BEML : Annual Report FY 2022-23

59 2022-23

Chairman's

Message

Dear Shareholders,

I hope this letter finds you and your loved ones in good health and high spirits. As we approach another significant milestone in the life of our Company, I am filled with both pride and gratitude. It is with great pleasure that I address you today as the Chairman & Managing Director of BEML Limited, reflecting on the remarkable journey we have undertaken together. The past year has brought its share of challenges emerging from a 'polycrisis' encompassing climate change, geopolitical issues and reglobalisation. Yet, through resilience, innovation, and the unwavering support of our shareowners, we have emerged stronger than ever.

Amidst this widespread unpredictability, India stands tall as a beacon of growth and stability. A new global economic demand is being shaped with these crises involving radical new strategies, innovations, and business models. Addressing these challenges and opportunities, BEML Limited is crafting a comprehensive vision to build an innovative, sustainable, future- tech, and inclusive Indian Company, powered by agility, competitiveness, resilience, and customer and people centricity. New avenues for growth have been identified, whilst fortifying existing core capabilities and putting in place higher order structural competitiveness to create new vitality for the enterprise.

i

These strategic interventions will make a growing contribution to the nation in its journey to the Amrit Kaal.

We have to progress through the process of Transformation based on the principles of TCS where:

• - stands for Truth, Trust & Technology

C - stands for Compassion,

Creativity & Climate

S - Stands for Speed, Simplicity & Self- Confidence

Growth drives most organizations. And along with growth comes change. And change is frightening. We have to overcome this fear and not grow with a view that something can't be done and hence should not be done in our quest for a strong, inclusive growth.

I am thrilled to present an overview of our achievements, shed light on our future vision, and reaffirm our commitment to creating enduring value for each one of you. Your unshakeable trust in us remains the driving force behind our pursuit of excellence, and for that, I extend my sincerest appreciation.

I, on behalf of the Board of Directors as well as 5,197 passionate human assets of BEML Limited, present to you the Company's Annual Report for the financial year 2022-23 for your consideration and adoption at the ensuing Annual General Meeting.

The Year Passed

Performance Highlights:

Let me begin with the stellar performance of our Defence Business Group which has achieved highest ever sales during the year. The year was also earmarked as reentry in exports of Defence products as

your Company became part of Armenia Export deal regarding supply of High Mobility Vehicles (HMV) for Pinaka project. The supplies were commenced and will be completed during current year.

Our Mining & Construction (M&C) Business Group which contributes about 50% of our Turnover has excelled and has achieved highest ever sales. The exemplary feat was well supported by Spares & Service group which has contributed more than 50% of M&C sales and achieved its peak sales during the year.

The performance of our Rail & Metro Business Group was reasonable due to various extraordinary events. Neverthe- less, on project execution front, supplies commenced for Rail Grinding Machine to Indian Railways which again was the first ever "India manufactured". Also, additional order for 18 Metro cars for Kolkata Metro and 88 of Mainline Electric Multiple Unit from Indian Railways were booked during the year. These orders will be executed during current year.

The supply chain disruptions and project delays beyond our control presented us with its share of challenges, prompting us to adopt a strategic focus on maintaining our financial stability. We recognized the importance of managing costs diligently while continuing to invest in growth areas.

In pursuit of this objective, we undertook several key cost control measures. Our teams diligently analyzed our operations and identified opportunities for efficiency enhancements. We optimized our supply chain processes, introduced streamlined administrative workflows, treasury management and invested in energy- efficient technologies. These measures were not only necessary responses to the prevailing economic conditions but also a

ii

testament to our commitment to prudent financial management.

I am pleased to report that these efforts yielded positive results. Through our cost control initiatives, we achieved significant savings across various aspects of our operations and achieved Profit Before Tax of Rs. 278.60 crore which is highest in the last 12 years. These outcomes underscore our ability to adapt to changing circumstances while safeguarding your investment.

Your company made exports aggregating Rs. 830.14 Crore (which includes physical exports of Rs 178.42 Crore and deemed export of Rs 651.72 Crore) and got export incentive of Rs.1.92 Crore during FY 2022- 23 as against exports of Rs 564.74 crore (which includes physical exports of Rs.

1. crore and deemed exports of Rs.

1. Crore) and export incentive of Rs.

1. Crore during the previous year. During the year, we have concluded the supplies to Cameroon and expanded our footprints to 70 countries where BEML equipment have been supplied till date.

Order book is the key driver of our turnaround. During 2023-24, we shall strive to build a healthy order book which will surpass all our previous records and ensure a quantum jump in growth in the coming years. Intense focus on Product Quality, Cash collection, execution as per schedule and controlling costs will continue to remain our priority areas.

The order book position of your Company as on 01.04.2023 stood at Rs. 8,570 crore as against Rs. 9,192 crore in the previous year. Further, Value added per employee was reported Rs. 33 lakhs as against Rs. 31 lakhs in the previous year, a jump of 6.45%.

59 2022-23

Competition:

Although your Company is in intense competition across all Business verticals, 74% of sales was achieved on competitive mode. Your Company has sustained and maintained major market share in Dump Trucks, Dozers, and Metro cars.

Research & Development:

Research & Development (R&D) has played a pivotal role in driving innovation, growth, and sustainability. In an ever- evolving business landscape, our dedication to R&D has remained steadfast, propelling us forward and ensuring our position in industry. During the year, we have designed & developed and upgraded products across all three business verticals.

Further, our commitment to R&D is a testament to our belief in investing not only in physical assets but also in intellectual capital. We understand that the knowledge and expertise generated through our R&D endeavours are invaluable assets that contribute to our long-term competitiveness. During the year, your Company has filed 105 Intellectual Property Rights (IPR) as against target of 96. I am happy to share that, we have been granted eleven patents during the year which is the highest since inception.

It gives me immense pleasure to share that over 75% of our business was through In - house R&D Developed products which is a lead indicator of your company's technical prowess and competence.

Further, R&D expenditure for the year as a Percentage (%) of revenue stands at 1.91% and as a Percentage (%) of PBT stands at 26.75%.

iii