Bharat Heavy Electricals Ltd

Dear Members,

Your Directors are pleased to present the 61st Annual Report on the business and operations of your Company, and the Audited Financial Statements for the year ended March 31, 2025.

(Rs. Crores)

The year 2024-25 experienced rising order inflow trend with all time high order booking at D92,535 Crores. The company has been successful in receiving several prestigious orders in core thermal power business and also stepping up its diversification initiatives by gaining orders in segments of Transmission, Transportation, Defence etc. The total outstanding Order Book as on March 31, 2025 stands at its highest ever marking of D1,96,328 Crores (net of taxes) reflecting the company's robust business outlook.

In alignment with vision of Atmanirbhar Bharat, Bharat Coal Gasification and Chemicals Limited (BCGCL), a joint venture between Bharat Heavy Electricals Limited (BHEL) and Coal India Limited (CIL), was established in May 2024. The JV plans to establish India's first commercial-scale coal-to-2000 TPD ammonium nitrate plant using BHEL's indigenously developed technology. The plant will convert high-ash coal to produce technical-grade ammonium nitrate. The project not only enhances domestic value addition to coal resources but also reduces dependency on imports, reinforcing India's commitment to technological innovation and self-sufficiency.

The company achieved a robust 19% growth in revenue, with a focus on enhancing capacity utilisation backed by a strong order book. With a revenue of D27,355 Crores in FY 2024-25, an increase of ~D4,500 Crores over previous year, coupled with reduction in material cost by 3.3%, the company achieved a marked 38% rise in gross margins as compared to previous year, and resulting in a Profit After Tax of D513 Crores with EBITDA of D1,745 Crores (45% increase over PY).

The multipronged measures undertaken include bulking of requirements through centralized procurement and sub-contracting, design standardisation and optimization, enhancing vendor base, Advance Manufacturing Actions etc., thereby resulting in cost reduction, in addition to enhancing capacity utilisation.

The company prioritized cash collection, increasing overall collections by 40.5% (~I10,500 Crores), from customers, including advances. After factoring significant enhancement of I3,400 Crores (~16% increase over PY) towards material-related payments to enable fast paced execution of projects, the net cash surplus generated during FY 2024-25 was I1,977 Crores.

The increase in collection from net billing is ~I4,500 Crores (20% increase over PY) due to project centric focus towards timely execution and improved payment terms in the projects under execution. Consequently, the Trade Receivables collection period reduced to 115 days in FY 2024-25 from 122 days in the previous year.

The company has not transferred any amount to the Reserves during FY 2024-25.

The Board of Directors, in its meeting held on May 16, 2025 has recommended a final dividend @25% on the paid-up equity share capital (I0.50 per share of I2 each), amounting to I174.10 Crores, out of profit for FY 2024-25, subject to your approval. The Company has a dividend distribution policy in place in pursuance of the requirements of Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("LODR"). Dividend distribution policy is available on the Company's website at https://www.bhel.com/dividend-distribution-policy-bhel-0.

The Company has not accepted deposits from the public within the ambit of Section 73 of the Companies Act, 2013 during FY 2024-25.

During FY 2024–25, the company met its capital expenditure and operating fund requirements primarily through internal accruals. However, due to increased cash outflows mainly on materials and sub-contracting expenses to accelerate project execution, and intermittent cash flow mismatches, the company resorted to short-term borrowings of I8,795 Crores and maintained a Cash and Bank Balance of I7,612 Crores as on March 31, 2025.

To optimize cash management and maintain operational liquidity, the company also places intermittently available surplus funds in fixed deposits. For meeting short-term operational requirements, the company continues to utilize borrowing instruments such as WCDLs, loans against FDs, and listed Commercial Papers.

There is no transaction relating to loans or advances covered under section 186 of the Companies Act 2013 in FY 2024-25. Further, it is clarified that investment is as per Note 5 on ‘Investment', of Audited Annual Accounts 2024-25 of the company. During the FY 2024–25, the Company has provided a Corporate Guarantee on behalf of its newly established joint venture, Bharat Coal Gasification and Chemicals Limited, without charging any fee/consideration. In line with the requirements of Ind AS 109, the fair value of providing the corporate guarantee has been initially recognised as a deemed investment of I5.29 Crores in the joint venture, with a corresponding recognition of a financial liability.

The credit ratings of your Company are as follows:

There are no material changes and commitments affecting the financial position of the Company between the end of FY 2024-25 and the date of this report. There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company's operations in the future. There is no change in the nature of the business of the Company during FY 2024-25.

The Equity Shares of the Company are listed on NSE and BSE. The shares of the Company were not suspended from trading during FY 2024-25.

Pursuant to section 134(5) of the Companies Act, 2013, the Board of Directors confirms that: a) In the preparation of the Annual Accounts, the applicable Accounting Standards (Ind AS) have been followed along with proper explanations relating to material departures; b) 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 fair view of the state of affairs of the Company at the end of financial year and of the profit of the Company for that period; c) The Directors have taken proper and sufficient care for 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 have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and operating effectively; f) The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Your company has continued to focus on growth momentum, strengthening the core business, expediting execution and taking concrete steps towards diversification including enhancing business in non-coal areas. For further details, please refer Annexure-I to the Board's Report.

Pursuant to Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a report on Corporate Governance (including Board and Committee Meetings details) is given at Annexure-II to the Board's Report together with the following, i. Certificate of Non-Disqualification of Directors under Schedule V of the SEBI Listing Regulations. ii. Auditors certificate on Corporate Governance under SEBI Listing Regulations and Department of Public Enterprises (DPE) guidelines on Corporate Governance. iii. Secretarial Audit Report under Section 204 (1) of the Companies Act, 2013.

Declaration under Section 149(6) of the Companies Act, 2013 pertaining to criteria of independence has been given by the Independent Directors to the Board of Directors. All the Independent Directors have registered themselves on the online database of the Indian Institute of Corporate Affairs (IICA), notified under Section 150 of the Companies Act, 2013. In the opinion of the Board, the Independent Directors possess integrity, necessary expertise and experience.

Your company continuously reviews and strengthens its compliance of systems and processes.

• To attain the highest standard of Corporate Governance, integrity in operations is maintained alongside ethical and transparent functioning.

• To ensure compliances, a quarterly legal compliance report on the Applicable Laws/ Acts is reviewed by the Board of Directors.

• Being a listed company, compliance with the SEBI (Listing

Obligations and Disclosure Requirements) Regulations, 2015 is ensured. There is no adverse comment from SEBI for the FY 2024-25 on any financial matter.

• The Company has complied with all the applicable secretarial standards.

• For preparation of financial statements, the company ensures compliance to the Indian Accounting Standards (Ind AS), Guidance Notes and other authoritative literature issued by the ICAI, Companies Act, 2013 and other applicable statutes.

The continuous endeavour of your Company to constantly enhance transparency in presentation and disclosures in its Financial Statements reflects a strong commitment to compliances and good corporate governance.

The Company, over the years, has been consistently making significant contribution to the Exchequer, and maintaining high standards of integrity with respect to tax compliances. For FY 2024-25, the company's contribution to exchequer was over I5,000 Crores (inclusive of ITC utilised).

As on March 31, 2025, the Company had in place a Board Level Audit Committee in terms of the requirements of the Companies Act, 2013 read with rules made thereunder and Regulation 18 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the details in respect of which are given in the Corporate Governance Report. All the issues are fairly and transparently deliberated in the meetings which are held at regular intervals. The views and suggestions of the Board Level Audit Committee members are taken into account and imbibed into the Company's processes. Further, there has been no instance where the Board of Directors have not accepted the recommendation of the Board Level Audit Committee. From November 2, 2024 till March 28, 2025, since there was only one Independent Director on the Board of BHEL, the compliances pertaining to quorum and number of meetings of the Audit Committee as per the SEBI Listing Regulations could not be met. Accordingly, during this period, the proposals for recommendation/ review/ approval of the Audit Committee were being directly submitted to the Board for its review/ approval.

Shri Ashok Aseri and Shri Aashish Chaturvedi have been appointed as Part-time Non-O_cial (Independent) Directors w.e.f. March 29, 2025.

Shri S M Ramanathan has been appointed as Whole Time (Functional) Director w.e.f. April 30, 2025 and has taken charge as Director (Engineering, Research & Development). In accordance with applicable statutory provisions and Article 67(iv) of the Articles of Association of the Company, S/ Shri Ashok Aseri, Aashish Chaturvedi and S M Ramanathan, having been appointed as additional directors, shall hold directorship upto the 61st Annual General Meeting of the Company and are eligible for appointment as Directors at the Meeting.

Further, pursuant to Section 152 of the Companies Act, 2013 and Article 67(i) of the Articles of Association of the Company, Shri Tajinder Gupta and Ms. Bani Varma will retire by rotation at the Annual General Meeting and being eligible, offer themselves for re-appointment.

Dr. K. Sivaprasad, who was appointed as Part-time Non-o_cial (Independent) Director on November 9, 2021, ceased to be Director of the Company on completion of his tenure on November 1, 2024. Shri Jai Prakash Srivastava, who was appointed as Director (E, R&D) on August 12, 2022, ceased to be a Director of the Company on attaining the age of superannuation on December 31, 2024. The Board of Directors places on record its deep appreciation for the valuable services rendered as well as advice and guidance provided by Dr. K. Sivaprasad and Shri Jai Prakash Srivastava during their respective tenures on the BHEL Board. In compliance with Regulation 36(3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, brief resume of the Directors proposed for appointment and re-appointment along with the nature of their expertise in specific functional areas and names of companies in which the person holds directorship along with the membership of the Committees of the Board are given in the explanatory statement/ annexure to the Notice.

CEO/CFO certificate as per Regulation 17(8) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is placed at Annexure- III to the Board's Report. Consolidated Financial Statements

The brief on consolidated financial statements prepared pursuant to section 129 (3) of the Companies Act, 2013 and Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirement) Regulations, 2015, is given in section 1.4.3 under Management Discussion and Analysis (Annexure – I).

In rapidly evolving industrial landscape, sustainability is not just an ethical responsibility but has emerged as a strategic imperative. BHEL is committed to environmental protection and long-term sustainability. Through rigorous compliance with environmental standards and environmental improvement initiatives, the company aims to reduce carbon footprint and contribute to a greener future. As part of broader Environmental, Social, and Governance (ESG) strategy, a major initiative called gfjr ch,pbZ,y (HARIT BHEL) is underway, which aims to transform BHEL into a Green Company with the target of achieving Net Zero by the year 2047 and making the company a model "Green PSU". The brief of some of these activities that help us move towards a sustainable future are given in Annexure-IV to the Board's Report, Section 4.1, 4.2, 4.4, 4.5.

BHEL is committed to upholding the highest standards in Health, Safety, and Environmental (HSE) stewardship. The Company's HSE philosophy is built on the belief that all incidents are preventable and that a safe, healthy, and environmentally responsible workplace is essential to long-term success.

The well-being of employees, contractors, and communities remain top priority. The Company is striving to create a workplace culture where safety is a shared responsibility and is integrated into everyday tasks. Further, the company is maintaining a zero-incident safety culture, complying with all the relevant health and safety laws, regulations, and industry best practices, encouraging active participation in safety programs and open communication on safety matters. Recognizing responsibility to minimize the environmental impact of its operations, the company is dedicated to sustainable practices that reduce emissions, conserve resources, and prevent pollution. Further details are provided in Annexure-IV to the Board's Report, Section 4.3.

In line with the requirement of the listing regulations, Business Responsibility and Sustainability Report providing disclosures in environmental, social and governance perspectives is enclosed at Annexure-V to the Board's Report. A guide for understanding the ESG disclosure and BRSR mapping with five Global Reporting Framework (GRI, SDG, TCFD, CDP and SASB) is available at NSE website.

BHEL has consistently been at the forefront of technological innovation and national development. The Company's contribution span across various sectors such as coal to chemicals, high efficiency thermal power plants, rail transportation, transmission, nuclear power, defence & aerospace, downstream oil and gas, green hydrogen, e-mobility etc. These efforts align with ‘Atmanirbhar Bharat' and ‘Viksit Bharat' missions of Government of India, fostering self-reliance and supporting India's net-zero goals.

In the year 2024-25, BHEL has incurred an expenditure of around D662 Crores towards R&D activities, which is ~2.4% of the revenue. This includes expenditure incurred on R&D projects taken up for development of new products, processes and systems, as well as efforts made for modifications/ improvements in products and designs. BHEL has filed 506 Intellectual Property Right (IPR) applications during the year, enhancing the company's intellectual capital to more than 5,940 numbers. Around 13.5% of the company's revenue, amounting to ~D3,700 Crores, has been achieved from its in-house developed products, systems and services. Further details of major developments have been provided in

In today's interconnected world, prioritizing data and cyber security is critical, especially for leading engineering organizations like BHEL. The Company has implemented advanced security measures to safeguard IT assets and data from cyber threats. These measures include a multi-layered defence system incorporating cutting-edge technologies for data centres, networks, applications, and end-user devices. Additionally, proactive steps are taken to continually enhance security based on feedbacks and inputs. Further details have been included in Annexure-I, Section 1.12 of the Board's Report.

Information in accordance with the provisions of Section 134(3)(m) of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 regarding conservation of energy, technology absorption and Research & Development, foreign exchange earnings and outgoing is given at Annexure-VII to the Board's Report.

As per provisions of section 197 of the Companies Act, 2013 read with the Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, every listed company is required to disclose the details of the remuneration of the Directors etc. in the Board's report. However, as per Notification No. GSR 463(E) dated June 5, 2015 issued by the Ministry of Corporate Affairs, Government Companies are exempted from complying with provisions of section 197 of the Companies Act, 2013. BHEL being a Government Company, such particulars are not included as part of the Board's Report. Statement pursuant to Section 129 of the Companies Act, 2013 (Form AOC-I) relating to subsidiary companies and joint ventures and Form AOC-II pursuant to section 134(3)(h) of the Companies Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014 is given at Annexure-IX to the Board's Report.

BHEL is dedicated to promote the use of ‘Hindi' as the O_cial Language in compliance with the Government of India's Rajbhasha Policy. The Company has ensured the implementation of Rajbhasha Policy and has taken various initiatives. Further details have been provided in

BHEL upholds the principles of Good Governance, Transparency, Probity, and Ethics to ensure integrity in operations. The company has put in place a robust Vigil Mechanism to ensure probity and integrity in operations. The Company encourages reporting of unfair and unethical practices and in terms of Regulation 22 of SEBI (LODR) Regulations, 2015 and Section 177 of the Companies Act, 2013. The Company has put in place a Whistle Blower Policy which provides adequate safeguard to the complainant against victimization. The "Board Level Audit Committee" (BLAC) reviews the functioning of the Whistle Blower / Vigil Mechanism, and annual review of the Vigilance function is also done by CMD / Board of Directors. Further, details are provided in Annexure-VIII to the Board's Report. Proceedings under Insolvency and Bankruptcy Code

No applications against BHEL under Insolvency and Bankruptcy Code, 2016 (IBC) have been admitted during the year and no proceedings against BHEL under IBC are pending as on March 31, 2025.

The Statutory Auditors of your Company are appointed by the Comptroller and Auditor General of India. Two firms of statutory auditors were appointed as joint statutory auditors and five firms were appointed as branch auditors. The names of audit firms appointed for FY 2024-25 are given separately in the Annual Report.

The Auditors' Report on Standalone and Consolidated Financial Statements for FY 2024-25 of the Company are given at Annexure-X to the Board's Report. There is no qualification in the Auditors report on the Financial Statements of the Company. The Supplementary Audit report under section 143(6) read with section 129(4) of the Companies Act, 2013 issued by the Comptroller & Auditor General of India also forms part of Annexure-X.

In terms of section 204(1) of the Companies Act, 2013, the Company engaged M/s Akhil Rohatgi & Co., Company Secretaries in whole-time practice, as Secretarial Auditors for conducting Secretarial Audit for FY 2024-25 and their report forms part of Corporate Governance section. Secretarial Auditor in his Audit Report has observed that: (i) During the period under review, the number of independent directors on the Board of the Company was less than half of the total strength of the Board as required under Regulation 17(1) of the SEBI Listing Regulations, Para 3.1.4 of the DPE Guidelines on Corporate Governance and Section 149 (4) of the Companies Act, 2013. Further, the Company did not have an independent woman director during the time period 13.04.2024 to 31.03.2025 as required under Regulation 17 (1) of the SEBI Listing Regulations and Section 149(1) of the Companies Act, 2013; and (ii) During the time period from 02.11.2024 to 28.03.2025, composition of the Audit Committee and the Nomination & Remuneration Committee were not in accordance with Regulations 18 (1) & (2) and 19 respectively of the SEBI Listing Regulations, Paras 4.1.1 & 4.4 and 5.1 respectively of the DPE Guidelines on Corporate Governance and Sections 177(2) and 178 (1) respectively of the Companies Act, 2013, due to only one independent director remaining on the Board of the Company during the said period. The Secretarial Auditor has also noted in his report the explanation given by the Company that BHEL, being a Government Company, all the directors are appointed by the President of India, acting through administrative ministry and as such appointment of requisite number of independent directors is beyond the control of the Company. Further, the Company has been in constant communication with its administrative ministry requesting for appointment of independent directors on its Board so as to ensure compliance with corporate governance norms enunciated under the SEBI Listing Regulations, DPE Guidelines on Corporate Governance and Companies Act, 2013. With effect from 29.03.2025, two independent directors were appointed on the Board and the Audit Committee and Nomination & Remuneration Committee were also reconstituted in compliance with the legal provisions. The Management noted the observation regarding vacancies of Independent Director and explained that the matter of filling up of the same is under process at the end of Government of India.

In terms of provisions of Section 148 of the Companies Act, 2013 and as per the Companies (Cost Records and Audit) Rules, 2014 and amendments thereof, the Board, on the recommendation of the Audit Committee, approved the appointment of seven firms of Cost Accountants as Cost Auditors for auditing the cost accounts of your Company for FY 2024-25. Cost accounts and records as specified by the Central Government under sub-section (1) of section 148 of the Companies Act, 2013 have been properly maintained and complied with. The detail of cost auditors appointed for FY 2024-25 are given separately in the Annual Report. The Cost Audit Report for FY 2023-24 with Nil qualification has been filed under XBRL mode, within due date.

We, the Directors of your company, gratefully acknowledge and deeply appreciate the cooperation and guidance we have received from the Government of India, particularly the Ministry of Heavy Industries, in various aspects of our company's operations and strategic initiatives.

We are also sincerely thankful to the various ministries, statutory authorities, and departments of the Government of India for their valuable support and continuous cooperation. We place on record our heartfelt appreciation to our valued customers, both in India and abroad, for placing their unwavering faith in us.

We also express our gratitude to the Comptroller and Auditor General of India, professional bodies, Statutory Auditors, Branch Auditors, Secretarial Auditor, and Cost Auditors for their constructive suggestions and ongoing cooperation. We are truly grateful to our esteemed shareholders for the trust and confidence they have placed in our management, and we look forward to their continued support in the future. We would also like to acknowledge with appreciation the continued cooperation from all our technology collaborators, suppliers, and contractors. The support extended by financial institutions, bankers, and stock exchanges is likewise highly appreciated.

Last but not least, we place on record our sincere appreciation for the diligent efforts, hard work, and commitment shown by all BHEL employees, who have worked tirelessly to meet our company's commitments.

Chairman & Managing Director

Place: New Delhi

Date: July 25, 2025