working with transparency, honesty & integrity.

* Trusting & respecting individuals.

* Fostering team work.

* Striving to achieve high employee satisfaction.

* Encouraging flexibility and innovation.

* Endeavouring to fulfil social responsibilities.

* Proud of being a part of the organisation.

Objectives

* To be a customer focused company providing state-of-the-art products & solutions at competitive prices, meeting the demands of quality, delivery & service.

* To generate internal resources for profitable growth.

* To attain technological leadership in defence electronics through in-house R&D, partnership with defence / research laboratories & academic institutions.

* To give thrust to exports.

* To create a facilitating environment for employees to realise their full potential through continuous learning & team work.

* To give value for money to customers & create wealth for shareholders.

* To constantly benchmark company’s performance with best-in-class internationally.

* To raise marketing abilities to global standards.

* To strive for self-reliance through indigenisation.

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ANNUAL REPORT 2009 - 10

BoardofDirectors

WholetimeDirectors

1. Mr Ashwani Kumar Datt, Chairman & Managing Director

2. Mr M L Shanmukh, Director (Human Resources)

3. Mr H S Bhadoria, Director (Bangalore Complex)

4. Mr I V Sarma, Director (Research & Development)

5. Mr M G Raghuveer, Director (Finance)

6. Mr H N Ramakrishna, Director (Marketing)

7. Mr Anil Kumar, Director (Other Units)

Part-timeGovernmentDirectors

8. Mr Satyajeet Rajan, IAS, Joint Secretary (Electronics), Ministry of Defence, Department of Defence Production

9. Lt Gen P Mohapatra, AVSM, Signal Officer-in-Chief, Army Headquarters

Part-timeIndependentDirectors

10. Lt Gen (Retd) G Sridharan, Former Director General Quality Assurance, Ministry of Defence

11. Mr M S Ramachandran, ex-Chairman, Indian Oil Corporation Ltd

12. Prof V K Bhalla, Professor, FMS, University of Delhi

13. Mr Anil Razdan, ex-Secretary to Government of India

PermanentSpecialInviteestoalltheBoardmeetings

1. Air Marshal P K Barbora, PVSM, VM, ADC, Vice Chief of Air Staff, Indian Air Force

2. Vice Admiral Ganesh Mahadevan, AVSM, VSM, Chief of Material, Indian Navy

5

ANNUAL REPORT 2009 - 10

PrincipalExecutives

CORPORATEOFFICE

ChiefVigilanceOfficer

Mr Syed Kabeer Ahmad, IRSME

GeneralManagers

CompanySecretary

Mr C R Prakash

UNITS

ExecutiveDirectors/GeneralManagers

BANKERS AUDITORS

State Bank of India HDFC Bank StatutoryAuditors BranchAuditors

State Bank of Hyderabad Canara Bank M/s R G N Price & Co M/s B R Maheswari & Co

State Bank of Patiala Syndicate Bank M/s Argade Shyam & Co

State Bank of Travancore Vijaya Bank M/s N Koteswara Rao & Co

State Bank of Mysore Bank of Baroda

State Bank of Bikaner & Jaipur Andhra Bank

Mr G D Gupta

Mr Ramesh Kumar Marhatha

Mrs Elaine Mathias

Mr Jagdish Kumar Batheja

Mr Ramesh Chandra Nautiyal

Mr H S Bhatia

Mr Girish Kumar

Mr M V Gowtama

Mr Vipin Katara

ChennaiMr D K Mehrotra

GhaziabadMr Chandra PrakashExecutive Director

Mr Sunil Kumar SharmaMr Sushil Chand Jain

HyderabadMr G Raghavendra Rao

KotdwaraMr R Chandrakumar

MachilipatnamMr Vijay Gundannavar

PanchkulaMr N Suresh

PuneMr Amarendra Dasari

NaviMumbaiMr R K Handa

CRL,BangaloreDr Ajit T KalghatgiChief Scientist

CRL,GhaziabadMr K C PanditaChief Scientist

Bangalore

Mr A A Mohan Ram

Executive Director

Mr Philip Jacob

Mr M S Venkatesh Murthy

Mr Amol Newaskar

Mr C Nageshwar Rao

Mr S Ramachandran

Mr Manmohan Handa

Mr A R Krishna Murthy

Mr P C Jain

Mr M Vijayaraghavan

Mr Sanmoy Kumar Acharya

6

ANNUAL REPORT 2009 - 10

ThePastDecade (Rs. in lakhs)

Particulars 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

Sales & Services 171533 194199 250802 279859 321209 353628 395269 410254 462369 521977

Value of Production 178757 202998 253639 280783 323497 345003 401275 411137 527327 524788

Other Income 4382 2960 5511 9199 12228 11858 19781 27824 22997 37641

Materials 91928 108663 147907 147977 175823 185063 213522 206889 304106 302454

Salaries, Wages & Benefits 39423 36388 36761 43826 44161 43693 51968 65917 75579 100958

Depreciation / Amortisation 5192 4909 5528 6227 7147 7944 8459 9264 10560 11594

Interest 2464 2026 1197 506 906 2564 80 25 1077 53

Manufacturing & Other Expenses (including Excise Duty & Exceptional items)

22141 25499 29141 44544 39092 32071 41780 39736 49319 42867

Profit Before Tax 21991 28473 38616 46902 68596 85526 105247 117130 109684 104502

Provision For Tax 6470 8505 12555 15292 23964 27225 33431 34456 35108 32415

Profit After Tax 15521 19968 26061 31610 44632 58301 71816 82674 74576 72087

Dividend 3200 4000 5600 8000 8960 11680 14400 16560 14960 15360

Equity Capital 8000 8000 8000 8000 8000 8000 8000 8000 8000 8000

Reserves & Surplus 56478 73854 92997 115582 150008 194931 249231 313295 370368 424526

Loan Funds 8226 8368 4075 3295 1536 881 171 138 121 73

Gross Block 80933 86265 94165 104096 112928 124031 132480 143076 157990 170217

Cumulative Depreciation / Amortisation

61970 66174 70943 75298 80994 86993 93913 101727 111245 121221

Inventory 84477 94130 94795 101529 106496 103714 124635 135157 242096 244871

Debtors 59993 62971 71224 66754 69912 101769 169341 205571 227653 216836

Working Capital 45519 59433 70441 84952 110903 151777 200996 263090 313556 365629

Capital Employed 64482 79524 93663 113750 142832 188817 239563 304438 360301 414625

Net Worth 62688 77712 97486 122908 157637 202705 257135 321295 378368 432526

Earning per Share (In Rupees) 19.40 24.96 32.58 39.51 55.79 72.88 89.77 103.34 93.22 90.11

Book Value per share (In Rupees)

78.36 97.14 121.86 153.64 197.05 253.38 321.42 401.62 472.96 540.66

No. of Employees 14177 13572 13750 13038 12390 12262 12357 12371 11961 11545

7

ANNUAL REPORT 2009 - 10

Directors’ Report

To the Members,

On behalf of the Board of Directors of your Company, I am delighted to present the Annual Report on the performance and achievements of your Company for the year ended 31st March 2010 along with the Audited Statement of Accounts, Auditors’ Report and the Report on the Accounts by the Comptroller and Auditor General of India.

During the year 2009-10 your Company achieved a major milestone by surpassing, for the first time, Rs. 500,000 lakhs mark in turnover. By logging-in Rs. 521,977.40 lakhs turnover, BEL achieved excellent rating in turnover parameter for the year, as per the MoU with the Government of India. This is against Rs. 462,368.89 lakhs turnover in the previous year, registering a growth of 12.89 % over the previous year. The Value of Production during the year was Rs. 524,788.20 lakhs as against Rs. 527,327.27 lakhs in the previous year, marginally lesser by 0.48 % over previous year. The Profit After Tax for the year was Rs. 72,087.10 lakhs as against Rs. 74,575.97 lakhs in the previous year. Value added per employee for the year was Rs. 18.69 lakhs, as against previous year's figure of Rs. 18.11 lakhs. Supplies to the Defence Sector constituted 83.44 % of the sales, balance 16.56 % being supplies to the civilian sector.

All the nine manufacturing Units of your Company performed well and earned profits during the year.

Operating Results

The summarised operating results for the years 2009-10 and 2008-09 are given below:

(Rs. in lakhs)

2009-10 2008-09Value of Production 524,788.20 527,327.27Turnover (Gross) 521,977.40 462,368.89Profit Before Depreciation, Interest and Tax

116,150.06 121,320.21

Interest 53.48 1,076.85Depreciation 11,594.23 10,559.77Provision for Tax 32,415.25 35,107.62Profit After Tax 72,087.10 74,575.97

Distribution of Value of Production for 2009-10 is given below:

Amount(Rs. in lakhs)

Percentage

Materials 302,453.65 57.63Employee Cost 100,958.47 19.24Other Expenses (Net) 5,226.02 1.00Depreciation 11,594.23 2.21Interest 53.48 0.01Provision for Tax 32,415.25 6.18Profit After Tax 72,087.10 13.73Total 524,788.20 100.00

Appropriations & Dividend

Your Directors recommend the following appropriations from the disposable surplus:

(Rs. in lakhs)

Capital Reserve 90.77

Interim Dividend on paid up Capital of Rs. 8,000 lakhs @ Rs. 6 per share

4,800.00

Proposed Final Dividend on paid up Capital of Rs. 8,000 lakhs @ Rs. 13.20 per share

10,560.00

Dividend Tax 2,569.66

Transfer to General Reserve 40,000.00

Balance retained in Profit & Loss Account 191,303.51

Your Company declared and paid during 2009-10 an interim dividend @ Rs. 6 per share.

Significant Achievements

Major Orders Executed

Some of the important orders executed during the year include supply of High Power HF Communication Sets, Frequency Hopping VHF Transreceivers, UHF Handheld Radio, UHF Radio Relays, Upgraded Fire Control Systems, Surveillance Radar Element, Thermal Imager based Integrated Observation Equipment, 3D Central Acquisition Radar (Rohini), Shipborne and Airborne Electronic Warfare Systems, Night Vision Binoculars, Low Flying Detection Radars (Indra II), L Band Surveillance Radar (Mk III), Ship-based 3D Surveillance Radar, Doppler Weather Radar, Digital Mobile Radio Relay and Upgraded EVMs. These equipment have been supplied to a wide range of customers from the Army, Navy, Air Force, Defence PSUs, Paramilitary and others.

Among the many orders executed during the year, the following merit special attention:

Air Traffic Control Radar 33S Surveillance Radar Element (SRE) Phase II: It is an S band Air Traffic Control Radar suited for Terminal Control applications. It detects and automatically tracks a large number of aircraft within LFA (Local Flying Area) under all weather conditions and is configured for high availability.

Radio Relay F - Low Band: It is a digital communication equipment that provides fast, reliable and secure communication. It can operate in a fixed frequency mode or in two different hopping modes - conventional and adaptive. The transmission security in the network is increased considerably by the use of frequency hopping techniques.

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Central Acquisition Radar, Rohini: It is a 3D surveillance Radar in S band. Stacked beam reception gives 3D information of height apart from range and bearing. It is developed jointly with LRDE.

Indra II: L-band 2D low level Surveillance Radar caters to the vital gap-filling role in air defence environment.

Frequency Hopping VHF Transceivers: A frequency hopping, software configurable ECCM radio (5W & 25W) in the VHF band. It has in-built data communication features to enable transfer of any type of files / free text and has GPS functionality.

Thermal Imager Based Integrated Observation Equipment: It consists of a Digital Goniometer, Artillery Mounted Long Range Thermal Imager and Laser Range Finder. Hand Held GPS is interfaced to it through a cable. It is mounted on a Tripod stand and used by Forward Observers of Artillery. Targets at a distance of 10 km and beyond can be located and their co-ordinates computed.

Intelligent CCTV Surveillance System for Indian Parliament: BEL won the prestigious order for the supply and installation of this system for Parliament. It involves integration of large numbers of cameras on an IP platform with an integrated Command & Control Centre. The intelligent features of the system include video and audio content analysis, redundant recording, reporting and response matrix and integration with 3D modeling of Parliament House and Tetra Communication System.

New Products

Some of the new products / systems introduced during the year include Integrated Air Command and Control System, Advanced Naval Gun Fire Control System for IN Ships, Gap Measuring Device Mk III, Perimeter Security Jammer, Frequency Hopping HF Transreceivers for paramilitary forces, Data Facility Kit for VHF radios and V / UHF Protocol Analyzer.

A closer look at some of the new products:

IACCS: Integrated Air Command and Control System (IACCS) is an automated Air Defence Command and Control Center for controlling and monitoring of air operations. It receives data from different types of homogeneous / heterogeneous Radars (2-D or 3-D), mobile observation posts and various other Air Force or civilian agencies to create real time, comprehensive recognised air situation picture (RASP) at the ADCC, which is an IACCS Command & Control Centre (C&C Centre).

Advanced Naval Gun Fire Control System: This state-of-the-art system, developed by BEL to be installed on board

IN Ships is a quick reaction, multi-sensor, multi-weapon, short / medium / long-range defence system against air / surface / shore targets on board naval ships. It consists of 5 functional sub-systems: Tracker, Weapon Control, Sight Control, Combat Management System and Support Systems, each of which can be used as an independent system.

Gap Measuring Device Mk III: It is an electro-optical system developed for accurate range finding during day and night. It's inbuilt computer calculates the height difference between the two banks of same water body. It can measure a minimum distance of 10 m and a maximum distance of 1.5 km.

Business Initiatives

New business initiatives during the year include:

For the last few years, the Indian Defence Forces are in the process of modernising their infrastructure and their areas of operations. BEL has been proactively participating in their modernisation activities. Development & Engineering teams have been set up to work in the areas of Tactical Communication Systems, Battlefield Management System, Command Information Decision Support System, Future Infantry Soldier System and High Data Rate Multi-band Software Defined Radio.

BEL is discussing with technology leaders for forming joint ventures in the areas of defence electronics, namely, Missile Electronics & Guidance Systems, Airborne Electronic Warfare products, civilian & select defence Radars. Some of these proposals are in the advanced stage of discussions.

BEL is also discussing with BHEL for setting up a joint venture Company (JVC) for Solar Photovoltaic manufacturing.

MoU signed with M/s Indus Teqsite, Chennai, for exploring the setting up of JVC for development of digital subsystems & test systems for Radars, Avionics, Electronic Warfare, etc.

MoU signed with M/s Thales International, France, for exploring possibility of setting up of a JVC for civilian and select defence Radars.

A medium term perspective plan of your Company has been drawn up for the period 2009-2014. The plan lists the challenges, opportunities and strategies for the Company to face the current defence business scenario due to increased participation by private companies. Also, an activity has been launched to study the preparedness of BEL to meet futuristic customer requirements and achieve accelerated growth in the next decade. The present capability of your Company in technology, products and solutions vis-à-vis business growth along with capability enhancements is being assessed.

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Manufacturing Initiatives

State-of-the-art Digital Flight Control Computer (DFCC) manufacturing facility.

During the year your Company has set up a state-of-the-art integrated manufacturing facility for assembly, inspection and testing of Digital Flight Control Computer (DFCC), all under one roof. DFCC is a state-of-the-art, multiple redundant (improving its reliability, one channel will take over if another fails) Digital Fly-By-Wire Flight Control System of the Light Combat Aircraft (LCA), Tejas, which basically controls the maneuvering (pitch, yaw and roll) of the aircraft. The facility includes Thermal Cycling Chamber, Vibration Machine, Dehumidifying Chambers for storing PCBs, high-resolution inspection tools for identifying process errors, Automated Test Equipment for rigorous performance testing and Engineering Test Station for testing the DFCC unit. The facility has ESD safe flooring and ESD safeguards for assembly, inspection and testing. Reflow and wave soldering facilities have been set up to enhance reliability. With this unique facility, your Company has acquired the capability to meet the requirements of the LCA programme.

Walk-in Thermal Chambers have been commissioned which can test the performance of the products within a temperature range of - 40˚C to +70˚C.

Spark 400 Machine has been commissioned for SMT Assemblies.

Vibration Machine has been installed to carry out vibration test of large subsystem / Test Rack of various projects like Combat Management System and Central Acquisition Radar.

Rapid Thermal Cycling Chamber (Capacity 270 Ltr), an Environmental Stress Screening chamber with very fast temperature change rate, has been installed.

Electro-Plating Facility for Ferrous and Non-ferrous and Magnesium metals has been established in the plating shop at Machilipatnam Unit.

Exports

During the year, your Company’s exports turnover registered an impressive growth of 33 per cent from US $ 177.7 lakhs in 2008-09 to US $ 236.7 lakhs during 2009-10. The range of products exported includes Composite Communication System, Versatile Communication System, Fire-Control System, Radar Warning Receiver, Enhanced Tactical Computer, Night Vision Devices, Data Link II, FM Transmitters, Crypt-fax, LED based traffic signaling system, Secure Telephone, Non-Eye Safe & Eye Safe Laser

Range Finders, Vacuum Interrupter for Switchgears, Solar Cells, Magnetrons, X-Ray Tube parts like Casings, Stators, Magnetic and Electro-mechanical assemblies. These exports were made to various countries including USA, UK, Israel, Suriname, Malaysia, Indonesia, Singapore, Philippines, Czech Republic, Sri Lanka, Russia, Zimbabwe, UAE, Switzerland, Belgium, Turkey, Bangladesh and Germany.

Over the years, BEL has established its presence in many countries, supplying number of equipment and components covering various types of Radios, Radar and spares, Communication System, Solar Products and Vacuum Interrupters. Export is a thrust area for BEL. Your Company has been making efforts for continuous growth in this area and has also put-in specific efforts and investments to address the emerging offset business opportunities due to implementation of offset policy by the Government of India.

During the last financial year, newer markets and offset opportunities have been addressed and orders worth US $ 583.3 lakhs have been obtained including US $ 480 lakhs pertaining to offset business segment. The orders obtained during the year, include Naval systems such as Composite Communication System, Versatile Communication System, ESM System, Electro-Optic Fire Control System & their integration onboard the Fleet Tanker in Italy, airborne equipment such as Data Link II, IFF and Radar Finger Printing system and Radar sub-systems. As on 1.4.2010, your Company has an export order book of US $ 738.9 lakhs.

Finance

During the year, your Company has been able to meet its entire fund requirement towards Capital investments and additional working capital needs without resorting to borrowings, through efficient management of funds. Your Company has been able to retain the highest rating by ICRA, for both short term and long term sanctioned bank limits, which will continue to help in securing the best rates for the services availed from the consortium banks. During the year, many of the activities related to accounting of transactions have been suitably changed to take advantage of the online ERP platform, thereby reducing the transaction time of accounting. With passage of time the availability of centralised data on a real time basis is expected to result in the desired improvement in the information flow, thereby improving the decision making process further.

The inventory position of your Company has marginally increased from 169 days of value of production as on 31st March 2009 to 172 days as on 31st March 2010. Efforts are on to rationalise the procurement process further with a view to achieving further reduction in the inventory levels. The level of debtors to sales has

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improved from 180 days as on 31st March 2009 to 152 days as on 31.03.2010. This reduction in debtors has been brought about by an increase in the collection of both opening debtors and the current year debtors, which could be achieved due to better even flow of sales throughout the year, aided by constant follow up and regular reviews.

The working capital position will be closely monitored to ensure that the improvement seen in the position of debtors and inventory is sustained. During the coming year, it is planned to take up the job of IFRS implementation and your Company will be able to prepare the accounts in line with the IFRS requirement within the scheduled dead line, as stipulated by the Accounting Standards Board.

Your Company does not have any public deposit scheme at present. However, the matured past public deposits is Rs. 38.55 lakhs as on 31.3.2010. Of these, 34 deposits amounting to Rs. 36.50 lakhs are claimed but not paid as these accounts are frozen on advice of Karnataka Lok Ayukta. Remaining past deposits of Rs. 2.05 lakhs as on 31.3.2010 is unclaimed. The entire amount of public deposits outstanding as on 31.3.2010 is included in the Current Liabilities, Schedule No. 12 of the Balance Sheet.

Performance against MoU

Your Company has been signing a Memorandum of Understanding with its Administrative Ministry, Ministry of Defence (MoD) every year. The performance of your Company against the MoU for 2009-10 is ‘Excellent’. The MoU between the MoD and BEL for the year 2010-11 was signed on 4 March 2010. Sales target set in the MoU for 2010-11 is Rs. 535,000 lakhs for achieving ‘Very Good’ performance rating and Rs. 561,750 lakhs for achieving ‘Excellent’ performance rating.

Order Book Position

The order book position of your Company as on 1 April 2010 was Rs. 1,135,000 lakhs, out of which orders worth Rs. 447,800 lakhs are executable during 2010-11. The balance will get executed in 2011-12 and beyond.

Research & Development

Research and Development is the core strength of BEL and focused attention was given during the year for nurturing and monitoring of R&D for the development of new technologies and products for business generation. Other than in-house efforts, BEL R&D engineers had active interactions with DRDO and other national research and development agencies and academic institutes and also with foreign partners for joint development efforts.

Your Company continued its R&D activities in all the areas of its business segments, namely: Radars, Naval Systems, Communication, Encryption, Electronic Warfare, Command Control Systems, Opto-electronics, Tank & Weapon electronics, Fire Control Systems, Avionics, Civilian equipment & systems and Components during the year. Development & Engineering Divisions attached to all the Strategic Business Units of Bangalore and Other Units concentrated on product development in the respective areas of allocated business segments. Central D&E and the two Central Research Laboratories of the Company supported the D&E Divisions by way of developing specialised core modules and other technology and software modules for the product development.

The analysis of turnover of your Company for the year 2009-10 indicates that 57% of the turnover is due to BEL designed products, 18% of the turnover due to DRDO and other indigenous agencies developed products and remaining 25% is due to products for which technologies were acquired through foreign ToTs.

During the year, R&D Divisions of BEL have completed more than 30 projects each in the areas of equipment / systems and components. Some of the new products / systems introduced during the year include Integrated Air Command and Control System (IACCS), Advanced Naval Gun Fire Control System for IN Ships, Gap Measuring Device MK-III, Static Jammers, Frequency Hopping HF Transreceiver for Paramilitary forces, Data Facility Kit for VHF radios, V / UHF Protocol Analyzer etc. Brief information about some of the introduced products are given below:

(a) Advanced Naval Gun Fire Control System: This is a quick reaction multi-sensor and multi-weapon based defence system mounted on board naval ships for short / medium / long range defence system against air / surface / shore targets.

(b) Static Jammers: Static Jammers is a counter RCIED system meant for protection of high risk and high value targets viz. Ship Building Centre etc. The system is installed in shelters, which are located at pre-defined positions in order to provide protection to the entire Security Threat area. This is a static broad band transmitting equipment used to mute the receivers likely to be operated remotely by hostile transmitters in V / UHF, GSM & CDMA bands.

(c) Frequency Hopping HF Transreceiver: This is a DSP based light weight 20W High Frequency man pack radio providing complete solution to the short-range communication requirements in the HF band. The radio provides Voice, Data, Telegraphy and Flash Message Communication. Communication reliability has been enhanced with the

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introduction of Automatic Link Enhancement (Best Call) feature. Frequency Hopping feature of the radio provides secure transmission and anti-jamming protection.

(d) V / UHF Protocol Analyzer: This equipment is used for analysis and decoding of wide range of signals. The equipment facilitates search and monitoring of signals, demultiplexing of both Frequency Division and Time Division Multiplexing structures and reconstruction of voice, fax, VFT (Voice Frequency Telegraph) and modem data.

Scientists from Central Research Laboratories and other R&D divisions of BEL have contributed 38 technical papers in the national and international journals during the year. R&D Engineers of BEL have submitted 2 Patent applications during the year.

Quality

The Company has adopted the ‘Six Sigma’ methodology about a decade back for achieving breakthrough improvements. Quality Institute of Bharat Electronics has been imparting training on ‘Six Sigma’ since July 1999 and has trained 1,078 officers so far. During the year, 265 six-sigma projects were completed, resulting in cost reduction, process improvement and customer satisfaction.

BEL has adopted the ‘CII-EXIM Bank Business Excellence Model’ since 2002 and select Units / SBUs have been participating in the Award scheme of this Model every year since then. This Model depicts that Excellent Organisations achieve and sustain superior levels of performance that meet or exceed the expectations of all their stakeholders.

During the year, four of our Units / SBUs applied for the ‘CII-EXIM Bank Award for Business Excellence’. While MILCOM SBU became the first BEL Unit to receive higher level ‘Commendation Certificate for Significant Achievement’, other three, viz. Ghaziabad Unit, Panchkula Unit and Components SBU received ‘Commendation Certificate for Strong Commitment to Excel’ under this Award scheme.

With a view to institutionalise the ‘business excellence’ in the Company, an internal ‘BEL Business Excellence Award’ scheme has been introduced from the year 2009-10. Under this, all Units / SBUs of the Company will participate in this award scheme every year and best four Units / SBUs will be identified and rewarded. Introduction of this scheme is likely to bring a healthy competition among the Units / SBUs to achieve higher levels of excellence.

As a part of our endeavor to enhance the customer satisfaction level, we have been conducting customer satisfaction surveys

every year. This survey is being conducted through a third party to bring in objectivity. Based on the feedback obtained from the survey, corrective actions are taken to improve our processes so as to enhance the satisfaction level of customers. During the year 2009-10 the customer satisfaction survey was conducted for six products, each belonging to a different Unit / SBU. Overall customer satisfaction index was found to be 82%.

SAP Implementation

Based on the study and recommendation by Tata Consultancy Services, your Company undertook implementation of SAP across all Units / Offices of the Company. Implementation of SAP R / 3 including Payroll, Product Lifecycle Management module at all Units and Offices of BEL was completed in a phased manner by July, 2008. A number of improvements, checks and validations have since been incorporated in the system based on user feedback. Standard SAP package does not cater to several requirements such as Material Gate Pass, Visitors Pass etc. The following add on modules have been developed and released to users during 2009-10: Material Gate Pass System, Visitors Gate Pass System, Vendor Payment Information System, Quality Control Circles Monitoring System, Six Sigma Projects Monitoring System and Contract Monitoring System

Implementation of the following new dimension modules is in progress: supplier Relationship Management (SRM) and Knowledge Management (C Folders) modules have been configured and tested. Employee Self Service (ESS) module has been configured and testing is in progress. Customer Relationship Management (CRM), Strategic Enterprise Management (SEM) and Supply Chain Management (SCM) modules are under configuration. All the above modules are planned to be implemented during 2010-11.

Following new tools / modules have been licensed from SAP. These tools / modules are planned to be implemented during 2010-11.

Test Data Migration Server (TDMS): This facilitates migration of select test data for testing of new developments.

Adobe Forms: This facilitates users to generate information in an off line mode and upload the data to SAP directly.

Business Objects: This module facilitates presentation of reports to Senior Management to see reports in a flexible and dynamic manner.

Procurement for Public Sector (PPS) Module: This module facilitates e-procurement with provision for online bidding by

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vendors, 2 Part Bidding, Accounting of Earnest Money Deposit, opening of Bids by Tender Opening Committee etc.

Human Resources

The employee strength of your Company was 11,545 as on 31.3.2010 as against 11,961 as on 31.3.2009. The Company employed 2447 women employees as on 31.3.2010. As a reflection of the Company operating in high tech area, it employed 3420 engineers and scientists as on 31.3.2010

The particulars of SC / ST and other categories of employees as on 31.3.2010 are as under:

Category of EmployeesExecutives Non-Executives

Group ‘A’ Group ‘B’ Group ‘C’ Group ‘D’

Scheduled Caste 763 78 1,295 117

Scheduled Tribe 222 06 129 30

OBC 712 67 999 60

Ex-Servicemen 83 48 328 86

Physically Handicapped 72 09 168 18

To address the learning and organisation development needs, various HRD training programmes were organised in Company’s Learning & Development Divisions. These included in-house developed modules as well as modules developed and imparted with the assistance of various outside HR specialists. In addition, various management development programmes as well as technology programmes were organised during the year through premier training institutions for all grades of executives. The Company-wide per capita training days for the year was 3.0. Some of the specific HR initiatives during the year are discussed separately as part of the Management Discussion and Analysis Report attached.

Industrial Relations & Welfare

Industrial relations continued to be harmonious throughout your Company. During the year pay revision, due from 1.1.2007, was implemented for Board level and below Board level executives. Wage settlement with non-executive employees, also due from 1.1.2007, was concluded in May, 2010. Various programmes were organised for the benefit of all sections of employees and their families, some which were exclusively for women employees and SC / ST employees to improve their awareness in legal issues, safety matters, etc. Special programmes were organised for differently-abled employees on the topics of Team Building, Interpersonal Skills, Habits for Excellence & Improving Quality of Life. Besides various statutory and voluntary welfare measures, the Company encourages various cultural and sports events for its employees.

Your Company’s comprehensive medical scheme covers all employees, their dependent family members as well as retired employees and their spouses. BEL Hospital at Bangalore extends outpatient medical treatment to the residents of neighbouring villages and employees of BEL associate institutions / societies in addition to its own employees, their dependents and retired employees / their spouses. Welfare programmes organised by BEL Hospital during the year includes: Pulse Polio Immunisation programme, administering of Vitamin A solution to children between 9 months and 5 years as measure of prevention of blindness and to increase resistance to infection, Screening program, counselling and preventive measures for respiratory diseases, Eye camp for screening Retinal diseases, Medical camp for Heart check-up was conducted for retired employees, programme for employees, family members for detection and prevention of cancer, etc.

Educational institutions run by the Company for education of children of employees and also of neighboring villages, performed well during the year.

Awards & Recognition

Important awards and recognitions received during the year by your Company and its employees include:

Raksha Mantri's Awards for Import Substitution, Design Efforts, Innovation and Best Performing Division among DPSUs. (2007-08)

Commendation Certificate of “SCOPE Meritorious Award for R&D, Technology Development & Innovation” (2007-08)

SODET Award 2008-09 for two of BEL's engineers in the Gold and Bronze category for Technology Innovation and Development, respectively.

Dun & Bradstreet Corporate Award 2009 in the category of Electrical and Electronic Equipment sector.

Indian Semiconductor Association Technovation Award for the Best Electronic Product of the Year 2010 for the Pre-shower 32 Channel Silicon Strip Detector supplied to CERN, Geneva, for the Big Bang Experiment.

Concern Age Care Award in recognition of BEL's contribution towards elderly care.

Ghaziabad Unit's Six Sigma project, 'Productivity Improvement in Assembly of STARS - V Accessory Cables, was adjudged first in the Lean Manufacturing Category by the Symbiosis Center for Management & Human Resource Development, Pune.

Ghaziabad Unit won the International Safety Award for the 18th time from the British Safety Council, UK.

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Environment Management

Your Company is committed to clean and healthy environment and has been maintaining the surroundings free from pollution. As an organisation accredited to ISO 14001:2004 standard, the Company has great regard to environment and puts in every effort to prevent pollution of any kind in all its activities. BEL adopts cleaner technology, zero effluent discharge, rain water harvesting techniques, conservation of natural resources, use of renewable energy etc., to name a few, in it’s endeavour towards maintaining a cleaner environment. The significant features of the initiatives are illustrated below.

Cleaner Technology: Efforts have been made to prevent pollution through introduction of cleaner technology. Changing over to Cyanide-free Zinc and Copper plating in electroplating process has resulted in elimination of use of hazardous Cyanide. Alternative electronic components have been introduced in many of the designs to exclude the hazardous effects of materials such as Polybrominated compounds, Hexavalent Chromium, Mercury, Beryllium Oxide, PVC and Lead. Use of Energy efficient devices introduced in the equipment designs results in resource conservation in addition to reducing the operating cost. Other measures undertaken include minimising significant environmental impacts by replacement / change of Hazardous operation / process / chemicals with Non-Hazardous processes like replacement of Ozone depleting substance like Trichloroethylene with Ozone friendly Non-chlorinated solvent, replacement of Asbestos sheet roof with Aluminum sheets, improvement in Elctro-Plating processes and operation by modernisation of Electro-Plating and ETP, provision of Acoustic Enclosures for Noise generating systems, etc.

Water Management: Rainwater harvesting and innovative recharging of bore wells enable the Company to collect the runoff water and recharge the ground water table. The large-scale rainwater-harvesting reservoir at Bangalore unit has a capacity of 1,700 lakhs litres with expected annual yield of around 2,340 lakhs litres. Rainwater harvesting reservoirs are set up in other Units also. During the year two more rain water harvesting sites were installed at Ghaziabad Unit covering a very wide catchment area of rain water. By Rainwater harvesting and recharging of bore wells ground water yield has improved. Water softening plant of 1.00 lakh litres per day is in operation at Hyderabad Unit for softening the ground water to reduce the scaling etc.

Waste water generated in the manufacturing process is treated to meet reusable standards and recycled for production purpose. In the same way domestic waste water generated in the factory and colony is treated and recycled for horticulture purpose.

Emission To Air: Emission to air is checked through stack monitoring and with appropriate air pollution control equipments. Emissions passing through chimneys are treated to bring down the level of pollutants much below the stipulations of State Pollution Control Boards (SPCBs).

Hazardous Waste Management System: The problem associated with generation of hazardous waste is addressed at root cause level itself. By utilising appropriate chemicals in the waste water treatment, less sludge is generated in the process of chemical detoxification. BEL has tied up with the State Pollution Control Boards “Treatment, Storage & Disposal Facility” operators for disposal of landfillable solid hazardous waste. The hazardous wastes are disposed in a scientific manner as per the guidelines of State Pollution Control Boards.

Biomedical Waste: Biomedical wastes generated in hospital and medical centers are collected and disposed of scientifically as per the regulatory guidelines.

OHSAS 18001(2007) - In addition to caring for the environment, BEL equally respects the well being of its workforce through OHSAS 18001(2007) implementation. Bangalore Complex and Ghaziabad Unit are certified for OHSAS 18001: 2007.

Other Initiatives: Your Company has taken action to mitigate climate change as per the National Policy by establishing two Wind Energy power plants, one 2.5 MW plant near Davanagere during 2006-07 and another 3 MW plant near Hassan during 2007-08. The two Wind Energy power plants together have generated 106.5 lakhs units of energy during 2009-10 and has resulted in reduction in CO

2 emission to the tune of 9934 tons. The Company has taken up replacement of two old centrifugal chillers, which were running with ozone depleting CFC 11 with new energy efficient screw chillers using eco-friendly refrigerant R134a. The replacement has resulted in energy savings to the tune of 1.5 lakhs KWhr per year. Old air compressors, blowers & Air Handling Units have been replaced with energy efficient ones leading to energy conservation of around 75,000 KWhr per year. In order to keep the environment of the factory and township green, 1,35,000 trees and 3,60,000 Sq Mtrs of lawn are being maintained at Bangalore Complex. A herbal park has been developed inside the Ghaziabad factory premises. During the year 1000 Jatropha Plants (Bio diesel crops) were planted in Bangalore Complex. A green belt has been developed around Test Platforms at Hyderabad Unit.

Subsidiary / Joint Ventures

Your Company’s subsidiary at Pune, BEL Optronic Devices Ltd,. (BELOP) recorded a turnover of Rs. 5,874.48 lakhs as against the

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ANNUAL REPORT 2009 - 10

turnover of Rs. 3,114.67 lakhs in the previous year, an increase of 89 % over the previous year. BELOP achieved Profit After Tax of Rs. 227.42 lakhs as against a net loss of Rs. 358.05 lakhs in the previous year. BELOP manufactures mainly Image Intensifier Tubes (I.I. Tubes). These Tubes are supplied to the Defence customers and also used in the Night Vision Devices manufactured by BEL. Though the subsidiary has performed well during the year as compared with its performance in the previous year, it still has problems on the technology front. Indian Army, has shifted its requirement from II Generation I.I. tubes to higher specification I.I. Tubes for which technology does not exist with BELOP. Efforts are on to source technology for the higher specification tubes from available sources in the world market. Meanwhile, BELOP is importing kits in SKD / CKD form to manufacture higher specification Tubes to take care of the immediate requirements of the customers. Due to this, the contribution is low and profitability is affected.

In accordance with Section 212(8) of the Companies Act 1956 (the Act) your Company has obtained exemption from the Govt. from attaching the Balance Sheet, Profit & Loss Account, Auditors’ Report, Directors' Report, etc., of the subsidiary Company to the Balance Sheet of BEL. Hence, Annual Accounts of the subsidiary Company, BEL Optronic Devices Ltd., are not attached to the Balance Sheet of BEL. A copy of the Annual Accounts of BELOP and the related information will be made available upon request by any member of BEL or BELOP. The Annual Accounts of BELOP are kept for inspection by investors at the registered office of BEL and BELOP. Any investor interested to inspect the same may please contact the Company Secretary of BEL or BELOP. A statement as per Section 212 of the Act relating to the subsidiary Company, BELOP, is annexed to this report. Further, the information required to be disclosed as per the directions while granting exemption under Section 212(8) of the Companies Act 1956 is provided in this Annual Report.

The Joint Venture Company (JVC) with General Electric, USA, viz., GE BE Pvt Ltd., manufacturing CT Max and other latest version X-Ray Tubes continues to perform well. BEL supplies some parts required for the products manufactured by this JVC. GE BE Pvt Ltd., achieved a turnover of Rs. 50,928.95 lakhs as against Rs. 52,820.49 lakhs in the previous year. The Profit After Tax was Rs. 6,608.33 lakhs as against Rs. 5,249.55 lakhs in the previous year. The JVC declared and paid 100% dividend for the year 2009-10 and BEL received Rs. 260 lakhs as dividend from the JVC on BEL’s share of investment.

The other JVC, viz., BEL Multitone Pvt Ltd., jointly promoted by BEL and Multitone plc, UK was set up to supply, install and service Private Paging Systems and Pagers. The JVC is presently in shell stage with

no business transactions being effected, and action is in progress to close down this Company, as there are no business prospects for paging systems in the country.

Consolidated Accounts

Consolidated Financial Statements of your Company and its Subsidiary and Joint Venture Companies are attached to this Report.

Vigilance

The performance of Vigilance Department during 2009-10 has been satisfactory. 99.6% of the Executives of the Company have filed their Annual Property Returns. 1189 Purchase Orders / Contracts including 536 high value Orders / Contracts have been reviewed / scrutinised during the year and found to be in order. As per the CVC / CTE Guidelines, 2 teams for Inspection of Works Contracts and 2 teams for Inspection of Purchase Orders have been constituted. During 2009-10, 12 Works Contracts and 8 high value POs have been inspected by in-house inspection teams and 2,341 Regular / Surprise inspections were conducted.

During the year 225 Executives and 10 Non-executives have taken part in Vigilance Awareness Training Programme. 35 Executives & 50 Non Executives working in sensitive areas for 3 years and above have been transferred to different posts.

In terms of CVC’s guidelines for Leveraging Technology to ensure transparency through effective use of website, the following information has been made available in the BEL website:

Application forms for Registration of Subcontractors / Vendors online for being included in the Approved Vendors List and applications for recruitment have also been facilitated online.

Details of awarded Contracts / Purchase Orders valuing more than Rs. 10 lakhs in respect of works contracts, service contracts, capital items and non-production items are being published on BEL website.

Details of awarded Contracts / Purchase Orders issued on nomination / single tender basis value exceeding Rs. 5 lakhs are being published on BEL website.

Details of awarded Purchase Orders / Sub Contract Orders for production items with a threshold value of Rs. 100 lakhs and above are being published on BEL website.

Vendor Payments Information System is made available on BEL website.

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ANNUAL REPORT 2009 - 10

In addition to the above, a new Vigilance page has been put on BEL website (www.bel-india.com). E-procurement is under development and it is expected to be implemented shortly.

Integrity Pact

The Central Vigilance Commission (CVC) has advised Government organisations to adopt Integrity Pact (IP) voluntarily in their major procurement activities. IP essentially envisages an agreement between the prospective vendors / bidders and the buyer, committing the persons / officials of both sides not to resort to any corrupt practices in any aspect / stage of the contract. Only those vendors / bidders, who commit themselves to such a pact with the buyer, would be considered competent to participate in the bidding process. The CVC guidelines further advises CPSUs to appoint Independent External Monitors as approved by the CVC to oversee the compliance of obligations under the IP. BEL is pursuing the adoption of IP in compliance with CVC guidelines.

Implementation of Official Language

Being a Government Company, BEL is committed to complying with the Official Language policies of the Government of India. Nine Units / Offices have been notified under rule 10(4) of OL rules and orders have been issued under rule 8(4) of OL Rules for those having proficiency in Hindi to do their Official work in Hindi. Efforts are on to ensure the progressive use of Hindi in all spheres of activities of the Company. Hindi workshops for those having working knowledge in Hindi were conducted during the year. Company’s website is available in both Hindi and English version and efforts are on to progressively have the entire website in bilingual.

During the year the Committee of Parliament on Official Language has visited the Company’s Regional Office at Kolkata and officials of the Ministry of Defence inspected the Pune Unit and CRL, Bangalore. The Drafting and Evidence Sub committee of Parliament inspected the Ghaziabad Unit. Ministry of Home Affairs (MHA) officials also inspected the Regional Office at Kolkata.

Implementation of RTI Act

The information required to be provided to citizens under Section 4(1)(b) of the RTI Act 2005 has been posted on the website of Company, www.bel-india.com. The information posted on the website contains general information about the Company, powers and duties of employees, information about decision-making, rules, regulations, manuals and records held by BEL, directory of the Company’s officers, pay scales, procedure for requesting additional information about the Company by citizens and associated request formats. During the year 2009-10 the Company received and attended to 91 requests for information under RTIA.

Directorate

Following changes took place in the Directorate of your Company since the last report. Three Independent Directors, viz. Mr Anil Razdan, ex-Secretary to Government of India, Prof. VK Bhalla, Professor, FMS, University of Delhi and Mr MS Ramachandran, ex-Chairman, Indian Oil Corporation Ltd., have been appointed w.e.f. 27 November 2009. Mr Satyajeet Rajan, Joint Secretary (Electronics), Ministry of Defence has been appointed as part-time Official Director w.e.f. 27th January, 2010 in place of Mr Gyanesh Kumar, Joint Secretary (Shipyards), Ministry of Defence. Mr Anil Kumar has been appointed as Director (Other Units) w.e.f. 3rd February, 2010.

Directors’ Responsibility Statement

Pursuant to the provisions under Section 217(2AA) of the Companies Act, 1956 your Directors state:

(i) that in the preparation of the annual accounts, the applicable Accounting Standards have been followed and in respect of Accounting Standard 17, necessary explanation for departure has been given in Note No. 19 of the Notes to Accounts (Schedule 21);

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

(iii) that the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

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

Auditors

Pursuant to Section 619(2) of the Companies Act 1956, the Comptroller and Auditor General of India appointed M/s R G N Price & Co., Chartered Accountants, Chennai as Statutory Auditors for the year 2009-10 for audit of accounts of Bangalore Complex, Hyderabad and Chennai Units and Corporate Office. M/s B R Maheswari & Co, Chartered Accountants, New Delhi, were reappointed as Branch Auditors of Ghaziabad, Panchkula and Kotdwara Units for 2009-10. M/s Argade Shyam & Co, Chartered Accountants, Pune were reappointed as Branch Auditors for Pune and Taloja Units for 2009-10. M/s N Koteswara Rao & Co, Chartered Accountants, Guntur were reappointed as Branch Auditors for Machilipatnam Unit for 2009-10.

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ANNUAL REPORT 2009 - 10

Auditors’ Report

Auditors’ Report on the Annual Accounts for the financial year 2009-10 and Comments of the Comptroller & Auditor General of India under Section 619(4) of the Companies Act, 1956 are appended to this report.

Corporate Governance

A report on Corporate Governance along with a Compliance Certificate from the Auditors as prescribed under the Listing Agreements with the Stock Exchanges on which BEL’s shares are listed as well as Government Guidelines on Corporate Governance for Central Public Enterprises, is annexed to this Report.

Management Discussion and Analysis Report

Management Discussion and Analysis Report required under the Listing Agreements with the Stock Exchanges on which BEL’s shares are listed as well as Government Guidelines on Corporate Governance for Central Public Enterprises, is annexed to this Report.

Other Disclosures

Information required to be disclosed in accordance with Section 217 (1)(e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules 1988 regarding conservation of energy, technology absorption and foreign exchange earnings and outgo, is attached to this report.

The particulars of employees to be given as per Section 217(2A) of the Companies Act 1956, read with the Companies

(Particulars of Employees) Rules 1975 are appended to this report.

Acknowledgement

Your Directors take this opportunity to acknowledge with a deep sense of appreciation the support and co-operation received from the Government of India, Ministry of Defence, Departments of Defence Production, Defence Acquisition, Defence Finance and Defence Research & Development Organisation. The Board also gratefully acknowledges the patronage extended to the Company by its esteemed customers, particularly the Indian Army, Indian Navy, Indian Air Force, para-military forces and others. We thank the Comptroller and Auditor General of India, Chairman, Members and employees of the Audit Board, Statutory Auditors and Branch Auditors, Company's Bankers, collaborators and vendors. The Board appreciates the untiring efforts and contribution by the employees at all levels, which enabled your Company to achieve the significant performance during the year. The Board of Directors also wishes to place on record its appreciation and gratitude to all the shareholders / investors for the trust and confidence reposed in the Company and look forward to their continued support and participation in sustaining the growth of your Company in the coming years.

For and on behalf of the Board

Place : Bangalore Ashwani Kumar DattDate : 20th August 2010 Chairman & Managing Director

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ANNUAL REPORT 2009 - 10

Annexure to Directors’ Report

Statement PurSuant to Section 212 of the comPanieS act 1956 relating to SubSidiary comPany

1. Name of the Subsidiary : BEL Optronic Devices Limited

2. Holding Company’s Interest at the end of the financial year 2009-10 (as at 31.3.2010) :

(a) The number of equity shares held : 17,00,223 shares of Rs. 100 each fully paid

(b) Extent of interest in the capital of subsidiary : 92.79%

3. The net aggregate amount, so far as it concerns members of the holding Company and is not dealt with in the Company’s accounts, of the subsidiary’s profits after deducting its losses or vice versa

i) for the financial year of the subsidiary as aforesaid : Rs. 211 lakhs

ii) for the financial years / period of the subsidiary since it became the holding Company’s subsidiary

: Rs. 1,978 lakhs (cumulative profit)

The net aggregate amount of the profits of the subsidiary after deducting its losses or vice versa

i) for the financial year of the subsidiary aforesaid : NIL

ii) for the previous financial years of the subsidiary since it became the holding Company’s subsidiary : NIL

so far as those profits are dealt with, or provision is made for those losses, in the Company’s accounts.

Place : Bangalore C R Prakash M G Raghuveer Ashwani Kumar DattDate : 25th June 2010 Company Secretary Director (Finance) Chairman & Managing Director

information for the inVeStorS aS reQuired by the miniStry of corPorate affairS

Information related to BEL Optronic Devices Ltd., Subsidiary Company of Bharat Electronics Ltd., for the Financial Year Ended 31.3.2010:

(Rs. in lakhs)

(a) Capital : 1,832.29 (f) Turnover (Gross) : 5,874.48

(b) Reserves & surplus : 1,285.91 (g) Profit before Taxation : 258.19

(c) Total assets (Gross Block) : 5,011.38 (h) Provision for Taxation : 30.76

(d) Total liabilities : 134.39 (i) Profit After Tax : 227.42

(e) Details of investment : NIL (j) Proposed dividend (%) : NIL

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ANNUAL REPORT 2009 - 10

Annexure to Directors’ Report (Contd.)

Information required to be provided under the Companies (Disclosure of particulars in the report of Board of Directors) Rules, 1988

A. Conservation of Energy

(a) Energy conservation measures taken during the year 2009-10

Energy conservation measures taken during the year 2009-10 include the following:

• Incorporation of variable frequency drives for AHU’s, cooling tower motors and centrifugal fans.

• Provision of PVC curtains for the identified doors of air-conditioned area to minimise losses.

• Optimising compressed air operation through decentralised compressed air systems.

• Replacement of old Reciprocating Chillers in AC plants with energy efficient screw chillers for meeting variable cooling load demand.

• KVA demand management by improving power factor using automatic power factor controllers.

• Installation of servo voltage stabilizers for optimising lighting voltage and Energy consumption.

• Use of energy efficient light fittings in modernisation projects and day light harvesting.

• Use of solar water heating systems for hot water applications.

• Incorporation of wind-driven roof ventilators based exhaust systems.

(b) Additional investments and proposals being implemented for reduction of consumption of Energy

Additional investments made during the year for implementing the measures at (a) above, was around Rs. 169 lakhs.

(c) Impact of measures at (a) and (b) above for reduction of energy consumption and consequent impact on the cost of production of goods

The electricity consumption in KWhrs per each lakh rupee of production has come down to 100 units during 2009-10 from 112 units during 2008-09.

The electricity consumption for the year 2009-10 is 51.8 MKWhrs, same as in 2008-09 in spite of additional facilities added and increased production activities.

The Company’s two wind Energy power plants, 2.5 MW plant near Davanagere and 3 MW plant near Hassan together generated 106.5 lakhs units of energy during 2009-10 and has resulted in reduction in CO2 emission to the tune of 9,934 tons.

B. Technology Absorption

Form B

R&D Activities

1. Specific areas in which R&D was carried out by the Company

During 2009-10, the Company has carried out R&D activities in all the areas of its business as already mentioned in the Directors’ report under section Research and Development. Some of the completed R&D projects during the year in the various business areas of the Company are:

- Radar : Support vehicles for Akash System, revised configuration of the Upgraded Battle Field Surveillance Radar

- Communication : High data rate VHF Radio, Compact VHF Handheld Radio, CNR man pack Radio, UHF Satcom System, BEACON MK-III, MHA Exchange (MEX-089), test bed and interim system for Tactical Communication System

- Electronic Warfare : V / UHF Communication Jammer, Wide Band Surveillance Receiver, Additive Scrambler Analyzer & Descrambler

- Command Control System : Update of Battlefield

Surveillance System, Test Bed for F-INSAS

- Control System and Gun Upgrades : LYNX U1 Gun Fire Control System

for P-28 class of ships, Stabilized Turret System for EON-51

- Opto-electronics : TI Sight for IGLA , Cooled TI with 640x512 detector, Laser Target Designator, Eye-safe LRF Monocular (class-1)

- Tank Electronics : Digital Intercom System DAVIS, Indigenisation of Auto Loading of Gun mechanism

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ANNUAL REPORT 2009 - 10

- Other Products : Electronic Baton for Commonwealth Games 2010, Vehicle Underside Scanning System, Prateeksha Rail Mobile, Ship Jetty connectivity network, EVM for TN State Election Commission

2. Benefits derived as a result of R&D activities

As a result of R&D activities in the Company, a large number of new products were developed, which will bring new business to the Company in future. Other than development of new business for the Company, R&D activities save foreign exchange for the Company due to indigenous development of products and indigenisation of components & assemblies. R&D activities promote self-reliance in the area of technology development.

3. Future plan of action

R&D plan made for each R&D division of BEL for the next 3 years based on customers’ perspectives and market feedback, will be closely monitored for the progress of the projects. Infrastructure, capital items and requisite manpower as required for the R&D divisions will be allocated on priority. Interactions with DRDO, other National Labs and design agencies and academic institutions will be further strengthened. Interactions with foreign companies for taking up of joint development projects will be encouraged where necessary.

4. Expenditure on R&D

During 2009-10, BEL has spent a sum of Rs. 31,594.64 lakhs on R&D. The expenditure on revenue account was Rs. 29,161.21 lakhs and on capital account was Rs. 2,433.43 lakhs. The total expenditure as percentage of turnover during the year was 6.05%.

5. Technology absorption, adaptation and innovation:

(a) Efforts in brief, made towards technology absorption, adaptation & innovation

R&D divisions of BEL take interest in the absorption of state-of-art technologies in the areas of BEL’s business acquired either through indigenous or imported routes other than its own in-house developments.

In respect of indigenous technologies, BEL R&D divisions have made efforts to interact with

various Defence Research and Development Organisations’ laboratories, other National laboratories, Private design houses, academic institutions etc., for either technology absorption of state-of-art products developed by them or by taking up of joint development programmes with them.

During 2009-10, R&D Engineers of BEL have completed development of products like TETRA System from C-DAC technology, Man pack version of Combat Net Radio from DRDO (DEAL) technology, Integrated Fire Detection and Suppression System for BMP from DRDO (CFEES) technology, BEACON MK-III from DRDO (CAIR) technology etc.

(b) Benefits derived as a result of the above efforts

BEL Engineers are able to absorb the indigenous technologies as a result of close interactions with DRDO and other National Labs. This helps to commercialise the products at BEL and provide product support to the customers. BEL engineers try to bring out updates of the existing technologies and apply the technologies acquired in different applications. All these efforts help to commercialise state-of-art technologies for the customers, develop further business, save foreign exchange and promote self-reliance.

(c) Information regarding technology imported during the last 5 years

During the last 5 years, certain technologies of interest from various countries have been imported and productionised at BEL and brought to the level of indigenous manufacture for cost reduction and improving indigenous content. BEL engineers make effort to absorb / assimilate the imported technologies to provide necessary product support to the customers, try to bring out updates for these products and apply the knowledge gained in the development of new products for business development.

C. Foreign Exchange Earnings and Outgo

Detailed information on export has been provided in the Directors’ Report. Foreign Exchange Earnings on account of export (FOB) was Rs. 9,936.71 lakhs as against Rs. 7,227.96 lakhs in the previous year. Foreign Exchange Outgo was Rs. 2,14,573.86 lakhs as against Rs. 2,43,789.68 lakhs in the previous year.

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ANNUAL REPORT 2009 - 10

Annexure to Directors’ Report (contd.)

Information as per Section 217(2A) of the Companies Act 1956 read with the Companies (Particulars of Employees) Rules 1975 and forming part of the Directors’ Report for the year ended 31st March 2010

Sl.No.

Name of the EmployeeShri/Smt.

Designation/Nature of Duty

AgeYrs.

Previous Employment/Position Held

QualificationDate ofJoining

ExperienceYrs.

Gross

(a) Statement showing the particulars of employees who were in receipt of remuneration of not less than Rs. 24,00,000/- per annum during the financial year 2009-10

1 A K Datt Chairman & Managing Director 59 Nil BE (Mech) 11.1.1973 37 4,516,834

2 M L Shanmukh Director (Human Resources) 54 GGM (HRD) at Container Corpn. Ltd.

BA, LLB 14.4.2004 30 5,056,118

3 H S Bhadoria Director (Bangalore Complex) 59 Nil BE (Mech) 12.1.1973 37 4,403,148

4 I V Sarma Director (Research & Development) 58 Nil BE (E&C) 10.2.1975 35 3,483,045

5 M G Raghuveer Director (Finance) 58 GM(Fin.), Tungabhadra

Steel Products Ltd.

B.Sc, FCA 27.5.1997 33 3,176,917

6 H N Ramakrishna Director (Marketing) 57 Nil BE (Electronics)

1977 33 2,830,470

7 Gokhale S S Addl. General Manager 54 Nil B.E. (Mech.) 6.10.1978 31 2,725,869

8 N A Narasimha Murthy

Chief Regional Manager, New York 56 Nil B.E. (Mech.) 16.2.1978 32 2,566,236

9 Jayprakash S Dy. Chief Regional Manager, New York 35 Nil B.E. (Mech.) 1.7.1997 12 3,289,807

(b) Statement showing the particulars of employees who were in receipt of remuneration of not less than Rs. 2,00,000/- per month during the part of the financial year 2009-10.

1 V V R Sastry Chairman & Managing Director 60 Nil BE (E&C) 1.5.1969 40 3,260,452

2 P R K Hara Gopal Director (Finance) 60 Jt. Managing Director

in Andhra Pradesh

Gas Power Corporation

Limited

B.ComFCA

5.7.2002 37 3,446,544

3 N K Sharma Director (Marketing) 60 NilB.Tech (Mech)

3.11.1971 37 3,294,723

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ANNUAL REPORT 2009 - 10

Annexure to Directors’ Report (Contd.)

Management Discussion and Analysis Report

A) Industry Structure and Developments, Strengths, Weaknesses, Opportunities and Threats, Major Initiatives undertaken and planned to ensure sustained Performance and Growth

(a) General outlook of economy, industry in which the Company operates, Government Budget, particularly the Defence Budget and how these impact the Company:

The economy has grown at 7.4% in 2009-10 and is expected to grow at 8% in the coming year. India is emerging as a strong growing economy. This is substantiated by this year's positive growth in the general Index of Industrial Production (IIP) compared to negative growth of last year. The cumulative growth in index of manufacturing sector is 10.9% during April-March 2009-10 compared to previous year and this has resulted in growth of overall General Index of IIP to 10.4%.

India is currently the 10th largest defence spender in the world with a 3rd highest growth rate. The Government of India has increased the total defence allocation from Rs. 14,170,300 lakhs to Rs. 14,734,400 lakhs. This increase in defence budget and the modernisation plans of defence services has the potential for providing enhanced growth opportunity for the Company's products and services.

The Defence Public Sector Undertakings (DPSUs) have dominated the defence industry in the past. This scenario is likely to change with the introduction of new Defence Procurement Policy (DPP) allowing more participation from private companies to manufacture defence products. On the other hand, the growing Indian defence market is attracting major global defence equipment manufacturers to compete for business in India.

The above scenario provides an opportunity as well as a challenge to BEL. The challenge to BEL is to keep pace with technological developments so that state-of-the-art products can be offered to the Defence customers. BEL is taking proactive steps to protect and further consolidate its leadership position in the Indian Defence Market while at the same time accelerating the efforts to get into new business areas, aligned with its core strengths.

The amendments in DPP have given an opportunity to BEL for forming JVs with leading global defence players and acquire required critical technologies. The above approach will also put BEL in a position, wherein it can source state-of-the-art subsystems / products from such Joint Ventures and play the role of a system integrator for large strategic defence systems.

The offset clause in DPP has also created an additional opportunity for BEL, with the foreign vendors approaching BEL for partnership to fulfill their offset obligations. Export revenues of BEL have grown due to offset contracts and this trend may continue in the coming years.

(b) SWOT Analysis

Strengths:

• Clearly defined Vision, Mission, Objectives and Values.

• Good image and reputation resulting from performance and track record.

• Company under Ministry of Defence - Strong customer relationships

• In-depth understanding of Defence Market in India.

• Good R&D base - Technology and new product development.

• Close relationship with DRDO Labs.

• Good infrastructure and manufacturing facilities.

• Well-established systems and procedures, including use of advanced ERP.

• Skilled and committed workforce with excellent domain knowledge.

Weaknesses:

• Not proactive enough in providing futuristic solutions to customers.

• Dependence on defence market.

• Time to market - long product development cycle time.

• Slower response time.

• Limited value addition in system integration projects.

• Inability to attract top class talent.

• Inadequate International business knowledge and exposure.

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ANNUAL REPORT 2009 - 10

Opportunities:

• Expanding defence acquisition plans.• "Offset" business - Strategic alliances and access

to global business.• Large investments in infrastructure, energy and

e-governance projects.• Homeland security business.• Maintenance, Repair and Overhaul (MRO)

business.• Upgrade programmes of defence.• Access to critical technology.

Threats:

• Changes in defence procurement policies - growing competition with private industry participation in defence sector.

• Rapid changes in technology.• Global sourcing of technology - Non-availability

and exorbitant cost.• Emergence of Joint Venture companies of foreign

OEMs with Indian private industry.

(c) Major initiatives undertaken and planned to ensure sustained performance and growth of the Company

1. Technology updation and R&D:

i. Challenges:

Core technologies of BEL’s business involve applications of fast changing technological fields like Electronics, IT and Software. Some of the most challenging tasks of R&D Engineers of BEL are to keep abreast with latest technologies in the various fields of BEL’s business areas, quickly master the emerging technologies and apply them during the development of new products. The technologies required to manufacture various products in the areas of BEL’s business are required to be developed and upgraded continuously to meet emerging user requirements including overcoming of obsolescence issues. The need for constant technological upgrades juxtaposed with the need for maintaining legacy systems places an enormous responsibility on BEL to be not only current in the world class technologies but also to be innovative in finding means to tackle obsolescence of legacy products and systems.

ii. Measures:

BEL has responded to the above challenges with a positive note and has identified various measures to meet them. The measures include strengthening the technology development

process through short, medium and long term technology roadmaps, increased investments in R&D and setting up of a Company-wide knowledge management system to harness the complete potential of the R&D engineers and sharing of accumulated R&D knowledge in various fields amongst the R&D engineers. BEL is enhancing its efforts for in-house developments and also strengthening interactions with DRDO Labs, other national research laboratories and R&D organisations including academia to enhance indigenous developments. BEL is also taking adequate initiatives for joint developments with reputed foreign companies to quickly harness specialised technologies into the new products.

iii. Initiatives:

Following are some of the new initiatives undertaken by BEL in the areas of R&D and technology development during the year 2009-10:

• A new Central Research Laboratory has been established at Bangalore for carrying out research in new technologies of Electronic Warfare Systems and Electro-optics.

• A Radar Chair has been set up by BEL at the Indian Institute of Science for encouraging research in the frontier areas of Radar science and technologies.

• BEL Software Technology Centre, Bangalore has been upgraded to CMMI Level-5 Certification to take up high end software module developments.

• Scope of in-house Excellence R&D Awards Scheme has been enhanced to accommodate several new categories of awards for further encouragement of excellent R&D work at BEL.

• Obsolescence management process for legacy equipment has been simplified by linking SAP with obsolescence Database Software

2. Manufacturing:

State-of-the-art Digital Flight Control Computer (DFCC) manufacturing facility

The Company has set up a state-of-the-art integrated manufacturing facility for assembly, inspection and testing of Digital Flight Control Computer (DFCC), all under one roof. DFCC is a state-of-the-art, multiple redundant (improving its reliability, one channel will take over if another

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ANNUAL REPORT 2009 - 10

fails) Digital Fly-By-Wire Flight Control System of the Light Combat Aircraft (LCA), Tejas, which basically controls the maneuvering (pitch, yaw and roll) of the aircraft.

The facility includes Thermal Cycling Chamber, Vibration Machine, Dehumidifying Chambers for storing PCBs, high resolution inspection tools for identifying process errors, Automated Test Equipment for rigorous performance testing and Engineering Test Station for testing the DFCC unit. The facility has ESD safe flooring and ESD safeguards for assembly, inspection and testing. Reflow and wave soldering facilities have been set up to enhance reliability. With this unique facility, BEL has acquired the capability to meet the requirements of the LCA programme.

Walk-in Thermal Chambers have been commissioned which can test the performance of the products within a temperature range of - 40˚C to +70˚C.

Spark 400 Machine has been commissioned for SMT Assemblies.

Vibration Machine has been installed to carry out vibration test of large subsystem / test rack of various projects like Combat Management System and Central Acquisition Radar.

Rapid Thermal Cycling Chamber (Capacity 270 Ltr), an Environmental Stress Screening Chamber with very fast temperature change rate, has been installed.

Electro-plating Facility for ferrous and Non-ferrous and magnesium metals has been established in the plating shop at Machilipatnam Unit.

3. New initiatives taken, diversification / expansion plans

BEL is adapting to changing business environment with an objective to assess its position with emphasis on structured business development activity for understanding and offering products / solutions to customers proactively by having a medium-term perspective plan in place.

(i) Preparation of 5 year perspective plan for the Company (2009-14)

A medium-term perspective plan of the Company has been prepared and released for the period 2009-14. The major systems and products of BEL for next 5 year dispatch period and R&D plans for the Company have been projected. The primary

input considered for these projections is the marketing leads based on inputs from defence services and other inputs by direct interactions with customers. The perspective plan also lists the challenges, opportunities and strategies for BEL to face the current defence business scenario due to increased participation by private companies.

Financial performance of the Company for the next 5 years based on the dispatch plans has been projected. Various initiatives in technology development and R&D, human resource management, quality, cost reduction have been brought out, including export and offsets strategies and new business initiatives planned. Few selected areas for priority action during the plan period also have been identified.

(ii) Benchmarking of BEL with leading Indian / foreign companies in the defence business.

Benchmarking of BEL at a Company level has been carried out with the help of an external consultant. The Indian / foreign companies against which BEL has been benchmarked are medium and big sized companies operating in the areas similar to major business areas of BEL. The key functional areas of the organisation have been considered for comparing performance and position of BEL against the targeted companies. The findings show BEL as one of the strong companies among the Indian players. However in comparison with International companies, some gaps have been observed which needs to be studied and improved.

(iii) Strategic alliances for emerging businesses through co-development, co-production, product manufacture through technology transfer.

BEL has been entering into strategic alliances with Indian and foreign players to ensure business in a competitive market scenario. These alliances are for addressing various emerging markets where BEL ties up with suitable partners / defence labs for collaboration. It is being pursued proactively and addressed at SBU / Unit level in their area of operation and strength. BEL has been pursuing the following partnerships:

• Technical collaboration agreement with M/s Indra Sistemas, Spain for Radar band ESM system (for Indian Navy).

• Development and ToT for Anti Submarine Warfare (ASW) system with NSTL, India.

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ANNUAL REPORT 2009 - 10

• Co-operation on software defined Radio systems technology with M/s Thales.

• Development for medium power Radar with DRDO.

(v) Forming of Joint Ventures / acquiring technology companies (for both existing / emerging business areas)

BEL is discussing with reputed foreign / Indian players for forming Indian Joint Ventures in the areas of defence electronics, namely, missile electronics and guidance systems with Rafael, Israel and with Thales, France for civilian and select defence Radars. These proposals are in the advanced stages of discussions. BEL is also discussing with BHEL for setting up a JVC for Solar PV manufacturing.

MoU signed with M/s Indus Teqsite, Chennai for exploring the setting up of JVC for development of digital subsystems and test systems for Radars, avionics, electronic warfare etc.

(v) Identified areas of diversification

Currently BEL is engaged in executing large strategic weapon system contract received from MoD and many similar programs are on the anvil. This has necessitated BEL to assess and create necessary infrastructure to handle such large programs.

However, in order to sustain and enhance the growth of the Company and be in the forefront of professional electronics domain, BEL has plans to diversify into the following new non-defence areas:

ATM Radars.

Solar PV business.

Critical infrastructure (Government) protection systems.

Interception and monitoring systems – Terrestrial wireless, satellite communication, email, etc.

Next generation optical networking solutions.

Nuclear, Biological and Chemical (NBC) warfare defence and protection.

Mobile WiMAX broadband networks.

Lightweight multipurpose shelters.

Satellite On The Move (SOTM) systems.

Terminals for micro financing agencies.

Pilot project for railway communication / disaster management.

(d) Specific Measures on Risk Management, Cost Reduction and Indigenisation

1. Risk Management:

The Risk Management Committee constituted by the Company has identified the various risks associated with different areas of operations of the Company and recommended risk mitigation measures. These measures are being implemented. To address the product and technology related risks, two separate Divisions have been set up at the Corporate Office, viz., (i) "Strategic Business Planning Group" and (ii) “Technology Planning Group”.

The Company has adopted the Project Management concept to minimise / mitigate the risk of losses on liquidated damages due to delays in execution of projects and project managers and associated executives are being trained on latest Project Management systems / tools.

The marketing function is also being strengthened and marketing executives are imparted intensive training on marketing skills in a competitive environment. To enhance marketing skills to compete in a fast changing market, marketing executives are continuously nominated for a 6-months residential Marketing program at IMI, New Delhi. The program is focused on providing key marketing knowledge and skills required for business.

All the assets of the Company are covered by Insurance. Necessary measures are being taken to manage risks associated with FE variation and other areas of Finance, HRD, etc.

2. Cost Reduction:

In the era of global and private participation in Defence sector, there is a constant and compelling need for the Company to remain competitive in all areas of its operations. One of the approaches to retain this competitive edge is to constantly strive to achieve reduction in costs in an environment in which technological superiority has to be matched with competitive price. To give more impetus to this, BEL has adopted cost reduction strategy as one of the thrust areas from late 90s. Various avenues like design change, alternate material, labour, indigenisation, alternative sourcing, inventory management, process / yield improvement, energy conservation, quality initiatives like Six Sigma, QCC, Suggestions, Value Engineering are identified for cost reduction. During the year

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ANNUAL REPORT 2009 - 10

2009-2010 more than 50 task forces were working on cost reduction in various Units / SBUs and the Company achieved a cost reduction of Rs. 19,400 lakhs.

3. Indigenisation:

Self-reliance is one of the objectives of the Company to meet the strategic needs of the nation. In view of the increasing competition in the open market era, indigenisation activity has become one of the thrust areas of BEL to be cost competitive. Each of the units of BEL takes measures towards indigenisation activity for the high cost imported assemblies & modules used in the BEL products under manufacture.

Apart from indigenisation of imported components / assemblies, indigenised technology at BEL is developed in the following ways.

• Development of indigenous technology through in house R&D efforts at BEL.

• Development of indigenous technologies jointly between national labs (like DRDO, ISRO, CSIR, C-DOT, academic institutions, etc.,)

• Product ionisation of indigenous technologies of interest of BEL developed by various indigenous design houses in India.

• System & turnkey projects designed by BEL and realised through integration of bought out subsystems for faster availability of desired systems to customer.

During the design stage, all out efforts are made to identify the indigenous source of procurement for components / modules. The source identification is carried out with the help of a well-developed online (SAP) Approved Vendor Directory (AVD) of all components / modules available across 9 units of BEL spread across the Country.

Every year the Company introduces new products as well as upgrades the existing products through indigenous efforts. BEL has been receiving prestigious RM awards in the category of import substitution. The turnover from indigenously developed products during 2009-10 was 75%.

B) Internal Control System and its Adequacy

The Company has an adequate system of Internal Controls implemented towards achieving effectiveness and efficiency

of operations, reliability of financial reporting and compliance with applicable laws and regulations.

The system comprises well defined organisation structure, pre-identified authority levels and procedures issued by management covering all vital and important areas of activities, viz., Budget, Purchase, Material Management, Works, Finance & Accounts, Human Resources, etc. These procedures are updated from time to time and are subject to strict compliance.

The Company has implemented ERP (SAP) System in all of its manufacturing Units / Offices. This has further strengthened the Internal Control Systems with its in-built checks and balances at various levels of operations.

The Company has an Internal Audit Department which continuously reviews compliance with Company’s procedures, policies, applicable laws and regulations with well defined annual audit programme. The Company revised the Internal Audit manual during the year to ensure adequate audit coverage under SAP environment. Significant audit observations are reported to the management level Audit Committee / Audit Committee of Board of Directors. The Internal Audit function is headed by General Manager (Internal Audit) reporting to the Chairman & Managing Director.

The Internal Control Systems are reviewed by the Audit Committee. The adequacy of Internal Control procedures is reviewed and reported by the Statutory Auditors in their Audit Report. BEL being a Government Company, is subject to Government Audit also.

C) Financial / Operational Performance

1. Strategy & Objectives

The main objectives of the financing strategy of the Company are as follows:

(i) To make available the required funds through internal accruals and / or by effective cash flow management with a view to have the least interest cost.

(ii) To maintain the highest credit rating in the short-term to be able to raise funds at most economical rate if required.

(iii) To meet the expectations of the various stakeholders.

(iv) To effectively execute tax planning thereby improving the post tax yield to the shareholders.

(v) To maintain highest standards of financial reporting by following the mandatory as well as recommendatory accounting standards.

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ANNUAL REPORT 2009 - 10

Each of the objectives listed continue to be accorded the highest priority by BEL. During the financial year, the entire working capital needs and the funding for capital expenditure was met from the internal resources without resorting to any external borrowing.

2. Performance Highlights(Rupees in lakhs)

Year ended31.3.2010

Year ended31.3.2009

Gross Sales / Income from Operations

521,977.40 462,368.89

Total Expenditure Before Interest

457,873.56 439,563.88

Profit Before Interest and Tax 104,555.83 110,760.44

Operating Margin (PBIT / Gross Sales) Ratio

20.03 % 23.95 %

Profit After Tax 72,087.10 74,575.97

No. of Days Inventory / Value of Production (DPE Method)

172 169

No. of Days Sundry Debtors / Sales & Services

152 180

Current Ratio 1.74 1.67

Debt Equity Ratio 0.00017 0.00032

3. Analysis of Financial Performance of 2009-10

• Turnover registered a growth of 12.89 %, from Rs. 462,368.89 lakhs in 2008-09 to Rs. 521,977.40 lakhs in 2009-10.

• Value of Production has marginally decreased from Rs. 527,327.27 lakhs in 2008-09 to Rs. 524,788.20 lakhs in 2009-10. Reduction of 0.48 %.

• 3.34% decrease in Profit After Tax, from Rs. 74,575.97 lakhs in 2008-09 to Rs. 72,087.10 lakhs in 2009-10.

• Reduced PAT to Sales Ratio, from 16.13% in 2008-09 to 13.81 % in 2009-10.

• Sales Per Employee has increased from Rs. 38.66 lakhs in 2008-09 to Rs. 45.21 lakhs in 2009-10.

• Earning Per Share has decreased from Rs. 93.22 in 2008-09 to Rs. 90.11 in 2009-10.

• Book Value Per Share has increased from Rs. 472.96 in 2008-09 to Rs. 540.66 in 2009-10.

• Networth has grown from Rs. 378,368.15 lakhs in 2008-09 to Rs. 432,525.59 lakhs in 2009-10.

D) Development in Human Resources

In order to address the Learning and Organisation Development needs, various Management Development programs as well as technology programs were organised in the year 2009-10. These programs were organised through premier training institutions for employees at different levels. The Company-wide per capita training mandays for the year 2009-10 was 3.

Some of the important HRD initiatives during the year included:

• Competency modeling intervention has been initiated to identify the critical competencies having an impact on business outcomes that had to be demonstrated at all levels across the Organisation. The competency model for BEL has 9 competencies and was arrived at with the help of an external consultant. A total of 70 job descriptions and competency profiles have been made for senior executive roles. Development centres have been conducted through an external HR Consultant for 61 senior executives including GMs / AGMs and individual development plans have been made for addressing their developmental needs.

• Outward bound learning program was conducted for executives to internalise learning from the performances in realistic situation. This training takes the participant away from the comfort zone, in an informal risk-free environment, thereby enabling the participant to experiment and explore their hidden potential. Three cross-functional teams - a total of 70 participants were sent for the training during the year 2009-10.

• To enhance marketing skills to compete in a fast changing market, 21 executives completed a 6-months residential marketing program at IMI, New Delhi. The program was focused on providing key marketing knowledge and skills required for business.

• In order to strengthen the leadership capability, three Programs on ‘360 Degree Feedback and Leadership” were conducted and 60 AGMs / Sr DGMs / DGMs attended the program.

• Four Leadership Review Workshops were conducted in various units with assistance of Prof T V Rao from M/s TVRLS. 71 DGMs / Sr DGMs / AGMs attended the program. The action plans were reviewed.

• To enable our senior executives to be change agents, 4 programs on ”Leading the Change” was conducted at MDI, Gurgaon. 83 executives in DGM / Sr DGM / AGM grade attended.

• In order to hone Project Management skills, executives were trained in Project Management and 58 executives are PMP certified.

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ANNUAL REPORT 2009 - 10

• Technology Programmes to enhance the knowledge of BEL engineers in various technology areas were conducted: Finite Element Method, basic course on Digital Signal Processing, advanced course on Digital Signal Processing, VHDL, Embedded System Design, RF Measurement, Basics of LAN / WAN technologies, Advanced Data Communication, Designing with VHDL and essentials of FPGA, basics of Digital Communication and advanced FPGA.

E) Corporate Social Responsibility (CSR)

BEL is committed to contributing to the socio-economic development of its stakeholders and the business decisions

of the Company will be in line with its obligations of CSR. The Company’s sustained initiatives shall aim at earning the goodwill of the community and enhancing the image of the Company. Pursuing this objective, the Company has prepared a policy on Corporate Social Responsibility. The CSR policy has laid down the following broad areas for providing benefit to the stakeholders:

• Health care

• Education

• Rural development

• Environment protection

• Conservation of resources

During the year the Company has approved the following CSR initiatives with a total financial outlay of Rs. 259.3 lakhs:

Name of Agency Project

BEL Ashankura Special School, Bangalore Augment facilities in the School

University Visveswaraya College of Engineering, Bangalore Augment facilities in the Electronics Laboratory

Akshay Patra Foundation, Bangalore Assistance for procurement of food distribution vehicles

Karnataka Parent's Association for Mentally Retarded Citizens, Bangalore

Assistance for procurement of a vehicle

Nightingales Medical Trust, Bangalore Assistance of establishing a comprehensive Dementia Care Centre

Helpage India, New Delhi Adoption of one mobile medical van

Helpage India, New Delhi Assistance for procurement of equipments for physiotherapy centre for elderly people

Blind Relief Association, New Delhi Literacy for the Blind - Braille Production Centre Equipments

People for Animals, New Delhi Assistance for Mobile Animal Unit / Ambulance

Neighbouring villages near BEL Navi Mumbai Unit and health centers situated in Navi Mumbai

Provide solar street lighting

NGOs in Hyderabad - MEANS, FBA - Home for the destitute, Save Child, Lakshya Sadhana and ZP High School, Mallapur, Hyderabad

Providing materials for infrastructure

Govt. Hospital, Kotdwara Providing assistance for infrastructure upgradation

Govt. Primary School, Budanpur District Providing assistance for renovation and infrastructure upgradation

District Administration - Panchkula Providing solar traffic lights near BEL, Panchkula Unit

Govt. of Karnataka Chief Minister's Relief Fund for Flood Relief

Govt. of Andhra Pradesh Chief Minister's Relief Fund for Flood Relief

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ANNUAL REPORT 2009 - 10

Annexure to Directors’ Report (Contd.)

Corporate Governance Report

Philosophy and Code of Governance

BEL’s philosophy of Corporate Governance is based on the principles of honesty, integrity, accountability, adequate disclosures, legal compliances, transparency in decision-making and avoiding conflicts of interest. BEL gives importance to adherence to adopted corporate values and objectives and discharging social responsibilities as a corporate citizen. BEL believes in customer satisfaction, financial prudence and commitment to values. Our corporate structure, business and disclosure practices have been aligned to our Corporate Governance philosophy.

BEL strives to transcend much beyond the basic requirements of Corporate Governance focusing consistently towards value addition for all its stakeholders. In keeping with its professional approach, BEL is implementing the precepts of Corporate Governance in letter and spirit.

Board of Directors

Composition

The composition of BEL Board of Directors is in line with Clause 49 of Listing Agreements with Stock Exchanges and the guidelines on Corporate Governance issued by the Government of India. BEL

Board of Directors consists of 7 Wholetime Directors (Executive Directors), including the Chairman & Managing Director, 2 Govt. Directors (Non-executive Directors) and 9 Non-executive Independent Directors. In addition, as per Govt. directives, the Vice Chief of Air Staff, Indian Air Force and the Chief of Material, Indian Navy are Permanent Special Invitees to all the Board Meetings of the Company. Of the nine Independent Directors, one had resigned in January, 2009 and seven completed their tenure in May, 2009. Of these eight casual vacancies, three were filled up during the year. The competent authority in the Government is in the process of appointing five more Independent Directors.

Meetings and Attendance

During the financial year ended 31.3.2010, seven board Meetings were held and the maximum interval between any two meetings was 90 days. The board meetings were held on 15.4.2009, 24.4.2009, 24.6.2009, 24.7.2009, 11.8.2009, 30.10.2009 and 29.1.2010. Details of attendance of the Directors at the Board Meetings, Annual General Meeting and the number of other directorships / committee memberships held by them during 2009-10 etc., are given below:

Sl.

No.Directors

Meetings

held during

respective

tenure of

Director

No. of

Board

Meetings

attended

Attendance

at the last

AGM held

on 25 Sep

2009

No. of other

directorships

held

* Number of Committee

membership across all

companies

As Chairman As Member

Wholetime (Executive) Directors

1 Mr V V R Sastry (up to 30.4.2009) 2 2 No 2 Nil Nil

2 Mr A K Datt 7 7 Yes 1 Nil 1

3 Mr P R K Hara Gopal (up to 31.7.2009) 4 4 No 2 2 -

4 Mr M L Shanmukh 7 7 Yes 1 1 1

5 Mr H S Bhadoria 7 7 Yes 2 Nil 1

6 Mr N K Sharma (up to 31.8.2009) 5 5 No Nil Nil Nil

7 Mr I V Sarma 7 7 Yes 2 Nil 1

8 Mr M G Raghuveer (w.e.f. 1.8.2009) 3 3 Yes 2 1 1

9 Mr H N Ramakrishna (w.e.f.. 1.9.2009) 2 2 Yes Nil Nil Nil

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ANNUAL REPORT 2009 - 10

Sl.

No.Directors

Meetings

held during

respective

tenure of

Director

No. of

Board

Meetings

attended

Attendance

at the last

AGM held

on 25 Sep

2009

No. of other

directorships

held

* Number of Committee

membership across all

companies

10 Mr Anil Kumar (w.e.f.. 3.2.2010) Nil Nil No Nil Nil 1

Part-time Govt. (Non-executive) Directors

11 Mr Gyanesh Kumar (up to 26.1.2010) 6 4 No 3 1 3

12 Mr Satyajeet Rajan (w.e.f. 27.1.2010) 1 1 No Nil Nil 1

13 Lt Gen P Mohapatra 7 1 No 2 Nil Nil

Non-executive Independent Directors

14 Dr V Bakthavatsalam (up to 22.5.2009) 2 2 No 4 1 -

15 Prof N Balakrishnan (up to 22.5.2009) 2 Nil No 3 1 -

16 Dr Ashok Jhunjhunwala (up to 22.5.2009) 2 Nil No 12 1 6

17 Prof Goverdhan Mehta (up to 22.5.2009) 2 1 No 2 Nil 3

18 Mr K G Ramachandran (up to 22.5.2009) 2 1 No 1 1 1

19 Prof S Sadagopan (up to 22.5.2009) 2 2 No 3 Nil 2

20 Mr Bhupindar Singh (up to 22.5.2009) 2 2 No 4 1 2

21 Lt Gen (Retd) G Sridharan (w.e.f. 18.5.2009) 5 5 Yes Nil 2 -

22 Mr Anil Razdan (w.e.f. 23.11.2009) 1 1 No Nil Nil 1

23 Prof V K Bhalla (w.e.f. 23.11.2009) 1 1 No 3 1 4

24 Mr M S Ramachandran (w.e.f. 23.11.2009) 1 1 No 6 Nil 1

Note: * As per Clause 49, chairmanship / membership of the Audit Committee and the Shareholders’ Grievance Committee are considered.

The numbers of directorship and committee positions given above are as notified by the Directors and it is confirmed that no Director has been a member of more than 10 committees or acted as Chairman of more than 5 committees across all Companies in which he / she is a Director.

Code of Conduct

Board of Directors of your Company has laid down a Code of Conduct for all Board members and senior management personnel of the Company as per Clause 49 and the Guidelines on Corporate Governance for Central Public Sector Enterprises issued by the Dept. of Public Enterprises (DPE Guidelines). The Code of Conduct has been posted on the Company’s website, www.bel-india.com. All Board members and senior management personnel have affirmed compliance with the Code of Conduct during the year 2009-10. A declaration to this effect signed by the Chairman & Managing Director is attached to this report.

Audit Committee

The composition of the Audit Committee is in line with Section 292A of the Companies Act 1956, Clause 49 of Listing Agreements with Stock Exchanges and the guidelines on Corporate Governance issued by the Government of India. The Company’s Audit Committee consisted of four Independent Directors, one Govt. Director and one Wholetime Director. In addition, the Statutory Auditors of the Company, the Director (Finance) and the General Manager (Internal Audit) also attend the meetings of the Audit Committee, regularly. The Company Secretary is the Secretary to the Audit Committee. Chairman of the Audit Committee is an Independent Director. Chairman of the Audit Committee attended the Annual General Meeting of the Company held on 25th September 2009. The terms of reference of the Audit Committee are as specified in Section 292A of the Act, Clause 49 and the DPE Guidelines.

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ANNUAL REPORT 2009 - 10

During the year ended 31.3.2010, the Audit Committee met six times on 24.4.2009, 24.6.2009, 24.7.2009, 11.8.2009, 30.10.2009 and 29.1.2010.

The attendance of the Chairman and members of the Audit Committee in these meetings were as follows:

NameMeetings held

during respective tenure of Director

No. of meetings attended

Lt Gen (Retd) G Sridharan (w.e.f. 18.5.2009)

5 5

Mr Gyanesh Kumar (up to 26.1.2010)

5 4

Mr Satyajeet Rajan (w.e.f. 27.1.2010)

1 1

Mr K G Ramachandran (up to 22.5.2009)

1 1

Prof S Sadagopan (up to 22.5.2009)

1 1

Mr Bhupindar Singh (up to 22.5.2009)

1 1

Mr H S Bhadoria 6 6

NameMeetings held

during respective tenure of Director

No. of meetings attended

Mr Anil Razdan (w.e.f. 27.11.2009)

Nil Nil

Prof V K Bhalla (w.e.f. 27.11.2009)

Nil Nil

Mr M S Ramachandran (w.e.f. 27.11.2009)

Nil Nil

Remuneration Committee / Remuneration Policy

Being a Central Govt. Public Sector Enterprise, the appointment, tenure and remuneration of Directors are decided by the Govt. of India, and hence the Company has not constituted any remuneration committee. The Govt. letter appointing the Chairman & Managing Director and other functional directors indicate the detailed terms and conditions of their appointment, including the period of appointment, basic pay, scale of pay, dearness allowance, city compensatory allowance, entitlement to accommodation, etc., and it also indicates that in respect of other terms and conditions not covered in the letter, the relevant rules of the Company shall apply.

Details of remuneration of Wholetime Directors during the year 2009-10 are given below:(Remuneration in Rs.)

Name of Director Salary * Benefits **

Company contribution to

PF & Incremental Gratuity***

IncentiveLeased

AccommodationTotal

Mr V V R Sastry (up to 30.4.2009) 2,453,315 167,242 118,574 268,229 253,092 3,260,452

Mr A K Datt 2,768,821 48,477 486,634 223,644 989,258 4,516,834

Mr P R K Hara Gopal (up to 31.7.2009) 2,219,461 197,199 435,615 226,207 368,062 3,446,544

Mr M L Shanmukh 2,624,314 39,542 # 1,348,003 226,207 818,052 5,056,118

Mr H S Bhadoria 2,770,011 41,028 561,454 224,399 806,256 4,403,148

Mr N K Sharma (up to 31.8.2009) 2,460,301 87,657 150,317 178,386 418,062 3,294,723

Mr I V Sarma 2,193,840 41,152 414,197 185,488 648,368 3,483,045

Mr M G Raghuveer (w.e.f. 1.8.2009) 1,189,477 177,740 748,732 162,735 0 2,278,684

Mr H N Ramakrishna (w.e.f. 1.9.2009) 1,109,834 27,305 570,227 164,683 0 1,872,049

Mr Anil Kumar (w.e.f. 3.2.2010) 324,110 5,507 205,994 197,905 0 733,516

* Includes terminal benefits.

** Medical and other perquisites valued as per IT Rules.

*** Includes Leave Encashment at the time of retirement.

# Includes past service cost pertaining to previous employment.

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ANNUAL REPORT 2009 - 10

Part-time Govt. Directors (Non-executive Directors) are not paid any remuneration. They are also not paid sitting fees for attending Board / Committee meetings. Non-executive Independent Directors are paid sitting fees of Rs. 20,000 / - per meeting of the Board / Committee of the Board attended. However, if the same Non-official Part-time Director attends more than one meeting (of Board / Committee) on the same day, the sitting fees payable for each of such additional meeting is Rs. 10,000 / -. Details of sitting fees paid to the Independent Directors during the year 2009-10 are given below:

(Sitting fees in Rs.)

Name

Sitting Fees

TotalBoard Meetings

Committee Meetings

Dr V Bakthavatsalam (up to 22.5.2009)

40,000 0 40,000

Prof N Balakrishnan (up to 22.5.2009)

0 0 0

Dr Ashok Jhunjhunwala (up to 22.5.2009)

0 0 0

Prof Goverdhan Mehta (up to 22.5.2009)

20,000 0 20,000

Mr K G Ramachandran (up to 22.5.2009)

20,000 10,000 30,000

Prof S Sadagopan (up to 22.5.2009)

40,000 10,000 50,000

Mr Bhupindar Singh (up to 22.5.2009)

40,000 10,000 50,000

Lt Gen (Retd) G Sridharan (w.e.f. 18.5.2009)

100,000 140,000 240,000

Mr Anil Razdan (w.e.f. 27.11.2009)

20,000 0 20,000

Prof V K Bhalla (w.e.f. 27.11.2009)

20,000 0 20,000

Mr M S Ramachandran (w.e.f. 27.11.2009)

20,000 0 20,000

The Company does not pay any commission to its Directors. The Company has not issued any stock options to its Directors. None of the Non-executive Directors had any pecuniary relationship or transactions with the Company during the year.

The Chairman & Managing Director and other Functional Directors are appointed by the Govt. initially for a period of 5 years from the date of appointment or up to the date of superannuation of the individual or promotion to next grade, or until further orders of the Govt., whichever is the earliest. Depending on the age

and performance and on meeting other stipulated conditions the initial period is extendable for further period of 5 years or up to the date of superannuation or promotion to next grade, whichever is earlier. The Part-time Govt. Directors are ex-officio appointees and their term is co-terminus with the term of respective position held by them in Govt. at the time of appointment on the Company’s Board. The non-executive independent Directors are appointed for a period of 3 years.

Directors’ Shareholding

Mr Ashwani Kumar Datt and Mr Satyajeet Rajan hold 100 shares each in the Company, on behalf of the Govt. of India. No other Directors of the Company hold any BEL shares or convertible instruments of the Company as on 31.3.2010.

Shareholders / Investors Grievance Committee

Your Company has constituted a Shareholders / Investors Grievance Committee for reviewing and resolving grievances of shareholders / investors. The Shareholders / Investors Grievance Committee consist of following members of the Board:

1. Lt Gen (Retd) G Sridharan : Chairman

2. Mr M L Shanmukh : Member

3. Mr Anil Kumar : Member

Transfer requests and complaints from the shareholders are attended to promptly as and when they are received. 5 grievances from shareholders, mainly relating to dividend payment, were received and resolved during the year. No grievance was pending as on 31.3.2010. There were no pending share transfers at the close of the financial year.

Other Board Subcommittees

Your Directors have constituted the following Subcommittees of the Board:

1. Procurement Committee consisting of the Chairman & Managing Director, Govt. Director representing the Administrative Ministry, Director (Finance), concerned operational Director [ie, Director(BC) / Director(OU)] and one Independent Director to consider and approve:

(i) purchase of capital items, plant, machinery and equipment and material for capital works valuing more than Rs. 1,000 lakhs per purchase order and approve the terms of purchase, and

(ii) purchase of direct or indirect materials and sub-contracts on outside parties with or without the Company’s materials to meet the needs of the planned production and sales and approve the terms of purchase valuing more than Rs. 3,000 lakhs per purchase / subcontract.

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ANNUAL REPORT 2009 - 10

2. R&D Committee consisting of the Chairman & Managing Director, Govt. Director representing the Administrative Ministry, Director (R&D), Director (Finance) and one Independent Director to consider and approve research, development and engineering proposals with expenditure exceeding Rs. 500 lakhs and up to Rs. 1,500 lakhs in each case.

3. Investment Committee consisting of the Chairman & Managing Director, the Director (Other Units) and the Director (Finance) to approve investment of short-term surplus funds.

4. Appointments Committee consisting of the Chairman & Managing Director and Wholetime Directors of relevant functional areas and one Part-time Director for filling up vacancies in the posts of General Managers / Executive Directors.

Compliance Officer

Mr C R Prakash, Company Secretary, is the Compliance Officer. His contact details are:

Mr C R Prakash, Company Secretary,Bharat Electronics Ltd, Regd. & Corp. OfficeOuter Ring Road, Nagavara, Bangalore - 560045T. 080 25039300; F. 080 25039266; E. secretary@bel.co.in

General Body Meetings

Details of last three Annual General Meetings are as follows:

Year Location Date & Time2006-07 The Grand Ball Room, Hotel Grand

Ashok, Kumara Park, High Grounds Bangalore – 560 001

20th September 2007 at 2.30 PM

2007-08 The Kalinga Hall, Hotel Grand Ashok, Kumara Park, High Grounds Bangalore – 560 001

29th September 2008 at 2.30 PM

2008-09 Magadh Hall, The Lalit Ashok Hotel, Kumara Park, High Grounds Bangalore – 560 001

25th September 2009 at 2.30 PM

All the resolutions, including special resolutions, set out in the respective notices of last three Annual General Meetings were passed by the shareholders. No resolutions were put through postal ballot last year.

Disclosures

(a) Related Party Transactions are disclosed in Note No. 22 of Notes to the Accounts (Schedule 21 to the Profit & Loss Account of the Company for the year-ended 31.3.2010). The Company does not have any materially significant related party transactions, which may have potential conflict with its interest at large.

(b) There were no cases of non-compliance by the Company and no penalties / strictures were imposed on the Company by the Stock Exchanges or SEBI or any other Statutory Authority on any matter related to capital markets, during the last three years.

(c) No items of expenditure, other than those directly related to its business or incidental thereto, those spent towards the welfare of its employees / ex-employees, towards fulfilling its Corporate Social Responsibility, were debited in books of accounts.

(d) Expenses incurred for the Board of Directors and Top Management are in the nature of salaries, allowances, perquisites, benefits and sitting fees as permissible under the rules of the Company. No other expenses, which are personal in nature, were incurred for the Board of Directors and Top Management.

(e) Administrative and office expenses as a percentage of total expenses and reasons for increase, if any:

Administrative and office expenses were 3.02 % of the total expenses for the year 2009-10 as against 3.85 % in the previous year. No significant increase during the year.

Training of Directors

Directors were sponsored for training programme on Corporate Governance conducted by the Institute of Public Enterprises, Hyderabad in the previous year.

Presidential Directives and Guidelines

Your Company has been following the Presidential Directives and guidelines issued by the Govt. of India from time to time regarding reservation for SCs, STs and OBCs in letter and spirit. Liaison Officers are appointed at various Units / Offices all over the Country to ensure implementation of the Govt. Directives. Officials dealing with the subject were provided necessary training to enable them to update their knowledge on the subject and perform their job effectively. BEL has been implementing the Government Directives on reservation and the representation of SC / ST / OBCs in BEL as on 31.3.2010 are as under:

Category of EmployeesGroup

‘A’Group

‘B’Group

‘C’Group

‘D’

Scheduled Caste 763 78 1,295 117

Scheduled Tribe 222 06 129 30

OBC 712 67 999 60

Your Company has been implementing the Govt. Directives on reservation for Persons with Disabilities and Ex-Servicemen and

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ANNUAL REPORT 2009 - 10

their representation as on 31.3.2010 are as under:

Category of EmployeesGroup

‘A’Group

‘B’Group

‘C’Group

‘D’Physically Handicapped 72 09 168 18Ex-Servicemen 83 48 328 86

During the year, a Presidential Directive was issued vide Govt. of India, Ministry of Defence, Department of Defence Production No.17(1) / 2009-D(BEL) dt. 27th April, 2009 on revision of pay scales, fitment formula, allowances and perquisites of board level and below board level executives of the Company and the same has been implemented.

Means of Communication

The quarterly and annual financial results of the Company are sent to the Stock Exchanges by facsimile / e-mail and letter by courier immediately after the Board has taken them on record. The quarterly unaudited financial results are published in one of the newspapers, ie, Economic Times / Mint Express / Business Standard / Financial Express / Business Line / Business Bhaskar (in English / Hindi) and Samyuktha Karnataka / Times of India, Kannada / Prajavani / Kannada Prabha (in Kannada).

The quarterly unaudited results are simultaneously posted on the Company’s website, viz., www.bel-india.com. The Company has been filing all Corporate announcements, quarterly results, shareholding pattern, other information submitted to the Stock Exchanges on the NSE / BSE managed common platform, viz., www.corpfiling.co.in. Investors may please log on to www.corpfiling.co.in to view the information filed by the Company on this common platform. Press releases are also being sent to the Stock Exchanges and posted on your Company’s website.

No presentations have been made to institutional investors or to the analysts.

Code for Prevention of Insider Trading

In accordance with the SEBI (Prohibition of Insider Trading) Regulations 1992, the Company has put in place a Code of Conduct and Disclosure Procedure (the Code) to prevent insider trading in the Company’s securities and for transparent / streamlined disclosure / dissemination of information to the investors / public. The Code is applicable to all Directors, officers (top three tiers in all the Units / Offices of the Company) and certain other specified employees at the Corporate Office.

Secretarial Audit

The Company obtains a Secretarial Audit Report from a Practising Company Secretary every quarter to reconcile the total admitted capital with the National Securities Depository Ltd, (NSDL) and Central Depository Services (India) Ltd, (CDSL) and the total issued

and listed capital. The Secretarial Audit Report confirms that the total issued / paid up capital is in agreement with the total number of shares in physical form and the total number of dematerialised shares held with NSDL and CDSL. The Secretarial Audit Report is forwarded to all the Stock Exchanges where BEL shares are listed.

The Company also obtains a Certificate of Compliance from a Practising Company Secretary at half-yearly intervals certifying that transfer requests complete in all respects have been processed and share certificates with transfer endorsements have been issued by the Company within one month from the date of lodgement thereof. This Certificate of Compliance is forwarded to all the Stock Exchanges where BEL shares are listed.

MCA-21 Compliance

The e-governance initiative of the Ministry of Corporate Affairs in the administration of the Companies Act 1956 (MCA-21) provides the public, corporate entities and others an easy and secure online access to the corporate information including the filing of documents and public access to the information required to be in public domain under the statute, at any time and from anywhere. The Company has complied with all mandatory e-filing requirements under MCA-21, during 2009-10.

Listing on Stock Exchanges

BEL’s shares are listed on the following three Stock Exchanges:

1. Bangalore Stock Exchange Ltd Stock Exchange Towers No. 51, 1st Cross, J C Road Bangalore - 560 027

2. Bombay Stock Exchange Ltd 25th Floor, Phiroze Jeejeebhoy Towers Dalal Street, Mumbai - 400 001

3. National Stock Exchange of India Ltd Exchange Plaza, Plot No. C / 1 G Block, Bandra-Kurla Complex Bandra (E), Mumbai - 400 051

The Company has paid listing fees for the Financial Year 2009-10 and 2010-11 to all the three Stock Exchanges.

The Stock Code assigned to the Company’s equity shares by the respective Stock Exchanges and the ISIN number assigned by the Depositories for demat trade of the Company’s equity shares are given below:

Stock Exchange Stock CodeBangalore Stock Exchange Ltd BELBombay Stock Exchange Ltd 500049National Stock Exchange of India Ltd BEL

Demat Share ISIN INE263A01016

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ANNUAL REPORT 2009 - 10

Custody Fees to Depositories

The Company has paid annual custody fees for the Financial Year 2009-10 and 2010-11 to both the Depositories, viz., NSDL and CDSL.

Market Price Data

The details of high / low market prices of the shares of the Company at the Bombay Stock Exchange Ltd (BSE) and the National Stock Exchange of India Ltd (NSE) are as under:

Month

Quotation on BSE -Rupees Per Share

Quotation on NSE -Rupees Per Share

High Low High Low

April 2009 1,000.00 830.00 998.00 826.00

May 2009 1,385.00 889.00 1,395.00 940.00

June 2009 1,469.00 1,270.00 1,468.00 1,254.60

Month

Quotation on BSE -Rupees Per Share

Quotation on NSE -Rupees Per Share

High Low High Low

July 2009 1,571.15 1,285.00 1,542.00 1,283.00

August 2009 1,548.00 1,385.00 1,509.00 1,382.00

September 2009 1,547.85 1,364.00 1,547.00 1,352.50

October 2009 1,655.00 1,390.05 1,655.95 1,383.00

November 2009 1,864.85 1,446.00 1,814.95 1,435.00

December 2009 1,958.00 1,790.00 1,961.00 1,791.00

January 2010 2,170.00 1,880.05 2,166.00 1,879.30

February 2010 2,100.00 1,900.00 2,095.05 1,925.00

March 2010 2,252.00 1,922.00 2,251.90 1,996.85

A comparison of closing quotation of the Company’s share price on NSE with the closing position of NSE NIFTY during the year 2009-10

(position as on first trading day of every month) is presented in the following graph:1

Both NSE NIFTY index and your Company’s share price on NSE have been indexed to 100 as on 1 April 2009 to prepare the above chart.

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ANNUAL REPORT 2009 - 10

Liquidity

The Company’s shares are very liquid and are actively traded on the

Indian Stock Exchanges. Relevant data of turnover for the financial

year 2009-10 is given below:

BSE NSE BSE+NSE

No. of shares traded 4,135,576 17,837,391 21,972,967

Value (Rs in Lakhs) 64,300 285,060 349,360

Share Transfer

Alpha Systems Pvt. Ltd., Bangalore, a SEBI registered Category I

Registrar and Share Transfer Agent is the Company’s Registrar and

Share Transfer Agent. Address of Alpha Systems Pvt. Ltd., is given

below, to forward all share transfer / transmission / split /

consolidation / issue of duplicate certificates / change of address

requests as well as all dematerialisation / rematerialisation

requests and related matters as well as all dividend related queries,

complaints:

Alpha Systems Pvt. Ltd.,

# 30, Ramana Residency, 4th Cross

Sampige Road, Malleswaram

Bangalore – 560 003

T. 080 23460815 to 818; F. 080 23460819; E. alfint@vsnl.com

Share Transfer System

Shares sent for transfer are registered within the stipulated period.

Shares under objection are returned within the stipulated period

seeking suitable rectification. The Share Transfer Committee meets

periodically to approve the transfers within the specified period.

Shareholding Pattern as on 31 March 2010

Sl.No.

CategoryNo. of

ShareholdersNo. of Shares

% Holding

1 Central Govt. (Govt. of India) 6 60,689,600 75.86

2 Mutual Funds / UTI 113 5,473,834 6.84

3 Financial Institutions / Banks 5 15,100 0.02

4 Insurance Companies 12 5,907,149 7.38

5 Foreign Institutional Investors 92 4,262,749 5.33

6 Bodies Corporate 722 1,707,451 2.13

7 Individuals 19,456 1,804,252 2.26

8 Clearing Members 143 38,643 0.05

9 NRIs 575 93,340 0.12

10 Trusts 7 7,882 0.01

Total 21,131 80,000,000 100.00

Top 10 Shareholders as on 31 March 2010

Sl.No.

NameNo. of Shares

% Holding

1 President of India (including 5 Govt. nominees) 60,689,600 75.862 Life Insurance Corporation of India 2,119,931 2.653 LIC of India - Market Plus 1,421,822 1.784 LIC of India - Money Plus 799,601 1.005 LIC of India Market Plus - 1 729,525 0.916 Life Insurance Corporation of India - Profit Plus 553,353 0.697 HDFC Trustee Company Ltd - HDFC Top 200 Fund 530,000 0.668 DSP Blackrock India T.I.G.E.R. Fund 476,890 0.609 Birla Sun Life Insurance Company Ltd., 437,513 0.55

10 Fidelity Northstar Fund 400,000 0.50

Distribution of Shareholding as on 31 March 2010

No. of Equity Shares Held

No. of Shareholders

%No. of Shares

%

Upto 500 20,269 95.92 1,027,939 1.28501-1000 373 1.77 279,919 0.351001-2000 176 0.83 260,623 0.332001-3000 57 0.27 142,322 0.183001-4000 27 0.13 98,226 0.124001-5000 31 0.15 146,112 0.185001-10,000 48 0.23 375,986 0.4710001 and above 150 0.71 77,668,873 97.09Total 21,131 100.00 80,000,000 100.00

Dematerialisation of Shares

99.98% of total equity capital disinvested by the Govt. (i.e. 24.14% of the total paid up capital) is held by the investors in dematerialised form with NSDL and CDSL.

Outstanding GDRs / ADRs / Warrants: Not Applicable

Transfer to IEPF Account

Under Section 205A(5) of the Companies Act 1956 (the Act) companies are required to transfer to the Investor Education and Protection Fund (the Fund) established by the Govt under Section 205C of the Act the money transferred by the companies to the Unpaid Dividend Account and which remain unclaimed / unpaid for a period of 7 years. As per Section 205C of the Act no claims shall lie against the Fund or the Company in respect of individual amounts thus transferred to the Fund and no payment shall be made in respect of any such claims. During the year 2009-10 the Company transferred to the Fund an amount of Rs. 195,711 / - from the unpaid dividend account for the year 2001-2002. The unclaimed / unpaid dividend for the year 2002-03 is due for transfer to the Fund in 2010. Notices to this effect have been sent to the respective shareholders to enable them to claim and receive the amount. The Company has

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ANNUAL REPORT 2009 - 10

posted on its website www.bel-india.com in a separate page titled “Information for Investors” the details of dividend payment since 2002-03 onwards and guidance information for claiming unpaid dividend. Shareholders are requested to make use of the claim form provided therein to claim unpaid / unclaimed dividend.

Credit Rating

In order to comply with the Basel II requirements of Banks, the Company has got its entire working capital facilities rated by ICRA, besides continuing the existing rating for short-term debt programme. ICRA has reaffirmed the LAAA (pronounced as L triple A) rating to the Rs. 2 billion fund based limit and the A1+ (pronounced as A one plus) rating to the Rs. 10 billion non-fund based limit of the Company. The ratings indicate the highest credit quality in the long- and short-term. The existing rating of A1+ for the short-term debt programme has also been reaffirmed for Rs. 50 lakhs.

CEO / CFO Certification

In terms of the requirements of Clause 49 and DPE Guidelines, the CEO / CFO certificate has been obtained and placed before the Audit Committee and the Board.

Compliance

The Company has complied with the Corporate Governance norms / guidelines under Clause 49 and DPE Guidelines. The Company has also been submitting to the Stock Exchanges and to the Govt., quarterly compliance report on Corporate Governance. As required under the Listing Agreement with the Stock Exchanges, the Auditors’ Certificate on compliance of conditions of Corporate Governance by the Company is attached.

Non-mandatory Requirements

The Company has not adopted the non-mandatory requirements as mentioned in Annexure-I D of Clause 49.

Additional / General Information for Shareholders

Annual General Meeting

Date : 28th September 2010Time : 2.30 PMVenue : Kalinga Hall, The Lalit Ashok Hotel, Kumara Park, High Grounds, Bangalore - 560 001.

Financial Calendar 2010-11

Financial Year : 1 April 2010 to 31 March 2011First quarter results : By end of July 2010Second quarter results : By end of October 2010Third quarter results : By end of January 2011Fourth quarter results : By end of April 2011Annual General Meeting : September 2011

Book Closure

15 September 2010 to 28 September 2010 (both days inclusive)

Dividend Payment Date

Dividend will be paid within 30 days of declaration.

Plant Locations

1. Jalahalli, Bangalore - 560013 (Karnataka) Phone: (080) 28382626 Fax: (080) 28380266

2. Bharat Nagar Post, Ghaziabad - 201010 (Uttar Pradesh) Phone: (0120) 2777707 Fax: (0120) 2776730

3. Plot No. 405, Industrial Area, Phase III Panchkula - 134113 (Haryana) Phone: (0172) 2588252, 2588400 Fax: (0172) 2594548, 2591463

4. Balbhadrapur, Kotdwara - 246149, Dist. Pauri Garhwal (Uttarakhand) Phone: (01382) 231171 to 231178 Fax: (01382) 231132, 231135

5. Plot No. L-1, M.I.D.C. Industrial Area Navi Mumbai - 410208. (Maharashtra) Phone: (022) 27412701 Fax: (022) 27412888, 27412887

6. N.D.A. Road, Pashan, Pune - 411021 (Maharashtra) Phone: (020) 22903000 / 25881400 / 01 / 02 Fax: (020) 25880577, 25888789

7. Industrial Estate, Nacharam Hyderabad - 500076, (Andhra Pradesh) Phone: (040) 27150113 to 27150117 Fax: (040) 27171406

8. Post Box No. 26, Ravindranath Tagore Road Machilipatnam - 521001 (Andhra Pradesh) Phone: (08672) 223581 to 223583 Fax: (08672) 222640

9. Post Box No. 981, Nandambakkam Chennai - 600089 (Tamil Nadu) Phone: (044) 22326906 Fax: (044) 22326905

Registered Office / Address for Correspondence

Bharat Electronics Ltd., Registered Office, Outer Ring Road Nagavara, Bangalore - 560 045Phone: (080) 25039300; Fax: (080) 25039233; e-mail:. secretary@bel.co.in; Website: www.bel-india.com

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ANNUAL REPORT 2009 - 10

DECLARATION

Pursuant to the relevant provisions under Clause 49 of the Listing Agreement with Stock Exchanges, and the Department of Public Enterprises (DPE) Guidelines on Corporate Governance for Central Public Sector Enterprises as contained in the DPE OM No. 18(8) / 2005-GM dated 22 June 2007, all Board Members and Senior Management Personnel of the Company have affirmed compliance with the Code of Business Conduct & Ethics for Board Members & Senior Management of Bharat Electronics Ltd., for the year ended 31 March 2010.

For Bharat Electronics Ltd

Place : Bangalore Ashwani Kumar DattDate : 25th June 2010 Chairman & Managing Director

R.G.N. Price & Co. 1051, IInd FloorChartered Accountants 20th Main, 5th Block Rajajinagar, Phone: 23113158/23300331 E-mail: priceblr@yahoo.co.ukAUDITORS’ CERTIFICATE

ToThe Members Bharat Electronics LimitedBangalore

We have examined the compliance of conditions of Corporate Governance by Bharat Electronics Limited, for the year ended on 31st March, 2010, as stipulated in clause 49 of the Listing Agreement of the said Company with Stock Exchanges and Department of Public Enterprises (DPE) Guidelines on Corporate Governance for Central Public Sector Enterprises.

The compliance of the conditions of Corporate Governance is the responsibility of the Management. Our examination was limited to the procedures and implementation thereof, adopted by the Company for ensuring compliance of the conditions of the Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company.

In our opinion, and to the best of our information and according to the explanations given to us, we certify that, the Company has complied with the conditions of Corporate Governance as stipulated in the above mentioned Listing Agreement and DPE Guidelines. However, we observed that there are only four Independent Directors on the Board against the requirement of nine Independent Directors.

We state that no investor grievances are pending for a period exceeding one month against the Company as per the records maintained by the Shareholders’/Investors’ Relations Committee.

We state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the Management has conducted the affairs of the Company.

For R.G.N. Price & Co.Chartered Accountants

H.S. VenkateshPartner

Place : Bangalore Membership No. 026666Date : 25th June 2010 Firm Regn. No. 002785S

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ANNUAL REPORT 2009 - 10

Auditors’ Report

The Members Bharat Electronics LimitedNagavara, Outer Ring RoadBangalore - 560045

1. We have audited the attached Balance Sheet of Bharat Electronics Limited as at 31st March 2010, the Profit and Loss Account and also the cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003 (as modified on 25 Nov 2004) issued by the Central Government in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to in Paragraph 3 above, we report that:

a. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit.

b. In our opinion, proper books of account, as required by law, have been kept by the Company in so far as it appears, from our examination of those books. The audit of the accounts of Bangalore, Hyderabad and Chennai Units and Corporate Office were carried out by us, whilst the audit of Ghaziabad, Panchkula, Kotdwara, Pune, Navi Mumbai and Machilipatnam units were audited by respective branch auditors. The reports of branch auditors have been considered by us while preparing our report. In the case of New York and Singapore offices, not visited by us, in respect

of which the accounts are maintained at Corporate Office, the returns / records received from the said offices have been verified and found to be adequate for the purpose of our audit. We further state that the disclosure in Note No. 24 of Schedule 21 of Company’s share of Assets, Liabilities, Income and Expenses in the joint ventures is based on audited financial statements of GE BE Pvt. Ltd., and audited financial statements of BEL Multitone Pvt. Ltd., as provided by the respective operators of joint ventures.

c. The Balance Sheet and the Profit and Loss Account cash flow dealt with by this report, are in agreement with the books of account of this Company;

d. In our opinion, the Balance Sheet, Profit and Loss Account and Cash flow Statement dealt with by this report comply with the accounting standards referred to in Section 211(3C) of the Companies Act, 1956, read with Section 211(3B) of the Companies Act, 1956 and Item No. 19 on Notes on Accounts regarding segment reporting.

e. As the Company is a Government Company, it is exempt from the provisions of Section 274 (1) (g) of the Companies Act, 1956 regarding disqualification of directors.

f. In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the Significant Accounting Policies and the Notes forming part of accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

i) In the case of the Balance Sheet, of the State of affairs of the Company as at 31st March, 2010,

ii) In the case of the Profit and Loss Account, of the profit of the Company, for the year ended on that date.

iii) In the case of Cash Flow Statement, of the cash flow for the year ended on that date.

For R.G.N Price & Co.Chartered Accountants

H. S. VenkateshPartner

Bangalore Firm Regn. No. 002785S25th June 2010 Membership No. 026666

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ANNUAL REPORT 2009 - 10

(i) (a) The Company has generally maintained proper records showing full particulars including quantitative details and situation of Fixed Assets.

(b) As explained to us, the Management has generally carried out the physical verification of a portion of the Fixed Assets in accordance with their phased programme of physical verification, which is considered reasonable having regard to the size of the Company and nature of its business and discrepancies, if any, were properly dealt with on such verification during the year.

(c) During the year, the Company has not disposed off substantial portion of the Fixed Assets.

(ii) (a) The raw material, stores and spare parts, tools, work in progress and semi finished goods inventory with the Company have been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable. In case of finished goods, stock verification was done at year end.

(b) The procedures of physical verification of raw material inventories followed by the management are generally reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material and have been appropriately dealt in the books. In the case of materials with sub-contractors confirmations from certain sub-contractors were not received and in this regard please refer Item No. 10 (a) of Notes to Accounts.

(iii) The Company has not granted / taken any loans to / from parties covered in the register maintained under Section 301 of the Companies Act, 1956 and hence, Clause No. iii of Companies Audit Report Order, 2003, as amended in 2004, is not applicable.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business with regard to purchases of inventory, Fixed Assets and with regard to the sale of goods and services. During the course of our audit, we have not

observed any continuing failure to correct major weaknesses in internal control system.

(v) According to the information and explanations given to us, we are of the opinion that there are no transactions that need to be entered in register maintained under Section 301 of the Companies Act, 1956.

(vi) Company has not accepted any deposit from public in the current year and all deposits had matured and settled except for Rs. 38.55 Lakhs, out of which Rs. 36.50 lakhs are being retained as per Garnishee Order of Lok Ayukta, Bangalore and the balance Rs. 2.05 lakhs though matured have not been claimed by the depositors. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Section 58AA and other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975.

(vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

(viii) The Company, pursuant to the rules made by the Central Government for the maintenance of cost records under section 209(1)(d) of the Companies Act, 1956 has to maintain cost records for electronic products and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained. However, we have not made a detailed scrutiny of the same.

(ix) (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income Tax, Sales Tax (VAT), Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues applicable to it.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Service Tax, Sales Tax (VAT), Customs Duty, Excise Duty and Cess were in arrears, as at March 31, 2010 for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us, there are no dues of Income Tax, Service Tax, Sales Tax (VAT), Customs Duty, Excise Duty and Cess which

Annexure referred to in Para 3 of our report of even date on the accounts of Bharat Electronics Limited, for the year ended 31st March 2010.

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ANNUAL REPORT 2009 - 10

have not been deposited on account of any dispute except as follows:

Nature of Statute

Nature of Dues

Amount disputed

(Rs. in thousands)

Forum where dispute is pending

The Central Excise Act, 1944

Excise Duty Demand

6,490 Custom Excise and Service Tax Appealate Tribunal, New Delhi

572.6 CESTAT

418.8 Commissioner (Appeals)

192.53 Commissioner

U.P. Trade Tax Act, 1948

Benefit of Concessional Form 3D not allowed. (Year 1979-80)

192 Case remanded to 1st Appelate Authority

Central Sales Tax Act, 1956

Sales Tax dues and benefit of concessional Form C (Year 1989-90)

772 Case remanded to Deputy Commissioner (Appeal).

Central Sales Tax Act, 1956

Sales Tax dues and benefit of concessional Form D(Year 1989-90)

213 Case remanded to AC (Appeal).

UP Trade Tax Act, 1948

Benefit of concessional Form 3B and 3D not allowed (Year 1991-1992)

112 Appeal filed with DC (Appeals) for acceptance of duplicate copy of 3d(1)

UP Trade Tax Act, 1948

Non-receipt of Concessional forms for sale to Army and NTPC (Year 2008)

305 Joint Commissioner – Corporate Circle, Ghaziabad.

Income Tax (TDS)

Applicability of Section 194(‘C) or 194(I) (Financial year 2007-08 and 2008-09).

7,337 CIT (Appeals), Ghaziabad.

ESI Act, 1948

Interest and damage towards late deposit

352 Punjab and Haryana High Court, Chandigarh

Sales Tax Act, Bihar

Sales Tax 664.4 Commissioner of Commercial Taxes (Appeals, Chirkunda, Bihar)

AP Sales Tax Sales Tax 108.3 DC (Appeals) Secundarabad Division, Hyderabad

Rajasthan Sales Tax

Sales Tax 160 DC (Appeals), Udaipur

Nature of Statute

Nature of Dues

Amount disputed

(Rs. in thousands)

Forum where dispute is pending

Karnataka Sales Tax

Sales Tax 12,757.5 JC (Appeals), Bangalore

Service Tax Service Tax 84.2 Commissioner (Appeals)Service Tax Service Tax 379.7 High Court of KarnatakaService Tax Service Tax 363.3 Commissioner (Appeals)Service Tax Service Tax 1033.8 CommissionerTrade Tax Department, Kotdwara

Trade Tax Dues and Interest on dues

16,512 Tribunal Commercial Tax and Joint Commissioner (Appeals), Commercial Tax, Dehradun

Tamil Nadu Sales Tax

Sales Tax 160,749 Andhra Pradesh High Court

Andhra Pradesh VAT

Sales Tax 2,604 Sales Tax Appellate tribunal

CST Act 1956

CST 48,208 Sales Tax Appellate tribunal

Urban Land Tax

Land Tax 4,144 Land Tax Authorities

Vacant Land Tax

Land Tax 1,035 Land Tax Authorities

(x) The Company does not have accumulated losses as at the end of the Financial year and has not incurred Cash losses during the financial year and in the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to bank.

(xii) According to information furnished, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) The Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the Company.

(xiv) The Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the Company.

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ANNUAL REPORT 2009 - 10

(xv) The Company has not given any guarantee for loans taken by others from banks or financial institutions.

(xvi) The Company has not availed any term loan, and hence, clause (xvi) of CARO 2003 is not applicable.

(xvii) According to the information and explanation given to us and on an overall examination of the Balance Sheet of the Company, we report that no funds raised on short term basis have been used for long term investment.

(xviii) The Company has not made preferential allotment of shares to parties covered in the register maintained under Section 301 of the Companies Act, 1956.

(xix) The Company has not issued any debentures.

(xx) The Company has not raised money by public issues and hence Clause 4 (xx) of CARO 2003is not applicable to the Company.

(xxi) During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company noticed or reported during the year nor have we been informed of any such case by the management, that causes the financial statements to be materially misstated.

For R.G.N Price & Co.Chartered Accountants

H. S. VenkateshPartner

Bangalore Membership No. 02666625th June 2010 Firm Regn. No.002785S

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ANNUAL REPORT 2009 - 10

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ANNUAL REPORT 2009 - 10

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ANNUAL REPORT 2009 - 10

Significant Accounting Policies

1. BASIS OF ACCOUNTING

The financial statements are prepared and presented under the historical cost convention, in accordance with Generally Accepted Accounting Principles in India (GAAP), on the accrual basis of accounting, except as stated herein. GAAP comprises the mandatory Accounting Standards (AS) covered by the Companies (Accounting Standards) Rules, 2006 issued by the Central Government, to the extent applicable, and the provisions of the Companies Act, 1956 and these have been consistently applied.

2. USE OF ESTIMATES

The preparation of the financial statements in conformity with GAAP, requires that the management make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liability as at the date of financial statements and the reported amounts of revenue and expenses during the reporting period. Although such estimates are made on a reasonable and prudent basis taking into account all available information, actual results could differ from these estimates and such differences are recognised in the period in which the results are ascertained.

3. REVENUE RECOGNITION

(i) Revenue from sale of goods is recognised as under:

a. In the case of FOR contracts, when the goods are handed over to the carrier for transmission to the buyer after prior inspection and acceptance, if stipulated, and in the case of FOR destination contracts, if there is a reasonable expectation of the goods reaching destination within the accounting period. Revenue is recognised even if goods are retained with the Company at the request of the customer.

b. In the case of ex-works contracts, when the specified goods are unconditionally appropriated to the contract after prior inspection and acceptance, if required.

c. In the case of contracts for supply of complex equipments/systems where the normal cycle time of completion/delivery period is more than 24 months and the value of the equipment/system is more than Rs. 100 Crores, revenue is recognised on the “percentage completion” method. Percentage completion is based on the ratio of actual costs incurred on the contract upto the reporting date to the estimated total cost of the contract.

Since the outcome of such a contract can be estimated reliably only on achieving certain progress, revenue is recognised upto 25% progress only to the extent of costs. After this stage, revenue is recognised on proportionate basis and a contingency provision equal to 20% of the surplus of revenue over costs is made while anticipated losses are recognised in full.

d. If the sale price is pending finalisation, revenue is recognised on the basis of price expected to be realised. Where break up prices of sub units sold are not provided for, the same are estimated.

e. Price revisions and claims for price escalations on contracts are accounted on admittance.

f. Where installation and commissioning is stipulated and price for the same agreed separately, revenue relating to installation and commissioning is recognised on conclusion of installation and commissioning activity. In case of a composite contract, where separate fee for installation and commissioning is not stipulated and the supply is effected and installation and commissioning work is pending, the estimated costs to be incurred on installation and commissioning activity is provided for and revenue is recognised as per the contract.

g. Sales exclude Sales Tax / Value Added Tax (VAT) and include Excise Duty.

(ii) Other income is recognised on accrual.

4. FIXED ASSETS AND CAPITAL WORK-IN-PROGRESS:

(i) Tangible Assets:

Tangible Fixed Assets are stated at cost less accumulated depreciation / amortisation including where the same is acquired in full or in part with Government grant. Cost for this purpose includes all attributable costs for bringing the asset to its location and condition, cost of computer software which is an integral part of the related hardware, and also includes borrowing costs during the acquisition / construction phase, if it is a qualifying asset requiring substantial period of time to get ready for intended use. The cost of Fixed Assets acquired from a place outside India includes the exchange differences if any, arising in respect of liabilities in foreign currency incurred for acquisition of the same upto 31.03.2007.

45

ANNUAL REPORT 2009 - 10

Capital work-in-progress comprises supply-cum-erection contracts, the value of capital supplies received at site and accepted, capital goods in transit and under inspection and outstanding advances paid to acquire Fixed Assets and the cost of Fixed Assets that are not yet ready for their intended use as at the balance sheet date.

(ii) Intangible Assets:

The cost of software (which is not an integral part of the related hardware) acquired for internal use and resulting in significant future economic benefits, is recognised as an intangible asset in the books of accounts when the same is ready for use.

(iii) Impairment of Assets:

The Company assesses the impairment of assets with reference to each Cash Generating Unit (CGU) at each Balance Sheet date if events or changes in circumstances, based on internal and external factors, indicate that the carrying value may not be recoverable in full. The loss on account of impairment, which is the difference between the carrying amount and recoverable amount, is accounted accordingly. Recoverable amount of a CGU is its Net Selling Price or Value in Use whichever is higher. The Value in Use is arrived at on the basis of estimated future cash flows discounted at Company’s pre-tax borrowing rates.

Reversal of impairment provision is made when there is an increase in the estimated service potential of an asset, either from use or sale, on reassessment after the date when impairment loss for that asset was last recognised.

5. DEPRECIATION / AMORTISATION

Tangible depreciable Fixed Assets are generally depreciated on straight-line method at the rates (or higher rates as disclosed) and in the manner prescribed in Schedule XIV to the Companies Act, 1956. Special instruments are amortised over related production. Intangible Assets are amortised over a period of three years on straight-line method. Prorata depreciation / amortisation is charged from / upto the date on which the assets are ready to be put to use / are deleted or discarded. Leasehold land is amortised over the period of lease.

6. BORROWING COSTS

Borrowing costs that are specifically attributable to qualifying assets as defined in Accounting Standard AS 16 are added to the cost of such assets until use or sale and the balance expensed in the year in which the same is incurred.

7. RESEARCH & DEVELOPMENT EXPENDITURE

Research and Development expenditure other than on specific development-cum-sales contracts is charged off as expenditure when incurred. R & D expenditure on development cum sale contracts is treated at par with other sales contracts. Such expenditure on Fixed Assets is capitalised.

8. GOVERNMENT GRANTS

All Grants from Government are initially recognised as Deferred Income.

The amount lying in Deferred Income on account of acquisition of Fixed Assets is transferred to the credit of Profit and Loss Account in proportion to the depreciation charged on the respective assets to the extent attributable to Government Grants utilised for the acquisition.

The amount lying in Deferred Income on account of Revenue Expenses is transferred to the credit of Profit and Loss Account to the extent of expenditure incurred in the ratio of the funding to the total sanctioned cost, limited to the grant received.

Grants in the nature of promoter’s contribution are credited to Capital Reserve.

9. INVESTMENTS

(i) Investments are categorised as Trade or Non-Trade. Trade investments are the investments made to enhance the Company’s business interests.

(ii) Investments are further classified either as long-term or current based on the management’s intention at the time of purchase. Long term investments are valued at acquisition cost. Any diminution in the value other than of temporary nature is provided for. Current investments are carried at lower of cost or fair value.

10. INVENTORY VALUATION

All inventories of the Company other than disposable scrap are valued at lower of cost or net realisable value. Disposable scrap is valued at estimated net realisable value. Cost of materials is ascertained by using the weighted average cost formula. Cost of work in progress and finished goods include materials, direct labour and appropriate overheads. Finished goods at factories include applicable excise duty. Adequate provision is made for inventory which are more than five years old which may not be required for further use.

46

ANNUAL REPORT 2009 - 10

11. SUNDRY DEBTORS

(i) Full provision is made for all debts considered doubtful of recovery having regard to the following considerations:

a. Time barred debts from government / government departments / government companies are generally not treated as doubtful debts.

b. Where debts are disputed in legal proceedings, provision is made if any decision is given against the Company even if the same is taken up on appeal to higher authorities / courts.

(ii) Provision for bad and doubtful debts is generally made for debts outstanding for more than three years, excepting those which are contractually not due as per the terms of the contract or those which are considered realisable based on a case to case review.

12. INCOME TAX

Tax expense comprising current tax after considering deferred tax and fringe benefit tax as determined under the prevailing tax laws are recognised in the Profit and Loss Account for the period.

Certain items of income and expenditure are not considered in tax returns and financial statements in the same period. The net tax effect calculated at the current enacted tax rates of this timing difference is reported as deferred income tax asset / liability. The effect on deferred tax assets and liabilities due to change in such assets / liabilities as at the end of the accounting period as compared to the beginning of the period and due to a change in tax rates are recognised in the Profit and Loss Account for the period.

13. PROVISION FOR WARRANTIES

Provision for expenditure on account of performance guarantee & replacement / repair of goods sold is made on the basis of trend based estimates.

14. FOREIGN CURRENCY TRANSACTIONS

Foreign exchange transactions including that of integral foreign branches are recorded using the exchange rates prevailing on the dates of the respective transactions. Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date are translated at period-end rates. The resultant exchange difference arising from settlement of transactions during the period and translations at the period end, except those upto 31.03.2007 relating to acquisition of Fixed Assets from a place outside

India, is recognised in the Profit and Loss Account. Exchange differences relating to the acquisition of Fixed Assets were adjusted in the carrying cost of the Fixed Assets till 31.03.2007.

Premium or discount arising at the inception of the forward exchange contract is amortised as income / expenditure over the life of the contract.

The exchange rate differences on the amount of forward exchange contracts between the rate on the last reporting date / the rate at the time of entering into a contract during the period and the rate on the settlement date are recognised in the statement of Profit and Loss in the reporting period in which the exchange rates change. The exchange differences arising from the rates prevailing at the time of entering into the contract and the reporting date are also accrued and adjusted in the Profit and Loss Account.

Any Profit or Loss arising on cancellation or renewal of a forward exchange contract is recognised as income or as expense in the period when the cancellation or renewal occurs.

15. EMPLOYEE BENEFITS

(i) All employee benefits payable wholly within twelve months of rendering the related services are classified as short term employee benefits and they mainly include (a) Wages & Salaries; (b) Short-term compensated absences; (c) Profit-sharing, incentives and bonuses and (d) Non-monetary benefits such as medical care, subsidised transport, canteen facilities etc., which are valued on undiscounted basis and recognised during the period in which the related services are rendered.

Incremental liability for payment of long term compensated absences such as Annual and Sick leave as well as Leave Travel Concession (LTC) is determined as the difference between present value of the obligation determined annually on actuarial basis using projected unit credit method and the carrying value of the provision contained in the balance sheet and provided for.

(ii) Defined contribution to Employee Pension Scheme is made on monthly accrual basis at the applicable rates.

(iii) Incremental liability for payment of Gratuity and Employee Provident Fund to employees is determined as the difference between present value of the

47

ANNUAL REPORT 2009 - 10

obligation determined annually on actuarial basis using Projected Unit Credit Method and the Fair Value of Plan Assets funded in an approved trust set up for the purpose for which monthly contributions are made in the case of provident fund and lump sum contributions in the case of gratuity.

(iv) Incremental liability under BEL Retired Employees Contributory Health Scheme (BERECHS) is determined annually on actuarial basis using Projected Unit Credit Method and provided for.

(v) Actuarial liability for the year is determined with reference to employees at the end of January of each year.

(vi) Payments of voluntary retirement benefits are charged off to revenue on incurrence.

16. PRIOR PERIOD ADJUSTMENTS AND EXTRAORDINARY ITEMS

Prior period adjustments and extraordinary items having material impact on the financial affairs of the Company are disclosed.

17. TECHNICAL KNOW-HOW

Revenue expenditure incurred on technical know-how is charged off to Profit and Loss Account on incurrence.

18. PROVISIONS AND CONTINGENT LIABILITIES

Provisions for losses and contingencies arising as a result of a past event where the management considers it probable that a liability may be incurred, are made on the basis of the best reliable estimate of the expenditure required to settle the present obligation on the Balance Sheet date, and are not discounted to its present value. Provisions are reviewed at each Balance Sheet date and adjusted to reflect the current best estimate. Significant variations thereof are disclosed.

Contingent liabilities to the extent the management is aware, are disclosed by way of notes to the accounts.

19. CASH FLOW STATEMENT

Cash flow statement has been prepared in accordance with the indirect method prescribed in Accounting Standard - 3 on Cash Flow Statements.

For M/s RGN Price & Co. Ashwani Kumar DattChartered Accountants Chairman & Managing Director

H S Venkatesh Partner M G RaghuveerMembership No. 026666 Director (Finance)Firm Regn No. 002785S

Place : Bangalore C R PrakashDate : 25th June 2010 Company Secretary

48

ANNUAL REPORT 2009 - 10

Balance Sheet as at 31st March 2010(Rs. in Lakhs)

ScheduleAs at

31.3.2010

As at

31.3.2009

SOURCES OF FUNDSShareholders Funds

Share Capital 1 8,000.00 8,000.00Reserves & Surplus 2 424,525.59 370,368.15

432,525.59 378,368.15Government Grants 3 2,041.96 2,344.31Loan Funds

Secured Loans 4 72.61 121.08Unsecured Loans - -

72.61 121.08434,640.16 380,833.54

APPLICATION OF FUNDSFixed Assets

Gross Block 170,217.05 157,990.36Less: Depreciation 121,220.77 111,244.63Net Block 5 48,996.28 46,745.73Capital Work-in-Progress 6 3,142.85 4,672.16

52,139.13 51,417.89Investments 7 1,198.11 1,198.11Deferred Tax Assets 15,673.88 14,661.91(Refer Note No. 21 of Schedule 21)Current Assets, Loans & Advances

Inventories 8 244,870.52 242,096.11Sundry Debtors 9 216,836.20 227,652.76Cash & Bank Balances 10 357,840.50 264,194.52Loans & Advances 11 43,332.83 49,754.61

862,880.05 783,698.00Less: Current Liabilities and Provisions

Current Liabilities 12 443,102.49 413,853.75Provisions 13 54,148.52 56,288.62

497,251.01 470,142.37Net Current Assets 365,629.04 313,555.63Miscellaneous Expenditure - -(to the extent not written off or adjusted)

434,640.16 380,833,54

Accounting Policies and Schedules 1 to 22 form part of Accounts.

As per our report of even date attached.

For R G N Price & Co. Ashwani Kumar Datt Chartered Accountants Chairman & Managing Director

H S Venkatesh Partner M G RaghuveerMembership No. 026666 Director (Finance)Firm Regn No. 002785S

Place : Bangalore C R PrakashDate : 25th June 2010 Company Secretary

49

ANNUAL REPORT 2009 - 10

Profit and Loss Account for the year ended 31st March 2010(Rs. in Lakhs)

Schedule Year ended31.3.2010

Year ended31.3.2009

INCOMESales less returns 501,539.47 450,268.38Revenue from Long Term Contracts - 1,908.50Income from services 20,437.93 10,192.01Turnover (Gross) 521,977.40 462,368.89Less: Excise Duty 3,933.52 4,015.50Turnover (Net) 518,043.88 458,353.39Other revenues 14 36,334.89 22,571.07Accretion / (Decretion) to Work-in-Progress, Finished Goods and Scrap 15 2,810.80 64,958.38Profit on Sale of Fixed Assets (Net) 341.96 105.69Transfer from Grants 964.34 320.29

558,495.87 546,308.82EXPENDITUREConsumption of Raw Materials and Components 227,395.21 236,630.71Consumption of Stores & Spares 4,134.69 3,886.68Purchase of Finished Goods 70,923.75 63,588.24Employees Remuneration and Benefits 16 100,958.47 75,579.35Other Expenses of Manufacturing, Administration, Selling and Distribution 17 35,813.23 37,591.91Interest 18 53.48 1,076.85Depreciation / Amortisation on Fixed Assets 11,594.23 10,559.77

450,873.06 428,913.51Less: Expenditure allocated to Capital Jobs 35.74 37.36

450,837.32 428,876.15Profit before Prior Period, exceptional and extraordinary items 107,658.55 117,432.67Less: Exceptional Items - Expense 19 3,134.91 7,847.47

104,523.64 109,585.20Less: Extraordinary items - -Profit for the Year 104,523.64 109,585.20Less: Prior Period Items (Net) 20 21.29 (98.39)Profit Before Tax (PBT) 104,502.35 109,683.59Less: Provision for Taxation

- Current Year 33,500.00 34,727.00- Earlier Years (72.78) 419.03- Deferred Taxes (1,011.97) (418.41)- Fringe Benefit Tax - 380.00- Total Provision for Taxation 32,415.25 35,107.62

Profit After Tax (PAT) 72,087.10 74,575.97Less: Transfer to Capital Reserve (Capital Profit on sale of fixed assets included above) 90.77 8.73Add: Balance Brought Forward from previous year 177,236.84 160,172.05Profit available for appropriation 249,233.17 234,739.29Appropriations:Dividends:

Interim Dividend 4,800.00 4,800.00Proposed Final Dividend 10,560.00 10,160.00

Dividend Tax 2,569.66 2,542.45Transfer to General Reserve 40,000.00 40,000.00Balance carried to Balance Sheet 191,303.51 177,236.84

249,233.17 234,739.29Notes to Accounts 21Balance Sheet Abstract & Company’s General Business Profile 22

Earnings per Share (Equity Shares of Rupees Ten each) in Rupees:Basic & Diluted:Before Extraordinary Item Rs. 90.11 93.22After Extraordinary Item Rs. 90.11 93.22Face Value of share Rs. 10) 10

Number of Shares used in computing earnings per share:Basic & Diluted 80,000,000) 80,000,000

Accounting Policies and Schedules 1 to 22 form part of Accounts.

As per our report of even date attached.

For R G N Price & Co. Ashwani Kumar Datt Chartered Accountants Chairman & Managing Director

H S Venkatesh Partner M G RaghuveerMembership No. 026666 Director (Finance)Firm Regn No. 002785S

Place : Bangalore C R PrakashDate : 25th June 2010 Company Secretary

50

ANNUAL REPORT 2009 - 10

Schedules to Financial Statements(Rs. in Lakhs)

Particulars As at31.3.2010

As at31.3.2009

SCHEDULE – 1

Share Capital

Authorised Capital100,000,000 (100,000,000) Equity Shares of Rs. 10 each 10,000.00 10,000.00

Issued, Subscribed & Paid-up Capital80,000,000 (80,000,000) Equity Shares of Rs. 10 each 8,000.00 8,000.00

SCHEDULE – 2

Reserves & Surplus

Capital Reserve

a) Land valuation Reserve 200.64 200.64

b) Capital Profit:

At the beginning of the year 757.49 748.76

Add: Transfer from Profit & Loss Account 90.77 8.73

848.26 757.49

c) On acquisition of Machilipatnam Unit 0.85 0.85

0.85 0.85

d) General Investment Subsidy for Kotdwara Unit 50.00 50.00

1,099.75 1,008.98

General Reserve

At the beginning of the year 192,122.33 152,122.33

Add: Transfer from Profit & Loss Account 40,000.00 40,000.00

232,122.33 192,122.33

Surplus

Balance carried from P & L Account 191,303.51 177,236.84

424,525.59 370,368.15

SCHEDULE – 3

Government Grants

Grant from Government for Research and other purposes

At the beginning of the year 2,344.31 2,018.85

Add: Additions during the year 661.99 645.75

Less: Transfer to Profit & Loss Account 964.34 320.29

2,041.96 2,344.31

2,041.96 2,344.31

SCHEDULE – 4

Secured Loans

Cash Credit from Banks secured by hypothecationof Inventories and Book debts - -

Liability on Leased Assets – (Secured by vehicles on lease) 72.61 121.08

72.61 121.08

51

ANNUAL REPORT 2009 - 10Sc

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52

ANNUAL REPORT 2009 - 10

Schedules to Financial Statements (Contd.)(Rs. in Lakhs)

ParticularsAs at

31.3.2010As at

31.3.2009

SCHEDULE – 6Capital Work in Progress at CostCivil Construction 1,046.90 494.48Plant, Machinery etc., 1,584.04 2,747.13Capital Goods in Transit & under Inspection 557.67 443.26Less: Provision 368.03 368.03

189.64 75.23Advances on account of Capital items 128.88 1,248.09Less: Provision 0.29 0.36

128.59 1,247.73Intangible Assets – Enterprise Resource Planning (ERP)

– under implementationOpening Balance 107.59 112.41Add: Amount incurred during the year 353.70 406.19

461.29 518.60Less: Amount Capitalised during the year 267.61 411.01

193.68 107.593,142.85 4,672.16

SCHEDULE – 7Investments at Cost – Long TermNon-tradeUnquotedInvestment in Shares / Bonds:40 Shares of Rs. 50 each fully paid inCuffe Parade Persopolis Premises Co-op. Society, Mumbai 0.02 0.0210 Shares of Rs. 50 each fully paid inSukh Sagar Premises Co-op. Society, Mumbai 10 Shares of Rs. 50 each fully paid inShri Sapta Ratna Co-op. Society Ltd., Mumbai 0.01 0.015 Shares of Rs. 50 each fully paid inDalamal Park Co-op. Society Ltd., Mumbai30 Shares of Rs. 50 each fully paid inChandralok Co-op. Housing Society Ltd., Pune 0.02 0.02Note: These are in respect of apartments owned by the Company,cost of which is included under Fixed Assets

TradeUnquotedSubsidiary:

17,00,223 (17,00,223) Equity Shares of Rs. 100 each fully paid in BEL Optronic Devices Ltd., Pune 936.08 936.08

Others:26,00,000 (26,00,000) Equity Shares of Rs. 10 each fully paid in GE BE Private Ltd., Bangalore 260.00 260.003,18,745 (3,18,745) Equity Shares of Rs. 10 each fully paid in BEL Multitone Pvt. Ltd., Bangalore 31.88 31.88Less: Provision for Diminution in value of investment 29.90 29.90

1.98 1.981,198.11 1,198.11

Aggregate value of unquoted shares 1,198.11 1,198.11

53

ANNUAL REPORT 2009 - 10

Schedules to Financial Statements (Contd.)(Rs. in Lakhs)

ParticularsAs at

31.3.2010As at

31.3.2009

SCHEDULE – 8

Inventories

Stores and Spares 2,052.85 2,490.52

Raw Materials & Components 133,459.60 128,684.32

Materials in Transit and under Inspection 6,069.28 10,344.86

Less: Provision 200.66 114.18

5,868.62 10,230.68

Finished Goods 14,406.82 18,412.07

Work-in-Progress 97,824.51 91,017.51

Disposable Scrap 78.05 69.00

253,690.45 250,904.10

Less: Provision for obsolescence 8,819.93 8,807.99

244,870.52 242,096.11

SCHEDULE – 9

Sundry Debtors

Debts – Considered Good:

Debts over six months 100,080.13 85,278.06

Other debts 116,756.07 142,374.69

216,836.20 227,652.75

Debts – Considered Doubtful:

Debts over six months 35,753.53 31,649.59

Other debts 4,316.64 3,186.08

40,070.17 34,835.67

256,906.37 262,488.42

Less: Provision for doubtful debts 40,070.17 34,835.66

216,836.20 227,652.76

Particulars of Sundry Debtors:

Considered good in respect of which the

Company is fully secured 58.31 67.37

Considered good for which the Company holds

no security other than the debtors personal security 216,777.89 227,585.39

216,836.20 227,652.76

SCHEDULE – 10

Cash and Bank Balances

Cash and Cheques on hand 14,589.61 21,926.23

With Scheduled Banks:

Current Accounts 45,067.50 33,166.29

Deposit Accounts (incl. Accrued Interest) 298,166.58 209,083.06

Unpaid Dividend Account 16.81 18.94

357,840.50 264,194.52

54

ANNUAL REPORT 2009 - 10

Schedules to Financial Statements (Contd.)(Rs. in Lakhs)

ParticularsAs at

31.3.2010As at

31.3.2009

SCHEDULE – 11

Loans and Advances

Loans to Employees * 1,814.42 1,974.33

Loans to Others 216.09 219.39

Advances Recoverable in cash or in kind or for value to be received:

Advances to Employees * 820.42 1,211.37

Advances for Purchase 22,957.20 32,123.52

Claims Receivable – Purchases 3,244.29 3,157.96

Advances to others 6,076.89 4,772.36

33,098.80 41,265.21

Advance payment of Income Tax (including FBT)[Net of Provisions for Tax – Rs. 104,886.74 (Rs. 107,623.77)] 5,498.01 3,633.16

Balances with Customs, Port Trust and Other

Government Authorities 1,667.97 1,633.31

Deposits 2,670.39 2,512.07

44,965.68 51,237.47

Less: Provision for Doubtful Loans, Advances and Claims 1,632.85 1,482.86

43,332.83 49,754.61

Particulars of Loans and Advances:

Considered good in respect of which the Company is fully secured - -

Considered good for which the Company holds no security other than debtors personal security 43,332.83 49,754.61

Considered doubtful and provided for 1,632.85 1,482.86

44,965.68 51,237.47

* Includes due by Directors & Secretary Rs. 0.45 (Rs. 1.29) [Maximum amount due at any time during the year Rs. 0.80 (Rs. 2.00)]

SCHEDULE – 12

Current Liabilities

Sundry Creditors:

Dues to Micro and Small Enterprises 166.79 154.98

Creditors - Others 80,113.12 95,966.84

Subsidiary Company 50.13 -

80,330.04 96,121.82

Other Liabilities 12,130.85 15,934.56

Advances / Progress Payments received from Customers 350,586.24 301,739.88

Investor Education & Protection Fund to be credited when due:

– Unpaid Dividend Account* 16.81 18.94

– Unpaid Matured Deposits* 38.55 38.55

443,102.49 413,853.75* Amount to be transferred to the Investor Education & Protection Fund as

at Balance Sheet date. NIL NIL

55

ANNUAL REPORT 2009 - 10

Schedules to Financial Statements (Contd.)(Rs. in Lakhs)

ParticularsAs at

31.3.2010As at

31.3.2009

SCHEDULE – 13ProvisionsTaxation (Including FBT) [Net of Advance Tax Rs. 104,886.74(Rs. 107,623.77) refer advance tax Schedule - 11]

- -

Proposed Final Dividend 10,560.00 10,160.00Dividend Tax 1,753.88 1,726.69Employee Benefits :Gratuity 3,198.76 12,294.59Long-term compensated absences 16,791.87 13,898.72BERECHS 12,327.76 10,413.56Proposed Pension Scheme 4,817.56 -Contingencies towards Long-term Contracts 598.75 3,957.27Performance Warranty 4,099.94 3,837.79

54,148.52 56,288.62

Particulars Year ended31.3.2010

Year ended31.3.2009

SCHEDULE – 14Other RevenuesSale of Scrap & Surplus Stores 635.19 613.91Export Benefits 174.09 169.81Income from Long - Term Trade Investments – Dividend Gross (TDS – Nil) 260.00 260.00Interest Income – Gross [TDS 2,180.45 (3,631.64)] 16,986.89 16,071.75Interest Income from Staff / Income Tax refund / others 152.35 185.34Transport Receipts 224.56 65.86Rent Receipts 249.95 122.43Canteen Receipts 377.87 141.79Water Charges collected 32.36 32.55Provision withdrawn - Contingencies towards long term contracts 3,358.52 -Provision withdrawn - Doubtful Debts, LD, Obsolete Inventory etc. 4,473.66 2,991.86Provision withdrawn - Others 522.18 593.65Foreign Exchange Rate Differential (Gain) 6,663.21 -Miscellaneous 2,224.06 1,322.12

36,334.89 22,571.07

SCHEDULE – 15Accretion / (Decretion) to Work-in-progress, Finished Goods and ScrapWork-in-Progress:

Closing Balance 97,824.51 91,017.51Opening Balance 91,017.51 38,167.16

6,807.00 52,850.35Finished Goods:

Closing Stock 14,406.82 18,412.07Opening Stock 18,412.07 6,294.02

(4,005.25) 12,118.05Scrap:

Closing Stock 78.05 69.00Opening Stock 69.00 79.02

9.05 (10.02)2,810.80 64,958.38

SCHEDULE – 16Employees Remuneration and BenefitsSalaries, Wages and Bonus / Ex-gratia 78,169.80 57,074.96Gratuity 4,199.17 5,047.12Contribution to Provident and Pension Funds 7,253.26 4,506.23Provision for BEL Retired Employees Contributory Health Scheme 1,914.20 1,181.89Welfare Expenses[including Salaries 1,031.00 (999.53), PF Contribution 62.56 (63.97)] 9,422.04 7,769.15

100,958.47 75,579.35

56

ANNUAL REPORT 2009 - 10

Schedules to Financial Statements (Contd.)(Rs. in Lakhs)

ParticularsYear ended

31.3.2010Year ended

31.3.2009

SCHEDULE – 17Other Expenses of Manufacturing,Administration, Selling & DistributionPower and Fuel [after adjusting Rs. 421.24 (Rs. 559.07)income from wind energy] 2,411.62 2,598.57Water charges 310.21 291.17Royalty & Technical Assistance 1,007.72 122.46Rent 1,121.98 442.13Rates & Taxes 270.23 285.32Insurance 323.36 426.73Auditors’ Remuneration:

Audit 7.08 7.08Tax Audit 1.60 1.60Certification 1.99 1.99Expenses 6.37 5.94

17.04 16.61Repairs & Maintenance:

Buildings 1,399.17 1,891.14Plant & Machinery 579.72 566.18Others 4,120.87 3,757.17

6,099.76 6214.49Bank Charges 489.96 471.96Printing and Stationery 349.06 388.11Discounts, Allowances & Rebate 3.65 2.34Advertisement & Publicity 515.93 827.59Travelling Expenses 3,731.48 3,651.88Hiring Charges for Van & Taxis 393.84 484.57Excise Duty – Others 254.55 63.01Packing & Forwarding 1,164.77 830.77Bad Debts & Advances written off 104.39 2,637.33Less: Charged to Provisions 101.11 2,636.90

3.28 0.43Provision for Obsolete / Redundant Materials 1,188.51 2,179.99Provisions for Doubtful Debts, Liquidated Damages, Customers’ Claims and Disallowances 8,803.79 7,276.50Provision for Doubtful Advances, Claims 260.03 237.96Provision for Warranties 262.15 13.92Write off of Raw Materials, Stores & Components due to obsolescence and redundancy 203.03 21.89Write - back of Material written off earlier - (29.77)Less: Charged to Provisions 179.22 -

23.81 (7.88)Sponsorship / Contribution for Professional & Social Activities 422.59 177.35Provision for Contingencies towards Long-term Contracts - 148.12Others:Expenditure on Service Orders / other Misc. Direct Expenditure 2,963.76 2,301.18Foreign Exchange Rate Differential (Loss) - 3,763.21After Sales Service 391.63 679.80Telephones 609.83 609.54Expenditure on Seminars & Courses 510.94 530.51Selling Commission 87.85 424.64Other Selling Expenses 83.77 421.04Miscellaneous 1,736.13 1,717.89

6,383.91 10,447.8135,813.23 37,591.91

57

ANNUAL REPORT 2009 - 10

Schedules to Financial Statements (Contd.)(Rs. in Lakhs)

ParticularsYear ended

31.3.2010Year ended

31.3.2009

SCHEDULE – 18

Interest

On Cash Credit - 0.16

Interest on Fixed Loan - Lease Financing 13.55 16.56

On Dues to Micro & Small Enterprises 2.50 1.20

On Others 37.43 1,058.93

53.48 1,076.85

SCHEDULE – 19

Exceptional Items

Company Contribution to proposed Pension Scheme for the

period from 1.1.2007 to 31.03.2009 3,134.91 -

Gratuity past liability on account of enhancement in limit from Rs. 3.50 lakhs toRs. 10 lakhs w.e.f. 1.1.2007 till 31.03.2008 - 7,847.47

3,134.91 7,847.47

SCHEDULE – 20

Prior Period Items

Prior Period Income:

Sales - (17.33)

Others 109.27 118.61

Total Prior Period Income (A) 109.27 101.28

Prior Period Expenditure:

Material Consumption - 1.22

Salaries & Wages 1.77 -

Depreciation (0.50) (0.48)

Others 129.29 2.15

Total Prior Period Expenditure (B) 130.56 2.89

Total Prior Period Items Net (Income) Expenditure [(A) - (B)] 21.29 (98.39)

58

ANNUAL REPORT 2009 - 10

2009-10 2008-09Gross Expenditure 29,161.21 22,499.77

IncomeSales 1,476.53 651.93Accretion / (Decretion) to

WIP & FG2,221.42 426.81

Others 1,191.85 525.65Gross Income 4,889.80 1,604.39Net Expenditure 24,271.41 20,895.38

5. The Company has made certain modifications / changes to accounting policies during the year 2009-10 which are generally clarificatory in nature except in respect of policy on Employee Benefits. The changes made in Employee Benefits and the impact thereof is as under:

- Leave Travel Concessions benefit given to employees were hitherto treated as short-term benefits and accounted on payment basis. As per the expert opinion given by Expert Advisory Committee (EAC) of The Institute of Chartered Accountants of India (ICAI), the liability towards this is a long-term benefit and accordingly should be actuarially valued. As per the actuarial valuation, the liability as on 31st March 2010 is Rs. 202.75 and this has been accounted in 2009-10.

- As per AS-15®, the liability, if any, towards shortfall in payment of minimum interest by the Company managed Provident Funds is to be actuarially valued and provided for. Accordingly the Company actuarially valued the position as on 31st March 2010 and as per Actuary’s report, no additional liability exists on this account as on 31st March 2010 (31st March 2009 - Rs. Nil).

6. Letters requesting confirmation of Balances have been sent in respect of Sundry Debtors, Sundry Creditors, Advances and Deposits. Wherever replies have been received, reconciliation has been done and provisions / adjustments have been made wherever considered necessary.

7. The Company has analysed indications of impairment of assets of each geographical composite manufacturing unit considered as Cash Generating Units (CGU). On the basis of assessment of internal and external factors, none of the Units has found indications of impairment of its assets and hence no provision is considered necessary.

8. a) In respect of certain Fixed Assets mentioned below, execution of title / sale Deed by the appropriate authorities is pending.

SCHEDULE - 21

Notes forming part of the Accounts for the year ended 31st March, 2010

1. Estimated amount of contracts remaining to be executed on Capital Account and not provided for amounts to Rs. 11,524.66 (Rs. 6,581.64).

2. Exemption has been granted [vide GOI Letter No. 46 / 3 / 2010-CL-III dated 5th March 2010] to the Company from compliance with the following provisions contained in Part II of Schedule VI to the Companies Act, 1956, as amended:

Para Particulars3(i)(a) Details regarding sales in respect of each class of

goods with quantities thereof.3(ii)(a)(1) Value of raw materials consumed giving item wise

break up and quantities thereof.3(ii)(a)(2) Opening and closing stock of goods produced

giving break up in respect of each class of goods with quantities thereof.

3(ii)(d) Value of opening and closing stock of goods, purchases, sales and consumption of raw materials with quantitative break up and Gross Income from services rendered.

4 C Details regarding licensed capacity, installed capacity and actual production in respect of each class of goods manufactured.

4 D (a) Value of imports calculated on CIF basis for the year in respect of raw materials, components, spares and Capital goods.

4 D (c) Value of imported and indigenous raw materials, components and spares consumed and percentage of each to the total consumption.

3. a) Expenditure in foreign exchange on account of royalty, know how, interest and other matters (on payment basis) amounted to Rs. 335.86 (Rs. 555.44).

b) Earnings in foreign exchange on account of exports on FOB basis amounted to Rs. 9,936.71 (Rs. 7,227.96).

4. Expenditure incurred on Research and Development during the year, which are included in the respective natural classification, is given below:

2009-10 2008-09ExpenditureMaterials 7,071.70 3,855.07Employees Remuneration &

Benefits15,421.46 12,914.59

Depreciation 1,867.58 1,559.67

Others 4,800.47 4,170.44

Schedules to Financial Statements (Contd.)(Rs. in Lakhs)

59

ANNUAL REPORT 2009 - 10

Schedules to Financial Statements (Contd.)(Rs. in Lakhs)

(i) Freehold land Rs. 3.75 (Rs. 3.75) (Machilipatnam - 0.516 acres) (ii) Leasehold land Rs. 0.18 (Rs. 0.18) (Ghaziabad) (iii) Buildings Rs. 0.16 (Rs. 0.16) (Ghaziabad)

Deeds containing the terms of transfer / grant of land from State Governments / State Undertakings have not been finalised in respect of 86.78 acres (86.78 acres) pertaining to Panchkula Unit. Out of this, title in respect of land measuring 0.962 acres is under litigation.

Pending finalisation of formal deeds, no provision towards registration and other costs have been made.

b) Pending execution of title / sale deeds and handing over of physical possession of land allotted to BEL Hyderbad by Andhra Pradesh Industrial Infrastruture Corporation (APIIC) admeasuring 5.60 acres (5.60 acres) in Mallapur, Hyderabad, no provision towards registration and other cost has been made in the books of accounts. Cost of land paid to APIIC amounting to Rs. 65.12 (Rs. 65.12) is included in Capital WIP-Advances.

c) Based on a Memorandum of Understanding reached with the Defence authorities, expenditure on civil works was incurred on land allotted to BEL for setting up of the Hyderabad Unit. Pending finalisation of the terms and conditions by the appropriate authorities, the cost of land measuring 25.110 (25.110) acres has not been provided in the books of accounts.

d) Land acquired free of cost from the Government in some units has been accounted at a notional value by corresponding credit to Capital Reserve.

e) The Company has installed Windmill Generator at two locations. The leasehold land of the Windmill Generator-I is capitalised at the nominal value of Rs. 5 (Five Rupees only) as the upfront lease cost is nil. The leasehold land of Windmill Generator-II is capitalised at the cost of Rs. 114.00. In both the cases the lease agreement for the land is pending finalisation.

f) Freehold land of Pune Unit measuring 3897.52 square meters (cost Rs. 0.48) is to be handed over to Pimpri Chinchwad Municipal Corporation for the purpose of road widening at an estimated provisional compensation of Rs. 245.00 based on the rates fixed by Moolya Nirdharan Suchi of Government of Maharastra. Approval from Ministry of Defence, Government of India is awaited.

9. a) In pursuance of the Companies (Amendment) Act, 1988 and Schedule XIV thereof increased rates of depreciation on straight line method in accordance with the Schedule XIV have been adopted wherever required, only on additions after 1.4.1987.

b) Wherever the rates of depreciation applied prior to 1.4.1987 are higher than the rates specified in Schedule XIV to the Companies Act, 1956 they have been continued. However, additions forming part of existing machines are depreciated on the same basis as the original machines.

c) Depreciation for multiple shifts is charged on block of assets for the full year.

d) The straight line rates of depreciation adopted other than those under Schedule XIV are as under:

i) Buildings 2.5% / 5%

ii) Plant andMachinery

10% / 11.31% / 15% / 16.21% / 20% / 25%

iii) Vehicles 20% / 25%

iv) Furniture, Fixture and other equipment

10% / 15% / 20% / 25%

v) Assets under Build, Own, Operate andTransfer (BOOT)Contract

Depreciated over theperiod of Contract

vi) Intangible Assets Amortised over three years

10. a) Raw Materials and Components include Rs. 2,765.88 (Rs. 1,869.89) being materials with subcontractors, out of which Rs. 163.38 (Rs. 160.75) of material is subject to confirmation and reconciliation. The impact, if any, on consequent adjustment is considered not material.

b) Pending reconciliation, stock verification discrepancies for the year [shortages of Rs. 141.36 (Rs.63.99) and surplus of Rs. 82.30 (Rs. 16.28)] have not been adjusted in the accounts.

11. Liability, if any, in respect of labour matters under dispute before various judicial authorities is not ascertainable, but is expected to be not material.

12. The exchange rate variations arising on transactions in foreign currency between the date of recording of such transactions and the settlement / the Balance Sheet date resulting in a net exchange gain of Rs. 6663.21 (Loss

60

ANNUAL REPORT 2009 - 10

Rs. 3,763.21) during the year have been included in the Profit and Loss Account in Schedule No. 14 - “Other Revenues” [Previous Year: in Schedule No. 17 - “Other Expenses of Manufacturing, Administration, Selling & Distribution”].

13. “Excise Duty, which is included in turnover (Gross) is shown as a deduction from turnover (Gross) in the Profit and Loss Account. “Excise Duty - Others” included in the Schedule 17 - “Other Expenses of Manufacturing, Administration, Selling & Distribution” represents incremental provision of Excise Duty on Finished Goods, Excise Duty on Sale of Scrap etc.

14. The information regarding amounts due to Micro and Small Enterprises as required under Micro, Small & Medium Enterprises Development (MSMED) Act, 2006 as on 31st March 2010 is furnished below:

i) The principal amount and the interest due thereon remaining unpaid to any supplier as at 31st March 2010:

Principal Amount Rs. 163.95 (Rs. 153.62) Interest Rs. 1.74 (Rs. 0.47)

ii) The amount of interest paid by the Company along with the amount of the payment made to the supplier beyond the appointed day during the year ending 31st March 2010:

Principal Amount Rs. 7.85 (30.89) Interest Rs. 0.80 (0.33)

iii) The amount of interest due and payable for the period of delay in making payment (which have been paid but beyond the appointed day during the year) but without adding the interest specified under the Act: Rs. 0.17 (0.79).

iv) The amount of interest accrued and remaining unpaid at the end of the year ending 31st March 2010: Rs. 2.84 (Rs. 1.36)

v) The amount of further interest remaining due and payable even in the succeeding years, until such date when the interest dues as above are actually paid to the small enterprise, for the purpose of disallowance as a deductible expenditure under section 23 of MSMED Act: Rs. 2.50 (Rs. 1.20)

The information has been given in respect of such suppliers to the extent they could be identified as Micro & Small Enterprises on the basis of information available with the Company.

15. Contingent Liabilities:

a. Claims not

acknowledged as debts

Rs. 8,654.70 (Rs. 4,506.46)

b. Outstanding

Letters of Credit

Rs. 22,658.62 (Rs. 33,714.78)

c. Others Rs. 397.30 (Rs. 291.81)d. Provisional Liquidated Damages up to 31.03.2010 on

unexecuted customer orders where the delivery date has expired is Rs. 4,873.96 (Rs. 6,852.52).

16. The following disclosure is made as per AS-7 (Accounting for Construction Contracts) in respect of accounting policy 3i(c) relating to revenue recognition on contracts:

a) Contract revenue recognised during the year Rs. Nil (Rs. 1,908.50).

b) No contract revenue is recognised in the current year. In the previous year, contract revenue was recognised using the percentage of completion method. Ratio of the actual cost incurred on the contracts upto 31.03.2009 to the estimated total cost of the contracts, was used to determine the stage of completion.

c) Aggregate amount of cost incurred: Rs. 43,009.84 (Rs. 70,613.40).

d) Recognised profit upto 31.03.2010 (net of provision for contingency): Rs. 2,817.66 (Rs. 15,829.10).

e) Amount of advances received and outstanding as at 31.03.10 - Rs. 48.85 (Rs. 48.88)

f) The amount of retention Rs. 1,404.70 (Rs. 8,111.26)

17. Provision for wage revision in respect of non-executives has been made in the accounts of 2009-10 based on the wage settlement reached with Negotiating Trade Unions (NTUs) during May 2010. This includes Rs. 7,987.35 pertaining to the period upto 31st March 2009.

As per the guidelines issued by the Department of Public Enterprises (DPE), GOI on the pay revision for Officers of PSUs, the Company has submitted a proposal to the Ministry of Defence, GOI for a Pension Scheme (Defined Contribution Scheme) for Executives which has been duly considered by the Board of Directors. Pending approval by the Administrative Ministry, a provision for Rs. 4,817.56 has been made in the accounts of 2009-10 which includes Rs. 3,134.91 being the past liability towards management contribution to Pension Scheme for the period up to 31.03.2009 and the same has been treated as an Exceptional item in the Profit and Loss Account.

Schedules to Financial Statements (Contd.)(Rupees in Lakhs) Schedules to Financial Statements (Contd.)

(Rupees in Lakhs)

61

ANNUAL REPORT 2009 - 10

Schedules to Financial Statements (Contd.)(Rupees in Lakhs) Schedules to Financial Statements (Contd.)

(Rupees in Lakhs)

Further, as per the DPE guidelines the Company has formulated a new incentive scheme in lieu of the existing Executive Performance Incentive Scheme (EPI Scheme) for Executives viz. Performance Related Pay (PRP Scheme) effective from the Financial Year 2007-08 which has been duly recommended by the Remuneration Committee and approved by the Board of Directors. Necessary provision on this account has been made in the accounts of 2009-10.

18. As per the provisions of revised Accounting Standard 15, the following information is disclosed in respect of Employee Benefits:

Gratuity Scheme:

The Company has a gratuity scheme for its employees, which is a funded plan. Every year the Company remits funds to the gratuity trust to the extent of shortfall of the assets over the fund obligations, which is determined through actuarial valuation. As per the gratuity scheme, gratuity is payable to an employee on the cessation of his employment after he has rendered continuous service for not less than 5 (five) years in the Company. For every completed year of service or part thereof in excess of six months, the Company shall pay gratuity to an employee at the rate of 15 (fifteen) days’ salary based on the last drawn basic & dearness allowance.

The following tables summarise the components of net benefit expense recognised in the Profit and Loss Account and the funded status and amounts recognised in the Balance Sheet for the plan as furnished in the Disclosure Report provided by the actuary:

GRATUITY SCHEME:

Particulars 2009-10 2008-09

i) Change in Benefit Obligations : Present Value of Obligation as at the

beginning of the year35,120.87 24,027.68

Current Service Cost 2,784.62 2,351.75 Interest Cost 2,707.55 1,724.57

Past Service Cost (Non vested Benefits) - - Past Service Cost (vested Benefits) - 7,192.98

Actuarial (gain) / Loss 3,525.25 1,890.61 Benefits paid (2,552.91) (2,066.72)

Present Value of Obligation as at the end of the period

41,585.38 35,120.87

ii) Change in Fair Value of Plan Assets:

Fair Value of Plan Assets at the beginning of the year

24,579.01 23,785.92

Particulars 2009-10 2008-09

Expected return on Plan Assets 2,794.49 2,252.46

Contributions 10,541.86 841.76

Benefits paid (2,552.91) (2,066.72)

Actuarial gain / (loss) on Plan Assets 3,074.51 (234.41)

Fair Value of Plan Assets at the end of the period

38,436.96 24,579.01

Excess of Obligation over Plan Assets 3,148.42 10,541.86

iii) Expenses Recognised in the Statement of Profit & Loss A/c

Opening Net Liability - -

Current Service Cost 2,784.62 2,351.75

Interest Cost 2,707.55 1,724.57

Expected return on Plan Assets (2,794.49) (2,252.46)

Net Actuarial (gain) / loss recognised in the period

450.73 2,125.02

Past Service Cost (Non vested Benefits) - -

Past Service Cost (vested Benefits) - 7,192.98

Expenses Recognised in the Statement of Profit & Loss [Excluding Rs. 1,050.75 (Rs. 1,752.73) in respect of retired employees which has been provided on actual basis]

3,148.42 11,141.86

Actual Return on Plan Assets 9.78% 9.72%

iv) Amounts recognised in Balance Sheet:

Present Value of Obligation as at the end of the period

41,585.38 35,120.87

Fair Value of Plan Assets at the end of the period

38,436.96 24,579.01

Funded Status (3,148.42) (10,541.86)

Unrecognised Actuarial (gains) / losses - -

Liability recognised in Balance Sheet [excluding Rs. 1,050.75 (1,752.73) in respect of retired employees which has been provided on actual basis & after considering payment of Rs. 1,000.41 to the Trust during the year]

3,148.42 10,541.86

v) Category of Assets as at March 31 2010

State Govt. Securities 14.30% 23.94%

Govt. of India Securities 2.77% 9.14%

High Quality Corporate Bonds 22.99% 45.64%

Special Deposit 0.61% 0.97%

Investment with Insurer 59.33% 20.31%

vi) Principal Assumptions:

Discounting rate 8.00% 7.50%

Salary escalation rate 7.50% 6.25%

Expected rate of Return on Plan Assets 9.78% 9.72%

62

ANNUAL REPORT 2009 - 10

BEL Retired Employee’s Contributory Health Scheme (BERECHS):

The Company has a contributory health scheme for its retired employees “BEL Retired Employees’ Contributory Health Scheme” (BERECHS), which is a non-funded scheme. The primary objective of the scheme is to provide medical facilities to employees retiring on attaining the age of superannuation, or on VRS. Benefits under the scheme shall be available to the employees who become members and their spouses only. The Company takes insurance cover for in-patient treatment. In addition to the annual insurance premium, the Company bears 50% of the medicine cost and 75% of the cost of diagnostic tests for outpatient treatment and for the treatment of specified diseases, the Company bears the full cost of treatment, over and above the insurance coverage.

The following tables summarise the components of net benefit expense recognised in the Profit and Loss Account and the funded status and amounts recognised in the Balance Sheet for the plan as furnished in the disclosure report provided by the actuary:

BEL RETIRED EMPLOYEES CONTRIBUTORY HEALTH SCHEME (BERECHS):

Particulars 2009-10 2008-09i) Change in Benefit Obligations : Present Value of Obligation (PVO) as at

the beginning of the year11,383.04 10,535.00

Current Service Cost 733.26 643.87 Interest Cost 878.45 767.26 Actuarial (gain) / Loss 773.53 46.65 Benefits paid (804.88) (609.74)

Present Value of Obligation as at the end of the period

12,963.40 11,383.04

ii) Change in Fair Value of Plan Assets: Fair Value of Plan Assets at the

beginning of the year- -

Expected return on Plan Assets - - Contributions 804.88 609.74 Benefit paid (804.88) (609.74) Actuarial gain / (loss) - - Fair Value of Plan Assets at the end of

the period- -

iii) Expenses Recognised in the Statement of Profit & Loss

Opening Net Liability - - Current Service Cost 733.26 643.87 Interest on Defined benefit obligation 878.45 767.26 Expected return on Plan Assets - -

Particulars 2009-10 2008-09 Net Actuarial (gain) / loss recognised in

the period773.53 46.65

iv) Expenses Recognised in the Statement of Profit & Loss A/c

2,385.24 1,457.78

Add : Amortisation of Initial Actuarial Liability towards existing employees (valued on 31.03.2004) over 14 years

333.85 333.85

Net Expenses Recognised in the Statement of Profit & Loss A/c (Expenses: Rs. 804.89, Provisions: Rs. 1,914.20)

2,719.09 1,791.63

v) Principal Assumptions :

Discounting Rate 8.00% 7.50%

Rate of increase in compensation level 7.50% 6.25%

Health care costs escalation rate 6.00% 6.00%

Attrition Rate 1.50% 2.00%

vi) Amounts recognised in Balance Sheet :

Present Value of Obligation as at the end of the period

12,963.40 11,383.04

Fair Value of Plan Assets at the end of the period

- -

Funded Status (12,963.40) (11,383.04)

Unrecognised Actuarial (gains) / losses - -

Liability recognised in Balance Sheet (as per actuarial valuation)

12,963.40 11,383.04

Less : Initial actuarial Liability towards existing employees (valued on 31.03.2004) Amortised over 14 years

2,972.56 2,972.56

Add : Amortisation of above initial actuarial liability till 2009-10

2,336.92 2,003.07

Liability recognised in Balance Sheet 12,327.76 10,413.56

vii) Effect of a one percentage point increase in assumed health care cost trend rates on the aggregate of the service cost and interest cost and defined benefit obligation

Effect on the aggregate of the service cost and interest cost

42.63 33.88

Effect on defined benefit obligation 324.08 284.57

viii) Effect of a one percentage point decrease in assumed health care cost trend rates on the aggregate of the service cost and interest cost and defined benefit obligation

Effect on the aggregate of the service cost and interest cost

(42.41) 33.67

Effect on defined benefit obligation (323.35) (284.01)

Long Term Compensated Absence Scheme:

The Company has a Long Term Compensated Absence Scheme for its employees, which is a Non-Funded Scheme. The employees of the Company are entitled to two types of

Schedules to Financial Statements (Contd.)(Rupees in Lakhs)

Schedules to Financial Statements (Contd.)(Rupees in Lakhs)

63

ANNUAL REPORT 2009 - 10

Schedules to Financial Statements (Contd.)(Rupees in Lakhs)

Schedules to Financial Statements (Contd.)(Rupees in Lakhs)

Long Term Compensated Absences: Annual Leave (AL) and Sick leave (SL). The Scheme provides for compensation to employees against the unavailed Leave (both AL & SL) on attaining the age of superannuation, VRS, resignation (only AL) and death. AL can also be encashed during service.

The following table summarises the components of net benefit expense recognised in the Profit & Loss Account and the funded status and amount recognised in the Balance Sheet for the plan as furnished in the disclosure Report provided by the actuary:

Particulars 2009-10 2008-09

i) Expenses Recognised in the Statement of Profit & Loss

Net Expenses Recognised in the Statement of Profit & Loss A/c [Expenses: Rs. 2,348.92, Provisions: Rs. 2,728.41 excluding Provision for Retired Non Executive Employees Rs. 164.74]

5,077.33 4,451.23

ii) Principal Assumptions:

Discounting Rate 8.00% 7.50%

Rate of increase in compensation level 7.50% 6.25%

iii) Amounts to be recognised in Balance Sheet:

Liability recognised in Balance Sheet (as per actuarial valuation) excluding Provision for Retired Non Executive Employees Rs. 164.74

16,627.13 13,898.72

Provident Fund Contributions:

During the year the Company has recognised an amount of Rs. 5,633.16 (Rs. 4,570.20) towards contribution to Employees Provident Fund and Pension Schemes in the Profit and Loss Account. The guidance on implementing AS 15 (Revised) issued by the Institute of Chartered Accountants of India states that provident funds setup by employers that guarantee a specified rate of return and which require interest shortfalls to be met by the employer would be defined benefit plans in accordance with the requirements of paragraph 26(b) of AS 15® and acturially valued.

Pursuant to the Guidance Note, the Company has determined on the basis of actuarial Valuation carried out as at 31st March 2010 that there is no liability towards the interest shortfall on valuation date under para 55 and 59 of AS 15 (R) (having regard to terms of plan that there is no compulsion on the part of the Trust to distribute any part of the surplus, if any, by way of additional interest on PF balances).

The following tables summarise the disclosure report provided by the actuary:

Particulars 2009-10 2008-09i) Change in Benefit Obligations :

Present Value of Obligation as at the beginning of the year 73,834.61 70,481.25

Current Service Cost 15,480.76 14,426.01 Interest Cost 5,060.33 4,750.58 Past Service Cost (Non vested Benefits) - - Past Service Cost (vested Benefits) - - Actuarial (gain) / Loss 2,092.02 (1,542.88) Benefits paid (12,727.15) (14,280.35)

Present Value of Obligation as at the end of the period 83,740.57 73,834.61

ii) Change in Fair Value of Plan Assets:

Fair Value of Plan Assets at the beginning of the year 82,664.65 75,203.16

Expected return on Plan Assets 7,307.34 6,609.82 Contributions 14,422.76 14,955.71 Benefit paid (12,727.15) (14,280.35) Actuarial gain / (loss) on Plan Assets 53.22 176.31

Fair Value of Plan Assets at the end of the period 91,720.82 82,664.65

iii) Expenses Recognised in the Statement of Profit & Loss A/c

Opening Net Liability - - Current Service Cost 15,480.76 14,426.01 Interest Cost 5,060.33 4,750.58 Expected return on Plan Assets (7,307.34) (6,609.82)

Net Actuarial (gain) / loss recognised in the period 2,038.80 (1,719.19)

Past Service Cost (Non vested Benefits) - - Past Service Cost (vested Benefits) - -

Expenses Recognised in the Statement of Profit & Loss A/c 15,272.55 10,847.58

iv) Amounts recognised in Balance Sheet :

Present Value of Obligation as at the end of the period 83,740.57 73,834.61

Fair Value of Plan Assets at the end of the period 91,720.82 82,664.65

Difference (7,980.25) (8,830.04) Unrecognised Actuarial (gains) / losses - - Liability recognised in Balance Sheet - -

v) Amount for the Current Period Present Value of Obligation 83,740.57 73,834.61 Plan Assets 91,720.82 82,664.65 Surplus / (Deficit) 7,113.25 8,830.04

Experience Adjustments on Plan liabilities - (Loss) / Gain (1,572.56) 1,542.88

Experience Adjustments on Plan Assets - (Loss) / Gain 53.22 176.31

vi) Category of Assets as at 31 March 2010 Government of India Securities 25.60% 15.42% State Government Securities 15.28% 20.98% High Quality Corporate Bonds 58.78% 45.37% Equity shares of listed companies 0.00% 0.00% Property 0.00% 0.00% Special Deposit Scheme 0.34% 18.22% Mutual Funds 0.00% 0.01% Cash 0.00% 0.00% Total 100.00% 100.00%

64

ANNUAL REPORT 2009 - 10

Particulars 2009-10 2008-09vii) Principal Assumptions:

Discounting Rate 8.00% 7.50% Salary escalation rate 7.50% 6.25%

Expected rate of Return on Plan Assets 8.75% 8.75%

Experience adjustments for funded schemes

The disclosure with respect to clause 120 (n) of AS-15(R) towards experience adjustments are being made for funded schemes viz. Gratuity. As long term compensated absences and BERECHS are not funded, such disclosure is not required.

Particulars 2009-10 2008-09 2007-08i) Present Value of Obligation as

at the end of the period41,585.38 35,120.87 24,027.68

ii) Fair Value of Plan Assets at the end of the period

38,436.96 24,579.01 23,785.92

iii) Excess of Obligation over Plan Assets – Surplus / (deficit)

(3,148.42) (10,541.86) (241.76)

Experience Adjustmentsiv) Experience Adjustments on

Plan liabilities - (Loss) / Gain(1,485.62) (472.76) (1,529.33)

v) Experience Adjustments on Plan Assets - (Loss) / Gain

3,074.51 (234.41) 47.75

Best Estimate of Contribution to be paid

The best estimate of contribution to be paid towards Gratuity during the annual period beginning after the Balance Sheet is Rs. 3,198.76 (Rs. 12,294.59). In case of Provident Fund, there is no actuarial liability assessed for short fall in interest as at year end.

19. The Company is engaged in manufacture and supply of strategic electronic products primarily to Defence Services and hence it would not be in public interest for the Company to present segment information. For similar reasons the Company has been granted exemption from publication in the annual accounts the quantitative particulars required under Schedule VI to the Companies Act, 1956. The SEBI has also granted exemption, for these reasons, to the Company from publication of segment information required under Accounting Standard 17 (AS 17) in quarterly unaudited financial results. Hence Segment information required under Accounting Standard 17 (AS 17) is not disclosed. Such non-disclosure has no financial effect.

20. As per the provisions of Accounting Standard 19, the following information is disclosed in respect of Finance Lease:

a) The net carrying amount (WDV) at the Balance Sheet date in respect of vehicles taken on lease is Rs. 63.44 (Rs. 113.06).

b) Total minimum lease payments as at the Balance Sheet date is Rs. 85.49 (Rs. 149.46) and the present value is Rs. 72.61 (Rs. 121.08).

The minimum lease amount payable with present value for each of the following periods is given below:

PeriodMinimum

LeasePayments

PresentValue

i) not later than one year Rs. 37.24(Rs. 47.84)

Rs. 35.16(Rs. 45.20)

ii) later than one year & not later than five years

Rs. 48.25(Rs. 101.62)

Rs. 37.45(Rs. 75.88)

iii) later than five years NIL NIL

Rs. 85.49 Rs. 72.61

21. Break up of Net Deferred Tax Assets is given below:

Deferred Tax Assets 2009-10 2008-09

Provision against Debts, Inventory, Performance Guarantee & Leave Encashment etc.

19,888.78 18,811.29

Technical Know-how fee 302.55 228.35

20,191.33 19,039.64

Deferred Tax Liability

Depreciation 4,517.45 4,377.73

4,517.45 4,377.73

Net Deferred Tax Assets 15,673.88 14,661.91

22. Related Party Disclosure:

(a) The related parties and their relationship with the Company are as under:

- Subsidiary Company viz. BEL Optronic Devices Ltd., (Equity Holding 92.79%);

- Joint Venture Companies:

GE BE Private Ltd. (Equity Holding 26%); and

BEL Multitone Private Ltd., (Equity Holding 49%)

The transactions with related parties are as follows:

Sl. No.

Particulars Subsidiary Joint Ventures

Grand TotalBELOP GE BE

BEL Multitone

1 Purchase of Goods 428.24(255.87)

-(-)

-(-)

428.24(255.87)

2 Sale of Goods -(0.99)

1048.37(930.18)

-(-)

1048.37(931.17)

3 Rendering Services 1.19(-)

-(0.12)

-(-)

1.19(0.12)

Schedules to Financial Statements (Contd.)(Rupees in Lakhs)

65

ANNUAL REPORT 2009 - 10

Sl. No.

Particulars Subsidiary Joint Ventures

Grand TotalBELOP GE BE

BEL Multitone

4 Receiving Services -(-)

1.41(-)

-(-)

1.41(-)

5 Rent Received -(-)

-(-)

0.34(0.32)

0.34(0.32)

6 Provision of Corporate Guarantees

-(-)

-(-)

-(-)

-(-)

7 Interest Income on Loans

-(-)

-(-)

-(-)

-(-)

8 Dividend Income on Investments

-(-)

260.00(260.00)

-(-)

260.00(260.00)

9 Creditors outstanding as on 31.03.2010

50.13(-)

0.07(0.07)

-(-)

50.20(0.07)

10 Debtors outstanding as on 31.03.2010

1.19(1.02)

323.98(273.76)

-(-)

325.17(274.78)

11 Provision for doubtful debtors as on 31.03.2010

-(-)

17.88(18.41)

-(-)

17.88(18.41)

12 Investment in Equity as on 31.03.2010*

936.08(936.08)

260.00(260.00)

31.88* (31.88)

1227.96(1227.96)

* Against this, a provision of Rs. 29.90 towards diminution in value of investment in BEL Multitone Private Limited has been made.

(b) Management contracts including deputation of Employees:-

Two officials (Managers) of BEL have been deputed to BELOP (Subsidiary) and their salary etc. is paid by BELOP during the year as per terms and conditions of employment.

(c) The key management personnel & their remuneration details are as follows:

The total salary including other benefits drawn by the key management personnel during the year 2009-10 is Rs. 323.45 (Rs. 178.93) as detailed below:

Names withdesignation Year

Salary & Allowances

incl. benefits*

Contribut-ion to PF& Incre-mental

Gratuity / Leave /

BERECHS

Leased Accommo-

dationOthers Total

Shri A K Datt

[CMD from 01.05.09] &

D(OU) upto 30.04.09

2009-10 28.17 4.87 9.90 2.23 45.17

2008-09 10.54 14.00 2.74 0.58 27.86

Shri V V R Sastry

[CMD upto 30.04.09]

2009-10 26.20 1.19 2.53 2.68 32.60

2008-09 12.41 13.48 3.09 0.60 29.58

Shri P R K Hara Gopal

Director [Finance]-

upto 31.07.09

2009-10 24.17 4.36 3.68 2.26 34.47

2008-09 12.11 5.47 3.03 0.58 21.19

Names withdesignation Year

Salary & Allowances

incl. benefits*

Contribut-ion to PF& Incre-mental

Gratuity / Leave /

BERECHS

Leased Accommo-

dationOthers Total

Shri M.G. RaghuveerDirector [Finance]- from 01.08.09

2009-10 13.67 7.48 - 1.63 22.78

2008-09 - - - - -

Shri M.L. ShanmukhDir [HR]

2009-10 26.64 13.48** 8.18 2.26 50.56

2008-09 9.95 5.95 3.03 0.58 19.51

Shri Anil KumarDir [OU] -from 03.02.10

2009-10 3.30 2.06 - 1.98 7.34

2008-09 - - - - -

Shri H S Bhadoria Dir [BG CX]

2009-10 28.11 5.61 8.06 2.25 44.03

2008-09 9.58 13.55 3.03 0.58 26.74

Shri N K SharmaDir [Mktg] upto 31.08.09

2009-10 25.48 1.50 4.18 1.78 32.94

2008-09 10.88 14.35 3.03 0.54 28.80

Shri H N RamakrishnaDir [Mktg] -from 01.09.09

2009-10 11.37 5.70 - 1.65 18.72

2008-09 - - - - -

Shri I V SarmaDir [R&D]

2009-10 22.35 4.15 6.48 1.86 34.84

2008-09 12.37 12.41 - 0.47 25.25

Total [Current Year] 2009-10 209.46 50.40 43.01 20.58 323.45

Total [Previous Year] 2008-09 77.84 79.21 17.95 3.93 178.93

* includes terminal benefits at the time of retirement. ** includes past service cost pertaining to previous

employment.

23. Disclosure as required under AS 29 - Provisions, contingent liabilities and contingent assets:

Provision for warranty is made towards meeting the expenditure on account of performance guarantee and warranties in accordance with accounting policy No. 13. The details of the same are given below:

Opening Balance

as on 01.04.2009

Additional Provisions

made during the year

Amounts used during

the year*

Unused Amounts

reversed during the year

Closing Balance

as on 31.03.2010

3,837.79

(3,864.06)

1,464.99

(1,180.48)

485.26

(526.82)

717.58

(679.93)

4,099.94

(3,837.79)

* includes Rs. Nil (40.19) debited to opening provision.

24. Interest in Joint Venture Companies (JVCs):

Disclosure of interest in Joint Venture, as per Accounting Standard 27, is as under:

Name of Joint Ventures ProportionateOwnership of BEL

a) GE BE Private Limited 26% b) BEL Multitone Private Limited 49%

Country of Incorporation India

Schedules to Financial Statements (Contd.)(Rupees in Lakhs)

66

ANNUAL REPORT 2009 - 10

The proportionate share of assets, liabilities, income and expenditure of the above JVCs are given below:

Particulars GE BE Pvt. Ltd.(Audited)

BEL Multitone Pvt. Ltd. (Audited)

Sources of Funds 31.3.2010 31.3.2009 31.3.2010 31.3.2009Share Capital 260.00 260.00 31.88 31.88Reserves & Surplus 11,119.04 9,399.95 - -

Secured Loans 30.81 37.61 - -Unsecured Loans - - 21.50 21.50

Total 11,409.85 9,697.56 53.38 53.38Application of Funds

Net Fixed Assets 1,285.10 1,125.36 - -Capital Work in progress 122.98 281.03 - -Investments 0.03 0.03 - -

Deferred Tax Assets 177.53 180.93 - -

Current Assets, Loans & Advances: Inventory 1,046.72 1,101.38 - - Sundry Debtors 1,381.64 695.11 1.20 1.49Cash & Bank 0.46 5.58 35.95 35.25

Loans & Advances 9,433.04 8,679.27 1.02 1.33

Total Current Assets 11,861.85 10,481.34 38.17 38.07Current Liabilities & Provisions: Current Liabilities 1,934.05 2,039.37 12.62 13.35 Provisions 103.59 331.77 - -

Total Current Liabilities 2,037.64 2,371.14 12.62 13.35Net Current Assets 9,824.21 8,110.21 25.55 24.72Debit balance in P & L A/c - - 27.83 28.66

Total 11,409.85 9,697.56 53.38 53.38

ParticularsGE BE Pvt. Ltd.

(Audited)BEL Multitone Pvt.

Ltd. (Audited)Income 31.3.2010 31.3.2009 31.3.2010 31.3.2009

Turnover 13,241.53 13,733.33 - -Excise Duty (12.27) (10.15) - -Other revenues 709.33 659.23 1.92 2.56Total Income (A) 13,938.58 14,382.41 1.92 2.56

ExpenditureMfg. & other expenses 10,974.85 12,000.20 1.08 1.32Finance cost 5.54 7.77 - -Depreciation 359.73 323.04 - -Provision for taxation 880.29 686.51 - 0.18Total Expenditure (B) 12,220.41 13,017.53 1.08 1.50Profit (Loss) after tax (A) - (B) 1,718.17 1,364.88 0.84 1.06

The Company’s share of contingent liabilities in the JVCs is as under:

ParticularsGE BE Pvt. Ltd.

(Audited)BEL Multitone Pvt. Ltd.

(Audited)

31.03.2010 31.03.2009 31.03.2010 31.03.2009

Capital Commitments 25.27 45.93 - -

Other Contingent Liabilities 2,225.36 1,642.11 - -

25. Pursuant to the announcement of the ICAI requiring the disclosure of “Foreign Exchange Exposure”, the major currency-wise exposure as on 31.3.2010 is given below:

CurrencyPayables Receivables Contingent Liability*

Foreign Currency

Indian Rupee equivalent

Foreign Currency

Indian Rupee equivalent

Foreign Currency

Indian Rupee equivalent

USD439.01

(654.47)20,095.82

(33,353.48)53.48

(47.66)2,389.07(2427.36)

301.68(432.38)

13,743.58(22,034.01)

Euro149.33

(269.48)9,173.64

(18,186.69)17.29 (0.01)

1,030.53 (0.67)

142.55(118.62)

8756.76(8,005.78)

GBP12.93

(49.26)893.33

(3,589.22)0.15

(0.06)10.18(4.37)

11.41(15.75)

788.53(1,147.65)

JYEN44.49

(97.99)31.03

(50.93)-

(-)-

(-)164.61

(172.21)80.83

(89.34)

SGD1.25

(1.34)40.93

(45.47)-

(-)-

(-)0.66

(-)21.63

(-)

CHF5.71

(47.82)245.50

(2,157.75)0.43

(-)20.18

(-)1.21

(2.23)52.28

(100.85)

Canadian Dollars

-(-)

-(-)

-(-)

-(-)

-(0.05)

-(1.84)

Others-

(-)363.67

(187.09)-

(-)11.11

(-)-

(-)34.49

(1,156.22)

Total (Rs.)-

(-)30,843.92

(57,570.63)-

(-)3,461.07

(2,432.40)-

(-)23,478.10

(32,535.69)

Amount covered by Exchange Rate variation clause from Customers out of the above

14,809.49(35,992.80)

-(-)

-(-)

-(-)

3501.67(14,350.72)

* includes exposures relating to outstanding Letters of Credit and Capital Commitments.

The Company does not have any derivative instruments.

26. Previous year’s figures have been regrouped wherever necessary. Figures in brackets relate to previous year.

For R G N Price & Co. Ashwani Kumar Datt Chartered Accountants Chairman & Managing Director

H S Venkatesh Partner M G RaghuveerMembership No. 026666 Director (Finance)Firm Regn No. 002785S

Place : Bangalore C R PrakashDate : 25th June 2010 Company Secretary

Schedules to Financial Statements (Contd.)(Rupees in Lakhs)

67

ANNUAL REPORT 2009 - 10

For R G N Price & Co. Ashwani Kumar Datt Chartered Accountants Chairman & Managing Director

H S Venkatesh Partner M G RaghuveerMembership No. 026666 Director (Finance)Firm Regn No. 002785S

Place : Bangalore C R PrakashDate : 25th June 2010 Company Secretary

Schedules 1 to 22 form part of the Accounts

Schedules to Financial Statements (Contd...)SCHEDULE - 22

Balance Sheet Abstract and Company’s General Business ProfileI Registration Details Registration No 7 8 7 State Code 0 8

Balance Sheet Date 3 1 0 3 2 0 1 0 Date Month Year

II Capital raised during the year (Amount in Rs. Lakhs)

Public Issue Rights Issue

N I L N I L

Bonus Issue Private Placement

N I L N I L

III Position of Mobilisation and Deployment of Funds (Amount in Rs. Lakhs) Total Liabilities Total Assets

4 3 4 6 4 0 4 3 4 6 4 0

Sources of Funds Paid-up Capital Reserves & Surplus

8 0 0 0 4 2 4 5 2 6

Secured Loans Unsecured Loans

7 3 N I L

Application of Funds Net Fixed Assets Investments

4 8 9 9 6 1 1 9 8

Net Current Assets Misc. Expenditure

3 6 5 6 2 9 N I L

Accumulated Losses

N I L

IV Performance of Company (Amount in Rs. Lakhs) Turnover Total Expenditure

5 2 1 9 7 7 4 5 7 9 2 7 Profit Before Tax Profit After Tax 1 0 4 5 0 2 7 2 0 8 7

Earning Per Share in Rs. Dividend % 9 0 1 9 2

V Generic names of three Principal Products / Services of Company (as per monetary terms)

Item Code No. (ITC Code) 8 5 2 6 1 0 0 0

Product Description R A D A R

Item Code No. (ITC Code) 8 5 2 5 2 0 0 0

Product Description C O M M U N I C A T I O N

T R A N S M I T T E R S

C U M R E C E I V E R S

Item Code No. (ITC Code) 9 0 0 5 8 0 9 0

Product Description E L E C T R O

O P T I C P R O D U C T S

68

ANNUAL REPORT 2009 - 10

Cash Flow Statement for the year ended 31st March 2010(Rs. in Lakhs)

Particulars 2009-10 2008-09A. CASH FLOW FROM OPERATING ACTIVITIES:

Net Profit Before Tax as per Profit & Loss Account 104,502.35 109,683.59 Adjustments for:

Depreciation (incl. prior period items) 11,593.73 10,559.28Provision for Employee Benefits 529.08 15,732.08Provision for Contingencies towards Long-term Contract -3,358.52 148.12Provision for Performance Guarantee 262.15 -26.27Interest Income -16,986.89 -16,071.75Dividend Income -260.00 -260.00Interest Expense 53.48 1,076.85Profit on Sale of Fixed Assets -341.96 -105.69Transfer from Government Grants -964.34 -320.29

Operating Profit Before Working Capital Changes 95,029.08 120,415.92 Adjustments for:

Trade and Other Receivables 19,103.18 -22,142.22Inventories -2774.41 -106,939.01Trade Payables & Advances 29,250.87 84,938.04

Cash Generated from Operations 140,608.72 76,272.73Receipt of Grants 661.99 645.75Direct Taxes Paid (Net) -35,292.07 -36,987.01

Cash Flow Before Extraordinary Items 105,978.64 39,931.47Extraordinary Items - -

Net Cash from Operating Activities 105,978.64 39,931.47B. CASH FLOW FROM INVESTING ACTIVITIES:

Purchase of Fixed Assets -12,331.71 -17,078.35Sale of Fixed Assets 358.70 126.54Bank Deposits -128,223.37 3,731.25Interest Received 16,986.89 16,071.75Dividend Received 260.00 260.00Net Cash from / (used in) Investing Activities -122,949.49 3,111.19

C. CASH FLOW FROM FINANCING ACTIVITIES :Increase / Decrease in Long-term Loan Borrowings -48.47 -16.73Dividends Paid (including Dividend Tax) -17,504.60 -19,372.63Increase / Decrease in Unpaid Matured Deposits - -0.07Interest Expens -53.48 -1,076.85Net Cash used in Financing Activities -17,606.55 -20,466.28Net Increase / Decrease in Cash and Cash Equivalents (A+B+C) -34,577.40 22,576.38Cash and Cash Equivalents at the beginning of the Year 126,255.64 103,679.26Cash and Cash Equivalents at the end of the Year 91,678.24 126,255.64

Notes:1. The above statement has been prepared under indirect method as per the Accounting Standard on Cash Flow Statement (AS - 3).

2. Additions to Fixed Assets are stated inclusive of movements of Capital Work-in-Progress between the beginning and end of the period and treated as Investing Activities.

3. “Cash and Cash Equivalents” consists of Cash on hand, Balances with Banks and Deposits having a maturity period of three months or less from the date of deposit. Cash and Bank Balance shown in Schedule No. 10 is inclusive of Rs. 266,162.26 (Rs. 137938.88) being the deposits having an original maturity period of more than three months.

For R G N Price & Co. Ashwani Kumar Datt Chartered Accountants Chairman & Managing Director

H S Venkatesh Partner M G RaghuveerMembership No. 026666 Director (Finance)Firm Regn No. 002785S

Place : Bangalore C R PrakashDate : 25th June 2010 Company Secretary

Consolidated Financial Statements

69

ANNUAL REPORT 2009 - 10

Auditors’ Report

To

The Board of Directors

Bharat Electronics Limited

Regd. Office : Outer Ring Road

Nagavara

Bangalore-560 045

We have audited the attached Consolidated Balance Sheet of Bharat Electronics Limited Group as at 31st March 2010 and the Consolidated

Profit and Loss Account and also the Consolidated Cash Flow Statement for the year ended on that date annexed thereto. These

financial statements are the responsibility of the management. Our responsibility is to express an opinion on these financial statements

based on our audit.

We conducted our audit in accordance with generally accepted auditing standards in India. These standards require that we plan and

perform the audit to obtain reasonable assurance whether the financial statements are prepared, in all material respects, in accordance

with an identified financial reporting frame work and are free of material misstatements. An audit includes examining, on a test basis,

evidence supporting the amounts and disclosures in financial statements. An audit also includes assessing the accounting principles

used and significant estimates made by management, as well as evaluating the overall financial statements. We believe that our audit

provides a reasonable basis of our opinion.

We did not audit the financial statements of the Subsidiary BEL Optronics Devices Limited whose financial statements reflect total assets

of Rs. 32.52 Crores as at 31st March 2010, total revenues of Rs. 63.58 Crores and Cash Out Flows amounting to Rs. 7.72 Crores for the

year ended, whose financial statements were audited by other auditors. The financial statements of Joint Venture GE BE Private Limited

and BEL Multitone Private Limited are audited by other auditors, and in our opinion, in so far as it relates to amounts included in respect

of joint venture, are based solely on these audit reports.

We report that the Consolidated Financial Statements have been prepared by the Company’s management in accordance with the

requirements of Accounting Standard -21- Consolidated Financial Statements and Accounting Standard 27 - financial reporting of interest

in joint ventures issued by the Institute of Chartered Accountants of India to the extent they are applicable.

Based on our audit and on consideration of the reports of other auditors on separate financial statements, in our opinion and to the best

of our information and according to the explanations given to us, the attached Consolidated Financial Statements give a true and fair

view in conformity with the accounting principle generally accepted in India:

(a) In the case of the Consolidated Balance Sheet, of the state of affairs of the Group as at 31st March 2010;

(b) In the case of the Consolidated Profit and Loss Account, of the Profit for the year ended on that date; and

(c) In the case of the Consolidated Cash Flow Statement, of the cash flows for the year ended on that date.

For R G N Price & Co.

Chartered Accountants

H S Venkatesh

Place : Bangalore Partner

Date : 30th July 2010 Membership No.: 026666

FR No: 0027865S

70

ANNUAL REPORT 2009 - 10

Significant Accounting Policies on the Consolidated Financial Statements (CFS) for the year 2009-10

1. BASIS OF ACCOUNTING The financial statements are prepared and presented

under the historical cost convention, in accordance with

Generally Accepted Accounting Principles in India (GAAP),

on the accrual basis of accounting, except as stated herein.

GAAP comprises the mandatory Accounting Standards (AS)

covered by the Companies (Accounting Standards) Rules,

2006 issued by the Central Government, to the extent

applicable, and the provisions of the Companies Act, 1956

and these have been consistently applied.

2. USE OF ESTIMATES

The preparation of the financial statements in conformity

with GAAP, requires that the management make estimates

and assumptions that affect the reported amounts of assets

and liabilities, disclosure of contingent liability as at the

date of financial statements and the reported amounts of

revenue and expenses during the reporting period. Although

such estimates are made on a reasonable and prudent basis

taking into account all available information, actual results

could differ from these estimates and such differences are

recognised in the period in which the results are ascertained.

3. REVENUE RECOGNITION

(i) Revenue from sale of goods is recognised as under:

a. In the case of FOR contracts, when the goods are

handed over to the carrier for transmission to

the buyer after prior inspection and acceptance,

if stipulated, and in the case of FOR destination

contracts, if there is a reasonable expectation

of the goods reaching destination within the

accounting period. Revenue is recognised even

if goods are retained with the Company at the

request of the customer.

b. In the case of ex-works contracts, when the

specified goods are unconditionally appropriated

to the contract after prior inspection and

acceptance, if required.

c. In the case of contracts for supply of complex

equipments / systems where the normal cycle time

of completion / delivery period is more than 24

months and the value of the equipment / system

is more than Rs. 100 crores, revenue is recognised

on the “percentage completion” method.

Percentage completion is based on the ratio of

actual costs incurred on the contract upto the

reporting date to the estimated total cost of the

contract.

Since the outcome of such a contract can be

estimated reliably only on achieving certain

progress, revenue is recognised upto 25%

progress only to the extent of costs. After this

stage, revenue is recognised on proportionate

basis and a contingency provision equal to 20% of

the surplus of revenue over costs is made while

anticipated losses are recognised in full.

d. If the sale price is pending finalisation, revenue is

recognised on the basis of price expected to be

realised. Where break up prices of sub units sold

are not provided for, the same are estimated.

e. Price revisions and claims for price escalations on

contracts are accounted on admittance.

f. Where installation and commissioning is stipulated

and price for the same agreed separately, revenue

relating to installation and commissioning is

recognised on conclusion of installation and

commissioning activity. In case of a composite

contract, where separate fee for installation and

commissioning is not stipulated and the supply is

effected and installation and commissioning work

is pending, the estimated costs to be incurred

on installation and commissioning activity is

provided for and revenue is recognised as per the

contract.

g. Sales exclude Sales Tax / Value Added Tax (VAT)

and include Excise Duty.

(ii) Other income is recognised on accrual.

4. FIXED ASSETS AND CAPITAL WORK-IN-PROGRESS:

(i) Tangible Assets:

Tangible fixed assets are stated at cost less

accumulated depreciation / amortisation including

where the same is acquired in full or in part with

Government grant. Cost for this purpose includes

71

ANNUAL REPORT 2009 - 10

all attributable costs for bringing the asset to its

location and condition, cost of computer software

which is an integral part of the related hardware,

and also includes borrowing costs during the

acquisition / construction phase, if it is a qualifying

asset requiring substantial period of time to get ready

for intended use. The cost of Fixed Assets acquired

from a place outside India includes the exchange

differences if any, arising in respect of liabilities in

foreign currency incurred for acquisition of the same

upto 31.03.2007.

Capital work-in-progress comprises supply-cum-

erection contracts, the value of capital supplies

received at site and accepted capital goods in

transit and under inspection and outstanding

advances paid to acquire Fixed Assets and the

cost of Fixed Assets that are not yet ready for

their intended use as at the Balance Sheet date.

(ii) Intangible Assets:

The cost of software (which is not an integral part of

the related hardware) acquired for internal use and

resulting in significant future economic benefits, is

recognised as an intangible asset in the books of

accounts when the same is ready for use.

(iii) Impairment of Assets:

The Company assesses the impairment of assets

with reference to each Cash Generating Unit (CGU)

at each Balance Sheet date if events or changes in

circumstances, based on internal and external

factors, indicate that the carrying value may not be

recoverable in full. The loss on account of impairment,

which is the difference between the carrying amount

and recoverable amount, is accounted accordingly.

Recoverable amount of a CGU is its Net Selling Price or

Value in Use whichever is higher. The Value in Use is

arrived at on the basis of estimated future cash flows

discounted at Company’s pre-tax borrowing rates.

Reversal of impairment provision is made when there

is an increase in the estimated service potential of an

asset, either from use or sale, on reassessment after

the date when impairment loss for that asset was last

recognised.

5. DEPRECIATION / AMORTISATION

Tangible depreciable Fixed Assets are generally depreciated

on straight-line method at the rates (or higher rates as

disclosed) and in the manner prescribed in Schedule XIV to

the Companies Act, 1956. Special instruments are amortised

over related production. Intangible Assets are amortised

over a period of three years on straight-line method. Prorata

depreciation / amortisation is charged from / upto the date

on which the assets are ready to be put to use / are deleted

or discarded. Leasehold land is amortised over the period of

lease.

6. BORROWING COSTS

Borrowing costs that are specifically attributable to qualifying

assets as defined in Accounting Standard AS 16 are added

to the cost of such assets until use or sale and the balance

expensed in the year in which the same is incurred.

7. RESEARCH & DEVELOPMENT EXPENDITURE

Research and Development expenditure other than on

specific development-cum-sales contracts is charged off

as expenditure when incurred. R & D expenditure on

development-cum-sale contracts is treated at par with

other sales contracts. Such expenditure on fixed assets is

capitalised.

8. GOVERNMENT GRANTS

All Grants from Government are initially recognised as

Deferred Income.

The amount lying in Deferred Income on account of

acquisition of Fixed Assets is transferred to the credit of

Profit and Loss Account in proportion to the depreciation

charged on the respective assets to the extent attributable

to government grants utilised for the acquisition.

The amount lying in Deferred Income on account of

Revenue Expenses is transferred to the credit of Profit and

Loss Account to the extent of expenditure incurred in the

ratio of the funding to the total sanctioned cost, limited to

the grant received.

Grants in the nature of promoter’s contribution are credited

to Capital Reserve.

9. INVESTMENTS

(i) Investments are categorised as Trade or Non-Trade.

Trade investments are the investments made to

enhance the Company’s business interests.

72

ANNUAL REPORT 2009 - 10

(ii) Investments are further classified either as long-term or current based on the Management’s intention at the time of purchase. Long term investments are valued at acquisition cost. Any diminution in the value other than of temporary nature is provided for. Current investments are carried at lower of cost or fair value.

10. INVENTORY VALUATION

All inventories of the Company other than disposable scrap are valued at lower of cost or net realisable value. Disposable scrap is valued at estimated net realisable value. Cost of materials is ascertained by using the weighted average cost formula. Cost of work in progress and finished goods include Materials, Direct Labour and appropriate overheads. Finished goods at factories include applicable excise duty. Adequate provision is made for inventory, which are more than five years old which may not be required for further use.

11. SUNDRY DEBTORS

(i) Full provision is made for all debts considered doubtful of recovery having regard to the following considerations:

a. Time barred debts from government / government departments / government companies are generally not treated as doubtful debts.

b. Where debts are disputed in legal proceedings, provision is made if any decision is given against the Company even if the same is taken up on appeal to higher authorities / courts.

(ii) Provision for bad and doubtful debts is generally made for debts outstanding for more than three years, excepting those which are contractually not due as per the terms of the contract or those which are considered realisable based on a case to case review.

12. INCOME TAX

Tax expense comprising current tax after considering deferred tax and fringe benefit tax as determined under the prevailing tax laws are recognised in the Profit and Loss Account for the period.

Certain items of income and expenditure are not considered in tax returns and financial statements in the same period. The net tax effect calculated at the current enacted tax rates of this timing difference is reported as deferred income tax asset / liability. The effect on deferred tax assets and

liabilities due to change in such assets / liabilities as at the end of the accounting period as compared to the beginning of the period and due to a change in tax rates are recognised in the Profit and Loss Account for the period.

13. PROVISION FOR WARRANTIES

Provision for expenditure on account of performance guarantee & replacement / repair of goods sold is made on the basis of trend based estimates.

14. FOREIGN CURRENCY TRANSACTIONS

Foreign exchange transactions including that of integral foreign branches are recorded using the exchange rates prevailing on the dates of the respective transactions. Monetary assets and liabilities denominated in foreign currencies as at the Balance Sheet date are translated at period-end rates. The resultant exchange difference arising from settlement of transactions during the period and translations at the period end, except those upto 31.03.2007 relating to acquisition of Fixed Assets from a place outside India, is recognised in the profit and loss account. Exchange differences relating to the acquisition of Fixed Assets were adjusted in the carrying cost of the Fixed Assets till 31.03.2007.

Premium or discount arising at the inception of the forward exchange contract is amortised as income / expenditure over the life of the contract.

The exchange rate differences on the amount of forward exchange contracts between the rate on the last reporting date / the rate at the time of entering into a contract during the period and the rate on the settlement date are recognised in the statement of Profit and Loss in the reporting period in which the exchange rates change. The exchange differences arising from the rates prevailing at the time of entering into the contract and the reporting date are also accrued and adjusted in the Profit and Loss Account.

Any Profit or Loss arising on cancellation or renewal of a forward exchange contract is recognised as income or as expense in the period when the cancellation or renewal occurs.

15. EMPLOYEE BENEFITS

(i) All employee benefits payable wholly within twelve months of rendering the related services are classified as short term employee benefits and they mainly include (a) Wages & Salaries; (b) Short-term

73

ANNUAL REPORT 2009 - 10

compensated absences; (c) Profit-sharing, incentives and bonuses and (d) Non-monetary benefits such as medical care, subsidised transport, canteen facilities etc., which are valued on undiscounted basis and recognised during the period in which the related services are rendered.

Incremental liability for payment of long term compensated absences such as Annual and Sick leave as well as Leave Travel Concession (LTC) is determined as the difference between present value of the obligation determined annually on actuarial basis using Projected Unit Credit Method and the carrying value of the provision contained in the balance sheet and provided for.

(ii) Defined contribution to Employee Pension Scheme is made on monthly accrual basis at the applicable rates.

(iii) Incremental liability for payment of Gratuity and Employee Provident Fund to employees is determined as the difference between present value of the obligation determined annually on actuarial basis using Projected Unit Credit Method and the Fair Value of Plan Assets funded in an approved trust set up for the purpose for which monthly contributions are made in the case of provident fund and lump sum contributions in the case of gratuity.

(iv) Incremental liability under BEL Retired Employees Contributory Health Scheme (BERECHS) is determined annually on actuarial basis using Projected Unit Credit Method and provided for.

(v) Actuarial liability for the year is determined with reference to employees at the end of January of each year.

(vi) Payments of voluntary retirement benefits are charged off to revenue on incurrence.

16. PRIOR PERIOD ADJUSTMENTS AND EXTRAORDINARY

ITEMS

Prior period adjustments and extraordinary items having

material impact on the financial affairs of the Company are

disclosed.

17. TECHNICAL KNOW-HOW

Revenue expenditure incurred on technical know-how is

charged off to Profit and Loss Account on incurrence.

18. PROVISIONS AND CONTINGENT LIABILITIES

Provisions for losses and contingencies arising as a result of

a past event where the management considers it probable

that a liability may be incurred, are made on the basis of the

best reliable estimate of the expenditure required to settle

the present obligation on the Balance Sheet date, and are not

discounted to its present value. Provisions are reviewed at

each Balance Sheet date and adjusted to reflect the current

best estimate. Significant variations thereof are disclosed.

Contingent liabilities to the extent the management is aware,

are disclosed by way of notes to the accounts.

19. CASH FLOW STATEMENT

Cash flow statement has been prepared in accordance with the

indirect method prescribed in Accounting Standard - 3 on Cash

Flow Statements.

20. BASIS OF CONSOLIDATION

The consolidated financial statements are prepared in

accordance with the following Accounting Standards issued

by the Institute of Chartered Accountants of India: Accounting

Standard 21 (Consolidated Financial Statements) in respect

of the Subsidiary Company and Accounting Standard 27

(Financial Reporting of Interests in Joint Ventures) in respect

of Joint Venture Companies.

For R G N Price & Co.Chartered Accountants

H S VenkateshPartnerMembership No. 026666Firm Regn. No. 002785S

Place : Bangalore Date : 30th July 2010

Ashwani Kumar DattChairman & Managing Director

M G RaghuveerDirector (Finance)

C R PrakashCompany Secretary

74

ANNUAL REPORT 2009 - 10

Consolidated Balance Sheet as at 31st March 2010(Rs. in Lakhs)

Schedule As at 31.3.2010

As at31.3.2009

SOURCES OF FUNDSShareholders Funds

Share Capital 1 8,000.00 8,000.00Reserves & Surplus 2 437,617.06 381,859.38

445,617.06 389,859.38

MINORITY INTEREST 2A 220.47 204.41

Government Grants 3 2,083.74 2,397.97Loan Funds

Secured Loans 4 106.72 162.69Unsecured Loans 5 21.51 21.51

128.23 184.20448,049.50 392,645.96

APPLICATION OF FUNDSFixed Assets

Gross Block 179,880.50 167,096.22Less: Depreciation / Amortisation 128,806.98 118,238.56Net Block 6 51,073.52 48,857.66Less: Unrealised Profit 0.12 0.12Net Block after Unrealised Profit 51,073.40 48,857.54Capital Work-in-progress 7 3,272.93 4,989.38

54,346.33 53,846.92Investments 8 0.07 0.07Deferred Tax Assets(Refer Note No. 17 of Schedule 22) 15,832.37 14,803.22

Current Assets, Loans & AdvancesInventories 9 246,884.90 244,250.47Sundry Debtors 10 219,501.84 229,434.73Cash & Bank Balances 11 358,669.65 265,773.65Loans & Advances 12 53,268.66 59,384.88

878,325.05 798,843.73Less: Current Liabilities and Provisions

Current Liabilities 13 445,849.20 417,707.78Provisions 14 54,605.12 57,140.20

500,454.32 474,847.98Net Current Assets 377,870.73 323,995.75

Miscellaneous Expenditure(To the extent not written off or adjusted)Technical Know-how fee - -

448,049.50 392,645.96Notes to CFS 22

Accounting Policies and Schedules 1 to 22 form part of CFS.

As per our report of even date attached.

For R G N Price & Co.Chartered Accountants

H S VenkateshPartnerMembership No. 026666Firm Regn. No. 002785S

Place : Bangalore Date : 30th July 2010

Ashwani Kumar DattChairman & Managing Director

M G RaghuveerDirector (Finance)

C R PrakashCompany Secretary

75

ANNUAL REPORT 2009 - 10

For R G N Price & Co.Chartered Accountants

H S VenkateshPartnerMembership No. 026666Firm Regn. No. 002785S

Place : Bangalore Date : 30th July 2010

Ashwani Kumar DattChairman & Managing Director

M G RaghuveerDirector (Finance)

C R PrakashCompany Secretary

Consolidated Profit and Loss Account for the year ended 31st March 2010(Rs. in Lakhs)

Schedule Year ended31.3.2010

Year ended31.3.2009

INCOMESales less returns 519,527.71 466,323.06Revenue from Long Term Contracts - 1,908.50Income from services 20,943.74 10,517.67Turnover (Gross) 540,471.45 478,749.23Less: Excise Duty 4,018.17 4,058.80Turnover (Net) 536,453.28 474,690.43Other revenues 15 36,986.69 23,079.41Accretion / (Decretion) to Work-in-Progress, Finished Goods and Scrap 16 2,958.62 65,047.18Profit on Sale of Fixed Assets (Net) 343.30 108.34Transfer from Grants 976.22 333.19

577,718.11 563,258.55EXPENDITUREConsumption of Raw Materials and Components 241,388.33 248,792.13Consumption of Stores & Spares 4,205.85 3,927.98Purchase of Finished Goods 70,923.75 63,588.24Employees Remuneration and Benefits 17 101,761.64 76,321.27Other Expenses of Manufacturing, Administration, Selling and Distribution 18 36,960.29 39,568.98Interest 19 58.47 1,082.76Depreciation / Amortisation on Fixed Assets 12,229.78 11,284.83

467,528.11 444,566.19Less: Expenditure allocated to Capital Jobs 35.74 37.36

467,492.37 444,528.83Profit before Prior Period and Extraordinary Items 110,225.74 118,729.72Less: Exceptional Items - Expens 20 3,134.91 7,847.47

107,090.83 110,882.25Less: Extra ordinary item - -Profit for the Year 107,090.83 110,882.25Less: Prior Period Items (Net) 21 17.52 (97.12)Profit Before Tax (PBT) 107,073.31 110,979.37Less: Provision for Taxation

- Current Year 34,462.99 35,427.91- Earlier Years (107.53) 419.03- Deferred Taxes (1,029.15) (553.89)- Fringe Benefit Tax - 386.64- Total Provision for Taxation 33,326.31 35,679.69

Profit After Tax Before Minority Interest 73,747.00 75,299.68Minority Interest 16.40 (27.37)Profit After Tax After Minority Interest 73,730.60 75,327.05Less: Transfer to Capital Reserve (Capital Profit included above) 90.77 8.73Add: Balance Brought Forward from previous year 184,657.52 167,022.34Profit available for appropriation 258,297.35 242,340.66

Appropriations:Dividends:

Interim Dividend 4800.00 4,800.00Proposed Final Dividend 10,560.00 10,160.00Dividend Tax 2,613.85 2,586.64

Transfer to General Reserve 40,171.86 40,136.50Balance carried to Balance Sheet 200,151.64 184,657.52

258,297.35 242,340.66Notes to CFS 22Earnings per Share (Equity Shares of Rupees Ten each) in Rupees:

Basic & Diluted:Before Extraordinary Item Rs. 92.16 94.16After Extraordinary Item Rs. 92.16 94.16Face Value of Share Rs. 10.00 10.00

Number of Shares used in computing earnings per share:Basic & Diluted 80,000,000 80,000,000

Accounting Policies and Schedules 1 to 22 form part of CFS.

As per our report of even date attached.

76

ANNUAL REPORT 2009 - 10

Schedules to Consolidated Financial Statements(Rs. in Lakhs)

ParticularsAs at

31.3.2010As at

31.3.2009SCHEDULE – 1Share CapitalAuthorised Capital100,000,000 (100,000,000) Equity Shares of Rs. 10 each 10,000.00 10,000.00Issued, Subscribed & Paid-up Capital80,000,000 (80,000,000) Equity Shares of Rs. 10 each 8,000.00 8,000.00

SCHEDULE – 2Reserves & SurplusCapital Reservea) Land Valuation Reserve 200.64 200.64b) Capital Profit:

At the beginning of the year 757.49 748.76Add: Transfer from Profit & Loss Account 90.77 8.73

848.26 757.49c) Capital Reserve on Consolidation of Subsidiary 206.82 206.82d) ESOP [JVC - GE BE Pvt. Ltd.,] 1.85 0.92e) On acquisition of MC Unit 0.85 0.85f) General Investment Subsidy for Kotdwara Unit 50.00 50.00

1,308.42 1,216.72General Reserve

At the beginning of the year 193,542.56 153,406.06Add: Transfer from Profit & Loss Account 40,171.86 40,136.50

233,714.42 193,542.56Surplus

Balance carried from P & L Account 200,151.64 184,657.52P & L Surplus / Adjst. on Consolidation of JVCs 2,442.70 2,442.70

202,594.34 187,100.22Less: Unrealised Profit on Stock 0.12 0.12

202,594.22 187,100.10437,617.06 381,859.38

SCHEDULE – 2AMinority InterestAt the beginning of the year 204.41 231.89Add: Transfer from Profit & Loss Account 16.40 (27.37)

220.81 204.52Less: Consolidation Adjustments 0.34 0.11

220.47 204.41SCHEDULE – 3Government GrantsGrant from Government for Research and other purposes

At the beginning of the year 2,397.97 2,085.41Add: Additions during the year 661.99 645.75Less: Transfer to Profit & Loss Account 976.22 333.19

2,083.74 2,397.97SCHEDULE – 4Secured Loans

Liability on Leased Assets (Secured by vehicles on lease) 106.72 162.69 106.72 162.69

SCHEDULE – 5Unsecured Loans

Others 21.51 21.5121.51 21.51

77

ANNUAL REPORT 2009 - 10Sc

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78

ANNUAL REPORT 2009 - 10

Schedules to Consolidated Financial Statements (Contd.)(Rs. in Lakhs)

ParticularsAs at

31.3.2010As at

31.3.2009

SCHEDULE – 7Capital Work In Progress at CostCivil Construction 1,046.90 513.65 Plant, Machinery etc. 1,714.12 3,042.24 Capital Goods in Transit & under Inspection 557.67 446.20Less: Provision 368.03 368.03

189.64 78.17Advances on account of Capital Items 128.88 1,248.09Less: Provision 0.29 0.36

128.59 1,247.73Intangible Assets – Enterprise Resource Planning (ERP)

– under implementationOpening Balance 107.59 112.41 Add: Amount incurred during the year 353.70 406.19

461.29 518.60 Less: Amount Capitalised during the year 267.61 411.01

193.68 107.59 3,272.93 4,989.38

SCHEDULE – 8Investments at Cost – Long TermNon-tradeUnquotedInvestment in Shares / Bonds:40 Shares of Rs. 50 each fully paid inCuffe Parade Persopolis Premises Co-op. Society, Mumbai 0.02 0.0210 Shares of Rs. 50 each fully paid inSukh Sagar Premises Co-op. Society, Mumbai 10 Shares of Rs. 50 each fully paid inShri Sapta Ratna Co-op. Society Ltd., Mumbai 0.01 0.015 Shares of Rs. 50 each fully paid inDalamal Park Co-op. Society Ltd., Mumbai30 Shares of Rs. 50 each fully paid inChandralok Co-op. Housing Society Ltd., Pune 0.02 0.02Note: These are in respect of apartments owned by BEL, cost of which is included under Fixed AssetsGovernment Securities 0.02 0.02

0.07 0.07Aggregate Value of Unquoted Shares 0.07 0.07

SCHEDULE – 9InventoriesStores and Spares 2,134.46 2,600.08Raw Materials & Components 134,596.10 129,788.27Materials in Transit and under Inspection 6,078.30 10,640.75Less: Provision 200.66 114.18

5,877.64 10,526.57Finished Goods 14,453.22 18,574.49Work-in-Progress 98,603.78 91,526.32Disposable Scrap 78.05 69.00

255,743.25 253,084.73Less: Provision for obsolescence 8,851.39 8,831.59 Unrealised Profit on Stock 6.96 2.67

246,884.90 244,250.47

79

ANNUAL REPORT 2009 - 10

Schedules to Consolidated Financial Statements (Contd.)(Rs. in Lakhs)

ParticularsAs at

31.3.2010As at

31.3.2009

SCHEDULE – 10Sundry DebtorsDebts – Considered Good:

Debts over six months 99,992.70 85302.05Other debts 119,509.14 144,132.67

219,501.84 229,434.72Considered Doubtful:

Debts over six months 35,754.77 31,650.76Other debts 4,316.64 3,186.08

40,071.41 34,836.84259,573.93 264,271.56

Less: Provision for doubtful debts 40,071.41 34,836.83219,501.84 229,434.73

Particulars of Sundry Debtors:Considered good in respect of which the Company is fully secured 58.31 67.37Considered good for which the Company holds no security other than the debtors personal security 219,443.53 229,367.36

219,501.84 229,434.73

SCHEDULE – 11Cash and Bank BalancesCash and Cheques on hand 14,590.51 21,926.68With Scheduled Banks:

Current Accounts 45,168.89 33,512.48Deposit Accounts (incl. Accrued Interest) * 298,800.45 210,226.27Margin Money Account 92.99 89.28Unpaid Dividend Account 16.81 18.94

358,669.65 265,773.65* Term deposits of Rs. 92.99 (89.28) have been pledged with bank

SCHEDULE – 12Loans and AdvancesLoans to Employees 1,815.92 1,975.84Loans to Others 216.09 219.39Advances Recoverable in cash or in kind or for value to be received:Advances to Employees * 823.28 1,214.22Advances for Purchase 22,991.47 32,146.74Claims Receivable – Purchases 3,244.29 3,157.96Advances to others 6,867.80 4,802.02

33,926.84 41,320.94Advance payment of Income Tax (including FBT)[Net of Provisions for Tax – Rs. 106,549.25 (Rs. 109,280.49)] 5,946.98 4,552.90Balances with Customs, Port Trust and other Government Authorities 1,667.97 2,349.97Deposits 11,347.30 10,468.29

54,921.10 60,887.33Less: Provision for Doubtful Loans, Advances and Claims 1,652.44 1,502.45

53,268.66 59,384.88

80

ANNUAL REPORT 2009 - 10

Schedules to Consolidated Financial Statements (Contd.)(Rs. in Lakhs)

ParticularsAs at

31.3.2010As at

31.3.2009

SCHEDULE – 12 (Contd.)

Particulars of Loans and Advances:

Considered Good in respect of which the Company is fully secured - -

Considered good for which the Company holds no security other than debtors personal security 53,268.66 59,384.88

Considered doubtful and provided for 1,652.44 1,502.45

54,921.10 60,887.33

* Includes due by Directors & Secretary Rs. 0.45 (Rs. 1.29) [Maximum amount at any time during the year Rs. 0.80 (Rs. 2.19)].

SCHEDULE – 13

Current Liabilities

Sundry Creditors:

Dues to Micro and Small Enterprises 188.14 194.38

Creditors - Others 82,454.60 98,876.32

82,642.74 99,070.70

Other Liabilities 12,331.80 16,733.83

Advances / Progress Payments received from Customers 350,819.30 301,845.76

Investor Education & Protection Fund to be credited when due:

– Unpaid Dividend Account * 16.81 18.94

– Unpaid Matured Deposits * 38.55 38.55

445,849.20 417,707.78

* Amount to be transferred to the Investor Education & Protection Fund as at Balance Sheet date NIL NIL

SCHEDULE – 14

Provisions

Taxation(Including FBT) [Net of Advance Tax Rs. 105,796.49 (Rs. 107,739.87)] 327.79 714.18

Proposed Final Dividend 10,560.00 10,160.00

Dividend Tax 1,798.07 1,770.88

Employee Benefits

Gratuity 3,214.56 12,325.82

Long-term compensated absenses 16,837.27 13,938.39

BERECHS 12,327.76 10,413.57

Proposed Pension Scheme 4,817.56 -

Contingencies towards Long-term Contracts 598.75 3,957.27

Performance Guarantee 4,123.36 3,860.09

54,605.12 57,140.20

81

ANNUAL REPORT 2009 - 10

Schedules to Consolidated Financial Statements (Contd.)(Rs. in Lakhs)

ParticularsYear ended

31.3.2010Year ended

31.3.2009

SCHEDULE – 15

Other Revenues

Sale of Scrap & Surplus Stores 655.35 633.04

Export Benefits 174.09 169.81

Interest Income – Gross [TDS 2,260.34 (3,797.49)] 17,575.21 16,814.51

Interest Income from Staff / Income Tax refund / others 152.35 185.34

Transport Receipts 224.56 65.86

Rent Receipts 249.95 122.43

Canteen Receipts 377.87 141.79

Water Charges 32.36 32.55

Provision withdrawn – Contingencies towards long term contracts 3,358.52 -

Provision withdrawn – Doubtful Debts, LD, Obsolete Inventory etc., 4,473.66 2,991.86

Provision withdrawn – Others 522.18 594.46

Foreign Exchange Rate Differential (Gain) 6,939.75 -

Miscellaneous 2,250.84 1,327.76

36,986.69 23,079.41

SCHEDULE – 16

Accretion / (Decretion) to Work-in-progress Finished Goods and Scrap

Work-in-Progress:

Closing Balance 98,603.78 91,526.32

Opening Balance 91,526.32 38,591.44

7,077.46 52,934.88

Finished Goods:

Closing Stock 14,453.22 18,574.49

Opening Stock 18,574.49 6,449.61

(4,121.27) 12,124.88

Scrap:

Closing Stock 78.05 69.00

Opening Stock 69.00 79.02

9.05 (10.02)

2,965.24 65,049.74

Less: Unrealised Profit on Stock 6.62 2.56

2,958.62 65,047.18

SCHEDULE – 17

Employees Remuneration and Benefits

Salaries, Wages and Bonus / Ex-gratia 78,872.48 57,713.57

Gratuity 4,205.59 5,068.33

Contribution to Provident and Pension Funds 7,316.24 4,555.01

Provision for BEL Retired Employees Contributory Health Scheme 1,914.20 1,181.89

Welfare Expenses [including Salaries 1,031.00 (999.53),

PF Contribution 62.56 (63.97)] 9,453.13 7,802.47

101,761.64 76,321.27

82

ANNUAL REPORT 2009 - 10

Schedules to Consolidated Financial Statements (Contd.)(Rs. in Lakhs)

ParticularsYear ended

31.3.2010Year ended

31.3.2009

SCHEDULE – 18Other Expenses of Manufacturing, Administration, Selling & DistributionPower and Fuel [after adjusting Rs. 421.24 (Rs. 559.07) income from wind energy] 2,662.65 2,837.74Water charges 313.18 294.96Royalty & Technical Assistance 1,134.55 255.64Rent 1,123.86 443.39Rates & Taxes 296.06 310.45Insurance 335.18 441.89Auditors’ Remuneration:

Audit 11.57 11.57Tax Audit 1.98 2.03Certification 1.99 1.99Expenses 6.42 6.00

21.96 21.59Repairs & Maintenance:

Buildings 1,441.13 1,922.61Plant & Machinery 704.80 714.90Others 4,165.53 3,845.85

6,311.46 6,483.36Bank Charges 503.21 481.35Printing and Stationery 352.21 391.29Discounts, Allowances & Rebate 3.65 2.34Advertisement & Publicity 515.93 827.59Travelling Expenses 3,789.03 3,709.76Hiring Charges for Van & Taxis 393.84 484.57Excise Duty – Others 256.51 63.01Packing & Forwarding 1,164.77 830.77Bad Debts & Advances written off 104.50 2,741.77Less: Charged to Provisions 101.11 2,741.34

3.39 0.43Provision for Obsolete / Redundant Materials 1,188.51 2,179.99Provisions for Doubtful Debts, Liquidated damages, Customers’ Claims and Disallowances 8,803.79 7,276.50Provision for Doubtful Advances, Claims 260.03 237.96Provision for Warranties 265.76 13.71Write off of Raw Materials, Stores & Components due to obsolescence and redundancy 203.03 21.89Write-back of Material written off earlier - (29.77)Less: Charged to Provisions 179.22 -

23.81 (7.88)

Sponsorship / Contribution for Professional & Social Activities 422.59 177.35Provision for Contingencies towards Long-term Contracts - 148.12Others:Expenditure on Service Orders / Other Misc. Direct Expenses 3,440.38 2,812.68Foreign Exchange Rate Differential - 4,452.81After Sales Service 391.63 679.80Telephones 628.01 627.74Expenditure on Seminars & Courses 510.94 530.51Selling Commission 87.85 424.64Other selling Expenses 83.77 421.04Miscellaneous 1,671.78 1,713.88

36,960.29 39,568.98

83

ANNUAL REPORT 2009 - 10

Schedules to Consolidated Financial Statements (Contd.)(Rs. in Lakhs)

ParticularsYear ended

31.3.2010Year ended

31.3.2009

SCHEDULE – 19

Interest

On Cash Credit from Bankers - 0.16

On Lease Financing 18.54 21.55

On Dues to Micro & Small Enterprises 2.50 2.10

On Others 37.43 1,058.95

58.47 1,082.76

SCHEDULE – 20

Exceptional Items

Company contribution to proposed Pension Scheme for theperiod from 1 / 1 / 2007 to 31 / 3 / 2009 (BEL) 3,134.91 -

Gratuity past liability on account of enhancement in limit from Rs. 3.50 Lakhsto Rs. 10 Lakhs w.e.f. 1 / 1 / 2007 till 31 / 3 / 2008 (BEL) - 7,847.47

3,134.91 7,847.47

SCHEDULE – 21

Prior Period Items

Prior Period Income:

Sales - (17.33)

Others 113.16 118.95

Total Prior Period Income (A) 113.16 101.62

Prior Period Expenditure:

Material Consumption - 1.22

Repairs & Maintenance 1.77 -

Depreciation (0.50) (0.48)

Others 129.41 3.76

Total Prior Period Expenditure (B) 130.68 4.50

Total Prior Period Items - Net Expenses / Income [(A) - (B)] 17.52 (97.12)

84

ANNUAL REPORT 2009 - 10

SCHEDULE – 22

Notes to Consolidated Financial Statements for the year ended

31.3.2010

1.0 Consolidation Procedure:

1.1 The Consolidated Financial Statements (“CFS”) have been

prepared on the basis of audited financial statements of

the Parent Company viz. Bharat Electronics Limited (BEL),

its subsidiary viz. BEL Optronic Devices Limited, Pune, India

(Share Holding 92.79%), and audited financial statements

of Joint Venture Company (JVC) viz. GE BE Private Limited,

Bangalore (Share Holding 26%) and BEL Multitone Private

Limited, Bangalore (JVC - Share Holding 49%). The financial

statements of the Parent and its Subsidiary have been

combined on a line-by-line basis by adding together like items

of assets, liabilities, income and expenses, after eliminating

intra-group transactions and unrealised profit / loss. In respect

of JVCs, consolidation has been done on proportionate

consolidation basis, after eliminating intra-group transactions

and unrealised profit / loss. The financial statements of the

subsidiary and JVCs are drawn up to the same reporting date

as that of the Parent Company.

1.2 The difference between the cost to the parent company of

its investment in the subsidiary company and the parent

company’s portion of the equity in the subsidiary with

reference to the date of acquisition of controlling interest is

recognised in the financial statements as Goodwill / Capital

Reserve. The parent company’s share of post acquisition

profit / losses of the subsidiary is adjusted in the revenue

reserves.

1.3 Minority interests in the net results of operations and

the net assets of the subsidiary represent that part of the

profit / loss and the net assets not attributable to the parent

company.

2.0 Additional information disclosed in individual financial

statements of the parent and subsidiary / JVCs having

no bearing on the true and fair view of the consolidated

financial statements and also the information pertaining to

the items which are not material have not been disclosed

in the consolidated financial statements in view of the

Accounting Standards Interpretation (ASI)-15 issued by

the Institute of Chartered Accountants of India (ICAI), New

Delhi.

3.0 Impact of Changes in Accounting Policies:

3.1 The Parent company has made certain modifications / changes

to accounting policies during the year 2009-10 which are

generally clarificatory in nature except in respect of policy

on Employee Benefits. The changes made in Employee

Benefits and the impact thereof is as under:

- Leave Travel Concessions benefit given to employees

were hitherto treated as short-term benefits and

accounted on payment basis. As per the expert

opinion given by Expert Advisory Committee (EAC) of

The Institute of Chartered Accountants of India (ICAI),

the liability towards this is a long-term benefit and

accordingly should be actuarially valued. As per the

actuarial valuation, the liability as on 31st March 2010

is Rs. 202.75 and this has been accounted in 2009-10.

- As per AS-15®, the liability, if any, towards shortfall in

payment of minimum interest by the Company managed

Provident Funds is to be actuarially valued and provided

for. Accordingly the Parent Company actuarially valued

the position as on 31st March 2010 and as per Actuary’s

report, no additional liability exists on this account as on

31st March 2010 (31st March 2009 - Rs. Nil).

3.2 The Accounting Policy of the parent and subsidiary / JVCs are

generally uniform except in respect of the following items,

which are not material in nature and it is not practicable to

quantify the proportion of such items in the CFS:

- Cost of inventories is generally assigned by using the

weighted average cost formula, except in case of JVCs,

which are following FIFO method for RMC and bought out

items for resale.

- Depreciation on Fixed Assets is calculated generally

on the straight line method except in case of a Joint

Schedules to Consolidated Financial Statements (Contd.)(Rs. in Lakhs)

85

ANNUAL REPORT 2009 - 10

Venture Company viz M / s. BEL Multitone Private

Limited which is following WDV method consistently.

BEL Multitone Pvt. Ltd. (JVC) does not have any Fixed

Assets as on 31st March 2010.

4. Estimated amount of contracts remaining to be executed

on Capital Account and not provided for amounts to

Rs. 11,549.93 (Rs. 6,668.21).

5. Letters requesting confirmation of balances have been sent

in respect of Sundry Debtors, Sundry Creditors, Advances

and Deposits. Generally replies have been received and

reconciled. Provisions / adjustments have been made

wherever considered necessary.

6. i) In pursuance of the Companies (Amendment) Act,

1988 and Schedule XIV thereof increased rates of

depreciation on straight line method in accordance

with the Schedule XIV have been adopted wherever

required, only on additions after 1.4.1987.

ii) Wherever the old rates of depreciation applied prior to

1.4.1987 are higher than the rates specified in Schedule

XIV of the Companies Act, 1956 they have been

continued. However, additions forming part of existing

machines are depreciated on the same basis as the

original machines.

iii) Depreciation for multiple shifts is charged on block of

assets for the full year.

iv) The rates of depreciation adopted other than those

under Schedule XIV are as under:

a) Buildings 2.5% / 5%

b) Plant and Machinery 10% / 11.31% / 15% /

16.21% / 20% / 25%

c) Vehicles 20% / 25%

d) Furniture, Fixture and 10% / 15% /

Other Equipment 20% / 25%

e) Computers

[in JVC - GE BE (P) Ltd.,] 50%

f) Assets under Build, Depreciated over

Own, Operate the period of

and Transfer (BOOT) contract

Contract

g) Intangible Assets Amortised over

three years

7. The Parent Company has analysed indications of

impairment of assets of each geographical composite

manufacturing units considered as Cash Generating

Units (CGU). On the basis of assessment of internal and

external factors, none of the Units has found indications

of impairment of its assets and hence no provision is

considered necessary. The subsidiary (BELOP) and GE BE

Pvt. Ltd. (JVC) have also analysed indications of impairment

of assets and found no indication of impairment of

assets and hence no provision for the same is considered

necessary. BEL Multitone Pvt. Ltd. (JVC) does not have any

Fixed Assets.

8. The exchange Rate variations arising on transactions in

foreign currency (including relating to fixed assets, in

previous excluding those relating to Fixed Assets) between

the date of recording of such transactions and the

settlement / the Balance Sheet date resulting in a net

exchange gain of Rs. 6,939.75 (Loss Rs. 4,452.81) during the

year have been included in Schedule No. 14 - “Other Revenues”

[Previous Year: in Schedule No. 17 - “Other Expenses of

Manufacturing, Administration, Selling & Distribution”].

9. Raw Materials and Components of Parent Company

includes Rs. 2,765.88 (Rs. 1,869.89) being materials with

subcontractors. Out of which Rs. 163.38 (Rs. 160.75) of

material is subject to confirmation and reconciliation.

The impact, if any, on consequent adjustment is considered

not material.

10. The information regarding amounts due to Micro and Small

Enterprises as required under Micro, Small & Medium

Enterprises Development (MSMED) Act, 2006 as on

31st March 2010 is furnished below:

i) The principal amount and the interest due thereon

Schedules to Consolidated Financial Statements (Contd.)(Rs. in Lakhs)

86

ANNUAL REPORT 2009 - 10

remaining unpaid to any supplier as at 31st March

2010:

Principal Amount Rs. 185.30 (Rs. 192.12)

Interest Rs. 1.74 (Rs. 1.37)

ii) The amount of interest paid by the Company along

with the amounts of the payment made to the

supplier beyond the appointed day during the year

ending 31st March 2010:

Principal Amount Rs. 220.36 (Rs. 93.97)

Interest Rs. 0.80 (Rs. 0.33)

iii) The amount of interest due and payable for the period

of delay in making payment (which have been paid

but beyond the appointed day during the year) but

without adding the interest specified under the Act:

Rs. 0.17 (Rs. 1.59)

iv) The amount of interest accrued and remaining unpaid

at the end of the year ending 31st March 2010 :

Rs. 2.84 (Rs. 2.26)

v) The amount of further interest remaining due and

payable even in the succeeding years, until such date

when the interest dues as above are actually paid to

the small enterprise, for the purpose of disallowance

as a deductible expenditure under section 23 of

MSMED Act: Rs. 2.50 (Rs. 2.10)

The information has been given in respect of such suppliers

to the extent they could be identified as Micro & Small

Enterprises on the basis of information available with the

Company.

11. The following disclosure is made as per AS-7 (Accounting

for Construction Contracts) in respect of accounting policy

3i(c) relating to revenue recognition on contracts by Parent

Company:

a) Contract revenue recognised during the year Rs. Nil

(Rs. 1,908.50)

b) No contract revenue is recognised during the current

year. Percentage of completion method was used to

determine the contract revenue recognised in the

previous years. Ratio of the actual cost incurred on the

contracts upto 31.03.2009 to the estimated total cost

of the contracts, was used to determine the stage of

completion.

c) Aggregate amount of cost incurred: Rs. 43,009.84

(Rs. 70,613.40)

d) Recognised profit upto 31.3.2010 (net of provision for

contingency): Rs. 2,817.66

(Rs. 15,829.10)

e) Amount of advances received and outstanding as at 31.

3.2010: Rs. 48.85

(Rs. 48.88)

f) The amount of retention: Rs. 1,404.70

(Rs. 8,111.26)

12. As per the provisions of revised Accounting Standard 15, the

following information is disclosed in respect of employee

benefits:

Gratuity:

ParticularsConsolidated

2009-10 2008-09

i) Change in Benefit Obligations :

Present Value of Obligation (PVO) as at the beginning of the year

35,230.33 24,105.61

Current Service Cost 2,795.77 2,359.79

Interest Cost 2,716.33 1,731.21

Past Service Cost (vested Benefits) - 7,193.18

Actuarial (gain) / loss 3,521.67 1,910.58

Benefits paid (2,556.32) (2,070.04)

Present Value of Obligation as at the end of the period

41,707.78 35,230.33

ii) Change in Fair Value of Plan Assets:

Fair Value of Plan Assets at the beginning of the year

24,657.24 23,849.81

Expected return on Plan Assets 2,801.86 2,258.42

Contributions 10,563.48 855.80

Benefit paid (2,554.91) (2,070.04)

Schedules to Consolidated Financial Statements (Contd.)(Rs. in Lakhs)

87

ANNUAL REPORT 2009 - 10

ParticularsConsolidated

2009-10 2008-09

Actuarial gain / (loss) on Plan Assets 3,075.88 (236.76)

Fair Value of Plan Assets at the end of the period

38,543.55 24,657.23

Excess of Obligation over Plan Assets 3,164.23 10,573.10

iii) Expenses Recognised in the Statement of Profit & Loss A / c

Opening Net Liability - -

Current Service Cost 2,795.77 2,359.79

Interest Cost 2,716.33 1,731.21

Expected return on Plan Assets (2,801.86) (2,258.42)

Net Actuarial (gain) / loss recognised in the period

445.78 2,147.33

Past Service Cost (vested Benefits) - 7,192.98

Expenses Recognised in the Statement of Profit & Loss [excluding Rs. 1,050.75 (Rs. 1,752.73) in respect of retired employees which has been provided on actual basis]

3,156.02 11,172.89

Actual Return on Plan Assets 7.5% / 8% / 9.78%

7.5% / 8% / 9.72%

iv) Amounts recognised in Balance Sheet:

Present Value of Obligation as at the end of the period

41,707.78 35,230.33

Fair Value of Plan Assets at the end of the period

38,543.55 24,657.24

Funded Status (3,148.42) (10,541.86)

Unrecognised Actuarial (gains) / losses

- -

Liability recognised in Balance Sheet [excluding Rs. 1,050.75 (Rs. 1,752.73) in respect of retired employees which has been provided on actual basis & after considering payments to the Trust during the year]

3,164.23 10,573.09

v) Category of Assets as at March 31, 2010

State Govt. Securities 14.30% 23.94%

Govt. of India Securities 2.77% 9.14%

ParticularsConsolidated

2009-10 2008-09

High Quality Corporate Bonds 22.99% 45.64%

Special Deposit 0.61% 0.97%

Investment with Insurer59.33% /

100%20.31% /

100%

vi) Principal Assumptions:

Discounting rate 8% / 8.25% / 8.45%

6.25% / 7.50% / 8%

Salary escalation rate 5% / 7.5% / 8%

5% / 6.25% / 8%

Expected rate of Return on Plan Assets

7.50% / 8% / 9.78%

7.50% / 8% / 9.72%

BEL Retired Employees Contributory Health Scheme (BERECHS):

ParticularsConsolidated

2009-10 2008-09

i) Change in Benefit Obligations :

Present Value of Obligation (PVO) as

at the beginning of the year

11,383.04 10,535.00

Current Service Cost 733.26 643.87

Interest Cost 878.45 767.26

Actuarial (gain) / Loss 773.53 46.65

Benefits paid (804.88) (609.74)

Present Value of Obligation as at the

end of the period

12,963.40 11,383.04

ii) Change in Fair Value of Plan Assets:

Fair Value of Plan Assets at the

beginning of the year

- -

Expected return on Plan Assets - -

Contributions 804.88 609.74

Benefit paid (804.88) (609.74)

Actuarial gain / (loss) - -

Fair Value of Plan Assets at the end

of the period

- -

Schedules to Consolidated Financial Statements (Contd.)(Rs. in Lakhs)

88

ANNUAL REPORT 2009 - 10

ParticularsConsolidated

2009-10 2008-09

iii) Expenses Recognised in the Statement of Profit & Loss

Opening Net Liability - -

Current Service Cost 733.26 643.87

Interest on Defined benefit obligation

878.45 767.26

Expected return on Plan Assets - -

Net Actuarial (gain) / loss recognised in the period

773.53 46.65

Expenses Recognised in the Statement of Profit & Loss A / c

2,385.24 1,457.78

Add : Amortisation of Initial Actuarial Liability towards existing employees (valued on 31.03.2004) over 14 years

333.85 333.85

Net Expenses Recognised in the Statement of Profit & Loss A / c (Expenses: Rs. 804.89, Provisions: Rs. 1,914.20)

2,719.09 1,791.63

iv) Principal Assumptions :

Discounting Rate 8.00% 7.50%

Rate of increase in compensation level

7.50% 6.25%

Health care costs escalation rate 6.00% 6.00%

Attrition Rate 1.50% 2.00%

v) Amounts recognised in Balance Sheet:

Present Value of Obligation as at the end of the period

12,963.40 11,383.04

Fair Value of Plan Assets at the end of the period

- -

Funded Status (12,963.40) (11,383.04)

Unrecognised Actuarial (gains) / losses

- -

Liability recognised in Balance Sheet (as per actuarial valuation)

12,963.40 11,383.04

Less: Initial actuarial Liability towards existing employees (valued on 31.3.2004) Amortised over 14 years

2,972.56 2,972.56

ParticularsConsolidated

2009-10 2008-09

Add : Amortisation of above initial actuarial liability till 2009-10

2,336.92 2,003.07

Liability recognised in Balance Sheet 12,327.76 10,413.55

vi) Effect of a one percentage point increase in assumed health care cost trend rates on the aggregate of the service cost and interest cost and defined benefit obligation

Effect on the aggregate of the service cost and interest cost

42.63 33.88

Effect on defined benefit obligation 324.08 284.57

vii) Effect of a one percentage point decrease in assumed health care cost trend rates on the aggregate of the service cost and interest cost and defined benefit obligation

Effect on the aggregate of the service cost and interest cost

(42.41) 33.67

Effect on defined benefit obligation (323.35) (284.01)

Long Term Compensated Absence Scheme:

ParticularsConsolidated

2009-10 2008-09

Expenses Recognised in the Statement of Profit & Loss A / c

5,095.21 4,476.25

i) Principal Assumptions:

Discounting Rate 8% / 8.25% /

8.45%6.25%

7.50% / 8%

Rate of increase in compensation level

5% / 7.55% / 8%

5% / 6.25% / 8%

ii)Amounts recognised in Balance Sheet:

Liability recognised in Balance Sheet (as per actuarial valuation)

16,672.53 13,938.39

Provident Fund Contributions:

The Parent Company has separate Trusts for Provident Fund.

During the year the Parent Company has recognised an amount of

Rs. 5,633.16 (Rs. 4,570.20) towards contribution to Employees

Schedules to Consolidated Financial Statements (Contd.)(Rs. in Lakhs)

89

ANNUAL REPORT 2009 - 10

Provident Fund and Pension Schemes in the Profit and Loss

Account. The guidance on implementing AS 15 (Revised) issued

by the Institute of Chartered Accountants of India states that

provident funds setup by Employers that guarantee a specified

rate of return and which require interest shortfalls to be met by the

employer would be defined benefits plans in accordance with the

requirements of paragraph 26(b) of AS 15® and actuarially valued.

Pursuant to the Guidance Note, the Parent Company has

determined on the basis of Actuarial Valuation carried out as at

31st March 2010 that there is no liability towards the interest

shortfall on valuation date under para 55 and 59 of AS 15 (R) (having

regard to terms of plan that there is no compulsion on the part

of the Trust to distribute any part of the surplus, if any, by way of

additional interest on PF balances).

The following tables summarise the Disclosure Report provided by

the Actuary:

Particulars 2009-10 2008-09

i) Change in Benefit Obligations :

Present Value of Obligation as at

the beginning of the year73,834.61 70,481.25

Current Service Cost 15,480.76 14,426.01

Interest Cost 5,060.33 4,750.58

Past Service Cost (Non vested

Benefits)- -

Past Service Cost (vested Benefits) - -

Actuarial (gain) / Loss 2,092.02 (1,542.88)

Benefits paid (12,727.15) (14,280.35)

Present Value of Obligation as at

the end of the period83,740.57 73,834.61

ii) Change in Fair Value of Plan

Assets:

Fair Value of Plan Assets at the

beginning of the year82,664.65 75,203.16

Expected return on Plan Assets 7,307.34 6,609.82

Contributions 14,422.76 14,955.71

Benefit paid (12,727.15) (14,280.35)

Actuarial gain / (loss) on Plan

Assets53.22 176.31

Particulars 2009-10 2008-09

Fair Value of Plan Assets at the end

of the period

91,720.82 82,664.65

iii) Expenses Recognised in the

Statement of Profit & Loss A / c

Opening Net Liability - -

Current Service Cost 15,480.76 14,426.01

Interest Cost 5,060.33 4,750.58

Expected return on Plan Assets (7,307.34) (6,609.82)

Net Actuarial (gain) / loss

recognised in the period

2,038.80 (1,719.19)

Past Service Cost (Non vested

Benefits)

- -

Past Service Cost (vested Benefits) - -

Expenses Recognised in the

Statement of Profit & Loss A / c

15,272.55 10,847.58

iv) Amounts recognised in Balance

Sheet :

Present Value of Obligation as at

the end of the period

83,740.57 73,834.61

Fair Value of Plan Assets at the end

of the period

91,720.82 82,664.65

Difference (7,980.25) (8,830.04)

Unrecognised Actuarial

(gains) / losses

- -

Liability recognised in Balance

Sheet

- -

v) Amount for the Current Period

Present Value of Obligation 83,740.57 73,834.61

Plan Assets 91,720.82 82,664.65

Surplus / (Deficit) 7,113.25 8,830.04

Experience Adjustments on Plan

liabilities - (Loss) / Gain

(1,572.56) 1,542.88

Experience Adjustments on Plan

Assets - (Loss) / Gain

53.22 176.31

vi) Category of Assets as at

31st March 2010

Government of India Securities 25.60% 15.42%

Schedules to Consolidated Financial Statements (Contd.)(Rs. in Lakhs)

90

ANNUAL REPORT 2009 - 10

Particulars 2009-10 2008-09

State Government Securities 15.28% 20.98%

High Quality Corporate Bonds 58.78% 45.37%

Equity shares of listed companies 0.00% 0.00%

Property 0.00% 0.00%

Special Deposit Scheme 0.34% 18.22%

Mutual Funds 0.00% 0.01%

Cash 0.00% 0.00%

Total 100.00% 100.00%

vii) Principal Assumptions:

Discounting Rate 8.00% 7.50%

Salary escalation rate 7.50% 6.25%

Expected rate of Return on Plan

Assets

8.75% 8.75%

The Subsidiary (BELOP) and JVC (GE BE) are funding the Provident

Fund contributions with the Government Provident Funds.

13. Interest in Joint Venture Companies (JVCs):

Disclosure of interest in joint ventures, as per Accounting

Standard 27, is as under:

Name of Joint VenturesProportionate

Ownership of BEL(a) GE BE Private Limited

(b) BEL Multitone Private Limited

Country of Incorporation

The Company’s share of contingent liabilities

in the JVCs is included under Note 14.

26%

49%

India

14. Contingent Liabilities (including share in JVCs):

Claims not acknowledged as debts Rs. 10,893.97 (Rs. 6,162.48)

Outstanding letters of Credit Rs. 22,673.05 (Rs. 33,718.42)

Others Rs. 397.30 (Rs. 291.81)

LD on unexecuted supplies Rs. 4,873.96 (Rs. 6,852.52)

15. The Parent Company (BEL) is engaged in manufacture and

supply of strategic electronic products primarily to Defence

Services and hence it would not be in public interest

for the Company to present segment information. For

similar reasons the Company has been granted exemption

from publication in the annual accounts of Quantitative

Particulars required under Schedule VI to the Companies

Act, 1956. The SEBI has also granted exemption, for these

reasons, to the Company from publication of segment

information required under Accounting Standard 17 (AS 17)

in quarterly un-audited financial results. Hence, Segment

information required under AS 17 are not disclosed.

Such non-disclosure has no financial effect.

16. Related Party Transactions:

The related party transactions during the year with JVCs are

given below :

GE BE Private Limited (Equity Holding 26%); and

BEL Multitone Private Limited (Equity Holding 49%)

Natures of transactions with these Companies (on 100%

basis) are as follows:

Sl. No.

Particulars

Joint Ventures Companies

Grand TotalGE BE

Private Limited

BEL Multitone

Pvt. Limited1 Purchase of Goods -

(-)-(-)

-(-)

2 Sale of Goods 1,048.37(930.18)

-(-)

1,048.37(930.18)

3 Rendering Services -(0.12)

-(-)

-(0.12)

4 Receiving Services 1.41(-)

-(-)

1.41(-)

5 Rent Received -(-)

0.34(0.32)

0.34(0.32)

6 Dividend Income on Investments

260.00(260.00)

-(-)

260.00(260.00)

7 Creditors outstanding as on 31.3.2010

0.07(0.07)

-(-)

0.07(0.07)

8 Debtors outstanding as on 31.3.2010

323.98(273.76)

-(-)

323.98(273.76)

9 Provision for doubtful debtors as on 31.3.2010

17.88(18.41)

-(-)

17.88(18.41)

10 Investment inEquity as on 31.3.2010*

260.00(260.00)

31.88 * (31.88)

291.88(291.88)

* A Provision of Rs. 29.90 towards diminution in value of

investment in BEL Multitone Private Limited has been

made by BEL in 2007-08 and the JVC is in the process of

being wound up.

The Key Management Personnel are as follows:

(a) Shri A K Datt, Director, CMD from 1 / 5 / 2009

(b) Shri V V R Sastry, CMD upto 30 / 04 / 2009

(c) Shri P R K Hara Gopal, Director (Finance) upto

31 / 07 / 2009

91

ANNUAL REPORT 2009 - 10

For R G N Price & Co.

Chartered Accountants

H S Venkatesh

Partner

Membership No. 026666

Firm Regn. No. 002785S

Place : Bangalore

Date : 30th July 2010

Ashwani Kumar Datt

Chairman & Managing Director

M G Raghuveer

Director (Finance)

C R Prakash

Company Secretary

(d) Shri M L.Shanmukh, Director (Human Resources)

(e) Shri H S Bhadoria Director (Bangalore Complex)

(f) Shri N K Sharma, Director (Marketing) upto

31 / 8 / 2009

(g) Shri M G Raghuveer, Director (Finance) from

1 / 8 / 2009

(h) Shri H N Ramakrishna, Director (Marketing) from

1 / 9 / 2009

(i) Shri I V Sarma, Director (R&D)

(j) Shri Anil Kumar, Director (OU) from 03 / 02 / 2010

(k) Shri Srikant Srinivasan, MD, GE BE Private Ltd.

The total salary including perquisites drawn by the above

key management personnel during the year 2009-10 are

Rs. 340.14 (Rs. 194.37) as detailed below:

Salary & Allowances including benefits Rs. 224.54 (Rs. 91.83)Contribution to Provident Fund & Gratuity etc. Rs. 51.73 (Rs. 80.38)Leased Accommodation Rs. 43.01 (Rs. 17.95)Others Rs. 20.86 (Rs. 4.21)

17. Break up of Net Deferred Tax Assets is given below:

2009-10 2008-09Deferred Tax Assets:Provision against Debts, Inventory, Performance Guarantee & Leave Encashment etc.

19,925.19 18,882.40

Technical Know-how Fee 302.55 228.35 20,227.74 19,110.75

Deferred Tax Liability:Depreciation 4,395.37 4,307.53

4,395.37 4,307.53 Net Deferred Tax Assets 15,832.37 14,803.22

18. Disclosure as required under AS 29 - Provisions, Contingent

Liabilities and Contingent Assets:

Provision for warranty is made towards meeting the

expenditure on account of Performance Guarantee and

warranties in accordance with the Accounting Policy. The

details of the same are given below:

Opening Balance

as on 01 / 04 / 2009

Additional Provisions

made during the

year

Amounts used

during the year*

Unused Amounts reversed

during the year

Closing Balance

as on 31 / 03 / 2010

3,860.09

(3,889.64)

1,468.60

(1,180.48)

487.75

(529.89)

717.58

(680.14)

4,123.36

(3,860.09)

* includes Rs. Nil (Rs. 40.19) debited to opening provision.

19. The Parent, Subsidiary and JVCs do not have any derivative

instruments. One of the JVC viz. GE BE Pvt. Ltd., has

taken forward contracts to mitigate its risks associated

with foreign currency fluctuations in respect of highly

probable forecasted transactions. The JVC does not enter

into any forward contract which is intended for trading or

speculative purposes.

20. Previous year figures represent the corresponding figures

as appearing in the Consolidated Financial Statements

of the Company as on 31.03.2009, which have been

regrouped / reclassified wherever necessary. Figures for

the current year of the group have been regrouped /

reclassified wherever necessary to conform to the Parent

Company’s presentation. Figures in brackets relate to

previous year.

92

ANNUAL REPORT 2009 - 10

Consolidated Cash Flow Statement for the year ended 31st March 2010 (Rs in Lakhs)

Particulars 2009-10 2008-09A. CASH FLOW FROM OPERATING ACTIVITIES:

Net Profit Before Tax as per Profit & Loss Account 107,073.31 110,979.37Adjustments for:

Extraordinary Items - -Depreciation (incl. prior period items) 12,229.29 11,284.36Income from Investments -17,575.21 -16,814.51Provision for Employee Benefits 519.37 15,750.32Provision for Contingencies towards Long-term Contract -3,358.52 148.12Provision for Performance Guarantee 263.27 -29.55Interest Expense 58.47 1,082.76Profit on Sale of Fixed Assets -343.30 -108.34Transfer from Government Grants -976.22 -333.19

ESOP amortisation - GE BE Pvt. Ltd. 0.93 0.92Operating Profit Before Working Capital Changes 97,891.39 121,960.26Adjustments for:

Trade and Other Receivables 17,442.85 -23,225.25Inventories -2,634.43 -107,368.33Trade Payables & Advances 28,143.55 86,696.08

Cash Generated from Operations 140,843.36 78,062.76Receipt of Grants 661.99 645.75Direct Taxes Paid (Net) -36,135.93 -37,799.69

Cash Flow Before Extraordinary Items 105,369.42 40,908.82Extraordinary Items - -

Net Cash from Operating Activities 105,369.42 40,908.82B. CASH FLOW FROM INVESTING ACTIVITIES:

Purchase of Fixed Assets -12,751.67 -17,714.49Sale of Fixed Assets 366.27 133.37Bank Deposits -128,255.62 3,734.42Interest Income 17,575.21 16,814.51Net Cash from / (used) in Investing Activities -123,065.81 2,967.81

C. CASH FLOW FROM FINANCING ACTIVITIES:Increase / Decrease in Long-term Loan Borrowings -55.97 -24.16Increase / Decrease in Short-term Borrowings - -Dividends Paid (including Dividend Tax) -17,548.79 -19,416.82Interest Expense -58.47 -1,082.76Net Cash used in Financing Activities -17,663.23 -20,523.74Net Increase / Decrease in Cash and Cash Equivalents (A+B+C) -35,359.62 23,352.89Cash and Cash Equivalents at the beginning of the year 127,774.01 104,421.12Cash and Cash Equivalents at the end of the year 92,414.39 127,774.01

Notes:1. The above statement has been prepared under indirect method as per the Accounting Standard on Cash Flow Statement (AS - 3)2. Additions to Fixed Assets are stated inclusive of movements of Capital Work-in-Progress between the beginning and end of the period and treated as

Investing Activities.3. “Cash and Cash Equivalents” consists of Cash on hand, Balances with Banks and Deposits having a maturity period of three months or less from the date

of deposit. Cash and Bank Balance shown in Schedule No. 11 is inclusive of Rs. 266,255.26 (Rs. 137,999.64) being the deposits having an original maturity period of more than three months.

For R G N Price & Co.Chartered Accountants

H S VenkateshPartnerMembership No. 026666Firm Regn. No. 002785S

Place : BangaloreDate : 30th July 2010

Ashwani Kumar DattChairman & Managing Director

M G RaghuveerDirector (Finance)

C R PrakashCompany Secretary