AFFLUENCE

DIRECTORS’ REPORT

Dear Members,

Your Directors have pleasure in presenting the 46th Annual Report together with the Audited Accounts of the Company for the year ended 31 Mar 2016. 2.      Highlights of operations:

2.1     Your Company has achieved highest Sales Turnover of Rs.. 4163.58 Crore during the fiscal year under report surpassing the MoU target and registering an increase of 48.72% over that of Previous Year.

2.2     Supply of one of the ATGMs against the Indent of Indian Army was completed successfully and a fresh Indent is expected for a bulk quantity during the financial year 2016-17.

2.3     Implementation of ERP/SAP in all the Units was completed.3.      Performance:  

3.1        Performance of the Company in financial terms is summarized below:

3.2        Following data reflects the financial position of the Company:

              *Regrouped figures4.         Dividend & transfer to general reserve:

            Your Company has a consistent track record of Dividend Payment. During the year, your Company paid an Interim Dividend of Rs. 67.62 Crore in Feb 2016 and further your Board recommended a sum of Rs. 101.35 Crore as final Dividend for the financial year 2015-16. Further an amount of Rs. 318 Crore is being transferred to General Reserve.

5.         CAPITAL STRUCTURE:

5.1        During the year, your Company in Compliance with the letter No.H-62012/2/2016-D (BDL), Dated 28 Jan 2016 received from the Ministry of Defence, successfully completed the Buyback of 172500 fully paid equity shares of Rs. 1000/- each at a price of Rs. 11528 per share.

5.2        The Buyback of shares was completed before the scheduled date and remitted an amount of Rs. 198.86 Crore was remitted to the Govt. of India on 29 Mar 2016. All the provisions have been complied with in this regard as per the provisions of Companies Act.

5.3        Total Paid Up Capital after Buyback stands at Rs. 97.75 Crore comprising of 977500 Equity shares of Rs. 1000 each and the Authorized Capital stood at Rs.125 Crore comprising of 1250000 Equity Shares of Rs.1000/- each. Gross Block of fixed assets of the Company (including special tools and equipment) stood at Rs.1175.55 Crore representing an increase of Rs. 235.51 Crore over 2014-15.

6.         PERFORMANCE AGAINST MoUs:

6.1       During the previous year 2014-15, the Company achieved a rating of              “Excellent”. The MoU rating for the year 2015-16 is also likely to be “Excellent”.

6.2       MoU for the financial year 2016-17 was finalized at Ministry, with sales target fixed at     Rs. 4400 Crore (excluding duties and taxes). Your Company is well poised to achieve the targets fixed in the MoU.

7.         COST REDUCTION:     

7.1          In line with MoD guidelines, cost reduction has been identified as a thrust area and  various cost reduction measures have been initiated. Apex Committee on Cost reduction has been constituted under the Chairmanship of a Functional Director.  Review meetings are being held at regular intervals to monitor progress in achieving yearly targets. During the year under report, an amount of Rs. 76 Crore has been achieved under Cost review/ reduction programme.

7.2          E-reverse auction is being implemented under E-Procurement wherever possible which resulted in more competitive price and reduction in material cost. Further, continuous efforts are being made for increasing Vendor base for various projects resulting in considerable savings in material cost. Further, energy saving devices are being installed as part of energy Audit.

7.3          Salary slips and e-meal card (food coupons) are generated in electronic form at Kanchanbagh, Bhanur and Vizag Units. By this your Company has reduced paper consumption.

      8.         Economy Measures:

8.1        Company has observed fiscal prudence and economy areas like travelling expenses, advertisement and publicity expenses, purchase of new vehicles, conducting seminars and conferences, courtesy and entertainment etc during the year 2015-16.

8.2        Inventory of raw-materials, work-in progress and spare parts is maintained at optimal levels. Energy consumption and fixed and variable overheads and Contingency expenditure are being reviewed and pruned to bare minimum.9.         Modernization and upgradation:

            Automation of production systems at Kanchanbagh complex has been planned to increase the production of Surface to Air Missiles. Storage facilities are being augmented to meet increased production targets.

10.        Foreign Exchange Earnings and Outgo:

            Earnings of foreign exchange for the year was Rs. 1.65 Crore and the outgo was             Rs. 604.08 Crore. 11.        Exhibitions:

11.1      Senior Executives and Directors participated in National and International Exhibitions during the year 2015-16.  Such platforms are used to gain awareness in advanced technologies, interact with experts and share knowledge. Visiting the pavilions of other countries and understand the systems available with them enables your Company to draw up its own future business plans effectively.  12.        Board of Directors:  

(i)             Appointment of Independent Directors:

Smt.Sushama V Dabak and Prof. Ajay Pandey were appointed as Independent Directors on the Board of BDL w.e.f 01 Dec 2015 and Lt Gen (Retd.) Anil Chait was appointed as Independent Director on the Board of BDL w.e.f. 07 Jan 2016. With that the vacancies of Independent Directors have been filled up. 

(ii)            Statement on declaration by Independent Directors:

Independent Directors have given declarations u/s 149(7) of the Companies Act, 2013 that they meet the criteria of independence as laid down u/s 149 (6) of the said Act.

(iii)           Change of Directors:

In terms of Articles of Association of the Company, the President of India is vested with powers to appoint the Directors of the Company from time to time and also shall determine terms of office of such Directors.

Accordingly Shri.J.Rama Krishna Rao, IAS, Joint Secretary (ES), Government Nominee Director was on the Board of BDL till 06 Aug 2015  and after that Smt.Kusum Singh, Joint Secretary (P&C) was on the Board of BDL till 03 Mar 2016.

Shri.R.G.Vishwanathan, Addl. FA & JS (DRDO) was on the Board of BDL till                03 Mar 2016.

Shri Ashwani Kumar Mahajan, Addl. FA & JS was appointed on the Board of BDL           w.e.f. 09 Mar 2016 in place of Smt. Kusum Singh, JS (P&C) and Shri R.G.Vishwanathan, Addl FA & JS (DRDO).

The Board places on record its deep appreciation for the valuable services rendered by Shri J Rama Krishna Rao,IAS, Joint Secretary (ES), Smt.Kusum Singh, Joint Secretary (P&C) and Shri R.G.Vishwanathan, Addl (FA) during their tenure on the Board.

Shri V Gurudatta Prasad was appointed as Director (Production) by President of India w.e.f 10 Sep 2015. Further the tenure of AVM NB Singh, AVSM, VSM (Retd.), Director (Technical) was completed on 30 Jun 2016 on attaining age of Superannuation.        Shri K Divakar was appointed as Director (Technical) w.e.f.01 Jul 2016 by the President of India.

The Board places on record its deep appreciation for the valuable services rendered by AVM NB Singh, AVSM, VSM (Retd.) during his tenure as Director (Technical).

(iv)          Number of Meeting of Board:

During the year 2015-16, Eight (8) Board Meetings were held on 09 May 2015,            05 Jun 2015, 27 Jul 2015, 28 Sep 2015, 30 Nov 2015, 29 Jan 2016, 05 Feb 2016 and 11 Mar 2016. Requirements on number and frequency of meetings, in terms of provisions of Companies Act and DPE Guidelines were complied with in full.

13.        Directors’ Responsibility Statement:

            As per Section 134(5) of Companies Act, 2013 as amended, the Directors state:

(i)             that in the preparation of the annual accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures therefrom.

(ii)            that the selected accounting policies have been applied consistently and judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at the end of the financial year and of the financial statement of the Company for the year ended 31 Mar 2016.

(iii)           that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

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

(v)           that the Company has devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

                                                                                                                                                     14.        Human Resource Development:

14.1      During the year under report the Company has conducted 1383 training programmes for Executives and 927 training programmes for Non-Executives to impart training on knowledge based, development oriented and need based topics. Such training programmes were organized in-house and at premises of external agencies to cover the present and future requirements of the Company.

14.2      Apart from regular Training Programmes, your Company organized the following activities/ programmes during the year:

(a)           Management Development Programmes (MDPs):

26 Senior Executives (DGM & above grade) were sponsored for the Management Development Programmes conducted by premier institutes in India like IIM-A, IIM-B, IIM-C, IIM-K, and XLRI Jamshedpur during FY 2015-16.

(b)           Executive Development Programmes (EDP) :

Executive Development Programmes were conducted, exclusively designed for Executives who have got promoted from Non Executive Cadre since 2007 onwards.

The programmes were conducted in 5 batches and a total 170 Executives were trained in these programmes.

(c)           Advanced Management Programmes (AMP) :

An Advanced Management Programme was conducted and two Principal Executives were sponsored for the programme.

(d)           IPMA Level ‘D’ Certification Programme:

HRD successfully organized IPMA Level ‘D’ Certification Programme for the Executives of the Company. In this certification course a total 60 Executives appeared, out of which 54 Executives have successfully cleared the certification programme and became Certified Project Management Associate (IPMA ‘D’ Certified).

(e)        Project Management Professional (PMP) Programme:

To create awareness about Project Management concepts and transform your Company into a Project driven organization by institutionalizing the Project Management principle in the Company, Management has identified 66 Executives to undergo PMP Certification program conducted by PMI USA. Accordingly 35 Hrs. mandatory Contact Programme for all the 66 Executives was conducted at Institute of Systems, Technology and Management in 2 Batches.

30 Executives have registered themselves with PMI USA and 3 Executives have successfully cleared the PMP certification exam.

15.        PARTICULARS OF EMPLOYEES

            There were no employees of the Company who received remuneration in excess of the limits prescribed under Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.16.        Industrial Relations ANd Employee Welfare:  

16.1      Your Company has continued to maintain cordial and harmonious relations with recognized and other registered trade unions and Associations during the year under report.  All the Statutory Committees such as Welfare Committee, Works Committee, Safety Committee, Canteen Committee and Plant Level Committee have extended their cooperation to maintain discipline at all levels. Management is also receiving maximum support and cooperation from the employees as in the past in achieving the set targets.

16.2      Compliance of Statutory Welfare Provision is followed meticulously. Your Company also continued to extend non statutory facilities such as school, canteen allowance, uniforms, shoes etc. Company has been taking care of medical needs of employees and their family members as per Company’s Medical Rules. In line with DPE guidelines, Company has framed a Pension Scheme for Executives and Post Retirement Medical Benefit Scheme for Executives and Non-Executives of the Company and obtained approval of the Board.

16.3      The Management also took initiatives to provide proactive and compassionate human relations by creating an atmosphere of mutual trust.

17.        Foreign Visits:

            Your Company incurred an expenditure of Rs. 79.18 lakhs during the year under report towards foreign travel for business trips and for on the Job Training of personnel.

18.        SECURITY:

18.1      Central Industrial Security Force (CISF) is providing Security and Fire Services in both Kanchanbagh and Bhanur Units. Efforts are being made to induct CISF in Vizag Unit also. During the year under report, CISF has played a vital role in the Security and safeguarding the property of the Company. CISF team adopted robust security measures combining physical measures with technology to keep the highly sensitive installations secure.

18.2      Plant Security Council is in place to review the security arrangements and implementation of IB guidelines. Regular Security review meetings are being conducted both by Management and CISF to beef up security.

18.3      Biometric Access Control System has been installed in addition to Computerized Photo Identity Cards to prevent unauthorized entry and CCTV Cameras have been installed all over the factory premises to cover more area under CCTV surveillance. Door Frames Metal Detectors, X-ray baggage machines are also in use. Barricades, Boom Barriers and Morchas are provided to strengthen physical security measures.  

18.4      Regular programmes on Security awareness were conducted besides observing Security Week/Fire Week. Employees are sensitized on the security threat and action to be taken in case of emergency and fire accidents. 

 19.       SAFETY:

19.1      Safety, Health and Environment norms (SHE) are stringently followed in the Company. Industrial Safety Committee and Explosive Safety Committee at corporate level are functioning to meet the requirements. Safety committee meetings are held at regular intervals for monitoring Safety, Health and Environment as per the statutory requirement. The works are carried out in compliance with the Factories Act 1948, and strictly adhering to the Storage & Transport of Explosive Committee (STEC) regulations.

19.2      Annual explosive safety audit cycle-2015 was conducted by Centre for Fire, Explosive & Environment Safety (CFEES) MoD, New Delhi and the record of discussions made by the audit team was brought to the notice of concerned for compliance. Regular medical checkups are carried out for employees working in hazardous areas by qualified medical team.

19.3      Safety training programmes were arranged through HRD conducted by National Safety Council (NSC), Central Labour Institute (CLI), Regional Labour Institute (RLI) and Centre for Fire, Explosive & Environment Safety (CFEES) MoD, New Delhi to inculcate Safety consciousness and to establish safe working environment.

19.4      The revised safety manual in printed form was distributed to all Divisional Heads and Directors and is made available on intranet.

19.5      BDL-Safety Policy and Objectives boards are displayed at all divisions/departments of Kanchanbagh, Bhanur and Vizag Units.

19.6      As core team member of Environment Management System (EMS) and ISO 14001-2004, Safety Engineering Department is playing a key role for continual improvement by conducting internal audits. Safety Engineering Department is in continuous interaction with Inspector of Factories, Pollution Control Board and Centre for Fire, Explosive & Environment Safety (CFEES), Ministry of Defence and ensuring compliance of various guidelines issued from time to time. Mock drills are also conducted at regular intervals to ensure fire fighting preparedness.

20.        RESERVATION OF POSTS FOR SCs/STs AND TOTAL MANPOWER:

20.1      The Company has been following Presidential Directives of the Government with regard to reservation of posts for SCs/STs in recruitments.

20.2      Total manpower strength (including Functional Directors) as on 31 Mar 2016 was at 3132 out of which number of persons on temporary rolls was 17. Of the total strength, 72 are ex-servicemen, 578 are of Schedule Caste and 212 are of Scheduled Tribes. The percentage of Schedule Caste and Scheduled Tribes in respect of Employees was at 18.39% and 6.77% respectively.

20.3      Number of persons on temporary rolls as on 31 Mar 2016 was 17, out of which two belong to Schedule Caste and one belong to Schedule Tribes category. The No. of Schedule Caste and Scheduled Tribes in various categories of posts as on                  31 Mar 2016 is given below:

*excluding Functional Directors

20.4      Recruitment of employees in Schedule Caste and Schedule Tribes during 2015-16 is given below:

            As per the recommendation No.51, Para (ii)(a) of the National Commission for Women (NCW) in its Annual Report for the year 1995-96, the employment position of Women  is given below as directed by Ministry of Defence vide their letter No. 39(6)/99/D(B&C), dated 27th Aug 1999.I.           EXECUTIVES

22.        PERSONS WITH DISABILITIES (pwd) as on 31 Mar 2016:

            The total number of Physically Challenged employees as on 31 Mar 2016 was 102 and its percentage to total employees works out to 3.26%.

HI- Hearing Impaired, LD-Locomotive Disability, VI-Visually Impaired.

23.        ANNUAL RETURN:

            In accordance with the provisions of Companies Act, 2013, Company is required to attach extract of Annual Return for the year under report and the same is placed as Annexure-I.  24.        ENVIRONMENT AND POLLUTION CONTROL:  

            Your Company contributes in all respects to the environment by maintaining a clean and green environment. Effluent treatment plant, Sewage treatment plant, water conservation, tree plantation, planting of flower bearing trees and landscaping, utilizing treated effluent water etc; have been carried out. The Internal Committees are periodically review status on various types of pollutions and take appropriate steps to reduce the pollution. All Units are having valid consent for operation obtained from Pollution Control Boards.

            Your Company has implemented green initiatives such as zero liquid discharge system, hazardous waste disposal system and further following initiatives were taken during the year for environmental protection

i)              Tree Plantation:

20 nos. of teak wood trees have been planted by Kanchanbagh unit and 1075 nos. of other different types of saplings were planted by Bhanur unit on the occasion of World Environment Day-2016.

ii)            Testing Of Environmental Parameters:

The environment parameters like ambient air quality, wastewater from sewage treatment plant and effluent treatment plant, air quality of diesel generator set and Venturi scrubber are tested at Kanchanbagh, Bhanur and Vizag Units through certified agency and results are within the prescribed limits of laid down by Pollution Control Board.                         

25.        Quality:

            Your Company manufactures products which are single shot in nature. These products require stringent Quality standards and high degree of reliability. In pursuit of this objective, your Company has been adopting International Quality Management System practices by way of obtaining ISO certification for the last 20 years. Currently CP-IGMP, ITD, Electronics Division and D & E divisions have been certified to ISO 9001:2008 Quality Management System standard. MILAN Division has been certified to Aerospace standard i.e. AS 9100C, released by International Aerospace Quality group (IAQG).

Electrical measured values have traceability to National or International standards which were achieved through calibrating the Electronics equipment in ISO/IEC 17025:2005 (NABL) accredited Labs of Milan Division and Bhanur Unit.

Your Company is planning to upgrade to AS 9100C standard for AKASH division in the next financial year.

During the year under report, your Company has introduced IAQG requirements in Bhanur Unit by implementing AS 9100 C Aerospace Quality Management system and got certified in the month of Dec 2015 by NVT Quality Certification, Bengaluru.  The Certificate is valid from 10 Dec 2015 to 09 Dec 2018.

In case of all ISO/AS certified divisions, regular audits by external agencies are conducted. Customer satisfaction is being measured for all major products manufactured in the respective divisions.

Your Company is continuously striving to improve customer satisfaction through customer meets and interaction with users. Corrective actions are taken wherever necessary for improvement.

26         Exports:

Your Company has not executed any appreciable Export Orders during the year 2015-16.  For achieving exports, your Company is having regular interaction with the overseas customers.  Offset implementation also offers a major opportunity to achieve our export targets.  Your Company is interacting with aero-space majors in Europe and Russia to exploit opportunities arising out of offsets.

27.        INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY: 

            Your Company had put in place all required internal controls and systems to meet the canons of financial propriety. External audit firms are appointed to ensure their adequacy and report thereon. A detailed analysis of reports of Internal Audit Firms as well as reports of Internal Audit Department of your Company are placed before the Audit Committee for its review and advice. The adequacy of internal control procedures are reviewed and reported by Statutory Auditors in their Audit Report. Your Company being a Government Company is subject to Government Audit also.  28.        official Language (OL) Implementation:

28.1      The provision of OL Act-1963 (as amended in 1967) & Rules thereunder are implemented properly. OLIC Meetings are held quarterly under the Chairmanship of CMD and similarly the Quarterly progress reports on use of OL are sent in time to authorities concerned.

28.2      Under the OL Act, 1963 and the Presidential Orders thereon, the papers laid before the Parliament, Annual Report of the Company, MoU with MoD and brief of the Company along with presentations for various delegations and Parliamentary Committees were prepared in bilingual form and submitted accordingly.

28.3      Department of Official Language organized Southern Region Rajbhasha Conference of twin cites at Kochi on19 February, 2016. On this occasion the TOLIC (U) was awarded Rajbhasha Kirthi Puraskar for best Implementation of OL in ‘C” region (Third Place).

28.4      On the eve of Vigilance Awareness Week, National Safety Week, Fire Safety Week, Environment Day and observance of Quami Ekata Diwas in the Company, various competitions were conducted in Hindi, English and Telugu to involve more and more employees of the organization and bring in awareness on these subjects among them.

28.5      The Website of the company prepared in Hindi was updated from time to time in compliance with the directives from Govt. of India.

28.6      Hyderabad being the headquarters of TOLIC, the regular half yearly meetings consisting 49 PSUs of twin cities were organized under the Chairmanship of CMD, BDL and the decision taken therein were implemented at twin cities level.

28.7      With an objective to promote and propagate Hindi and inculcate the habit of reading Hindi among the Officers and Employees of the Company, various Hindi Magazines and News Papers are subscribed regularly. Besides this, popular Hindi books on all subjects are also purchased annually with the same objective as per the directives of DOL. 29.        Technological conservation & renewable energy development:

                Technology Conservation

29.1      Your Company has taken up indigenization which encompasses various nascent technologies like Thin Film Hybrid Technologies, manufacturing of HMX-based explosive compositions and optical devices like Photo Diodes, Lens and Filters etc.,

29.2      The indigenization programme covered uncommon components which are not part of Technology transfer from OEM. The equivalent indigenous materials were indentified and processed indigenously. The evaluation process was concluded successfully validating all the sub-systems of one of the ATGMs made from these Indigenous parts. This reduces the dependence on OEM and also brings down production cost of missiles

            Renewable Energy Development

29.3      Sustainable development has become the national priority to channelize the development process in an environment friendly way with the optimum utilization of available natural resources. In its relentless pursuit of implementing sustainable development practices, your Company has unleashed various programmes to conserve energy thus promoting energy efficiency.

29.4      Solar energy is one of the most important renewable energy sources, which has been gaining increased attention in the recent past. Solar energy is clean and free of emissions, which is great for environment, as it does not produce pollutants or byproducts harmful to the Nature.

29.5      In view of its importance, during the year 2015-16, your Company established Grid connected Solar Photo Voltaic (PV) Roof Top Power Plants with an estimated Payback period of around 6-7 years at the following locations:

·       100KWp Grid connected Solar PV Power Plant commissioned on the Roof Top of Main Canteen building at Kanchanbagh unit and it is in operation from December 2015.

·       Another 100KWp Grid connected Solar PV Power Plant commissioned on the Roof Top of D&E building at Kanchanbagh Unit and it is in operation from    Feb 2016.

Over a period of 25 years, each 100KWp Solar system will offset the carbon footprint by 80 tons of CO2 which is effectively equivalent to planting 105 acres of forest.

29.6      Further, your Company under Green Energy commitment to Hon’ble Prime Minister of India committed to set up 25 MW Grid connected Solar PV power plants in the units. Initially installation of 5 MW Grid connected Solar Power plant at Bhanur unit is in progress which will be operational from March 2017. The generated solar power will be connected to Telangana state electrical power grid at Nandigama sub-station.

30.        Vigilance:

30.1      On 26 Oct 2015, AVM NB Singh, AVSM, VSM (Retd.), Director (Technical) of BDL administrated Vigilance Pledge in Corporate Office and the same was telecast live to other Units of the Company. Shri K.R.Nandan, IPS (Retd.), Vigilance Commissioner, Telangana Stage inaugurated Vigilance Awareness Week Celebrations 2015 as Chief Guest. The theme of the year was “Preventive Vigilance as a tool of Good Governance”.

30.2      On 31 Oct 2015, Chairman & Managing Director has released a booklet of ‘Dos’ and ‘Don’ts’ prepared by Vigilance Department. The book let consists of various important points viewed from Vigilance angle.

30.3      The main focus of the Vigilance Department has been preventive/ proactive vigilance. Keeping this in view, the activities of this Department clearly indicate progressive change in focus of activities taken up/reported upon to the Management.

30.4      System improvement suggestions were given by Vigilance Department to the Management on areas like Recruitment and Absorption of Management Trainees, Resignation, Constitution of Technical Audit Committee, Departmental Promotions, Absorption of Foreign visits, Merit Awards to Employees, during the year under report. Systemic improvement suggestions were given while according vigilance clearance to Executives who are deputed abroad on official visit. Accordingly Management issued guidelines on deputing employees for foreign visits for strict compliance.

31.        CORPORATE SOCIAL RESPONSBILITY AND SUSTAINABILITY DEVELOPMENT:

31.1      In terms of DPE Guidelines on MoU and Section 135 of Companies Act, 2013, the Corporate Social Responsibility & Sustainability Committee (CSR & SD) has been constituted to examine proposals for approval of CSR & SD plan and review implementation/execution of plan and steering CSR & SD agenda of the Company.

As on 31 Mar 2016 the CSR and SD Committee consists of the following Members:

a)  Lt Gen. (Retd.) Anil Chait       :           Chairman

                 Independent Director

b)  AVM NB Singh                     :           Member

                 Director (Technical)

c)  Shri S Piramanayagam          :           Member

                 Director (Finance)

31.2      Board of Directors of your Company has approved a “Policy on Corporate Social Responsibility and Sustainability” to ensure commitment at all levels in the organization to operate Company’s business in an economically, socially and environmentally responsible and sustainable manner, while recognizing interests of all stakeholders.  The CSR and SD activities are monitored periodically by the Committee and an annual report on CSR and SD activities undertaken during the year 2015-16 is enclosed at Annexure-II.

31.3      In accordance with provisions of the Companies Act, 2013 the Company needs to spend in every financial year, at least 2% of average net profits of the Company made during the three immediate preceding financial years towards CSR activities. The below Board Level Committee at Company level under the Chairmanship of Executive Director (P&A) closely monitors the progress of these activities taken up by the Company and review meetings were conducted periodically. During the year 2015-16, your Company spent an amount of Rs..11.26 Crore on CSR activities as against the requirement of Rs..10.28 Crore as per the Companies Act, 2013.

31.4      CSR activities being undertaken are placed on Company’s Web-link http://                   www.bdl-india.com.32.        AUDIT COMMITTEE:

            An Audit Committee is in place as a part of good Corporate Governance. Six meetings have been held during the year 2015-16 to review internal control systems and their adequacy, including coverage of Audit Functions.  Details of composition, terms of reference etc., are covered in Report on Corporate Governance attached to this report (Annexure-IV).33.        Auditors:               M/s.S.R.Mohan & Co., Chartered Accountants, Hyderabad were appointed as Statutory Auditors of the Company for the financial Year 2015-16 by the Comptroller & Auditor General of India. The Auditors have audited the Accounts and their Report is placed as a part of Annual Report.

34.        Comments of the Comptroller & Auditor General of India

            The Comments of Comptroller and Auditor General of India (C&AG) under Section 143 (5) of the Companies Act, 2013 on the accounts of the Company for the year ended     31 Mar 2016 are placed next to Statutory Auditors Report.

 35.       COST AUDITORS

            Your Company appointed M/s DZR & Co., Cost Accounts, Hyderabad as Cost Auditors for the FY 2015-16 in terms of Section 148 of Companies Act, 2013, read with the Companies (Cost Records and Audit) Rules 2014.

  36.      CEO / CFO CERTIFICATION:

            As per the requirements of DPE Guidelines, the CEO/CFO certificate has been obtained and placed before the Audit Committee and the Board. 

  37.      Corporate Governance:

  37.1    Corporate Governance is about application of best management practices, compliance of laws and adherence to ethical standards to achieve Company’s objective of enhancing stakeholders’ value and discharge of social responsibility. 

  37.2    The Company has a well established, transparent and fair administrative set up to provide for professionalism and accountability.   

  37.3    As per the guidelines on Corporate Governance for CPSEs issued by DPE vide its OM No. 18 (8)/2005-GM, dated 14 May 2010, the Management Discussion and Analysis Report (Annexure-III), Report on Corporate Governance (Annexure-IV) along with Certificate on compliance of conditions on Corporate Governance from a Practising Company Secretary (Annexure-V) as required under the said guidelines are attached to this report.

  37.4    Quarterly and Yearly compliance reports on Corporate Governance are being forwarded to MoD in the prescribed format.

  38.     RISK MANAGEMENT:

  38.1    DPE guidelines on Corporate Governance for CPSEs – 2010 says that the Board of the Company should ensure integration and alignment of Risk Management Systems with Corporate and operational objectives and also that risk management is undertaken as a part of normal business practice and not as a separate task set at times.

  38.2    In line with the above guidelines, your Company has framed Risk Management Policy of the Company which is applicable to all levels and all Units of the Company.  One of the objectives of Risk Management Policy is to ensure that all current and future risk exposures of the Company are identified, assessed, quantified, appropriately mitigated and managed.

  38.3    Divisional Level Committees have been formed to assess current status of Risk and identify measures to mitigate risks and also to evaluate mitigation measures so identified. Periodical Review meetings are taking place and a report being placed before the Board once in every Six months.

  39.     DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013:         

            In line with the provisions contained under “The Sexual Harassment of Women at the workplace (Prevention, Prohibition & Redressal) Act, 2013 your Company has put in place “Anti Sexual Harassment Policy” in line with the requirements of the above Act.  During the year 2015-16, your Company has not received any Sexual harassment complaints.

  40.      Compliance under the right to information act, 2005.

            The information required to be provided to citizens under Section 4(1)(b)             of Right to Information Act, 2005 is placed on Company’s Website   www.bdl-india.com.   

             It contains general information of the Company, functions, powers and duties of employees/officers, decisions making             process, rules, regulations, manuals and records held by the Company, directory of the Company’s Officers, pay scales of officers/ employees and procedure for seeking information and inspection of records.  The Company has nominated a Central Public Information Officer at DGM level to attend to queries and appeals. Further, during the year 2015-16 the Company received 102 applications/queries and the same were disposed off.

   41.     Acknowledgements

   41.1   Your Directors gratefully acknowledge the valuable support and assistance received from all Government Agencies particularly Ministry of Defence, Department of Defence Production, DRDO Laboratories, Central Government Departments, State Governments of Telangana and Andhra Pradesh, Quality Assurance Agencies of Government of India and other PSUs for the help extended from time to time.

   41.2   The Company wishes to place on record its appreciation for the co-operation extended and guidance provided by the Comptroller & Auditor General of India, the Principal Director of Commercial Audit & Ex-officio Member, Audit Board, Statutory Auditors, Bankers and Suppliers.

   41.3   The Directors take this opportunity to place on record their deep appreciation for the valuable contribution made and co-operation extended by the employees at all levels to propel the Company to greater heights and to sustain its growth path in the years to come.

for and on behalf of the Board of Directors

Place:   New Delhi                                                                                  V UDAYA BHASKAR

Date:      10 Aug 2016                                                           CHAIRMAN AND MANAGING DIRECTOR

                                                                                                   DIN: 06669311                         

Annexure-I

FORM No. MGT – 9

EXTRACT OF ANNUAL RETURN

AS ON THE FINANCIAL YEAR ENDED ON 31 MAR 2016

[Pursuant to Section 92 (3) of the Companies Act, 2013 and Rule 12 (1) of the Companies (Management and Administration) Rules, 2014]

I.       REGISTRATION AND OTHER DETAILS:

i)       Corporate Identity Number (CIN)      :           U24292TG1970GOI001353

ii)      Registration Date                           :           16 JUL 1970

iii)     Name of the Company                    :           BHARAT DYNAMICS LIMITED

iv)     Category / Sub–Category

of the Company                             :           Miniratna Category-1

v)      Address of the registered office

and Contact details                                    :           Kanchanbagh, Hyderabad.

vi)     Whether Listed Company                :           YES/ NO

vii)    Name, Address and Contact

details of Registrar and Transfer

Agent, if any                                  :           Not Applicable.

II.      PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY:

All the business activities contributing 10% or more of the total turnover of the Company shall be stated:

III.    PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE CMPANIES

IV.    SHARE HOLDING PATTERN

(Equity Share Capital Breakup as percentage of Total Equity)

i)    Category – wise Share Holding

*Due to Buyback

ii)    Shareholding of Promoters

iii)   Change in Promoters’ Shareholding (please specify, if there is no change)               

*Note: During the year the Company bought back 172500 fully paid Equity Share of Rs.1000 each at a price of  Rs. 11528 per share in compliance with the letter No.H-62012/2/2016-D (BDL), dated 28 Jan, 2016 received from the Ministry of Defence.

(iv)   Shareholding Pattern of top ten Shareholders (other than Directors, Promoters and Holders of GDRs and ADRs):

(v)     Shareholding of Directors and Key Managerial Personnel:

(V) INDEBTEDNESS

Indebtedness of the Company including interest outstanding/accrued but not due for payment

(VI) REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

A.  Remuneration to Managing Director, Whole Time Directors and/or Manager:

                                                                                              (Amt. in Rs.)

B.  Remuneration to other Directors:

                                                                                            (Amt in Rs.)

C.  Remuneration To Key Managerial Personnel Other than MD/Manager/WTD

         (Amt  in Rs.)

(VII).  PENALTIES/ PUNISHMENT/ COMPOUNDING OF OFFENCES:

Annexure-II

ANNUAL REPORT ON CORPORATE SOCIAL RESPONSIBILITY & SUSTAINABILITY ACTIVITIES

{Rule 8 of the Companies (Corporate Social Responsibility Policy) Rules, 2014}

a) Brief outline of the Company CSR &SD Policy

The Company formulated CSR & SD Policy in alignment with Mission of the Company to continue to enhance the quality of life of less privileged in our society by providing infrastructure and to be a credible and transparent organization striving for the eradication of poverty and maintain ecological balance.

In order to pursue this mission, the Company has set the objectives as under:

·         Identify & focus education as a priority and take up suitable interventions for betterment of educational facilities at village level.

·         Concentrate on health, hygiene and environmental up-gradation to make village life clean and hygienic.

·         Educate and encourage village youth to take up self employment for livelihood.

·         To provide support and participate in Government efforts in social, economic and environmental development of the less privileged.

·         Adopting eco-friendly technology in conserving energy

·         Recycling of waste water by using state of art technology and using treated water for Non potable uses.

·         Construction of rain water harvesting pits for improving the water table.

·         Adopting innovative methods in utilizing renewable energy sources.

·         Increasing green cover in and around BDL Campus to reduce the ambient temperature and improving the soil quality.

Further, CSR & SD Policy may be accessed on the website www.bdl-india.com. The details of the projects/programmes are also listed in the said website.

b) Composition of CSR Committee as on 31 Mar, 2016

            i)   Lt.Gen.(Retd) Anil Chait                                 -           Chairman

ii)  AVM NB Singh, AVSM, VSM (Retd.)              -           Member

iii) Shri.S.Piramanayagam                                  -           Member

c) Average Net Profit of the Company for last three financial years:

The Average net profits of the Company for the last three financial years is Rs.51395 Lakh

d) Prescribed CSR Expenditure:

    The prescribed CSR Expenditure i.e. 2% of the amount in the item No.(c) above is Rs.1027.89 Lakh

 e) Details of CSR spent during 2015-16

a)     Total Amount to be spent for the financial year          :  Rs.1027.89 Lakh

b)    Amount unspent, if any                                            :  Nil

c)     Manner in which the amount spent during the financial year is detailed below

CSR ACTIVITIES UNDERTAKEN DURING THE FY 2015-16

(Format prescribed under Rule 8 of the Companies (CSR Policy) Rule 2014)

(Rs. in Lakh)

f)  In case the Company has failed to spend the two percent of the Average Net profit of the last three financial years or any part thereof, the Company shall provide the reasons for not spending the amount in its Board Report:

NIL

g) A responsibility statement of the CSR Committee that the implementation and monitoring of CSR Policy, is in compliance with CSR objectives and policy of the Company

     It is hereby stated that the implementation and monitoring of CSR Policy is in compliance with CSR objectives and policy of the Company

Annexure-III

MANAGEMENT DISCUSSIONS AND ANALYSIS REPORT

1.   INDUSTRY STRUCTURE AND DEVELOPMENT:

Bharat Dynamics Limited (BDL), a Government of India Enterprise under the Ministry of Defence was established in Hyderabad in the year 1970 to be a manufacturing base for guided missiles and allied defence equipment.

BDL, a Miniratna Category- I Public Sector Enterprise, is amongst a few industries in the world having capabilities to produce state-of-the-art guided weapon systems. The Company is poised to enter new avenues of manufacturing, covering a wide range of weapon systems such as Surface-to-Air Missiles, Air Defence Systems, Heavy Weight Torpedoes, Air-to-Air Missiles etc., making it a world-class defence equipment manufacturer. With the experience of over four decades in manufacturing and integration of missiles, BDL has also entered into the area of refurbishment and life extension of missiles. The major manufacturing divisions of the company have ISO 9001: 2008 certification.

Currently, BDL has three manufacturing units. The first unit is co-located with its Corporate Office at Hyderabad, the second one in Medak District of Telangana and the third unit, which is dedicated exclusively to the manufacture of underwater weapons, is at Visakhapatnam in Andhra Pradesh.

As a part of the expansion plan, BDL is setting up two more units - one at Amravati District in Maharashtra and another one at Ibrahimpatnam in Telangana.

BDL has indigenously developed and test fired recently, an advanced Wireless Anti-Tank Missile with RF Guidance. BDL had earlier in Jan 2016 successfully test fired its first indigenously developed ATGM. With the successful completion of the developmental trials of these two new systems, BDL entered into the era of  development of new generation short range missile systems both for moving and stationary land targets. 

The Company is having a healthy order book position of Rs.13721 Crores as on 31 Mar 2016. Based on the anticipated orders, the Company is well poised for an exponential growth.

The Products of the Company being single shot devices, call for highest reliability. In pursuit of this objective, quality policies of the Company have been laid down. The quest for technological excellence has been the guiding principle of the organization and living up to the sobriquet, ‘THE FORCE BEHIND PEACE ’.

2.   FUTURE OUTLOOK:

The Defence Industry in India is experiencing significant and progressive change with huge opportunities for growth. Company has a healthy order book position of around Rs..13721 Crore as on 31 Mar 2016 which will keep production line busy in the years ahead. Your Company has challenging times ahead with delivery commitments with respect to major ATGMs & SAM Projects.

Based on the Order book position and anticipated orders, your Company is well poised for an exponential growth. Your Company is enhancing its existing capacities and also establishing new manufacturing facilities at multi-locations to meet the commitments in respect of orders on hand and those that are in pipeline.

Consequent to the modernization programme launched by the Indian Armed Forces, the future outlook of the Company is looking bright.

However, keeping in view of the Government Policies such as opening of FDI in Defence Sector etc., to encourage competition from all sectors in Defence Acquisition Programmes, your Company is aware that its Nominated Production Agency Status is being slowly transformed into that of a Competitive Bidder. With decades of experience under its belt, your Company is well positioned and geared up to face challenges in future.

3.      RISKS AND CONCERNS:

i)              Dependence on single source vendor developed by the designer.

ii)             Continued dependence on OEMs in respect of certain projects.

iii)            Long gestation time in concluding contracts and getting orders.

iv)            Lengthy acquisition periods for the weapon systems by Armed forces.

     4.    INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

            The Company has put in place all required internal controls and systems to meet the canons of financial propriety. Appointment of External Audit Firms has been continued to ensure adequacy of Internal Control System and report thereon. Detailed analysis of the reports of Internal Audit Firm(s) as well as reports of Internal Audit Department of the Company are being placed before the Audit Committee for its review and advice.

      5.   DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

      5.1  Performance of the Company in financial terms is summarized below:

        5.2 Following data reflects the financial position of the Company:

6.  MATERIAL DEVELOPMENTS IN HUMAN RESOURCES, INDUSTRIAL RELATIONS  FRONT, INCLUDING NUMBER OF PERSONS EMPLOYED:

6.1.1 Total manpower strength of the Company as on 31 Mar 2016 is as under:

6.1.2 The Company intensified focus on training and development of manpower. Training and development at middle management levels were in focus during the year. Apart from regular Training Programs, your Company organized  Management Development programs, Executive Development Programmes, Advanced Management Program, IPMA Level ‘D’ Certification Program, Project Management Professional (PMP) Program for the development of various skills of the Executives during the year.

         6.2   Industrial Relations

The Company continues to enjoy cordial and harmonious Industrial Relations with the Cooperation and support of all sections of employees viz. Recognized Trade Union, Associations such as SC, ST, OBC and Officers Association. Statutory and Non Statutory Committees such as Works Committee, Safety Committee, and Welfare Committee are contributing to work place discipline.

   7. ENVIRONMENTAL PROTECTION AND CONSERVATION, TECHNOLOGICAL CONSERVATION AND RENEWABLE ENERGY DEVELOPMENTS:

Your Company contributes in all respects to the environment by maintaining a clean and green environment. Effluent treatment plant, Sewage treatment plant, water conservation, tree plantation, planting of flower bearing trees and landscaping, utilizing treated effluent water etc; have been carried out. The Internal Committees are periodically reviewing the status on various types of pollutions and take appropriate steps to reduce the pollution. All the Units are having valid consent for operation obtained from Pollution Control Boards.

Your Company has implemented green initiatives such as zero liquid discharge system, hazardous waste disposal system and further various initiatives were being taken during the year for environmental protection.

Sustainable development has become the national priority to channelize the development process in an environment friendly way with the optimum utilization of available natural resources. In its relentless pursuit of implementing sustainable development practices, your Company has unleashed various programmes to conserve energy thus promoting energy efficiency.

Solar energy is one of the most important renewable energy sources, which has been gaining increased attention in the recent past.  Solar energy is clean and free of emissions, which is great for the environment, as it does not produce pollutants or byproducts harmful to the Nature.

In view of its importance, during the year 2015-16 your Company established Grid connected Solar Photo Voltaic (PV) Roof Top Power Plants with an estimated Payback period of around 6-7 years at its factory units.

Further your Company under Green Energy commitment to Hon’ble Prime Minister of India committed to set up 25 MW Grid connected Solar PV power plants in the units. Initially installation of 5 MW Grid connected Solar Power plant at Bhanur unit through M/s. Solar Energy Corporation of India is in progress which will be operational from March 2017. The generated solar power will be connected to Telangana state electrical power grid at Nandigama sub-station.

          8.    FOREIGN EXCHNAGE CONSERVATION

The Company is striving constantly to conserve foreign exchange by reducing import of components and subsystems from OEMs by increasing indigenous content in the assembly of final products.

                       Annexure – IVREPORT ON CORPORATE GOVERNANCE

1.         COMPANY’S PHILOSOPHY ON CORPORATE GOVERNANCE:

1.1          Philosophy of the Company in respect of Corporate Governance is to ensure transparency in all its operations, make appropriate disclosures, comply with the laws, maintain ethical standards and take care of the interest of all the stakeholders. 

1.2        In keeping with its professional approach, the Company is implementing the precepts of Corporate Governance in letter and spirit.

1.3        The Company’s activities are monitored by several external agencies like Statutory Auditors, Comptroller and Auditor General of India, Central Vigilance Commission, Ministry of Defence (Department of Defence Production), etc.

2.         BOARD OF DIRECTORS:

2.1        Composition and Category of Directors:-

2.1.1     The strength of the Board of BDL shall not be less than 2 and not more than 15 under the provisions of Articles of Association of the Company as amended from time to time. The Directors shall not be required to hold any qualification shares.     

2.1.2     The composition of the Board of Directors of the Company had been restructured by the Government of India with Eight members viz. Four Whole Time Directors, including Chairman and Managing Director, one Government Director and three Part-time Non-official Directors (Independent Directors).

2.1.3     Details of the Members of the Board as on 31 Mar 2016 are as follows:

2.1.4     The Company earlier had Permanent Special Invitees on the Board of BDL and subsequently withdrawn the same in view of directions received from the Ministry of Defence vide its Notification No. 8(80)/2015-D(Coord/DDP), Dt. 03 Mar 2016. Hence as on 31 March, 2016 there were no Permanent Special Invitees on the Board of BDL.

2.2        Meetings of the Board and Attendance thereof; Number of other Boards or Board Committees in which Director is a Member or Chairperson

2.2.1     During the year 2015-16, Eight (8) Board Meetings were held on 09 May 2015,            05 Jun 2015, 27 Jul 2015, 28 Sep 2015, 30 Nov 2015, 29 Jan 2016, 05 Feb 2016 and 11 Mar 2016. The Board meets at least once in every three months and at least four such meetings shall be held every year. Required information is made available to the Board for its information/decision making.

2.2.2     Details of attendance of the Directors at the Board Meetings, Annual General Meeting and the number of other Directorship/Committee Membership held by them during 2015-16 etc., are furnished below:

2.2.3     Leave of absence was granted to Directors in case of their inability to attend the meeting due to unavoidable reasons. 

2.2.4     No Director is a member in more than ten Committees or Chairman of more than five Committees across all companies in which he/she is a Director as per the guidelines of DPE in this regard.

3.         COMMITTEES OF THE BOARD:

3.1       The Company has the following five (5) Committees of the Board functioning as on     31 Mar 2016:

            a)         Audit Committee

            b)         Remuneration Committee

            c)         Procurement Committee

            d)         HR Committee

            e)         CSR & SD Committee.         

3.2        Minutes of the Meeting of the Committees are being placed before the Board Meeting held immediately after the committee meetings for noting by the Board.  Decisions are being taken by the Committees by majority / unanimity.

4.         AUDIT COMMITTEE:

4.1        Brief Description of Terms of Reference

4.1.1     The Role, Powers, areas of review of information etc., of the Audit Committee were revised as per the Guidelines on Corporate Governance for CPSEs issued by DPE vide OM No.18(8)/2005-GM, dated 14 May 2010. The terms of reference to the Audit Committee, interalia, include the following:-

i)      Oversight of the Company’s financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible.

ii)      Recommending to the Board, the fixation of audit fees.

iii)     Approval of payment to statutory auditors for any other services rendered by the statutory auditors.

iv)    Reviewing with the Management, the annual financial statements before submission to the Board for approval.

v)     Reviewing with the Management, performance of internal auditors, and adequacy of the internal control systems.

vi)    Discussion with internal auditors and/or auditors any significant findings and follow up thereon.

vii)   Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern.

viii)  To Review the follow up action on the Audit observations of the C&AG Audit.

4.1.2     Four Chartered Accountant firms have been assigned the task to conduct Internal Audit of specific areas of operation of the Company to carry out Internal Audit for the year 2015-16 onwards. These are in addition to the Internal Audit Department of the Company. Audit Reports submitted by Chartered Accountant Firms were placed before the Audit Committee for its review.

4.2        Composition, Name of Members and Chairman:

4.2.1      During the year the Company reconstituted the Committee. The composition of the Committee as on 31 Mar 2016 is as under

Smt.Sushama V Dabak                          :           Chairperson

Independent Director

Prof Ajay Pandey                                  :           Member

Independent Director    

Lt Gen (Retd.) Anil Chait             :           Member

Independent Director    

AVM NB Singh, AVSM, VSM (Retd.)      :           Member

Director (Technical)

4.2.2     For Audit Committee Meetings, Functional Directors are invited as Permanent Special Invitees and representatives of Statutory Auditor and external Chartered Accountant Firms doing Internal Audit Work may attend by invitation.  Company Secretary acts as the Secretary of the Audit Committee.

4.2.3     During the year, Six (6) meetings of the Audit Committee were held on 24 Apr 2015,    27 Jul 2015, 28 Sep 2015, 30 Nov 2015, 29 Jan 2016 and 26 Mar 2016. The details of attendance of Members for the said Meetings are as follows:

5.         REMUNERATION COMMITTEE:

5.1       During the year the Company reconstituted the Committee and the composition of the Committee as on 31 Mar, 2016 is as under:

            a)         Prof. Ajay Pandey        

                        Independent Director                 :           Chairman

            b)         Lt Gen (Retd.) Anil Chait

Independent Director                 :           Member

            c)         Smt. Sushama V Dabak

                        Independent Director                 :           Member

d)         Head P&A                                 :           Secretary

5.2       During the year, two (2) meetings of the Remuneration Committee were held on          27 Jul 2015 and 30 Nov 2015. The details of attendance of members for the said Meetings are as follows:

5.3        Remuneration Policy /Details of Remuneration to All Directors:

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

5.3.2     Chairman and Managing Director and other Functional Directors are appointed by the Government initially for a period of 5 years from the date of appointment or upto the date of superannuation of the individual or until further orders of the Government, whichever is the earliest.  Depending on the age and performance and on meeting other stipulated conditions the initial period is extendable for a further period upto           5 years or upto the date of superannuation, whichever is earlier. The part-time Government Directors are generally from the Administrative Ministry and their term is co-terminus with the term of respective position held by them in Government at the time of appointment on the Company’s Board. The Part-time Non-executive Directors (Independent Directors) are appointed for a period of 3 years.

5.3.3     Details of remuneration of Whole-time Directors paid during the year 2015-16 are given below:

                                  (Amt in Rs.)

5.3.4     Part-time Government Directors (Non-executive Directors) are not paid any remuneration. They are also not paid sitting fee for attending Board/Committee meetings.

5.3.5     The Board at its meeting held on 22 Nov 2013 enhanced the sitting fees payable to the Independent Directors to Rs. 20000 per sitting for attending the Board Meetings and retained the sitting fee of Rs. 10000 per sitting payable in respect of Board Level Committee Meetings. Details of sitting fee paid to the Independent Directors during year 2015-16 is given below:

           (Amt in Rs.)

6.         PROCUREMENT COMMITTEE:

6.1        The Committee was constituted by Board on 29 Jul 2011 to review and sanction new Projects (including R&D Projects) beyond the powers of CMD and upto a maximum limit of Rs. 25 Crore in each case and shall also approve procurement proposals which are beyond the powers of CMD but within the powers of Board. 

6.2       Procurement Committee is empowered to review and sanction for placement of Purchase Orders/Award of Contracts as per the limits given below:

6.3        The Board in its 229th Meeting held on 11 Mar 2016 reconstituted Procurement Committee. It consists of following Directors as on 31 Mar 2016:

Company Secretary acts as a Secretary to the Committee and head Corporate Commercial Department is invited to assist the Committee.

6.4        During the year 2015-16, three (3) meetings of the Procurement Committee were held on 28 Sep 2015, 29 Jan 2016, and 11 Mar 2016.  The details of attendance of the members for the said meetings are as follows:

7.         HR COMMITTEE

            The HR Committee was constituted by the Board on 29 July 2011 to review and approve all proposals relating to HR matters. The Committee consists of following members as on 31 Mar 2016

Company Secretary acts as Secretary to the Committee and Head (P&A) Department will be invited to assist the Committee.

During the year, No meetings were held.

8.    CSR & SD COMMITTEE:

8.1       The Company reconstituted the CSR & SD Committee during the year and it consists of following members as on 31 Mar 2016

a)  Lt Gen. (Retd.) Anil Chait       :           Chairman

                 Independent Director

b)  AVM NB Singh                     :           Member

                 Director (Technical)

c)  Shri S Piramanayagam          :           Member

                 Director (Finance)

Chairman of below Board Level Committee formed by the Company is the Secretary of the Committee for monitoring CSR Plan and Sustainable Development of the Company. 

8.2        During the year under report, two (2) meetings of the Committee was held on 04 Jun 2015 and 27 Jul 2015.  The details of attendance of members for the said meetings are as follows:-

9.         SEPARATE MEETING OF INDEPENDENT DIRECTORS:

9.1        Department of Public Enterprises vide OM No. F.No.16(4)/2012-GM dated                   28 Dec 2012 circulated model Role and Responsibilities of Independent Directors, which includes that Independent Directors shall hold at least one meeting in a year without the attendance of Functional and Government Directors and members of the Management of the Company.  In line with this Companies Act, 2013 under Schedule IV of the Act discusses the Role and Functions of Independent Directors and also states that Independent Directors of the Company shall hold at least one meeting in a year, led by the Independent Director of the Company, without the attendance of Non-Independent Directors and members of Management.

9.2        During the year after a long correspondence MoD appointed three (3) Independent Directors viz. Smt.Sushama V Dabak (w.e.f 01 Dec 2015), Prof.Ajay Pandey             (w.e.f 01 Dec 2015) and Lt Gen (Retd.) Anil Chait (w.e.f 07 Dec 2016) on the Board. As per the provisions of the Act a separate meeting of Independent Directors was held on          26 Mar 2016 for the year 2015-16.

10.        GENERAL BODY MEETINGS:

10.1      All the Annual General Meetings of the Company were held at the Registered Office of the Company. The details of such meetings for the last three years are as under:

10.2      During the year an Extra Ordinary General Meeting was held on 11 Mar 2016 at 14:00 Hrs at New Delhi and passed a Special Resolution for approval of Buyback of Shares including Amendment of Articles in this respect.

11.        DISCLOSURES:

11.1      During the year 2015-16 the Company has not entered into any transaction with the Directors that may have potential conflict with the interest of the Company at large.  The members of the Board, apart from receiving Remuneration (wherever applicable), do not have any material pecuniary relationship or transaction with the Company which, in the Judgment of the Board, may affect independence of judgment of the Directors.

11.2      No Penalties and Strictures were imposed on the Company by any statutory authority on any matter related to any guidelines issued by Government during the last three years.

11.3      Whistle Blower Mechanism:

The guidelines of Corporate Governance for CPSEs 2010 issued by DPE have been complied with. The Whistle Blower Policy of the Company, inter alia, contains a provision enabling any person to approach the Chairman of the Audit Committee.  However, during the year under report, no personnel was denied access to the members of the Audit Committee or its Chairman.

11.4      The Company is complying with all the Guidelines on Corporate Governance for CPSEs 2010 issued by DPE except guidelines on Segment Wise Reporting. All the applicable Accounting Standards are followed except AS-17 relating to Segment reporting keeping in view the nature of business and the sensitive nature of disclosure. However, such non disclosure does not have any financial effect on the accounts of the Company. Necessary disclosure is being made in Notes forming part of Accounts in this regard.  .

11.5      There were no items of expenditure debited in books of account, which are not for the purpose of the business.

11.6      The Company has not incurred any expenditure which is personal in nature for the Board of Directors and Top management.

11.7      Details of Administrative and Office Expenses as a percentage of total expenses vis-a-vis financial expenses are furnished below:

        (Rs.  in Crore)

Increase in the expenditure during 2015-16 as compared to 2014-15 is due to imposition of excise duty with effect from 01 Jun 2015 on the products manufactured by the Company.

12.        MEANS OF COMMUNICATION:

The Company’s communication system with its Shareholders, Directors and other stakeholders is through all means of communication channels including correspondence and the official website (www.bdl-india.com) of the Company. The Company website provides information about (i) Payment of Interim Dividend,             (ii) Measurement of Company’s Performance through MoU rating, (iii) establishment of video conferencing system for virtual communication across all the units of BDL,         (iv) Company’s Profile, Milestones, Mission, Vision, objectives, achievements etc         (v) Annual Report information (vi) Company’s Products (vii) details of Tenders            (viii) E-procurement (ix) Careers (x) information under RTI Act 2005 etc. The performance of the Company is communicated to Administrative Ministry every month. 

13.        The Company is striving to ensure unqualified financial statements.

14.        Need-based Training Programmes are formulated from time to time to meet the requirements of the Company keeping in view the Projects on hand and also to foresee the customers further requirements in the technology front. As Part of training programme, (i) Management Development Programme for Senior Executives through Premier Institutions like IIM, MDI, (ii) Revalidation & skill upgradation for employees working in workshops in various trades etc are being conducted in addition to regular training programmes.

 15.       CODE OF CONDUCT FOR DIRECTORS AND SENIOR EXECUTIVES:

 15.1     A Code of Conduct and Business Ethics as suggested by DPE in its Guidelines on Corporate Governance for CPSEs 2010 has been adopted by the Company in respect of its Directors and Senior Level Executives.

 15.2     The Code has also been posted on the Company’s website. The Directors and the Senior Executives have given declarations affirming the compliance with the code of conduct during the year 2015-16.

 15.3     A declaration to this effect by the Chairman & Managing Director is given below:

 16.       DECLARATION BY CHAIRMAN & MANAGING DIRECTOR:

As provided under the Guidelines on Corporate Governance for CPSEs as contained in the DPE OM No. 18(8)/2005-GM, dated 14 May 2010, issued by Department of Public Enterprises (DPE), it is hereby declared that all Board Members and Senior Management Personnel affirmed compliance with “The Code of Business Conduct & Ethics for Board Members and Senior Management of Bharat Dynamics Limited” for the year ended 31 Mar 2016.

for and on behalf of the Board of Directors

Place:   New Delhi                                                                                     V UDAYA BHASKAR

Date:    10 Aug 2016                                                    CHAIRMAN & MANAGING DIRECTOR

Highlights of operations:   2.1     Your Company has achieved highest Sales Turnover of Rs.. 4163.58 Crore during the fiscal year under report surpassing the MoU target and registering an increase of 48.72% over that of Previous Year.   2.2     Supply of one of the ATGMs against the Indent of Indian Army was completed successfully and a fresh Indent is expected for a bulk quantity during the financial year 2016-17.   2.3     Implementation of ERP/SAP in all the Units was completed.     3.      Performance:   3.1        Performance of the Company in financial terms is summarized below:   Particulars Rs. in Crore % of Increase/        (Decrease) 2014-15 2015-16 Value of Sales 2799.68 4163.58 48.72% Value of Production 2770.05 4299.84 55.23% Profit Before Tax 614.19 850.26 38.44% Profit After Tax 418.57 563.24 34.56% Value Added 914.95 1679.54 83.57%   3.2        Following data reflects the financial position of the Company:   Particulars Rs. in  Crore % of Increase / (Decrease) 2014-15 2015-16 Gross Block 940.04 1175.55 25.05% Depreciation Reserve 546.18 592.25 8.43% Net Block 393.86 583.30 48.09% Working Capital 2740.34* 1996.94 (27.13)% Capital Employed 3134.20* 2580.24 (17.67)% Net Worth 1533.37 1652.23 7.76%               *Regrouped figures  

Renewable Energy Development   29.3      Sustainable development has become the national priority to channelize the development process in an environment friendly way with the optimum utilization of available natural resources. In its relentless pursuit of implementing sustainable development practices, your Company has unleashed various programmes to conserve energy thus promoting energy efficiency.   29.4      Solar energy is one of the most important renewable energy sources, which has been gaining increased attention in the recent past. Solar energy is clean and free of emissions, which is great for environment, as it does not produce pollutants or byproducts harmful to the Nature.   29.5      In view of its importance, during the year 2015-16, your Company established Grid connected Solar Photo Voltaic (PV) Roof Top Power Plants with an estimated Payback period of around 6-7 years at the following locations:   ·       100KWp Grid connected Solar PV Power Plant commissioned on the Roof Top of Main Canteen building at Kanchanbagh unit and it is in operation from December 2015.   ·       Another 100KWp Grid connected Solar PV Power Plant commissioned on the Roof Top of D&E building at Kanchanbagh Unit and it is in operation from    Feb 2016.   Over a period of 25 years, each 100KWp Solar system will offset the carbon footprint by 80 tons of CO2 which is effectively equivalent to planting 105 acres of forest.   29.6      Further, your Company under Green Energy commitment to Hon’ble Prime Minister of India committed to set up 25 MW Grid connected Solar PV power plants in the units. Initially installation of 5 MW Grid connected Solar Power plant at Bhanur unit is in progress which will be operational from March 2017. The generated solar power will be connected to Telangana state electrical power grid at Nandigama sub-station.  

Technology Conservation   29.1      Your Company has taken up indigenization which encompasses various nascent technologies like Thin Film Hybrid Technologies, manufacturing of HMX-based explosive compositions and optical devices like Photo Diodes, Lens and Filters etc.,   29.2      The indigenization programme covered uncommon components which are not part of Technology transfer from OEM. The equivalent indigenous materials were indentified and processed indigenously. The evaluation process was concluded successfully validating all the sub-systems of one of the ATGMs made from these Indigenous parts. This reduces the dependence on OEM and also brings down production cost of missiles

Earnings of foreign exchange for the year was Rs. 1.65 Crore and the outgo was             Rs. 604.08 Crore

Directors’ Responsibility Statement:               As per Section 134(5) of Companies Act, 2013 as amended, the Directors state:   (i)             that in the preparation of the annual accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures therefrom.   (ii)            that the selected accounting policies have been applied consistently and judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at the end of the financial year and of the financial statement of the Company for the year ended 31 Mar 2016.   (iii)           that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.   (iv)          that the annual accounts have been prepared on a going concern basis.  that the Company has devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.