Dear Members,

Your Directors are pleased to present the 62 nd Annual Report on the business and operations of your Company, including the Audited Financial Statements for the fiscal year ended March 31, 2026. The financial and operational performance during the year reflects the Company's resilience, strong business fundamentals and sustained focus on enhancing execution. As India's leading engineering and manufacturing enterprise, BHEL remains committed to supporting the nation's priorities of energy security, infrastructure development, technological self-reliance and clean energy transition. With a strong order book, improved execution momentum and a diversified business portfolio, the Company is well placed to enhance BHEL's contribution to the vision of Viksit Bharat while creating sustainable and long term value for all stakeholders.

Financial Performance Highlights

( I Crore)

The key financial performance highlights of the Company for the financial year 2025–26 are presented below:

• Revenue Growth - The Company achieved a growth of 19% in Revenue from Operations (RFO), driven by enhanced utilisation of shop capacities by 25% and a strong order book position.

• Profitability - Driven by improved operational and financial performance, EBITDA increased by 83% to I3,189 Crore, while Profit After Tax (PAT) more than tripled to I1,578 Crore over the previous year.

• Cash Realisation - The Company maintained a strong focus on cash realisation against dispatches which resulted in an increase of 41% over previous year. Total cash collection from customers stood at I46,425 Crore which is 143% of Revenue.

• Trade Receivables - The Company's thrust on receivables management, resulted in significant improvement during FY 2025–26. Trade receivables as number of days of RFO reduced to 100 days after absorbing the impact of 19% increase in RFO, which is the best in the last 10 years.

• Trade Payables - The company's focus on accelerating execution by enabling the supply chain, resulted in reduction in trade payables in terms of number of days to 165 days in FY 2025-26 from 201 days in the previous year.

• Liquidity management - The Company generated cash from operations of I5,827 Crore during the year, i.e. an increase of 176% over previous year reflecting efficien t working capital management.

A comprehensive analysis of the Company's financial performance, including its financial results, financial position, fund position, key financial ratios and segment-wise performance for FY 2025–26, is contained in Section 1.4 of Annexure-I to this Report.

State of Company's Affair s

The Company continued to strengthen its business position during FY 2025–26 through sustained order inflows, improved project execution, enhanced operational efficien cy and robust financial performance. Backed by a diversified business portfolio and strong execution capabilities, the Company maintained healthy business momentum across its key sectors. The significant developments relating to the Company's affair s during the year are presented hereunder which may be read in conjunction with Annexure -I.

Order Book

The Company's strong order inflows during FY 2025–26 further strengthened its order book, providing healthy revenue visibility and a robust foundation for future business growth. The status of the Company's order book as on 31 March 2026 is summarised in the graphs shared on page 21.

The Company continued its strong order inflow momentum during FY 2025–26, with orders worth I75,916 Crore secured during the year, including export orders of I209 Crore. The company has been successful in receiving several prestigious orders in core thermal power business, as well as in Transmission, Transportation, Defence & Aerospace, Coal to Chemical segments, reflecting its sustained effort s towards diversification. In FY 2025–26, BHEL secured orders from BCGCL worth

~I8,300 Crore (excl Taxes) for its 2000 TPD ammonium nitrate plant, namely LSTK1 package for Coal Gasification & Raw Syngas Cleaning Plant and LSTK2 package for Syngas Purification Plant, strengthening its presence in the coal gasification sector.

BHEL is strategically diversifying into new-growth sectors to drive sustainable growth, enhance profitability, and reduce its dependence on the conventional thermal power business. Leveraging its core engineering, manufacturing and project execution capabilities, the Company has secured significant business opportunities across emerging and strategic nonthermal sectors.

As on 31 March 2026, the Company's outstanding order book of I2,39,057 Crore includes non-thermal orders of

over I66,000 Crore, reflecting the robust diversification of its business portfolio. This demonstrates BHEL's growing presence across sectors such as Hydro and Nuclear Power, Coal-to-Chemicals, Rail Transportation, Defence and Aerospace, Power Transmission, Oil & Gas, Industrial Products, and renewable energy businesses.

The Company's all-time high order book supports higher volumes of operations, enabling potential for enhanced operating leverage and profitability.

Project Execution and Delivery

The Company continued to undertake focused initiatives during FY 2025–26 to strengthen project execution capabilities, improve delivery performance and ensure timely completion of projects. During FY 2025–26, the Company successfully commissioned/synchronised ~8.9 GW of power generation capacity across various projects reflecting the Company's strong project execution capabilities and continued contribution to strengthening the country's power generation capacity. To further reinforce execution, the Company adopted advance manufacturing initiatives, calibrated outsourcing and targeted capacity augmentation to align manufacturing capabilities with project requirements, reduce lead times and improve execution efficien cy. In addition, streamlined decision-making mechanisms were introduced to expedite procurement, facilitate faster resolution of critical issues and support timely project execution across business segments.

Operational Excellence and Cost Leadership

The Company continued to implement strategic initiatives to enhance operational efficien cy and improve cost competitiveness across its business segments. These included aggregation of procurement requirements through centralised procurement and subcontracting to leverage economies of scale, optimisation of manufacturing capacities and continuous improvement in operational processes. These initiatives contributed to improved execution efficien cy, enhanced capacity utilisation, reduced lead times and sustained cost optimisation, thereby strengthening the Company's overall operational performance.

Working Capital and Liquidity Management

The Company has implemented a structured and system-driven mechanism for monitoring receivables across projects and business segments, resulting in enhanced collection efficien cy and accelerated realisation of outstanding dues. During FY 2025–26, focused receivables management enabled the Company to achieve a 41% year-on-year increase in customer collections against dispatches, with overall collections reflecting at 143% of Revenue. This significantly strengthened the Company's liquidity position and reduced its dependence on short-term external borrowings.

Consequently, Trade Receivables improved from 115 days of Revenue from Operations in the previous year to 100 days during FY 2025–26, reflecting sustained focus on working capital management, disciplined receivables monitoring, effect ive cash realisation and improved contract management.

Supported by improved collection efficien cy and disciplined financial management, the Company streamlined payment mechanism for procurements, representing an increase of approximately 28% over the previous year, thereby facilitating accelerated project execution.

The Company's Trade Payables as number of days reduced to 165 days during FY 2025–26 from 201 in the previous year, reflecting the emphasis on supply chain enablement to accelerate execution. This has strengthened supplier confidence, enhanced supply chain reliability and supported faster project execution.

As part of prudent treasury and liquidity management, intermittently available surplus funds were deployed in fixed deposits to optimize returns, while ensuring adequate liquidity for operations. For meeting short-term operational and working capital requirements, the company continued to utilize various borrowing instruments such as Working Capital Demand Loans (WCDLs), loans against Fixed Deposits and listed Commercial Papers.

The combined benefits of improved working capital management, lower financing costs, and enhanced execution support are expected to create a virtuous cycle of faster project execution, improved cash generation, and higher profitability.

Capital Expenditure

During FY 2025–26, company incurred I671 Crore ( I 536 Crore during previous year) towards capital expenditure on modernization and rationalization of existing facilities, with a focus on enhancing operational efficien cy, supporting productivity, and aligning operations with evolving business needs. The company primarily met its capital expenditure requirements through internal accruals.

Dividend

The Board of Directors, in its meeting held on May 4, 2026 has recommended a final dividend @70% on the paid-up equity share capital (I1.40 per equity share of the face value

Material Changes and Commitments affect ing the Financial Position

There have been no material changes and commitments affect ing the financial position of the Company which have occurred between the end of FY 2025-26 and the date of this report.

of I2 each), amounting to I487.49 Crore, out of profit for FY 2025-26, subject to approval of shareholders. The Company has formulated a Dividend Distribution policy in pursuance of the requirements of Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ('LODR'). Dividend distribution policy is available on the Company's website at the weblink https://www.bhel.com/sites/default/ files/Board_Approved%20Dividend%20Distribution%20 Policy.pdf.

The dividend recommended is in accordance with the company's dividend distribution policy.

Transfer to Reserves

The company has not transferred any amount to the Reserves during FY 2025-26.

Deposits

The Company did not accept any public deposits as defined under Chapter V of the Companies Act, 2013 during FY 2025-26.

Loans, Guarantees and Investments

There is no transaction relating to loans or advances covered under section 186 of the Companies Act 2013 in FY 2025-26. Further, as per Note 5 on 'Financial Assets-Investment', of Audited Annual Accounts 2025-26 of the company. The Corporate Guarantee issued by the Company in FY 2024-25 on behalf of its joint venture, M/s Bharat Coal Gasification and Chemicals Limited, without charging any fee/consideration, continues to remain in force. The Fair Value of providing the Corporate guarantee has been initially recognised as a deemed investment with a corresponding recognition of a financial liability in accordance with Ind AS 109. The aforesaid deemed investment and liability are being subsequently measured and accounted for in accordance with the applicable Ind AS framework and are appropriately disclosed in the financial statements of the Company.

Credit Rating

The credit ratings of your Company are as follows:

No significant or material orders were passed by any regulator, court, tribunal, or other authority during the financial year under review and up to the date of this Report which may impact the going concern status of the Company or materially affect its future operations.

There was no change in the principal nature of the business of the Company during FY 2025-26. The Company continued to carry on its existing business activities, including the diversified business operations undertaken in earlier years.

Suspension of Trading

The shares of the Company were not suspended from trading during FY 2025-26 and until the date of the Report.

Directors' Responsibility Statement

Pursuant to section 134(5) of the Companies Act, 2013, the Board of Directors confirms that: a) In the preparation of the Annual Accounts, the applicable Accounting Standards (Ind AS) have been followed along with proper explanations relating to material departures; b) The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affair s of the Company at the end of financial year and of the profit & loss of the Company for that period; c) The Directors have taken proper and s ufficien t care for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; d) The Directors have prepared the Annual Accounts on a going concern basis; e) The Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and operating effect ively; f) The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effect ively.

Management Discussion and Analysis

Your company maintained its growth momentum with focus on the core business as well as diversification, strengthening operations and supply chain, and accelerating project execution. For further details, please refer Annexure-I to the Board Report.

Corporate Governance

Pursuant to Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a report on Corporate Governance (including Board and Committee Meetings details) is given at Annexure-II to the Board Report together with the following: i. Certificate of Non-Disqualification of Directors under

Schedule V of the SEBI Listing Regulations. ii. Auditors certificate on Corporate Governance under SEBI Listing Regulations and Department of Public Enterprises (DPE) Guidelines on Corporate Governance. iii. Secretarial Audit Report under Section 204 (1) of the Companies Act, 2013 and Regulation 24A of the SEBI Listing Regulations.

Declaration of Independence

Declaration under Section 149 of the Companies Act, 2013 & Regulation 25 (8) of SEBI Listing Regulations, pertaining to criteria of independence was given by Shri Ramesh Patlya Mawaskar, Independent Director, to the Board of Directors. Shri Ramesh Patlya Mawaskar is registered on the online database of the Indian Institute of Corporate Affair s (IICA), notified under Section 150 of the Companies Act, 2013 and has also qualified the online proficiency self-assessment test conducted by IICA. In the opinion of the Board, the Independent Director possesses integrity, necessary expertise and experience.

No Independent Director has resigned from the Company before the expiry of his tenure during FY 2025-26.

Compliances

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

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

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

• Being a listed company, compliance with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is ensured. There is no adverse comment from SEBI for the FY 2025-26 on any financial matter.

• The Company has complied with all the applicable secretarial standards for FY 2025-26.

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

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

Contribution to the Exchequer

The Company, over the years, has been consistently making significant contribution to the Exchequer, and maintaining high standards of integrity with respect to tax compliances. For FY 2025-26, the company's contribution to the exchequer was I7,098 Crore.

Audit Committee

Upto March 27, 2026, the Company had in place a Board Level Audit Committee in terms of the requirements of the Companies Act, 2013 read with rules made thereunder, DPE Guidelines and SEBI Listing Regulations, the details in respect of which are given in the Corporate Governance Report (Annexure-II) . All the issues were fairly and transparently deliberated in the meetings which were held at regular intervals. The views and suggestions of the Board Level Audit Committee members were taken into account and imbibed into the Company's processes. Further, there was no instance where the Board of Directors had not accepted the recommendation of the Board Level Audit Committee. However, w.e.f. March 28, 2026, the compliances pertaining to quorum as per the SEBI Listing Regulations could not be met due to lack of Independent Directors on the Board of the company. Accordingly, since March 28, 2026, the proposals for recommendation/ review/ approval of the Audit Committee are being directly submitted to the Board for its review/ approval.

Details of changes in Directors and Key Managerial Personnel Appointment

Ms. Nigar Fatima Husain, Additional Secretary & Financial Advisor, Ministry of Heavy Industries has been appointed as Part-time O_cial Director w.e.f. April 27, 2026.

In accordance with applicable statutory provisions and Article 67(iv) of the Articles of Association of the Company, Ms. Nigar Fatima Husain, having been appointed as an additional director, shall hold directorship upto the 62 nd Annual General Meeting of the Company and is eligible for appointment as Director at the Meeting.

Further, pursuant to Section 152 of the Companies Act, 2013 and Article 67(i) of the Articles of Association of the Company, Shri Rajesh Kumar Dwivedi and Shri S M Ramanathan will retire by rotation at the Annual General Meeting and being eligible, offer themselves for re-appointment.

Cessation

Ms. Arti Bhatnagar, former Special Secretary & Financial Advisor, Ministry of Commerce & Industry, who was appointed as Part-time O_cial Director on February 14, 2023, ceased to be Part-time O_cial Director on attaining the age of superannuation on September 30, 2025. Shri Krishna Kumar Thakur, who was appointed as Director (HR) on July 4, 2023, was relieved of the charge w.e.f. March 19, 2026 (F/N) to enable him to assume the charge of the post of Director (Personnel), NMDC Ltd, pursuant to Ministry of Heavy Industries order dated March 18, 2026.

Shri Ashok Aseri and Shri Aashish Chaturvedi, who were appointed as Part-time Non-o_cial (Independent) Directors on March 29, 2025, ceased to be Directors of the Company on completion of their tenure on March 27, 2026.

Shri Asit Gopal, Special Secretary & Financial Advisor, Ministry of Commerce & Industry, who was appointed as Part-time O_cial Director on February 3, 2026, ceased to be Part-time O_cial Director on April 27, 2026.

Shri Ramesh Patlya Mawaskar, who was appointed as Part-time Non-o_cial (Independent) Director on June 8, 2023, ceased to be Director of the Company on completion of his tenure on June 1, 2026.

The Board of Directors places on record its deep appreciation for the valuable services rendered as well as advice and guidance provided by Ms. Arti Bhatnagar, Shri Krishna Kumar Thakur, Shri Ashok Aseri, Shri Aashish Chaturvedi, Shri Asit Gopal and Shri Ramesh Patlya Mawaskar, during their respective tenures on the BHEL Board.

In compliance with Regulation 36(3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, brief resume of the Directors proposed for appointment and re-appointment along with the nature of their expertise in specific functional areas and names of companies in which the person holds directorship along with the membership of the Committees of the Board are given in the explanatory statement/ annexure to the Notice.

CEO/ CFO Certificate

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

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

Sustainable Development

In today's industrial landscape, sustainability has become a strategic imperative for BHEL. The company integrates environmental protection into its core operations through Harit BHEL . This program targets Net Zero emissions by 2047, positioning BHEL as a model Green PSU with defined milestones and transparent reporting.

BHEL adopts best practices to minimize environmental impact while enhancing efficien cy, including renewable energy expansion, low-emission technologies, waste management, water optimization, and zero-e_uent discharge. E_orts also encompass sapling plantations, green cover protection, water bodies revival, biodiversity promotion, and circular economy principles (reduce-reuse-recycle) across all activities. Townships maintain Single Use Plastic Free certification through strict enforcement, while manufacturing units pursue GreenCo Ratings.

These initiatives, detailed in Annexure-IV to the Board's Report , safeguard the planet while creating enduring value for stakeholders and future generations.

Health, Safety and Environment (HSE)

BHEL upholds the highest standards in Health, Safety, and Environment (HSE), grounded in the principle that all incidents are preventable and healthy and safe working environment is essential to long-term success. Employee, contractor, and community well-being remains paramount, fostered through a shared safety culture, rigorous training, proactive risk management, and zero-incident goals aligned with laws and best practices.

Environmental stewardship is integral to operations—from planning to closure—focusing on emission and energy reductions, responsible waste management, resource conservation, biodiversity protection, and pollution prevention. HSE performance is continually reviewed to drive accountability, learning, and innovation.

Further details are in Annexure-IV to the Board's Report, Section 4.3.

Business Responsibility and Sustainability Report (BRSR)

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

Achievements of R&D and Technological Development

BHEL has always been consistent with the innovation and development of technologies in alignment with 'Atmanirbhar Bharat'. The Company is engaged in new technology development and its commercialization in sectors like Coal to Chemicals, high efficien cy Thermal Power Plants, Rail Transportation, Transmission, Nuclear Power, Defence & Aerospace, Downstream Oil and Gas, Green Hydrogen, e-Mobility etc. Further, company is continuously working towards upgrading its current technology and product lines. In FY 2025-26, BHEL has incurred an expenditure of around I822 Crore towards R&D activities, which is around 2.4%

of its revenue from operations. This includes expenditure incurred on R&D projects taken up for development of new products, processes and systems, as well as effort s made for modifications/ improvements in products and designs. BHEL has filed 428 Intellectual Property Right (IPR) applications during the year, enhancing the company's intellectual capital to 6068 numbers. Around 14% of the company's revenue, amounting to ~I4,693 Crore, has been achieved from in-house developed products, systems and services. Further details of major developments have been provided in Annexure-VI to the Board's Report.

Data and Cyber Security

BHEL prioritizes cybersecurity within its risk management framework, by operating an Information Security Management System (ISMS) aligned with global standards and regulatory requirements. A key milestone in FY 2025-26 was transitioning to ISO/IEC 27001:2022 and upgrading IT and cybersecurity infrastructure. Beyond technical defences, BHEL fosters a security-aware culture through structured training and CERT-In compliance. Furthermore, the Company has initiated critical steps toward DPDP Act, 2023 compliance to safeguard personal data. This integrated approach to technology, processes, and people ensures robust cyber resilience and the protection of vital information assets. Further details have been included in Annexure-I, Section 1.12 of the Board Report.

Other disclosures

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

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

Implementation of O_cial Language

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

Vigil Mechanism

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

Annexure-VIII to the Board's Report.

Proceedings under Insolvency and Bankruptcy Code

No applications against BHEL under Insolvency and Bankruptcy Code, 2016 (IBC) have been admitted during the year and no proceedings against BHEL under IBC are pending as on March 31, 2026.

Valuation Di_erence between Loan Sanction and one-time settlement

The differ ence between amount of the valuation done at the time of one time settlement and the valuation done while taking loan from the Banks or Financial Institutions – Not Applicable to the Company.

Compliance to the provisions under Maternity Benefit Act

The Company is in compliance with the applicable provisions relating to maternity benefits as prescribed under Maternity Benefit Act, 1961.

Statutory Auditors

The Statutory Auditors of your Company are appointed by the Comptroller and Auditor General of India. Two firms of statutory auditors were appointed as joint statutory auditors and five firms were appointed as branch auditors. The names of audit firms appointed for FY 2025-26 are given at

Annexure-X .

Auditors' Report on the Accounts

The Auditors' Report on Standalone and Consolidated Financial Statements for FY 2025-26 of the Company are given at Annexure-XI to the Board's Report. There is no qualification in the Auditors report on the Financial Statements of the Company. The Supplementary Audit report under section 143(6) read with section 129(4) of the Companies Act, 2013 issued by the Comptroller & Auditor General of India also forms part of Annexure-XI.

Secretarial Auditor

In terms of Section 204(1) of the Companies Act, 2013, and Regulation 24A of the SEBI Listing Regulations, the Company engaged M/s Akhil Rohatgi & Co., Company Secretaries in whole-time practice, as Secretarial Auditors for conducting Secretarial Audit for FY 2025-26 and their report forms part of Corporate Governance section. Secretarial Auditor in his Audit Report has observed that: i) During the period under review, the number of independent directors on the Board were less than half of the total strength of the Board as required under Regulation 17(1) of the SEBI Listing Regulations, Para 3.1.4 of the DPE Guidelines on Corporate Governance and Section 149 (4) of the Companies Act, 2013. Further, the Company did not have an independent woman director as also required under Regulation 17 (1) of the SEBI Listing Regulations; and ii) During the time period from 28.03.2026 to 31.03.2026, composition of the Audit Committee and the Nomination

& Remuneration Committee were not in accordance with Regulations 18 (1) and 19 (1) respectively of the SEBI Listing Regulations, Paras 4.1.1 and 5.1 respectively of the DPE Guidelines on Corporate Governance and Sections 177 (2) and 178 (1) respectively of the Companies Act, 2013, due to only one independent director being on the Board of the Company.

The Secretarial Auditor has also noted in his report the explanation given by the Company that BHEL, being a Government Company, all the directors are appointed by the President of India, acting through the administrative ministry and as such appointment of requisite number of independent directors is beyond the control of the Company. Further, the Company has been in constant communication with its administrative ministry requesting for appointment of independent directors on its Board so as to ensure compliance with corporate governance norms enunciated under the SEBI Listing Regulations, DPE Guidelines on Corporate Governance and Companies Act, 2013.

The Management noted the observation regarding vacancies of Independent Director and mentioned that the matter of filling up of the same is under process at the end of Government of India. DuringFY2025–26,theCompanyensuredtimelyimplementation of all applicable corporate actions in accordance with the prescribed statutory and regulatory timelines. There were no delays or deviations in the implementation of such corporate actions during the year.

Cost Auditors

Pursuant to the provisions of Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014, the Company is required to maintain cost records and have such records audited. The Company has duly maintained the prescribed cost records and accounts in respect of its applicable products, and the same are being regularly reviewed for compliance with the applicable statutory requirements.

Based on the recommendation of the Audit Committee, the Board of Directors had approved the appointment of seven firms of Cost Auditors, including a Lead Cost Auditor, for conducting the audit of the cost records of the Company's 14 manufacturing units for the financial year 2025-26. The names of audit firms appointed for FY 2025-26, duly ratified by the shareholders, are given at Annexure-X . The total remuneration to be paid to the cost auditors is I15.76 Lakhs. The Cost Audit Report for the financial year 2024-25 was filed with the Central Government within the prescribed time and did not contain any qualification, reservation, adverse remark or disclaimer.

The Cost Audit for the financial year 2025-26 is under progress and, upon completion thereof, the Cost Audit Report shall be filed with the Central Government within the prescribed time limit as stipulated under the applicable provisions of the Companies Act, 2013 and the rules made thereunder. Details of the Cost Auditors for conducting the cost audit of the FY 2026-27 and the remuneration proposed to be paid to them (subject to the ratification by the shareholders) are set out in the Explanatory Statement forming part of the Notice convening the ensuing Annual General Meeting.

Appreciation and Acknowledgements

Your Directors gratefully acknowledge with deep sense of appreciation, the co-operation and guidance received from the Government of India, particularly the Ministry of Heavy Industries in various spheres of the company's operations and strategic initiatives. Your Directors are deeply appreciative of and thankful to various ministries and statutory authorities and various departments of the Government of India for their valuable support and continuous cooperation.

The Directors place on record their sincere appreciation towards the Company's valued customers in India and abroad for their co-operation in addressing various issues faced in complex and long gestation construction contracts.

The Directors also express their gratitude to the Comptroller and Auditor General of India, professional bodies, Statutory Auditors, Branch Auditors, Secretarial Auditor and Cost Auditors for their constructive suggestions and continuous cooperation. The Directors place on record their sincere appreciation towards the company's esteemed shareholders for the support and confidence reposed by them in the management of the company and look forward to the same in future. The Directors also wish to place on record their appreciation for the continued cooperation received from all the technology collaborators, suppliers and contractors. The support provided by the financial institutions, bankers and stock exchanges are also acknowledged and appreciated. Last but not the least, your Directors wish to place on record their sincere appreciation for the diligent effort s, hard work and commitment put in by all BHEL employees, who have worked round-the-clock, to meet the company's commitments.