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CORPORATE SOCIAL RESPONSIBILITY: As part of CSR activities, BDL constructed a kitchen shed for “Mid-Day Meals” and also constructed a toilet block at SC Mandal Primary School at Veldurthi Village, Medak Dist., BDL also supplied duel desk tables for the students. Blankets to the inmates of SC Social Welfare Hostel were distributed and ceiling fans were provided. BDL distributed uniforms, belts and ties to primary school children at Manasanapalli Village in Medak Dist. BDL distributed school note books and also supplied duel desk tables to the ZPHS School and Primary School at Bhanur Village. BDL collected blankets, clothes, food grains and distributed the same to the flood relief victims of Kurnool and Mahaboobnagar Dist. of AP in the month of Dec 09. BDL employees voluntarily contributed Rs.23,41,743/- to the CMs Flood Relief Fund in 2009. CORPORATE GOVERNANCE: Your Company is committed to adhere to the highest standards of Corporate Governance. The 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. Towards this end, the Company has initiated the process of implementation of ERP and also started e-tendering, e-reverse auction, etc. Integrity Pact is also proposed to be introduced. Two Independent External Monitors, Dr.Ashok Narayan, IAS (Retd) and Lt Gen Arvind Mahajan, PVSM, AVSM, VSM & Bar, FIE (Retd) have also recently been appointed. Replacements for the three Independent Directors who vacated their position in Sept 2009 are, however, yet to be appointed by the MoD. FUTURE OUTLOOK: The order book position is healthy and the focus on defence products will continue. The Company will aggressively pursue new orders for products and systems in its core segments like Surface to Air Missiles, Torpedoes, Decoys and other sophisticated defence equipment. CHALLENGES AND OPPORTUNITIES: BDL has been exposed to competition since the year 2001, when the Defence Sector started opening up for Indian Private Industry. Introduction of Defence Procurement Procedure 2006 (DPP 2006), which was modified in the year 2008 and issued as DPP 2008, has further opened up the Defence Market

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- Page 3- to Private Players and foreign competitors. This has significant implications for BDL in that BDL’s products will have to compete on the Technology, Quality, Price, Delivery and after sales support dimensions on a global basis. This will need considerable effort as BDL’s R&D and technology Capabilities and its ability to market its products will have to rise to international standards. Cycle Times for manufacturing and time to market products will need to be compressed to match international competition. Although BDL has the advantage of lower labour cost, it is somewhat neutralized by economies of scale in favour of MNCs. Some of the strategies to combat the challenges will be through the measures, namely, enhanced dependence on in-house R&D, Joint Development Projects with technology houses, both domestic and international, strengthening marketing set up and tie ups, constant modernization of infrastructure facilities, speedy indigenisation, collaboration with Private Sector in complementary systems and technologies enhanced customer focus and employee satisfaction, so as to secure a healthy growth rate in the coming years. Offset provisions in the MoD’s “Defence Procurement Procedure” provide an opportunity for more business arising out of large defence contracts placed by India on foreign vendors. Increase in Defence Capital Acquisitions is another opportunity. These opportunities are being pursued with Ministry of Defence and foreign OEMs. FOCUS ON IN-HOUSE DESIGN & ENGINEERING (D&E): Greater focus on D&E is required and your Company proposes to progressively invest substantial amounts in R&D. In order to update the knowledge of our engineers and technicians and also to utilize the experience, innovation and enthusiasm of the Company’s human resources, BDL is taking all possible steps to further their technological skills. Graduates from IITs are also being encouraged to join BDL, through campus recruitment. EXPORTS: For achieving exports, your Company has regular interaction with the overseas customers. Offset implementation also offers a major opportunity to achieve our export targets. We are interacting with aero-space majors in Europe and the Middle East to exploit opportunities arising out of offsets.

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DIRECTORS’ REPORT Dear Members,

Your Directors have pleasure in presenting the 40th Annual Report together with the Audited Accounts of the Company for the year ended 31 Mar 10. HIGHLIGHTS OF OPERATIONS The Company has achieved a record sales turnover of Rs.627.23 Crore registering 35% increase over the previous year. This is the highest turnover ever achieved since inception. The Company has now drawn up plans to cross the Rs.1000 Crore mark during 2010-11 and maintain the momentum for growth. Main achievements of the Company during 2009-10 are: Out of the total turnover, Rs.341 Crore was contributed through sale of Anti Tank Guided Missiles (ATGMs). As the technological issues were resolved, these products are expected to contribute to the higher turnover during 2010-11. Rs.201 Crore was contributed by Surface to Surface Missiles. With the planned production this year of a Surface to Air Missile, this product group will play a significant role during 2010-11 and in the future. With the commencement of construction of a manufacturing facility at Vizag, Naval products will also contribute to the turnover in the coming years. BDL is also manufacturing three variants of defensive systems on aircraft and further orders for other type of aircrafts are in the pipeline. BDL is closely associated with ADA/HAL for this purpose. BDL is in constant contact with the Indian Army and IAF for life extension / refurbishment of their ageing missiles.

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- Page 2- PERFORMANCE The performance of the Company in financial terms is summarized below:

Rs. Crore 2009-10 2008-09

% of Increase/

(Decrease) Value of Sales 627.23 464.82 35% Value of Production

631.61 523.06 21%

Profit Before Tax 50.63 74.23 (32%) Profit After Tax 33.77 47.67 (29%) Value Added 193.60 158.22 22%

The following data reflects the financial position of the Company:

Rs.Crore 2009-10 2008-09

% of Increase / (Decrease)

Gross Block 357.48 307.65 16% Depreciation 228.84 214.15 7% Net Block 128.64 93.50 37% Special Tools & Equipment

14.58 10.45 39%

Working Capital 360.44 404.86 (11%) Capital Employed 503.66 508.81 (1%) Net Worth 526.88 519.93 1%

APPROPRIATION & DIVIDEND Your Directors have pleasure in recommending payment of a dividend of Rs.23.00 Crore at 20% on the paid up capital of Rs.115.00 Crore. The Directors also recommend that a sum of Rs.7.00 Crore be transferred to General Reserve. FINANCE The total paid up capital stood at Rs.115.00 Crore. The Gross Block of fixed assets of the Company (excluding special tools and equipment) stood at Rs.357.48 Crore representing an increase of Rs. 49.83 Crore over 2008-09. AUDIT COMMITTEE An Audit Committee had been constituted for better Corporate Governance. Three meetings have been held during the year to review the internal control systems and their adequacy, including coverage of Audit Functions.

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- Page 3 - PERFORMANCE AGAINST MoUs

During the year 2008-09, the Company achieved a rating of “Very Good”. The MoU performance for the year 2009-10 is also likely to continue as “Very Good.” 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. External audit firms have been appointed to ensure their adequacy and report theron. A detailed analysis of the reports of internal audit firms as well as reports of internal audit department of BDL are placed before the Audit Committee for review and advice. EXHIBITIONS BDL participated in the following Exhibitions:

• India International Trade Fair 2009 held from 14 – 27 Nov, 2009 at New Delhi.

• Defexpo – 2010 held from 15-18 Feb, 2010 at New Delhi.

A wide range of products were displayed by BDL. Several dignitaries from India and abroad visited the BDL stall. QUALITY BDL produces products which are single shot devices in nature. Single shot devices demand stringent Quality standards. In pursuit of this objective, the Company has instituted International Quality Systems ISO 9001:2008 in all important manufacturing divisions. The Company has also implemented Quality System Certification to International standards in critical non-manufacturing areas like Information Technology and Design & Engineering. The Company’s thrust in quality areas has resulted in improved Quality of products and services leading to higher levels of customer satisfaction. The Company during 2009-10 has fulfilled the following important MoU tasks:

• Extension of ISO 9001 certification coverage to Konkurs-M Launcher & C303 Launcher production lines.

• Upgradation of ISO 9001 certification to 2008 version for

three Divisions.

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-Page 4-

The Company is taking actions to upgrade the present certification

status to the new revised standard ISO 9001:2008 for the remaining three divisions.

HUMAN RESOURCE DEVELOPMENT

• The Institute of Systems & Technology Management during the financial year 2009-10 conducted various In-House and External Training Programmes for Executives and Non-Executives.

• 373 Executives were trained through In-House Programmes on

various topics such as Computer Awareness, Missile Awareness, Stress Management, Art of Living, Induction Training, Integrated Material Management, Internal Auditors, Manufacturing Excellence & Supply Chain Management for Executives, Six Sigma for Engineering Industries, Software Technology, Net Working & Documentation and PLC Programming with the help of eminent external agencies / consultants.

• 526 Non-executives were trained through In-House programmes

on various topics such as Computer Awareness, Missile Awareness Programming, Hardware, Java, PPC Project Planning, Industrial Hydraulics, Strategic Leadership, Project Management, ISO Awareness, Disaster Management and Work Study for Higher Productivity with the help of eminent external agencies / consultants.

• 299 Executives were sent on training to various outside

institutions namely NITIE-Mumbai, ISNT-Hyderabad, ATI-Chennai, Aeronautical Society of India-Bangalore, College of Military Engg-Pune, AMIA and SCOPE-New Delhi, ASCI & ESCI-Hyderabad, ARDE-Pune, CITD-Hyderabad, RCI-Hyderabad., ICWAI-NewDelhi, CMTI-Bangalore and DIQA-Bangalore.

• 129 Non-executives were sent for training to various outside

institutions namely NITIE-Mumbai, CECRI-Karaikudi and ISNT-Hyderabad, ATI-Chennai, CETE-Hyderabad, FTI-Bangalore, CLI –Mumbai and EHPV-Vizag.

• Special Lectures were organized on current topics by inviting

eminent personalities from Brahmakumaris, Pyramid Spiritual Society of India etc. Focus was on classes on Meditation, Health Management, Stress Management etc.

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INDUSTRIAL RELATIONS & EMPLOYEES WELFARE Cordial and harmonious industrial relations was maintained with cooperation from all sections of employees viz., recognized union, other registered trade unions and Associations such as SC,ST,OBC and Officers Associations. Statutory committees such as Works Committee, Safety Committee and Canteen Committee and shop level and plant level committees have ensured work place discipline all through the year. The wage revision for Non-executives is also completed and being implemented shortly.

Compliances on statutory welfare provisions is followed meticulously. Non-statutory welfare facilities such as subsidized transport, school fee reimbursement, canteen allowances etc., are continued during the year to motivate employees. Medical needs of the employees and their dependents is taken care as per BDL Medical rules. Retired employees Medical Insurance Scheme is in vogue to ensure the Medical needs of retired employees and their family members. As a measure of motivation and improved morale for achieving higher productivity, employees are encouraged to participate in sports and games, cultural and recreational activities. The non statutory welfare committees have been taking keen interest in these activities. IMPLEMENTATION OF PRESIDENTIAL DIRECTIVES The Company received a Presidential Directive No.H-62030/1/0227-D(BDL), dated 27 Apr 09 according sanction for implementation of revised pay scales to the Board level and below Board level executives as per DPE guidelines issued thereon. Accordingly, the Company has implemented the pay revision in compliance with the Presidential Directive. CORPORATE SOCIAL RESPONSIBILITY

As part of CSR activity, BDL constructed kitchen shed for “Mid-Day Meals” and also constructed toilets block at SC Mandal Primary School at Veldurthi Village, Medak District and also supplied number of duel desk tables for the students. Blankets were distributed to the inmates of SC Social Welfare Hostel and ceiling fans were also supplied. BDL distributed uniforms with belts and ties to children of the Primary School at Manasanapalli village in Medak Dist.

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BDL distributed Note Books and duel desk tables to the students of ZPHS School, Bhanur Village and Primary School. BDL collected blankets, clothes and food grains and distributed the same to the flood relief victims of Kurnool and Mahaboobnagar District of AP in the month of Dec 09. BDL employees voluntarily contributed Rs.23,41,743/- to the CMs Flood Relief Fund in 2009. The Company adopted Central Upper Primary School at Regadimailaram village in Mahaboob Nagar District and repaired the entire school building and kitchen for Mid day Meal Scheme. BDL provided provided uniforms, benches, play equipment for school children and teaching aids, Science Lab Equipment, History & Geographical charts, Tables & Chairs for the Teaching Staff besides providing drinking water facility. Separate toilets were constructed for boys and girls thus making the school completely kitted. The District Collector who inaugurated the programme expressed her willingness to increase the teaching staff to improve educational standards.

Free Medical Check up camp was conducted involving BDL SC Employees Welfare Association in the Sitaram Nagar Thanda in Amangal Mandal of Mahaboob Nagar District on 21 Mar 10 with the help of BDL Doctors and Panel Hospital Doctors. Specialists in Ophthalmology, Gynaecology, Child Specialists and General Physicians screened patients and distributed medicines and spectacles free of cost to the patients. The camp was attended by about 400 patients and was a grand success. SAFETY Safety, Health and Environment is maintained well at BDL. The two corporate committees, i.e., Industrial Safety Committee, which is statutory, and Explosive Safety Committee are functioning to cater to the needs of BDL. Safety Committee Meetings are held at regular intervals for monitoring Safety, Health and Environment as per statute requisites. The works are carried out in compliance with Factories Act 1948 and strictly adhere to STEC Regulations for explosive safety. Regular medical checkup is conducted for employees working in hazardous zones by qualified medical staff. Training Programmes are organized by HRD through NSC, CLI, RLI, CFEES, to inculcate safety and to establish safe working environment among the employees. Safety week / month is organized during the month of March with big enthusiasm. Various competitions and programmes are conducted by Safety Engineering Department and employees are awarded to boost their interest in Safety. Safety Department is in continuous interaction with the Inspector of Factories (AP), AP Pollution Control Board and CFEES; New Delhi to update their guidelines for compliance. Fire “mock drill” is conducted to ensure fire-fighting preparedness.

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SECURITY Central Industrial Security Force(CISF) is deployed both at Kanchanbagh and Bhanur. Regular security reviews are conducted both by the Management and CISF to beef up security. Periodical meetings are held with local police and civil authorities and the Company was crime free during the year. Security Awareness programmes were conducted during Security /Fire Week and employees are sensitized on the security threats and action to be taken in case of fire. IB guidelines are implemented to streamline the entry of contract labour, customers, suppliers and visitors to avoid unauthorized entry. On 18 Dec 09, a programme on security was conducted in BDL for senior officers. A team of officers under Joint Director, Intelligence Bureau, New Delhi sensitized the participants on Multi dimensional threats to industrial security, threats to vital installations in AP from various inimical forces, principles of industrial security, personal and document security, computer security, Explosives, IEDs and latest security gadgets deployed for industrial security. Computer photo passes, CCTV cameras, Door Frame Metal Detectors, X-Ray Baggage Scanner are in use to meet security surveillance. Barricades, Boom barriers and morchas are provided to strengthen the physical security measures. Efforts are on to introduce additional equipment for better control. PERSONNEL The strength of the personnel as on 31st March, 2010 is 2894 indicating an increase of 106 persons compared with that of the previous year. Of the total employees, 114 are Ex-servicemen and 537 belong to Scheduled Castes and 166 to Scheduled Tribes. The existing percentage of Scheduled Castes and Schedules Tribes in respect of non-executives is 19.31% and 4.94% respectively and in respect of Executives it is 16.13% and 8.28% respectively. The representation of Scheduled Castes and Scheduled Tribes in various categories of posts in the Company as on 31 Mar 10 was as follows:

Number of Employees Total Strength Scheduled Castes Scheduled Tribes

Category

31 Mar 09 31 Mar 10 31 Mar 09 31 Mar10 31 Mar 09 31 Mar 10 Group-A 549 521 81 84 45 46 Group-B 152 167 26 27 11 11 Group-C 1812 1917 313 337 77 96 Group-D 275 289 78 89 14 13

Total 2788 2894 498 537 147 166

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Recruitment of Scheduled Castes and Scheduled Tribes during the year 2009 -10 is given below: (No. of employees) Classification

of Posts Total

Vacancies Released

Total Recruitment

Reservation of Posts (out of

Col.2)

Recruitment made during

the Year 2009-10

SCs STs SCs STs (1) (2) (3) (4) (5) (6) (7)

Group-A 14 14 05 01 05 01 Group-B 22 22 02 - 02 - Group-C 169 169 34 18 34 18 Group-D 16 16 09 - 09 -

Total 221 221 50 19 50 19 EMPLOYMENT OF WOMEN As per recommendation No.51, para (ii) (a) of the National Commission for Women (NCW), in its Annual report for the year 1995-96, the employment situation of Women (percentage) is given below, as directed by Ministry of Defence vide their letter No.39(6)/99/D(B&C), dated 27 Aug 99.

I. EXECUTIVES:

(No. of employees) Grade Total Women Percentage

I 167 26 15.56% II 62 05 8.06% III 69 10 14.49% IV 172 13 7.56% V 117 00 0% VI 63 01 1.59% VII 25 00 0% VIII 09 00 0% IX 00 00 0%

Schedule -‘C’ 03 00 0% Schedule -‘B’ 01 00 0%

Total 688 55 7.99%

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- Page 9-

II. NON-EXECUTIVES: (No.of employees)

Grade Total Women Percentage WG-1 94 07 7.45% WG-2 303 57 18.81% WG-3 92 17 18.48% WG-4 166 24 14.46% WG-5 115 09 7.83% WG-6 75 04 5.33% WG-7 37 00 0% WG-8 240 08 3.33% WG-9 101 19 18.81% WG-10 983 70 7.12%

Total 2206 215 9.75% PHYSICALLY CHALLENGED(PC) EMPLOYEES There are 9 Executives and 79 Non-executives who are physically challenged. The percentage of total PC employees works out to 3.04%. DIRECTORS’ RESPONSIBILITY STATEMENT (DRS) As per Section 217 (2AA) of Companies Act,1956 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 judgements and estimates made 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 the financial year and of the Profit or Loss of the company for the year ended 31 Mar 10.

(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, 1956 as amended 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.

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- Page 10- PARTICULARS OF EMPLOYEES The particulars of employees to be furnished as per Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of employees) Rules, 1975 are nil. FORMATION OF REMUNERATION COMMITTEE OF BOARD OF DIRECTORS As per DPE OM No.2(70)/08-DPE(WG)-GL-XVI, dated 26 Nov 08 regarding revision of scales of pay to Board Level and below Board Level Executives, Remuneration Committee will have to be reconstituted due to the retirement of Independent Directors on completion of their tenure who were the members of the Committee constituted earlier. FOREIGN VISITS The Company incurred an expenditure of Rs. 28.42 Lakhs during the year towards foreign travel for training of personnel and on business trips. OFFICIAL LANGUAGE (OL) IMPLEMENTATION The provisions of O.L. Act, 1963 (as amended in 1967) & Rules thereunder are properly implemented. In addition to this:

• The Quarterly Meetings of OLIC are held regularly under the Chairmanship of CMD.

• The obligatory Quarterly Progressive Report on use of OL is sent

timely to the authorities concerned under the signatures of CMD. • CMD,BDL participates in TOLIC(PSUs) Meetings regularly. BDL has

been awarded the TOLIC Shield consecutively for the 8th time for the year 2008-09 under Major PSUs Category for best performance in the field of implementation of O.L. The shield was presented to GM(P&A), BDL by the CMD, ECIL & Chairman TOLIC at its annual meeting held on 26.10.2009 at NTPC.

• The MoU signed between BDL and MoD and Annual report of the

Company for the year 2009-10 was prepared in Hindi & English. • Hindi version of BDL website was updated.

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• The quarterly in-house Journal “Dynamic Samachar” was published

regularly in Telugu, Hindi & English. • As per the directives of DOL, GOI, the essential in-service Hindi

Training programme for 75 Staff Members of the office and four Hindi Workshops on usage of Hindi were organized during the financial year.

• Under the auspices of TOLIC, an Inter-PSUs Hindi Typing Competition on Computers was organized wherein 18 teams participated from various PSUs. BDL got 1st place in Non-Hindi category in the Competition besides 1st place in Inter-PSUs Antyakshari Competition, 2nd place in the Technical Paper Presentation Competition and 3rd place in the Essay Writing Competition.

• Hindi Fortnight was celebrated in Sep 09 (01 Sep 09 to 14 Sep 09).

During this period, various Hindi Competitions were conducted and cash prizes were awarded to the successful participants. A Hasya Kavi Sammelan was also organized on this occasion in which eminent poets from twin cities were invited. The programme was liked by one and all.

• As a part of promotion and propagation of OL at all levels, “Aaj ki

Shabadavali” and “Amrit Vani” has been introduced on all PCs of the Company through Intranet.

• The inaugural proceedings of all In-House training programmes

organized by ISTM were conducted in Hindi. • In our Company, Hindi is used as the language of communication on

various occasions like Republic Day, Security Week, Safety Week, Sadbhavana Divas, Independence Day, Quami Ekta Divas and Vigilance Awareness Week etc., besides use of Hindi by all employees on every Thursday.

VIGILANCE

• The main objective of Vigilance Department during the year was accelerating implementation of e-tendering / e-payments. Finance Departments had started e-payments with the help of Andhra Bank.

• CMD and CVO, BDL, participated in the 6th anniversary of Vigilance

Study Circle meet held on 10 Aug 09 which was chaired by CVC. CMD expressed his views on strengthening Vigilance administration.

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• Vigilance Awareness Week was celebrated from 03 to 06 Nov 09 in

BDL. Eminent personalities like the Dy. Director General ICRISAT(Retd.) and Vice-Chancellor of NALSAR University spoke on the subject “Importance of Morale, Motivation and Conduct in the fast changing environment”.

• As per the initiative and persuasion of CVO, e-reverse auction has

been conducted in case of 25 high value tenders resulting in substantial savings to BDL.

• A systemic improvement note was sent to Management in respect of absorption of LDPs at BDL – Bhanur.

• Systemic improvement suggestions with respect to vendor

registration and rating process have been tendered. • Investigation by Vigilance Department in two cases resulted in issue

of Advisory Letters to the delinquent employees by the Competent Authority.

• A systemic improvement advice was sent to the management in the

matter of deputation of officials abroad on official tours / trainings. • A proactive vigilance advice on the matter of VRS on medical

grounds was sent to CMD.

CORPORATE GOVERNANCE The Company is committed to attain the highest standards of Corporate Governance. The 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. BOARD OF DIRECTORS During the year under report, seven meetings of the Board of Directors were held and the Annual General Meeting of the Company for the year 2008-09 was held on 04 Sep 09. Shri HW Bhatnagar, Shri MS Kapur and Lt Gen PPS Bhandari, PVSM, AVSM (Retd), Independent Directors, retired on 15 Sep 09 consequent to expiry of their three-year tenure. The Board placed on record its warm appreciation of the valuable services rendered by the outgoing Directors.

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AUDITORS M/s. D V Ramana Rao & Co., Chartered Accountants, Hyderabad were appointed as Auditors of the Company for the financial Year 2009-10 by the Comptroller & Auditor General of India. ENVIRONMENT AND POLLUTION CONTROL The Company contributes in all aspects of the environment by maintaining a clean and green environment. Effluent water treatment, waste management, water conservation, tree plantation, planting of flower bearing trees, and land scaping utilizing treated effluent water, was carried out. TECHNOLOGICAL CONSERVATION & RENEWABLE ENERGY DEVELOPMENTS The Company continues to emphasize on energy conservation. Some of the measures adopted for energy conservation include:

SOLAR WATER HEATING / SOLAR COOKING

• Solar water heaters are used instead of Electric Geysers in Canteen at Bhanur Unit.

• Vizag Unit will soon implement solar water heaters and solar cooking

system for the canteen in the new plant likely to come up by the end of FY 2010-11.

GREEN BUILDING

• Vizag Unit Admin building is identified as a Green Building and the design of this building is registered for silver lead rated building. The construction of this complex will commence from Jul 10.

FOREIGN EXCHANGE EARNINGS AND OUTGO The earnings of foreign exchange for the year was Rs.0.03 Crore and the outgo was Rs.261.52 Crore.

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MODERNIZATION AND UPGRADATION E-procurement and e-recruitment was implemented resulting in substantial benefits to the organization. The organization is planning to increase the scope of application at a larger scale next year to harness increased benefits using Information Technology. The IT Infrastructure was upgraded to meet the changing requirements. On the security front, modernization to mitigate different threats is being planned during the year 2010-11. ECONOMY MEASURES Inventory of raw-materials, work in progress and spare parts is maintained at optimal levels. Energy consumption, fixed and variable overheads and Contingency expenditures are being constantly reviewed and pruned to the barest minimum. COST REDUCTION Cost reduction has been identified as a major thrust area. Accordingly, an apex committee chaired by Director(Production) and divisional committees were formed to overview the cost reduction measures. These committees meet periodically to review the progress of the cost reduction activity. EXPORTS BDL has executed export orders worth Rs.0.08 Crore (including deemed exports) during the year 2009-10. FUTURE PLANS There is a growth of 35% in sales over the previous year and this is likely to increase further. The targeted growth projected for the Financial Year 2010-11 is 60% over the Financial Year 2009-10. The Order Book position is healthy with orders to the tune of Rs.4,000 Crore, which is likely to increase substantially in the near future. COMMENTS OF THE COMPTROLLER & AUDITOR GENERAL OF INDIA The comments of Comptroller and Auditor General of India (C&AG) under section 619(4) of the Companies Act, 1956 on the accounts of the Company for the period ending 31 Mar 2010 are placed next to the Statutory Auditors’ Report.

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