Bharat Dynamics Ltd

DeAR ShARehOLDeRS,

At the outset, I would like to extend my gratitude to each of you for your continued support and investment in BDL. Your unwavering support and faith in us inspires us to achieve new milestones of success.

I take pleasure in sharing with you the 53rd Annual Report of BDL, a company built over more than five decades of spirited and perseverant efforts by a highly skilled work force.

Despite the operational and supply chain disruptions caused by the current global scenario, BDL?s performance throughout the financial year 2022 23 has been impressive, bearing testimony to the hard work put forth by all the stakeholders associated with the company.

The Government of India?s initiatives to make India self-reliant in providing state-of-the-art weapon systems to the Indian Armed Forces and clearance for export to Friendly Foreign Countries (FFCs) have opened plenty of opportunities for BDL to grow and expand into the market. BDL has set the path to work towards more opportunities and live I take this opportunity to share the performance highlights during the last financial year and the future outlook for BDL. fInanCIal and performanCe hIghlIghts of the year:

BDL achieved productionof 2508.43 crore as against 2901.76 crore of previous financial year and also achieved sales turnover of 2489.39 crore as against 2817.40 crore of previous financial year.

BDL has achieved a profit after tax (PAT) of 352.17 crore as against a profit of 499.92 crore reported in the previous financial year. I am extremely pleased to inform you that BDL continues to maintain a consistent dividend payment. Your Board has recommended a final dividendof 1.20perequityshareof 10each,amounting 21.99 crore. It also gives me great pleasure to inform you that BDL has already paid an interim dividend of 8.15 per share in February 2023. The total dividend for FY 2022 23 declared by the company is 9.35 per share (face value of 10 each).

PeRfORMANCe ViS-A-ViS MoU:

In terms of the Memorandum of Understanding (MoU) signed with the Department of Defence Production, Ministry of Defence (MoD), Government of India, BDL has been rated "Very Good" for the year 2021 22, and for 2022 23, it is under evaluation. new partners In pursuItof teChnologyupgradatIon:

Technology upgradation has always been an area of priority for BDL in order to keep pace with the current requirements in the global defence industry. In pursuit of this, BDL has entered into MoUs or teaming agreements with several entities, like: MoU with MBDA, France, for the manufacturing of Mistral missiles in India for supply to the IAF.

MoU with a startup, i.e., M/s New Space Technologies, Bangalore, on product development, including integration of BDL payload(s) onto the UAV platforms of M/s NRT for military applications, technical support, armament support, and infrastructure support.

MoU with BHEL for jointly working on the emerging opportunities in the Indian defence and aerospace market, especially the space sector.

MoU with Raphe mPhibr Private Limited, Noida, to work together on UAVs and launch systems for the ULPGM project. MoU with Dassault Aviation Pvt. Ltd., France, for the integration of BDL weapon systems like Astra and SAAW on Rafale aircraft for the Indian Armed Forces and future export markets MoU with Thales Belgium S.A. and Thales India Private Limited for the setting up of manufacturing facilities Rocket and its major components in India, to be a part of Thales global supply chain for future requirements of Thales export markets and also for the India market.

MoU with BARIJ Dynamics LLC ("AL TARIQ"), Abu Dhabi, United Arab Emirates, to cooperate together for the manufacturing of PGM kits in India, both for India as well as the export market.

MoU with BULTEXPRO LTD., Bulgaria, for setting up the manufacturing facilities for 122mm GRAD BM ER and non-ER rockets in India, including ToT.

BDL has also entered into a Licencing Agreement for Transfer of Technology (LAToT) with Research Centre Imarat (RCI, DRDO

Lab) for the manufacturing of Ceramic Radomes (GELCAST Process). dIVersIfICatIon plan:

As part of BDL?s diversification plan, we have identified new verticals such as guided bombs, drone-delivered payloads, warhead manufacturing, products for space applications and propellants. These endeavors are expected to create new business opportunities Apart from missiles, which have been the mainstay of BDL, infrastructure is being set up in the Jhansi plant for the manufacture of rockets and propellants. Production will commence on receipt of orders from the Indian Armed Forces with ToT from the foreign technology partner. new InfrastruCture:

To support our growth, BDL has undertaken initiatives to set up new infrastructure facilities, including the RF SEEKER facility, Warhead Manufacturing Facility, SMT Line and High Computing Testing Facility, State-of-the-Art Stores and Environmental Test Facility, and a modular Automatic Storage and Retrieval System facility. These initiatives will enhance our self-reliance and contribute to BDL?s Atmanirbhar campaign.

QualItysystems :

Being a missile manufacturing company and producing single-shot devices, the quality of the product is of paramount importance, and our products should work the first time and every time.Hence, these products require stringent quality standards and a high degree of reliability. In pursuit of this objective, BDL has adopted and maintains international quality standards. As you are aware, the production units in Kanchanbagh and Bhanur are already certified with the International Aerospace Quality Management Standard AS 9100D. BDL?s corporate office has been re-certified with ISO 9001:2015 by the certification body, M/s Novo Star Management Systems Solution India Pvt. Ltd.

new InItIatIVes:

In the spirit of Atmanirbharta in defence, BDL has taken up many new initiatives during the year. In this endeavour, Hon?ble RM inaugurated the Warhead Manufacturing Facility at the BDL Bhanur Unit, the Seeker Manufacturing Facility at the BDL Kanchanbagh Unit, and the Central Storage Facility at the BDL Visakhapatnam Unit.

ReSeARCh AND DeVeLOPMeNt (R&D):

Research and Development (R&D) remain crucial for BDL, and we continuously work on new product development and the upgradation of existing products to meet customer requirements.

Corporate goVernanCe:

BDL has a well-established relationship between Company?s Management, its board, its shareholders, and other stakeholders. With its well-laid-out principles,policies,procedures, responsibilitiesand accountabilities, BDL has the perfect means clearlydefined of attaining its objectives and systems in place for monitoring the performance. BDL conducts business with the highest ethical standards and prohibits all forms of bribery and corruption across all units of the organisation. During the year under review, no such instances of bribery or corruption were reported.

BDL?s activitiesare monitored by several external agencies like the Statutory Auditors, Comptroller and Auditor MoD (Dept. of Defence Production), etc.

I am glad to inform you that BDL has been consistently rated "excellent" by the MoD in the Corporate Governance category, which itself is a testimony to the established mechanisms, relations, regulations, and processes by which it is

CORPORAte SOCiAL ReSPONSiBiLitY AND SUStAiNABiLitY DeVeLOPMeNt:

BDL is conscious of its responsibilities towards society, and as per the provisions of the Companies Act, 2013, BDL is spending 2% of the average net profits of the immediate three preceding financial years towards CSR activities. The core areas of focus under CSR are healthcare, nutrition, education and literacy, skill development and sanitation, PM TB Mukth Abhiyan, Sahara hostel for Veer Naaris, etc. BDL, as per DPE Guidelines, has also ventured into aspirational districts and underdeveloped areas in Telangana and Andhra Pradesh to undertake corporate social responsibility (CSR).

Some of the major projects taken up during the year are as follows:

Establishment of Molecular Oncology Dept. and Procurement of equipment at MNJIO and Regional Cancer Centre, Hyderabad, Telangana State, with an estimated budget of 100 lakh, wherein BDL is supporting up to 75 lakh.

Fitment of Cochlear Implants to Children with Hearing Impairment through ALIMCO in Telangana and Andhra Pradesh, with an Outlay of 335 lakh Distribution of aids and appliances, including Artificial Limbs and Callipers, to Persons with in Aspirational Districts of Telangana, with an estimated budget of 50 lakh Awareness creation and supply of sanitary napkins to girl students of government an outlay of 100 lakh.

Construction of Panah (Sahara) Hostel for Veer Naaris (Naval Widows) with an estimated budget of supporting up to 200 lakh Supporting the Dokra and Terracota Craft Development Project at Kumurumbheem Asifabad (Aspirational District), Telangana, with an estimated budget of 76.35 lakh Contributed for Pradhan Mantri TB Mukth Abhiyan towards nutrition support to TB patients at Jayashankar Bhupalpally and Mulugu District of Telangana State to the extent of 35 lakh. wayforward :

The year 2022 23 ended with turnover of 2489.39 crore as compared to 2817.40 crore of previous financial year. The execution of orders got hampered due to various operational and technical challenges such as design improvements, delays in receipt of critical electronic components etc. BDL is taking all steps to overcome these constraints and looking forward to execute the orders within the given time frames of the contracts.

In addition to above, BDL has now started concentrating on export opportunities. Even though our main customers are the Indian Armed Forces, Company is exploring new markets for immediate growth. Many leads have been received from friendly foreign countries which are been pursued vigorously to convert them into firm orders. In order to sustain business and grow, BDL is making all efforts to ensure that these orders are executed within the delivery schedule with high quality at a competitive price. The government is putting a lot of restrictions on imports and giving impetus to reduce foreign importance of enhancing indigenization for self-reliance is noted. In R&D, we have increased the expenditure and extended all the support. Emphasis is being laid on timelines for R&D Projects. Accordingly, marketing efforts are put in place to generate revenue from successful R&D Projects. future outlooK:

BDL is going to witness high growth in the coming years. As on 01 April, 2023, the order book position of BDL is 20054 Crore (Net). We are further able to consolidate our order book with more orders that are in various stages of finalisation and are expected to materialise in 2023 24.

The positive Indigenization List brought out by the Gol in terms of restriction of imports in different phases opportunity to get continuous orders for these products for BDL from the Indian Armed Forces in the ensuing years, which will help to improve the BDL order book as well as help further growth of the company.

In the export market, there is interest in BDL?s products like Akash Weapon Systems from potential buyers. BDL is in the process of converting the leads received into orders. In order to further consolidate the order book of the company, there is a huge emphasis laid by BDL on the necessity of realising export orders, and the company is pursuing the same aggressively.

BDL is confident in the realisation of the potential orders due to the policy initiatives of the government and the ease of doing business in the country.

BDL is also investing in R&D activities both in-house and in association with DRDO for various programmes. BDL is also entering into various agreements with foreign OEMs, both for manufacturing in India as well as joint development programmes.

BDL?s future prospects appear promising, buoyed by a robust order book position and a stream of anticipated orders in the pipeline. In addition to that, the right support and policy initiatives from the Government of India further bolster the positive outlook ahead for your Company. aCKnowledgement:

I wish to place on record, on behalf of the entire BDL family, our sincere thanks and gratitude to investors and shareholders who have reposed trust in this company and continued to support us in all our endeavours through this financial year. I also look forward to the same support from investors in the years to come.

My special thanks also go to the MoD, Government of India, DIPAM, State Governments, Customers, Inspection Agencies, DPSUs, our vendors, Employees of BDL and all the agencies involved directly or indirectly in the growth of this company.

I also thank the board members for their valuable guidance and encouraging support in the functioning of the company Finally, let me assure you that BDL is poised to reach greater heights. The entire fraternity of BDL will strive to achieve the desired results and exceed the investors? expectations.

I am proud of what we?ve accomplished together in the past few years, and I am even more optimistic about the opportunities ahead.

Jai hind!!!