Bharat Electronics Ltd

To the Members,

Your Directors take pleasure in presenting this Integrated Annual Report and the Audited Financial Statements for the financial year ended 31 March 2024 together with the reports of the Statutory Auditors and the Comptroller and Auditor General of India thereon.

Financial Results and Performance Highlights

Financial results and performance highlights of the Company are summarised below:

( Rsin Lakhs)

Distribution of Value of Production for 2023-24 is given below:

( Rsin Lakhs)

The Company's turnover for FY 2023-24 increased to Rs19,81,993 Lakhs from Rs17,33,337 Lakhs in the FY 2022-23, registering a growth of 14.35%. The Profit After Tax (PAT) for FY is Rs4,02,000 Lakhs as compared to Rs3,00,667 Lakhs in the previous year. Turnover from indigenously developed products was 77%. Contribution for Defence supplies was at 80.70% of the turnover in FY 2023-24 as compared to 87% in the previous year.

Dividend

In pursuant to Regulation 43A of the SEBI (LODR) Regulations, 2015, the Board of Directors of the Company formulated a Dividend Distribution Policy keeping in view the provisions of the SEBI (LODR) Regulations, 2015, the Companies Act, 2013, Guidelines issued by the SEBI, DPE, DIPAM, Ministry of Finance and other Guidelines to the extent applicable to the Company. The Policy is placed on the Company's website at - https://bel-india.in/wp-content/uploads/2023/01/Board-approved-Dividend-Distribution-Policy.pdf

Our consistent performance and long-term value creation have been reflected in the quantum of Profits/Reserves distributed to Shareholders by the Company. The Board of Directors has recommended a final dividend of Rs0.80/- per equity share (80%), amounting to Rs58,478 Lakhs for FY 2023-24. The first interim dividend of Rs0.70 per equity share (70%) and the second interim dividend of Rs0.70 per equity share (70%) have been paid to the shareholders for FY 2023-24. Thus, the total dividend for FY 2023-24 is Rs2.20/- per equity share (220%), amounting to Rs1,60,815 Lakhs.

Transfer to Reserves

An amount of Rs40,000 Lakhs has been transferred to General Reserves for FY 2023-24.

Share Capital

The Company's authorised capital was Rs75,000 Lakhs (7,50,00,00,000 equity shares of Rs1/- each) and paid-up share capital was Rs73,098 Lakhs (7,30,97,78,829 equity shares of Rs1/- each fully paid-up) as on 31 March 2024. There was no change in the authorised/paid-up share capital of the Company during FY 2023-24.

Major Orders Executed

Long-Range Surface-to-Air Missile (LRSAM) Systems, Akash Missile Systems, SATCOM Network, Command & Control Systems, various Radars, Electronic Warfare Systems, Communication Equipment, Sonars, Electronic Voting Machine, Voter Verifiable Paper Audit Trail, Electro-optic Systems, Fire Control Systems, Home Land Security Systems, Smart City Projects etc.

Exports

Your Company has been exporting various products, systems and services to a number of foreign countries. Your Company has been giving enhanced thrust towards addressing the export opportunities in defence and non-defence areas and this has resulted in achieving export sales of US$ 92.98 Million in FY 2023-24 compared to US$ 48.33 Million in FY 2022-23. Some of the countries to which your Company has exported its products and systems are Spain, USA, UK, France, Germany, Israel, Sweden, Mauritius, Sri Lanka and SEZs. The major products/systems exported include Radar Warning Receiver, Missile Approach Warning System, T R Modules, Data Link II, Coastal Radar Systems, Mechanical Parts, Communication Equipment, EO System, Smart Mail Box, Services, etc.

Increase in export sales was mainly due to the concerted efforts and new initiatives taken by your Company. Continuous interactions with MEA, MoD and prospective customers, proactive offering of products, systems and services, undertaking and completing on-time delivery of customised projects have resulted in increased export sales. More efforts are directed towards providing efficient support/services to the customers.

During FY 2023-24, your Company has acquired export orders worth US$ 211.41 Million from various countries viz., USA, UK, France, Germany, Israel, Sweden, Mauritius, Denmark etc. Your Company has achieved an all-time high export order book of US$ 407.014 Million as on 1 April 2024. Over the years, your Company has established long term relationship with current and prospective customers.

Along with Defence, your Company is also exploring opportunities for civilian products and solutions in developed and developing countries in the areas of Artificial Intelligence (AI), Software Applications, Civil Aviation Radars, Smart Mail Box, Smart Cities, Critical Infrastructure Development, Solar Power Generation, Electronics System Design & Manufacturing Services, Wireless Communications etc.

Your Company is also focussing on various opportunities in the area of Offset Business from foreign OEMs. Your Company is also closely working and partnering with various major foreign Aerospace and Defence Companies by offering products and systems to meet their specific requirements. Your Company has identified Contract Manufacturing (Build to Print and Build to Spec) and Transfer of Technology for the latest systems and solutions as emerging export opportunities.

Further, efforts are put in to establish long-term supply chain relationships with global OEMs. In this regard, your Company has offered various products and services to major Platform OEMs and their Tier-I suppliers. This has helped your Company in leveraging partnership for co-development, co-production, transfer of technology, and similar arrangements with various OEMs to undertake manufacturing of their products at your Company's facilities and utilisation of services of your Company not only for Indian programs but also for their global requirements.

Persistent efforts by your Company have resulted in acquiring new customers from targeted geographical locations such as UK, Israel and SEZ - India. During the year, new proposals for Avionics, Radar Modules, Software Development Services, C4I etc. were submitted to global customers and foreign ministries.

Actions by your Company to enhance exports are as follows:

• Emphasis on Make in India and "Sell Globally" approach.

• Co-development/Co-production of products with foreign OEMs.

• Efforts to achieve "Single Vendor" status by offering customised solution/products.

• Joint working with DRDO to offer customised products and services in the export market.

• Collaboration with Indian OEMs to offer complete platform solutions to foreign customers.

• Establishing long term supply chain relations with global OEMs.

• Focus on big programs (C4I, Gun/Missile Systems/ Tank & Gun Upgrades etc.).

• Partnership with foreign local industry for business development and increasing local content.

• Leveraging the reach of Channel Partners.

• Establishing new overseas office.

• A vionics & EW Systems

• Weapon Locating Radar

• Electronic System Design & Manufacturing

• Coastal Radar System

• Ship Upgrade Tank & Gun Upgrade

• Air Space Protection System

• Thales, France

• BAE Systems, UK

• Lockheed Martin, USA

• Airbus Defence & Space, Spain

• Terma, Denmark

• Elbit Systems, Israel

• IAI, Israel

• SAAB, Sweden

• GE Medical Systems, US

• GE Healthcare, US

• Sri Lankan Navy

• Ministry of Defence, Armenia

• Maldives' Navy

• Ministry of Civil Aviation, Mauritius etc.

• Data Link II

• Radar Warning Receiver

• Missile Approach Warning System

• Electro-Optics Systems

• EW & Radar Modules

• Software Development Services

MoU with the Government

Your Company has been signing a Memorandum of Understanding (MoU) every year with the Ministry of Defence, Government of India based on guidelines issued by DPE. Performance of the Company for FY 2022-23 has been rated as "Very Good". The MoU rating for FY 2023-24 is yet to be furnished.

Order Book Position

The order book of the Company as on 1 April 2024 is around

Rs75,934 Crore. The order book comprises major programmes like Long-Range Surface-to-Air Missile (LRSAM) Systems, Missile Systems, Electronic Fuzes, Electronic Warfare, Avionics, Anti-Submarine Warfare, Network Centric Systems, Communication Equipment, Radars, Fire Control Systems, Thermal Imagers, Smart City Projects etc.

Finance

Your Company has been prudent in its financial management practices. It has been much disciplined in its Capital allocation strategy and efficient in managing its operational expenses. During FY 2023-24, the Company has met all its CAPEX and working capital requirements through internal accruals. All the above measures have contributed to consistent growth in all parameters. The Company's PBT has grown to Rs5,33,456 Lakhs in FY 2023-24 from Rs3,98,488 Lakhs in FY 2022-23. During FY 2023-24, EPS has increased to Rs5.50 from Rs4.11 in FY 2022-23. Net worth of the Company has increased to

Rs16,08,239 Lakhs in FY 2023-24 from Rs13,58,199 Lakhs in FY 2022-23 and corresponding Book Value per Share (BVPS) has increased to Rs22.00 in FY 2023-24 from Rs18.58 in FY 2022-23.

In spite of increase in Turnover in FY 2023-24 to Rs19,81,993 Lakhs from Rs17,33,337 Lakhs in FY 2022-23, Trade Receivable as a number of days of Turnover have decreased to 136 days in FY 2023-24 as against 148 days in respect of the previous year. During FY 2023-24, Inventory as a number of days of Value of Production has remained at 133 days as against 132_days in the previous year.

Deposits

The Company does not have any Public Deposit Scheme at present. However, the matured Public Deposit amount (collected prior to February 2006) with the Company was

Rs36.95 Lakhs as on 31 March 2024. Out of this, 34 deposits amounting to Rs36.50 Lakhs have not been claimed or have not been paid as these accounts were frozen on the advice of the Karnataka Lokayukta. The remaining matured deposits of

Rs0.45 Lakhs as on 31 March 2023 is unpaid due to insufficient documents/records produced by the Depositors.

Research & Development

BEL's Research and Development (R&D) philosophy is to enhance its pre-eminence in products/services for Defence and Professional Electronics through Research & Development. BEL's R&D strives for the development of new products built with cutting-edge technology modules. While fully meeting the customer requirements, the products developed by the Company are state-of-the-art, competitive and incorporate the highest levels of quality and reliability.

R&D has been one of BEL's core strengths which is being enhanced through in-house and collaborative R&D modes. Various divisions of BEL are involved in the development of Strategic Components, Technology Modules, Subsystems, Products, Systems and Systems of Systems.

BEL has a Three-Tier R&D structure, namely Central Research Laboratories (CRLs); Product Development and Innovation Centre (PDIC) & Centres of Excellence (CoEs);and Development and Engineering (D&E) groups attached to Strategic Business Units (SBUs)/Units. All the R&D/D&E centres of BEL have been recognised by the Department of Scientific & Industrial Research (DSIR) and function at multiple locations across India. D&Es are located at each of the SBUs and Units namely Bengaluru, Chennai, Ghaziabad, Hyderabad, Kotdwara, Machilipatnam, Navi Mumbai, Panchkula and Pune. PDIC and CoEs are located in Bengaluru while CRLs are located in Bengaluru and Ghaziabad. The D&Es/PDIC/ CoEs/CRLs work in the identified technology and product areas, based on three-year R&D plans and after due approval of budget/time by the competent authority.

Apart from in-house efforts, BEL R&D Engineers and Scientists collaborate with DRDO, ISRO, CSIR, other Research Laboratories, National and International Academia, Research Institutes, OEMs/Industries, Experts/Consultants, MSMEs and Start-ups in niche technology areas. BEL has created an ecosystem to co-create products/solutions in many business segments.

The D&E groups at SBUs/Units provide Systems and System of Systems solutions to the end users. Towards this, they get necessary technology modules and subsystems developed through CRLs, PDIC, CoEs and collaborative R&D partners. They conduct all evaluations and trials needed in the process of inducting these systems into service. They also extend technical support during the entire product life-cycle, and upgrades and also take care of obsolescence management.

D&E Projects Initiated During FY 2023-24: Several R&D projects have been initiated during FY 2023-24 both through in-house development and collaborative efforts (mainly with DRDO). Major projects initiated during FY 2023-24 are X Band GaN-based Radar, Missile Checkout Facility for QRSAM, EOIRST System, 1.0m Ku band COTM Antenna, Upgrades of 3D CAR Series Radar, Aslesha MK-I & Reporter Radar, Indigenous Precision Range Extension Kit, High Power Radar Trial Configuration, Long Range Radar SASTRA, ARM-based Secure Microcontroller, Passive Homing Head V1.2 for Seekers, Vihaang ESM System, i-CBTC System; SMARD (COMINT) System, HALT & HASS Testing of DFCC, Vehicle-based Anti-Drone System with Soft & Hard Kill, Project Pralay,

DJAG LRUs for JAGUAR DARIN III upgrade aircraft and Active Protection System for Tank T-90.

D&E Projects Realised During FY 2023-24: Some of the major projects realised/completed during FY 2023-24 are Sight and Gimbal for BMP Upgrade, Indigenous ASR-MSSR for AAI, Voice Communication & Control System (IACCS B-III), Compact Gun Fire Control System, USHUS-2 (Integrated Submarine SONAR suite for EKM platform), Development of CMS17A, Upgrade of Turret Sys & Dev of Sight System, Antenna & Rotator Unit for Naval Missile Defense Radar, Revathi Stabilization Platform, RDP for IACCS, IFF MK-XIIA Combined Interrogator Transponder, FET for ADC&RS and Multi Target Tracking Radar.

• IETE A wards: Young Scientist Award 2022.

• Smt Ranjana Pal Memorial Award 2023.

• CII Corporate Women Leadership Awards 2022-23: In Technology Category.

• Quantic 2^nd Annual Excellence Awards: -Best Digital Transformation Initiative Award (Electronics): Panchkula for Chandigarh Smart City Project.

Future Plan of Action: BEL's R&D will focus on developing innovative Products/Services across the organisation aligned with the objectives of growth and transformation. All the tiers of R&D (D&Es, PDIC, CoEs and CRLs) will continue to collaborate in identifying new areas of development and complementing each other in addressing the customer requirements through in-house and collaborative modes of development. BEL plans to continue investing in R&D to meet the continuously evolving requirements of its customers as well as for diversification. While a major thrust would be given for in-house development, collaboration with national laboratories, academic institutions, research institutes, industry and MSMEs will also continue to be strengthened. Focussed technology/product development efforts have been initiated in diversified areas like Arms & Ammunition, Smart Agriculture and AI-based projects including Predictive Maintenance. BEL has consistently been investing about 7% of its annual revenue every year in R&D and will continue to support R&D initiatives for enabling an Atmanirbhar Bharat, making & delivering high-quality defence & professional electronics products, systems & solutions for India and the world.

New Facilities Established

Infrastructure enhancement is one of the major objectives of the Company in order to stay upgraded for global opportunities and to be the best in business. During FY 2023-24, the Company has spent around Rs650 Crore as part of CAPEX investment towards modernisation of Plant & Machinery, Test instruments, R&D investments, Infrastructure up-gradation etc.

Information Technology (IT) Initiatives: e-Bhoomi for Building and Land Management: IS/CO has developed and deployed an e-Bhoomi, a platform to capture all records of Building and Land Management System in SAP. The platform e-Bhoomi has features like maintenance of registration types, property documents, ownerships, building or property titles and boundaries, total extent of areas, survey numbers, etc. and many more reports. This has resulted in the digitisation of documents pertaining to BEL's land and buildings.

Cyber Defense Center: Cyber security threats are continuously growing on BEL IT infrastructure. Innovative, sophisticated techniques & tactics are being deployed by adversaries for breaches & data exfiltration. To mitigate and keep a check on such risks, Cyber Defence Center (CDC) is established as dedicated centralised facility to monitor, improve the organisation's cyber security posture while preventing, detecting, analysing, and responding to cyber security threats in BEL. CDC is built on layered security approach (defence-in-depth) and continuously getting augmented with latest tools & technologies for maintaining the cyber resiliency.

New two-factor authentication system for Internet Mail: For access for BEL's Internet mail from outside of BEL premises, a new Grid-based authentication method has been implemented in the 4^th quarter of FY 2023-24. This is a Make-in-India product that addresses the security requirements without any dependency on third party hardware (like hardware tokens, smartphones, mobile networks for SMSs, OTPs and agent installation on user devices). Though the registered PIN and Target number are fixed, the grid pin will be changing on each login to avoid the risk of credential compromise. The System has been subjected to VAPT and all reported vulnerabilities were mitigated before go-live.

Upgradation of Web Security Systems: Centralised Internet Gateway was established for uniform deployment of cyber security policies across all BEL units. A secure web gateway (SWG) was deployed to further upgrade, streamline and enforce the granular policies on internet access. The objectives of a deployed secure web gateway are to filter internet traffic, enforce security and acceptable use policies, and protect users and organisations from online threats. Web gateway scrutinises every outgoing web request from the user system, ensuring requests do not breach set policies and only permitting them if deemed safe. Similarly, incoming data is inspected before reaching users. Web Gateway ensures safe internet access, prevents malware from reaching corporate Network and shield organisation from potential data breaches.

Quality

Quality, Technology and Innovation are three guiding pillars of BEL's business initiatives. Quality being the first pillar has been one of the focus areas for the Company. The Company is committed for continual improvement through a process approach in line with World-Class Quality Systems. All Units/ Strategic Business Units (SBUs)/Common Services Groups (CSGs) are accredited to ISO 9001 Quality Management Systems (QMS). Nineteen Units/SBUs of the Company are committed to the Environment Management System through ISO 14001 Certification. Ghaziabad, Kotdwara, NAMU and Bangalore Units are certified for first time for ISO 45001 & ISO 14001. BEL Hyderabad Unit has been conferred with the CII-EXIM Bank Business Excellence Award in the year 2023.

BEL received 24 Green Channel Certificates covering 13 Units/ SBUs from DGQA for a total of 76 products, in the areas of Radars, Naval Systems, Communications, and Electro Optics Products. Mast, Batteries and Gun Upgrade, BEL is the first PSU to reach this new height on Quality aspects; Ghaziabad SBU DCCS has received the Green Channel Certificate for the first time for CMS Systems in this year. 14 Units/SBUs/ Divisions of the Company are certified for Information Security Management System ISMS ISO 27001. During the year, Navi Mumbai Unit is certified for ISMS ISO 27001 for first time. BEL has a total of 19 AS9100D Certificates and 8 ISO 9001 Certificates. EM, NS2 SBUs and Pune, Panchkula, Kotdwara Units got recertified for AS9100D Standard this year. Test Equipment, Calibration and Maintenance Divisions of Bangalore Complex, Ghaziabad, Panchkula, Chennai, Navi Mumbai and Hyderabad Units (Total 13 Labs) are certified by NABL in accordance with ISO/IEC 17025 Standard. Software SBU is certified for CMMi level 5 and also for ITSMS ISO 20000-1. NCS & DCCS SBUs of Ghaziabad Unit, CRL- Ghaziabad, Chennai and Hyderabad Units are certified for CMMi Level 3. BAE and BEEI are certified for EOMS ISO 21001 for the first time.

HYBRID QA 4.0 implemented at Machilipatnam Unit. Online QA documentation inspection Module WIQAS is implemented at ADSN, NS1, NS2 and MILCOM SBUs of

Bangalore Complex. Digital/Virtual/Remote QA is also implemented at Hyderabad Unit.

The Company has facilitated involvement of employees in the Quality Movement through the Quality Control Circle (QCC). During FY 2023-24, 717 QCC Presentations are made by various QCC Teams. Many QCC teams are nominated for national competitions and all are adjudged for various categories of Awards. Kotdwara QCC Pragati Team has participated in ICQCC 2023 Online conducted by China and won the highest Platinum Award. Around 4,611 suggestions are awarded in FY 2023-24. A total savings of Rs120 Crore was achieved through this Suggestion Scheme implementation in various process improvements during this year.

During the year 18 Executives from various Units/SBUs are certified as "Certified Quality Engineers (CQE)" from ASQ. 23 Executives from various Units/SBUs were certified as "Certified Reliability Engineers (CRE)" from ASQ. 4 Senior Executives were certified as "Certified Manager of Quality/Organizational Excellence (CMQ/OE)" from ASQ. 43 Executives were certified as "Project Management Professionals (PMP)" from PMI USA. 13 Executives were certified as "Six Sigma Black Belt (SSBB)" by the Indian Statistical Institute (ISI), Bangalore. 20 Executives were certified as "Design for Six Sigma-Green Belt (DFSS-GB)" by the Indian Statistical Institute (ISI), Bengaluru. 25 mid-level and senior executives were certified as "Certified Data Analytics (CDA)" by the Indian Statistical Institute (ISI), Bengaluru.

Total 368 Six Sigma Projects have been completed during the year 2023-24, resulting in an estimated savings of Rs11,056.87 Lakhs to the company. 15 BEL Six Sigma teams participated in regional level competitions CCQC-2023 organised by QCFI and all 15 teams won the highest award "GOLD". 15 BEL Six Sigma teams participated in National level competitions NCQC-2023 organised by QCFI and all 15 teams won the highest award "PAR Excellence". 3 BEL Six Sigma teams (GAD, COMP & MC) participated in ICQCC-2023 organized by QCFI in online mode and won the highest award "GOLD". Panchkula Unit won the First Prize, GAD NCS SBU, Chennai units won second and third prizes respectively in companywide Quality Recognition Award (QRA) 2023.

This year also the Company conducted the Integrated Customer Satisfaction Survey, and the Satisfaction Index is 83.60 with a net promoter score of 53.45 which is very good in comparison with bench mark companies.

Human Resources

Your Company employed 8,937 people as on 31 March 2024 compared to 8,832 people as on 31 March 2023. Out of these employees, 5,078 were engineers/scientists and 1,928 were women employees. A total of 583 employees were inducted during FY 2023-24. 96 employees belonging to the Scheduled Castes (SC), 55 employees belonging to the Scheduled Tribes (ST), 207 employees from the Other Backward Classes (OBC), 32 employees belonging to the Minority Community and 5 Physically Challenged employees were inducted during FY 2023-24.

Your Company has been complying with the Government directives on reservations. The particulars of SC/ST and other categories of employees as on 31 March 2024 are as under:

Various training programmes were conducted during the year to enhance competencies in Technical, Functional, Managerial and Leadership areas. Structured Executive Development Programmes were conducted regularly with premier institutes to meet the evolving training needs of executives as they progress through various grades. A detailed write-up on HR initiatives during the year is provided separately in the Management Discussion and Analysis Report, which forms a part of this report.

Disclosure Under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company is an equal-opportunity employer and consciously strives to build a work culture that promotes the dignity of all employees. As required under the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules framed thereunder, the Company has implemented the policy on prevention, prohibition and redressal of sexual harassment at the workplace, which has been uploaded on the Company's intranet portal. All women, permanent, temporary or contractual, including those of the service providers, are covered under the Policy.

An Internal Complaints Committee has been constituted in each of the nine constituent units, including the corporate office to redress complaints relating to sexual harassment. Awareness programmes were conducted across the Company to sensitise employees and uphold the dignity of their colleagues at the workplace, particularly with respect to the prevention of sexual harassment. The details of the complaints filed, disposed of and pending during the year pertaining to sexual harassment are provided in the Business Responsibility and Sustainability Report, which forms a part of this report.

Awards and Accolades

Your Company strives to achieve the highest level of quality in all its products by considering consumer insights and by reaching out to consumers. During the year, your Company has received the following Awards and Accolades:

• Hyderabad Unit of BEL bagged the prestigious CII EXIM Bank Award for Business Excellence 2023

• Karnataka State Export Excellence Award

• Economic Times ‘Iconic Brand of the Year Award-2023'

• ‘Employee Excellence Award' from Times Group

• Institution of Engineers (India) ‘Industry Excellence Gold Award for Business Excellence'

• ‘Project of the Year - Large Category (Runner Up) Award' from Project Management Institute

• Indian Chamber of Commerce ‘PSE Excellence Awards'

• Governance Now PSU Awards

• National Export Excellence Award 2024

Subsidiaries, Joint Ventures and Associates

BEL Optronic Devices Limited (BELOP) is a wholly-owned subsidiary of BEL, which manufactures Image Intensifier. BELOP achieved a turnover of Rs12,645 Lakhs for the year compared to Rs6,098 Lakhs in the previous year. The Profit After Tax (PAT) for the year was Rs1,659 Lakhs compared to

Rs676 Lakhs in the previous year.

BEL-THALES Systems Limited (BTSL) is a subsidiary of BEL. Your Company holds 74% of the equity capital in BTSL. During the year, BTSL recorded a turnover of Rs9,368 Lakhs compared to Rs7,815 Lakhs in the previous year. The Profit After Tax (PAT) for the year was Rs277 Lakhs compared to Rs700 Lakhs in the previous year.

GE BE Private Limited is Associate Company of BEL. Your Company holds 26% of the equity capital in GE BE Pvt. Ltd. GE BE Pvt. Ltd. recorded a turnover of Rs1,71,833 Lakhs for the year compared to Rs1,57,547 Lakhs in the previous year. The Profit After Tax (PAT) was Rs16,184 Lakhs for the year compared to Rs17,624 Lakhs in the previous year.

The Defence Innovation Organisation (DIO) is a ‘Not for Profit' Company as per the provisions of Section 8 of the Companies Act, 2013 with an authorised share capital of Rs1 Crore. With an equity participation of 50% from BEL and 50% from HAL, the Company was formed with the objective of funding innovation in the Defence sector.

Pursuant to the provisions of Section 129(3) of the Companies Act, read with Rule 5 of Companies (Accounts) Rules, 2014 (as amended), a separate statement containing the salient features of the financial statement of Subsidiaries/ Associate/Joint Ventures in Form AOC-1 is appended to the Financial Statements.

Further, pursuant to the provisions of Section 136 of the Act, the financial statements of the Company, consolidated financial statements along with relevant documents and separate audited financial statements in respect of subsidiaries, are available on the website of the Company www.bel-india.in.

Consolidated Financial Statements

Consolidated Financial Statements of your Company and its Subsidiaries for the year ended 31 March 2024 have been prepared in accordance with the provisions of Section 129(3) of the Companies Act & applicable Indian Accounting Standards and forms part of this report.

Vigilance

The Company's Vigilance Organization is headed by a Chief Vigilance Officer (CVO). Mr Shrikant Walgad, IAS was the CVO till 14 February 2024. Thereafter on his repatriation to the parent cadre, Ms Kalyani Slyani Sethuraman, IRAS, CVO/ HAL was entrusted additional charge of BEL. Currently CVO/ HAL is looking after the post of CVO/BEL as per orders issued by MoD.

Full time Vigilance Officers are posted in Units and SBUs and are handling vigilance activities in the Units and SBUs. Vigilance Committees are formed to look after the Vigilance Administration in the Units and SBUs. The Unit/SBU Heads are designated as Chairman of the Vigilance Committee. Preventive Vigilance has been the thrust area of the Vigilance Organisation and the same received focussed attention during the current year. The Vigilance Department examines procurements and processes on continual basis, conducts regular and surprise inspections and investigates instances of any suspected transactions referred to it. An employee or third parties can bring any suspected transaction to the notice of CVO for investigation which is examined as per the Complaint Handling Policy of the Company. Online Complaint Management System has been made operational and complaints can be filed by accessing the Vigilance Portal in BEL website.

During the year, 1,233 high-value Purchase Orders/Contracts

(> Rs1 crore) have been reviewed. CTE Type Intensive Examination has been restructured with the formation of Five Intensive Examination teams. CTE Type of Intensive Examination of 60 High value Procurements Contracts has been taken up during the year 2023-24. Regular and surprise checks and inspections have also been conducted by the Field Vigilance Officers. During the year, 67 Complaints were received. A total of 65 Complaints were disposed. Disciplinary action and system/process improvement have been recommended in some cases where lapses were observed.

During the year, 1,966 Executives and 200 Non-executives were given a basic awareness program on Vigilance. 32 Executives & 11 Non-executives working in sensitive areas for more than 3 years have been rotated out of the total 46 employees covering 93%.

Vigilance Department has been certified for ISO 9001/2015 Certification for the Vigilance function of BEL. M/s. TUVSUD is an external auditor for ISO 9001/2015 Vigilance Audit with effect from July 2022.

In line with the CVC's guidelines on Leveraging Technology and to ensure transparency through the effective use of technology, the following functions have been made operational through SAP and the Company's website:

• E-Procurement.

• Online registration of Vendors.

• Vendor Payment Information System.

• E Payment/Bank transfer of payment to Vendors.

• Details of awarded contracts/purchase orders valuing more than Rs10 Lakhs in respect of works contracts, service contracts, capital items and non-production items have been posted in the website.

• Details of awarded Contracts/Purchase Orders issued on nomination/single tender basis value exceeding Rs5 Lakhs are posted in the website.

• Corruption Risk Management Policy is framed and implemented across the Company.

• Vendors' Directory is maintained.

• File Life Cycle Management System (FLM) is fully implemented across the company.

• Online filing of APRs is facilitated in SAP for all the Executives and the Executives have been filing the APRs in SAP.

• Vigilance Monthly and Quarterly Reports are generated through SAP.

• Vigilance clearance is accorded through the dedicated Vigilance portal in SAP.

Vigilance setup in BEL has been continuously endeavouring to bring transparency, fairness and equity in all transactions and processes of the company by creating a sense of awareness on systems and procedures through awareness campaigns and training programmes.

Key activities carried out during the year 2023-24: A) Observation of Vigilance Awareness Week 2023:

Inauguration and Integrity Pledge taken:

BEL has observed Vigilance Awareness Week from 30 October to 5 November 2023 with the theme "Say No To Corruption; Commit To The Nation" at all its offices across the country. Programmes under three months campaign, Lecture programmes, competitions, outreach programmes, Awareness programmes at Gramsabha, Seminars/Workshops/Training and other activities were conducted on most of the occasions.

Distribution of Pamphlets/Banners/Slogans/Standees on Vigilance:

Display of Banners and Boards near the Entrance Gate of all the 9 Units of BEL. And in various Schools and Colleges wherever Awareness Week Programme was conducted. Pamphlets on Integrity Pledge and PIDPI were made and distributed among Employees, Executives and Contract Personnel. Display of Banners during the Week at prominent places like Lalbagh Botanical Garden, Kanteerava Stadium, BEL Circle, Doddabommasandra Arch and Nanjappa Circle in Bengaluru.

Publicity of PIDPI among Vendors and the General Public:

As a part of Vigilance Awareness Week 2023 celebrations, PIDPI standees are kept all over the Units of BEL in reception areas, hospitals, residential apartments, entrance etc., Awareness programmes on PIDPI in schools, colleges are conducted and Training programmes on PIDPI are conducted for Probationary Engineers, Dy. Managers, Managers, DGMs and Sr. DGMs during the three months campaign as instructed by CVC.

Outreach Activities:

1. Street plays with a set of professionals were hired. 5 plays were played at prominent public visiting places in Bengaluru including at Lalbagh Botanical Garden, BEL Circle and Doddabommasandra Lake.

2. Vigilance Awareness Programme was conducted in Karnataka Public Govt. School, Hebbal, Pavithra Vidhyaniketan High School, Devinagar, Nitte Meenakshi Institute of Technology, Yalahanka and BEL Schools and Colleges during the period.

3. Workshop on PIDPI awareness by Prof O V Nandimath, National Law School of India University was held at BEL-Kalakshetra, Bengaluru. More than 600 employees participated.

4. Marathon event was organised at Doddabommasandra Lake. Around 250 students of BEL First Grade College participated in the event.

Capacity Building Program - Precursor to VAW 2023, the following training programmes were conducted in BAE:

(a) Role of IO/PO in conducting enquiries (b) Public Procurement (c) Ethics and Governance

(d) Systems and Procedures of the Organisation viz., Purchase, Sub Contract, Works Contract and CDA rules

(e) Cyber Hygiene and Security

Vigilance Manual Released:

Vigilance Manual of 2018 was revised and the new Vigilance Manual 2023 was released by CMD during the Valedictory Function of Vigilance Awareness Week 2023.

Organised in BEL: i Mid-career) training on "Vigilance Overview and Case Studies" for executives working in MM and Purchase finance was held at BEL Academy for Excellence (BAE), Bangalore.

ii) Sessions on Public Private Partnership (PPP) and GeM was conducted at BEL Chennai Unit. 34 BEL officers & 24 AVNL officers attended the session.

Faculty was Col Sandeep Bajpai, CQA (AVNL) from Avadi, Chennai.

iii) Interaction between CVO, BDL & MIDHANI, Hyderabad and Vigilance Officers was held at Corporate Office to discuss Vigilance systems & procedures. CVO, AGM, Sr. DGMs and DGM of Corporate Vigilance attended the session. Vigilance Officers from Other Units attended the session through Video Conference.

iv) Orientation Program for Project Engineers and Trainee Engineers on Vigilance Awareness was held by Head Vigilance-BC at CLD, Bangalore Complex.

v) Vigilance Induction Programmes for Probationary Engineers were held at BEL Academy for Excellence (BAE), Bangalore.

vi) As part of the induction program, a PIDPI awareness session was held for 122 newly joined probationary officers at Bengaluru.

C) V igilance Audit Conducted:

I SO 9001:2015 First Surveillance Audit by M/s. TUV SUD for Vigilance was held in the Chennai Unit, Bangalore Complex and Corporate Office.

D) Annual Vigilance Meet 2023-24:

Annual Vigilance Meet 2023-24 was held at Visakhapatnam on 14 December 2023 and 15 December 2023. During the meet, "Jagriti", a Vigilance Bulletin was released. The following Talks/Presentations were held during the meet.

i) Talk on "CBI Administration" by Mr Murali Rambha,

IPS, SP & HoD, CBI, ACB, Andhra Pradesh.

ii) Talk on "Vigilance Practices in Steel Plant" by

Mr S Karuna Raju, IAS, CVO, Vizag Steel Plant.

Integrity Pact

One of the initiatives of the Central Vigilance Commission (CVC) to eradicate corruption in procurement activity is the introduction of the Integrity Pact in large-value contracts with Government Organisations. In line with the directives from the Ministry of Defence and the Central Vigilance Commission, your Company has adopted an Integrity Pact with all vendors/suppliers/contractors/service providers for all Orders/Contracts of value Rs300 Lakh and above. The Integrity Pact essentially envisages an agreement between the prospective vendors/bidders and the principal (BEL), committing the persons/officials of both sides, not to resort to any corrupt practices in any aspect/stage of the contract. Only those vendors/bidders, who commit themselves to such a Pact with the principal, would be considered competent to participate in the bidding process. Integrity Pact, in respect of a particular contract, would be operative from the stage of invitation of bids till the final completion of the contract. Any violation of the same would entail disqualification of the bidders and exclusion from future business dealings.

As recommended by the CVC, the Company has appointed Mr Sanjay Kumar Srivastava, IAS (Retd.), Mr Rajiva Ranjan Verma, IPS (Retd.) and Dr Joginder Paul Sharma, IAS (Retd.) for monitoring the implementation of the Integrity Pact in the Company.

Procurement from Micro & Small Enterprises (MSEs)

Your Company has been providing increased thrust on enhancing procurement from Micro & Small Enterprises (MSE) and has been implementing Public Procurement Policy for MSEs as per the guidelines/notification issued by the Ministry of MSMEs. BEL has on-boarded on the TReDS Platform, GeM, MSME Sambandh & MSME Samadhaan Portals complying with Government guidelines.

The Company has conducted and participated in Vendor Development Programs for Indian vendors including MSME/Start-ups on various occasions throughout the year. BEL extends provisions as envisaged in Ministry of MSME notifications, released from time to time, to MSME/Start-ups in procurement.

BEL's procurement from MSEs is 37% of total Domestic procurement during FY 2023-24 against the mandatory target of 25% as per the Public Procurement Policy for MSEs.

Implementation of Official Language Policy

Your Company is committed to adhering to the Official Language (OL) policy of the Government of India. During 2023-24, the Company has achieved targets prescribed in the Annual Program issued by the Dept. of OL, Ministry of Home Affairs (MHA), GoI to transact official work in Hindi.

OL Inspections: The First Sub-Committee of the Committee of Parliament on Official Language conducted OL inspections of Regional Office Kolkata on 28 April 2023, Kotdwar Unit on 6 May 2023, Machilipattnam Unit on 11 July 2023, Central Research Laboratory, Bengaluru on 19 October 2023 and Pune Unit on 19 January 2024. Corporate OL Inspection team conducted 05 inspections of its subordinate Units/Offices.

DDP, MoD officials conducted an OL inspection of Central Research Laboratory, Bengaluru on 12 June 2023.

Bilingualisation: All Units and Offices of the Company including Corporate Office are issuing documents in bilingual as per the Section 3(3) of the Official Language Act, 1963. Usage of Hindi is being encouraged in correspondence and on computers. Individual orders under OL Rule 8 (4) were issued by CMD to officers/employees who are having proficiency in Hindi to do their complete work in Hindi. Also, a circular on creation of Check Points under Rule 12(1) of OL Rules was issued.

Computerisation and Website: Updated information pertaining to OL is being communicated through OL Portal GARIMA introduced by OL Dept. of Corporate Office. Quarterly progress reports from Units/Offices are being received online in SAP. Hindi notings are being written in File Life-cycle Management (FLM). The Company's website is also available in Hindi.

Training and Reporting: A roster is maintained for the Hindi language training and computer training which is updated from time to time. As per the Roster, employees were nominated for online training. Quarterly/half yearly reports are sent to OL Dept., MHA, GoI, MoD, Hindi Teaching Scheme and Town Official Language Implementation Committee (TOLIC) as per schedule.

Hindi Month Celebrations: 24 officers across BEL took part in the Hindi Day Function and 3^rd All India OL Conference organized by Dept. of OL, MHA on 14 September 2023 at Pune (Maharashtra). Hindi Month and Hindi Day was observed during September in all the Units and Offices of the Company.

Meetings/Workshops: CMD attended the Raksha Salahkar Samiti meeting held under the chairmanship of the honorable Defence Minister on 30 June 2023 at Delhi. Official Language Implementation Committee (OLIC) meetings, Hindi workshops and technical talks in Hindi were conducted in all Units/ Offices. OL Officers and Sr. Officers from BEL's Units situated in Karnataka, Andhra Pradesh and Tamil Nadu participated in the Regional OL Conference organised in Bengaluru on 19 January 2024.

Incentives and Awards: Company has various lucrative Incentive Schemes for doing original work in Hindi. These schemes are named after the renowned Hindi Litterateur which carries cash awards from Rs2,000 to Rs10,000. Employees have participated in the TOLIC competitions and won prizes. Corporate Office was awarded for excellence in OL implementation by TOLIC (Undertaking), Bengaluru. CMDs OL Shield for Excellence in OL implementation was awarded to the subordinate units situated in A, B and C region respectively.

Publications: Hindi Magazines were published by the Units/ Corporate Office of the Company to propagate usage of Hindi.

New Initiatives: In order to strengthen linguistic harmony among employees towards Hindi, a Linguistic Harmony Program was organised in which popular television serial Malgudi Days was screened. A dedicated section for OL has been introduced in the Company's website. Defence Electronics Glossary of BEL is being prepared in coordination with the Commission for Scientific and Technical Terminology (CSTT), Ministry of Education. Bharatendu Rajbhasha Kaushal Abhimukheekaran Program was initiated by the Corporate Office for OL Officers/Translators of Central Government Offices/Banks/Undertakings located at Bengaluru. World Hindi Day was celebrated on 10 January 2024 and message of honourable Prime Minister was read out. As part of the Krishna Sobti Hindi Lecture Series, lectures were organised on general interest and technical topics.

Continuous efforts are being made to ensure OL Implementation and for increasing the progressive usage of Hindi across the Company.

Implementation of the Right to Information Act, 2005

In consonance with the provisions of the Right to Information Act, 2005 (the Act), your Company has a well-defined mechanism in place to address the provisions of the Act. Your Company has a designated General Manager level officer as a "Nodal Officer" to oversee the implementation. The requests received are processed by 17 senior personnel designated as "Central Public Information Officers (CPIOs)" including one at the Corporate Office and each at the Units/ROs. Your Company has a designated General Manager level officer as a "First Appellate Authority" to dispose of the first appeals filed under the Act. In compliance with the Government directives, your Company is successfully processing the applications under the Act, online.

The information to be provided as per Section 4(1) (b) of the Right to Information Act, 2005 has been posted on the website of the Company www.bel-india.in. The FAA, CPIOs and other internal stakeholders involved are sensitized about their obligations under the Act through training and workshops.

Your Company received 403 applications (including 81 transferred by other Public Authorities to BEL) during the period from April 2023 to March 2024, and 28 RTI applications were carried forward from the year 2022-23. A total of 393 applications were responded to including 52 applications that were rejected, out of a total of 431 applications. Your Company received 61 First Appeals during the period, out of which 52 were disposed-off. Quarterly RTI returns for all the four (4) quarters have been submitted to the Central Information Commission.

Meetings of Board and Committee(s)

During the year, seven Board meetings were held and the maximum interval between any two meetings was not more than 120 days. The details of meetings of the Board and Committee(s) held during FY 2023-24 are furnished in the Corporate Governance Report, which forms a part of this report.

Change in Directors & Key Managerial Personnel and their Shareholding

The following changes took place in the Directorate and Key Managerial Personnel of your Company during FY 2023-24:

Mr Bhanu Prakash Srivastava, Chairman & Managing Director (Additional Charge) upto 20 June 2024, Mr Damodar Bhattad S, Director (Finance) and Chief Financial Officer and Mr S Sreenivas, Company Secretary are the KMPs, as defined under Section 2(51) of the Companies Act, 2013. Mr Manoj Jain took over as Chairman and Managing Director (KMP) w.e.f 20 June 2024 and is being appointed as Managing Director on terms as set out in the Notice of 70^th Annual General Meeting (AGM).

Mr Vikraman N, Director (Human Resources), retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.

The details of Directors and Key Managerial Personnel (KMPs) who are holding shares in the Company as on 31 March 2024 are given below:

Directors' Responsibility Statement

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors, in terms of Sections 134(3)(c) & 134(5) of the Companies Act, 2013 state that: a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

b) the Directors had selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31 March 2024 and of the profit of the Company for the year ended 31 March 2024;

c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) the Directors have prepared the annual accounts on a going concern basis;

e) the Directors ensured proper internal financial controls were in place and such financial controls were adequate and were operating effectively; and

f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws were in place and the same were adequate and operating effectively.

Integrated Report

The Company, has voluntarily provided an Integrated Report, which encompasses both financial and non-financial information to enable the Members to take well-informed decisions and have a better understanding of the Company's short, medium and long-term perspective. The Report also touches upon aspects such as the organisation's strategy, governance framework, performance and prospects of value creation based on the six forms of capital viz. financial capital, manufactured capital, intellectual capital, human capital, social and relationship capital and natural capital.

Significant and Material Orders

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and the Company's operations in future.

Events Subsequent to the Date of Financial Statements

There are no material changes and commitments affecting the financial position of the Company which occurred between 31 March 2024 and the date of signing of this Report.

Related Party Transactions

There were no materially significant related party transactions with the Company's Promoters, Directors, Management or their relatives, which could have had a potential conflict with the interests of the Company. Transactions with related parties that were entered into during FY 2023-24 were on an arm's length basis and were in the ordinary course of business. None of the transactions with related parties fall under the scope of Section 188(1) of the Companies Act, 2013. All Related Party Transactions are placed before the Audit Committee and also to the Board for approval, if required. Members may refer to the notes to the accounts for details of related party transactions. The policy for related party transactions has been uploaded on the Company's website www.bel-india.in. Information pursuant to Section 134(3)(h) of the Companies Act, 2013 read with rule 8(2) of the Companies (Accounts) Rules, 2014 is annexed to this report as Annexure-1.

Corporate Social Responsibility

Your Company has formulated a Corporate Social Responsibility Policy pursuant to the provisions of Section 135 & Schedule VII of the Companies Act, 2013 and the Companies (Corporate Social Responsibility) Rules, 2014 read with various clarifications, amendments issued by the Ministry of Corporate Affairs (MCA). The Corporate Social Responsibility Policy is posted on the Company's website, www.bel-india.in.

The CSR activities undertaken by your Company are in-line with the applicable Government Legislations & Guidelines issued from time to time, directing CSR fund distribution, themes for CSR expenditure, areas of operation etc. Our Community Interventions focus on holistic development, institution building and sustainability-related initiatives. Our focus sectors are Healthcare, Education, Skill Development, Rural Development and Environmental Sustainability. By implementing capacity building measures, empowering marginalised and underprivileged communities, we strive for inclusive growth and equitable societal development.

During FY 2023-24, DPE guidelines for CSR Expenditure stipulate CPSEs to take up CSR interventions on the common theme of Health & Nutrition with preference being given to Aspirational Districts identified by NITI Aayog. Accordingly, the Company has rolled out focused interventions to augment health infrastructure in Government Hospitals and make available mobile healthcare services at the door-step of the rural populace. Encouraging scientific curiosity among students & general public, opening up opportunities to experience technology-enabled learning aids in government educational institutions, promoting vocational skills training to enhance employability of youth and creating a sustainable ecosystem for flora & fauna in the wild are high points in the CSR space.

Pursuant to the requirement under the Companies (Corporate Social Responsibility) Rules, 2014 (as amended), a report on CSR activities for FY 2023-24 is annexed herewith as

Annexure-2.

Statutory Auditors

Pursuant to Section 139(5) of the Companies Act 2013, for FY 2023-24, the Comptroller and Auditor General of India (C&AG) appointed M/s P G Bhagwat LLP, Chartered Accountants, Bengaluru, as Statutory Auditors of the Company for the audit of accounts of Bangalore Complex, Hyderabad unit, Chennai unit and Corporate Office. M/s C V Chitale & Co., Chartered Accountants, Pune were appointed as Branch Auditors of Pune & Navi Mumbai units. M/s Ashwani & Associates, Chartered Accountants, New Delhi, were appointed as Branch Auditors of Ghaziabad, Panchkula and Kotdwara units. M/s P Subbarayudu & Co, Chartered Accountants, Vijayawada were appointed as Branch Auditors for the Machilipatnam unit.

The Statutory Auditors' Report on financial statements for FY 2023-24 and 'Nil' comments of the Comptroller & Auditor General of India (C&AG) under Section 143(6)(b) of the Companies Act, 2013 on the financial statement, including consolidated financial statement, are appended to the Annual Report.

Cost Auditors and Maintenance of Cost Records

Your Company appointed M/s Murthy & Co. LLP, Cost Accountants, Bengaluru, as Cost Auditors of the Company for FY 2023-24 for the audit of the cost records of the Company. The Company maintains cost records as specified by the Central Government under Section 148(1) of the Companies Act, 2013.

Secretarial Auditors

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (as amended), the Company has appointed M/s Thirupal Gorige & Associates LLP, Practicing Company Secretaries, Bengaluru for FY 2023-24 to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed to this report as Annexure-3.

The Secretarial Auditor in his report observed that the Board did not have the requisite number of Independent Directors as required under 17(1)(b) of the SEBI (LODR) Regulations, 2015 from 16 June 2023 to 31 July 2023.

It is informed that filling up of the vacancies of Independent Directors was pending with the appointing authorities namely the Government of India.

Reporting of Frauds by Auditors

During the year, neither the Statutory Auditor nor the Secretarial Auditor have reported to the Audit Committee under Section 143(2) of the Companies Act, 2013, any instance of fraud committed against the Company by its officers or employees, the details of which would need to be mentioned in the Board's Report.

Annual Return

Pursuant to Section 92(3) read with Section 134(3)(a) of the Act, the Annual Return in the prescribed format has been hosted on the website of the company at - https://bel-india. in/investors/#annualreports

Risk Management

Pursuant to the Reg.21 of SEBI (LODR) Regulations, 2015, the Board of Directors of the Company has constituted a Risk Management Committee. The details of the Committee and its terms of reference, Risk Management Policy etc. are set out in the Corporate Governance Report and a detailed note on Risk Management is provided in the Management Discussion and Analysis Report, which forms a part of this report.

Company's Policy on Director's Appointment, Remuneration and Board Evaluation

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for the selection and appointment of Directors, Senior Management and their remuneration, Board Evaluation etc. The details are set out in the Corporate Governance Report, which forms part of this report.

Vigil Mechanism/Whistle Blower Policy

The Company has a vigil mechanism named the Whistle-Blower Policy to deal with instances of fraud, mismanagement and unethical behaviour, if any. The details of the policy are set out in the Corporate Governance Report.

Declaration from Independent Director(s)

The Company has received necessary declaration from Independent Director(s) of the Company under Section 149(7) of the Companies Act, 2013 and Regulation 16(1)(b) of SEBI (LODR) Regulations, 2015 that the Independent Director(s) of the Company meet with the criteria of his Independence laid down in the Companies Act, 2013 and SEBI (LODR) Regulations, 2015.

Management Discussion and Analysis Report

Management Discussion and Analysis Report required under the SEBI (LODR) Regulations, 2015 and also under the Government (DPE) Guidelines on Corporate Governance for Central Public Sector Enterprises (CPSEs), is annexed to this Report as Annexure-4.

Particulars of Loans, Guarantees & Investments

In terms of Circular No. GSR 463(E) dated 5 June 2015 issued by the Ministry of Corporate Affairs, Government of India, the Company being a Government Company engaged in Defence production is exempt from Section 186 of the Companies Act, 2013.

Particulars of Employees and Related Disclosures

The provisions of Section 197 of the Companies Act and the relevant Rules regarding particulars of employees drawing remuneration in excess of the limits specified are exempted for Government Companies, in view of the Gazette Notification

No. GSR 463 (E) dated 5 June 2015 issued by the Ministry of Corporate Affairs, Government of India.

Internal Financial Controls

The Company has in place adequate internal financial controls with reference to financial statements. A detailed note on Internal Financial Controls is provided in the Management Discussion and Analysis Report, which forms part of this report.

Audit Committee

As on 31 March 2024, the Audit Committee comprised of Independent Directors viz., Mr Prafulla Kumar Choudhury, Chairman of the Committee, Dr Shivnath Yadav and Mr Gokulan B as its Members. During FY 2023-24, all the recommendations made by the Audit Committee were accepted by the Board.

Corporate Governance Report

In terms of Regulation 34 of the SEBI (LODR) Regulations, 2015 and DPE Guidelines, a Report on Corporate Governance along with a Compliance Certificate issued by the Statutory Auditors of the Company is annexed to this report as

Annexure-5.

Business Responsibility and Sustainability Report (BR&SR)

The SEBI (LODR) Regulations, 2015 mandated the inclusion of the Business Responsibility & Sustainability Report (BR&SR) as part of the Annual Reports for the top 1,000 listed entities based on market capitalisation. In terms of Regulation 34(2) (f) of Listing Regulations, a BR&SR for FY 2023-24 describing the initiatives taken by the Company from an Environmental, Social and Governance (ESG) perspective, in the format as specified by SEBI from time to time is annexed to this report as Annexure-6.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

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

Compliance with Secretarial Standards

The Company complies with all applicable mandatory Secretarial Standards issued by the Institute of Company Secretaries of India.

Acknowledgement

Your Directors place on record their deep appreciation and gratitude for the valuable support received from all the customers, particularly the Defence Services and the Paramilitary Forces and look forward to their continued support and co-operation in future. Your Directors also place on record their gratitude for the support received from the various Ministries of the Government of India, especially the Ministry of Defence, the Department of Defence Production. Your Directors express their gratitude to the Defence Research and Development Organisation (DRDO) and the various Research Laboratories under DRDO, particularly in the joint development programmes and new products. Your Directors express their sincere thanks to the Comptroller and Auditor General of India, Statutory Auditors, Branch Auditors,

Cost Auditors, Secretarial Auditors, Company's Bankers, Collaborators and Vendors. Your Directors appreciate the sincere effort by the employees at all levels, which enabled the Company to achieve a good performance during the year. Your Directors express their 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 the Company in the coming years.