C M Y K

C M Y K
DRAFT RED HERRING PROSPECTUS
(This Draft Red Herring Prospectus
will be updated upon filing with the RoC)
Book Building Issue
Dated September 28, 2011
The Company was incorporated in New Delhi on November 13, 1964 under the Companies Act, 1956, as amended (the Companies Act), as Bharat Heavy Electricals Limited,
a private limited company. Pursuant to a board resolution dated December 24, 1991 and shareholders resolution passed at the EGM on December 24, 1991, the Company was
converted into a public limited company.
Registered and Corporate Office: BHEL House, Siri Fort, New Delhi 110 049, India Tel: +91 (11) 6633 7000 Fax: +91 (11) 2649 3021
For information on change in the registered office of the Company, see the section titled History and Certain Corporate Matters on page 151.
Company Secretary and Compliance Officer: Mr. Inder Pal Singh Tel: +91 (11) 2600 1046
Fax: +91 (11) 6633 7533 E-mail: fpoinvestorsquery@bhel.in; Website: www.bhel.com
BHARAT HEAVY ELECTRICALS LIMITED
#
The Company and the Selling Shareholder in consultation with the BRLMs may consider closing the QIB Bidding Period a day before the Bid Closing Date for other Bidders.
BOOK RUNNING LEAD MANAGERS REGISTRAR TO THE ISSUE
Karvy Computershare
Private Limited
Plot No. 17 to 24,
Vithal Rao Nagar, Madhapur,
Hyderabad - 500 086,
Andhra Pradesh, India.
Tel: +91 (40) 4465 5000
Tel: (toll free): 1 800 345 4001
Fax: +91 (40) 2343 1551
Email: bhel.fpo@karvy.com
Website: www.karisma.karvy.com
Contact Person: Mr Murali Krishna
SEBI Registration No.: INR000000221
DSP Merrill Lynch Limited
8
th
Floor, Mafatlal Centre,
Nariman Point,
Mumbai 400 021,
Maharashtra, India.
Tel: +91 (22) 6632 8000
Fax: +91 (22) 2204 8518
Email : dg.bhelfpo@baml.com
Investor Grievance E-mail :
india_merchantbanking@baml.com
Website: www.dspml.com
Contact Person: Ms. Theresa Pimenta
SEBI Registration No.:INM000011625
In case of revision in the Price Band, the Bidding Period will be extended for at least three additional Working Days after the revision of the Price Band subject to the Bidding
Period not exceeding 10 Working Days. Any revision in the Price Band and the revised Bidding Period, if applicable, will be widely disseminated by notification to the
Bombay Stock Exchange Limited (the BSE) and the National Stock Exchange of India Limited (the NSE), by issuing a press release, and also by indicating the change
on the websites of the Book Running Lead Managers (BRLMs) and the Self Certified Syndicate Banks (SCSBs) and at the terminals of the members of the Syndicate.
This Offer is being made through the Book Building Process where up to 50% of the Net Offer will be allocated on a proportionate basis to Qualified Institutional Buyers
(QIBs) (QIB Portion). Further, 5% of the QIB Portion will be available for allocation on a proportionate basis to Mutual Funds only. The remainder of the QIB Portion
will be available for allocation on a proportionate basis to QIBs including Mutual Funds, subject to valid Bids being received from them at or above the Offer Price. In
addition, not less than 15% of the Net Offer will be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 35% of the Net Offer will
be available for allocation on a proportionate basis to Retail Bidders, subject to valid Bids being received at or above the Offer Price. Any Bidder may participate in this Offer
through the ASBA process by providing the details of the ASBA Accounts in which the corresponding Bid Amounts will be blocked by the SCSBs. For more information,
specific attention is invited to the section titled Offer Procedure on page 423.
GENERAL RISKS
Investments in equity and equity-related securities involve a degree of risk and Bidders should not invest any funds in this Offer unless they can afford to take the risk of
losing their investment. Bidders are advised to read the Risk Factors carefully before making an investment decision in this Offer. For making an investment decision, Bidders
must rely on their own examination of the Company and this Offer, including the risks involved. The Equity Shares offered in this Offer have not been recommended or approved
by the Securities and Exchange Board of India (SEBI), nor does SEBI guarantee the accuracy or adequacy of this Draft Red Herring Prospectus. Specific attention of the
Bidders is invited to Risk Factors on page 16.
THE COMPANYS AND THE SELLING SHAREHOLDERS ABSOLUTE RESPONSIBILITY
The Company, having made all reasonable inquiries, accepts responsibility for and confirms that this Draft Red Herring Prospectus contains all information with regard to
the Company and the Offer, which is material in the context of the Offer, that the information contained in this Draft Red Herring Prospectus is true and correct in all material
aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of
which make this Draft Red Herring Prospectus as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect.
The Selling Shareholder confirms all information set out in this Draft Red Herring Prospectus in its respect as the Selling Shareholder which is material in the context of Offer
for Sale.
LISTING
The Equity Shares of the Company are listed on the BSE and the NSE. [] is the Designated Stock Exchange. We have received in-principle approval from the NSE and the
BSE for commencement of trading of the Equity Shares offered for sale pursuant to letters dated [] and [] respectively.
ICICI Securities Limited
ICICI Centre, H.T. Parekh Marg,
Churchgate,
Mumbai 400 020,
Maharashtra, India.
Tel: +91 (22) 2288 2460
Fax: +91 (22) 2282 6580
Email : bhel.fpo@icicisecurities.com
Investor Grievance Email :
customercare@icicisecurities.com
Website : www.icicisecurities.com
Contact Person: Mr. Mangesh Ghogle /
Mr. Ayush Jain
SEBI Registration No.:INM000011179
Kotak Mahindra Capital
Company Limited
1
st
Floor, Bakhtawar,
229, Nariman Point,
Mumbai 400021,
Maharashtra, India
Tel: +91 (22) 6634 1100
Fax: +91 (22) 2283 7517
Email : bhel.fpo@kotak.com
Investor Grievance E-mail :
kmccredressal@kotak.com
Website :www.investmentbank.kotak.com
Contact Person: Mr. Chandrakant Bhole
SEBI Registration No.: INM000008704
Morgan Stanley India
Company Private Limited
18F/19F, Tower 2,
One Indiabulls Centre,
841, Senapati Bapat Marg,
Mumbai 400 013, India
Tel: +91 (22) 6118 1000
Fax: +91 (22) 6118 1040
Email : bhel_fpo@morganstanley.com
Investor Grievance E-mail :
investors_india@morganstanley.com
Website : www.morganstanley.com/
indiaofferdocuments
Contact Person: Ms. Mayuri Gupta
SEBI Registration No.: INM000011203
BID/OFFER PROGRAM
BID OPENS ON []
BID CLOSES ON (FOR QIB BIDDERS)# []
BID CLOSES ON (FOR ALL OTHER BIDDERS) []
PROMOTER: PRESIDENT OF INDIA, ACTING THROUGH THE DEPARTMENT OF HEAVY INDUSTRY,
MINISTRY OF HEAVY INDUSTRIES AND PUBLIC ENTERPRISES, GOVERNMENT OF INDIA
FURTHER PUBLIC OFFER OF 24,476,000 EQUITY SHARES OF FACE VALUE OF ` 10 EACH (EQUITY SHARES) OF BHARAT HEAVY ELECTRICALS
LIMITED (BHEL OR THE COMPANY) THROUGH AN OFFER FOR SALE OF 24,476,000 EQUITY SHARES BY THE PRESIDENT OF INDIA ACTING
THROUGH THE DEPARTMENT OF HEAVY INDUSTRY, MINISTRY OF HEAVY INDUSTRIES AND PUBLIC ENTERPRISES, GOVERNMENT OF INDIA
(THE SELLING SHAREHOLDER) FOR CASH AT A PRICE OF ` [] PER EQUITY SHARE (INCLUDING A SHARE PREMIUM OF ` [] PER EQUITY SHARE)
AGGREGATING ` [] MILLION
*
(THE OFFER). THE OFFER COMPRISES A NET OFFER TO THE PUBLIC OF 22,028,400 EQUITY SHARES (THE NET
OFFER) AND A RESERVATION OF 2,447,600 EQUITY SHARES FOR SUBSCRIPTION BY ELIGIBLE EMPLOYEES (AS DEFINED HEREIN) (THE EMPLOYEE
RESERVATION PORTION). THE OFFER WOULD CONSTITUTE 5% OF THE POST OFFER PAID-UP EQUITY CAPITAL OF THE COMPANY AND THE NET
OFFER WOULD CONSTITUTE 4.50% OF THE POST OFFER PAID-UP EQUITY CAPITAL OF THE COMPANY.
THE FACE VALUE OF THE EQUITY SHARE IS ` 10 EACH AND THE OFFER PRICE IS ` [] TIMES THE FACE VALUE.
THE PRICE BAND, RETAIL DISCOUNT, EMPLOYEE DISCOUNT AND THE MINIMUM BID LOT WILL BE DECIDED BY THE SELLING SHAREHOLDER IN
CONSULTATION WITH THE COMPANY AND THE BOOK RUNNING LEAD MANAGERS AND PUBLISHED ATLEAST ONE WORKING DAY PRIOR TO THE
BID OPENING DATE, IN ONE HINDI NATIONAL DAILY NEWSPAPER AND ONE ENGLISH NATIONAL DAILY NEWSPAPER, EACH WITH WIDE
CIRCULATION (HINDI ALSO BEING THE REGIONAL LANGUAGE IN THE STATE WHERE THE REGISTERED OFFICE IS LOCATED), WITH THE
RELEVANT FINANCIAL RATIOS CALCULATED AT THE FLOOR PRICE AND AT THE CAP PRICE.**
*subject to adjustments that may be required as a consequence of, inter-alia the Retail Discount, Employee Discount and the actual subscription and Allotment in terms
of the Basis of Allotment.
**Discount of ` [] to the Offer Price is being offered to Retail Bidders (Retail Discount) and to Eligible Employees (the Employee Discount). Eligible Employees
and Retail Bidders should note that the benefit of the Retail Discount and Employee Discount can be availed at the time of submitting the Bid.
TABLE OF CONTENTS

SECTION I GENERAL .................................................................................................................................... 1
DEFINITIONS AND ABBREVIATIONS ......................................................................................................... 1
CERTAINCONVENTIONS, USE OF FINANCIAL INFORMATIONANDMARKET DATAAND
CURRENCYOF PRESENTATION ................................................................................................................ 10
NOTICE TOINVESTORS ............................................................................................................................... 13
FORWARD-LOOKINGSTATEMENTS ........................................................................................................ 15
SECTION II RISK FACTORS ...................................................................................................................... 16
RISKFACTORS .............................................................................................................................................. 16
SECTION III INTRODUCTION ................................................................................................................... 42
SUMMARYOF INDUSTRY ........................................................................................................................... 42
SUMMARYOF THE BUSINESS .................................................................................................................... 45
THE OFFER ..................................................................................................................................................... 51
SUMMARYFINANCIAL INFORMATION ................................................................................................... 53
GENERAL INFORMATION ........................................................................................................................... 64
CAPITAL STRUCTURE ................................................................................................................................. 78
OBJECTS OF THE OFFER .............................................................................................................................. 87
BASIS FOR THE OFFER PRICE ..................................................................................................................... 88
STATEMENT OF TAXBENEFITS ................................................................................................................ 92
SECTION IV ABOUT THE COMPANY ................................................................................................... 103
INDUSTRYOVERVIEW .............................................................................................................................. 103
THE BUSINESS ............................................................................................................................................. 122
REGULATIONS ANDPOLICIES ................................................................................................................. 143
HISTORYAND CERTAINCORPORATE MATTERS ................................................................................ 151
THE MANAGEMENT ................................................................................................................................... 168
THE PROMOTER ANDGROUP COMPANIES........................................................................................... 194
DIVIDENDPOLICY ..................................................................................................................................... 195
SECTION V FINANCIAL INFORMATION ............................................................................................. 196
MANAGEMENTS DISCUSSIONAND ANALYSIS OF FINANCIAL CONDITIONANDRESULTS OF
OPERATIONS ............................................................................................................................................... 324
MATERIAL DEVELOPMENTS ................................................................................................................... 339
STOCKMARKET DATAFOR EQUITYSHARES OF THE COMPANY ................................................... 343
FINANCIAL INDEBTEDNESS .................................................................................................................... 345
SECTION VI LEGAL AND OTHER INFORMATION ........................................................................... 347
OUTSTANDINGLITIGATIONANDMATERIAL DEVELOPMENTS ..................................................... 347
GOVERNMENT ANDOTHER APPROVALS ............................................................................................. 377
OTHER REGULATORY ANDSTATUTORYDISCLOSURES .................................................................. 403
SECTION VII OFFER RELATED INFORMATION ............................................................................... 414
TERMS OF THE OFFER ............................................................................................................................... 414
OFFER STRUCTURE .................................................................................................................................... 418
OFFER PROCEDURE ................................................................................................................................... 423
SECTION VIII MAIN PROVISIONS OF ARTICLES OF ASSOCIATION .......................................... 463
SECTION IX OTHER INFORMATION .................................................................................................... 477
MATERIAL CONTRACTS ANDDOCUMENTS FOR INSPECTION ........................................................ 477
DECLARATION .............................................................................................................................................. 480

1
SECTION I GENERAL
DEFINITIONS AND ABBREVIATIONS
Unless the context otherwise indicates or implies, the following terms have the following meanings in this Draft
Red Herring Prospectus, and references to any statute or regulations or policies will include any amendments or
re-enactments thereto, from time to time.
Company Related Terms
Term Description
BHEL and the
Company
Bharat Heavy Electricals Limited, a public limited company incorporated under the
Companies Act with its registered office at BHEL House, Siri Fort, New Delhi 110
049, India
AoA/Articles of
Association or Articles
The articles of association of the Company, as amended from time to time
Audit Committee The audit committee of the Board of Directors described in the section titled The
Management on page 168
Auditors The statutory auditors of the Company, being M/s. Gandhi Minocha & Co. and M/s.
S. N. Dhawan & Co., Chartered Accountants
Board or Board of
Directors
The board of Directors of the Company
Director(s) The directors of the Company
Executive Director(s) The executive director of the Company
MoA/Memorandum of
Association
The memorandum of association of the Company, as amended from time to time
Promoter The President of India, acting through the Department of Heavy Industry, Ministry
of Heavy Industries and Public Enterprises, Government of India
Registered Office and
Corporate Office
The registered and corporate office of the Company situated at BHEL House, Siri
Fort, New Delhi 110 049, India
Selling Shareholder The President of India, acting through the Department of Heavy Industry, Ministry
of Heavy Industries and Public Enterprises, Government of India
Subsidiaries Bharat Heavy Plate and Vessels Limited and BHEL Electrical Machines Limited
We or us or our or
Our Company
The Company and where the context requires, the Subsidiaries, joint ventures on a
consolidated basis.
Offer Related Terms
Term Description
Allotted/Allotment/Allot Unless the context otherwise requires, transfer of the Equity Shares to successful
Bidders pursuant to this Offer
Allottee A successful Bidder to whom the Equity Shares are Allotted
Application Supported
by Blocked
Amount/ASBA
Application (whether physical or electronic) used by a Bidder to make a Bid
authorizing the SCSB to block the Bid Amount in the specified bank account
maintained with the SCSB
ASBA Account Account maintained with an SCSB which will be blocked by such SCSB to the
extent of the Bid Amount of the ASBA Bidder
ASBA Form/ASBA Bid
cum Application Form
The Bid cum Application Form, whether physical or electronic, used by an ASBA
Bidder to make a Bid, which will be considered as the application for Allotment for
the purposes of the Red Herring Prospectus and the Prospectus
ASBA Bidder Any Bidder who Bids through ASBA
ASBA Revision Form The revision form whether physical or electronic used by ASBA Bidders to modify
the quantity of Equity Shares or the Bid Amount in any of their ASBA Bid cum
Application Forms or any previous Revision Forms
Bankers to the
Offer/Escrow Collection
Banks
[]
2
Term Description
Basis of Allotment The basis on which the Equity Shares will be Allotted, as described in the section
titled Offer Procedure Basis of Allotment on page 456
Bid An indication to make an offer during the Bidding Period by a Bidder in terms of
the Red Herring Prospectus
Bid Amount The highest value of the optional Bids indicated in the Bid cum Application Form
and payable by the Bidder upon submission of the Bid. For Eligible Employees
Bidding in the Employee Reservation Portion and Retail Bidders, the Bid shall be
net of the Retail Discount and Employee Discount, if any
Bid Closing Date The date after which the members of the Syndicate and SCSBs will not accept any
Bids. Such date shall be notified in an English national daily newspaper, a Hindi
national daily newspaper, each with wide circulation (Hindi also being the regional
language in the state where the Registered Office is located) and in case of any
revision, the extended Bid Closing Date shall also be notified on the website and
terminals of the Syndicate and SCSBs. The Company and the Selling Shareholder in
consultation with the BRLMs may consider closing QIB Bidding Period a day
before the Bid Closing Date.
Bidding Centre / Bidding
Location
A centre for acceptance of the Bid cum Application Form.
Bid cum Application
Form
The form in terms of which the Bidder (other than an ASBA Bidder) will Bid and
which will be considered as the application for Allotment
Bidder Any prospective investor who makes a Bid pursuant to the terms of the Red Herring
Prospectus and the Bid cum Application Form, including an ASBA Bidder
Bidding Period The period between the Bid Opening Date and the Bid Closing Date, inclusive of
both days, during which prospective Bidders can submit their Bids, including any
revisions thereof
Bid Opening Date The date on which the members of the Syndicate and SCSBs shall start accepting
Bids. Such date shall be notified in an English national daily newspaper, a Hindi
national daily newspaper, each with wide circulation (Hindi also being the regional
language in the state where the Registered Office is located) and in case of any
revision, the extended Bid Closing Date shall also be notified on the website and
terminals of the Syndicate and SCSBs.
Book Building Process The method of book building as described in Part A of Schedule XI of the SEBI
Regulations, in terms of which the Offer is being made
Book Running Lead
Managers / BRLMs
The book running lead managers to the Offer, in this case being DSP Merrill Lynch
Limited, ICICI Securities Limited, Kotak Mahindra Capital Company Limited and
Morgan Stanley India Company Private Limited
Cap Price Higher end of the Price Band, including revisions thereof, above which the Offer
Price will not be determined and above which no Bids will be accepted
Controlling Branches of
the SCSBs
Such branches of the SCSBs which coordinate Bids under the Offer by the ASBA
Bidders with the Registrar to the Offer and the Stock Exchanges, a list of which is
available on http://www.sebi.gov.in/pmd/scsb.html
Cut-off Price The Offer Price which will be any price within the Price Band. Only Retail Bidders
and Eligible Employees, whose Bid Amount does not exceed ` 200,000 are entitled
to Bid at the Cut-off Price. QIBs and Non-Institutional Bidders are not entitled to
Bid at the Cut-off Price
Designated Branches Such branches of the SCSBs which will collect the ASBA Bid cum Application
Form used by ASBA Bidders, a list of which is available on
http://www.sebi.gov.in/pmd/scsb.html or at such other website which may be
prescribed by SEBI from time to time
Designated Date The date on which funds are transferred from the Escrow Accounts to the Public
Offer Account and the Registrar to Offer issues instructions to SCSBs for transfer of
funds from ASBA Accounts to the Public Offer Account in terms of the Red
Herring Prospectus
Designated Stock
Exchange
[]
Draft Red Herring
Prospectus or DRHP
This draft red herring prospectus filed with SEBI and issued in accordance with the
SEBI Regulations.
3
Term Description
Eligible Employee A permanent and full-time employee of the Company and/or its Subsidiaries
(excluding the Directors and such other persons not eligible under applicable laws,
rules, regulations and guidelines), who are Indian nationals based, working and
present in India as on the date of submission of the Bid cum application
Form/ASBA Form.
Eligible NRI A NRI resident in a jurisdiction outside India where it is not unlawful to make an
offer or invitation under the Offer and in relation to whom the Red Herring
Prospectus constitutes an invitation to Bids on the basis of the terms thereof
Employee Discount The difference of ` [] between the Offer Price and the differential lower price at
which the Selling Shareholder and our Company have decided to Allot the Equity
Shares to Eligible Employees bidding in the Employee Reservation Portion. The
rupee amount of the Employee Discount will be decided by the Selling Shareholder
in consultation with the Company and the BRLMs, and published by our Company
at least one Working Day prior to the Offer Opening Date, in the following
newspapers, i.e. [] and []. The Employee Discount is being offered to Eligible
Employees bidding in the Employee Reservation Portion at the time of making a
Bid.
Employee Reservation
Portion
The portion of the Offer, being 2,447,600 Equity Shares, available for allocation to
Eligible Employees.
Equity Listing
Agreement(s)
Equity listing agreement(s) entered into by the Company with the Stock Exchanges,
including all amendments made thereto from time to time
Equity Share(s) Equity shares of the Company with a face value of ` 10 each*.
*The Board of Directors of the Company on July 01, 2011 and the Shareholders of
the Company on September 20, 2011, respectively have approved the sub-division of
equity share of face value of ` 10 each into 5 equity shares of face value of ` 2 each
w.e.f. record date i.e. October 4, 2011. Based on the issued, subscribed and paid-up
share capital of the Company of 489,520,000 equity shares of ` 10 each, the size of
the present Offer is 2,44,76,000 equity shares of ` 10 each, which will translate to
12,23,80,000 equity shares of ` 2 each when adjusted for the sub-division.
Escrow Account(s) Accounts opened with the Escrow Collection Banks for the Offer and in whose
favour the Bidders (excluding ASBA Bidders) will issue cheques or drafts in respect
of the Bid Amount
Escrow Agreement The agreement to be entered into amongst the Company, the Selling Shareholder,
the Registrar, the members of the Syndicate and the Escrow Collection Banks for
collection of the Bid Amounts and remitting refunds, if any, of the amounts to the
Bidders (excluding ASBA Bidders) on the terms and conditions thereof
First Bidder The Bidder whose name appears first in the Bid cum Application Form or the
Revision Form or the ASBA Bid cum Application Form or the ASBA Revision
Form as the case may be
Floor Price Lower end of the Price Band and any revisions thereof, below which the Offer Price
will not be finalized and no Bids will be accepted
Mutual Funds Mutual funds registered with SEBI under the SEBI (Mutual Funds) Regulations,
1996, as amended
Mutual Funds Portion 5% of the QIB Portion equal to a minimum of 550,710 Equity Shares available for
allocation to Mutual Funds only, out of the QIB Portion on a proportionate basis
Net Offer Offer less the Employees Reservation Portion, consisting of 22,028,400 Equity
Shares to be Allotted
Non-Institutional Bidders All Bidders, including sub-accounts of FIIs registered with SEBI, which are foreign
corporate or foreign individuals, that are not QIBs, Retail Bidders or Eligible
Employees and who have Bid for Equity Shares for an amount more than ` 200,000
Non-Institutional Portion The portion of the Offer, being not less than 15% of the Net Offer or 3,304,260
Equity Shares, available for allocation to Non-Institutional Bidders
Non-Resident Indian or
NRI
A person resident outside India, who is a citizen of India or a person of Indian origin
and will have the same meaning as ascribed to such term in the Foreign Exchange
Management (Deposit) Regulations, 2000, as amended
Offer Further public offer by the Company of 24,476,000 Equity Shares* through an Offer
4
Term Description
for Sale by the Selling Shareholder of the Company. The Offer comprises a Net
Offer to the public of 22,028,400 Equity Shares and an Employee Reservation
Portion of 2,447,600 Equity Shares for subscription by Eligible Employees
*The Board of Directors of the Company on July 01, 2011 and the Shareholders of
the Company on September 20, 2011 have approved the sub-division of equity share
of face value of ` 10 each into 5 equity shares of face value of ` 2 each w.e.f. record
date i.e. October 4, 2011. Based on the issued, subscribed and paid-up share capital
of the Company of 489,520,000 equity shares of ` 10 each, the size of the present
Offer is 2,44,76,000 equity shares of ` 10 each, which will translate to 12,23,80,000
equity shares of ` 2 each when adjusted for the stock split.
Offer Agreement The agreement dated September 28, 2011 entered into amongst the Company, the
Selling Shareholder and the BRLMs pursuant to which certain arrangements are
agreed to in relation to the Offer
Offer for Sale Offer for sale of 24,476,000 Equity Shares by the Selling Shareholder
Offer Price The final price at which Equity Shares will be offered and Allotted to the successful
Bidders in terms of the Red Herring Prospectus and the Prospectus. The Offer Price
will be decided by the Selling Shareholder, in consultation with the Company and
the BRLMs on the Pricing Date.
Price Band Price band of a minimum price (Floor Price) of ` [] and a maximum price (Cap
Price) of ` [], including revisions thereof. The Price Band for the Offer will be
decided by the Selling Shareholder, in consultation with the Company and the
BRLMs and advertised in an English national daily newspaper i.e. [], a Hindi
national daily newspaper i.e. [], each with wide circulation (Hindi also being the
regional language in the state where the Registered Office is located) at least one
Working Day prior to the Bid Opening Date, with the relevant financial ratios
calculated at the Floor Price and at the Cap Price
Pricing Date The date on which the Company and the Selling Shareholder, in consultation with
the BRLMs will finalize the Offer Price
Prospectus The Prospectus to be filed with the RoC in terms of Section 60 of the Companies
Act and SEBI ICDR Regulations, containing, among other things, the Offer Price
that is determined at the end of the Book Building Process, the size of the Offer and
certain other information and including any addenda or corrigenda thereof
Public Offer Account The bank account to be opened with the Bankers to the Offer to receive monies
from the Escrow Account(s) and the ASBA Accounts, on the Designated Date
Qualified Institutional
Buyers or QIBs
Public financial institutions as specified in Section 4A of the Companies Act, FIIs
and sub-accounts registered with SEBI (other than a sub-account which is a foreign
corporate or foreign individual), scheduled commercial banks, Mutual Funds,
multilateral and bilateral development financial institutions, state industrial
development corporations, insurance companies registered with the Insurance
Regulatory and Development Authority, provident funds (subject to applicable law)
with minimum corpus of ` 250 million and pension funds with minimum corpus of
` 250 million, the National Investment Fund set up by resolution F. No. 2/3/2005-
DD-II dated November 23, 2005 of Government of India published in the Gazette of
India, insurance funds set up and managed by army, navy or air force of the Union
of India and insurance funds setup and managed by the Department of Posts, India,
eligible for bidding in this Offer
QIB Portion The portion of the Offer being up to 50% of the Net Offer or 11,014,200 Equity
Shares to be Allotted to QIBs, on a proportionate basis
Red Herring Prospectus
or RHP
The red herring prospectus to be issued in accordance with Section 60B of the
Companies Act and the SEBI ICDR Regulations
Refund Accounts Account(s) opened with Refund Bank(s) from which refunds of the whole or part of
the Bid Amount (excluding the ASBA Bidders), if any, will be made
Refund Banks Escrow Collection Bank(s) with which Refund Account(s) are opened in this case
being, []
Registrar to the
Offer/Registrar
Karvy Computershare Private Limited
Registrars Agreement The agreement dated September 28, 2011 entered into amongst the Company, the
5
Term Description
Selling Shareholder and the Registrar to the Offer pursuant to which certain
arrangements are agreed to in relation to the Offer
Retail Bidders Bidders (including HUFs and NRIs), other than Eligible Employees submitting Bids
under the Employee Reservation Portion, who have Bid for Equity Shares for an
amount less than or equal to ` 200,000 in any of the bidding options in the Net Offer
Retail Discount The difference of ` [] between the Offer Price and the differential lower price at
which the Company and the Selling Shareholder has decided to Allot Equity Shares
to Retail Individual Bidders. The rupee amount of the Retail Discount will be
decided by the Selling Shareholder in consultation with the Company and the
BRLMs, and published by the Company at least one Working Day prior to the Offer
Opening Date, in the following newspapers, i.e. [].
Retail Portion The portion of the Offer, being not less than 35% of the Net Offer, or 7,709,940
Equity Shares at the Offer Price, available for allocation to Retail Bidders
Revision Form The form used by the Bidders to modify the quantity of Equity Shares or the price
options, as applicable, in any of their Bid cum Application Forms or any previous
Revision Form(s)
Self Certified Syndicate
Bank or SCSB
Banks which are registered with SEBI under the SEBI (Bankers to an Issue)
Regulations, 1994, as amended and offer services of ASBA, including blocking of
ASBA Accounts, a list of which is available on
http://www.sebi.gov.in/pmd/scsb.html
Stock Exchanges The BSE and the NSE
Syndicate Collectively, the BRLMs and the Syndicate Members
Syndicate Agreement The agreement to be entered into amongst the Syndicate, the Selling Shareholder
and the Company in relation to the collection of Bids (excluding Bids from the
ASBA Bidders) in this Offer
Syndicate Members []
Transaction Registration
Slip or TRS
The slip or document issued by a member of the Syndicate to a Bidder as proof of
registration of the Bid
Underwriters The BRLMs and the Syndicate Members
Underwriting Agreement The Agreement between the Underwriters, the Company and the Selling
Shareholder to be entered into, on or after the Pricing Date
U.S. QIB A qualified institutional buyer, as defined in Rule 144A under the U.S. Securities
Act of 1933, as amended
Working Day All days other than a Sunday or a public holiday, on which commercial banks in
Mumbai are open for business (except in reference to announcement of Price Band
and Bidding Period, where a working day means all days other than a Saturday,
Sunday or a public holiday, on which commercial banks in Mumbai are open for
business)
Conventional and General Terms/ Abbreviations and References to Other Business Entities
Term Description
Act or Companies Act Companies Act, 1956, as amended
BAN Beneficiary account number
BGGTS BHEL GE Gas Turbine Services Private Limited
BHEL EML BHEL Electrical Machines Limited
BHPVL/BHPV Bharat Heavy Plate and Vessels Limited
BPPL Barak Power Private Limited
BSE The Bombay Stock Exchange Limited
CAG Comptroller and Auditor General of India
CAGR Compounded annual growth rate
CDSL Central Depository Services (India) Limited
CLB Company Law Board
Competition Act The Competition Act, 2002, as amended
6
Term Description
Competition
Commission
Competition Commission of India
CPSU Central public sector undertakings
CSR Corporate social responsibility
DDKPL Dada Dhuniwale Khandwa Power Limited
Depositories NSDL and CDSL
Depositories Act SEBI Depositories Act, 1996, as amended
Depository Participant or
DP
A depository participant as defined under the Depositories Act
DHI Department of Heavy Industry, Ministry of Heavy Industries and Public Enterprises,
GoI
DoD Department of Disinvestment, Ministry of Finance, GoI
DoE Department of Expenditure , Ministry of Finance, GoI
DPE Department of Public Enterprises, Ministry of Heavy Industries and Public
Enterprises, GoI
DP ID Depository participants identity
DSPML DSP Merrill Lynch Limited
DTC Bill The Direct Tax Code Bill, 2010
EBITDA Earnings before interest, taxes, depreciation and amortization
ECS Electronic clearing service
EGM Extraordinary general meeting of the shareholders of a company
EPF Act Employees (Provident Fund and Miscellaneous Provisions) Act, 1952, as amended
EPS Earnings per share
FCNR Account Foreign currency non-resident account established in accordance with the FEMA
FDI Foreign direct investment
FEMA Foreign Exchange Management Act, 1999, as amended, together with rules and
regulations thereunder
FIIs Foreign institutional investors (as defined under the Securities and Exchange Board
of India (Foreign Institutional Investors) Regulations, 1995) registered with SEBI
FIPB Foreign investment promotion board
Fiscal or fiscal or
Financial Year or FY
A period of twelve months ended March 31 of that particular year, unless otherwise
stated.
FPO Further public offering
GIR No General index register number
GoI or Government Government of India
HEIL Heavy Electricals (India) Limited
HR Human resources
HUF Hindu undivided family
ID Act Industrial Disputes Act, 1947, as amended
IFRS International financial reporting standards
Income Tax Act or I.T.
Act
Income Tax Act, 1961, as amended
Indian GAAP Generally accepted accounting principles in India
Industrial Policy The policy and guidelines relating to industrial activity in India, issued by the GoI
from time to time
Insurance Regulatory
and Development
Authority or IRDA
Statutory body constituted under the Insurance Regulatory and Development
Authority Act, 1999, as amended
I-Sec ICICI Securities Limited
Kotak Kotak Mahindra Capital Company Limited
LPCL Latur Power Company Limited
MCA Ministry of Corporate Affairs, GoI
Minimum Wages Act Minimum Wages Act, 1948, as amended
MoF Ministry of Finance, GoI
MoU Memorandum of understanding
7
Term Description
Morgan Stanley Morgan Stanley India Company Private Limited
MPL Mysore Porcelains Limited
N/A Not applicable
NBFC Non banking financial company
NBPPL NTPC BHEL Power Projects Private Limited
NEFT National electronic fund transfer
Non-Resident or NR A person resident outside India, as defined under the FEMA and includes a non-
resident Indian
NRE Account Non-Resident external account established in accordance with the FEMA
NRO Account Non-Resident ordinary account established in accordance with the FEMA
NSDL National Securities Depository Limited
NSE National Stock Exchange of India Limited
NTPC National Thermal Power Corporation Limited
OCB A company, partnership, society or other corporate body owned directly or
indirectly to the extent of at least 60% by NRIs including overseas trusts in which
not less than 60% of the beneficial interest is irrevocably held by NRIs directly or
indirectly and which was in existence on October 3, 2003 and immediately before
such date was eligible to undertake transactions pursuant to the general permission
granted to OCBs under the FEMA. OCBs are not allowed to invest in this Offer.
PAN Permanent account number allotted under the I.T. Act
PFI Public financial institution
PPIL Powerplant Performance Improvement Limited
PSU Public sector undertaking
RBI Reserve Bank of India
Re. One Indian rupee
Regulation S Regulation S of the U.S. Securities Act, 1933
REMCO Radio and Electricals Manufacturing Company Limited
RoC Registrar of Companies, National Capital Territory Delhi and Haryana
RPCL Raichur Power Corporation Limited
` / INR / Rupees/ Rs. Indian rupees
RTGS Real time gross settlement
RTI Right to information
Rule 144A Rule 144A under the U.S. Securities Act, 1933
SCRA Securities Contract (Regulations) Act, 1956, as amended
SCRR Securities Contracts (Regulation) Rules, 1957, as amended
SEBI Securities and Exchange Board of India constituted under the SEBI Act
SEBI Act Securities and Exchange Board of India Act, 1992, as amended
SEBI Insider Trading
Regulations
SEBI (Prohibition of Insider Trading) Regulations, 1992, as amended
SEBI Regulations SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009, as
amended
STT Securities transaction tax
Supreme Court Supreme Court of India
UPCL Udangudi Power Corporation Limited
US GAAP or U.S.
GAAP
Generally accepted accounting principles in the United States of America
U.S. Securities Act U.S. Securities Act of 1933, as amended
wef. With effect from
8
Industry/ Business Related Terms
Term Description
AC Alternating current
AHP Ash handling plant
BFP Boiler feed pump
BOP Balance of plant
BTG Boiler, turbine and generator
CAS Compressed air system
CCPP Combined cycle power plant
CEA Central Electricity Authority of India
CERC Central Electricity Regulatory Commission of India
CHP Coal handling plant
CII Confederation of Indian Industry
ckm circuit kilometre
CRGO Cold-rolled grain-oriented steel
CSP Concentrated solar power
CWP Cooling water pump
DEMU Diesel electric multiple units
DC Direct current
DM De-mineralisation
EHV Extra high voltage
EMU Electric multiple unit
EPC Engineering, procurement and construction
ERP Enterprise resource planning
ESP Electrostatic precipitators
FACTS Flexible AC transmission systems
FBC Fluidised bed combustion
FPS Fire protection system
GENP General Electric Oil & Gas Nuovo Pignone
GDP Gross Domestic Product
GW Gigawatt(s)
HV High-voltage
HRSG Heat recovery steam generators
HVAC Heat ventilation and air conditioning
HVDC High Voltage Direct Current
IEEMA Indian Electrical & Electronics Manufacturers Association
IEI Institution of Engineers (India)
IEX Indian Energy Exchange
IGCC Integrated gasification combined cycle
IPTC Independent Private Transmission Company
IRFC Indian Railway Finance Corporation
ITPs Independent transmission projects
JNNSM Jawaharlal Nehru National Solar Mission
kV Kilo volt
MNRE Ministry of New and Renewable Energy
MoP Ministry of Power
MPPs Merchant Power Plants
MVA Mega Volt Ampere
MW Megawatt(s)
NTP National Tariff Policy
NVVN NTPC Vidyut Vyapar Nigam
OA Operating availability
OIL Oil India Limited
ONGC Oil and Natural Gas Corporation Limited
9
Term Description
Order Book The total contract value (as per the terms of the contract) of all existing contracts as
of such date, minus any revenue already recognised by the Company on a
standalone basis in relation to such existing contracts up to and including such date.
We use the percentage completion method to recognise revenue for long-term
construction contracts, which constitute the substantial majority of our contracts
PLF Plant load factor
PPAs Power Purchase Agreements
PPPs Public Private Partnerships
PT Pre-treatment
PXIL Power Exchange India Limited
R&D Research and development
REBs Regional Electricity Boards
ROD Regional Operations Division
SAIL Steel Authority of India Limited
SCOPE Standing Conference of Public Enterprises
SPV Solar photovoltaic
SRSF Special Railway Safety Fund
STG Steam turbine generator
T&D Transmission and distribution
TBG Transmission business group
TLTs Transmission line towers
TPL Tata Projects Ltd
UHV Ultra high voltage
UMPPs Ultra Mega Power Projects
Vision 2020 Indian Railways Vision 2020
The words and expressions used but not defined in this Draft Red Herring Prospectus will have the meaning
assigned to such terms under the Companies Act, SEBI Act, the SCRA, the Depositories Act and the rules and
regulations thereunder.
Notwithstanding the foregoing, terms in the sections titled Main Provisions of Articles of Association,
Statement of Tax Benefits, Regulations and Policies, Financial Statements and Outstanding Litigation
and Material Developments on pages 463, 92, 143, 196 and 347 in this Draft Red Herring Prospectus
respectively, will have the same meaning given to such terms in these respective sections.
10
CERTAIN CONVENTIONS, USE OF FINANCIAL INFORMATION AND MARKET DATA AND
CURRENCY OF PRESENTATION
Certain Conventions
Unless otherwise specified or the context otherwise requires, all references to India in this DRHP are to the
Republic of India, together with its territories and possessions, and all references to the US, the USA, the
United States or the U.S. are to the United States of America, together with its territories and possessions.
Unless the context otherwise requires, a reference to the "Company" is a reference to Bharat Heavy Electricals
Limited and unless the context otherwise requires, a reference to "we", "us" and "our" refers to Bharat Heavy
Electricals Limited and its subsidiaries and joint ventures, as applicable in the relevant fiscal period, on a
consolidated basis.
Financial Information
In this Draft Red Herring Prospectus, we have included (i) the audited restated standalone financial statements
for fiscal 2007, 2008, 2009, 2010 and 2011; (ii) the audited restated consolidated financial statements for fiscal
2009, 2010 and 2011 and the unaudited unconsolidated limited review financial statements for the three month-
period ended June 30, 2011. These financial statements are based on the audited standalone and consolidated
financial statements for such respective periods (except the unaudited unconsolidated limited review financial
statements for the three month-period ended June 30, 2011), which have been prepared in accordance with the
Companies Act and Indian GAAP and have been restated in accordance with the SEBI Regulations.
The fiscal year commences on April 1 and ends on March 31, and unless otherwise specified or the context
otherwise requires, all references to a particular fiscal year are to the twelve-month period ended March 31 of
that year.
Indian GAAP differs in certain material respects from U.S. GAAP and IFRS. We have not attempted to quantify
the impact of IFRS or U.S. GAAP on the financial data included in this Draft Red Herring Prospectus, nor do
we provide a reconciliation of the financial statements to those under U.S. GAAP or IFRS. Accordingly, the
degree to which the financial information prepared in accordance with Indian GAAP, Companies Act and the
SEBI Regulations included in this Draft Red Herring Prospectus will provide meaningful information is entirely
dependent on the readers level of familiarity with Indian accounting standards and accounting practices, Indian
GAAP, the Companies Act and the SEBI Regulations. See the section titled Risk Factors The proposed
adoption of IFRS could result in the financial condition and results of operations appearing materially different
than under Indian GAAP. on page 35. Any reliance by persons not familiar with Indian accounting practices,
Indian GAAP, the Companies Act and the SEBI Regulations on the financial disclosures presented in this Draft
Red Herring Prospectus should accordingly be limited. In making an investment decision, investors must rely
upon their own examination of the Company, the terms of the Offer and the financial information relating to the
Company. Potential investors should consult their own professional advisors for an understanding of these
differences between Indian GAAP and IFRS or U.S. GAAP, and how such differences might affect the financial
information contained herein.
Currency and Units of Presentation
All references to Rupees, or ` or Rs. are to Indian Rupees, the official currency of the Republic of India.
All references to US$ or USD or U.S. Dollar are to United States Dollars, the official currency of the
United States of America. All reference to JPY are to Japanese Yen, the official currency of Japan and all
references to or Euro are to Euro, the official currency of the European Union. In this Draft Red Herring
Prospectus, any discrepancies in any table between the total and the sums of the amounts listed therein are due
to rounding-off. All figures mentioned in this Draft Red Herring Prospectus are denominated in millions, unless
otherwise specified.
Industry and Market Data
Unless stated otherwise, industry and market data used throughout this Draft Red Herring Prospectus have been
derived from industry publications. Industry publications generally state that the information contained in those
publications has been obtained from sources believed to be reliable but that their accuracy and completeness are
not guaranteed and their reliability cannot be assured. Although we believe that the industry and market data
used in this Draft Red Herring Prospectus is reliable, neither we nor the Selling Shareholder nor the BRLMs nor
any of their respective affiliates nor advisors have prepared or verified it independently. The extent to which the
11
market and industry data used in this Draft Red Herring Prospectus is meaningful depends on the readers
familiarity with and understanding of the methodologies used in compiling such data.
Such data involves risks, uncertainties and numerous assumptions and is subject to change based on various
factors, including those discussed in the section titled Risk Factors on page 16. Accordingly, investment
decisions should not be based on such information.
In accordance with the SEBI Regulations, we have included in the section titled Basis for the Offer Price on
page 88, information pertaining to the peer group companies of the Company. Such information has been
derived from publicly available annual reports of the peer group companies.
Exchange Rates
This Draft Red Herring Prospectus contains translations of U.S. Dollar and other currency amounts into Indian
Rupees that have been presented solely to comply with the requirements of item (VIII) sub-item (G) of Part A of
Schedule VIII of the SEBI Regulations. It should not be construed as a representation that such currency
amounts could have been, or can be converted into Indian Rupees, at any particular rate or at all.
The exchange rates of the USD and EURO into Indian Rupees for the last five Financial Years i.e. 2007, 2008,
2009, 2010 and 2011 and on monthly basis commencing from September, 2010 uptil August 2011 are provided
below.
INR USD
Fiscal Year Year/ Month
End
Average High Low
2007 43.59 45.29 46.95 43.14
2008 39.97 40.24 43.15 39.27
2009 50.95 45.91 52.06 39.89
2010 45.14 47.42 50.53 44.94
2011 44.65 45.58 47.57 44.03
Month
Sep-10 44.92 46.06 46.87 44.92
Oct-10 44.54 44.41 44.74 44.03
Nov-10 46.04 45.02 46.04 44.25
Dec-10 44.81 45.16 45.70 44.81
Jan-11 45.95 45.39 45.95 44.67
Feb-11 45.18 45.44 45.81 45.11
Mar-11 44.65 44.99 45.27 44.65
Apr-11 44.38 44.37 44.68 44.04
May-11 45.03 44.90 45.38 44.30
Jun-11 44.72 44.85 45.10 44.61
Jul-11 44.16 44.42 44.69 43.95
Aug-11 46.02 45.28 46.13 44.05
Source: Reserve Bank of India
INR EURO
Fiscal Year Year/ Month
End
Average High Low
2007 58.14 58.11 59.90 53.77
2008 63.09 56.99 64.48 54.32
2009 67.48 65.14 69.17 60.57
2010 60.56 67.08 71.06 60.52
2011 63.24 60.21 63.98 56.07
Month

Sep-10 61.00 60.08 61.10 59.11
Oct-10 61.81 61.71 62.33 60.96
12
Fiscal Year Year/ Month
End
Average High Low
Nov-10 60.36 61.49 62.59 60.36
Dec-10 59.81 59.68 60.31 59.12
Jan-11 62.54 60.53 62.73 58.63
Feb-11 62.15 62.09 63.16 61.41
Mar-11 63.24 63.03 63.98 62.32
Apr-11 65.83 64.23 65.83 63.01
May-11 64.75 64.48 66.23 63.57
Jun-11 64.79 64.54 65.48 63.39
Jul-11 63.10 63.46 64.80 62.26
Aug-11 66.70 64.94 66.70 62.87
Source: Reserve Bank of India
13
NOTICE TO INVESTORS
United States of America (United States)
The Equity Shares have not been recommended by any U.S. federal or state securities commission or regulatory
authority. Furthermore, the foregoing authorities have not confirmed the accuracy or determined the adequacy
of this Draft Red Herring Prospectus. Any representation to the contrary is a criminal offence in the United
States and may be a criminal offence in other jurisdictions.
The Equity Shares have not been and will not be registered under the U.S. Securities Act of 1933, as amended
(the U.S. Securities Act) or any state securities laws in the United States and may not be offered or sold within
the United States under the U.S. Securities Act, except pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the U.S. Securities Act and applicable state securities laws in the
United States.
Accordingly, the Equity Shares are being offered and sold (i) in the United States only to, qualified institutional
buyers (as defined in Rule 144A under the U.S. Securities Act (Rule 144A) and referred to in this Draft Red
Herring Prospectus as U.S. QIBs, which, for the avoidance of doubt, does not refer to a category of
institutional investors defined under applicable Indian regulations and referred to in this Draft Red Herring
Prospectus as QIBs), acting for its own account or for the account of another U.S. QIB (and meets the other
requirements set forth herein), in reliance on the exemption from registration under the U.S. Securities Act
provided by Rule 144A or other available exemption; and (ii) outside the United States in reliance on Regulation
S.
Each purchaser of Equity Shares inside the United States will be required to represent and agree, among other
things, that such purchaser (i) is a U.S. QIB; and (ii) will only reoffer, resell, pledge or otherwise transfer the
Equity Shares in an "offshore transaction" in accordance with Rule 903 or Rule 904 of Regulation S.
Each purchaser of Equity Shares outside the United States will be required to represent and agree, among other
things, that such purchaser acquiring the Equity Shares in an offshore transaction in accordance with
Regulation S.
We conduct business activities with countries and persons that are subject to sanctions administered or enforced
by the U.S. Department of Treasurys Office of Foreign Assets Control, the United Nations Security Council,
the European Union and/or Her Majestys Treasury. Certain investors may not wish to invest in our Equity
Shares as a result of such activities. Investors are urged to consider carefully the information in the Draft Red
Herring Prospectus with respect to our business activities in Sudan, Myanmar (Burma), Syria, Libya and
Belarus, and to review carefully "Risk Factors- Some of the countries in which we operate, such as Libya,
Myanmar (Burma), Sudan, Belarus and Syria, are subject to certain international sanctions.

European Economic Area
This Draft Red Herring Prospectus has been prepared on the basis that all offers of Equity Shares will be made
pursuant to an exemption under the Prospectus Directive, as implemented in Member States of the European
Economic Area (EEA), from the requirement to produce a prospectus for offers of Equity Shares. The
expression Prospectus Directive means Directive 2003/71/EC of the European Parliament and Council and
includes any relevant implementing measure in each Relevant Member State (as defined below). Accordingly,
any person making or intending to make an offer within the EEA of Equity Shares which are the subject of the
placement contemplated in this Draft Red Herring Prospectus should only do so in circumstances in which no
obligation arises for our Company or any of the Underwriters to produce a prospectus for such offer. None of
our Company and the Underwriters have authorized, nor do they authorize, the making of any offer of Equity
Shares through any financial intermediary, other than the offers made by the Underwriters which constitute the
final placement of Equity Shares contemplated in this Draft Red Herring Prospectus.
Notice to New Hampshire Residents
Neither the fact that a registration statement or an application for a license has been filed under chapter 421-b of
the New Hampshire revised statutes (RSA 421-b) with the State of New Hampshire nor the fact that a security
is effectively registered or a person is licensed in the State of New Hampshire constitutes a finding by the
Secretary of State of New Hampshire that any document filed under RSA 421-b is true, complete and not
14
misleading. Neither any such fact nor the fact that an exemption or exception is available for a security or a
transaction means that the Secretary of State of New Hampshire has passed in any way upon the merits or
qualifications of, or recommended or given approval to, any person, security or transaction. It is unlawful to
make, or cause to be made, to any prospective purchaser, customer or client, any representation inconsistent
with the provisions of this paragraph
15
FORWARD-LOOKING STATEMENTS
All statements contained in this Draft Red Herring Prospectus that are not statements of historical facts
constitute forward-looking statements. Investors can generally identify forward-looking statements by
terminology such as aim, anticipate, believe, continue, estimate, expect, intend, may,
objective, plan, potential, project, pursue, should, will, would, or other words or phrases of
similar import. Similarly, statements that describe the strategies, objectives, plans or goals are also forward-
looking statements.
All statements regarding the expected financial condition and results of operations, business, plans and
prospects are forward-looking statements. These forward-looking statements include statements as to the
business strategy, the revenue, profitability, planned projects or initiatives. These forward-looking statements
and any other projections contained in this Draft Red Herring Prospectus (whether made by us or any third
party) are predictions and involve known and unknown risks, uncertainties and other factors that may cause the
actual results, performance or achievements to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements or other projections. Important factors
that could cause actual results, performance or achievements to differ materially include, but are not limited to,
those discussed under the sections titled Risk Factors, Managements Discussion and Analysis of Financial
Condition and Results of Operations, Industry Overview and The Business on pages 16, 324, 102 and 122
of this Draft Red Herring Prospectus respectively.
The forward-looking statements contained in this Draft Red Herring Prospectus are based on the beliefs of
management, as well as the assumptions made by and information currently available to management. Although
we believe that the expectations reflected in such forward-looking statements are reasonable at this time, we
cannot assure investors that such expectations will prove to be correct. Given these uncertainties, investors are
cautioned not to place undue reliance on such forward-looking statements. If any of these risks and uncertainties
materialize, or if any of the underlying assumptions prove to be incorrect, the actual results of operations or
financial condition could differ materially from that described herein as anticipated, believed, estimated or
expected. All subsequent written and oral forward-looking statements attributable to us are expressly qualified
in their entirety by reference to these cautionary statements.
By their nature, certain market risk disclosures are only estimates and could be materially different from what
actually occurs in the future. As a result, actual future gains or losses could materially differ from those that
have been estimated. The Company, the Selling Shareholder, the BRLMs, the Syndicate Members or their
respective affiliates do not have any obligation to, and do not intend to, update or otherwise revise any
statements reflecting circumstances arising after the date hereof or to reflect the occurrence of underlying
events, even if the underlying assumptions do not come to fruition. In accordance with SEBI requirements, the
Company, the Selling Shareholder and the BRLMs will ensure that investors are informed of material
developments until the time of the grant of final listing and trading permissions with respect to Equity Shares
being offered, by the Stock Exchanges. The Company and the Selling Shareholder will ensure that investors are
informed of material developments in relation to statements about the Company and the Selling Shareholder in
this Draft Red Herring Prospectus, Red Herring Prospectus and Prospectus until the Equity Shares are Allotted
to the investors.
16
SECTION II RISK FACTORS
RISK FACTORS
An investment in equity securities involves a high degree of risk. You should carefully consider all the
information in this Draft Red Herring Prospectus, including our financial statements and the related notes and
the sections titled The Business and Managements Discussion and Analysis of Financial Condition and
Results of Operations beginning on pages 122 and 324, respectively, and the risks and uncertainties described
below, before making an investment in our Equity Shares. If any one or some combination of the following risks
were to occur, our business, financial condition and results of operations could suffer, and the price of our
Equity Shares could decline and you may lose all or part of your investment. Unless specified in the relevant
risk factors below, we are not in a position to quantify the financial implication of any of the risks mentioned
below. Additional risks not presently known to us or that we currently deem immaterial may also impair our
business operations. The following factors have been considered for determining the materiality:
1. Some events may not be material individually but may be found material collectively;
2. Some events may have material impact qualitatively instead of quantitatively;
3. Some events may not be material at present but may have a material impact in the future.
This Draft Red Herring Prospectus also contains forward-looking statements that involve risks and
uncertainties. The actual results of our operations could differ materially from those anticipated in these
forward-looking statements as a result of certain factors, including the risks we face as described below. You
should also consider the warning regarding forward looking statements in the section titled Forward-Looking
Statements beginning on page 15.
Unless otherwise stated, financial information included in this section for Financial Years 2011, 2010 and 2009
has been derived from our restated and audited consolidated financial statements as of and for the Financial
Years ended March 31, 2011, March 31, 2010 and March 31, 2009. For further information, see the section
titled Certain Conventions, Use of Financial Information and Market Data and Currency of Presentation
Financial Information.
In this section, unless the context otherwise requires, a reference to the Company is a reference to Bharat
Heavy Electricals Limited and unless the context otherwise requires, a reference to we, us and our
refers to Bharat Heavy Electricals Limited and its Subsidiaries and joint ventures, as applicable in the relevant
fiscal period, on a consolidated basis.
You should not invest in this offering unless you are prepared to accept the risk of losing all or part of your
investment, and you should consult your tax, financial and legal advisors about the particular consequences to
you of an investment in the Equity Shares.
INTERNAL RISK FACTORS
Risk Factors Related to Our Business and Our Company
1. The Company is presently involved in 19 proceedings of a criminal nature, and any adverse
decision in any of these proceedings may have a material adverse effect on our business, results of
financial condition and results of operations.
We are presently involved in 19 criminal proceedings which have been filed against us in various forums.
Amongst the cases filed against us, one case is pending before the Court of Judicial Magistrate, Jogindernagar
District Mandi (Himachal Pradesh) and two cases are pending before the Court of Chief Judicial Magistrate,
Kullu and Bilaspur (Himachal Pradesh) against our Company in relation to alleged breaches of violation of the
Minimum Wages Act, 1948. There are two proceedings for violation of safety standards pending before the
Metropolitan Magistrate, Chennai and before the First Class Judicial Magistrate at Mulugu. Further, there are
three cases filed before the Court of the Judicial Magistrate, G.B. Nagar and one case before Court of the
Judicial Magistrate, Tehri Garhwal in relation to alleged breaches of the Contract Labour (Regulation and
Abolition) Act, 1970. There are eight cases pending before the Court of Chief Judicial Magistrate, Tiruvallur for
alleged violation of the provisions of the Building & Other Construction Labourers (Employment & Job Status
Regulation) Act, 1996 and Tamil Nadu Building Act, 2006. We have one case pending before the Court of Chief
Judicial Magistrate, Haridwar in relation to alleged breaches of the Factories Act, 1948. Further, one case which
17
was filed by one of our erstwhile employees against us under sections 337, 340, 506 and 323 of the Indian Penal
Code, 1860 is pending before the Court of Judicial Magistrate, Jhansi. For details of these cases, see the section
titled "Outstanding Litigation and Material Developments" on page 347 of this Draft Red Herring Prospectus.
We cannot provide any assurance that these matters will be decided in our favour. Further, there is no
assurance that similar proceedings will not be initiated against us in the future.
2. We face significant competition in our operations, which could adversely affect our business.
We face significant competition in our operations. In our business, we compete primarily with other large-scale
operators in India and abroad. We face significant competition from certain Indian companies which have
established manufacturing joint ventures with foreign partners, such as L&T Mitsubishi Heavy Industries,
Bharat Forge Alstom and JSW Toshiba. Several Chinese manufacturers, such as Shanghai Electric Group
Company Limited, SEPCO Electric Power, Harbin Power Plant Equipment Group Corporation and Dongfang
Electric Corporation, have recently been making inroads into the Indian power sector. See the section titled
Business Competition at page 141. The long term-contracts in our Order Book generally comprise several
projects, which are expected to be completed within the next few years. We may be subject to enhanced
competitive pressures then particularly as many of the domestic manufacturers are undertaking an expansion in
their capacity which is expected to become available for use at that time.
Our market position depends on our ability to anticipate and respond to various competitive factors, including
the introduction of new or improved products and services and new technology, pricing strategies adopted by
our competitors, changes in customer preferences, especially those relating to project financing, and meeting
qualifying requirements of the bid process for power generation projects. There can be no assurance that our
current or potential competitors will not offer products comparable or superior to those that we offer at the same
or lower prices or at shorter delivery times or adapt quickly to evolving industry trends or changing market
requirements. In addition, our competitors may have greater financial resources and may benefit from greater
economies of scale and operating efficiencies than we do. We may lose our customers to our competitors if,
among other things, we fail to maintain the quality levels of our products and services or our prices at
competitive levels for comparable products or services, meet project completion schedules or if we are unable to
differentiate ourselves from our competitors. Increased competition may result in price reductions, reduced
gross profit margins and loss of our market share, any of which could adversely affect our business.
3. Our operations in the power segment could be adversely affected by cheaper financing of power
projects facilitated by some of our Chinese competitors.
Chinese competitors have recently been able to secure syndicated financing from Chinese financial institutions
for power projects at relatively low cost, thereby providing them with an advantage over non-Chinese
competitors in securing orders from Indian power generation companies, which traditionally constitute our
primary customer base in this sector. If Chinese competitors continue to have access to cheaper financing, it
could result in an increase in orders placed with Chinese manufacturers and loss of new orders for domestic
equipment manufacturers, including us. Recently, RBI issued a circular dated September 27, 2011 which allows
Indian companies which are in the infrastructure sector to avail of External Commercial Borrowings in
Renminbi (RMB), the official currency of the Peoples Republic of China, under the approval route, subject to
an annual cap of US$ 1 billion pending further review
4. Our financial performance is dependent on our winning long-term contracts.
We depend on winning long-term contracts to generate a substantial portion of our revenue. Any potential
decrease in either the volume of contracts that are awarded to us or our ability to win such contracts can result in
a significant decrease in our turnover and/or profit before tax from year to year.
The majority of our long-term contracts in the power segment are awarded through a competitive bidding
process, which involves an analysis of whether we meet certain pre-qualification criteria such as net worth,
experience, technological capacity and performance, reputation for quality, safety record, financial strength and
size of previous contracts in similar projects. In selecting contractors for major projects, customers generally
limit the tender to contractors they have pre-qualified based on these criteria, although price competitiveness of
the bid is the most important selection criterion. We form a collaboration with other companies to bid for
contracts where we do not qualify on a standalone basis and therefore may not be able to compete for such
projects if we are unable to bid along with our collaborators. Our ability to bid for and win such projects is
dependent on our ability to show experience of working on similar or larger projects and developing strong
18
engineering capabilities and credentials to execute more technically complex projects. If we fail to qualify for
and fail to win long-term contracts, our business, financial condition and results of operations may be adversely
affected.
Under our long-term contracts, we may be required to agree to supply goods or services at prices without any or
with limited ability to make adjustments. Our long-term contracts have relatively long completion periods,
which generally last two to four years. We generally require extensive working capital to perform the contracts
as we receive payments only at certain milestones over the duration of the contract. The long completion period
subjects us to the enhanced risk of unforeseeable problems and circumstances beyond our control, such as
shortages of and increases in the price of materials, equipment, technically qualified personnel and labour, the
occurrence of accidents and shortfalls in performance, capacity, efficiency and power output. The occurrence of
any of these factors could cause a delay in the completion of an order and result in cost overruns and payment of
liquidated damages to our customers or compensation payments to our suppliers or subcontractors for delays in
delivery schedules. As a result, the profit margins that we realise on our long-term contracts may be lower than
our original estimates. There can be no assurance that all of our long-term contracts will be completed on time.
5. Our current Order Book may not necessarily translate into future income in its entirety. Some of our
current orders may be modified, cancelled, delayed, put on hold or not fully paid for by our customers, which
could adversely affect our results of operations.

In Financial Year 2011, the contract value of new orders that we booked was `605,070 million. As many of the
contracts that we enter into are executed over a period of several years, at any given time we have an Order
Book which we define as the total contract value (as per the terms of the contract) of all existing contracts as of
such date, minus any revenue already recognised by the Company on a standalone basis in relation to such
existing contracts up to and including such date. We use the percentage completion method to recognise revenue
for long-term construction contracts, which constitute the substantial majority of our contracts. We use the
percentage completion method to recognise revenue for long-term construction contracts, which constitute the
substantial majority of our contracts. As of June 30, 2011, our Order Book stood at `1,596,000 million. The
contract value of new orders that we booked during the three months ended June 30, 2011, was ` 24,710
million. In the Financial Year ended March 31, 2011, the contract value of new orders that we booked was `
605,070 million for the year. The contract value of new orders booked in the three months ended June 30, 2011
in the power and industry segments was ` 3,980 million and ` 20,730 million, respectively (which included ` 70
million from international operations). Our new orders did not include any major orders in the power industry.
We attribute the decline in new orders booked in the three months ended June 30, 2011 to a reduction in the
number of orders placed by our customers in the power generation sector which is a result of the non-
availability of environmental clearances and issues in procuring coal linkages for their power projects. The
growth of our Order Book in the past is a cumulative indication of the revenues that we expect to recognise in
future periods in relation to signed contracts or contracts where binding letters of intent have been received. Our
Order Book only represents business that is considered firm, although this is subject to, among other things,
cancellation or other early termination because of a breach by us of our contractual obligations, non-payment by
our customers, a delay in the initiation of our customers projects, unanticipated variations or adjustments in the
scope and schedule of our obligations for reasons outside our and our customers control. We do not make
adjustments to our Order Book to take account of the possibility of such events as these are fairly unusual but if
such events occur, they could significantly reduce the size of our Order Book and the income and profits that we
ultimately earn from the contracts. We cannot guarantee that the income anticipated in our Order Book will be
realised, or, if realised, will be realised on time or result in profits. In addition, our Order Book during a
particular future period depends on continued growth of the power sector in India and our ability to remain
competitive.
As stated above, a delay in the initiation of our customers projects unanticipated variations or adjustments in
the scope and schedule of our obligations could occur for reasons outside our and our customers control. For
some of the contracts in our Order Book, our customers are obliged to perform or take certain actions, such as
acquiring land, securing the right of way, clearing forests, supplying owner supplied material, securing required
licences, authorisations or permits, obtaining fuel linkages, making advance payments or opening of letters of
credit or obtaining adequate financing on reasonable terms, approving designs, approving supply chain vendors
and shifting existing utilities. If a customer does not perform these and other actions in a timely manner or at all,
and if such potential failure is not provided for in the contract, our projects could be delayed, put on hold,
modified or cancelled and as a result, our results of operations could be adversely affected.
19
We generally recognise turnover based on the percentage of costs that we have incurred in relation to the
underlying contract and therefore our turnover is generally dependent on the progress of that project. In
addition, the profitability of a contract in our Order Book and our cash flow may be affected by the following
amongst others:
withholding of payments by customers or mismatch between our internal cost milestones and the
payment milestones under our customer contracts;
the refusal of suppliers to maintain favourable payment conditions;
postponement/putting on hold of previously awarded contracts;
increase in raw material costs;
unanticipated technical problems with equipment supplied by us or incompatibility of such equipment
with existing infrastructure;
logistical issues and risks inherent in transporting equipment;
difficulties in obtaining required governmental permits;
unanticipated costs due to project modifications;
delays in award of major contracts;
performance defaults by suppliers, subcontractors or consortium partners;
customer payment defaults and/or bankruptcy; and
changes in law or taxation.
We are in the process of formalising stricter risk management procedures. However, we can give no assurance
that these and our other initiatives will be sufficient to avoid problems in the future, and certain of our projects
may be subject to delays, cost overruns, or performance shortfalls which may lead to the payment of penalties or
damages. All of these factors could have a material adverse effect on our business, financial condition and
results of operations.
6. Fluctuations in the supply and price of raw materials such as steel and copper could result in
increased operating expenses that we may not be able to pass on to our customers.
As part of our operations, we must obtain from our suppliers sufficient quantities of raw materials, such as steel,
steel-based products and copper, at acceptable prices and quality and in a timely manner. We generally do not
have supply contracts for more than one year. Accordingly, we cannot assure you that we will be able to obtain
sufficient amounts of raw materials from our existing suppliers or from alternative sources at acceptable prices,
in a timely manner, or at all. Furthermore, raw materials, such as steel products, that are critical to our
production process are subject to substantial pricing cyclicality and periodic shortages of supply in India. We
cannot assure you that shortages of raw materials will not occur in the future or that we will be able to pass on
cost increases to our customers. Any failure to obtain adequate raw materials or components, or to do so on
commercially acceptable terms and in a timely manner, could interfere with our manufacturing operations, and,
therefore, the results of our operations.
7. We and our customers may face difficulties in securing land for power generation project sites.
Our customers and, to a lesser extent, we face increasing difficulties in locating and securing sufficient land
required for power generation project sites. Large projects typically require large tracts of land for development.
The unavailability or shortage of available sites for development could result in projects being delayed or not
being executed at all and, accordingly, adversely impact the market for our products and services. In addition,
competing uses for project sites and potential environmental concerns relating to projects may also adversely
affect the availability of suitable project sites.
8. We currently do not comply with certain provisions of the Equity Listing Agreement relating to the
composition of our Board and are in the process of implementing risk assessment and minimisation
procedures as envisaged under the Equity Listing Agreement.
We are currently not in compliance with certain provisions of the Equity Listing Agreement relating to the
composition of our Board and are in the process of implementing risk assessment and minimisation procedures
as envisaged under the Equity Listing Agreement. The Securities Contracts (Regulation) Act, 1956 prescribes
certain penalties for non-compliance with the conditions of the Equity Listing Agreement. However, we intend
to be in compliance with the requirements of Clause 49 of the Equity Listing Agreement in relation to the
composition of our Board prior to the filing of the Red Herring Prospectus with the RoC. Presently, our Board
has thirteen Directors, of which five are independent Directors, while Clause 49 of the Equity Listing
20
Agreement stipulates that independent Directors should comprise 50% of our Board. In addition, in Financial
Year 2009, our audit committee met only three times (out of the prescribed four times). No penalties or
suspension of trading have been imposed by the Stock Exchanges.
9. The power sector and other industries in which we operate in India are dependent on the regulatory
developments in India and the continued growth of the Indian economy. Any adverse change in
policy/implementation/industry demand may adversely affect us.
In Financial Year 2011, we derived 97% of our turnover from our operations in India. Our principal customers
are power sector companies, as well as companies in the metal, petrochemical, refining, fertiliser and paper
industry and in other industries in India in which we operate. The industries in which we operate in India are
regulated by, and are directly or indirectly dependent on, GoI policies and support. We are particularly
dependent on regulatory developments in the Indian power sector. For example, the GoI may from time to time
amend its coal linkage policy, under which it sets forth criteria for prioritising coal supply and coal block
allotment to power plants in India, its gas allocation policy or its fertiliser subsidy policy. Starting April 1, 2012,
the coal linkage policy will favour super-critical technology projects over sub-critical technology projects. As a
result, we expect the industry focus will increasingly shift to the super-critical technology segment, with a
corresponding reduction in the sub-critical segment, which may adversely affect our competitive position and
Order Book. Any changes in GoI policies or in the level of direct or indirect support provided by the GoI to the
industries in which our customers operate in India could adversely affect our business, financial condition and
results of operations.
Our results of operations have in the past been favourably affected by the GoIs initiatives to further increase
private sector participation in the power sector. For example, the GoI has expressed a Power for All by 2012
objective, allowing private investment in power generation in 1991 and enacting the Electricity Act, 2003 in
2003 designed to increase private sector participation in the Indian power industry. As per CEA, GoIs 12th
Five-Year Plan envisages a tentative capacity addition of approximately 100,000 MW and spending in the
Indian power sector in the next five years in the order of approximately ` 11,000 billion. In addition, the
increasing prevalence of mega and ultra-mega power projects, many of which are subject to tax incentives, has
encouraged power sector growth, which has led to further demand for our products and services as we have the
technology and capability to meet the requirements of these projects. In addition, captive power capacity in
India has been increasing, as has GoI focus on the area. For example, the Electricity Act, 2003 exempts captive
power generators from license requirements.
Although the power sector is a rapidly growing sector in India, we believe that further development of this
sector is dependent upon the formulation and effective implementation of regulations and policies that facilitate
and encourage private sector investment in power projects. Many of these regulations and policies are evolving
and their success will depend on whether they are designed to adequately address the issues faced and are
effectively implemented. In addition, these regulations and policies will need continued support from stable and
experienced regulatory regimes that not only stimulate and encourage the continued investment of private
capital into power projects, but also lead to increased competition, appropriate allocation of risk, transparency,
and effective dispute resolution. The availability of private capital and the continued growth of the private
power sector in India are also linked to the continued growth of the Indian economy.
Any adverse change in the policies relating to the power sector and other industries in which we operate may
adversely affect our Order Book. The Electricity Act puts in place a framework for major reforms in the sector.
Furthermore, there could be additional changes in the manner of determination of tariff and other policies and
licensing requirements for, and tax incentives applicable to, companies in the power sector and other industries
in which we operate. Presently, we do not know what the nature or extent of review and amendment of the
Electricity Act and rules and policies issued thereunder in the future may be, and cannot assure you that any
amendments will not have an adverse impact on our business, financial condition and results of operations.
Moreover, our customers in the power sector in India are subject to supervision and regulation by the Central
Electricity Authority, the Central Electricity Regulatory Commission and state electricity regulatory
commissions. If the central and state governments initiatives and regulations in the power sector and other
industries in which we operate do not proceed in the desired direction, or if there is any downturn in the
macroeconomic environment in India, our business, financial condition, prospects and results of operations
could be adversely affected.
In addition, it is generally believed that demand for power in India will increase in connection with expected
increases in Indias GDP. However, there can be no assurance that demand for power in India will increase to
21
the extent we expect or at all or will not be satisfied by the expected growth in manufacturing capacity of our
competitors. In the event demand for power in India does not increase as anticipated, the extent to which we are
able to grow our business by selling our products and services to customers in the power sector and other
industries in which we operate in India would be limited and this could have a material adverse effect on our
business, financial condition and results of operations.
10. Risks inherent to the power sector and other industries in which we operate in India could materially
and adversely affect our business, financial condition and results of operations.
Our principal customers are power sector companies, as well as companies in the metal, petrochemical, refining,
fertiliser, paper and other industries in India in which we operate. There are numerous risks inherent to our
suppliers, subcontractors and customers operations. Many of these risks are beyond our control and include:
adverse fluctuations in liquidity, interest rates or currency exchange rates (such as the recent interest rate
increases and the depreciation of the Indian rupee) or any downgrade of Indias sovereign credit rating,
which could affect our customers ability to finance their projects;
political, regulatory, fiscal, monetary and legal actions and policies that may adversely affect the viability of
projects in the power sector and other industries in which we operate, including changes in any tariff
regulations applicable to power plants;
the terms of fixed price power purchase agreements, primarily in the case of UMPPs, to which power sector
customers are subject becoming onerous on account of unanticipated increases in input costs;
delays in the implementation of GoI policies and initiatives;
environmental concerns and environmental regulations applicable to power and industry sector projects,
including, for example, relevant coal mining areas being classified as no-go areas;
delays in obtaining environmental clearances or land for power and industry sector projects;
extent and reliability of power sector infrastructure in India;
strikes or work stoppages by employees that affect the project implementation schedule or operations of
power and industry sector projects;
adverse changes in demand for, or the price of, power generated or distributed by power sector projects;
the willingness and ability of consumers to pay for the power produced;
increase in project development costs due to environmental challenges and changes in environmental
regulations;
interruption or disruption in domestic or international financial markets, whether for equity or debt funds;
delays in the construction and operation of power and industry sector projects;
dependence on securing an adequate supply of cement, a key raw material, at cost-effective rates;
issues with access of power plants to water, a key input for thermal and hydro power projects;
issues faced by power generation companies in securing coal from foreign sources, such as Indonesia and
Australia, due to rising prices or any other reason;
capacity oversupply in the power transmission sector in India;
weak payment records of SEBs, typically the key customers for our power generation customers;
litigation and other forms of opposition from local communities and other parties to a project;
obsolescence of technology;
failure of third parties such as contractors, fuel suppliers, sub-contractors and others to perform their
contractual obligations in respect of power and industry sector projects, due to bankruptcy or any other
reason;
adverse developments in the overall economic environment in India; and
economic, political and social instability or occurrences such as natural disasters, armed conflict and
terrorist attacks, particularly where power and industry sector projects are located in the markets they are
intended to serve.
In addition, in certain of our industry segment business areas, such as rail transportation and defence, we also
rely on the GoI as the single customer for our products and services. For example, Indian Railways is the single
customer for most of our rail transportation products, and its growth plan for the next decade is dependent on,
and subject to, the general macro-economic conditions in India and the growth of Indias GDP. Any adverse
change in, among other things, the GoIs investment plans, business strategy, budget allocations and equipment
22
acquisition plans for the rail transportation and defence sectors could adversely impact our Order Book and
results of operations in these business areas.
The long-term profitability of projects, when commissioned, is partly dependent on the efficiency of their
operation and maintenance of their assets. Delayed implementation, initial complications, inefficient operations,
inadequate maintenance and similar factors may reduce the profitability of such projects, adversely affecting the
ability of our customers to purchase our products and services. In addition, projects may be exposed to
unplanned interruptions caused by catastrophic events such as floods, earthquakes, fires, major plant
breakdowns, pipeline or electricity line ruptures or other disasters, in which case the cost of repairing or
replacing damaged assets could be considerable. Repeated or prolonged interruption may result in a permanent
loss of customers, substantial litigation or penalties and/or regulatory or contractual non-compliance. To the
extent the risks mentioned above or other risks relating to the power sector and other industries in which we
operate materialise, the strength of our Order Book and our results of operations may be adversely affected.
11. Significant shortages in the supply of crude oil or natural gas could adversely affect the Indian
economy and our customers in particular, which could adversely affect us.
Crude oil prices are volatile and are subject to a number of factors such as the level of global production and
political factors such as war and other conflicts, particularly in the Middle East, where a substantial proportion
of the worlds oil and natural gas reserves are located. Further, in June 2010, the GoI eliminated subsidies on
certain petroleum products, and there have been media reports regarding the proposed deregulation of diesel and
liquefied petroleum gas in the near future.
Any significant increase in oil prices could affect the Indian economy, including the power sector, and the
Indian banking and financial system, which would, in turn, also further affect the Indian power sector. High oil
prices could also add to inflationary pressures on the Indian economy. In addition, increases in oil prices may
have a significant impact on the power sector and related industries in which we operate. This could adversely
affect our business, our financial condition and our ability to implement our strategy.
Finally, natural gas is a significant input for the power sector. India has experienced interruptions in the
availability of natural gas, which has caused difficulties in these projects. Continued difficulties in obtaining a
reliable, timely supply of natural gas could adversely affect some of our customers projects and could impact
the strength of our Order Book and our financial condition. Prices of other key raw materials, for example steel,
coal and cement, have also risen in recent years and if the prices of such raw materials approach levels that
project developers deem unviable, this will result in a slowdown in the infrastructure sector and thereby reduce
our business opportunities and adversely affect our business, financial condition and results of operations.
Continued shortages of fuel could adversely affect some of our power generation and transmission customers
projects and could impact the strength of our Order Book and our business, financial condition and results of
operations.
12. Any inability to effectively execute our projects and manage our growth or to successfully implement
our business plan and growth strategy could have an adverse effect on our financial condition and results of
operations.
Our net turnover increased by 26.2% from `268,231 million in Financial Year 2009 to `338,449 million in
Financial Year 2010 and by 17.6% from Financial Year 2010 to `398,086 million in Financial Year 2011. In
addition, we have initiated a number of expansion programmes, including the capacity enchantment of our
existing manufacturing facilities, the extension of existing businesses into new products and services, expansion
of international business and the formation of strategic alliances with foreign corporations. We expect that the
execution of our projects and our growth strategy will place significant strains on our management, financial and
other resources. Further, continued expansion increases the challenges involved in financial and technical
management, recruitment, training and retaining sufficient skilled technical and management personnel, and
developing and improving our internal administrative infrastructure. We may evaluate and consider expansion
in the future to pursue existing and potential market opportunities. Our inability to manage our business plan
effectively and execute our growth strategy, including completion of our capacity enhancement plan, could have
an adverse effect on our operations, results, financial condition and cash flows. In addition, due to any inability
to manage such challenges, we may also be unable to meet the annual performance targets set by the GoI
pursuant to an annual Memorandum of Understanding that we enter into with the GoI, and we may not obtain an
23
excellent rating. If we are unable to successfully implement our business plan and growth strategy, our
business, financial condition and results of operations will be materially and adversely affected.
We have also been pursuing opportunities to venture into new lines of business. For example, we have explored
opportunities to foray into the NBFC space to fund power projects. Pursuing any new lines of businesses will
require significant capital expenditures and other resources and may require new regulatory approvals.
Moreover, we do not have significant operational experience in these sectors. There can be no assurance that we
will be successful in expanding into new lines of business, and if we are unable to successfully implement a
planned expansion, it could adversely affect our business, operations and profitability.
In order to manage the execution of new projects and our growth effectively, we must implement and improve
operational systems, procedures and internal controls on a timely basis. If we fail to implement and improve
these systems, procedures and controls on a timely basis, or if there are weaknesses in our internal controls that
would result in inconsistent internal standard operating procedures, we may not be able to meet our expected
schedule of project implementation, hire or retain employees, pursue new business, complete future strategic
agreements or operate our business effectively. There can be no assurance that our existing or future
management, operational and financial systems, procedures and controls will be adequate to support future
operations or establish or develop business relationships beneficial to our future operations.
13. If we do not effectively manage our business outside India, we may incur losses or be otherwise
adversely affected.
We do business in several countries outside India and the expansion of our business outside India is a key
strategy for us. See the section titled Business International Operations. We plan to continue to expand our
business in other countries, either directly or through subsidiaries and/or joint ventures. Because of our
relatively limited experience in operating outside India, we are subject to additional risks related to our
international expansion strategy, including risks related to complying with a wide variety of national and local
laws of other countries, uncertain political and economic environments, government instability, restrictions on
the import and export of certain technologies, expropriation or deprivation of assets and multiple and possibly
overlapping tax structures. In addition, we may face competition in other countries from companies that may
have more experience with operations in such countries or with international operations generally. We may also
face difficulties integrating new facilities in different countries into our existing operations. If we do not
effectively manage our foreign operations, our business, financial condition and results of operations may be
adversely affected.
14. Changes in existing terms or termination of our technical collaboration agreements could have a
material adverse impact on our business and results of operations.
We have entered into several technical collaboration arrangements with leading global manufacturing and
engineering companies in order to acquire the know-how to design, engineer, manufacture, erect, commission,
troubleshoot, repair, service, retrofit of power generation equipment. Under these arrangements, we are licensed
to manufacture and sell the products as per the design of our collaborator in the agreed markets. The
continuation of certain of our existing technical collaboration arrangements, such as our technical collaboration
agreements with Siemens AG of Germany and Alstom SA of France, through which we acquire technology
relating to steam turbines, TG and axial/lateral condensers, boilers is important to the successful operation of
our power generation business.
15. We cannot provide any assurance that such technical collaboration arrangements will be renewed or
extended at the end of their term, or that such agreements will not be terminated before the end of their term.
Any termination of or failure to extend a technical collaboration agreement may require us to seek a new source
for the technological input that we benefit from as a result of our current agreements. There can be no assurance
that we will be able to find a suitable replacement for a technical collaboration partner for any of our existing
technical collaboration agreements or that we will be able to negotiate favourable terms with any such partner in
a timely manner. Any failure to replace or negotiate appropriate terms with new partners upon termination of
any technical collaboration agreements that we are party to may have an adverse effect on our business,
financial condition and results of operations.
24
16. We are dependent upon timely delivery by third parties of certain parts, components and services
that meet our quality standards in our operations.
We generally outsource the production of non-technology intensive and non-key components to third party
manufacturers to achieve greater cost efficiency and increase production capacity, while retaining the
manufacture of technologically advanced or key components in-house. Using third parties to manufacture,
assemble and test some of our products reduces our control over manufacturing yields, quality assurance and
product delivery schedules. The third parties who supply us with parts, components and spare parts may not
have sufficient capacity to meet all of our needs in a timely manner and in accordance with our quality standards
in the event of excess demand.
We normally use third party logistic providers for deliveries of finished and unfinished products to our domestic
and overseas customers as well as between our manufacturing facilities and our project sites. Transportation
strikes have, in the past, and could again in the future have, an adverse effect on our supplies and deliveries to
and from particular plants. An increase in freight costs or the unavailability of adequate port and shipping
infrastructure for transportation of our products to our markets may have an adverse effect on our business,
financial condition and results of operations.
In addition, we employ a number of external subcontractors for executing the works at our project sites as most
of our projects are dependent on them for construction, installation, delivery and commissioning, as well as the
supply and testing of key plant and equipment. We may only have limited control over the timing or quality of
services, equipment or supplies provided by these subcontractors and are highly dependent on some of our
subcontractors who supply specialised services and sophisticated and complex machinery. We may be exposed
to risks relating to the quality of the services, equipment and supplies provided by subcontractors necessitating
additional investments by us to ensure the adequate performance and delivery of subcontracted services or the
financial condition of our subcontractors. We cannot assure you that the performance of our external
subcontractors will meet our specifications or performance parameters or that they will remain financially
sound. The limited availability of subcontractors with the required and adequately qualified and experienced
manpower and other resources is critical to the timely completion of our projects and could adversely affect our
operations and profitability. There can be no assurance that we will not encounter issues in this regard in the
future, or that we will be able to replace a supplier or a subcontractor that is not able to meet our requirements.
Any such underperformance, shortages or delays in the supply of parts, components, spare parts or services from
third parties could adversely affect our business, financial condition and results of operations.
17. Misconduct by employees or partners or our failure to comply with laws or regulations could weaken
our ability to win contracts, which could result in reduced revenues and profits.
Misconduct, fraud, non-compliance with applicable laws and regulations, or other improper activities by any
one of our employees or partners could have a significant negative impact on our business and reputation. Such
misconduct could include the failure to comply with government regulations regarding the protection of
classified information, regulations prohibiting bribery and other foreign corrupt practices, regulations regarding
the pricing of labour and other costs in government contracts, regulations pertaining to the internal controls over
financial reporting, environmental laws, and any other applicable laws or regulations. For example, we provide
services that may be highly sensitive or that relate to critical national security matters; if a security breach were
to occur, our ability to procure future government contracts could be severely limited. The precautions we take
to prevent and detect these activities may not be effective, and we could face unknown risks or losses. Our
failure to comply with applicable laws or regulations or acts of misconduct could subject us to fines and
penalties, loss of security clearance, and suspension or debarment from contracting, which could weaken our
ability to win contracts and result in reduced revenues and profits and could have a material adverse impact on
our business, financial condition and results of operations.
18. Our contingent liabilities, outstanding bank guarantees and corporate bank guarantees on a
consolidated basis could materially and adversely affect our financial condition and results of operations.
As of March 31, 2011, we had contingent liabilities on a consolidated basis as set out below. If these contingent
liabilities were to fully materialise or materialise at a level higher than we expect, it may materially and
adversely impact our business, financial condition, results of operations and prospects.
25
(in ` million)
Sr. No. Year ended March 31, 2011
Claims against us not acknowledged as debts
(a) Income tax pending appeals 356
Against which paid under protest (27)
(b) Sales tax demands 5,216
Against which paid under protest (994)
(c) Excise duty demands 3,399
Against which paid under protest (90)
(d) Custom duty demands 2
Against which paid under protest (1)
(e) Court and arbitration cases 4,097
(f) Liquidated damages 14,011
(g) Counterclaims by subcontractors 6
(h) Service tax demands 2,166
Against which paid under protest (2)
(i) Others 2,099
As of March 31, 2011, we had outstanding bank guarantees of ` 374,740 million and corporate guarantees of `
41,920 million on standalone basis.
19. We are exposed to credit risk with respect to some of our customers.
To the extent our customers do not advance us sufficient funds to finance our expenses during the execution
phase of our contracts, we are exposed to the risk that they will be unable to accept delivery or that they will be
unable to make payment at the time of delivery. In these circumstances, we could be unable to recover the
expenses we incur on a project and could be unable to obtain the operating margins we expected upon entering
into the contract. Although we endeavour to confirm that the customer has financing before we commence our
work, we cannot assure you that we can or will be able to confirm such financing for all projects and services
we undertake, and therefore will be subject to the ability of the customer to pay for our products and services.
If one or more of our large customers were unable to meet its commitments, due to bankruptcy or any other
reason, we would be unable to recover some or all of the costs we incur on these projects, which could have a
material adverse effect on our business, financial condition and results of operations.
20. We are involved in certain legal, tax and other proceedings in India that, if determined against us,
may have a material adverse effect on our business, financial condition and results of operations.
There are certain outstanding legal proceedings against us pending at various levels of adjudication before
various courts, tribunals, authorities and appellate bodies in India. Should any new development arise, such as
change in applicable laws or rulings against us by the appellate courts or tribunals, we may need to make
provisions in our financial statements, which may increase our expenses and current liabilities. In addition, we
are presently, and in the future may be, subject to risks of litigation including public interest litigation. We
cannot give you any assurance that these legal proceedings will be decided in our favour. Any adverse decision
may have a significant effect on our business and financial condition, the implementation of our current or
future projects and our results of operations. Details of the proceedings that have been initiated against us and
the amounts claimed against us in these proceedings, to the extent ascertainable, are set forth below:
(in ` millions unless stated otherwise)
Nature of Proceedings Number of Proceedings Amount Involved
Criminal 19 -
Civil 144 1,452.32
Direct Tax 11 5,331.48
Indirect Tax 387 59,835.77
Statutory/Legal Notices 166 215.55
Consumer Cases 5 18.23
Property and Land Acquisition Cases 75 6.46
Labour and Service Matters 263 44.50
26
Nature of Proceedings Number of Proceedings Amount Involved
Arbitration 64 5,558.95 and USD 12.29
million
Public Interest Litigation 1 -
Total 1135 72,463.26 and USD 12.29
million
Further, details of proceedings that have been initiated against our Subsidiaries and the amounts claimed against
us in these proceedings, to the extent ascertainable, are set forth below:
(in ` million)
Nature of Proceedings Number of Proceedings Amount Involved
Criminal 1 -
Civil 25 183.57
Income Tax (Direct Tax) 4 394.04
Income Tax (Indirect Tax) 100 1,237.35
Labour and Service Matters 1 -
Arbitration 7 210.28
Total 138 2,025.24
For further information, please see the section titled Outstanding Litigation and Material Developments of this
Draft Red Herring Prospectus at page 347.
21. The proposed merger of our wholly owned subsidiary Bharat Heavy Plate and Vessels Limited with
us may have an adverse impact on our operations and financial condition.

Our wholly owned subsidiary BHPVL had been referred to BIFR on August 23, 2004. For more details refer to
the section titled History and Certain Corporate Matters on page 151.

The board of directors of our Company and BHPVL have given their in-principle approval on November 25,
2010 and December 29, 2010, respectively, for initiating the process of merger of BHPVL with the Company
with effect from October 21, 2010, subject to obtaining the necessary approvals from Department of Heavy
Industry, Ministry of Heavy Industries and Public Enterprises and other concerned authorities.

Notwithstanding the foregoing, the merger with BHPVL may take more time than expected. In particular,
BHPVL incurred accumulated losses amounting to ` 2,635.77 million up to March 31, 2011 and it is subject to
ongoing litigation relating to a number of matters. In addition, certain liabilities of BHPVL may remain
unknown or underestimated. In the event any of the liabilities materialise or it takes more time than anticipated
for the proposed merger, this may have an adverse impact on our operations and financial condition.
22. We rely on a single tender process in procuring certain of the goods and services that we require in
our operations.
Although we have several suppliers in India and abroad, we rely on a single tender process in procuring certain
of the goods and services that we require in our operations. In addition, pursuant to our technical collaboration
agreements, for certain goods and services, such as rotor kits for large size gas turbines, we are contractually
required to use a single supplier, which exposes us to any price changes imposed by such supplier and the risk
that these goods and services may be delayed or not delivered to us at all. We cannot assure you that we will be
able to procure from such suppliers all the goods and services that we need on commercially acceptable terms or
at all in the future.
23. Changes in or termination of arrangements with our joint venture partners could have a material
adverse impact on our business operations.
We supplement our operations by cooperating with a number of domestic and international companies through
joint venture arrangements.
We cannot provide any assurance that such joint venture arrangements will be renewed or extended at the end of
their respective terms. A delay in or failure to do so may have an adverse effect on our business, financial
condition and results of operations.
27
The success of our business collaboration depends significantly on the satisfactory performance by our joint
venture partners of their contractual and other obligations. As we do not control our partners, we face the risk
that they may not perform their obligations. If they fail to perform their obligations satisfactorily, we may not be
successful in carrying out our operations. In such a circumstance, we may be required to make additional
investments or become liable for our partners obligations, which could result in reduced profits or in some
cases, significant losses. Our collaborations may face difficulties in their operations due to a variety of
circumstances, which could have an adverse effect on our business, financial condition and results of operations.
If the interests of our partner conflict with our interests, our business may be adversely affected.
These and other factors may cause our joint venture partners to act in a way contrary to our interests, or
otherwise be unwilling to fulfill their obligations under our arrangements with them. Any of the foregoing could
have an adverse effect on our business, reputation, financial condition and results of operations.
24. We may incur additional expenses and delays under our contracts due to technical problems or other
interruptions at our manufacturing facilities and project sites and may be subject to certain other risks under
our customer contracts.

Disruptions in operations due to technical problems or other interruptions could adversely affect the operations
at our manufacturing facilities and project sites. Such interruptions could cause delays in production or project
execution and cause us to incur additional expenses. Additionally, our customers have the ability to cancel
purchase orders in the event of delays in project delivery and may decrease future orders if delays are persistent.
Moreover, to the extent that such disruptions do not result from damage to our physical property, these may not
be covered by our insurance policies. Any such disruptions may adversely affect our business, financial
condition and results of operations. Such disruptions may not be covered under the force majeure provisions of
our customer contracts.
The terms of our customer contracts subject us to certain additional risks, many of which are beyond our control
and could reduce our profitability. See the sub-section titled Sales, Marketing and Customer Contracts in the
section titled Business on page 122 of this Draft Red Herring Prospectus.
For example, certain of our contracts contain cross-fall breach provisions which means that any failure or delay
under one contract could result in the automatic termination of our role in all associated contracts for that
project. Payments under the indemnity provisions of our customer contracts could exceed our income from the
contract in question and together with any payments of liquidated damages under customer contracts could
reduce our profitability and have an adverse effect on our business, financial condition and results of operations.
In addition, we typically offer a guarantee/warranty period for our projects, which generally ranges from 12 to
18 months from the date of commissioning. We are also regularly required to provide either bank guarantees or
corporate guarantees of our performance under long-term contracts, which generally cover a period that is co-
terminus with the warranty. We provide for these guarantees/warranties at the rate of 2.5% of revenue
recognised from such projects. As of March 31, 2011, we had outstanding `374,740 million under bank
guarantees and `41,920 million under corporate guarantees. We cannot assure you that such provisioning will be
sufficient to cover all actual expenses associated with such guarantees/warranties, which would adversely affect
our business, financial condition and results of operations.
25. Our business involves the execution of large, complex, projects or components of such projects,
which subjects us to additional risks.
Our business involves the supply of equipment and services to power projects (either individually or on a
turnkey basis) which are technologically complex in their operation. In order to design our projects, we have to
establish close relationships with our customers to get a thorough understanding of their operations and
technological needs. There can be no assurance as to our capability to execute future turnkey projects based
upon our past experience.
Larger power projects often involve multiple components, engagements or phases, and a customer may choose
not to retain us for all stages or may cancel or delay certain stages of the projects. We may therefore have to
work closely with other service providers and vendors to complete our role in the project. Co-ordination with
multiple parties in the delivery of services may require greater project management efforts on our part. Any
failure in this regard may adversely impact our performance.
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In addition, power projects are subject to the risk of terminations, cancellations or delays which may result from
the business or financial condition of our customers or the economy generally, as opposed to factors related to
the quality of our products or services. For example, inclement unanticipated weather, including during
monsoon season, may delay or disrupt development of the power projects of our customers undergoing
construction at such times and consequentially may affect the commencement of operations of the power
stations. Unanticipated inclement weather could also affect the erection and commissioning activities that we
have to perform under our contracts. Cancellations or delays may make it difficult to plan for project resource
requirements and resource planning inaccuracies may have an adverse impact on our profitability.
26. We and our customers are subject to a broad range of environmental laws and regulations in India
and abroad.
Environmental laws and regulations in India and other countries where we operate impose increasingly stringent
environmental protection standards on us and our customers regarding, among other things, smoke or flue gas
emissions, noise pollution, waste water discharges, the use and handling of hazardous waste or materials, waste
disposal practices and the remediation of environmental contamination. These standards expose us and our
customers to the risk of substantial environmental costs and liabilities, including liabilities associated with past
activities. Our industrial activities and those of our customers are subject to obtaining permits, licences and/or
authorisations, or subject to prior notification. Our and our customers facilities must comply with these permits,
licences or authorisations and are subject to regular administrative inspections.
We invest significant amounts to ensure that we conduct our activities in order to reduce the risks of impacting
the environment and regularly incur capital expenditures in connection with environmental compliance
requirements. The procedures ensuring compliance with environmental, health and safety regulations are
decentralised and monitored at each plant level.
The outcome of environmental, health and safety matters cannot be predicted with certainty and there can be no
assurance that we will not incur any environmental, health and safety liabilities in the future. In addition, the
discovery of new facts or conditions or future changes in environmental laws, regulations or case law may result
in increased liabilities that could have a material effect on our business, financial condition and results of
operations.
27. Our success depends on our ability to attract and retain our key management personnel. If we are
unable to do so, it would adversely affect our business and results of operations.
Our future success substantially depends on the continued service and performance of the members of our senior
management team and other key personnel in our business for management, running of our daily operations, and
the planning and execution of our business strategy. There is intense competition for experienced senior
management and other key personnel with technical and industry expertise in our business and if we lose the
services of any of these or other key individuals and are unable to find suitable replacements in a timely manner,
our ability to realise our strategic objectives could be impaired. We face specific disadvantages in our efforts to
attract and retain our management. As a public sector undertaking, GoI policies regulate and control the
emoluments, benefits and perquisites that we pay to our employees, including our key managerial and technical
personnel and these policies may not permit us to pay at market rates. Additionally, we may not have in place
the necessary systems and processes to develop key personnel internally. The loss of key members of our senior
management or other key team members, particularly to competitors, could have an adverse effect on our
business and results of operations. Our performance also depends on our ability to attract and train highly skilled
personnel. If we are unable to do so, it would materially and adversely affect our business, prospects and results
of operations.
28. Our products often incorporate advanced and complex technologies and may require fine tuning
after they have been delivered.
We design, manufacture and sell numerous products of large individual value that are used in major
infrastructure projects. From time to time, we introduce new, highly sophisticated and technologically complex
products to the markets in which we operate. We occasionally discover the need to fine tune or modify such
products after we begin manufacturing them or after our customers begin operating them. Given the technical
sophistication of some of our products, we cannot assure you that we will not encounter new problems or delays
with our products, in spite of the technical validation processes we implement in our manufacturing operations.
29
Any such problems or delays could be costly, could harm our business reputation or decrease our market share
relative to our competitors and could have a material adverse impact on our business, financial condition and
results of operations.
29. We are subject to various risks as a manufacturing company.
As a manufacturing company, we are subject to several risks, including:
ability to hire skilled labour;
difficulty in predicting order volumes in advance;
limited flexibility in deploying highly specialised or custom-built equipment being used for
one project to another project;
issues in securing an adequate and uninterrupted supply of power for our manufacturing
operations and at cost-effective rates; and
difficulty in selling custom-built equipment to third parties in the event of a customer default.
The occurrence of any of these events, individually or in aggregate, could have a material adverse effect on our
business, prospects, financial condition and results of operations.
30. We have substantial capital expenditure and working capital requirements and may require
additional financing to meet those requirements.
Our business is capital intensive. We continuously need to expand and upgrade our existing production
facilities. The cost of implementing new technologies or expanding capacity and allocation of resources to
research and development could be significant and could adversely affect our results of operations.
The actual amount and timing of future capital requirements may differ from estimates as a result of, among
other things, unforeseen delays or cost overruns, unanticipated expenses, regulatory changes, economic
conditions, engineering design changes, technological changes, including additional market developments and
new opportunities in our industry. Our sources of additional financing, if required, to meet our capital
expenditure plans may include the incurrence of debt or the issue of equity or debt securities or a combination of
both. If we decide to raise additional funds through the incurrence of debt, our interest and debt repayment
obligations will increase, and could have a significant effect on our profitability and cash flows and we may be
subject to additional covenants, which could limit our ability to access cash flows from operations. If we decide
to raise additional funds through the issuance of equity, your shareholding in the Company may be diluted.
In many cases, a significant amount of our working capital is required to finance the purchase of materials and
the performance of engineering, procurement, manufacturing and other work before payment is received from
customers. Our working capital requirements may increase if the payment terms in our agreements include
reduced advance payments or longer payment schedules. These factors may result in increases in the amount of
our receivables and short-term borrowings.
Continued increases in our working capital requirements may have an adverse effect on our business, financial
condition and results of operations.
As a result of the recent crisis in the credit markets worldwide and challenging economic environment, we
cannot assure you that we will be able to raise the full amount we believe is necessary to fund our capital
expenditure and working capital requirements, or that such amounts will be available at costs acceptable to us.
Further, our ability to raise financing from lenders outside India will depend upon the regulatory environment in
India with regard to external commercial borrowing and our ability to raise such funds under the automatic
route. Our failure to obtain sufficient financing could result in the delay or abandonment of our development
and expansion plans or disruption in our operations and have an adverse effect on our business, financial
condition and results of operations.
31. The security of our IT systems may fail and adversely affect our business, operations, financial
condition and reputation.
We are dependent on the effectiveness of our information security policies, procedures and capabilities to
protect our computer and telecommunications systems and the data such systems contain or transmit. An
external information security breach, such as a hacker attack, fraud, a virus or worm, or an internal problem with
30
information protection, such as failure to control access to sensitive systems, could materially interrupt our
business operations or cause disclosure or modification of sensitive or confidential information. Our operations
also rely on the secure processing, storage and transmission of confidential and other information in our
computer systems and networks. Our computer systems, software and networks may be vulnerable to
unauthorised access, computer viruses or other malicious code and other events that could compromise data
integrity and security. Although we maintain procedures and policies to protect our IT systems, such as data
back-up system, disaster recovery and business continuity system, any failure of our IT systems as mentioned
above could result in business interruption, material financial loss, initiation of regulatory actions and legal
proceedings and harm to our reputation.
32. We may in the future conduct additional business through joint ventures, strategic partnerships or
mergers and acquisitions, exposing us to certain regulatory and operating risks.
We intend to continue to identify and pursue suitable joint venture, strategic partnership and merger or
acquisition opportunities in India and internationally, in particular with companies/firms whose resources,
capabilities and strategies are likely to enhance and diversify our operations. We may not be able to identify
suitable joint venture partners, strategic partners or merger or acquisition targets or we may not complete
transactions on terms commercially acceptable to us, or at all. We cannot assure you that we will be able to
successfully form such alliances and ventures, integrate acquired companies into our operations or realise the
anticipated benefits of such alliances and joint ventures. Further, such partnerships may be subject to regulatory
approvals, which may not be received in a timely manner, or at all. In addition, we cannot assure you that the
expected strategic benefits or synergies of any future partnerships will be realised. Further, such investments in
strategic partnerships may be long-term in nature and may not yield returns in the short to medium term. Such
initiatives may place additional strains on our management, financial and other resources and any unforeseen
costs or losses could adversely affect our business, profitability and financial condition.
We evaluate merger and acquisition opportunities as part of our growth strategy and may commit ourselves to
mergers or acquisitions in the future, if suitable opportunities arise. These may require significant investments
which may not result in favourable returns. Acquisitions involve additional risks, including:
unforeseen contingent risks or latent liabilities relating to these businesses that may become
apparent only after the merger or acquisition is completed;
integration and management of the operations and systems;
retention of select personnel;
co-ordination of sales and marketing efforts; and
diversion of managements attention from other ongoing business concerns.
If we are unable to integrate the operations of an acquired business successfully or manage such future
acquisitions profitably, we may not meet our growth targets and our financial condition and results of operations
may be adversely affected.
33. The manufacturing processes for some of our products are complex and involve some hazards.
The manufacturing processes for some of our products are highly complex, require technically advanced and
costly equipment and hazardous materials, and involve risks, including breakdown, failure or substandard
performance of equipment, improper installation or operation of equipment, environmental hazards and
industrial accidents. For example, we use hydrogen gas in testing turbo-generators, which, if leaked, could
potentially result in an explosion. In addition, defects in or malfunctioning of our products could cause severe
damage to property and death or serious injury to our customers personnel, which could expose us to litigation
and damages. Although we believe we take adequate safety measures in our operations, we cannot assure you
that such accidents will not occur in the future, resulting in death, serious injury to our personnel or destruction
of property and equipment. Any disruption in our operations due to any of these events or otherwise could result
in litigation against us and damage to our reputation, which would adversely affect our business, financial
condition and results of operations.
34. Failure to protect our intellectual property rights and to keep our technical knowledge confidential
could erode our competitive advantage.
Intellectual property rights are important to our business. As of June 30, 2011, we had 1,555 patents and
copyrights registered and filed for registration in India and abroad. If we fail to protect our intellectual property
31
rights, including patents, trademarks, trade secrets and copyrights, our competitiveness, business and financial
condition may be adversely affected.
Like many of our competitors, we possess extensive technical knowledge about our products. Our know-how is
a significant independent asset, which may not be adequately protected by intellectual property rights such as
patent registration. Some know-how is protected only by secrecy. As a result, we cannot be certain that our
know-how will remain confidential in the long run. Even if all reasonable precautions, whether contractual or
otherwise, are taken to protect the confidential technical knowledge of our products and business, there is still
danger that such information may be disclosed to others or become public knowledge in circumstances beyond
our control. In the event that the confidential technical information or know-how in respect of our products or
business becomes available to third parties or to the public, our competitive advantage over other companies
could be harmed, which could have an adverse effect on our business, prospects, financial condition and results
of operations.
35. We may inadvertently infringe the intellectual property rights of others, any misappropriation of
which could harm our competitive position.
While we take care to ensure that we comply with the intellectual property rights of others, we cannot determine
with certainty whether we are infringing any existing third-party intellectual property rights which may force us
to alter our technologies, obtain licences or cease some of our operations. We may also be susceptible to claims
from third parties asserting infringement and other related claims. If such claims are raised, those claims could:
(a) adversely affect our relationships with current or future customers: (b) result in costly litigation; (c) cause
product shipment delays or stoppages; (d) divert management's attention and resources; (e) subject us to
significant liabilities; (f) require us to enter into potentially expensive royalty or licensing agreements; and (g)
require us to cease certain activities.
Furthermore, necessary licences may not be available to us on satisfactory terms, if at all. Any of the foregoing
could adversely affect our business, financial condition and results of operations. In addition, in certain cases,
our customers share their intellectual property rights in the course of the product development process that we
carry out for them. If our customers intellectual property rights are misappropriated by our employees in
violation of any applicable confidentiality agreements, our customers may seek damages and compensation
from us. This could have an adverse effect on our business, financial condition and results of operations and
damage our reputation.
36. Some of the countries in which we operate, such as Libya, Myanmar (Burma), Sudan, Belarus and
Syria, are subject to certain international sanctions.
We conduct business activities with countries that are subject to sanctions administered or enforced by the U.S.
Department of Treasurys Office of Foreign Assets Control, the United Nations Security Council, the European
Union and/or Her Majestys Treasury. These business activities include (i) providing gas-based power projects,
thermal power projects and equipment in Libya; (ii) providing transformers (including the supply and
installation of transformers) in Myanmar (Burma); a project funded by the GoI (iii) providing power generating
equipment and a thermal power project, including transformers and reactors, in Sudan; a project funded by the
GoI (iv) providing thermal power projects, including steam turbines, in Syria; a project funded by the GoI and
(v) providing gas turbine equipment in Belarus; a project funded by the GoI. Revenues from these activities
accounted for approximately 1.4%, 2.4% and 3.6% of our total revenues in FY 2011, 2010 and 2009,
respectively.
Our activities with respect to these countries and persons subject us and our shareholders to a number of risks.
Existing sanctions against Libya, Myanmar (Burma), Sudan, Syria and Belarus present challenges in
conducting normal business operations, including international financial transfers. If these sanctions were to
expand further, either in severity or in terms of the range of countries applying them, it could have a material
adverse impact on our ability to conduct business in or with any of these countries. In addition, as a result of our
business activities with countries and persons that are subject to international sanctions, we may be subject to
negative media or investor attention, which may distract management, consume internal resources and affect
certain international investors perceptions of our Company. Although we currently do not have an extensive
international investor base, we expect to increase international holdings of our Equity Shares following the
Offer, and therefore the trading price of our Equity Shares may become more susceptible to any divestments by
international investors in response to changes in international sanctions regimes or changes in our business
activities in countries subject to such regimes. In addition, if we were to increase our business in or with these
32
countries, particularly relative to our total business, this could have a negative impact on our ability to raise
money in international capital markets and on the international marketability of our securities.
37. A significant part of our business transactions is with government entities or agencies, which may
expose us to various risks, including additional regulatory scrutiny and delayed collections of receivables.
A significant part of our business transactions is with public sector power companies and utilities. We may be
subject to additional regulatory or other scrutiny associated with commercial transactions with government
owned or controlled entities and agencies. In addition, there may be delays associated with collection of
receivables from government owned or controlled entities, including from our significant customers that are
power utilities. Our operations involve significant working capital requirements and delayed collection of our
receivables could adversely affect our liquidity. Contracts with government agencies are subject to various
uncertainties, restrictions, and regulations including oversight audits by various government authorities and
profit and cost controls. In addition, government contracts are subject to specific procurement regulations and a
variety of other socio-economic requirements. We must also comply with various regulations applicable to
government companies relating to employment practices, recordkeeping and accounting. These regulations and
requirements affect how we transact business with our customers and, in some instances, impose additional
costs on our business operations. We are also subject to government audits, investigations, and proceedings. If
we violate applicable rules and regulations, fail to comply with contractual or regulatory requirements or do not
satisfy an audit, we may be subject to a variety of penalties including monetary penalties and criminal and civil
sanctions, which may harm our reputation and could have a material adverse impact on our business, financial
condition and results of operations.
38. The interests of our Directors may cause conflicts of interest in the ordinary course of our business.
Conflicts may arise in the ordinary course of decision-making by our Board. Some of our non-Executive
Directors may also be on the board of directors of certain companies engaged in businesses similar to our
business. In accordance with the procedure laid down in the Companies Act, our Directors are required to
disclose any conflict of interest to our Board, following which they are allowed to participate in any discussions
concerning the matters tabled before our Board. Further, certain of our Directors also hold Equity Shares and are
interested to the extent of any dividend payable to them in respect of the same. For details, see the section titled
The Management Shareholding of the Directors on page 180. There is no assurance that our Directors will
not provide competitive services or otherwise compete in business lines in which we are already present or will
enter into in the future.
39. We are subject to stringent labour laws and trade union activity or any work stoppage could have an
adverse affect on our business, financial condition and results of operations.
India has stringent labour legislation that protects the interests of workers, including legislation that sets forth
detailed procedures for employee removal and dispute resolution and imposes financial obligations on
employers. This makes it difficult for us to maintain flexible human resource policies, discharge employees or
downsize, which though not quantifiable, may adversely affect our business and profitability.
We have 82 registered trade unions under the Trade Unions Act 1926. Although we consider our relations with
our employees to be stable, as of June 30, 2011, 52.8% of our employees are unionised and our failure to
effectively negotiate with the trade unions representing our employees or any union activity could result in work
stoppages. Any such work stoppage, though not quantifiable, could have an adverse affect on our business,
financial condition and results of operations.
40. Our insurance may not be adequate to protect us against all potential losses to which we may be
subject.
We maintain insurance for a variety of risks, including risks relating to construction at project sites, transit of
materials, assets at our manufacturing facilities and other similar risks.
There are various other types of risks and losses for which we are not insured, such as loss of business,
environmental liabilities, natural disasters, war and nuclear risks, because they are either uninsurable or not
insurable on commercially acceptable terms. Should an uninsured loss or a loss in excess of insured limits occur,
or our insurers decline to fully compensate us for our losses, we could incur losses, including losing the
33
anticipated future income derived from that business, property or asset until the date of its reinstatement. Any
such losses could have an adverse effect on our financial condition.
41. Any future capital raising exercise or sale of our Equity Shares by any existing shareholders,
including the GoI, could significantly affect the price of our Equity Shares and may dilute your
shareholding.
To fund future growth plans, we may raise further capital by way of a subsequent issue of Equity Shares in
either the domestic or the international market. Any such issuance of our Equity Shares would dilute the
shareholding of our existing investors. Any such future issuance of Equity Shares or sales of Equity Shares by
any of our significant shareholders, including the GoI, may dilute the investors positions in Equity Shares and
adversely affect the price of our Equity Shares, and could impact our ability to raise capital through an offering
of our securities.
42. Any dispute, proceeding or irregularity in title to properties leased or owned by us may adversely
affect our financial condition and results of operations.
We have taken certain properties on lease for our operations. We cannot assure you whether the leases for such
properties would be renewed in favourable terms. Certain of these properties may not have been constructed or
developed in accordance with local planning and building laws and other statutory requirements. In addition,
there may be certain irregularities in title in relation to some of our owned/leased properties. For example, some
of the agreements for such arrangements may not have been duly executed and/or adequately stamped or
registered in the land records of the local authorities or the lease deeds may have expired and not yet been
renewed. Since registration of land title in India is not centralised and has not been fully computerised, the title
to land may be defective as a result of a failure on our part, or on the part of a prior transferee, to obtain the
consent of all such persons or duly complete stamping and registration requirements. The uncertainty of title to
land may impede the processes of acquisition, independent verification and transfer of title, and any disputes in
respect of land title that we may become party to may take several years and considerable expense to resolve if
they become the subject of court proceedings. Any such dispute, proceedings or irregularities may have an
impact on the operation of our business.
43. We may fail to obtain certain regulatory approvals in the ordinary course of our business in a timely
manner or at all, or to comply with the terms and conditions of our existing regulatory approvals and licences
which may have a material adverse effect on the continuity of our business and may impede our effective
operations in the future.
We have submitted certain applications to various regulatory authorities seeking approvals and licences. For
details, please refer to the section titled Government Approvals of this Draft Red Herring Prospectus. There
can be no assurance that the relevant authorities will issue such permits or approvals to us or that they will be
issued on time. Further, these permits, licences and approvals are subject to several conditions and we cannot
assure you that we will be able to continuously meet the conditions, which may lead to cancellation, revocation
or suspension of relevant permits/licences/approvals. Failure on our part to renew or maintain such permits,
licences or approvals may result in the interruption of our operations and may have a material impact on our
business.
In the future, we may also be required to obtain new permits and approvals for our proposed operations. While
we believe that we will be able to obtain such permits and approvals as and when required, there can be no
assurance that the relevant authorities will issue any of such permits or approvals in the time-frame anticipated
by us or at all. Failure by us to maintain or obtain the required permits or approvals, may result in the
interruption of our operations or delay or prevent our expansion plans and may have a material and adverse
effect on our business, financial condition and results of operations.
44. The proceeds from this Offer will not be available to us.
As this Offer is an offer for sale of Equity Shares by the Selling Shareholder, the proceeds from this Offer will
be remitted to the Selling Shareholder and we will not benefit from such proceeds.
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45. We engage contract labour for carrying out certain of our operations and we are responsible for
paying the wages of such workers, if the independent contractors through whom such workers are hired
default on their obligations, which could have an adverse effect on our results of operations and financial
condition.
In order to retain operational efficiencies, we engage independent contractors who in turn engage on-site
contract labour for performance of certain of our ancillary operations in India. As of March 31, 2011, we
engaged 12,017 contract workers at our facilities. Although we do not engage these labourers directly, we are
responsible for any wage payments to be made to such labourers in the event of default by such independent
contractors. Any requirement to fund their wage requirements may have an adverse impact on our results of
operations and financial condition. In addition, under the Contract Labour (Regulation and Abolition) Act, 1970,
as amended, we may be required to absorb a number of such contract labourers as permanent employees. Thus,
any such order from a regulatory body or court may have an adverse effect on our business, financial condition
and results of operations.
46. Our ability to pay dividends in the future will depend upon future earnings, financial condition, cash
flows, working capital requirements, capital expenditures and other factors.
The amount of future dividend payments, if any, in addition to being regulated by the GoI, will depend upon our
future earnings, financial condition, cash flows, working capital requirements, terms and conditions of our
indebtedness, capital expenditures and other factors. There can be no assurance that we will be able to pay
dividends in the future.
47. Some of our records relating to forms filed with the Registrar of Companies are not traceable.
We have been unable to locate the copies of certain of our corporate records, i.e. prescribed forms filed by us
with the Registrar of Companies, including, among others, in respect of the allotment of Equity Shares, changes
in our authorised share capital and changes in our registered office from incorporation until 1984. While we
believe that these forms were duly filed on a timely basis, we have not been able to obtain copies of these
documents, including from the Registrar of Companies. We cannot assure you that these form filings will be
available in the future or that we will not be subject to any penalty imposed by the competent regulatory
authority in this respect.
EXTERNAL RISK FACTORS
Risks relating to India
1. Political instability or changes in the Government could delay the liberalisation of the Indian
economy and adversely affect economic conditions in India generally, which could impact our financial
results and prospects.
We are incorporated in India, derive the substantial majority of our revenues from operations in India and
almost all of our assets are located in India. Consequently, our performance and the market price of Equity
Shares may be affected by interest rates, government policies, taxation, social and ethnic instability and other
political and economic developments affecting India. The GoI has traditionally exercised and continues to
exercise significant influence over many aspects of the Indian economy. Our business, and the market price and
liquidity of our Equity Shares, may be affected by changes in the GoIs policies, including taxation.
Since 1991, successive Indian governments have pursued policies of economic liberalisation, including
significantly relaxing restrictions on the private sector. However, there can be no assurance that such policies
will be continued and any significant change in the GoIs policies in the future could affect our business and
economic conditions in India in general. In addition, as economic liberalisation policies have been a major force
in encouraging private funding in the Indian economy, any change in these policies could have a significant
impact on business and economic conditions in India, which could adversely affect our business and our future
financial condition and the price of our Equity Shares. In addition, any political instability in India or geo-
political stability affecting India will adversely affect the Indian economy and the Indian securities markets in
general, which could affect the price of our Equity Shares.
35
2. The proposed adoption of IFRS could result in our financial condition and results of operations
appearing materially different than under Indian GAAP.
We may be required to prepare annual and interim financial statements under IFRS in accordance with the
roadmap for the adoption of, and convergence with, IFRS announced by the Ministry of Corporate Affairs, GoI
in January 2010. The convergence of certain Indian Accounting Standards with IFRS was notified by the
Ministry of Corporate Affairs on February 25, 2011. The date of implementing such converged Indian
accounting standards has not yet been determined, and will be notified by the Ministry of Corporate Affairs in
due course after various tax-related and other issues are resolved.
Our financial condition, results of operations, cash flows or changes in shareholders equity may appear
materially different under IFRS than under Indian GAAP. This may have a effect on the amount of income
recognised during that period and in the corresponding period in the comparative period. In addition, in our
transition to IFRS reporting, we may encounter difficulties in the ongoing process of implementing and
enhancing our management information systems.
3. Our business and activities will be regulated by the Competition Act, 2002 (Competition Act) and
any application of the Competition Act to us could have a material adverse effect on our business, financial
condition and results of operations.
The Competition Act is designed to prevent business practices that have an appreciable adverse effect on
competition in India. Under the Competition Act, any arrangement, understanding or action in concert between
enterprises, whether formal or informal, which causes or is likely to cause an appreciable adverse effect on
competition in India is void and attracts substantial monetary penalties. Any agreement which directly or
indirectly determines purchase or sale prices, limits or controls production, shares the market by way of
geographical area, market or number of customers in the market is presumed to have an appreciable adverse
effect on competition. Further, if it is proved that the contravention committed by a company took place with the
consent or connivance or is attributable to any neglect on the part of, any director, manager, secretary or other
officer of such company, that person will be guilty of the contravention and liable to be punished. For more
information, see the section titled Regulations and Policies.
The provisions of the Competition Act relating to combinations were notified recently on March 4, 2011 and
came into effect on June 1, 2011. The Competition Commission of India (the CCI) may enquire into all
combinations, even if taking place outside India, or between parties outside India, if such combination is likely
to have an appreciable adverse effect on competition in India. Effective June 1, 2011, all combinations have to
be notified to the CCI within 30 days of the execution of any agreement or other document for any acquisition
of assets, shares, voting rights or control of an enterprise under the Competition Act. If we are affected, directly
or indirectly, by any provision of the Competition Act, or its application or interpretation, including any
enforcement proceedings initiated by the CCI and any adverse publicity that may be generated due to scrutiny or
prosecution by the CCI, it may have a material adverse effect on our business, financial condition and results of
operations.
4. A slowdown in economic growth in India could adversely impact our business. Our performance and
the growth of our business are necessarily dependent on the performance of the overall Indian economy.
According to the Central Statistics Office, overall (median) GDP growth rate for Financial Year 2011 was 8.5%.
Any slowdown in the Indian economy or in the growth of the power and industry sectors or any future volatility
in global commodity prices could adversely affect our customers and the growth of our business, which in turn
could adversely affect our business, financial condition and results of operations.
Indias economy could be adversely affected by a general rise in interest rates, currency exchange rates, adverse
conditions affecting agriculture, commodity and electricity prices or various other factors. Further, conditions
outside India, such as slowdowns in the economic growth of other countries could have an impact on the growth
of the Indian economy, and government policy may change in response to such conditions.
The Indian economy and financial markets are also significantly influenced by worldwide economic, financial
and market conditions. Any financial turmoil, especially in the United States of America, Europe or China, may
have a negative impact on the Indian economy. Although economic conditions differ in each country, investors
reactions to any significant developments in one country can have adverse effects on the financial and market
36
conditions in other countries. A loss of investor confidence in the financial systems, particularly in other
emerging markets, may cause increased volatility in Indian financial markets.
The recent global financial turmoil, which grew out of the sub-prime mortgage crisis in the United States and
the subsequent sovereign debt crisis in Europe, as well as the recent downgrade of the United States credit
rating and Italys sovereign rating by Standard & Poors and the threat of further downgrades of other countries,
led to a loss of investor confidence in worldwide financial markets. Indian financial markets also experienced
the effect of the global financial turmoil, evident from the sharp decline in SENSEX, BSEs benchmark index.
Any prolonged financial crisis may have an adverse impact on the Indian economy, thereby having a material
adverse effect on our business, financial condition and results of operations.
5. Our Equity Shares are quoted in Indian rupees in India and investors may be subject to potential
losses arising out of exchange rate risk on the Indian rupee and risks associated with the conversion of
Indian rupee proceeds into foreign currency.
Investors are subject to currency fluctuation risk and convertibility risk since the Equity Shares are quoted in
Indian rupees on the Indian stock exchanges on which they are listed. Dividends on the Equity Shares will also
be paid in Indian rupees. In addition, foreign investors that seek to sell Equity Shares will have to obtain
approval from the RBI, unless the sale is made on a stock exchange or in connection with an offer made under
regulations regarding takeovers. The volatility of the Indian rupee against the U.S. dollar and other currencies
subjects investors who convert funds into Indian rupees to purchase our Equity Shares to currency fluctuation
risks.
6. Our success depends on stable and reliable transportation infrastructure in India and any disruption
of transportation services could affect our operations.
We depend on various forms of transport, such as roadways, railways, airways, sea, canals and pipelines to
receive fuel, raw materials, equipment and water for our manufacturing activities and to deliver the equipment
manufactured to our customer sites. Indias physical infrastructure is less developed than that of many
developed nations. Any congestion or disruption in its port, rail and road networks or any other public facility
could disrupt our normal business activity. Transportation services could also be affected by weather-related
problems, strikes, and other force majeure events. Any deterioration of Indias physical infrastructure would
impact the rate of growth of the economy and disrupt the transportation of goods and supplies. These problems
could interrupt our business operations and add to our costs of doing business.
We face particular issues in this regard because the equipment manufactured by us is large and heavy. We are
therefore dependent upon the completion of initiatives to strengthen bridges and roads, and any delays in getting
approvals from various agencies in most of the states for movement of our oversized dimension consignments
could adversely impact our operations.
In addition, in certain cases, our customers have to build transportation infrastructure at the power plant sites
which entails obtaining approvals, rights of way and development by the GoI or the state governments and their
nominated agencies. As a result, our customers do not have total control over the construction, operation and
maintenance of the transportation infrastructure. Undertaking such development requires significant capital
expenditure and active engagement with the GoI or state government and its agencies responsible for organising
transport infrastructure. Such transportation infrastructure may not be constructed in a timely manner, operated
on a cost effective basis and maintained at adequate levels, which may affect both the initiation of power
projects by our customers and our own execution of such projects.
All of these factors could have a material adverse effect on our business, financial condition and results of
operations.
7. Unfavourable changes in legislation, including tax legislation, or policies applicable to us could
adversely affect our results of operations.
The Finance Minister has presented the Direct Tax Code Bill, 2010 (DTC Bill) on August 30, 2010, which is
proposed to be effective from April 1, 2012. On the finalisation of the DTC Bill and on obtaining the approval
of the Indian Cabinet, the DTC Bill will be placed before the Indian Parliament for its approval and notification
as an Act of Parliament. Accordingly, it is currently unclear what effect the Direct Tax Code would have on our
financial statements. However, under the proposed DTC Bill, the deductions under Sections 36(1)(vii)(c) and
37
36(1)(viii) of the I.T. Act, which are currently available to us, would not be available in the future, which will
increase our tax liability. If the DTC Bill is passed in its entirety and we are affected, directly or indirectly, by
any provision of the Direct Tax Code, or its application or interpretation, including any enforcement
proceedings initiated under it and any adverse publicity that may be generated due to scrutiny or prosecution
under the Direct Tax Code, it may have a material adverse effect on our business, financial condition and results
of operations. For more information, see the section titled Statement of Tax Benefits.
In addition, upon the passing of the Companies Bill 2009 by the Indian legislature the regulatory framework
may undergo a change which may affect our operations.
8. Investors may not be able to enforce a judgment of a foreign court against us or our management.
The enforcement by investors in our Equity Shares of civil liabilities, including the ability to affect service of
process and to enforce judgments obtained in courts outside of India may be affected adversely by the fact that
we are incorporated under the laws of the Republic of India and almost all of our executive officers and
directors reside in India. Nearly all of our assets and the assets of our executive officers and directors are also
located in India. As a result, it may be difficult to enforce the service of process upon us and any of these
persons outside of India or to enforce outside of India, judgments obtained against us and these persons in courts
outside of India.
India is not a party to any international treaty in relation to the recognition or enforcement of foreign judgments.
Recognition and enforcement of foreign judgments are provided for under Section 13 and Section 44A of the
Civil Procedure Code respectively. The GoI has under Section 44A of the Civil Procedure Code notified certain
countries as reciprocating countries, as discussed below. Section 13 of the Civil Procedure Code provides that a
foreign judgment shall be conclusive regarding any matter directly adjudicated upon, between the same parties
or between the parties whom they or any of them claim are litigating under the same title, except: (i) where the
judgment has not been pronounced by a court of competent jurisdiction, (ii) where the judgment has not been
given on the merits of the case, (iii) where it appears on the face of the proceedings that the judgment is founded
on an incorrect view of international law or a refusal to recognise the law of India in cases in which such law is
applicable, (iv) where the proceedings in which the judgment was obtained were opposed to natural justice, (v)
where the judgment has been obtained by fraud, or (vi) where the judgment sustains a claim founded on a
breach of any law in force in India.
Section 44A of the Civil Procedure Code provides that where a foreign judgment has been rendered by a court
in any country or territory outside India, which the Government has by notification declared to be a
reciprocating territory, it may be enforced in India by proceedings in execution as if the judgment had been
rendered by the relevant court in India. However, Section 44A of the Civil Procedure Code is applicable only to
monetary decrees not being in the nature of any amounts payable in respect of taxes or other charges of a similar
nature or in respect of a fine or other penalties and does not include arbitration awards. The United Kingdom
and some other countries have been declared by the Government to be a reciprocating territory for the purposes
of Section 44A. However, the United States has not been declared by the Government to be a reciprocating
territory for the purposes of Section 44A. A judgment of a court in the United States may be enforced in India
only by a suit upon the judgment, subject to Section 13 of the Civil Procedure Code and not by proceedings in
execution.
The suit must be brought in India within three years from the date of the judgment in the same manner as any
other suit filed to enforce a civil liability in India. Generally, there are considerable delays in the disposal of
suits by Indian courts. It may be unlikely that a court in India would award damages on the same basis as a
foreign court if an action is brought in India. Furthermore, it may be unlikely that an Indian court would enforce
foreign judgments if it viewed the amount of damages awarded as excessive or inconsistent with public policy in
India. A party seeking to enforce a foreign judgment in India is required to obtain prior approval from the RBI
under FEMA to repatriate any amount recovered pursuant to execution and any such amount may be subject to
income tax in accordance with applicable laws. Any judgment or award in a foreign currency would be
converted into Indian Rupees on the date of the judgment or award and not on the date of the payment.
Generally, there are considerable delays in the processing of legal actions to enforce a civil liability in India, and
therefore it is uncertain whether a suit brought in an Indian court will be disposed off in a timely manner or be
subject to considerable delays.
38
9. Our ability to raise foreign currency borrowings may be constrained by Indian law.
As an Indian company, we are subject to exchange controls that regulate borrowing in foreign currencies. Such
regulatory restrictions limit our financing sources and hence could constrain our ability to obtain financing on
competitive terms and refinance existing indebtedness. In addition, we cannot assure you that the required
approvals will be granted to us without onerous conditions, if at all. Limitations on raising foreign debt may
have an adverse effect on our business, financial condition and results of operations. Also see the section titled
Risk Factors-Internal Risk Factors on page 16 for additional details.
10. Economic developments and volatility in securities markets in other countries may also cause the
price of our Equity Shares to decline.
The Indian economy and its securities markets are influenced by economic developments and volatility in
securities markets in other countries. Investors reactions to developments in one country may have adverse
effects on the market price of securities of companies located in other countries, including India. For instance,
the economic downturn in the U.S. and several European countries during a part of fiscal 2008 and 2009, and
the recent sovereign debt crisis in Europe and the United States, adversely affected market prices in the worlds
securities markets, including India. Negative economic developments, such as rising fiscal or trade deficits, or a
default on national debt, in other emerging market countries may also affect investor confidence and cause
increased volatility in Indian securities markets and indirectly affect the Indian economy in general.
11. Investors may be subject to Indian taxes arising out of capital gains on the sale of the Equity Shares.
Under current Indian tax laws and regulations, capital gains arising from the sale of Equity Shares in an Indian
company are generally taxable in India. Any gain realised on the sale of listed equity shares on a stock exchange
held for more than 12 months will not be subject to capital gains tax in India if Securities Transaction Tax
(STT) has been paid on the transaction. STT will be levied on and collected by a domestic stock exchange on
which the Equity Shares are sold. Any gain realised on the sale of equity shares held for more than 12 months
by an Indian resident, which are sold other than on a recognised stock exchange and on which no STT has been
paid, will be subject to long term capital gains tax in India. Further, any gain realised on the sale of listed equity
shares held for a period of 12 months or less will be subject to short-term capital gains tax in India. Capital gains
arising from the sale of the Equity Shares will be exempt from taxation in India in cases where the exemption
from taxation in India is provided under a treaty between India and the country of which the seller is resident.
Generally, Indian tax treaties do not limit India's ability to impose tax on capital gains. As a result, residents of
other countries may be liable for tax in India as well as in their own jurisdiction on a gain upon the sale of the
Equity Shares.
12. Terrorist attacks, civil unrest and other acts of violence or war involving India and other countries
could adversely affect the financial markets and could have a material adverse effect on our business,
financial condition and results of operations and the price of our Equity Shares.
Terrorist attacks and other acts of violence or war may negatively affect the Indian markets in which our Equity
Shares trade and also adversely affect the worldwide financial markets. These acts may also result in a loss of
business confidence, make travel and other services more difficult and ultimately adversely affect our business.
India has experienced communal disturbances, terrorist attacks and riots during recent years. If such events
recur, our business may be adversely affected. The Asian region has from time to time experienced instances of
civil unrest and hostilities. Hostilities and tensions may occur in the future and on a wider scale. Military
activity or terrorist attacks in India, such as the attacks in Mumbai in November 2008 and July 2011, as well as
other acts of violence or war could influence the Indian economy by creating a greater perception that
investments in India involve higher degrees of risk. Events of this nature in the future, as well as social and civil
unrest within other countries in Asia, could influence the Indian economy and could have a material adverse
effect on the market for securities of Indian companies, including our Equity Shares.
13. India is vulnerable to natural disasters that could severely disrupt the normal operation of our
business.
India has experienced natural calamities, such as tsunamis, floods, droughts and earthquakes in the past few
years. The extent and severity of these natural disasters determines their impact on the Indian economy. For
example, the erratic progress of the monsoon in 2004 and 2009 affected sowing operations for certain crops.
39
Such unforeseen circumstances of below normal rainfall and other natural calamities, could have a negative
impact on the Indian economy. Because our operations are located in India, our business and operations could
be interrupted or delayed as a result of a natural disaster in India, which could affect our business, financial
condition, results of operations and the price of our Equity Shares.
14. An outbreak of an infectious disease or any other serious public health concerns in Asia or
elsewhere could adversely affect our business.
The outbreak of an infectious disease in Asia or elsewhere or any other serious public health concern, such as
swine influenza, could have a negative impact on the global economy, financial markets and business activities
worldwide, which could adversely affect our business, financial condition, results of operations and the price of
our Equity Shares. Although, we have not been adversely affected by such outbreaks in the past, we can give
you no assurance that a future outbreak of an infectious disease among humans or animals or any other serious
public health concerns will not have a material adverse effect on our business, financial condition, results of
operations and the price of our Equity Shares.
15. Rights of shareholders under Indian law may be more limited than under the laws of other
jurisdictions.
The Companies Act and related regulations, the Articles of Association and our Equity Listing Agreements
govern our corporate affairs. Legal principles relating to these matters and the validity of corporate procedures,
directors fiduciary duties and liabilities, and shareholders rights may differ from those that would apply to a
company in another jurisdiction. Shareholders rights under Indian law may not be as extensive as shareholders
rights under the laws of other countries or jurisdictions. Investors may have more difficulty in asserting their
rights as a shareholder than as a shareholder of a corporation in another jurisdiction.
16. A decline in Indias foreign exchange reserves may affect liquidity and interest rates in the Indian
economy, which could adversely impact our financial condition.
A decline in Indias foreign exchange reserves could impact the valuation of the Rupee and result in reduced
liquidity and higher interest rates, which could adversely affect our future financial condition. On the other
hand, high levels of foreign funds inflow could add excess liquidity to the system, leading to policy
interventions, which would also allow slowdown of economic growth. In either case, an increase in interest rates
in the economy following a decline in foreign exchange reserves could adversely affect our business, prospects,
financial condition, results of operations, and the price of the Equity Shares.
17. Companies operating in India are subject to a variety of central and state government taxes and
surcharges.
Tax and other levies imposed by the central and state governments in India that affect our tax liability include:
central and state taxes and other levies, income tax, value added tax, turnover tax, service tax, stamp duty and
other special taxes and surcharges which are introduced on a temporary or permanent basis from time to time.
Moreover, the central and state tax scheme in India is extensive and subject to change from time to time. For
example, a new direct tax code is proposed to be introduced before the Indian Parliament. In addition, there is a
proposal to introduce a new goods and services tax, effective April 1, 2012, and the scope of the service tax is
proposed to be enlarged. The central or state governments may in the future increase the corporate income taxes
they impose. Any such future increases or amendments may affect the overall tax efficiency of companies
operating in India and may result in significant additional taxes becoming payable. Additional tax exposure
could adversely affect our business and results of operations.
Risks relating to this Offer
1. The GoI will continue to control us after completion of the Offer.
The GoI is expected to hold 62.72% of our outstanding shares immediately after the Offer. Consequently, the
GoI, acting through the Department of Heavy Industry, Ministry of Heavy Industries and Public Enterprises,
will continue to control us and will have the power to elect and remove our directors and determine the outcome
of most proposals for corporate action requiring approval of our Board or shareholders, such as proposed five-
year plans, revenue budgets, capital expenditure, dividend policy and transactions with other GoI-controlled
companies. Under the Companies Act, we will continue to be a government company which is owned and
40
controlled by the GoI. This may affect the decision making process in certain business and strategic decisions
taken by us going forward.
2. The interests of the GoI as our controlling shareholder may conflict with your interest as a
shareholder.
Under our Articles of Association, the President of India may issue directives with respect to the conduct of our
business or our affairs for as long as we remain a government company, as defined under the Companies Act.
For instance, under Article 67 of our Articles of Association, the President of India can appoint any member of
our Board, including our Chairman and Managing Director on such terms and conditions, remuneration and
tenure as the President may from time to time determine. The interests of the GoI may be different from our
interests or the interests of our other shareholders. As a result, the GoI may take actions with respect to our
business and the businesses of our peers and competitors that may be in the public interest and may not be in our
or our other shareholders best interests. The GoI could, by exercising its powers of control, delay or defer or
initiate a change of control of us or a change in our capital structure, delay or defer a merger, consolidation, or
discourage a merger with another public sector undertaking.
3. After this Offer, the price of our Equity Shares may be volatile, or an active trading market for our
Equity Shares may not be sustained.
The price of our Equity Shares on the Stock Exchanges may fluctuate after this Offer due to a wide variety of
factors, including:
(i) volatility in the Indian and global securities markets;
(ii) our operational performance, financial results and capacity expansion;
(iii) developments in Indias economic liberalisation and deregulation policies, particularly in the
power sector or the non-banking finance sector;
(iv) changes in Indias laws and regulations impacting our business;
(v) changes in security analysts recommendations or the failure to meet the expectations of
securities analysts; and
(vi) the entrance of new competitors and their positions in the market.
Further, there can be no assurance that the prices at which our Equity Shares have historically traded will
correspond to the prices at which our Equity Shares will trade in the market subsequent to this Offer.
4. There has been press coverage about this Offer. You should read this Draft Red Herring Prospectus
carefully and we strongly caution you not to place any reliance on any information contained in press
articles, including, in particular, any financial projections, valuations or other forward-looking information.
There has been press coverage about us and this Offer, primarily in India, that included certain projections,
valuations and other forward-looking information. We wish to emphasise to potential investors that we do not
accept any responsibility for the accuracy or completeness of such press articles and that such press articles were
not prepared or approved by us. We make no representation as to the appropriateness, accuracy, completeness or
reliability of any of the projections, valuations or other forward-looking information, or of any assumptions
underlying such projections, valuations or other forward-looking information, included in or referred to by the
media. Any such statements may be inconsistent with, or conflict with, the information contained in this Draft
Red Herring Prospectus. Accordingly, you should only make your decision as to whether to purchase our Equity
Shares by relying only on the financial, operational and other information contained in this Draft Red Herring
Prospectus.
Prominent Notes:
1. This Offer is a further public offer of 24,476,000 Equity Shares
#
for cash at a price of ` [] per Equity
Share aggregating to ` [] by the Selling Shareholder. The Offer comprises a Net Offer to the public of
22,028,400 Equity Shares and a reservation of 2,447,600 Equity Shares for subscription by Eligible
Employees. The Offer would constitute 5 % of our post Offer paid-up equity capital and the Net Offer
would constitute 4.50% of our post Offer paid-up equity capital. The Offer Price is [] times the face
value.
41
# The Board of Directors of the Company on July 01, 2011 and the Shareholders of the Company on
September 20, 2011, respectively have approved the sub-division of equity shares of face value of ` 10
each into 5 equity shares of face value of ` 2 each w.e.f. the record date i.e. October 4, 2011. Based on
the issued, subscribed and paid-up share capital of the Company of 489,520,000 equity shares of ` 10
each, the size of the present Offer is 2,44,76,000 equity shares of ` 10 each, which will translate into
12,23,80,000 equity shares of ` 2 each when adjusted for the stock split.
2. A discount of ` [] to the Offer Price is being offered to Retail Bidders and to Eligible Employees,
respectively.
3. Our net worth was ` 201,512 million as of March 31, 2011, as per our audited restated consolidated
financial statements included in this Draft Red Herring Prospectus.
4. The book value per Equity Share as of March 31, 2011 was ` 411.65 per Equity Share.
5. The average cost of acquisition per Equity Share to the Promoters is `5 per Equity Share.
6. Refer to our financial statements relating to related party transactions in the section titled Financial
Information on page 196.
7. Bidders may contact any of the BRLMs and other members of the Syndicate for any complaints in
relation to the Offer.
8. There has been no financing arrangement by which our Directors and their relatives have financed the
purchase by any other person of our securities other than in the normal course of business of the
financing entity during the period of six months immediately preceding the date of filing of the Draft
Red Herring Prospectus with SEBI.
Any clarification or information relating to the Offer shall be made available by the BRLMs and by us to the
public at large and no selective or additional information will be available for a section of the public in any
manner whatsoever. For any clarifications or information relating to the Offer, Bidders may contact the BRLMs,
who will be obliged to provide such clarification or information to the investors.
42
SECTION III INTRODUCTION
SUMMARY OF INDUSTRY
We have not commissioned any report for the purposes of this Draft Red Herring Prospectus. The data and
information in this section have been extracted from publicly available sources prepared by various entities,
including the Indian Ministry of Power (MoP), the Central Electricity Authority of India (CEA), the
Central Electricity Regulatory Commission of India (CERC), the Reserve Bank of India (RBI) and
officially prepared materials by the Government of India (GoI), and various multilateral institutions. We may
have re-classified the data and information for the purposes of presentation. While we believe that the
information and data in this section are reliable, we cannot ensure the accuracy of such information or data,
and none of our Company, the Selling Shareholder, the BRLMs or any of our and their respective affiliates or
advisors have independently verified this information or data. You should not assume that the information and
data contained in this section speak as of any date other than the date of this Draft Red Herring Prospectus,
except as otherwise indicated. You should also be aware that since the date of this offering document there may
have been changes in the power and manufacturing industries, and the various sectors therein, that could affect
the accuracy or completeness of the information in this section.
OVERVIEW OF THE INDIAN ECONOMY
India is the worlds largest democracy by population with an estimated population size of 1.2 billion as of
March 31, 2011 (Source: Provisional Population Totals Paper 1 of 2011 India series 1, Census Data 2011
published by the Office of the Registrar General & Census Commissioner, India). Indias 2010 Gross Domestic
Product (GDP) in purchasing power parity terms was US$4.05 trillion. (Source: Central Intelligence Agency
(CIA) World Factbook, September 2011). This made India the fifth largest economy in the world after the
European Union, the United States, China and Japan. The Indian economy is among the fastest growing
economies globally and has grown at an average rate of 8.6% per annum during the last five years (Financial
Years 2006 to 2010) (Source: World Development Indicators (WDI) Database, World Bank, September 2011).
SUMMARY OF SECTORS IN WHICH THE COMPANY OPERATES
OVERVIEW OF THE INDIAN POWER SECTOR
India is both a major producer and a major consumer of power. According to data from IEA - Key World Energy
Statistics (2010) India ranked as the worlds fifth largest power producing nation as well as the fifth largest
power consuming nation in 2010 behind the United States, China, Japan and Russia. As of March 31, 2011,
Indias total annual power production was 811.1 billion kWh, including 5.6 billion kWh of import from Bhutan.
Power
Transmission
and Distribution
Non Conventional Energy
Sources
Industrial Systems
BTG Equipments
Combined-cycle
Turnkey Power
Stations
Transformers
Switchgears And
Control Gears
Capacitors and
Insulators
HVDC Transmission
Systems
Solar Energy Systems Railways
Oil & Gas
Power Generation Transmission
Non Conventional Energy
Sources
Industrial products and
systems
BTG Equipments
Co-generation/Combined
cycle Power Plants
Power Plants
Turnkey Power
Stations
Transformers, Reactors
Switchgears and
Control Gears
Capacitors and
Insulators
HVDC Transmission
Systems
Solar Energy Systems
Railways
Oil & Gas
Turnkey Substations/
Switchyard (AIS / GIS)
Process Industries
Other Businesses
43
(Source: CEA, Energy Generation Report, April 2011). Its total annual power requirement was approximately
861.6 billion kWh. (Source: CEA, Monthly Review of Power Sector, March 2011).
Compared to the world average per capita electricity consumption, Indias low per capita electricity
consumption presents a significant potential for sustainable growth in power demand in India. The per capita
consumption of power in India increased from 566.7 kWh per year in Financial Year 2003 to 733.5 kWh per
year in Financial Year 2009, representing a CAGR of 4.4% for the same period. (Source: Source: CEA, Monthly
Review of Power Sector, March 2011).
India has continuously experienced shortages in energy and peak power requirements. According to the CEA
Monthly Review of Power Sector published in June 2011, the total energy deficit for June 2011 was
approximately 5.3% and the peak power deficit for June 2011 was 8.7%.
The total capacity addition during the past 25 years, between the 6
th
Five Year Plan and the 10
th
Five Year Plan,
was approximately 92,200 MW. The target capacity addition under the 11
th
Five Year Plan is 78,700 MW,
56.7% of which was achieved as of June 30, 2011. (Source: CEA Monthly Review of Power Sector, June 2011)
A tentative capacity addition of approximately 100,000 MW has been envisaged under the 12
th
Five Year Plan
as per CEA. This comprises an estimated 74,000 MW from thermal power, 20,000 MW from hydro power,
3,400 MW from nuclear power and 2,500 MW from lignite.
The following table sets forth a summary of India's energy generation capacity as of June 30, 2011 in terms of
fuel source and ownership:
Sector Hydro Thermal Nuclear Renewable
Sources
Total
Coal Gas Diesel Total
(in MW)
State 27,296.0 47,362.0 4,327.1 602.6 52,291.7 - 3,008. 9 82,596.6
Private 1,925.0 14,176.4 6,677.0 597.1 21,450.5 - 15,445.7 38,821.2
Central 8,885.4 35,205.0 6,702.2 - 41,907.2 4,780.0 - 55,572.6
Total 38,106.4 96,743.4 17,706.5 1,199.8 115,649.5 4,780.0 18,454.5 176,990.4
Source: CEA, Monthly Review of Power Sector, June 2011
OVERVIEW OF THE POWER TRANSMISSION MARKET IN INDIA
In India, the T&D system is a three-tier structure comprising distribution networks, State grids, and regional
grids. The distribution networks and State grids are principally owned and operated by SEBs or other State
utilities, or State governments (through state electricity departments). Most of the interstate and inter-regional
transmission lines are owned and operated by the Power Grid Corporation of India Limited (POWERGRID)
or its joint ventures.
The CEA anticipates that inter-regional transmission capacity would be in the order of 57,000 MW by Financial
Year 2015 and 75,000 MW by the end of the 12
th
Five Year Plan. The actual increase in transmission capacity
will depend on the corresponding growth in generation capacity. (Source: CEA, Key Inputs for Accelerated
Development of Indian Power Sector for 12
th
Plan & Beyond)
The average investment in T&D during the 10
th
Five Year Plan was approximately 32% of the investment in
power generation. (Source: Ministry of Power, Report on the Working Group on Power for Eleventh Plan
(2007-2012)). The estimated investment in T&D to be made under the 12
th
Five Year Plan is ` 2,400 billion in
Transmission and ` 3,700 billion in Distribution. Source: CEA, Base Paper, Key Inputs for Accelerated
Development of Indian Power Sector for 12
th
Plan & Beyond
OVERVIEW OF THE POWER GENERATION EQUIPMENT MARKET IN INDIA
Power generation equipments are split into two main components, namely boiler turbine generator (BTG) and
balance of plant (BOP). The BTG component constitutes the boiler as one unit and turbine generator as
another unit, while the BOP component mainly comprises coal handling plant (CHP), ash handling plant
(AHP), chimney, cooling tower, fuel oil handling systems, boiler feed pump, etc. Significant capacity
additions in generation are expected to drive demand for power generation equipments going forward.
44
Key Trends in the BTG Equipment Market in Power Segment in India:
Increasing Domestic Competition
Move towards super-critical technology
Increasing private sector share in power capacity addition
The following table shows the tentative estimated requirement of BOP equipment for thermal projects under the
12
th
Five Year Plan:
Name of System BOP Requirement (no. of units)
Coal Handling System 148
Ash Handling System 148
DM Plant 211
Cooling Towers 218
Chimneys 77
Fuel Oil System 148
Pre-Treatment Plant 160
Source: Base Paper, International Conclave on Key Inputs for Accelerated Development of Indian Power Sector
for the 12th Plan & Beyond, organised by MoP and CEA, August 18-19, 2009
INDUSTRIAL PRODUCTS AND SYSTEMS
The growth in demand for industrial products and systems such as captive power plants, compressors, oil field
equipment, electrical machines (high tension motors), etc. is dependent on the growth of various related
industries such as power, oil and gas, steel, cement, fertilisers, irrigation etc.
RAILWAY ELECTRICAL EQUIPMENTS IN INDIA
The Indian Railways have drawn up Vision 2020, a high-growth strategy which would require massive
investments in capacity creation, network expansion and upgradation over the next ten years. It estimates an
investment of approximately ` 14,000 billion through Financial Year 2020.
DEFENCE
The Union Budget for Financial Year 2012 makes a provision of ` 1,644.2 billion for defence services,
including ` 692 billion for capital expenditures. (Source: Union Budget 2011-12, Government of India)
GoI has recently brought out Defence Production Policy under which preference will be given to indigenous
design, development and production of equipment / weapon systems / platforms required for defence. (Source:
Ministry of Defence Annual Report 2011)
SOLAR THERMAL AND SOLAR PHOTOVOLTAIC BUSINESS
In January 2010, the Prime Minister of India launched the Jawaharlal Nehru National Solar Mission
(JNNSM) with a target of 20,000 MW of grid solar power (based on solar thermal power generating systems
and solar photovoltaic technologies), 2,000 MW of off-grid capacity, including 20 million solar lighting systems
and 20 million sq. m. solar thermal collector area, by 2022. (Source: MNRE website data as of September 3,
2011)
45
SUMMARY OF THE BUSINESS
Overview
We are an integrated power plant equipment manufacturer and one of the largest engineering and manufacturing
companies in India in terms of turnover. We are engaged in the design, engineering, manufacture, construction,
testing, commissioning and servicing of a wide range of products and services in our power and industry
segments. We have 15 manufacturing divisions, two repair units, four regional offices, eight service centres and
15 regional centres and currently operate at more than 150 project sites across India and abroad. Since our
establishment by the GoI in 1964, we have been at the forefront of Indias indigenous heavy electrical
equipment industry with a sustained track record of earning profit since Financial Year 1972 and paying
dividends since Financial Year 1977.
We carry on our business in two business segments: the power segment and the industry segment.
Power Segment. In the power segment, we offer a wide range of products and systems for coal-based thermal,
gas-based thermal, nuclear and hydro power projects. We execute these projects either on a turnkey/EPC basis
or by engineering, supplying and executing main plant equipment, which comprises primarily boilers, turbines
and generators, as well as auxiliary equipment such as electrostatic precipitators (ESP), electrical equipment,
control and instrumentation systems, pumps and heaters. In the turnkey business, we design, engineer,
manufacture, procure, construct and commission projects in the power generation sector, wherein we take
turnkey responsibility to supply a range of equipment and services, including the BOP and civil works and any
other work that may be required under the contract for a project. In addition, we provide spare parts and after
sales services for the life cycle of a plant. Based on information from the CEA, we estimate that our share in
Indias total installed generating capacity from utility sets (excluding non-conventional capacity) of 155,409
MW is approximately 96,311 MW, or 62%, as of March 31, 2011 and that, in Financial Year 2011, power
generating sets manufactured by us contributed approximately 72% of the total power generated in India by
utility sets (excluding non-conventional capacity). We have the capability to deliver power generation
equipment of 15,000 MW per year, and expect to be able to increase this capability to 20,000 MW per year by
the end of Financial Year 2012 upon completion of our capacity enhancement plan. We have technical
collaboration agreements with a number of leading international manufacturers, including General Electric
Company, Alstom SA, Siemens AG and Mitsubishi Heavy Industries Ltd. In Financial Years 2010 and 2011,
our power segment operations accounted for 78.7% and 79.9%, respectively, of our total turnover.
Industry Segment. We design, manufacture, supply and offer services for a broad range of systems and
individual products for the following business areas: captive power plants, power transmission, rail
transportation, renewable energy, industrial products (electrical and mechanical) and others. In Financial Years
2010 and 2011, our industry segment operations accounted for 21.3% and 20.1%, respectively, of our total
turnover.
We have been exporting our power and industry segment products and services for approximately 40 years. As
of June 30, 2011, we have exported our products and services to more than 70 countries. As of June 30, 2011,
we had cumulatively installed capacity of over 8,500 MW outside of India in 21 countries, including Malaysia,
Iraq, the UAE, Egypt and New Zealand, and had approximately 5,200 MW in 19 countries under various stages
of execution. Our physical exports range from turnkey projects to after sales services and in Financial Years
2010 and 2011, accounted for 4.9% and 3.2%, respectively, of our total turnover.
In Financial Year 2011, the contract value of new orders that we booked was `605,070 million. We book orders
as per the terms of the relevant contract. As of June 30, 2011, our Order Book stood at `1,596,000 million. Our
Order Book stood at `1,173,870 million as of March 31, 2009, `1,443,120 million as of March 31, 2010 and
`1,641,450 million as of March 31, 2011.
46
The following table sets forth the breakdown by segment of our total turnover for the periods indicated:
Financial Year Ended March 31,
2009 2010 2011 2009-2011
Turnover
(` `` `
million)
% of
total
Turnover
(` `` `
million)
% of
total
Turnover
(` `` `
million)
% of
total
Compound
annual
growth
rate (%)
Power segment 217,788 76.0 276,649 78.7 332,139 79.9 23.50
Industry segment 68,718 24.0 74,793 21.3 83,758 20.1 10.40
Total 286,506 100.0 351,442 100.0 415,897 100.0 20.48
From Financial Year 2009 to Financial Year 2011, our profit before tax grew at a compound annual growth rate
of 28.17%. Over the same period, our EBITDA grew from `54,416 million in Financial Year 2009 to `89,981
million in Financial Year 2011, at a compound annual growth rate of 28.59%. The table below summarises our
financial results for the periods indicated:
Financial Year Ended March 31,
2009 2010 2011 2009-2011
(` `` ` millions) Compound annual
growth rate (%)
Turnover 286,506 351,442 415,897 20.48
EBITDA
(1)
54,416 77,900 89,981 28.59
EBITDA margin (%) 19.0 22.2 21.6 NA
Profit before tax 50,807 73,158 83,461 28.17
Profit after tax 32,672 48,351 54,991 29.74
(1)
Please refer to the section titled Managements Discussion and Analysis of Financial Condition and Results
of Operations on page 324 of this Draft Red Herring Prospectus.
We are a listed government company under the Companies Act. The GoI holds 67.72% of our outstanding
shares as of June 30, 2011, and is expected to hold 62.72% of our outstanding shares immediately after the
Offer. We are one of the Navratna public sector enterprises. The grant of the Navratna status by the GoI in
1997 provided us with strategic and operational autonomy and enhanced financial powers to make investment
decisions up to certain specified limits without GoI approval. We received an Excellent rating from the GoI in
Financial Years 2007, 2008 and 2010. We were also awarded the Meritorious Award for Research and
Development, Technology Development and Innovation in Financial Year 2011 from the Standing Conference
of Public Enterprises (SCOPE), presented by the President of India, the Award for Excellence and
Outstanding Contribution to Public Sector Management (2008-09) in the Large Scale PSE Category in Financial
Year 2010 from SCOPE, presented by the Prime Minister of India and the IEI Industry Excellence Award 2010
for Overall Business Excellence and Industry Practices from the Institution of Engineers (India) (IEI).
Our Strengths
We believe that we have significant industry expertise and knowledge. In particular, we believe that the
following strengths enable us to compete successfully in our industry:
Well-positioned to capitalise on growing demand for power in India
With more than 40 years of operating experience as a specialised power generation and industrial systems and
products manufacturer, we believe that we have established a leading market position providing reliable and
high-quality products in the areas in which we operate. In our power segment operations, we have the capability
to deliver power generation equipment of 15,000 MW per year, and expect to be able to increase this capability
to 20,000 MW per year by the end of Financial Year 2012. Based on information from the CEA, we estimate
that that in Financial Year 2011, the power generated by BHEL manufactured sets contributed 72% of the total
power generated in India by utility sets (excluding non-conventional capacity). As per CEA, the GoIs 12
th
Five-
Year Plan envisages a tentative capacity addition of approximately 100,000 MW, with total investment in the
Indian power sector in the next five years of approximately ` 11,000 billion. We believe that we are well-
positioned to capitalise on the expected growth and expansion of the power sector in India.
47
Diverse range of products and services serving a broad spectrum of businesses and adapted to customer
requirements
We offer a diverse range of high-quality products and services that serve a broad spectrum of businesses in the
industries in which we operate.
In the power segment, we offer a broad range of equipment and services based on the individual specifications
and requirements of our customers, for power plants in India and elsewhere. We design, manufacture and
service coal-fired, nuclear, gas combined cycle and hydro-electric generation equipment of various capacities.
Based on information from the CEA, we estimate that, as of March 31, 2011, power generating sets
manufactured by us represented approximately 62% of the total installed generating capacity from utility sets
(excluding non-conventional capacity) in India. We also supply complete systems tailored to the requirements of
our domestic and overseas customers for entire power stations, and we have an established track record for
executing power projects on a turnkey basis. In the industry segment, we design, manufacture, supply and offer
services for a broad range of systems and individual products for the following business areas: captive power
plants, power transmission, rail transportation, renewable energy, industrial products (electrical and mechanical)
and others. Internationally, we are particularly active in the Middle East, Southeast Asia and Africa, and have
been executing turnkey contracts since 1980.
By customising the equipment and services that we sell to the specific requirements of our customers, we are
able to adapt to the evolving needs of the industries and markets in which we operate. In addition, through our
eight service centres, strategically located throughout India, we provide our customers with a single window
facility for after sales services, including the supply of spare parts, renovation and modernisation, and
overhauling and maintenance of power plants, which allows our customers to extend the life of the power plants
they operate.
Significant focus on research and development and technological tie-ups leading to continuing technological
innovation
We spend a substantial amount of funds on research and development to develop new and better products that
address the needs of our customers and the markets in which we operate. These expenditures amounted to `
6,722 million, ` 8,019 million and ` 9,440 million in Financial Years 2009, 2010 and 2011, respectively,
representing 2.4%, 2.3% and 2.2%, respectively, of our turnover in those years. Our efforts in this area were
most recently recognised by Forbes magazine, which ranked us as the 9
th
most innovative company in the
world in July 2011.
Through our technical collaboration with global industry leaders such as Alstom SA, Siemens AG and
Mitsubishi Heavy Industries Ltd., we believe we were one of the first companies in India to work on super-
critical technology and indigenise this new technology for use in India. We believe that we are well-positioned
to be a market leader in this technology which we believe will become the predominant technology used in India
for power plants going forward. We are also actively involved in the GoI initiative for the development of ultra-
supercritical technology.
Strong and diversified Order Book
We have a strong and diversified Order Book. In Financial Year 2011, the contract value of new orders that we
booked was `605,070 million. As of June 30, 2011, our Order Book stood at `1,596,000 million. Our Order
Book stood at `1,173,870 million as of March 31, 2009, `1,443,120 million as of March 31, 2010 and
`1,641,450 million as of March 31, 2011.
In the power segment, our new orders in Financial Year 2011 comprised power generation equipment of 16,507
MW capacity. Our order inflow in the domestic power segment was split between the public (both at the central
and state levels) and private sectors in Financial Year 2011, representing approximately 49% and 51%,
respectively in MW terms, reflecting the increased participation of the private sector in power projects. In the
48
industry segment, our Order Book comprises orders from companies in the Indian power sector as well as the
rail and water transportation, mining, electromechanical, oil and gas, cement and petrochemicals industries,
among others.
In Financial Year 2011, we secured five orders for projects utilising super-critical technology capable of
generating 6,400 MW of power, which is a new business for us. We also added seven new customers in the
domestic and international markets in Financial Year 2011.
Strong financial track record
We have a strong financial track record. Our turnover grew from `286,506 million in Financial Year 2009 to
`415,897 million in Financial Year 2011, representing a CAGR of 20.48%. Our EBIDTA grew from `54,416
million in Financial Year 2009 to `89,981 million in Financial Year 2011, representing a CAGR of 28.59%. Our
EBIDTA margin grew from 19.0% in Financial Year 2009 to 21.6% in Financial Year 2011. Our profit after tax
grew from `32,672 million in Financial Year 2009 to `54,991 million in Financial Year 2011, representing a
CAGR of 29.74%. Our net worth was `129,646 million as of March 31, 2009, `164,479 million as of March 31,
2010 and ` 201,512 million as of March 31, 2011.
Our Order Book remained relatively stable throughout the global financial crisis during 2007-2010, with the
contract value of new orders that we booked standing at ` 596,780 million in Financial Year 2009, ` 590,370
million in Financial Year 2010 and ` 605,070 million in Financial Year 2011. We have been able to achieve our
results with relatively limited use of debt.
We have a strong record of uninterrupted dividend distribution since Financial Year 1977, reflecting our strong
financial track record, with final dividends of 170% of par value paid in Financial Year 2009, 233% of par value
paid in Financial Year 2010 and 311.5% of par value paid in Financial Year 2011.
Experienced management team and operating team
Our senior management team and key management personnel possess extensive management skills, operating
experience and industry knowledge and are able to take advantage of market opportunities to formulate sound
business strategies and to execute them in an effective manner. With several members having been with us for
more than 30 years, our senior management team has shown its ability to steer us through different economic
cycles as demonstrated by our sustained track record of earning profit since Financial Year 1972 and paying
dividends since Financial Year 1977. We have also been able to attract many graduates from prestigious
domestic universities. Through cooperation with leading international companies, we believe that we have
assimilated international management practices and corporate governance standards.
Our Strategies
We intend to pursue the following principal strategies to exploit our competitive strengths and grow our
business:
Sustain leadership in the power sector
We have a strong strategic focus in the Indian power sector and plan to sustain our competitive edge by pursuing
capacity enhancement. We intend to complete our capacity enhancement plan by the end of Financial Year
2012, which will provide us with the capability to deliver power generation equipment of 20,000 MW per year.
We believe that this will enable us to address the anticipated market demand for power generation equipment
and to efficiently execute our existing Order Book.
We believe that we hold a leading position in the supply of power generation equipment in India. Based on
information from the CEA, we estimate that our share in Indias total installed generating capacity from utility
sets (excluding non-conventional capacity) of 155,409 MW is approximately 96,311 MW, or 62%, as of March
31, 2011, to which we intend to continue to make significant contributions, which we expect to execute in the
next five Financial Years. We continue to maintain and grow our strong position in private sector projects and
seek to make inroads in the UMPP sector. In our power transmission business, we are addressing opportunities
in the ultra high voltage (UHV) transmission segment by offering 765kV and 1,200kV equipment in order to
grow our Order Book for both loose equipment and turnkey substation projects. In addition, we plan to further
49
strengthen our presence in the extra high voltage (EHV) gas-insulated substations segment. We also intend to
grow our Order Book in the super-critical business over the next five years.
We have entered into several technical collaboration arrangements in order to develop and strengthen our power
generation equipment manufacturing capabilities. To retain our leadership in the power sector and further
expand our product and service offerings, we plan to continue to undertake joint ventures and other inorganic
growth initiatives, including strategic acquisitions, as well as technical and strategic collaborations, including
partnerships with SEBs through equity stakes in new power generation projects, which will enable us to secure
exclusive supply arrangements in relation to such projects.
Diversify through expansion in new growth areas and strategic partnerships
We intend to continue to target specific business sectors and industry segments in which we believe there is high
potential for growth and in which we enjoy competitive advantages. For example, we are currently focusing on
developing business in new areas such as solar power generation, nuclear power generation, urban
transportation, power transmission, wind energy generation and hydro-electric projects. To establish and
strengthen our position in these areas, we have entered into and intend to continue to enter into technical
collaborations with others.
We are also planning to expand in the area of renovation and modernisation of older thermal power projects.
According to CEA, under the 12
th
Five Year Plan, life extension works are planned for 72 thermal units with an
aggregate capacity of 16,532 MW and renovation and modernisation works are planned for 23 units with an
aggregate capacity of 4,971 MW. A substantial part of the equipment required for these projects is supplied by
BHEL. Approximately 68% of the aggregate capacity planned for life extension works has been supplied by
BHEL and around 96% of the aggregate capacity planned for renovation and modernisation works has been
supplied by BHEL. Since we provided a substantial proportion of the capacity identified for this purpose, we
believe that we are strategically positioned to benefit from this opportunity.
In addition, we will continue to expand our international business and intend to firmly establish ourselves as an
EPC contractor in the global market, enhance proximity to prospective overseas customers by opening new
offices in target countries and continue to explore strategic associations with local subcontractors and suppliers
in order to enhance local participation in power projects which we undertake outside of India.
Strengthen product cost competitiveness and accelerate project execution
We intend to implement a number of strategic initiatives to strengthen our product cost competitiveness,
including, among others, expansion of our vendor base and leveraging low-cost manufacturing through
outsourcing low-technology areas, such as structural fabrication. We also plan to form joint ventures with
domestic steel manufacturers for the manufacture of critical steel materials such as cold-rolled grain-oriented
steel, which is currently imported.
Our planned capacity enhancement and upgrades to higher-range equipment require an agile supply chain and
shorter delivery cycles. To this end, we intend to continue implementing strategic initiatives such as expanding
our vendor base to reduce risk and cost, entering into long-term rate contracts for raw materials such as steel,
copper, cold-rolled grain-oriented steel and transformer oil and outsourcing low-technology or non-core
manufacturing processes. In addition, we plan to continue to leverage our IT services to improve cost and
delivery cycles through reverse auction and e-procurement. We believe that these initiatives will enable us to
execute projects more quickly.
To further improve our operational efficiencies, we will continue to actively pursue the implementation of ERP
across all our operations and other capability-building initiatives, including design to cost, lean
manufacturing, and purchase and supply management.
We also plan to continue our productivity enhancement initiatives, such as multi-skilling of employees and
continuing to improve the quality of delivery, as well as machine utilisation improvement strategies including
effective utilisation of critical machines through three-shift, 24-hour operations, improved machine maintenance
and upkeep, and redeployment of employees.
50
Enhance product and service lines through emphasis on R&D
We intend to continue to enhance our products and services through our focus on research and development,
both internally and through our technical collaborations. We plan to use the latest computer-aided design tools
and analytical software to complement our extensive research and development operations and ensure that we
remain ahead of market trends. Furthermore, we will attempt to remain enterprise resource planning-compliant,
ensuring that all our data and processes are organised into a unified system.
To maintain our leading market position in India, we intend to try and develop innovative technologies, placing
a strong emphasis on the development and deployment of clean, low-carbon path technologies such as advanced
ultra super-critical technology, integrated gasification combined cycle (IGCC) technology and renewable
energy, as well as improve the energy efficiency of all our existing products.
51
THE OFFER
The following table summarizes the Offer details:
Equity Shares offered
Offer aggregating up to ` [] million 24,476,000
###
Equity Shares*
Of which
Employee Reservation Portion
#
2,447,600 Equity Shares
Therefore Net Offer
#
22,028,400 Equity Shares
Of which
A) Qualified Institutional Buyers portion** Up to 11,014,200 Equity Shares***
Of which
Available for allocation to Mutual Funds only 550,710 Equity Shares***
Balance for all QIBs including Mutual Funds 10,463,490 Equity Shares***
B) Non-Institutional Portion Not less than 3,304,260 Equity Shares***
C) Retail Portion Not less than 7,709,940 Equity Shares***
Equity Shares outstanding prior to the Offer 489,520,000 Equity Shares
Equity Shares outstanding after the Offer 489,520,000 Equity Shares
Use of Offer Proceeds See the section titled Objects of the Offer on page
87. The Company will not receive any proceeds of this
Offer.
* The Equity Shares being offered by the Selling Shareholder in the Offer have been held for more than a period
of one year as on the date of filing of this Draft Red Herring Prospectus. The Department of Heavy Industry,
Ministry of Heavy Industries and Public Enterprises, through its letter No. 3(9)/2009-PE.XI dated September 09,
2011, conveyed the approval granted by the GoI for the Offer.
###
The Board of Directors of the Company on July 01, 2011 and the Shareholders of the Company on
September 20, 2011 have approved the sub-division of equity share of face value of ` 10 each into 5 equity
shares of face value of ` 2 each w.e.f. record date i.e. October 4, 2011. Based on the issued, subscribed and
paid-up share capital of the Company of 489,520,000 equity shares of ` 10 each, the size of the present Offer is
2,44,76,000 equity shares of ` 10 each, which will translate to 12,23,80,000 equity shares of ` 2 each when
adjusted for the stock split. Post the record date i.e. October 4, 2011, the above table shall be updated depicting
face value as ` 2.
** 5% of the QIB Portion shall be available for allocation on a proportionate basis to Mutual Funds only. The
remainder will be available for allocation on a proportionate basis to QIBs and Mutual Funds, subject to valid
Bids being received at or above the Offer Price. However, if the aggregate demand from Mutual Funds is less
than550,710 Equity Shares, the balance Equity Shares available for allocation in the Mutual Fund portion will
be added to the QIB Portion and allocated proportionately to QIBs in proportion to their Bids. For more
information, see the section titled Offer Procedure on page 423 of this Draft Red Herring Prospectus.
Allocation will be made on a proportionate basis.
*** In the event of over-subscription, allocation will be made on a proportionate basis, subject to valid Bids
being received at or above the Offer Price.
#
Any under-subscription in the Employee Reservation Portion will be added to the Net Offer. In the event of
under subscription in the Net Offer, spill over to the extent of under-subscription will be allowed from the
Employee Reservation Portion. Subject to valid Bids being received at or above the Offer Price, any under-
subscription in any other category will be allowed to be met with spill-over from other categories or a
52
combination of categories, at the discretion of the Selling Shareholder and the Company, in consultation with
the BRLMs and the Designated Stock Exchange.
The Company and the Selling Shareholder, in consultation with the BRLMs, has fixed a discount of ` []
amounting to [] % of the Offer Price to Retail Bidders and Eligible Employees Bidding in the Employee
Reservation Portion.

53
SUMMARY FINANCIAL INFORMATION
The following tables set forth summary financial information derived from the audited standalone and
consolidated financial statements as of and for the years ended March 31, 2011, 2010 and 2009. These financial
statements are presented in the section titled Financial Information - Financial Statements beginning on
page 200 of this Draft Red Herring Prospectus. The summary financial information presented below should be
read in conjunction with the standalone and consolidated financial statements of the Company, the significant
accounting policies, notes to accounts and annexures thereto, and the section titled Managements Discussion
and Analysis of Financial Condition and Results of Operations on page 324 of this Draft Red Herring
Prospectus.
SUMMARY STATEMENT OF ASSETS AND LIABILITIES - RESTATED (CONSOLIDATED)
(` in millions)
As at March 31st
2011 2010 2009
A. Fixed Assets & Intangible Assets
Gross Block 83,440 68,574 55,011
Less:
Accumulated Depreciation/Amortisation 47,342 41,855 37,673
Lease Adjustment Account 2 142 412
Net Block 36,096 26,577 16,926
Add: Capital Work-in-Progress 22,028 15,524 12,123
TOTAL FIXED ASSETS 58,124 42,101 29,049
B. Investments 113 59 59
C. Deferred Tax Assets Net 21,652 19,311 22,564
D. Current Assets, Loans and Advances
Inventories 110,175 92,838 78,920
Sundry Debtors 275,105 228,173 172,139
Cash & Bank Balances 97,064 98,564 103,295
Other current assets 3,102 4,073 3,503
Loans and advances 30,763 24,041 19,500
TOTAL CURRENT ASSETS 516,209 447,689 377,357
E. Pre Operative Expenses 1 23 -
F. Preliminary Expenses 37 - -
TOTAL ASSETS (A+B+C+D+E+F) 596,136 509,183 429,029
G. Liabilities & Provisions
Secured Loans - 18 16
Unsecured Loans 2,702 1,465 1,649
Current Liabilities 315,680 281,795 235,341
Provisions 76,204 61,403 62,377
TOTAL LIABILITIES 394,586 344,681 299,383
54
As at March 31st
NET WORTH (A+B+C+D-G) 201,512 164,479 129,646
REPRESENTED BY
H. Share Capital 4,895 4,895 4,895
I. Reserves & Surplus 196,655 159,607 124,751
J. Less: Pre operative and Preliminary Exp. to the extent not
written off (E+F)
38 23 -
NET WORTH (H+I-J) 201,512 164,479 129,646

The above statement should be read with the significant accounting policies and notes to accounts in the section
titled Financial Information on page 196 of this Draft Red Herring Prospectus.
55
SUMMARY STATEMENT OF PROFIT & LOSS - RESTATED (CONSOLIDATED)
(` in millions)

For the year ended 31
st
March
2011 2010 2009
INCOME
Turnover (Gross) 415,897 351,442 286,506
Less: Excise duty & Service Tax 17,811 12,993 18,275
Turnover (Net) 398,086 338,449 268,231
Interest & other income 17,027 16,321 14,983
Accretion (Decretion) to Work-in-Progress & Finished
Goods
1,262 7,758 11,640
TOTAL INCOME 416,375 362,528 294,854
EXPENDITURE
Consumption of Material, Erection and Engineering
Expenses
233,666 208,630 178,400
Employees' remuneration & benefits 55,857 49,483 38,257
Other expenses of Manufacture, Administration,
Selling and Distribution
25,567 20,840 18,505
Provisions (net) 12,064 6,883 6,046
Interest & other borrowing costs 566 350 266
Depreciation and Amortisation 5,954 4,392 3,343
Less: Cost of jobs done for internal use 685 1,209 612
332,989 289,369 244,205
Profit Before Tax, Extra Ordinary Items and Prior
Period Items
83,386 73,159 50,649
Add/(Less): Prior period items (Net) (3) (1) 158
Add/(Less): Extra Ordinary Items 78 - -
Profit Before Tax (Restated) 83,461 73,158 50,807
Provision for Income Tax (30,811) (21,554) (25,150)
Deferred Tax 2,341 (3,253) 7,015

Profit After Tax (Restated) 54,991 48,351 32,672
Balance of profit brought forward from last year 10,922 6,081 3,329
Foreign Project Reserves written back - 14 12
Profit available for appropriation 65,913 54,446 36,013
APPROPRIATION
Transfer to General Reserve 40,029 30,025 20,022
56

For the year ended 31
st
March
Interim Dividend on Equity Shares 6,600 5,501 4,513
Proposed Dividend on Equity Shares 8,818 6,057 3,958
Corporate Dividend tax 2,527 1,941 1,439
Total Appropriation 57,974 43,524 29,932
BALANCE CARRIED TO BALANCE SHEET 7,939 10,922 6,081
NOTES TO ACCOUNTS
The above statement should be read with the significant consolidating accounting policies and notes to accounts
in the section titled Financial Information on page 196 of this Draft Red Herring Prospectus.
57
SUMMARY STATEMENT OF CONSOLIDATED CASH FLOW - RESTATED (CONSOLIDATED)
(` in millions)
For the year ended 31st March
2011 2010 2009
A. CASH FLOW FROM OPERATING ACTIVITIES
Net Profit Before Tax - Restated 83,461 73,158 50,807
Adjustment for
Depreciation/Amortisation 5,957 4,394 3,344
Lease Equalisation (140) (270) (179)
Provisions (Net) 6,389 6,249 12,750
Bad Debts & Liquidated Damages written off 405 1,429 57
Profit on sale of Fixed assets (43) (3) (84)
Interest paid 566 351 272
Interest/Dividend Income (6,395) (8,017) (7,848)
Operating Profit before Working Capital changes 90,200 77,291 59,117
Adjustment for
Decrease/(Increase) in Debtors, Loans and Advances and
others
(54,553) (62,977) (50,418)
Decrease/(Increase) in Inventories (17,446) (13,958) (21,140)
Increase/(decrease) in Current Liabilities and Provisions 47,221 35,075 70,263
Cash generated from operations 65,422 35,431 57,822
Direct Taxes Paid (Net of refund) (38,431) (19,130) (23,190)
NET CASH INFLOW FROM OPERATING ACTIVITIES 26,991 16,301 34,632
B. CASH FROM INVESTING ACTIVITIES
Purchase of Fixed Assets (21,861) (17,279) (13,562)
Sale and Disposal of Fixed Assets 65 86 318
Purchase of Investments (53) - -
Interest & Dividend Receipts 7,457 7,775 8,569
NET CASH USED IN INVESTING ACTIVITIES 14,392 9,418 4,675
C. CASH FLOW FROM FINANCING ACTIVITIES
Long Term Borrowings (Secured) (18) 2 16
Borrowings, Credit for Assets taken on lease (Unsecured) 1,310 (209) (1,348)
Dividend Paid (including tax on dividend ) (14,738) (11,064) (8,946)
Interest paid (653) (343) (343)
NET CASH USED IN FINANCING ACTIVITIES 14,099 11,614 10,621
D. NET INCREASE / (DECREASE) IN CASH AND CASH
EQUIVALENTS
(1,500) (4,731) 19,336
Opening Balance of Cash and Cash Equivalents 98,564 103,295 83,959
58
For the year ended 31st March
Closing Balance of Cash and Cash Equivalents 97,064 98,564 103,295
Note: Cash and Cash Equivalent comprises of the following:
Cash & Stamps in hand 16 15 12
Cheques, Demand Drafts in hand 4,340 2,307 3,865
Remittances in transit 86 358 0.2
Balances with Scheduled Banks
Current Account 9,772 6,131 15,379
Current Account-unclaimed dividend account 37 16 13
Deposit Account 82,569 89,679 83,736
Balance with non-scheduled Banks
Current Account 244 58 290
TOTAL 97,064 98,564 103,295

59
SUMMARY STATEMENT OF ASSETS AND LIABILITIES - RESTATED (STANDALONE)
(` in millions)
As at March 31st
2011 2010 2009 2008 2007
A. Fixed Assets & Intangible Assets
Gross Block 80,496 65,800 52,247 44,433 41,349
Less:
Accumulated Depreciation/Amortisation 46,486 41,014 36,853 33,839 31,039
Lease Adjustment Account 2 142 412 591 293
Net Block 34,008 24,644 14,982 10,003 10,017
Add: Capital Work-in-Progress 17,622 15,500 12,123 6,857 3,061
TOTAL FIXED ASSETS 51,630 40,144 27,105 16,860 13,078

B. Investments 4,392 799 524 83 83
C. Deferred Tax Assets (Net) 21,636 19,297 22,557 15,543 10,432
D. Current Assets, Loans and Advances
Inventories 109,630 92,354 78,370 57,364 42,177
Sundry Debtors 273,546 227,125 171,142 129,606 103,974
Cash & Bank Balances 96,302 97,901 103,147 83,860 58,089
Other current assets 3,096 4,068 3,502 4,211 1,997
Loans and advances 32,373 25,595 20,613 12,877 11,634
TOTAL CURRENT ASSETS 514,947 447,043 376,774 287,918 217,871
TOTAL ASSETS (A+B+C+D) 592,605 507,283 426,960 320,404 241,464
E. Liabilities & Provisions
Secured Loans - - - - -
Unsecured Loans 1,634 1,278 1,494 952 893
Current Liabilities 313,466 279,987 233,280 165,675 116,799
Provisions 75,968 61,358 62,382 47,082 35,686
TOTAL LIABILITIES 391,068 342,623 297,156 213,709 153,378
NET WORTH (A+B+C+D-E) 201,537 164,660 129,804 106,695 88,086
REPRESENTED BY
F. Share Capital 4,895 4,895 4,895 4,895 2,448
G. Reserves & Surplus 196,642 159,765 124,909 101,800 85,638
NET WORTH (F+G) 201,537 164,660 129,804 106,695 88,086
The above statement should be read with the significant consolidated accounting policies and notes to accounts
in the section titled Financial Information on page 196 of this Draft Red Herring Prospectus.
60
SUMMARY STATEMENT OF PROFIT & LOSS ACCOUNT - RESTATED
(STANDALONE)
(` in millions)

For the year ended 31
st
March
2011 2010 2009 2008 2007
INCOME
Turnover (Gross) 412,986 348,470 283,542 216,218 191,661
Less: Excise duty & Service Tax 17,709 12,923 18,209 20,964 15,014
Turnover (Net) 395,277 335,547 265,333 195,254 176,647

Interest & other income 16,933 16,177 14,974 11,808 8,130

Accretion/ (Decretion) to Work-in-Progress
& Finished Goods
1,274 7,866 11,515 8,272 1,812

TOTAL INCOME 413,484 359,590 291,822 215,334 186,589
EXPENDITURE
Consumption of Material, Erection and
Engineering Expenses
232,091 206,723 176,201 118,209 100,179
Employees' remuneration & benefits 55,257 48,983 37,934 32,106 25,328
Other expenses of Manufacture,
Administration, Selling and Distribution
25,359 20,646 18,358 16,442 16,601
Provisions (net) 12,063 6,905 5,768 4,929 3,930
Interest & other borrowing costs 549 318 221 114 417
Depreciation and amortisation 5,931 4,369 3,254 2,911 2,676
Less: Cost of jobs done for internal use 685 1,209 612 383 284
330,565 286,735 241,124 174,328 148,847
Profit before tax, extra ordinary items
and prior period items
82,919 72,855 50,698 41,006 37,742
Add/(Less): Prior period items (Net) (4) - 164 53 -
Add/(Less): Extra ordinary items - - - - -
Profit Before Tax (Restated) 82,915 72,855 50,862 41,059 37,742

Provision for Income Tax (30,630) (21,418) (25,030) (18,827) (15,545)
Deferred Tax 2,339 (3,260) 7,014 5,111 2,163

Profit After Tax (Restated) 54,624 48,177 32,846 27,343 24,360
Balance of profit brought forward from last
year
11,241 6,371 3,250 4,630 2,181
Foreign Project Reserves written back - 14 11 11 14
61

For the year ended 31
st
March
Profit available for appropriation 65,865 54,562 36,107 31,984 26,555
APPROPRIATION
Transfer to General Reserve 40,000 30,000 20,000 20,000 15,000
Interim Dividend on Equity Shares 6,486 5,385 4,406 4,406 3,060
Proposed Dividend on Equity Shares 8,762 6,021 3,916 3,059 2,937
Corporate Dividend tax 2,499 1,915 1,414 1,269 928
Total Appropriation 57,747 43,321 29,736 28,734 21,925

BALANCE CARRIED TO BALANCE
SHEET
8,118 11,241 6,371 3,250 4,630
The above statement should be read with the significant consolidated accounting policies and notes to accounts
in the section titled Financial Information on page 196 of this Draft Red Herring Prospectus.

62
SUMMARY STATEMENT OF CASH FLOW - RESTATED (STANDALONE)
(` in millions)

For the year ended 31st March

2011 2010 2009 2008 2007
A. CASH FLOW FROM OPERATING ACTIVITIES
Net Profit Before Tax - Restated 82,915 72,855 50,862 41,059 37,742
Adjustment for
Depreciation/Amortisation 5,934 4,371 3,255 2,912 2,675
Lease Equalisation (140) (270) (179) 299 423
Provisions (Net) 6,416 6,295 12,546 6,790 1,443
Bad Debts & Liquidated Damages written off 410 1,399 53 424 687
Provision for diminution in investment 1 - - - -
Profit on sale of Fixed assets (43) (3) (84) (17) (12)
Interest paid 549 319 222 114 417
Interest/Dividend Income (6,340) (7,930) (7,881) (6,691) (3,334)
Restated Operating Profit before Working Capital
changes
89,702 77,036 58,794 44,890 40,041
Adjustment for
Decrease/(Increase) in Debtors, Loans and Advances
and others
(53,954) (63,425) (52,566) (27,089) (30,126)
Decrease/(Increase) in Inventories (17,380) (14,034) (21,065) (15,288) (4,742)
Increase/(decrease) in Current Liabilities and
Provisions
46,866 35,308 70,818 54,999 38,377
Cash generated from operations 65,234 34,885 55,981 57,512 43,550
Direct Taxes Paid (Net of refund) (38,648) (19,035) (23,069) (22,733) (15,340)
NET CASH INFLOW FROM OPERATING
ACTIVITIES
26,586 15,850 32,912 34,779 28,210
B. CASH FROM INVESTING ACTIVITIES
Purchase of Fixed Assets (17,300) (17,222) (13,556) (7,030) (4,424)
Sale and Disposal of Fixed Assets 62 85 320 53 67
Investment in Subsidiary & Joint Ventures (3,593) (275) (441) - -
Interest & Dividend Receipts 7,403 7,746 8,549 6,851 2,234
NET CASH USED IN INVESTING ACTIVITIES 13,428 9,666 5,128 126 2,123
C. CASH FLOW FROM FINANCING ACTIVITIES
Long Term Borrowings (Secured) - - - - (5,000)
Borrowings-Credit for Assets taken on lease
(Unsecured)
351 (214) 526 51 306
Dividend Paid (including tax on dividend ) (14,563) (10,879) (8,730) (8,589) (4,051)
Interest paid (545) (337) (293) (344) (593)
63

For the year ended 31st March

NET CASH USED IN FINANCING ACTIVITIES 14,757 11,430 8,497 8,882 9,338
D. NET INCREASE(DECREASE) IN CASH AND
CASH EQUIVALENTS
(1,599) (5,246) 19,287 25,771 16,749

Opening Balance of Cash and Cash Equivalents 97,901 103,147 83,860 58,089 41,340

Closing Balance of Cash and Cash Equivalents 96,302 97,901 103,147 83,860 58,089

Note: Cash and Cash Equivalent comprises of the
following:

Cash & Stamps in hand 15 13 10 10 12
Cheques, Demand Drafts in hand 4,335 2,269 3,864 2,659 2,869
Remittances in transit 87 358 - 564 378
Balances with Scheduled Banks
Current Account 9,584 5,937 15,328 11,717 17,378
Current Account-unclaimed dividend account 37 16 13 9 7
Deposit Account 82,000 89,250 83,642 68,750 37,400
Balance with non-scheduled Banks
Current Account 244 58 290 151 45
Total 96,302 97,901 103,147 83,860 58,089
64
GENERAL INFORMATION
The Company was incorporated on November 13, 1964 as a private limited company under the Companies Act.
Pursuant to a Board resolution dated December 24, 1991 and shareholders resolution passed at the EGM on
December 24, 1991, the Company was converted into a public limited company.
Registered and Corporate Office of the Company
BHEL House,
Siri Fort,
New Delhi 110 049, India
Tel: +91 (11) 6633 7000
Fax: +91 (11) 2649 3021
Website: www.bhel.com
Corporate Identity Number: L74899DL1964GOI004281
Registrar of Companies
The Company is registered at the office of:
Registrar of Companies,
National Capital Territory of Delhi and Haryana
4th Floor, IFCI Tower,
61, Nehru Place,
New Delhi - 110 019,
India.
Telephone: +91 (11) 2623 5704
Facsimile: + 91 (11) 2623 5702
Board of Directors
The following table sets out the current composition of the Board as on the date of the filing of this Draft Red
Herring Prospectus. The Board currently consists of 13 Directors, of which five are independent Directors:
Sr.
No.
Name, Designation, DIN and Occupation Age Address
1. Mr. B. Prasada Rao
Chairman and Managing Director
DIN: 01705080
Occupation: Service
57 B-278, Asian Games Village
Complex, New Delhi 110049,
India
2. Mr. Anil Sachdev
Director - HR
DIN: 01676957
Occupation: Service
59 B-276, Asian Games Village
Complex, New Delhi 110049,
India
3. Mr. Atul Saraya
Director - Power
DIN: 02145899
Occupation: Service
57 B-273, Asian Games Village
Complex, New Delhi 110049,
India
4. Mr. O. P. Bhutani
Director E, R&D
DIN: 02898748
Occupation: Service
58 B 86, Suraj Mal Vihar, New
Delhi 110092, India
65
Sr.
No.
Name, Designation, DIN and Occupation Age Address
5. Mr. M. K. Dube
Director IS & P
DIN: 02732853
Occupation: Service
58 E-4/304 Arera Colony, Bhopal,
Madhya Pradesh 462016, India
6. Mr. P. K. Bajpai
Director Finance
DIN: 02205660
Occupation: Service
56 11/16, West Patel Nagar, New
Delhi 110008, India
7. Mr. Saurabh Chandra
Part Time Official (Government Nominee)
Director
DIN: 02726077
Occupation: Government Officer
56 D-I/9, Bharti Nagar, New Delhi
110003, India
8. Mr. Ambuj Sharma
Part Time Official (Government Nominee)
Director
DIN: 00613944
Occupation: Government Officer
52 D-I/11, Rabindra Nagar, New
Delhi 110003, India
9. Mr. Ashok Kumar Basu
Part Time Non-Official (independent) Director
DIN: 01411191
Occupation: Retired Bureaucrat
69 GD-282,Sector III, Salt Lake
City, Kolkata, West Bengal
700106, India
10. Mr. M. A. Pathan
Part Time Non-Official (independent) Director
DIN: 00040352
Occupation: Professional
69 K-80, Ist Floor, Hauz Khas
Enclave, New Delhi 110 016,
India
11. Ms. Reva Nayyar
Part Time Non-Official (independent) Director
DIN: 00890248
Occupation: Retired Bureaucrat
65 5-A, Old Friends Colony
(West), Mathura Road, New
Delhi 110 065, India
12. Mr. V. K. Jairath
Part Time Non-Official (independent) Director
DIN: 00391684
Occupation: Retired Bureaucrat
52 194-B, Kalpataru Horizon, S.K.
Ahire Marg, Worli, Mumbai,
Maharashtra 400018, India
13. Mr. S. Ravi
Part Time Non-Official (independent) Director
DIN: 00009790
Occupation: Professional
52 D-218, Saket, New Delhi
110017, India
For further details and profile of the Directors, see the section titled The Management on page 168.
66
Company Secretary and Compliance Officer
The company secretary and compliance officer is Mr. Inder Pal Singh. His contact details are as follows:
Mr. Inder Pal Singh,
Company Secretary,
BHEL House,
Siri Fort,
New Delhi 110 049, India
Tel: +91 (11) 2600 1046
Fax: +91 (11) 6633 7533
Website: www.bhel.com
Email: fpoinvestorsquery@bhel.in
Bidders can contact the company secretary and compliance officer, the BRLMs or the Registrar to the Offer in
case of any pre-Offer or post-Offer related problems such as non-receipt of Allotment advice, credit of Allotted
Equity Shares in the respective beneficiary account or refund orders.
All complaints, queries or comments received by SEBI shall be forwarded to the Book Running Lead Managers,
who shall respond to the same.
Book Running Lead Managers
DSP Merrill Lynch Limited
8
th
Floor, Mafatlal Centre,
Nariman Point,
Mumbai - 400 021,
Maharashtra, India.
Tel: +91 (22) 6632 8000
Fax: +91 (22) 2204 8518
Email: dg.bhelfpo@baml.com
Investor Grievance E-mail:
india_merchantbanking@baml.com
Website: www.dspml.com
Contact Person: Ms. Theresa Pimenta
SEBI Registration No.: INM000011625
ICICI Securities Limited
ICICI Centre, H.T. Parekh Marg,
Churchgate,
Mumbai - 400 020,
Maharashtra, India.
Tel: +91 (22) 2288 2460
Fax: +91 (22) 2282 6580
Email: bhel.fpo@icicisecurities.com
Investor Grievance E-mail:
customercare@icicisecurities.com
Website: www.icicisecurities.com
Contact Person: Mr. Mangesh Ghogle / Mr. Ayush Jain
SEBI Registration No.: INM000011179
Kotak Mahindra Capital Company Limited
1
st
Floor, Bakhtawar,
229, Nariman Point,
Mumbai 400021,
Maharashtra, India
Tel: +91 (22) 6634 1100
Fax: +91 (22) 2283 7517
Email: bhel.fpo@kotak.com
Investor Grievance E-mail:
kmccredressal@kotak.com
Website: www.investmentbank.kotak.com
Contact Person: Mr. Chandrakant Bhole
SEBI Registration No.: INM000008704
Morgan Stanley India Company Private Limited
18F/19F, Tower 2,
One Indiabulls Centre, 841, Senapati Bapat Marg,
Mumbai - 400 013, India
Tel: +91 (22) 6118 1000
Fax: +91 (22) 6118 1040
Email: bhel_fpo@morganstanley.com
Investor Grievance E-mail:
investors_india@morganstanley.com
Website: www.morganstanley.com/indiaofferdocuments
Contact Person: Ms. Mayuri Gupta
SEBI Registration No.: INM000011203
Syndicate Members
[]
67
Domestic Legal Counsel to the Company and the Selling Shareholder
Khaitan & Co
One Indiabulls Centre, 13
th
Floor,
841 Senapati Bapat Marg, Elphinstone Road,
Mumbai 400013, Maharashtra, India
Tel: +91 (22) 6636 5000
Fax: +91 (22) 6636 5050
International Legal Counsel to the Company and the Selling Shareholder
Baker & McKenzie.Wong & Leow
8 Marina Boulevard #05-01,
Marina Bay Financial Centre Tower 1,
Singapore 018981
Tel: +65 6338 1888
Fax: +65 6337 5100
Domestic Legal Counsel to the Book Running Lead Managers
Luthra & Luthra Law Offices
103, Ashoka Estate,
Barakhamba Road,
New Delhi 110001, India
Tel: +91 (11) 4121 5100
Fax: +91 (11) 2372 3909
International Legal Counsel to DSP Merrill Lynch Limited and Morgan Stanley India Company Private
Limited
O'Melveny & Myers LLP
9 Raffles Place
#22-01/02
Republic Plaza 1
Singapore 048619
Tel: +65 6593 1800
Fax: +65 6593 1801
Registrar to the Offer
Karvy Computershare Private Limited
Plot No. 17 to 24, Vithal Rao Nagar,
Madhapur, Hyderabad - 500 086,
Andhra Pradesh, India.
Tel: +91 (40) 4465 5000
Tel: (toll free): 1-800-345 4001
Fax: +91 (40) 2343 1551
Email: bhel.fpo@karvy.com
Website: www.karisma.karvy.com
Contact Person: Mr. Murali Krishna
SEBI registration number: INR000000221
Bankers to the Offer/Escrow Collection Banks
[]
68
Self Certified Syndicate Banks
The list of banks that have been notified by SEBI to act as SCSBs for the ASBA process is provided at
http://www.sebi.gov.in/pmd/scsb.pdf or at such other website as may be prescribed by SEBI from time to time.
For details on designated branches of SCSBs collecting the ASBA Bid cum Application Form, please refer to
the above mentioned link.
In relation to ASBA Bids submitted to a member of the Syndicate, the list of branches of the SCSBs at the
Syndicate ASBA Bidding Locations (Mumbai, Chennai, Kolkata, Delhi, Ahmedabad, Rajkot, Jaipur, Bengaluru,
Hyderabad, Pune, Vadodara and Surat) named by the respective SCSBs to receive deposits of ASBA Forms
from the members of the Syndicate is provided on http://www.sebi.gov.in/pmd/scsb-asba.html. For more
information on such branches collecting ASBA Forms from the members of the Syndicate at Syndicate ASBA
Bidding Locations, see the above mentioned SEBI link.
Refund Banks
[]
Statutory Auditors to the Company
M/s. Gandhi Minocha & Co
Chartered Accountants
B-6, Shakti Nagar Extension,
Near Laxmi Bai College,
Delhi 110052
Tel: +91 (11) 2730 3078/ 4227 3690
Fax: +91 (11) 2730 8800
Email: gandhica@yahoo.com
Firm Registration No: 000458N
M/s. S. N. Dhawan & Co
Chartered Accountants
C37, Connaught Place,
New Delhi 110001
Tel: +91 (11) 4368 4444
Fax: +91 (11) 4368 4445
Email: suresh.seth@mazars.co.in
Firm Registration No: 000050N
Bankers to the Company
Allahabad Bank
International Branch 3rd Floor,
17, Parliament Street,
New Delhi 110001, India
Tel: +91 (011) 23360326 / 23746613
Fax: +91 (011) 23742302 / 23361397
E-mail: br.del_ibl@allahabadbank.in
Website: www.allahabadbank.com
Contact Person: Dr. S. K. Sharma
Andhra Bank
Vijya Bank, Green Park Branch,
R-3 (Main) Green Park,
Aurbindo Marg,
New Delhi 110016, India
Tel: +91 (011) 26512406 / 26569005
Fax: +91 (011) 26513478
E-mail: bmdel162@andhrabank.co.in
Website: www.andhrabank.in
Contact Person: Mr. K. Satya Prasad
69
Axis Bank Limited
Statesman House, 2nd Floor,
148 Barakhamba Road,
New Delhi 110001, India
Tel: +91 (011) 43682434
Fax: +91 (011) 41515449
E-mail: vivek.dawar@axisbank.com
Website: www.axisbank.com
Contact Person: Mr. Vivek Dawar
Bank of Baroda
Ground Floor,
Bank of Baroda Bldg, 16 Sansad Marg,
New Delhi 110001, India
Tel: +91 (011) 23320863 / 580
Fax: +91 (011) 23711267
E-mail: indel@bankofbaroda.com
Website: www.bankofbaroda.com
Contact Person: Mr. V. K. Kukerja
Bank of India
Large Corporate Branch,
4,Parliament Street,
PTI Building Parliament Street,
New Delhi 110001, India
Tel: +91 (011) 23765126 / 23765124 / 23765125
Fax: +91 (011) 23765123
E-mail:
LargeCorporateBr.NewDelhi@bankofindia.co.in
Website: www.bankofindia.com
Contact Person: Mr. G. P. Bose
Canara Bank
Prime Corporate Branch II,
2nd Floor, World Trade Tower,
Barakhamba Lane,
New Delhi 110001, India
Tel: +91 (011) 23413381
Fax: +91 (011) 23411590
E-mail: dgmcb1942@canarabank.com
Website: https://www.canarabank.in
Contact Person: Mr. K. Radhakrishnan
Central Bank of India
R.W.A., Sector 15A,
Noida 201301, Uttar Pradesh, India
Tel: +91 (0120) 2511747
Fax: +91 (0120) 2511747
E-mail: bmdela3172@centralbank.co.in
Website: www.centralbankofindia.co.in
Contact Person: Mr. S. K. Gupta
Citibank N.A.
DLF Square. 17
th
Floor,
Jacaranda Marg, M Block,
DLF City Phase II,
Gurgaon 122002, India
Tel: +91 (0124) 489 3521
Fax: +91 (0124) 489 3591
E-mail: ankit1.sharma@citi.com
Website: http://www.online.citibank.co.in
Contact Person: Mr. Ankit Sharma
Corporation Bank
Scope Complex,
Lodhi Road,
New Delhi 110003, India
Tel: +91 (011) 24392051 / 24361469
Fax: +91 (011) 24363542
E-mail: wadhwa@corpbank.co.in
Website: www.corpbank.com
Contact Person: Mr. H. C. Wadhwa
Deutsche Bank AG
DLF Square, 4
th
Floor,
Jacaranda Marg, DLF City Phase II,
Gurgaon 122002, India
Tel: +91 (0124) 4122601
Fax: +91 (0124) 256 0284
E-mail: ajay.rajan@db.com
Website: www.db.com
Contact Person: Mr. Ajay Rajan
The Federal Bank Limited
Satkar Building,
G-1-6, 79-80, Nehru Place,
New Delhi 110019, India
Tel: +91 (011) 26481939
Fax: +91 (011) 26484165
E-mail: ndld@federalbank.co.in
Website: www.federal-bank.com
Contact Person: Mr. V. K. Seth
HDFC Bank Limited
B-6/3, Safdarjung Enclave,
Opp. Deer Park,
New Delhi 110029, India
Tel: +91 (011) 41392121 / 41392100
Fax: +91 (011) 41652283
E-mail: l.k.dhamija@hdfcbank.com
Website: www.hdfcbank.com
Contact Person: Mr. L. K. Dhamija
70
The Hongkong and Shangai Banking
Corporation Limited
JMD Regent Square, DLF Phase II,
Mehrauli Road,
Gurgaon 122002, India
Tel: +91 (0124) 4182105
Fax: +91 (0124) 4182035
E-mail: anuragpandey@hsbc.co.in
Website: www.hsbc.co.in
Contact Person: Mr. Anurag Pandey
ICICI Bank Limited
ICICI Bank Towers, NBCC Place,
BP Marg, Pragati Vihar,
New Delhi 110003, India
Tel: +91 (011) 30278360/
Fax: +91 (011) 24369970 / 24390070
E-mail: sunil.rathi@icicibank.com
Website: www.icicibank.com
Contact Person: Mr. Sunil Rathi
IDBI Bank Limited
Indian Red Cross Society Building,
3rd Floor, 1, Red Cross Road,
New Delhi 110001, India
Tel: +91 (011) 66281028/ 66281035
Fax: +91 (011) 23752730
E-mail: nitin.jain@idbi.co.in
Website: www.idbi.com
Contact Person: Mr. Nitin Jain
Indian Bank
Main Branch, G-41,
Connaught Circus,
New Delhi 110001, India
Tel: +91 (011) 23712158 / 23712160
Fax: +91 (011) 23718418/ 23712161
E-mail:
cmcreditnewdelhimain@indianbank.co.in /
ibnewdelhimain@vsnl.net
Website: www.indian-bank.com
Contact Person: Mr. R. Mani
IndusInd Bank Limited
219-220, Somdutt Chambers II,
Bikhaji Cama Place,
New Delhi 110066, India
Tel: +91 (011) 46032020
Fax: +91 (011) 46032682
E-mail: rakesh.arora@indusind.com
Website: www.indusind.com
Contact Person: Mr. Rakesh Arora
Kotak Mahindra Bank Limited
Ambadeep Building,
6
th
Floor,14 K G Marg,
New Delhi 110001, India
Tel: +91 (011) 45875130/ 66084230
Fax: +91 (011) 66084209
E-mail: sandeep.mishra@kotak.com
Website: www.kotak.com
Contact Person: Mr. Sandeep Mishra
Oriental Bank of Commerce
C-1, Sector 61,
Noida 201307,
Uttar Pradesh, India
Tel: +91 (0120) 2588821/ 2588861
Fax: +91 (0120) 2588861
E-mail: bm1208@obc.co.in
Website: www.obcindia.co.in
Contact Person: Mr. R C Sharma
Punjab & Sind Bank
Green Park Extension,
New Delhi 110016, India
Tel: +91 (011) 26867788 / 26529398
Fax: +91 (011) 26516299
E-mail: d0040@psb.org.in
Website: www.psbindia.com
Contact Person: Mr. G. S. Dhingra
Punjab National Bank
74, Janpath
New Delhi-110001, India
Tel: +91 (011) 23317606
Fax: +91 (011) 23358887
E-mail: BO0131@pnb.co.in
Website: www.pnbindia.in
Contact Person: Mr. Salim

The Royal Bank of Scotland N.V.
11
th
Floor, Tower C, Cyber Greens,
DLF Cyber City, Sector 25A,
Gurgaon-122002, India
Tel: +91 (0124) 4181933
Fax: +91 (0124) 4181737, 1710
E-mail: runa.baksi@rbs.com
Website: www.rbs.in
Contact Person: Ms. Runa Baksi
71
Standard Chartered Bank
3
rd
Floor, Building 7A,
DLCF Cyber City, Sector 24/25/25A,
Gurgaon-122002, India
Tel: +91 (0124) 4876142
Fax: +91 (0124) 4876204
E-mail: Rajat.Bahree@sc.com
Website: www.standardchartered.co.in
Contact Person: Mr. Rajat Bahree
State Bank of Hyderabad
Commercial Branch, 1
st
Floor,
74, Janpath,
New Delhi-110001, India
Tel: +91 (011) 23320756
Fax: +91 (011) 23329982 / 23313683
E-mail: ramprasad.s@sbhyd.co.in
Website: www.sbhyd.com
Contact Person: Mr. Rama Prasad
State Bank of India
CAG Branch,
11th/12th Floor,1 Tolstoy Marg,
Jawahar Vyapar Bhawan,
New Delhi 110001, India
Tel: +91 (011) 23352810
Fax: +91 (011) 23353101
E-mail: rakesh.singhala@sbi.co.in
Website: www.sbi.co.in
Contact Person: Mr. Rakesh Kumar Singhala
State Bank of Travancore
Travancore House, K G Marg,
New Delhi-110001, India
Tel: +91 (011) 23386806 /23386445
Fax: +91 (011) 23384189
E-mail: ifbdelhi@sbt.co.in
Website: www.statebankoftravancore.com
Contact Person: Mr. Virender Handa
Syndicate Bank
Nehru House, IP Estate,
4 Bahadur Shah Zafar Marg,
New Delhi-110002, India
Tel: +91 (011) 23329306 / 23358168
Fax: +91 (011) 23312695
E-mail: brn9017@yahoo.co.in
Website: www.syndicatebank.in
Contact Person: Mr. S.K. Sharma

UCO Bank
Flagship Corporate Centre 5,
Parliament Street,
New Delhi 110001, India
Tel: +91 (011) 23731529
Fax: +91 (011) 23710015
E-mail: bo.fccnewdelhi@ucobank.co.in
Website: www.ucobank.com
Contact Person: Mr. S. S. Wasan
Union Bank of India
IF BranchM-11,
Middle Circle, Connaught Place,
New Delhi 110001, India
Tel: +91 (011) 23417401 / 23417402/23417403
Fax: +91 (011) 23417405
E-mail: ifbcp@unionbankofindia.com
Website: www.unionbankofindia.co.in
Contact Person: Mr. K K Dhawan
United Bank of India
Delhi Oberoi Hotel Branch,
Hotel the Oberoi,
Zakir Hussain Marg,
New Delhi 110003, India
Tel: +91 (011) 24392052 / 24395133
Fax: +91 (011) 23741566 / 24395064
E-mail: bmich@unitedbank.co.in
Website: www.unitedbankofindia.com
Contact Person: Mr. Sanjay Koolwal
Vijaya Bank
D- 65,Hauz Khas,
New Delhi 110016, India
Tel: +91 (011) 26963242 / 26969614
Fax: +91 (011) 26961524
E-mail: del.hauzkhas6015@vijayabank.co.in
Website: www.vijayabank.com
Contact Person: Dr. Pradeep Naik
72
Statement of Responsibilities of the Book Running Lead Managers
The following table sets forth the inter se allocation of responsibilities for various activities in relation to this
Offer among the BRLMs:
Sr.
No.
Activity Responsibility Designated
Coordinating
BRLM
1. Capital structuring with the relative components and formalities
such as type of instruments, etc.
All BRLMs DSPML
2. Due diligence of Companys operations/ management/ business
plans/ legal etc. Drafting and design of Red Herring Prospectus
including the memorandum containing salient features of the
Prospectus. The BRLMs shall ensure compliance with stipulated
requirements & completion of prescribed formalities with the Stock
Exchanges, the RoC & SEBI including finalization of Prospectus &
RoC filing of the same.
All BRLMs DSPML
3. Drafting and approval of all statutory advertisements All BRLMs DSPML
4. Drafting and approval of all publicity material (other than statutory
advertisement) including corporate advertisement, brochure,
corporate films, etc.
All BRLMs Kotak
5a. Appointment of Intermediaries: Printers and Advertising Agency All BRLMs Kotak
5b. Appointment of Intermediaries: Registrars and Bankers All BRLMs I-Sec
6. International institutional marketing Strategy, which will cover,
inter alia:
Finalizing the list and division of investors for one to one
meetings;
Finalizing the International road show schedule and investor
meeting schedules; and
Preparing road show presentation and frequently asked
questions
All BRLMs Morgan Stanley
7. Domestic institutional marketing strategy, which will cover,
inter alia:
Finalizing the list and division of investors for one to one
meetings; and
Finalizing the Domestic Institutional investor meeting
schedules
All BRLMs DSPML
8. Domestic Retail Marketing of the Offer, which will cover,
inter alia:
Formulating marketing strategies, preparation of publicity
budget;
Finalising media and PR strategy;
Finalising centres for holding conferences for brokers etc.;
All BRLMs Kotak
73
Sr.
No.
Activity Responsibility Designated
Coordinating
BRLM
Finalising collection centres; and Follow-up on distribution of
publicity and Offer material including form, prospectus and
deciding on the quantum of the Offer material; and
Co-ordination with the Stock Exchanges for book building
software, bidding terminals and mock trading
9. Domestic HNI Marketing of the Offer, which will cover, inter alia:
Formulating marketing strategies, preparation of publicity
budget;
Finalising media and PR strategy;
Finalising centres for holding conferences for brokers etc.;
Finalising collection centres;
Follow-up on distribution of publicity and Offer material
including form, prospectus and deciding on the quantum of the
Offer material.
All BRLMs Kotak
10. Managing the book, Finalisation of pricing in consultation with the
Company & the Selling Shareholder
All BRLMs Morgan Stanley
11. The post-bidding activities including management of escrow
accounts, follow-up with bankers to the offer, co-coordination of
non-institutional allocation, intimation of allocation and dispatch of
refunds to Bidders etc. The post Offer activities will involve
essential follow up steps, which include the finalization of listing of
instruments and dispatch of certificates and demat delivery of
shares, with the various agencies connected with the work such as
the Registrar to the Offer and Bankers to the Offer and the bank
handling refund business. The designated coordinating BRLM shall
be responsible for ensuring that these agencies fulfill their functions
and enable it to discharge this responsibility through suitable
agreements with the Company and the Selling Shareholder.
All BRLMs I-Sec
Even if any of these activities are being handled by other intermediaries, the Book Running Lead Managers
shall be responsible for ensuring that these agencies fulfil their functions and enable them to discharge this
responsibility through suitable agreements with the Company.
IPO Grading
As this is not an initial public offering of the Companys Equity Shares, grading of this Offer is not required.
Credit Rating
As this is an Offer comprising only Equity Shares, credit rating is not required.
Trustees
As the Offer is of Equity Shares, the appointment of trustees is not required.
74
Monitoring Agency
As this is an Offer for Sale, there is no requirement for appointing a monitoring agency.
Experts
Except for the report of the Auditors on standalone and consolidated financial statements and the statement of
tax benefits on page 256 and 196 and page 92, respectively, included in the Draft Red Herring Prospectus, the
Company has not obtained any expert opinions.
Book Building Process
Book Building refers to the process of collection of Bids on the basis of the Red Herring Prospectus, the Bid
cum Application Forms and the ASBA Bid cum Application Form. The Offer Price will be determined by the
Selling Shareholder and the Company, in consultation with the BRLMs, after the Bid Closing Date. The
principal parties involved in the Book Building Process are:
1. the Company;
2. the Selling Shareholder;
3. the BRLMs;
4. the Syndicate Members;
5. the Registrar to the Offer;
6. the Escrow Collection Banks; and
7. the SCSBs.
The Offer is being made through the Book Building Process where up to 50% of the Net Offer will be allocated
to QIBs on a proportionate basis. Further, 5% of the QIB Portion will be available for allocation on a
proportionate basis to Mutual Funds only. Further, not less than 15% and 35% of the Net Offer will be available
for allocation on a proportionate basis to Non-Institutional Bidders and Retail Bidders, respectively, subject to
valid Bids being received at or above the Offer Price. Further, 2,447,600 Equity Shares will be made available
for allocation on a proportionate basis to Eligible Employees, subject to valid Bids being received at or above
the Offer Price. Any Bidder may participate in the Offer through the ASBA process by providing details of the
ASBA Accounts in which the corresponding Bid Amounts will be blocked by the SCSBs. Any unsubscribed
portion in the Employee Reservation Portion will be added to the Net Offer. Under subscription, if any, in any
category, would be allowed to be met with spill-over from any other category or combination of categories at
the discretion of the Company and the Selling Shareholder, in consultation with the BRLMs and the Designated
Stock Exchange. For more information, see the section titled Offer Procedure on page 423.
In accordance with the SEBI Regulations, QIBs are not allowed to withdraw their Bid(s) after the Bid Closing
Date for QIBs, i.e. []. For further details, see the section titled Offer Structure on page 418.
The Book Building Process under the SEBI Regulations is subject to change from time to time and Bidders are
advised to make their own judgement about investments through this process prior to making a Bid in the Offer.
The Company and the Selling Shareholder shall comply with regulations issued by SEBI and any other ancillary
directions that SEBI may issue for this Offer. In this regard, the Company has appointed the BRLMs to manage
the Offer and to procure subscriptions to the Offer.
Steps to be taken by the Bidders for Bidding:
1. Check eligibility for making a Bid. For further details, see the section titled Offer Procedure on page 423;
2. Ensure that your PAN and demat account details, including DP ID and client ID details are correctly
mentioned in the Bid cum Application Form or ASBA Bid cum Application Form. Based on these three
parameters, the Registrar to the Offer will obtain details of the Bidders from the Depositories including
Bidders name, bank account, number, etc.;
3. Ensure that the Bid cum Application Form or ASBA Bid cum Application Form is duly completed as per
the instructions given in the Red Herring Prospectus and in the respective forms;
75
4. Except for bids on behalf of the Central or State Government and the officials appointed by the courts, for
Bids of all values ensure that you have mentioned your PAN allotted under the I.T. Act in the Bid cum
Application Form or ASBA Bid cum Application Form (see the section titled Offer Procedure on page
423). However, Bidders residing in the State of Sikkim are exempted from the mandatory requirement of
PAN. The exemption is subject to the Depository Participants verifying the veracity of the claim of the
Bidders that they are residents of Sikkim, by collecting sufficient documentary evidence in support of their
address; and
5. Bids by ASBA Bidders may be submitted in the physical mode to the Syndicate on the prescribed ASBA
Form at the Syndicate ASBA Bidding Locations and either in physical or electronic mode, to the SCSBs
with whom the ASBA Account is maintained. ASBA Bidders should ensure that the specified ASBA
accounts have adequate credit balance at the time of submission to the SCSB to ensure that the ASBA Bid
cum Application Form is not rejected.
For further details, please see the section titled Offer Procedure on page 423.
Illustration of Book Building Process and the Price Discovery Process
(Bidders should note that the following is solely for the purpose of illustration and is not specific to the Offer)
Bidders can bid at any price within the Price Band. For instance, assuming a price band of ` 20 to ` 24 per
equity share, an offer size of 3,000 equity shares and receipt of 5 bids from bidders, details of which are shown
in the table below, the illustrative book would be as given below. A graphical representation of the consolidated
demand and price would be made available at the bidding centers during the bidding period. The illustrative
book shown below indicates the demand for the shares of the company at various prices and is collated from
bids from various bidders.
Bid Quantity Bid Price (` ` ` ` ) Cumulative Quantity Subscription (%)
500 24 500 16.67
1,000 23 1,500 50.00
1,500 22 3,000 100.00
2,000 21 5,000 166.67
2,500 20 7,500 250.00
The price discovery is a function of demand at various prices. The highest price at which the offeror is able to
offer the desired number of shares is the price at which the book cuts off, i.e. ` 22 in the above example. The
offeror, in consultation with the BRLMs, will finalize the offer price at or below such cut off, i.e., at or below `
22. All bids at or above this offer price and cut-off bids are valid bids and are considered for allocation in the
respective categories.
Withdrawal of the Offer
In accordance with the SEBI Regulations, the Company and the Selling Shareholder, in consultation with the
BRLMs, reserve the right not to proceed with the Offer at any time including after the Bid Opening Date but
before Allotment without assigning any reason thereof. However, in the event the Selling Shareholder and the
Company withdraw the Offer after the Bid Closing Date, the Company will give the reason thereof within two
days of the Bid Closing Date by way of a public notice in the same newspapers where the pre-Offer
advertisement had appeared. The Stock Exchanges will also be informed promptly and the BRLMs, through the
Registrar to the Offer, will notify the SCSBs to unblock the bank accounts specified by the ASBA Bidders
within one day from the date of receipt of such notification.
In the event the Selling Shareholder, in consultation with the Company and the BRLMs, withdraws the Offer
after the Bid Closing Date, a fresh offer document will be filed with the RoC/SEBI in the event we subsequently
decide to proceed with a public offering.
Notwithstanding the foregoing, the Offer is subject to obtaining the final trading approvals of the Stock
Exchanges with respect to the Equity Shares issued in the Offer, which our Company will apply for only after
Allotment and dispatch of refunds within 12 Working Days of the Offer Closing Date.
76
BIDDING PROGRAMME
BID OPENS ON [] BID CLOSES ON
(FOR QIB BIDDERS)
#
[]
BID CLOSES ON
(FOR ALL OTHER
BIDDERS)
[]
# The Company and the Selling Shareholder, in consultation with the BRLMs, may consider closing the QIB
Bidding Period a day before the Bid Closing Date for other Bidders.
Bids and any revision in Bids will be accepted only between 10.00 a.m. and 5.00 p.m. (Indian Standard Time)
during the Bidding Period at the Bidding centers mentioned in the Bid cum Application Form, or in the case of
ASBA Bidders, at the Designated Branches, except that on the Bid Closing Date (which for QIBs will be a day
prior to the Bid Closing Date for other non-QIB Bidders), Bids will be accepted only between 10.00 a.m. and
3.00 p.m. (Indian Standard Time) and uploaded until (i) 4.00 p.m. in case of Bids by QIB Bidders; and until (ii)
3.00 p.m. for Non-Institutional Bidders, Retail Bidders and Eligible Employees. Due to limitation of time
available for uploading the Bids on the Bid Closing Date, Bidders other than QIB Bidders are advised to submit
their Bids one day prior to the Bid Closing Date and no later than 3.00 p.m. (Indian Standard Time) on the Bid
Closing Date. Bidders other than QIB Bidders are cautioned that in the event a large number of Bids are
received on the Bid Closing Date, as is typically experienced in public offers, which may lead to some Bids not
being uploaded due to lack of sufficient time to upload, such Bids that cannot be uploaded will not be
considered for allocation in the Offer. If such Bids are not uploaded, the Company, the Selling Shareholder and
the Syndicate will not be responsible. Bids will be accepted only on Working Days.
On the Bid Closing Date, extension of time will be granted by the Stock Exchanges only for uploading the Bids
received from Retail Bidders and Eligible Employees, after taking into account the total number of Bids
received up to the closure of timings for acceptance of Bid cum Application Forms as stated herein and reported
by the BRLMs to the Stock Exchanges within half an hour of such closure.
In case of discrepancy in the data entered in the electronic book vis--vis the data contained in the physical or
electronic ASBA Bid cum Application Form, for a particular ASBA Bidder, the Registrar to the Offer shall ask
the relevant SCSB for rectified data.
Only Bids that are uploaded on the online IPO system of the NSE and BSE shall be considered for allocation /
Allotment. In the event of a discrepancy of data between the Bids registered on the online IPO system and the
physical Bid cum Application Form, the decision of the Book Running Lead Managers and the Designated
Stock Exchange, based on the physical records of Bid cum Application Forms shall be final and binding on
all concerned.
The Company and the Selling Shareholder, in consultation with the BRLMs, reserve the right to revise the Price
Band during the Bidding Period in accordance with the SEBI Regulations. The Cap Price will be less than or
equal to 120% of the lower end of the Price Band and the lower end of the Price Band will not be less than the
face value of the Equity Shares. Subject to compliance with the immediately preceding sentence, the lower end
of the Price Band can move up or down to the extent of 20% of the lower end of the Price Band as disclosed at
least one Working Day prior to the Bid Opening Date and the upper end of the Price Band will be revised
accordingly.
In case of revision in the Price Band, the Bidding Period will be extended for at least three additional Working
Days after revision of Price Band subject to the Bidding Period not exceeding 10 Working Days. Any revision
in the Price Band and the revised Bidding Period, if applicable, will be widely disseminated by notification to
the Stock Exchanges, by issuing a press release, by indicating the change on the websites of the BRLMs and at
the terminals of the Syndicate and by intimation to the SCSBs.
Underwriting Agreement
After the determination of the Offer Price, but prior to filing of the Prospectus with the RoC, the Company and
the Selling Shareholder intend to enter into an underwriting agreement with the Underwriters for the Equity
Shares proposed to be offered through this Offer as per the SEBI Regulations. The Underwriting Agreement
shall not apply to the subscription by the ASBA Bidders who have submitted their Bids directly to the SCSBs in
77
this Offer. Pursuant to the terms of the underwriting agreement, the obligations of the Underwriters are several
and are subject to certain conditions to closing, as specified therein.
The underwriting agreement is dated []. The Underwriters have indicated their intention to underwrite the
following number of Equity Shares:
(This portion has been intentionally left blank and will be completed before filing of the Prospectus with the
RoC)
Name and Address of the Underwriters Indicated Number of Equity
Shares to be Underwritten*
Amount Underwritten
(In ` ` ` ` million)*
[] [] []
[] [] []
[] [] []
[] [] []
*The information will be finalized after determination of the Offer Price and finalization of the Basis of Allotment.
In the opinion of the Board of Directors (based on a representation given by the Underwriters), the resources of
the Underwriters are sufficient to enable them to discharge their respective underwriting obligations in full.
Each of the Underwriters is registered with SEBI under Section 12(1) of the SEBI Act or as a broker with the
Stock Exchanges. Pursuant to a meeting of a committee of the Directors held on [], 2011, the Selling
Shareholder and the Board have accepted and entered into the Underwriting Agreement dated [], 2011.
Allocation among the Underwriters may not necessarily be in proportion to their underwriting commitments.
Notwithstanding the above table, the Underwriters will be severally responsible for ensuring payment with
respect to the Equity Shares allocated to Bidders procured by them. In the event of any default in payment, the
respective Underwriter, in addition to other obligations mentioned in the underwriting agreement, will also be
required to procure subscriptions/ subscribe for Equity Shares to the extent of the defaulted amount in
accordance with the underwriting agreement
78

CAPITAL STRUCTURE
The share capital as on the date of filing of this Draft Red Herring Prospectus with the SEBI is set forth below:
(in ` million, except share data)
Aggregate
nominal value
Aggregate Value at
Offer Price
A. Authorised Capital*
2,000,000,000 Equity Shares 20,000.00 []

B. Issued, subscribed and paid up Equity Share capital
before the Offer

489,520,000 Equity Shares 4,895.20 []

C. Present Offer in terms of this Draft Red Herring
Prospectus

Offer of 24,476,000 Equity Shares fully paid up
#
244.76 []

D. Employee Reservation in terms of this Draft Red
Herring Prospectus

Not more than 2,447,600 Equity Shares fully paid up 24.47 []

E. Net Offer to the Public
Up to 22,028,400 Equity Shares fully paid up 220.28 []

Of Which:
QIB Portion of up to 11,014,200 Equity Shares: 110.14 []
Non-Institutional Portion of not less than 3,304,260 Equity
Shares:
33.04 []
Retail Portion of not less than 7,709,940 Equity Shares: 77.10 []

F. Equity Capital after the Offer
489,520,000 Equity Shares fully paid up 4,895.20 []

G. Share Premium Account
Before the Offer -
After the Offer -
*For details on changes in authorized share capital of the Company, see the section titled History and Certain
Corporate Matters on page 151.
# The Board of Directors of the Company on July 01, 2011 and the Shareholders of the Company on September
20, 2011 have approved the sub-division of equity share of face value of ` 10 each into 5 equity shares of face
value of ` 2 each w.e.f. record date i.e. October 4, 2011. Based on the issued, subscribed and paid-up share
capital of the Company of 489,520,000 equity shares of ` 10 each, the size of the present Offer is 2,44,76,000
equity shares of ` 10 each, which will translate to 12,23,80,000 equity shares of ` 2 each when adjusted for the
stock split. Post the record date i.e October 4, 2011, the above table shall be updated depicting face value as ` 2.
The Promoter presently holds 67.72% of the issued and paid up Equity Share capital of the Company. After the
Offer, the shareholding of the Promoter will be 62.72% of the fully diluted post Offer paid-up Equity Share
capital of the Company.
79
Notes to the Capital Structure:
1. Equity Share capital history of the Company:
Date of
Allotment
Number of
Equity
Shares
Face
Value
(` ` ` ` )
Issue
price
per
Equity
Share
(` ` ` ` )
Consideration
(cash, bonus,
consideration
other than
cash)
Nature of
Allotment
Cumulative
number of
Equity Shares
Cumulative
Equity Share
Capital (` ` ` ` )
February
2, 1965
3 1,000 1,000 Cash Allotment to
the Promoter
as initial
subscriber to
the MoA
3 3,000
1 1,000 1,000 Cash Allotment to
the Joint
Secretary,
Department of
Heavy
Engineering
as initial
subscriber to
the MoA
4 4,000
1 1,000 1,000 Cash Allotment to
Additional
Secretary,
MoF as initial
subscriber to
the MoA
5 5,000
19,995 1,000 1,000 Cash Allotment to
the Promoter
20,000 20,000,000
August 2,
1965
90,000 1,000 1,000 Cash Allotment to
the Promoter
110,000 110,000,000
10,000 1,000 1,000 Cash Allotment to
the Promoter
120,000 120,000,000
September
10, 1965
10,000 1,000 1,000 Cash Allotment to
the Promoter
130,000 130,000,000
30,000 1,000 1,000 Cash Allotment to
the Promoter
160,000 160,000,000
October
30, 1965
20,000 1,000 1,000 Cash Allotment to
the Promoter
180,000 180,000,000
20,000 1,000 1,000 Cash Allotment to
the Promoter
200,000 200,000,000
June 18,
1966
50,000 1,000 1,000 Cash Allotment to
the Promoter
250,000 250,000,000
241,112 1,000 1,000 Consideration
other than cash
Allotment to
the Promoter
pursuant to
transfer of
Assets from
HEIL to the
Company*
491,112 491,112,000
August
12, 1966
8,888 1,000 1,000 Cash Allotment to
the Promoter
500,000 500,000,000
February
25, 1967
86,112 1,000 1,000 Cash Allotment to
the Promoter
586,112 586,112,000
80
Date of
Allotment
Number of
Equity
Shares
Face
Value
(` ` ` ` )
Issue
price
per
Equity
Share
(` ` ` ` )
Consideration
(cash, bonus,
consideration
other than
cash)
Nature of
Allotment
Cumulative
number of
Equity Shares
Cumulative
Equity Share
Capital (` ` ` ` )
April 22,
1967
50,800 1,000 1,000 Cash Allotment to
the Promoter
636,912 636,912,000
July 25,
1967
10,000 1,000 1,000 Cash Allotment to
the Promoter
646,912 646,912,000
May 4,
1968
3,088 1,000 1,000 Cash Allotment to
the Promoter
650,000 650,000,000
June 17,
1972
150,000 1,000 1,000 Cash Allotment to
the Promoter
800,000 800,000,000
April 11,
1974
500,000 1,000 1,000 Consideration
other than cash
Allotment to
the Promoter
pursuant to
amalgamation
of HEIL with
the Company
under Section
396 of the
Companies
Act*
1,300,000 1,300,000,000
September
29, 1980
100,000 1,000 1,000 Cash Allotment to
the Promoter
1,400,000 1,400,000,000
December
24, 1980
100,000 1,000 1,000 Cash Allotment to
the Promoter
1,500,000 1,500,000,000
October 1,
1981
100,000 1,000 1,000 Cash Allotment to
the Promoter
1,600,000 1,600,000,000
November
26, 1981
132,100 1,000 1,000 Cash Allotment to
the Promoter
1,732,100 1,732,100,000
August
10, 1982
260,000 1,000 1,000 Cash Allotment to
the Promoter
1,992,100 1,992,100,000
December
22, 1982
7,900 1,000 1,000 Cash Allotment to
the Promoter
2,000,000 2,000,000,000
March 21,
1983
32,100 1,000 1,000 Cash Allotment to
the Promoter
2,032,100 2,032,100,000
June 24,
1983
100,000 1,000 1,000 Cash Allotment to
the Promoter
2,132,100 2,132,100,000
December
17, 1983
160,000 1,000 1,000 Cash Allotment to
the Promoter
2,292,100 2,292,100,000
July 23,
1984
100,000 1,000 1,000 Cash Allotment to
the Promoter
2,392,100 2,392,100,000
September
29, 1984
55,500 1,000 1,000 Cash Allotment to
the Promoter
2,447,600 2,447,600,000
With effect from December 23, 1991, the equity shares of face value of ` 1,000 each were split into 100 Equity
Shares of the face value of ` 10 each. Accordingly, the shareholding of the Promoter stood revised from 2,447,600
Equity Shares of ` 1,000 each to 244,760,000 Equity Shares of ` 10 each.
June 6,
2007
244,760,000 10 - Bonus Bonus issue in
the ratio of
one Equity
Share for each
Equity Share
held on the
record date i.e.
June 1, 2007
489,520,000 4,895,200,000
*For more information, please refer to the section titled History and Certain Corporate Matters on page 151
81
Note: RoC filings pertaining to some of the allotments as per the table above are not traceable. Please refer to
the section titled Risk Factors Some of our records relating to forms filed with the Registrar of Companies
are not traceable on page 34.
2. Build-up of Promoters shareholding and Lock-in:
(a) Details of the build up of the Promoters shareholding in the Company:
All allotments of Equity Shares were made to the Promoter. However, 79,004,800 Equity Shares
were disinvested by the Promoter, the details of which are as follows:
Date Nature of Transfer Mode of Transfer No.of Equity
Shares
December 30,
1991
Disinvestment of the Equity Shares
of the Company
Sale of Equity Shares to Institutional
Investors
48,952,000
August 13,
1993
Disinvestment of the Equity Shares
of the Company
Sale of Equity Shares to Institutional
Investors
1,117,000
March 17,
1994
Disinvestment of the Equity Shares
of the Company
Sale of Equity Shares to the existing
employees of the Company
2,012,200
March 24,
1994
Disinvestment of the Equity Shares
of the Company
Sale of Equity Shares to Institutional
Investors
26,923,600
Total 79,004,800
For the allotments made to Promoter, refer to the Equity Share capital history of the Company in the section titled
Capital Structure Notes to the Capital Structure Equity Share capital history of the Company on
page 79

(b) Minimum Promoters Contribution and Lock-in:
There is no requirement for minimum Promoters contribution under Regulation 34(b) of the SEBI
Regulations. By a letter (No. F.No.3(9)/2009-PE XI) dated September 27, 2011 the Promoter has
consented to lock in its post-Offer shareholding in the Company i.e. an aggregate of 307,034,400
Equity Shares for a period of one year from the date of Allotment or for such other time as may be
required in terms of Regulation 36(b) of the SEBI ICDR Regulations.
The Company has not made any issue of Equity Shares during preceding one year from the date of
this DRHP.
(c) Other requirements in respect of lock-in:
As per Regulation 39 read with Regulation 36(b) of the SEBI Regulations, the locked in Equity
Shares held by the Promoter, as specified above, may be pledged only with any scheduled
commercial banks or PFIs as collateral security for loans granted by such banks or financial
institutions, provided that the pledge of the Equity Shares is one of the terms of the sanction of the
loan.
In terms of Regulation 40 of the SEBI Regulations, the Equity Shares held by the Promoter may be
transferred inter se or to new promoters or persons in control of the Company, subject to
continuation of the lock-in in the hands of the transferees for the remaining period and compliance
with the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997.
82
3. Shareholding Pattern of the Company as on September 23, 2011:
Category of
Shareholder
No. of
Shareholders
Total No.
of Shares
Total No. of
Shares held in
Dematerialized
Form
Total Shareholding
as a % of total No. of
Shares
Shares pledged or
otherwise encumbered
As a %
of
(A+B)
As a % of
(A+B+C)
Number of
shares
As a
% of Total
No. of
Shares
(A) Shareholding of
Promoter and
Promoter Group

(1) Indian
Central Government
/ State
Government(s)
4 331,510,400 - 67.72 67.72 - -
Sub Total 4 331,510,400 - 67.72 67.72 - -
(2) Foreign - - - - - - -
Total shareholding of
Promoter and
Promoter Group (A)
4 331,510,400 - 67.72 67.72 - -
(B) Public
Shareholding

(1) Institutions
Mutual Funds / UTI 219 32,347,033 32,343,833 6.61 6.61 - -
Financial Institutions /
Banks
44 1,837,304 1,836,504 0.38 0.38 - -
Insurance Companies 8 30,994,072 30,993,672 6.33 6.33 - -
Foreign Institutional
Investors
498 63,215,186 63,213,386 12.91 12.91 - -
Sub Total 769 128,393,595 128,387,395 26.23 26.23 - -
(2) Non-Institutions
Bodies Corporate 3,193 17,440,520 17,439,320 3.56 3.56 - -
Individuals
Individual
shareholders holding
nominal share capital
up to ` 1 lakh
268,965 10,592,168 10,266,701 2.16 2.16 - -
Individual
shareholders holding
nominal share capital
in excess of ` 1 lakh
11 239,629 239,629 0.05 0.05 - -
Any Others
(Specify)

Directors & their
Relatives & Friends
3 620 220 0.00 0.00 - -
Trusts 44 185,054 185,054 0.04 0.04 - -
Clearing Members 344 345,047 345,047 0.07 0.07 - -
Non Resident Indians 6,540 812,809 812,809 0.17 0.17 - -
Foreign Nationals 2 158 158 0.00 0.00 - -
Sub Total 279,102 29,616,005 29,288,938 6.05 6.05 - -
Total Public
shareholding (B)
279,871 158,009,600 157,676,333 32.28 32.28 - -
Total (A)+(B) 279,875 489,520,000 157,676,333 100.00 100.00 - -
(C) Shares held by
Custodians and

83
Category of
Shareholder
No. of
Shareholders
Total No.
of Shares
Total No. of
Shares held in
Dematerialized
Form
Total Shareholding
as a % of total No. of
Shares
Shares pledged or
otherwise encumbered
against which
Depository Receipts
have been issued
(1) Promoter and
Promoter Group
- - - - - - -
(2) Public - - - - - - -
Sub Total - -- - - - - -
Total (A)+(B)+(C) 279,875 489,520,000 157,676,333 100.00 100.00 - -
4. 2,447,600 Equity Shares, have been reserved for allocation to Eligible Employees on a proportionate
basis, subject to valid Bids being received at the Offer Price and subject to the maximum Bid Amount
by each Eligible Employee not exceeding ` 200,000. Only Eligible Employees are eligible to apply in
this Offer under the Employee Reservation Portion. Bids by Eligible Employees bidding under the
Employee Reservation Portion may also be made in the Net Offer and such Bids will not be treated as
multiple Bids. If the aggregate demand in the Employee Reservation Portion is greater than 2,447,600
Equity Shares at the Offer Price, allocation will be made on a proportionate basis.
5. Any unsubscribed portion in the Employee Reservation Portion will be added to the Net Offer. In case
of under-subscription in the Net Offer category, spill-over to the extent of under-subscription will be
permitted from the Employee Reservation Portion to the Net Offer. Under subscription, if any, would
be allowed to be met with spill-over from any other category or combination of categories at the
discretion of the Company and the Selling Shareholder, in consultation with the BRLMs and the
Designated Stock Exchange.
6. The list of top ten shareholders of the Company and the number of Equity Shares held by them is as
under:
a. Top ten shareholders as on September 23, 2011:
Sr. No. Name of the Shareholders Number of equity shares % of pre-Offer Capital
1. President of India 331,510,000 67.72%
2. Life Insurance Corporation of India 48,830,123 9.98%
3. Lazard Asset Management LLC A/C
Lazard Emerging Markets Portfolio
7,071,092 1.44%
4. Abu Dhabi Investment Authority
Beacon
3,454,425 0.71%
5. Unit Trust of India 3,318,470 0.68%
6. ICICI Prudential Life Insurance
Company Limited
2,312,969 0.47%
7. HDFC Standard Life Insurance Company
Limited
2,231,989 0.46%
8. CLSA (Mauritius) Limited 2,028,238 0.41%
9. Comgest SA A/C Magellan 2,000,000 0.41%
10. Blackrock Global Allocation Fund, Inc. 1,934,510 0.40%
b. Top ten shareholders as on September 9, 2011:
Sr. No. Name of the Shareholders Number of equity shares % of pre Offer Capital
1. President of India 331,510,000 67.72%
2. Life Insurance Corporation of India 48,422,253 9.89%
3. Lazard Asset Management LLC A/c
Lazard Emerging Markets Portfolio
7,071,092 1.44%
4. Abu Dhabi Investment Authority 3,397,038 0.69%
5. Unit Trust of India 3,360,065 0.69%
84
Sr. No. Name of the Shareholders Number of equity shares % of pre Offer Capital
6. ICICI Prudential Life Insurance
Company Limited
2,492,659 0.51%
7. HDFC Standard Life Insurance Company
Limited
2,231,113 0.46%
8. CLSA (Mauritius) Limited 2,028,238 0.41%
9. Comgest SA A/C Magellan 2,000,000 0.41%
10. Blackrock Global Allocation Fund, Inc. 1,934,510 0.40%
c. Top ten shareholders as on September 18, 2009:
Sr. No. Name of the Shareholders Number of equity shares % of pre Offer Capital
1. President of India 331,510,000 67.72
2. Life Insurance Corporation of India 393,898 5.52
3. ICICI Prudential Life Insurance
Company Limited 9,799,497 2.00
4.
Unit Trust of India 847 0.79
5. Abu Dhabi Investment Authority 164,200 0.57
6. SBI Mutual Fund 60,728 0.48
7. JP Morgan Asset Management (Europe)
S.A.R.L. 2,183,475 0.45
8. CLSA (Mauritius) Limited 1,961,240 0.40
9. Invesco Asia Infrastructure Fund 1,946,600 0.40
10. Carmignac Gestion 1,916,000 0.39
7. A Bidder cannot Bid for more than the number of Equity Shares offered through the Net Offer, subject
to the maximum limit of investment prescribed under relevant laws applicable to each category of
Bidders.
8. The Promoter and Directors will not participate in this Offer.
9. Neither the Promoter nor the Directors and their immediate relatives have purchased or sold any Equity
Shares during the period of six months immediately preceding the date of filing of this Draft Red
Herring Prospectus.
10. None of the Directors, except Mr. B Prasada Rao, Mr. Atul Saraya and Mr. M.K. Dube, hold Equity
Shares of the Company in their individual capacities. For more information, see the section titled
Management on page 168.
11. The total number of holders of the Equity Shares as on September 23, 2011 was 279,875.
12. Except as stated below, the Company has not issued any Equity Shares for consideration other than
cash:
Date of
Allotment
Number of
Equity Shares
Face
Value (` ` ` `
)
Issue price per
Equity Share
(` ` ` ` )
Nature of Allotment
June 18,
1966
241,112 1,000 1,000 Transfer of Assets from HEIL to the
Company
April 11,
1974
500,000 1,000 1,000 Amalgamation of HEIL with the Company
under Section 396 of the Companies Act
June 6, 2007 244,760,000 10 - Bonus issue in the ratio of one Equity Share
for each Equity Share held on the record date
i.e. June 1, 2007

85
13. The Company has not issued any Equity Shares out of its revaluation reserves.
14. The Promoter, the Company, the Directors and the BRLMs have not entered into any buyback or
standby arrangements or any other similar arrangement for purchase of Equity Shares from any person,
being offered in this Offer.
15. Except as disclosed below, the Book Running Lead Managers and/or their associates do not hold any
Equity Shares as on September 23, 2011:
DSPML and its associates do not hold any shares in the Company except 216,244 Equity Shares
that are currently held by Merrill Lynch Capital Markets Espana SA SV;
I-Sec and its associates jointly hold 4,062,608 Equity Shares besides the 1,471 Equity Shares
which are held by ICICI Securities Limited under its equities broking operations where the clients
are the ultimate beneficiaries;
Kotak and its associates do not hold any shares in the Company except 17,770 Equity Shares that
are currently held by Kotak Mahindra Investments Limited.
Morgan Stanley and its associates do not hold any shares in the Company except 21,463 Equity
Shares that are currently held by Morgan Stanley Mauritius Company Limited.
16. There are no outstanding warrants, options or rights to convert debentures, loans or other instruments
into the Equity Shares as on the date of this Draft Red Herring Prospectus.
17. There will be only one denomination of the Equity Shares, unless otherwise permitted by law. We will
comply with such disclosure and accounting norms as may be specified by the SEBI from time to time.
18. There will be no further issue of capital whether by way of issue of bonus shares, preferential
allotment, rights issue or in any other manner during the period commencing from submission of this
Draft Red Herring Prospectus with the SEBI until the Offer is completed.
19. There has been no financing arrangement by which the Directors of the Company and their relatives
have financed the purchase by any other person of securities of the Company other than in the normal
course of business of the financing entity during the period of six months immediately preceding the
date of filing of this Draft Red Herring Prospectus with the SEBI.
20. No Equity Shares held by the Promoter are subject to any pledge.
21. The Equity Shares, including the Equity Shares in the Offer for Sale, are fully paid-up and there are no
partly paid-up Equity Shares.
22. Except for the sub-division of equity share of face value of ` 10 each into 5 equity shares of face value
of ` 2 each w.e.f. the record date i.e. October 4, 2011 approved by the Board of Directors of the
Company on July 01, 2011 and by the Shareholders of the Company on September 20, 2011, the
Company presently does not have any intention or proposal to alter the capital structure for a period of
six months from the date of opening of the Offer, by way of split / consolidation of the denomination of
Equity Shares or further issue of Equity Shares (including issue of securities convertible into
exchangeable, directly or indirectly, for the Equity Shares) whether by way of preferential issue or
bonus or right issue or further public issue of Equity Shares or qualified institutions placement or
otherwise, except that if the Company enters into acquisition(s) or joint venture(s), the Company may
consider additional capital to fund such activities or to use Equity Shares as a currency for acquisition
or participation in such joint ventures.
23. The Company has not issued any Equity Shares at a price lesser than the Offer Price in the last one year
preceding the date of filing of this Draft Red Herring Prospectus.
24. The Company does not currently have any employee stock option scheme / employee stock purchase
scheme for its employees.
86
25. The Company confirms that all issues of capital by the Company whether by way of bonus issue of
Equity Shares or any other manner after being listed on the Stock Exchanges, have been made in
compliance with the relevant provisions of the applicable rules and regulations as prevailing at the time
of such issuances.
87
OBJECTS OF THE OFFER
The Offer comprises of an Offer for Sale by the Selling Shareholder.
The object of the Offer for Sale is to carry out the disinvestment of 24,476,000 Equity Shares of ` 10 each
constituting 5% of the Companys pre-Offer paid up Equity Share capital. The Company will not receive any
proceeds from the Offer for Sale and all proceeds from the Offer for Sale shall go to the GoI.
OFFER RELATED EXPENSES
The estimated Offer expenses are as under:
Activity Amount (` `` `
million)
% of the Offer
Expenses
% of total
Offer Size
BRLM fees* [] [] []
Underwriting commission and selling commission
(including commission to SCSBs for ASBA
applications)*
[] [] []
Registrars fees* [] [] []
Publication of advertisements * [] [] []
Advisors* [] [] []
Bankers to the Offer* [] [] []
Others (listing fees, etc.) * [] [] []
Total [] [] []
*Will be incorporated at the time of filing of the Prospectus.
All expenses with respect to fees payable to the BRLMs, Registrar to the Offer and Legal Counsels to the
Company as well as expenses towards the publication of advertisements in connection with the Offer will be
paid by the GoI.
88
BASIS FOR THE OFFER PRICE
The Offer Price will be determined by the Selling Shareholder in consultation with the BRLMs and the
Company on the basis of an assessment of the market demand for the Equity Shares by way of the Book
Building Process and on the basis of the qualitative and quantitative factors as described below. The face value
of the Equity Shares is ` 10 each and the Offer Price is [] times of the face value at the lower end of the Price
Band and [] times the face value at the higher end of the Price Band.
Investors should also refer to the Sections titled Risk Factors and Financial Information on pages 16 and
196, respectively, to have an informed view before making the investment decision.
Qualitative Factors
Some of the qualitative factors of the Company which form the basis for computing the price are:
Well-positioned to capitalize on growing demand for power in India
Diverse range of products and services serving a broad spectrum of businesses and adapted to customer
requirements
Significant focus on research and development and technological tie-ups leading to continuing
technological innovation
Strong and diversified order book
For details, please see the Sections titled Our Business and Risk Factors on pages 122 and 16
respectively of this Draft Red Herring Prospectus.
The Board of Directors of the Company on July 01, 2011 and by the Shareholders of the Company on
September 20, 2011, respectively have approved the sub-division of equity share of face value of ` 10 each into
5 equity shares of face value of ` 2 each w.e.f. record date i.e. October 4, 2011. Based on the issued,
subscribed and paid-up share capital of the Company of 489,520,000 equity shares of ` 10 each, the size of the
present Offer is 2,44,76,000 equity shares of ` 10 each, which will translate to 12,23,80,000 equity shares of `
2 each when adjusted for the sub-division.
Quantitative Factors
1. Earnings Per Share (EPS)
(I)
As per restated standalone financial statements:

Particulars EPS
(Face Value ` 10 per equity share)
(`/share ) Weight
Fiscal 2009 * 67.10 1
Fiscal 2010 * 98.42 2
Fiscal 2011 * 111.59 3
Weighted Average 99.79
* As per standalone audited restated financial statements, Earning per share before extraordinary items.
Note: The Board of Directors of the Company on July 01, 2011 and by the Shareholders of the Company on September 20,
2011, respectively have approved the sub-division of equity share of face value of ` 10 each into 5 equity shares of face
value of ` 2 each w.e.f. record date i.e. October 4, 2011. Based on the issued, subscribed and paid-up share capital of the
Company of 489,520,000 equity shares of ` 10 each, the size of the present Offer is 2,44,76,000 equity shares of ` 10 each,
which will translate to 12,23,80,000 equity shares of ` 2 each when adjusted for the stock split.
89
As per restated consolidated financial statements:
Particulars EPS
(Face Value ` 10 per equity share)
(`/share ) Weight
Fiscal 2009 * 66.74 1
Fiscal 2010 * 98.77 2
Fiscal 2011 * 112.18 3
Weighted Average 100.14
* As per consolidated audited restated financial statements, Earning per share before extraordinary itemss.
Notes:
(I) For the definition of EPS please see the section titled Financial Information on page 196.
2. Price Earning Ratio (P/E Ratio)
P/E Ratio in relation to Price Band of ` [] - ` [] per Equity Share of face value of ` 10 each:
Particulars P/E at the lower end of
Price band (no. of
times)
P/E at the higher end of
Price band (no. of times)
Based on Standalone EPS for Fiscal 2011 of ` 111.59 * [] []
Based on Standalone Weighted Average EPS of ` 99.79 [] []
* As per standalone audited restated financial statements.
Particulars P/E at the lower end of
Price band (no. of
times)
P/E at the higher end of
Price band (no. of times)
Based on Consolidated EPS for Fiscal 2011 of ` 112.18* [] []
Based on Consolidated Weighted Average EPS of ` 100.14 [] []
* As per consolidated audited restated financial statements.
Industry P/E Ratio
(I)
i. Highest: []x
ii. Lowest: []x
iii. Industry Composite: []x
Notes:
(I) The industry composite is the average data of the four (4) peers, i.e., Larsen & Toubro Limited, Crompton
Greaves Limited, Thermax Limited and Siemens Limited. The P/E Ratio for each of the peers has been
calculated based on the closing price on [] on the NSE and the EPS sourced from the audited consolidated
annual accounts as reported in the annual report or stock exchange website of the respective companies for
the year ended March 31, 2011 for Larsen & Toubro Limited, Crompton Greaves Limited and Thermax
Limited and for the year ended September 30, 2010 for Siemens Limited.
3. Average Return on Net Worth (RONW)
(I)
As per restated standalone financial statements:
Particulars RONW % Weight
Fiscal 2009 * 25.30 1
Fiscal 2010 * 29.26 2
Fiscal 2011 * 27.10 3
Weighted Average 27.52
* As per standalone audited restated financial statements.
90
As per restated consolidated financial statements:
Particulars RONW % Weight
Fiscal 2009 * 25.20 1
Fiscal 2010 * 29.40 2
Fiscal 2011 * 27.25 3
Weighted Average 27.63
* As per consolidated audited restated financial statements.
Notes:
(I) For definition of RONW please refer to the section titled Financial Information on page 196
respectively.
4. Minimum Return on Increased Net Worth required for maintaining pre-Offer EPS for the
Financial Year 2011
There will be no change in the net worth post-Offer as the Offer is by way of offer for sale by the Selling
Shareholder.
5. Net Asset Value (NAV) per equity share
(I)
The adjusted NAV per equity share of face value of ` 10 each is as under:
i. As of March 31, 2011 is ` 411.70 on a standalone basis and ` 411.65 on a consolidated basis *
ii. Offer Price per Equity Share: ` [] **
iii. As of March 31, 2011 after the Offer is ` 411.70 on a standalone basis and ` 411.65 on a
consolidated basis ***
____
* As per audited restated financial statements.
** Offer Price will be determined on the conclusion of the Book Building Process.
*** There will be no change in the Net Worth post-Offer, due to the Offer, as the Offer is by way of offer for
sale by the Selling Shareholder.
Notes:
(I) For definition of NAV please refer to the section titled Financial Information on page 196
respectively.
6. Comparison of Accounting Ratios with Industry Peers
Sr.
No.
Name of the
company
Consolidated Year
End
Face
Value
(` per
equity
share)
Basic EPS
(`)
P/E
Ratio
NAV
(` per
equity
share)
RONW
(%)
Revenue
(in
billion)
1. BHEL Consolidated
March
31, 2011
` 10
(1)
` 112.18
(1)
[]
(2)
` 411.65
(1)
27.25
(1)
416.38
Peer Group
(3)
2. Larsen & Toubro
Limited
Consolidated
March
31, 2011
2 72.39 20.0 410.95 18.43 532.05
3. Crompton Greaves Consolidated
March
31, 2011
2 14.45 10.7 50.83 32.23 101.19
4. Thermax Limited Consolidated
March
31, 2011
2 32.03 15.2 110.35 31.90 53.951
5. Siemens Limited Consolidated
September
30, 2010
2 22.48 38.0 97.24 25.02 98.10
Notes:
91
1) Face value, EPS, NAV per equity share and RONW of the Company are based on the consolidated audited
restated financial statements of the Company for the year ended March 31, 2011.
2) The P/E Ratio for the Company will be based on the Offer Price which will be determined on conclusion of
Book Building Process and the EPS of the Company on a consolidated restated basis for the Financial Year
ended March 31, 2011.
3) The EPS (before extra ordinary income), NAV (net of revaluation reserve) per equity share and RONW
(based on earnings before extraordinary income) for each of the peers are based on the audited
consolidated annual accounts as reported in the annual report or stock exchange or website of the
respective companies for the year ended March 31, 2011 for Larsen & Toubro Limited, Crompton Greaves
Limited and Thermax Limited and for the year ended September 30, 2010 for Siemens Limited. The P/E
Ratio for each of the peers has been calculated based on the closing price on September 27, 2011 on the
NSE and the EPS sourced from the audited consolidated annual accounts for the year ended March 31,
2011 for Larsen & Toubro Limited, Crompton Greaves Limited and Thermax Limited and for the year
ended September 30, 2010 for Siemens Limited.
The Offer Price of ` [] has been determined by the Selling Shareholder in consultation with the Company and
the BRLMs on the basis of assessment of market demand for the Equity Shares by way of the Book Building
Process and is justified in view of the above qualitative and quantitative parameters. Kindly note that a Retail
Discount of ` [] to the Offer Price is being offered to Retail Individual Bidders and an Employee Discount of `
[] to the Offer Price is being offered to Eligible Employees bidding in the Employee Reservation Portion.
Prospective investors should also review the entire Red Herring Prospectus, including, in particular the sections
titled Risk Factors, The Business and Financial Information on pages 16, 122 and 196, respectively.
92
STATEMENT OF TAX BENEFITS
AUDITORS REPORT ON STATEMENT OF TAX BENEFITS
To,
The Board of Directors,
Bharat Heavy Electricals Limited,
BHEL House, Siri Fort
New Delhi - 110049.
Dear Sirs,
We hereby report that the enclosed annexure states the possible direct tax benefits may be available to M/s.
Bharat Heavy Electricals Limited (the Company) and its shareholders under the Income Tax Act, 1961 and
the Wealth Tax Act, 1957, presently in force in India. Several of these benefits are dependent on the Company
or its shareholders fulfilling the conditions prescribed under the relevant provisions of tax laws. Hence, the
ability of the Company or its shareholders to derive the tax benefits is subject to fulfillment of such conditions.
Additionally, in respect of the Company benefits listed, the business imperatives the faced by the company in
the future will also affect the benefits actually claimed.
The benefits discussed in the enclosed annexure are not exhaustive. This statement is only intended to provide
general information to the investors and is neither designed nor intended to be a substitute for professional tax
advice. In view of the individual nature of the tax consequences and the changing tax laws, each investor is
advised to consult their own tax consultant with respect to the specific tax implications arising out of their
participation in the issue.
Unless otherwise specified, sections referred to below are sections of the Income-tax Act, 1961 (the Act). The
income tax rates referred here are the existing tax rates based on the rates prescribed in the Finance Act, 2011
for the Financial Year 2011-12. All the provisions set out below are subject to conditions specified in the
respective sections.
We do not express any opinion or provide any assurance as to whether:
i) The Company is currently availing any of these benefits or will avail these benefits in future; or
ii) The Companys shareholders will avail these benefits in future; or
iii) The conditions prescribed for availing the benefits have been / would be met with.
The contents of the enclosed Statement of Tax benefits are based on information, explanations and
representations obtained from the Company and on the basis of our understanding of the business activities and
operations of the Company.
This report is intended solely for informational purposes for the inclusion in the Offer Document in connection
with the Proposed Offer for Sale of Equity Shares of the Company by the President of India (the Offer) and
is not to be used in, referred to or distributed for any other purpose.
For S.N.Dhawan & Co. For Gandhi Minocha & Co.
Chartered Accountants Chartered Accountants
FRN - 000050N FRN - 000458N
(Suresh Seth) (Manoj Bhardwaj)
Place: New Delhi Partner Partner
Date: September 28, 2011 Membership No.010577 Membership No.098606

93
STATEMENT OF TAX BENEFITS
STATEMENT OF POSSIBLE DIRECT TAX KEY BENEFITS WHICH MAY BE AVAILABLE TO
M/s. BHARAT HEAVY ELECTRICALS LIMITED AND THE PROSPECTIVE SHAREHOLDERS
UNDER THE CURRENT DIRECT TAX LAWS IN INDIA.
The following key benefits are available to the Company and the shareholders under current direct tax laws in
India for the Financial Year 2011-12.
The information provided below sets out the possible tax benefits available to the Company and its shareholders
under the current direct tax laws presently in force in India. Several of these benefits are dependent on the
Company or its shareholders fulfilling the conditions prescribed under the relevant tax laws. Hence, the ability
of the Company or its shareholders to derive the tax benefits is dependent upon fulfilling such conditions, which
based on business imperatives the Company faces in the future, the Company may or may not choose to fulfill.
The benefits discussed below are not exhaustive. This Statement is only intended to provide the tax benefits to
the Company and its shareholders in a general and summary manner and does not purport to be a complete
analysis or listing of all the provisions or possible tax consequences. In view of the individual nature of tax
consequences and the changing tax laws, each investor is advised to consult his/her own tax adviser with respect
to specific tax implications arising out of their participation in the issue.
SPECIAL TAX BENEFITS
1. SPECIAL TAX BENEFITS AVAILABLE TO THE COMPANY
There are no special tax benefits available to the Company
2. SPECIAL TAX BENEFITS AVAILABLE TO THE SHAREHOLDERS OF THE COMPANY
There are no special tax benefits available to the shareholders of the Company.
GENERAL TAX BENEFITS
1. Key benefits available to the Company under the Income-tax Act, 1961 (Act)
A. COMPUTATION OF BUSINESS INCOME
I. Depreciation
The Company is entitled to claim depreciation on specific tangible and intangible assets owned by it and used
for the purpose of its business under Section 32 of the Act.
Unabsorbed depreciation, if any, for an Assessment Year (AY) can be carried forward without any time limit
and set off against any source of income (not being income chargeable under the head Salaries) in the
subsequent AYs as per section 32 of the Act.
II. Expenditure on Scientific Research
As per the provisions of section 35(2AB), a company engaged in any business of manufacture or production of
any article or thing except those provided in the Eleventh Schedule of the Act subject to fulfillment of
conditions specified therein, incurs any expenditure on scientific research (not being expenditure in the nature of
cost of any land or building) on in-house research & development facility as approved by the prescribed
Authority (i.e. DSIR), shall be allowed a deduction of a sum equal to two times of the expenditure so incurred.
And as per the prevailing provisions of the Income Tax Act 1961 no deduction shall be allowed in respect of the
above mentioned expenditure which is incurred after 31
st
March, 2012.
94
III. Set off & Carry forward of business loss
Business losses (not from speculation business) if any, for any AY, can be set off against any income of that
year & the balance would be carried forward and set off against business profits for eight subsequent AYs.
IV. Minimum Alternate Tax (MAT) Credit:
The Company would be required to pay tax on its book profits under the provisions of section 115JB in case
where tax on its total income [the term defined under section 2(45) of the IT Act] is less than 18.50% (plus
applicable Surcharge + Education and Secondary & Higher Education cess) of its book profit (the term defined
under section 115JB of the IT Act). Such tax is referred to as Minimum Alternate Tax (MAT.)
The difference between the MAT payable under section 115JB of the IT Act and the tax on its total income
payable for that assessment year shall be allowed to be carried forward as MAT credit up to tenth assessment
year (w.e.f. FY 2009-10) immediately succeeding the assessment year in which the tax credit becomes
allowable. The MAT credit can be utilized to be set off against taxes payable on the total income computed
under the provisions of the IT Act other than 115JB thereof if any, in the subsequent assessment years in
accordance with the provisions & limit specified in section 115JAA of the IT Act.
B. COMPUTATION OF CAPITAL GAINS
I. The Capital assets may be categorized into short term capital assets and long term capital assets based on the
period of holding. Shares in a company, listed securities or units of the Unit Trust of India or units of a mutual
fund specified under section 10(23D) of the Act or Zero-Coupons bonds will be considered as long term capital
assets if they are held for a period exceeding 12 months. Consequently, capital gains arising on sale of these
assets held for more than 12 months are considered as long term capital gains. Capital gains arising on sale of
these assets held for 12 months or less are considered as short term capital gains.
II. According to section 48 of the Act, which prescribes the mode of computation of capital gains, provides for
deduction of cost of acquisition / improvement and expenses incurred in connection with the transfer of a capital
asset, from the sale consideration to arrive at the amount of capital gains. However, in respect of long term
capital gains [other than gains on transfer of bonds or debentures (other than capital indexed bonds issued by the
government)], it offers a benefit by permitting substitution of cost of acquisition / improvement with the indexed
cost of acquisition / improvement, which adjusts the cost of acquisition / improvement by a cost inflation index
as prescribed from time to time.
III. Exemption of long Term Capital gain
(a) According to section 10(38) of the Act, long-term capital gains on sale of equity shares or units of an
equity oriented fund where the transaction of sale is chargeable to STT shall be exempt from tax.
(b) Under the provisions of section 54EC of the Act and subject to the conditions specified therein, capital
gains not exempt under section 10(38) and arising on transfer of a long term capital asset shall not be
chargeable to tax to the extent such capital gains are invested in certain notified bonds within six
months from the date of transfer. Deduction under section 54EC of the Act is restricted to ` 50 lacs
during any Financial Year. However, if the said bonds are transferred or converted into money within a
period of three years from the date of their acquisition, the amount of capital gains exempted earlier
would become chargeable to tax as long term capital gains in the year in which the bonds are
transferred or converted into money.
95
IV. Tax on Long Term capital Gain u/s 112
According to the provisions of Section 112 of the Act, long term gains as computed above that are not exempt
under section 10(38) of the Act would be subject to tax at a rate of 20 percent (plus applicable Surcharge +
Education and Secondary & Higher Education cess). However, as per the proviso to Section 112(1), if the tax on
long term capital gains resulting on transfer of listed securities or Units or Zero-Coupons bonds, calculated at
the rate of 20 percent with indexation benefit exceeds the tax on long term gains computed at the rate of 10
percent without indexation benefit, then such gains are chargeable to tax at a concessional rate of 10 percent
(plus applicable Surcharge + Education and Secondary & Higher Education cess).
V. Tax on Short Term Capital Gain u/s 111A
According to the provisions of section 111A of the Act, short-term capital gains on sale of equity shares or units
of an equity oriented fund where the transaction of sale is chargeable to Securities Transaction tax (STT) shall
be subject to tax at a rate of 15 per cent (plus applicable Surcharge + Education and Secondary & Higher
Education cess).
C. INCOME FROM OTHER SOURCES
Dividend Income:
Under Section 10(34) of the IT Act, income by way of dividend (whether Interim or Final) referred to in Section
115-O received by the Company on its investments in shares of another Domestic company is exempt from
income tax in the hands of the Company.
Income received in respect of units of a mutual fund specified under Section 10(23D) of the Act (other than
income arising from transfer of units in such mutual fund) shall be exempt from tax under section 10(35) of the
income Tax Act.
However, it is pertinent to note that section 14A of the IT Act provides that no deduction shall be allowed in
respect of any expenditure incurred in relation such exempt income.
2. Key benefits available to resident shareholders
I. Dividend Income exempt under Section 10(34)
Dividends (both interim or final) income, if any, received by the resident shareholders from a domestic company
shall be exempt from tax under Section 10(34) of the Act read with Section 115-O of the Act.
II. Computation of capital gains
a. The Capital assets may be categorised into short term capital assets and long term capital
assets based on the period of holding. Shares in a company, listed securities or units of the Unit Trust of
India or units of a mutual fund specified under section 10(23D) of the Act or Zero-Coupons bonds will
be considered as long term capital assets if they are held for a period exceeding 12 months.
Consequently, capital gains arising on sale of these assets held for more than 12 months are considered
as long term capital gains. Capital gains arising on sale of these assets held for 12 months or less are
considered as short term capital gains.
b. According to section 48 of the Act, which prescribes the mode of computation of capital
gains, provides for deduction of cost of acquisition / improvement and expenses incurred in connection
with the transfer of a capital asset, from the sale consideration to arrive at the amount of capital gains.
However, in respect of long term capital gains, it offers a benefit by permitting substitution of cost of
96
acquisition / improvement with the indexed cost of acquisition / improvement, which adjusts the cost of
acquisition / improvement by a cost inflation index as prescribed from time to time.
c. Exemption of long term capital gain from income tax
According to section 10(38) of the Act, long-term capital gains on sale of equity shares where
the transaction of sale is chargeable to STT shall be exempt from tax.
According to the provisions of section 54EC of the Act and subject to the conditions specified
therein, capital gains not exempt under section 10(38) and arising on transfer of a long term
capital asset shall not be chargeable to tax to the extent such capital gains are invested in
certain notified bonds within six months from the date of transfer. However, if the said bonds
are transferred or converted into money within a period of three years from the date of their
acquisition, the amount of capital gains exempted earlier would become chargeable to tax as
long term capital gains in the year in which the bonds are transferred or converted into money.
Deduction under section 54EC of the Act is restricted to ` 50 lacs during any Financial Year.
Where the benefit of section 54EC has been availed of on investments in the notified bonds, a
deduction from the income with reference to such cost shall not be allowed under section 80C
of the Act [applicable to individuals and Hindu Undivided Families (HUFs)].
According to the provisions of section 54F of the Act and subject to the conditions specified
therein, in the case of an individual or a Hindu Undivided Family (HUF), gains arising on
transfer of a long term capital asset (not being a residential house), other than gains exempt
under section 10(38), are not chargeable to tax if the entire net consideration received on such
transfer is invested within the prescribed period in a residential house. If part of such net
consideration is invested within the prescribed period in a residential house, then such gains
would not be chargeable to tax on a proportionate basis. For this purpose, net consideration
means full value of the consideration received or accruing as a result of the transfer of the
capital asset as reduced by any expenditure incurred wholly and exclusively in connection
with such transfer. If the specified conditions prescribed in section 54F of the Act are not
followed, then, the exemption claimed will be revoked and the gains so exempted will be
taxable as long term capital gains in the year in which default is committed.
d. Tax on Long Term capital Gain u/s 112
According to the provisions of Section 112 of the Act, long term gains as computed above that are not
exempt under section 10(38) of the Act would be subject to tax at a rate of 20 percent (plus applicable
Surcharge + Education and Secondary & Higher Education cess). However, as per the proviso to
Section 112(1), if the tax on long term capital gains resulting on transfer of listed securities or Units or
Zero-Coupons bonds, calculated at the rate of 20 percent with indexation benefit exceeds the tax on
long term gains computed at the rate of 10 percent without indexation benefit, then such gains are
chargeable to tax at a concessional rate of 10 percent (plus applicable Surcharge + Education and
Secondary & Higher Education cess).
e. Tax on Short Term Capital Gain u/s 111A
According to the provisions of section 111A of the Act, short-term capital gains on sale of equity
shares where the transaction of sale is chargeable to STT shall be subject to tax at a rate of 15 per cent
(plus applicable Surcharge + Education and Secondary & Higher Education cess).

3. Key benefits available to Non-Resident Indian shareholders
I. Dividend income exempt under Section 10(34)
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Dividends (both interim or final) income, if any, received by the non-resident shareholders from a
domestic company shall be exempt from tax under Section 10(34) of the Act read with Section 115-O
of the Act.
II. Computation of capital gains
a. Capital assets may be categorised into short term capital assets and long term capital assets
based on the period of holding. Shares in a company, listed securities or units of the Unit Trust of India
or units of a mutual fund specified under section 10(23D) of the Act or Zero-Coupons bonds will be
considered as long term capital assets if they are held for a period exceeding 12 months. Consequently,
capital gains arising on sale of these assets held for more than 12 months are considered as long term
capital gains. Capital gains arising on sale of these assets held for 12 months or less are considered as
short term capital gains.
b. Section 48 of the Act contains special provisions in relation to computation of capital gains on
transfer of an Indian companys shares by non-residents. Computation of capital gains arising on
transfer of shares in case of non-residents has to be done in the original foreign currency, which was
used to acquire the shares. The capital gain (i.e., sale proceeds less cost of acquisition/ improvement)
computed in the original foreign currency is then converted into Indian Rupees at the prevailing buying
rate of exchange on the date of transfer.
c. Tax on Long Term capital Gain u/s 112
In case the investment is made in Indian rupees, the long-term capital gain is to be computed after
indexing the cost. According to the provisions of Section 112 of the Act, long term gains as computed
above that are not exempt under section 10(38) of the Act would be subject to tax at a rate of 20
percent (plus applicable Surcharge + Education and Secondary & Higher Education cess). However, as
per the proviso to Section 112(1), if the tax on long term capital gains resulting on transfer of listed
securities or Units or Zero- Coupons bonds, calculated at the rate of 20 percent with indexation benefit
exceeds the tax on long-term gains computed at the rate of 10 percent without indexation benefit, then
such gains are chargeable to tax at a concessional rate of 10 percent (plus applicable Surcharge +
Education and Secondary & Higher Education cess).
d. Tax on Short Term Capital Gain u/s 111A
According to the provisions of section 111A of the Act, short-term capital gains on sale of equity
shares where the transaction of sale is chargeable to STT shall be subject to tax at a rate of 15 per cent
(plus applicable Surcharge + Education and Secondary & Higher Education cess).
e. Special provision in respect of income / Long Term Capital Gain from specified foreign
exchange assets available to non-resident Indians under Chapter XII-A.
As per section 115C (e) Non-Resident Indian (NRI) means an individual being a citizen of India or a
person of Indian origin who is not a resident of India. Person is deemed to be of Indian origin if he or
either of his parents or any of his grandparents were born in undivided India.
Non-Resident Indians, being shareholders of an Indian Company, have the option of being governed by
the provisions of Chapter XII-A of the Act, which inter alia entitles them to the following benefits in
respect of income from specified foreign exchange assets means shares of an Indian company acquired
or purchased with, or subscribed to in convertible foreign exchange:
As per the provisions of section 115D read with Section 115E of the Act and subject to the
conditions specified therein, long term capital gains arising on transfer of an Indian companys
shares, will be subject to tax at the rate of 10 percent (plus applicable Surcharge + Education and
98
Secondary & Higher Education cess), without indexation benefit. Further, investment income
arising on transfer of an Indian companys shares, will be subject to tax at the rate of 20 percent
(plus applicable Surcharge + Education and Secondary & Higher Education cess).
As per the provisions of section 115F of the Act and subject to the conditions specified therein,
gains arising on transfer of a long term capital asset being shares in an Indian company shall not be
chargeable to tax if the entire net consideration received on such transfer is invested within the
prescribed period of six months in any specified asset or savings certificates referred to in section
10(4B) of the Act. If part of such net consideration is invested within the prescribed period of six
months in any specified asset or savings certificates referred to in Section 10(4B) of the Act then
such gains would not be chargeable to tax on a proportionate basis. For this purpose, net
consideration means full value of the consideration received or accruing as a result of the transfer
of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection
with such transfer.
Further, if the specified asset or savings certificate in which the investment has been made is
transferred / converted into money within a period of three years from the date of investment, the
amount of capital gains tax exempted earlier would become chargeable to tax as long term capital
gains in the year in which such specified asset or savings certificates are transferred / converted.
According to the provisions of Section 115G of the Act, Non-Resident Indians are not obliged to
file a return of income under Section 139(1) of the Act, if their only source of income is income
from investments or long term capital gains earned on transfer of such investments or both,
provided tax has been deducted at source from such income as per the provisions of Chapter XVII-
B of the Act.
Under Section 115H of the Act, where the Non-Resident Indian becomes assessable as a resident
in India, he may furnish a declaration in writing to the Assessing Officer, along with his return of
income for that year under Section 139 of the Act to the effect that the provisions of the Chapter
XII-A shall continue to apply to him in relation to such investment income derived from the
specified assets for that year and subsequent assessment years until such assets are converted into
money.
According to the provisions of Section 115I of the Act, a Non-Resident Indian may elect not to be
governed by the provisions of Chapter XII-A for any assessment year by furnishing his return of
income for that assessment year under Section 139 of the Act, declaring therein that the provisions
of Chapter XII-A shall not apply to him for that assessment year and accordingly his total income
for that assessment year will be computed in accordance with the other provisions of the Act.
f. Exemption of capital gain from income tax is not applicable in case non-resident Indian
shareholder opts for taxability discussed above under Para e
As per the provisions of section 10(38) of the Act, long-term capital gains on sale of equity shares,
where the transaction of sale is chargeable to STT, shall be exempt from tax.
As per the provisions of section 54EC of the Act and subject to the conditions specified therein,
capital gains not exempt under section 10(38) and arising on transfer of a long term capital asset
shall not be chargeable to tax to the extent such capital gains are invested in certain notified bonds
within six months from the date of transfer. Deduction under section 54EC of the Act is restricted
to ` 50 lacs during any Financial Year. However, if the said bonds are transferred or converted into
money within a period of three years from the date of their acquisition, the amount of capital gains
99
exempted earlier would become chargeable to tax as long term capital gains in the year in which
the bonds are transferred or converted into money.
Where the benefit of section 54EC has been availed of on investments in the notified bonds, a
deduction from the income with reference to such cost shall not be allowed under section 80C of
the Act.
As per the provisions of section 54F of the Act and subject to the conditions specified therein, in
the case of an individual or a HUF, gains arising on transfer of a long term capital asset (not being
a residential house), other than gains exempt under section 10(38), are not chargeable to tax if the
entire net consideration received on such transfer is invested within the prescribed period in a
residential house. If part of such net consideration is invested within the prescribed period in a
residential house, then such gains would not be chargeable to tax on a proportionate basis. For this
purpose, net consideration means full value of the consideration received or accruing as a result of
the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in
connection with such transfer. If the specified conditions prescribed in section 54F of the Act are
not followed, then, the exemption claimed will be revoked and the gains so exempted will be
taxable as long term capital gains in the year in which default is committed.
4. Benefits available to other Non-resident Shareholders
I. Dividends Income
Dividends (both interim or final) income, if any, received by the other non-resident shareholders from a
domestic company shall be exempt from tax under Section 10(34) of the Act read with Section 115-O
of the Act.
II. Computation of capital gains
a. The Capital assets may be categorised into short term capital assets and long term capital
assets based on the period of holding. Shares in a company, listed securities or units of the
Unit Trust of India or units of a mutual fund specified under section 10(23D) of the Act or
Zero-Coupons bonds will be considered as long term capital assets if they are held for a period
exceeding 12 months. Consequently, capital gains arising on sale of these assets held for more
than 12 months are considered as long term capital gains. Capital gains arising on sale of
these assets held for 12 months or less are considered as short term capital gains.
b. As per section 48 of the Act contains special provisions in relation to computation of capital
gains on transfer of an Indian companys shares by non-residents. Computation of capital
gains arising on transfer of shares in case of non-residents has to be done in the original
foreign currency, which was used to acquire the shares. The capital gain (i.e., sale proceeds
less cost of acquisition/ improvement) computed in the original foreign currency is then
converted into Indian Rupees at the prevailing buying rate of exchange on the date of transfer.
c. Exemption of long term capital gain from income tax
As per section 10(38) of the Act, long-term capital gains on sale of equity shares where the
transaction of sale is chargeable to STT shall be exempt from tax.
As per the provisions of section 54EC of the Act and subject to the conditions specified therein,
capital gains not exempt under section 10(38) and arising to the assesses on transfer of a long term
capital asset shall not be chargeable to tax to the extent such capital gains are invested in certain
notified bonds within six months from the date of transfer. Deduction under section 54EC of the
100
Act is restricted to ` 50 lacs during any Financial Year. However, if the assessee transfers or
converts the notified bonds into money within a period of three years from the date of their
acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long
term capital gains in the year in which the bonds are transferred or converted into money.
Where the benefit of section 54EC has been availed of on investments in the notified bonds, a
deduction from the income with reference to such cost shall not be allowed under section 80C of
the Act (applicable to individuals).
As per the provisions of section 54F of the Act and subject to the conditions specified therein, in
the case of an individual or a HUF, gains arising on transfer of a long term capital asset (not being
a residential house), other than gains exempt under section 10(38), are not chargeable to tax if the
entire net consideration received on such transfer is invested within the prescribed period in a
residential house. If part of such net consideration is invested within the prescribed period in a
residential house, then such gains would not be chargeable to tax on a proportionate basis. For this
purpose, net consideration means full value of the consideration received or accrued as a result of
the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in
connection with such transfer. If the specified conditions prescribed in section 54F of the Act are
not followed, then, the exemption claimed will be revoked and the gains so exempted will be
taxable as long term capital gains in the year in which default is committed.
d. Tax on Long Term capital Gain u/s 112
In case investment is made in Indian rupees, the long-term capital gain is to be computed after indexing
the cost. As per the provisions of Section 112 of the Act, long term gains as computed above that are
not exempt under section 10(38) of the Act would be subject to tax at a rate of 20 percent (plus
applicable Surcharge + Education and Secondary & Higher Education cess). However, as per the
proviso to Section 112(1), if the tax on long term capital gains resulting on transfer of listed securities
or Units or Zero-Coupons bonds, calculated at the rate of 20 percent with indexation benefit exceeds
the tax on long-term gains computed at the rate of 10 percent without indexation benefit, then such
gains are chargeable to tax at a concessional rate of 10 percent (plus applicable Surcharge + Education
and Secondary & Higher Education cess).
e. Tax on Short Term capital Gain u/s 111A
According to the provisions of section 111A of the Act, short-term capital gains on sale of equity
shares, where the transaction of sale is chargeable to STT, shall be subject to tax at a rate of 15 per cent
(plus applicable Surcharge + Education and Secondary & Higher Education cess).

101
5. Key Benefits available to Foreign Institutional Investors (FIIs)
a. Dividend Income
Dividends (both interim or final) income, if any, received by the Foreign Institutional Investors (FIIs)
from a domestic company shall be exempt from tax under Section 10(34) of the Act read with Section
115-O of the Act.
b. Taxability of Capital Gains
As per the provisions of section 115AD(1) of the Act, where the total income of a Foreign Institutional
Investor (Foreign Institutional Investor means such investor as the Central Government may, by
notification in the Official Gazette, specify in this behalf) includes income (other than income by way
of dividends referred to in Section 115-O) received in respect of the equity shares of the Company, or
income by way of short term or long term capital gains arising from the transfer of such securities,
subject to the sub section (2) & (3) of the said section, the income tax payable shall be the aggregate of:
(i) The amount of income tax calculated on dividends at the rate of 20%;
ii) The amount of income tax calculated on the income by way of short term capital gains at the
rate of 30%.
However, the amount of income tax calculated on the income by way of short term capital
gains referred to in section 111A shall be at the rate of 15% ; and
iii) The amount of income tax calculated on the income (calculated in the specified manner) by
way of long term capital gains included in the total income, at the rate of 10%.
Further, as per the provisions of section 196D, where any dividend income (other than dividends
referred to in Section 115-O) is payable to a Foreign Institutional Investor, the person responsible for
making the payment shall, at the time of credit of such income to the account of the payee or at the time
of payment thereof, deduct income tax thereon at the rate of 20%. However, no deduction of tax shall
be made from any income, by way of capital gains arising from the transfer of securities referred to in
Section 115AD(1)(b), payable to a Foreign Institutional Investor.
c. As per the provisions of section 10(38) of the Act, any income arising from transfer of long-
term capital asset being sale of equity shares or units of an equity oriented fund specified under section
10(23D) where such transaction is chargeable to securities transaction tax shall be exempt from tax.
6. Tax Treaty benefits
A Non-resident / Non-resident Indian shareholder / Foreign Institutional Investor has an option to be
governed by the provisions of section 90 of the Act or the provisions of a Tax Treaty that India has
entered into with another country of which the investor is a tax resident, whichever is more beneficial.
7. Key Benefits available to Mutual Funds
According to the provisions of Section 10(23D) of the Act, any income of Mutual Funds registered
under the Securities and Exchange Board of India Act, 1992 or Regulations made thereunder, Mutual
Funds set up by public sector banks or public financial institutions and Mutual Funds authorised by the
102
Reserve Bank of India would be exempt from income tax, subject to the conditions as the Central
Government may by notification in the Official Gazette specify in this behalf.
8. Benefits available under the Wealth Tax Act, 1957
Asset as defined under Section 2(ea) of the Wealth tax Act, 1957 does not include shares in companies.
Hence, wealth tax is not leviable on shares held in a company.

9. Benefits available under the Gift Tax Act, 1958
Gift tax is not leviable in respect of any gifts made on or after October 1, 1998. Therefore, any gift of
shares will not attract gift tax.
Notes:
a) All the above benefits are as per the current tax law and will be available only to the sole/first
named holder in case the shares are held by joint holders unless otherwise provided in the Act.
b) In respect of non-residents, the tax rates and the consequent taxation mentioned above will be
further subject to any benefits available under the relevant Double Tax Avoidance Agreement
(DTAA), if any, between India and the country in which the non-resident has fiscal domicile.
c) Wherever applicable, the benefits mentioned hereinabove are subject to fulfillment of the
specified conditions and up to the limits as mentioned in the relevant provisions.
d) In view of the individual nature of tax consequences, each investor is advised to consult his /
her own tax advisor with respect to specific tax consequences of his / her participation in the
scheme.
e) The above statement of possible direct taxes benefits sets out the provisions of law in a
summary manner only and is not complete analysis or listing of all potential tax consequences
of the purchase, ownership and disposal of equity shares.
f) Direct Tax code proposed to be introduced with effect from 01-04-2012 would replace the
present Income Tax Act, 1961
103
SECTION IV ABOUT THE COMPANY
INDUSTRY OVERVIEW
We have not commissioned any report for the purposes of this Draft Red Herring Prospectus. The data and
information in this section have been extracted from publicly available sources prepared by various entities,
including the Indian Ministry of Power (MoP), the Central Electricity Authority of India (CEA), the
Central Electricity Regulatory Commission of India (CERC), the Reserve Bank of India (RBI) and
officially prepared materials by the Government of India (GoI), and various multilateral institutions. We may
have re-classified the data and information for the purposes of presentation. While we believe that the
information and data in this section are reliable, we cannot ensure the accuracy of such information or data,
and none of our Company, the Selling Shareholder, the BRLMs or any of our and their respective affiliates or
advisors have independently verified this information or data. You should not assume that the information and
data contained in this section speak as of any date other than the date of this Draft Red Herring Prospectus,
except as otherwise indicated. You should also be aware that since the date of this Draft Red Herring
Prospectus there may have been changes in the power and manufacturing industries, and the various sectors
therein, that could affect the accuracy or completeness of the information in this section.
OVERVIEW OF THE INDIAN ECONOMY
India is the worlds largest democracy by population with an estimated population size of 1.2 billion as of
March 31, 2011 (Source: Provisional Population Totals Paper 1 of 2011 India series 1, Census Data 2011
published by the Office of the Registrar General & Census Commissioner, India). Indias 2010 Gross Domestic
Product (GDP) in purchasing power parity terms was US$4.05 trillion. (Source: Central Intelligence Agency
(CIA) World Factbook, September 2011). This made India the fifth largest economy in the world after the
European Union, the United States, China and Japan. The Indian economy is among the fastest growing
economies globally and has grown at an average rate of 8.6% per annum during the last five years (Financial
Years 2006 to 2010) (Source: World Development Indicators (WDI) Database, World Bank, September 2011).
The following table compares Indias GDP growth rate with the GDP growth rate of certain other countries:
Country 2006 2007 2008 2009 2010
Australia 3.1% 3.8% 3.7% 1.3% n.a.
Brazil 4.0% 6.1% 5.2% (0.6%) 7.5%
China 12.7% 14.2% 9.6% 9.2% 10.3%
France 2.5% 2.3% (0.1%) (2.7%) 1.5%
Germany 3.4% 2.7% 1.0% (4.7%) 3.6%
India 9.3% 9.8% 4.9% 9.1% 9.7%
Japan 2.0% 2.4% (1.2%) (6.3%) 5.1%
Korea (South) 5.2% 5.1% 2.3% 0.3% 6.2%
Malaysia 5.8% 6.5% 4.7% (1.7%) 7.2%
Russia 8.2% 8.5% 5.2% (7.8%) 4.0%
United Kingdom 2.8% 2.7% (0.1%) (4.9%) 1.3%
United States 2.7% 1.9% (0.0%) (2.7%) 2.9%
Source: World Development Indicators (WDI) Database, World Bank, September 2011
Five Year Plans
India follows a system of successive five-year plans (each, a Five Year Plan), which establish targets for
economic development in various sectors. The Five Year Plans are one of GoIs key tools for economic
planning. The Five Year Plans are developed, executed and monitored by the Planning Commission of India.
According to the Planning Commission of India, the 11
th
Five Year Plan (2007-2012) is aimed at achieving a
sustainable GDP growth rate of 9.0%. Such sustainable growth rate is dependent largely on investments in
infrastructure development, which includes transportation (railways, roads, ports and civil aviation), electricity
generation, transmission and distribution, communications (telecommunication and post), water supply and
sanitation, and solid waste management. The following table sets forth the actual levels of infrastructure
investment in various sectors under the 10
th
Five Year Plan (Financial Year 2002 to Financial Year 2007) and
104
planned levels for the 11
th
Five Year Plan (Financial Year 2007 to Financial Year 2012) for the respective
periods:
Sector-wise Investments: 10
th
Five Year Plan and Projected for the 11
th
Five Year Plan
(` billion at Financial Year 2007 prices)
10
th
Five Year Plan 11
th
Five Year Plan
Sectors ` ` ` `
Billion
US$
Billion
Share
(%)
` ` ` `
Billion
US$
Billion
Shar
e
(%)
Electricity (incl. non-
conventional energy)
3,402.4 75.6 37.0 6,586.3 146.4 32.1
Roads and Bridges 1,271.1 28.2 13.8 2,786.6 61.9 13.6
Telecommunications 1,018.9 22.6 11.1 3,451.3 76.7 16.8
Railways (incl. mass rapid
transit system)
1,020.9 22.7 11.1 2,008.0 44.6 9.8
Irrigation (incl. watershed) 1,198.9 26.6 13.0 2,462.3 54.7 12.0
Water supply & sanitation 601.1 13.4 6.5 1,116.9 24.8 5.4
Ports 230.0 5.1 2.5 406.5 9.0 2.0
Airports 68.9 1.5 0.7 361.4 8.0 1.8
Storage 56.4 1.3 0.6 89.7 2.0 0.4
Oil & Gas Pipelines 323.7 7.2 3.5 1,273.1 28.3 6.2
Total (` ` ` ` Billion) 9,192.3 204.3 100.0 20,542. 456.5 100.0
Source: Planning Commission, Government of India, Mid Term Appraisal of the 11
th
Five Year Plan
Note: 1USD = 45INR
The Central and State Governments of India are also focusing on establishing an appropriate policy framework
for the infrastructure sector, which provides the private sector with incentives to make large-scale investments,
while preserving adequate checks and balances through transparency, competition and regulation. There has
been a shift towards financing of infrastructure development in the private sector, primarily through Public
Private Partnerships (PPPs), which are designed to mobilise financial resources and realise benefits from
private sector efficiencies to meet the growing demand for infrastructure services. Private sector investments in
infrastructure are expected to grow from 24.5% under the 10
th
Five Year Plan to 36.2% under the 11
th
Five Year
Plan. Private sector investments in infrastructure are expected to grow from ` 7081.9 billion in Financial Year
2007 to ` 20,841.3 billion in Financial Year 2012, representing a CAGR of 24.1%. (Source: Planning
Commission, Government of India, Mid-Term Appraisal of the 11
th
Five Year Plan).
SUMMARY OF SECTORS IN WHICH THE COMPANY OPERATES
Power
Transmission
and Distribution
Non Conventional Energy
Sources
Industrial Systems
BTG Equipments
Combined-cycle
Turnkey Power
Stations
Transformers
Switchgears And
Control Gears
Capacitors and
Insulators
HVDC Transmission
Systems
Solar Energy Systems Railways
Oil & Gas
Power Generation Transmission
Non Conventional Energy
Sources
Industrial products and
systems
BTG Equipments
Co-generation/Combined
cycle Power Plants
Power Plants
Turnkey Power
Stations
Transformers, Reactors
Switchgears and
Control Gears
Capacitors and
Insulators
HVDC Transmission
Systems
Solar Energy Systems
Railways
Oil & Gas
Turnkey Substations/
Switchyard (AIS / GIS)
Process Industries
Other Businesses
105
OVERVIEW OF THE INDIAN POWER SECTOR
India is both a major producer and a major consumer of power. According to data from IEA - Key World Energy
Statistics (2010) India ranked as the worlds fifth largest power producing nation as well as the fifth largest
power consuming nation in 2010 behind the United States, China, Japan and Russia. As of March 31, 2011,
Indias total annual power production was 811.1 billion kWh, including 5.6 billion kWh imported from Bhutan.
(Source: CEA, Energy Generation Report, April 2011). Its total annual power requirement was approximately
861.6 billion kWh. (Source: CEA, Monthly Review of Power Sector, March 2011).
The following diagram depicts the structure of the Indian power industry for generation, transmission,
distribution and consumption:
Legend:
IPPs Independent Power Producer SPUs State Power Utilities
CPUs Central Power Utilities POWERGRID Power Grid Corporation of India Limited
SEBs State Electricity Boards EDs Electricity Departments
STUs State Transmission Utilities Discoms Distribution Companies
Power Demand in India
Indias rapid economic growth spurred the domestic demand for power. The persistent shortages of electricity
both for peak power and for energy indicate the need for improving the performance of the power sector in the
country. Reforms for a more efficient and competitive power sector have been under way in India for several
years. While there has been some progress in this regard, shortage of power and lack of access continue to be
major constraints on Indias economic growth. (Source: Planning Commission of India). Although power
generation capacity in India has increased substantially in recent years, it has not kept pace with the rapid and
continuing growth of the Indian economy, despite relatively low per capita electricity consumption in
comparison to other major economies. (Source: IEA, Key Energy World Statistics 2010).
Compared to the world average per capita electricity consumption, Indias low per capita electricity
consumption presents a significant potential for sustainable growth in power demand in India. The per capita
consumption of power in India increased from 566.7 kWh per year in Financial Year 2003 to 733.5 kWh per
year in Financial Year 2009, representing a CAGR of 4.4% for the same period. (Source: Source: CEA, Monthly
Review of Power Sector, March 2011).
The following table sets forth information relating to India's per capita consumption of power for the periods
indicated:
Year Per Capita Consumption (kWh)
FY 2003 566.7
FY 2004 592.0
FY 2005 612.5
Consumption Distribution Transmission Generation
SEBs/SPUs
CPUs
IPPs & Private
Licences
Captive
SEBs/STUs
POWERGRID
Private Utilities
SEBs, EDs, DISCOMS
Energy Available and
Sold
Transformation,
Transmission &
Distribution Losses
including Unaccounted
Energy
Agriculture, Domestic,
Commercial, Industries
and Others
Captive Consumer
Power Trading Companies
Open
106
Year Per Capita Consumption (kWh)
FY 2006 631.5
FY 2007 671.9
FY 2008 717.1
FY 2009 733.5
Source: CEA, Monthly Review of Power Sector, March 2011.
In its National Electricity Policy, the central government of India aims to increase per capita availability of
electricity to over 1000 units by Financial Year 2012, reinforcing the potential for investment in the Indian
power sector.
Power Supply in India
Each successive Five Year Plan of the GoI has contained increased targets for the addition of power generation
capacity. The energy deficit in India is a result of insufficient progress in the development of additional power
generation capacity. In each of the last three Five Year Plans (the 8
th
, 9
th
and 10
th
Five Year Plans, covering
Financial Years 1992 through 2007), only about 50% of the targeted additional energy capacity level was added.
India added an average of approximately 20,000 MW to its energy capacity in each of the 9
th
and 10
th
Five Year
Plan periods. (Source: White Paper on Strategy for Eleventh Plan, prepared by CEA and Confederation of
Indian Industry (the White Paper).
The following chart sets forth the targeted energy capacity addition for the Five Year Plans to date, the installed
capacity actually achieved at the end of these Five Year Plans and the installed capacity actually achieved as a
percentage of the targeted capacity additions for each of these Five Year Plans:
9,264
12,499
22,245
30,538
78,700
16,423
19,015
21,180
44,661
40,245 41,110
19,666
1,300
3,500
7,040 10,202
2,250
1,100
4,520 4,579
14,226
21,401
47%
57%
52% 54%
72%
96%
82%
64%
64%
85%
49%
0
18,000
36,000
54,000
72,000
90,000
I II III IV V VI VII VIII IX X XI
(MW)
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
Target Capacity Addition Actual Capacity Addition Target Achieved (%)
Source: White Paper and CEA Reports
Note: Figures for 11
th
Five Year Plan up to June 30, 2011
The total capacity addition during the past 25 years, between the 6
th
Five Year Plan and the 10
th
Five Year Plan,
was approximately 92,200 MW. The target capacity addition under the 11
th
Five Year Plan is 78,700 MW,
56.7% of which was achieved as of June 30, 2011. (Source: CEA Monthly Review of Power Sector, June 2011)
Out of Indias total installed capacity of 176,990.4 MW as on June 30, 2011, the installed capacity of state
power sector utilities, private sector entities and central sector companies accounted for approximately 46.7%,
21.9% and 31.4%, respectively.
The following table sets forth a summary of India's energy generation capacity as of June 30, 2011 in terms of
fuel source and ownership:
Sector Hydro Thermal Nuclear Renewable
Sources
Total
Coal Gas Diesel Total
(in MW)
State 27,296.0 47,362.0 4,327.1 602.6 52,291.7 - 3,008. 9 82,596.6
Private 1,925.0 14,176.4 6,677.0 597.1 21,450.5 - 15,445.7 38,821.2
Central 8,885.4 35,205.0 6,702.2 - 41,907.2 4,780.0 - 55,572.6
Total 38,106.4 96,743.4 17,706.5 1,199.8 115,649.6 4,780.0 18,454.5 176,990.4
Source: CEA, Monthly Review of Power Sector, June 2011
107
Together, the Central and State governments own and operate approximately 78.1% of the installed power
capacity in India. The private sector has historically been reluctant to enter the market for power because of
onerous governmental regulations on the construction and operation of power plants, and the sourcing of fuel for
such plants. However, private sector participation has been increasing over time owing to power sector reforms.
(Source: CEA Monthly Review of Power Sector, June 2011)
Demand-Supply Imbalance in India
India has continuously experienced shortages in energy and peak power requirements. According to the CEA
Monthly Review of Power Sector published in June 2011, the total energy deficit for June 2011 was
approximately 5.3% and the peak power deficit for June 2011 was 8.7%.
The following table sets forth the shortage of power in the peak demand and normative energy requirement in
India from Financial Year 2003 to Financial Year 2012:
Period Peak Demand Energy Requirement
Demand
(MW)
Availability
(MW)
Deficit Demand
(MU*)
Availability
(MU*)
Deficit
(MW) (%) (MU*) (%)
FY 2003 81,492 71,547 9,945 12.2 545,983 497,890 48,093 8.8
FY 2004 84,574 75,066 9,508 11.2 559,264 519,398 39,866 7.1
FY 2005 87,906 77,652 10,254 11.7 591,373 548,115 43,258 7.3
FY 2006 93,255 81,792 11,463 12.3 631,554 578,819 52,735 8.4
FY 2007 100,715 86,818 13,897 13.8 690,587 624,495 66,092 9.6
FY 2008 108,866 90,793 18,073 16.6 739,343 666,007 73,336 9.9
FY 2009 109,809 96,785 13,024 11.9 777,039 691,038 86,001 11.1
FY 2010 119,166 104,009 15,157 12.7 830,594 746,644 83,950 10.1
FY 2011 125,077 112,167 12,910 10.3 862,125 789,013 73,112 8.5
FY 2012 122,391 111,163 11,228 9.2 227,658 212,628 15,030 6.6
* Million Units
Note: FY12 figures for April 2011 - June 2011
Source: Power Scenario At A Glance, CEA Report, January 2011 and CEA Monthly Reviews of Power
Sector, March 2011 and June 2011
The deficits in electric energy and peak power requirements vary across different regions in India. The peak
deficit was at 12.5% in the western region of the country, followed by 11.0% in the north-eastern region of the
country in June 2011. In contrast, in June 2011, eastern India had the lowest regional deficit of 5.5%. (Source:
CEA Monthly Review of Power Sector, June 2011). The larger deficit in the former regions is a result of the
slow development progress of additional power generation capacity in these areas.
The following table outlines the peak and normative power shortages in India for the period April to June 2011
across the regions of India:
Region Peak Demand Energy Requirement
Demand
(MW)
Availability
(MW)
Deficit Demand
(MU*)
Availability
(MU*)
Deficit
(MW) (%) (MU*) (%)
North 37,651 34,575 3,076 8.2 66,976 63,932 3,044 4.5
West 39,566 33,705 5,861 14.8 72,421 65,111 7,310 10.1
South 33,937 31,489 2,448 7.2 61,843 59,478 2,365 3.8
East 14,000 12,879 1,121 8.0 23,787 22,752 1,035 4.4
North-East 1,762 1,581 181 10.3 2,631 2,351 280 10.6
*Million Units
Source: CEA Monthly Review of Power Sector, June 2011
Thermal Power Generation
As of March 31, 2011, thermal power plants accounted for 65.0% of Indias installed capacity, of which 83.2%
is accounted for by coal-based plants, based on total available thermal capacity. (Source: CEA, Power
Scenario at a Glance, March 2011, provisional figures).
108
Capacity Utilisation
Capacity utilisation in the Indian power sector is measured by the plant load factor (PLF) of generating
plants. The average PLF for coal-fired plants in India has increased from 69.0% in FY 2001 to 77.5% in FY
2010 as may be seen from the following table:
Average PLF for Thermal Power Plants in India
Period Central State Private Overall
FY 2001 74.3% 65.6% 73.1% 69.0%
FY 2002 74.3% 65.6% 73.1% 69.0%
FY 2003 77.1% 68.7% 78.9% 72.1%
FY 2004 78.7% 68.4% 80.5% 72.7%
FY 2005 81.7% 69.6% 85.1% 74.8%
FY 2006 82.1% 67.1% 85.4% 73.6%
FY 2007 84.8% 70.6% 86.3% 76.8%
FY 2008 86.7% 71.9% 90.8% 78.6%
FY 2009 84.3% 71.2% 91.0% 77.2%
FY 2010* 85.5% 70.9% 82.4% 77.5%
FY 2011* 83.1% 63.9% 79.7% 72.9%
* Up to December
Source: Ministry of Power, Annual Report 2010-11
Captive Power Generation
Another segment of power generation in India is the captive power segment. Captive power refers to power
generation from a project established by the industry / others for their own consumption. Captive power
capacity, at 19,509.5 MW, accounted for 11.0% of the 176,990.4 MW of total installed capacity in India.
(Source: CEA Monthly Review June 2011)
Indias dependence on captive power has been rising due to the continuing shortage of power and India's
sustained economic growth. The Electricity Act provided further incentives to captive power generation
companies to grow by making them exempt from licensing requirements. This has resulted in an increase in
captive power capacity. Reliability of power supply and better economics are other variables pushing industries
to develop captive generation plants.
Demand Projections
India had an installed generation capacity of 176,990.4 MW as of June 30, 2011. To deliver a sustained
economic growth rate of 8.0% through Financial Year 2032, according to the CEA, India needs, at a minimum,
to increase its primary energy supply between three and four times, and its electricity generation capacity
between five and six times, based on Financial Year 2004 levels. India would require an additional capacity of
approximately 43 to 56 gigawatts (GW) by the end of Financial Year 2012, 129 to 160 GW by Financial Year
2017 and 248 to 311 GW by Financial Year 2022, respectively, based on normative parameters in order to
sustain an 8.0% to 9.0% GDP growth rate. The following table sets forth the additional capacity required by
Financial Year 2012, Financial Year 2017 and Financial Year 2022, respectively, under different GDP growth
rate scenarios and the current (provisional) capacity as of June 30, 2011:
Assumed GDP
Growth
Electricity
Generation
Required
Peak Demand Installed
Capacity
Capacity
Addition
Required
(1)
(%) (BU) (GW) (GW) (GW)
By FY 2012 8.0 1,097 158 220 43
9.0 1,167 168 233 56
By FY 2017 8.0 1,524 226 306 129
9.0 1,687 250 337 160
By FY 2022 8.0 2,118 323 425 248
9.0 2,438 372 488 311
(1)
Based on the current existing installed capacity of 177 GW in India as of June 30, 2011.
Source: IEP Report, Expert Committee on Power and CEA, Monthly Review of Power Sector, June 2011
109
Future Capacity Additions
11
th
Five Year Plan (2007-2012)
The central government has identified the power sector as a key sector to promote sustained industrial growth by
embarking on an aggressive mission titled Power for All by Financial Year 2012, backed by extensive reforms
intended to make the power sector more attractive for private sector investment. As per the Mid-Term Appraisal
of the 11
th
Five Year Plan released by the Planning Commission, the electricity sector is expected to attract
32.1% of the total investment in infrastructure. According to the Monthly Review published by CEA in June
2011, the proposed capacity addition for power generation during the 11
th
Five Year Plan is 78,700.4 MW, as
set forth below:
Sector Hydro Thermal Nuclear Total
(in MW)
Central 8,654.0 24,840.0 3,380.0 36,874.0
State 3,482.0 23,301.4 0.0 26,783.4
Private 3,491.0 11,552.0 0.0 15,043.0
All-India Total 15,627.0 59,693.0 3,380.0 78,700.4
Source: CEA, Monthly Review of Power Sector, June 2011
12
th
Five Year Plan (2012-2017)
A tentative capacity addition of approximately 100,000 MW has been envisaged under the 12
th
Five Year Plan.
This comprises an estimated 74,000 MW from thermal power, 20,000 MW from hydro power, 3,400 MW from
nuclear power and 2,500 MW from lignite. Gas capacity under the 12
th
Five Year Plan has not been estimated
due to the uncertainty about the availability of gas for the power sector. However, the GoI is making efforts to
plan some gas-based capacity addition under the 12
th
Five Year Plan. (Source: Base Paper, International
Conclave on Key Inputs for Accelerated Development of Indian Power Sector for the 12
th
Plan & Beyond,
organised by MoP and CEA, August 18-19, 2009)
Regulatory Structure in India
In India, control over the development of the power industry is shared between the Centre and the State. The
Ministry of Power (MoP) is the highest authority governing the power industry in India. The CEA, a statutory
organisation constituted under the Electricity (Supply) Act, is the technical branch of the Ministry of Power,
assisting in technical, financial and economic matters relating to the electricity industry. The CEA is responsible
for giving concurrence to schemes involving capital expenditure beyond a certain limit fixed by the GoI from
time to time, and it is also responsible for the development of a sound, adequate and uniform power policy in
relation to the control and utilisation of national power resources. The Central Electricity Regulatory
Commission (CERC) formed under the Electricity Regulatory Commissions Act, 1998 is an independent
statutory body with quasi-judicial powers. Its main functions include the formulation of policy and the framing
of guidelines with regard to electricity tariffs.
Several States have set up State Electricity Regulatory Commissions (SERCs). The SERCs are engaged in
regulating the purchase, distribution, supply and utilisation of electricity, tariffs and charges payable, as well as
the quality of electricity supply service. State governments have set up SEBs at the state level, which are
responsible for ensuring that the supply, transmission and distribution of electricity in such States is carried out
in the most economical and efficient manner. These SEBs are required to coordinate with power generating
companies as well as with government entities that control the relevant power grids.
In recent years, in light of persistent power shortages and given the estimated rate of increase in Indian
electricity demand, the GoI has taken significant action to restructure the power sector, increase capacity,
improve transmission, sub-transmission and distribution, and attract investment to the sector. Some of the
various strategies and reforms adopted by the GoI as well as other initiatives in the Indian power are
summarised below:
Government Policy and Initiatives in the Indian Power Generation Sector
Electricity Act, 2003 (the "Electricity Act")
The most significant reform package was the introduction of the Electricity Act in 2003, which modified the
legal framework governing the electricity sector and was designed to alleviate many of the problems facing
Indias power sector as well as to attract capital for large-scale power projects. The Electricity Act replaced the
multiple pieces of legislation that previously governed the Indian electricity sector. The most significant reform
under the Electricity Act is the move towards a multi-buyer, multi-seller system, as opposed to the previous
110
structure which permitted only a single buyer to purchase power from generators. Furthermore, under the
Electricity Act, the regulatory regime is more flexible, has a multi-year approach and allows the Central and
State regulatory commissions greater freedom in determining tariffs, without being constrained by rate-of-return
regulations.
National Electricity Policy, 2005
GoI issued the National Electricity Policy in February 2005. This policy aims to accelerate the development of
the power sector by focusing on providing electricity supply to all areas in India and on protecting the interests
of consumers and other stakeholders. At the same time the policy keeps in view the availability of energy
resources, the technology available to exploit such resources, the economics of power generation through
various resources as well as energy security issues.
National Tariff Policy, 2006
GoI issued the National Tariff Policy ("NTP") on January 6, 2006. Its main objectives are to:
ensure availability of electricity to consumers at reasonable and competitive rates;
ensure financial viability of the sector and attract investments;
promote transparency, consistency and predictability in regulatory approaches across jurisdictions;
minimise perceptions of regulatory risks; and
promote competition, efficiency in operations and improvement in quality of supply.
The NTP stipulates that all future power requirements should be procured competitively by distribution
licencees except in cases of expansion of pre-existing projects or in cases in which a developer controlled or
owned by the public sector is involved. In these cases, regulators must resort to tariffs set by reference to
standards of the CERC, provided that expansion of generating capacity by private developers for this purpose
will be restricted to a one-time addition of not more than 50% of the existing capacity. Under the NTP, even for
public sector projects, tariffs for all new generation and transmission projects will be decided on the basis of
competitive bidding after a certain time period.
Ultra Mega Power Projects ("UMPPs")
For meeting the growing needs of the economy, power generation capacity in India must rise significantly and
sustainably over the coming decades. There is, therefore, a need to develop large capacity projects at the
national level to meet the requirements of different States. Development of UMPPs is one step the MoP is taking
to meet this objective. Each project has a capacity of minimum 4,000 MW and involves an estimated investment
of approximately US$ 4.0 billion. The projects are expected to substantially reduce power shortages in India.
The UMPPs will be awarded to developers on a build-own-operate basis. (Source: website of the MoP)
OVERVIEW OF THE POWER TRANSMISSION IN INDIA
The transmission of electricity is typically defined as the bulk transfer of power over a long distance at a high
voltage, generally at 132 KV and above. The distribution of electricity is the delivery of power from the
transmission system to the customer. A reliable T&D system is important for the proper and efficient transfer of
power from generating stations to load centers and beyond. A typical T&D system comprises transmission lines,
sub-stations, switching stations, transformers and distribution lines. Inter-regional transmission networks are
also required in India because power generation sources are unevenly distributed and power needs to be carried
over large distances from areas where power is generated to areas where load centers and demand exist.
In India, the T&D system is a three-tier structure comprising distribution networks, State grids, and regional
grids. The distribution networks and State grids are principally owned and operated by SEBs or other State
utilities, or State governments (through state electricity departments). Most of the interstate and inter-regional
transmission lines are owned and operated by the Power Grid or its joint ventures. At present, there are five
regional grids operating in India, in the Northern, Eastern, Western, Southern and Northeastern regions.
Regional or interstate grids facilitate the transfer of power from a region with a surplus to one with a deficit.
These regional grids also facilitate the scheduling of maintenance outages and coordination between power
plants. Presently the Northern, Eastern, Western and North Eastern regions are operating in one synchronous
mode and the Southern region is interconnected with Western Region and Eastern Region through HVDC links.
(Source: Ministry of Power, Annual Report 2009-2010).
Setting up of a National Grid
111
At the time of Independence, transmission power systems in India were isolated systems developed in and
around urban and industrial areas. The SEBs were responsible for the development of generation, transmission,
distribution and utilisation of electricity projects in their respective States. The objective of the projects was to
have a coordinated approach to an integrated electricity system. In 1964, for the purpose of coordinating power
sector planning on a larger scale and integrating state grid systems to achieve optimum development and
utilisation of resources, the country was divided into five regions. Regional Electricity Boards (REBs) were
established in each region to facilitate the integrated operation of state systems and to encourage the exchange of
power among the States. For this, inter-state lines were planned, which were treated as centrally sponsored
schemes. In 1981, the GoI approved a plan for setting up a national grid.
Since 2003, the focus of planning the generation and the transmission system in the country has shifted from
regional self-sufficiency towards optimisation of utilisation of resources on a nationwide basis. The process of
setting up the national grid was initiated with the formation of the central sector power-generation and
transmission companies, National Thermal Power Corporation Limited (now known as NTPC Limited),
National Hydroelectric Power Corporation Limited (now known as NHPC Limited) and POWERGRID.
POWERGRID was made responsible for planning, constructing, operating and maintaining all inter-regional
links as well as the integrated operation of national and regional grids.
Increase in Transmission Capacity under the 11
th
and 12
th
Five Year Plans
The goal of the transmission system development under the 11
th
Five Year Plan is to provide adequate inter-
regional and intra-regional transmission capacity, and to move towards a strong consolidated all-India grid.
With the strengthening of inter-regional connections by 2012, the inter-regional capacity is expected to grow to
32,650 MW by the end of the 11
th
Five Year Plan, according to the Planning Commissions Mid-Term Appraisal
of the 11
th
Five Year Plan. The CEA anticipates that inter-regional transmission capacity would be in the order
of 57,000 MW by Financial Year 2015 and 75,000 MW by the end of the 12
th
Five Year Plan. The actual
increase in transmission capacity will depend on the corresponding growth in generation capacity. (Source:
CEA, Key Inputs for Accelerated Development of Indian Power Sector for 12
th
Plan & Beyond)
Setting up a national grid requires the gradual strengthening and improvement of regional grids and their
progressive integration through extra high voltage and HVDC transmission lines.
The proposed targeted transmission lines capacity at the outset of the 11
th
Five Year Plan is set forth in the table
below:
Targeted Capacity under the 11th Five Year
Plan (ckm)
500 kV HVDC 7,432
765 kV 7,850
400 kV 125,000
230/220 kV 150,000
Total 290,282
Source: CEA, Base Paper, Key Inputs for Accelerated Development of Indian Power Sector for 12
th
Plan &
Beyond
The proposed targeted sub-station capacity at the outset of the 11
th
Five Year Plan is set forth in the table below:
Targeted Capacity under the 11th Five Year
Plan (MVA)
500 kV HVDC 11,200
765 kV 53,000
400 kV 145,000
230/220 kV 230,000
Total 428,000
Source: CEA, Base Paper, Key Inputs for Accelerated Development of Indian Power Sector for 12
th
Plan &
Beyond
The inter-regional transmission capacity planned at the outset of the 11
th
Five Year Plan is set forth below:
Targeted Capacity under the 11th Five Year
Plan (MW)
112
Targeted Capacity under the 11th Five Year
Plan (MW)
East-South 3,630
East-North 12,130
East-West 6,490
East-North East 2,860
North-West 4,220
West-South 2,720
North East/East North/West 6,000
Total 38,050
Source: CEA, Base Paper, Key Inputs for Accelerated Development of Indian Power Sector for 12
th
Plan &
Beyond
Note: Figures only include links of 220 kV and above
Investments in Transmission under the 11
th
and 12
th
Five Year Plans
Traditionally, the Indian government has focused on investments in the power generation sector to alleviate the
acute power shortage in the country. In the process, the T&D sector remained neglected and attracted
significantly less investment in comparison to the power generation sector. The average investment in T&D
during the 10
th
Five Year Plan was approximately 32% of the investment in power generation. (Source: Ministry
of Power, Report on the Working Group on Power for Eleventh Plan (2007-2012)). An investment of ` 1,400
billion was originally planned in the transmission sector under the 11
th
Five Year Plan as set out below:
(` ` ` ` in billion)
Inter-State 750
Intra-State 650
Total 1,400
Source: Ministry of Power, Report of the Working Group on Power for Eleventh Plan (2007-2012)
The CEA estimates that the targeted investment under the 12
th
Five Year Plan (2012-2017) in the power sector
will exceed that under the 11
th
Five Year Plan. The estimated investment in T&D to be made under the 12
th
Five
Year Plan is set forth below:
(` ` ` ` in billion)
Transmission 2,400
Distribution 3,700
Total 6,100
Source: CEA, Base Paper, Key Inputs for Accelerated Development of Indian Power Sector for 12
th
Plan and
Beyond
Private Investments in Electric Power Transmission
In 1998, the Electricity Laws (Amendment) Act was enacted, which recognised transmission as an independent
activity, distinct from generation and distribution, and allowed private investment in that sector. In 2000, the
GoI issued guidelines whereby the State transmission utilities (STUs, SEBs or their successor entities) and the
central transmission utility could identify transmission projects for the intrastate and the inter-state and inter-
regional transmission of power, respectively. The STUs and the CTU could invite private companies to
implement these projects through an Independent Private Transmission Company (IPTC) or on a joint-venture
basis. (Source: Website of the MoP). The role of the IPTC would be limited to the construction, ownership and
maintenance of transmission systems. Operations of the grid, including load despatch, scheduling and
monitoring, will be undertaken by the STUs and the CTU at the intrastate and interstate, and inter-regional
levels, respectively. The CTU and STUs would be involved in the development phase for obtaining project
approvals and various regulatory, and statutory clearances (such as environmental, forest and right-of-way
clearances), and would transfer such clearances to the private companies selected.
In April 2006, the GoI issued tariff-based competitive bidding guidelines for transmission services and bid
process management. It also issued guidelines for encouraging competition in the development of transmission
projects. The GoI also created an Empowered Committee, headed by a member of CERC. The functions of the
empowered committee include identifying projects under the above scheme, facilitating preparation of bid
documents, evaluating bids, finalising project agreements and developing projects. Regarding intrastate
113
transmission projects, the State governments can also adopt these guidelines and may constitute similar
committees. In May 2009, the GoI updated its regulations for the Empowered Committee and tariff-based
competitive bidding guidelines for transmission services.
Anticipated Requirement of Sub-Stations and Transmission Lines
Expected Transmission Requirement 2012-17
800 kV HVDC Bipole Projects, 6000 (MW) 2 to 3
HVDC Bipole 800 kV (ckm) 4,000 to 6,000
765 kV / 400 kV Substations (nos.) 40 to 50
765/400 kV (MVA) 120,000
765 kV Transmission Lines (ckm) 25,000 to 30,000
400/220, 400/132 kV (MVA) 80,000
400 kV Transmission Lines (ckm) 50,000
220/132, 66, 22, 11 kV (MVA) 95,000
220 kV Transmission Line (ckm) 40,000
Source: Base Paper, International Conclave on Key Inputs for Accelerated Development of Indian Power Sector
for the 12th Plan & Beyond, organised by MoP and CEA, August 18-19, 2009
OVERVIEW OF THE POWER GENERATION EQUIPMENT MARKET IN INDIA
Power generation equipments are split into two main components, namely BTG and BOP. The BTG component
constitutes the boiler as one unit and turbine generator as another unit, while the BOP component mainly
comprises CHP, AHP, chimney, cooling tower, fuel oil handling systems, boiler feed pump, etc.
Generation system components
Source: Company data
Note: (1) Others include condensers, cooling towers, boiler feed pumps, HP-LP heaters etc.
(2) E&C Erection & Commissioning
E&C of above



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8
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114
The performance of the power generation equipment industry in India is closely linked to the capacity addition
envisaged in each of the Five Year Plans. The 12
th
Five Year Plan envisages a total capacity addition of
approximately 100,000 MW by 2017, representing an average 20 GW capacity addition per year. (Source: CEA,
Key Inputs for Accelerated Development of Indian Power Sector for Twelfth Plan and Beyond). Even beyond
the 12
th
Five Year Plan, 15-20 GW of power capacity is expected to be added every year given the significant
shortages in energy and peak-power requirements. These capacity additions are expected to drive demand for
power generation equipments going forward.
Coal-based thermal power plants account for a major part of the demand for power generation equipments in
India, primarily due to the heavy dependence on coal-fired generation to meet Indias power generation
requirements. In the future, out of the 100,000 MW estimated capacity additions, approximately 76,500 MW is
expected from thermal power, out of which 74,000 MW is expected to come from coal-based power plants.
(Source: Key Inputs for Accelerated Development of Indian Power Sector for Twelfth Plan and Beyond).
The following table shows the breakup of thermal capacity additions, by units, envisaged under the 12
th
Five
Year Plan:
Fuel Type Unit Size No. of Units No. of Stations Capacity (MW)
Coal 250/255 9 6 2,275
270 4 3 1,080
300 14 7 4,200
334 2 1 668
350 17 6 5,950
500 17 10 8,500
600 13 6 7,800
660 54 24 35,640
800 10 3 8,000
Sub Total 140 66 74,113
Lignite 125 4 2 500
500 4 2 2,000
Sub Total 8 4 2,500
Total - Thermal 148 70 ~76,500
Source: Base Paper, International Conclave on Key Inputs for Accelerated Development of Indian Power Sector
for the 12th Plan & Beyond, organised by MoP and CEA, August 18-19, 2009
Key Trends in the BTG Equipment Market in the Power Segment in India
Increasing Domestic Competition
Since the introduction of the Electricity Act in 2003, the power industry in India has experienced a surge in
capacity addition. Until 2009, BHEL was the major player in the BTG segment in the domestic market with an
operational capacity of 10 GW. To cater to the surge in demand for power equipment, BHEL has ramped up its
capacity to the present level of 15 GW and is in the process of further expanding it to 20 GW by 2012.
Considering the demand, other domestic companies such as L&T, JSW, Bharat Forge and BGR Energy etc.
have announced plans to set up BTG manufacturing capacities. These companies have formed joint ventures
with foreign partners with experience of manufacturing boiler/turbine generators, such as L&T Mitsubishi
Heavy Industries, Bharat Forge Alstom, JSW Toshiba and BGR Energy Hitachi.
Several private sector power producers such as Adani Power, JSW Energy, Lanco Infratech and Sterlite Energy
have revealed plans to set up large power generation capacities between 2007 and 2010. Foreign companies like
Shanghai Electric Group Company Limited, Doosan Heavy Industries, Harbin Power Plant Equipment and
Dongfang Electric Corporation were among the awardees of the contracts.
Move towards supercritical technology
115
The thermodynamic efficiency of a power plant can be improved by using higher steam parameters. Power plant
cycles operating above the critical pressure of 221.1 bar are classified as supercritical cycles and the associated
technology is supercritical technology.
The GoI has planned to adopt a number of measures with a view to reducing pollution and increasing the unit
size of coal-based plants by means of introducing supercritical technology-based power plants. Supercritical
technology development plans under the 12
th
and 13
th
Five Year Plans include developing mass indigenous
production of supercritical boilers and turbine generators to reduce the cost of production and to meet the
demand for supercritical equipment. (Source: Base Paper, International Conclave on Key Inputs for Accelerated
Development of Indian Power Sector for the 12
th
Plan & Beyond, organised by MoP and CEA, August 18-19,
2009)
Increasing private sector share in power capacity addition
Private sector participation has grown significantly in the power generation sector since the Electricity Act 2003
and the National Tariff Policy 2006. Several private players have plans to set up substantial capacities in the
medium term. The private sector contributed 1,970 MW to thermal generation capacity in India from 2002 to
2007. Since then, thermal generation capacity of 5,920 MW was commissioned in 11
th
Five Year Plan and
approximately 16,266 MW additional thermal generation capacity is currently under construction in the private
sector. The private sector is also likely to contribute substantial generating capacity under the 12th Five Year
Plan. (Source: CEA 2009-10 Annual Report, September 2010)
Balance of Plant Market in India
BOP covers all components of a power plant except BTG such as CHP, AHP, water treatment systems, cooling
tower, civil works, fuel handling system and chimney, amongst others.
CHP
CHP handles coal from the unloading stage through transportation to the boiler to storage in bunkers. It also
processes raw coal to make it suitable for boiler operation, which includes receiving the coal from the mines,
weighing it, crushing it down to the required size and transferring it to various coal mill bunkers.
The 12
th
Five Year Plan estimates a total requirement of 148 CHPs. (Source: Base Paper, International
Conclave on Key Inputs for Accelerated Development of Indian Power Sector for the 12
th
Plan & Beyond,
organised by MoP and CEA, August 18-19, 2009)
AHP
AHP refers to the system of collecting fly ash and bottom ash generated when coal is burnt. Indian coal has high
ash content (around 40%).
The 12
th
Five Year Plan estimates a total requirement of 148 AHPs to be executed over the 12
th
Five Year Plan
period. (Source: Base Paper, International Conclave on Key Inputs for Accelerated Development of Indian
Power Sector for the 12
th
Plan & Beyond, organised by MoP and CEA, August 18-19, 2009)
Water treatment system and cooling tower
The water treatment system primarily comprises of systems transporting water from the source to the plant, Pre
Treatment (PT) plant and Demineralisation (DM) plant. The requirement of clarified water for the power
plant is taken care of by the PT plant, while the DM plant supplies demineralised water to the power plant.
Cooling towers are heat removal devices that transfer process waste heat into the atmosphere. Cooling towers
evaporate water to remove process heat and cool the water.
The 12
th
Five Year Plan estimates a total requirement of 211 DM Plants and 218 cooling towers to be executed
over the 12
th
Five Year Plan period. (Source: Base Paper, International Conclave on Key Inputs for Accelerated
116
Development of Indian Power Sector for the 12th Plan & Beyond, organised by MoP and CEA, August 18-19,
2009)
The following table shows the tentative estimated requirement of BOP equipments for thermal projects under
the 12
th
Five Year Plan:
Name of System BOP Requirement (no. of units)
Coal Handling System 148
Ash Handling System 148
DM Plant 211
Cooling Towers 218
Chimneys 77
Fuel Oil System 148
Pre-Treatment Plant 160
Source: Base Paper, International Conclave on Key Inputs for Accelerated Development of Indian Power Sector
for the 12th Plan & Beyond, organised by MoP and CEA, August 18-19, 2009
Status of BOPs for 11
th
Five Year Plan
Name of the BOP
System
BOPs Required for
Projects
Commissioned &
Under Const. (Nos.)
BOP Orders Placed
(Nos.)
BOP Orders Yet to
be Placed (Nos.)
Coal Handling System 67 56 11
Ash Handling System 68 59 9
DM Plant 71 58 13
Cooling Towers 143 133 10
Chimneys 116 109 7
Fuel Oil System 74 62 12
Pre-Treatment Plant 76 63 13
Source: Base Paper, International Conclave on Key Inputs for Accelerated Development of Indian Power Sector
for the 12th Plan & Beyond, organised by MoP and CEA, August 18-19, 2009
OVERVIEW OF THE TRANSMISSION SYSTEM COMPONENTS MARKET IN INDIA
The transmission segment plays a key role in transmitting power to various distribution entities across the
country. A reliable T&D system ensures proper and efficient transfer of power from power generating stations
to remote load centres and consumers. The T&D system is organised in a power grid, which interconnects
various power generating stations and remote load centres. It further ensures reliable power supply to load
centres and optimal utilization of generating capacity, even in the event of a failure of feeding power at the local
generating station or a maintenance shutdown. In addition, the power grid also ensures that power is transmitted
through alternate routes if a particular transmission line or a section of a transmission line suffers a breakdown
or is otherwise unavailable.
Transmission and sub-transmission networks are used to supply power to the distribution system. These, in turn,
supply power to end load centres and consumers. To facilitate the transfer of power between States, state grid
networks are interconnected through extra-high-voltage (EHV) and high-voltage (HV) transmission links to
form a regional grid. India has five such regional grids. These regional grids facilitate the transfer of any surplus
power to load centres facing power deficit.
Along with strengthened inter-regional transfer capability, these regional grids would also facilitate transferring
power from power surplus regions and States to regions and States experiencing power deficit. This would result
in the optimal utilisation of generating capacity. Setting up a national grid would require the integration of
117
regional grids through EHV and HVDC transmission networks. Further, a national grid would require modern
and reliable communication systems to effect data and voice transmission between load dispatch centres and
power generating stations.
The transmission line equipments consist of components like cables, motors, switchgears, transmission line
towers, transformers, capacitors etc. Under a broad-based classification, cables and transmission line towers
(TLTs) form part of transmission line equipments, while components like switchgears and transformers would
form part of a sub-station.
The following chart shows the key components of the transmission system:
The following chart shows the actual installed capacity of transmission lines and substations during the last five
years:
Transmission Lines Capacity Substations Capacity
210
221
236
255
262
0
50
100
150
200
250
300
Mar ' 08 Mar '09 Mar '10 Mar '11 Aug '11
('000 ckm)
288
303
319
357
364
0
80
160
240
320
400
Mar ' 08 Mar '09 Mar '10 Mar '11 Aug '11
('000 MVA)
*For the period ended August 31, 2011
Source: Year-ending CEA Reports
Note: Installed capacities include ckm of 765 kV, 400 kV, 220 kV & 500 kV HVDC transmission lines and
MVAs/MW of 765 kV, 400 kV, 220 kV and 500 kV HVDC substations
Transmission line equipments
Transmission Towers
Transmission line towers are steel structures used to support transmission lines and to provide the requisite
ground clearance for the transmission of HV, EHV, Ultra-high-voltage (UHV) and HVDC power currents.
The size and the structure of the transmission towers depends on the voltage of the transmission lines and the
number of conductors to be mounted.
Conductors
Transmission System
Transformers
& Reactors
Substation
Switchgears,
circuit breakers,
etc.
Other
Associated
Equipments
Transmission Line
Transmission
Line
Towers (TLT)
Cables,
Conductors
& Insulators
Other
Associated
Equipments
118
Conductors are bunch-stranded metal wires used for overhead transmission and distribution of power.
Conductors are made of, for example, copper, aluminium or alloys containing these two metals.
Insulators
An insulator is a material that does not respond to an electric field and completely resists the flow of electric
charge. Electrical insulators are used to support or to separate electrical conductors by completely resisting the
passage of electric current through them.
Competition
The transmission line sector is dominated by major players like KEC International, Jyoti Structures and
Kalpataru Transmission. These players execute projects on an EPC basis for the transmission segment.
Transmission tower EPC players offer a range of integrated services including designing, manufacturing,
erection, testing and commissioning of transmission line towers.
Substation components
Switchgears
Switchgears is a combination of electrical equipments such as fuses, LT & HT circuit breakers, isolators, control
panels and switch boards. One of the basic functions of switchgears is to protect the transmission network under
abnormal system conditions arising out of short-circuit faults, overloads, etc., while maintaining continuity in
the supply of power. Switchgears also provide for the isolation of circuits from power supplies.
Transformers
Transformers are pieces of electrical equipment primarily used for increasing or decreasing the voltage level to
transmit power efficiently over long distances. Generator transformers are employed at power stations to
increase the power voltage levels to transmit power at low energy loss. Power transformers are employed at
substations to decrease the power voltage levels and to deliver power to consumers.
Instrument transformers
Instrument transformers are pieces of electrical equipment used to reduce high voltage and high current values
to levels suitable for feeding into relays for protection and metering applications.
Competition
Some of the major players in the manufacturing of substation components such as power transformers,
instrument transformers and sub-station components (such as switchgears) are ABB, Areva T&D, Crompton
Greaves, EMCO and Siemens Ltd, etc. Some of these companies are also involved in the complete set-up of
sub-stations.
High Voltage Direct Current (HVDC) transmission
HVDC is used for transmitting bulk power economically over long distances. Transmission in DC enables
reduction in power loss in the power grid making higher amounts of power available at the receiving end or at
load centres. HVDC back-to-back systems are used as asynchronous links between two power systems for
controlled power flow.

HVDC thyristor valve converters are used at converter stations to convert alternating current (AC) to DC. The
DC power is then transported and converted back to AC at the receiving end by employing converter equipment.
INDUSTRIAL PRODUCTS AND SYSTEMS
The growth in demand for industrial products and systems such as captive power plants, compressors, oil field
equipment, electrical machines (high tension motors), etc. is dependent on the growth of various related
industries such as power, oil & gas, steel, cement, fertilisers, irrigation etc.
RAILWAY ELECTRICAL EQUIPMENTS IN INDIA
119
Indian Railways was at the threshold of a major change at the beginning of the 11
th
Five Year Plan. The key
challenge before it was not just attracting additional traffic, but meeting the accelerating demand for high-
quality services imposed by a growing economy. GoI had to take immediate and appropriate steps to augment
capacity and deploy it optimally through new investment and tariff policies. Indian Railways also had to
implement projects and procure assets rapidly by adopting practices in project execution, production, and
procurement of new assets.
In light of the arrears in replacement of over-aged assets, in the early part of the 10
th
Five Year Plan, GoI made a
decision to create a Special Railway Safety Fund (SRSF) in the amount of ` 170 billion of which ` 120
billion was to come from general revenues. As a result, the proportion of gross budgetary support (GBS) had
increased to 45% under the 10
th
Five Year Plan as compared to 34% under the 9
th
Five Year Plan and 23% under
the 8
th
Five Year Plan. (Source: Planning Commission, Government of India, Eleventh Five Year Plan 2007-
2012)
Under the 11
th
Five Year Plan, GoIs clear priority was to achieve higher maintenance standards of existing
assets in order to sustain Financial Year 2007 levels of traffic of about 730 million tonnes. GoI envisioned
renewals, rehabilitation, replacement and modernisation of assets in order to reduce asset failures, improve
utilisation levels and improve safety rates. These plans required an investment of over ` 600 billion (at constant
Financial Year 2007 prices) under the 11
th
Five Year Plan. Such a strategy would enable Indian Railways to
increase the output from the existing level of assets. With the quantum increase in both passenger and freight
traffic during the last three years of the 10
th
Five Year Plan, and the projected increase under the 11
th
Five Year
Plan, rolling stock availability was to be a key factor in the next five years. In addition to augmenting existing
production capacities, new production facilities capable of producing superior coaches, locomotives, and
wagons were required.
Technological upgradation and modernisation of rolling stock is also a key element of GoIs plan for rolling
assets. Universal switchover to 22.9 tonne axle load wagons from the present axle load of 21.3 tonne will lead to
improved loadability of the wagons. Efforts are directed at introducing lighter and corrosion-resistant materials
to improve the payload to tare ratio of wagons. Indian Railways are also planning to introduce special types of
wagons for transportation of automobiles, bulk cement, fly ash, and hazardous chemicals.
Under the 11
th
Five Year Plan the proportion of high-horsepower locomotives was to be increased as set forth
below:
11
th
Five Year Plan Requirements for Rolling Stock
Tenth Plan Eleventh Plan Targets
Targets Actual
Wagons (nos in FWUs) 65,000 90,554 155,000
Electric Locos (nos) ........................... 343 524 1,800
Diesel Locos (nos) .............................. 444 622 1,800
BG Conventional Coaches (VUs) ...... 9,160 10,789 17,500
EMUs/DEMUs/MEMUs (VUs) ......... 2,715 1,413 5,000
Legend:
EMUs Electric Multiple Units
FWUs Four Wheeler Units
VUs Vehicle Units
Source: Planning Commission, Government of India, Eleventh Five Year Plan 2007-2012
Indian Railways Vision 2020 (Vision 2020)
The Indian Railways have drawn up Vision 2020, a high-growth strategy which would require massive
investments in capacity creation, network expansion and upgradation over the next ten years. It estimates an
investment of approximately ` 14,000 billion through Financial Year 2020. The bulk of the investment for
world-class stations and high-speed corridors may be mobilised through Public Private Partnerships (PPPs). A
sizeable part of the investment required for port connectivity projects, electric/diesel locomotive manufacturing
units and new coach manufacturing units may also be mobilised through PPPs through special purpose vehicles
or joint ventures. Metropolitan transport projects and some new line projects may be undertaken through
partnerships with State governments. PPPs may also be used in setting up private freight terminals, logistics
parks, wagon investment schemes and licensing of freight service operators who would bring in specialized
120
rolling stock and new terminals. Railways may also borrow within prudent limits through Indian Railway
Finance Corporation (IRFC), a dedicated financing arm of the Ministry of Railways.
The rolling stock requirements of Indian Railways as per Vision 2020 are as set forth below:
Vision 2020: Capacity Enhancement and Modernisation Works for Rolling Stock
Broad
Category
Sub-Category Short-Term
2010-11 to 2011-12
Long-Term
2012-13 to 2019-20
Total
Physical
Target
(Units)
Investment
(` ` ` ` Billion)
Physical
Target
(Units)
Investment
(` ` ` ` Billion)
Physical
Target
(Units)
Investment
(` ` ` ` Billion)
Freight-Wagon 33,910 101.7 255,230 765.7 289,140 867.4
Diesel Locomotive 690 72.5 4,640 487.6 5,330 560.1
Electric Locomotive 555 67.2 3,730 581.5 4,280 648.7
Passenger Coaches
EMU/DEMUs/ME
MUs
6,912 110.6 43,970 714.6 50,880 825.2
Upgradation/expansi
on setting up of
PU/Workshops
103.6 912.3 1,016.0
Source: Indian Railways Vision 2020 of Government of India, Ministry of Railways (Railway Board)
Electric Locomotives
With the development of and increase in electrification of railways and the improvement in domestic railway
equipment, the electric locomotive is expected to become the dominant product in Indias locomotive market.
According to the IR Yearbook 2009-10, Indian Railways had 8,889 locomotives as of March 31, 2010, of which
3,825 were electric locomotives and 5,022 diesel-electric locomotives.
The locomotive market is expected to reflect the growing market trend towards electric locomotives and the
production demand for electric locomotives is expected to grow significantly in coming years.
Electric Multiple Units (EMUs)
Under the 10
th
Five Year Plan, as India increased the electrification of its railways, rail vehicles manufacturers
in India developed EMUs that were primarily used for passenger transportation on these electrified railways. By
improving foreign EMU technologies and cooperating with overseas manufacturers, Indian rail vehicles
manufacturers have successfully introduced suitably modified EMUs.
OIL FIELD EQUIPMENTS
The oil field equipment market in India includes the supply of equipment for oil exploration and production.
The range of equipment covers on-shore deep drilling rigs, super-deep drilling rigs, helirigs, work-over rigs,
mobile rigs and desert rigs with matching draw works, hoisting equipment, well heads and Christmas trees.
INDUSTRIAL ELECTRICAL MACHINES
Based on production data published by the Indian Electrical & Electronics Manufacturers Association
(IEEMA), the Indian HT Motor Industry has grown from 2,372 units at a total of 1,888 MW in the financial
2007 to 4,231 units at a total of 3,526 MW in Financial Year 2011, indicating a CAGR of 15.5% in units and
16.5% in MW. (Source: IEEMA Annual 2010-11, May 25, 2011)
DEFENCE
The Union Budget for Financial Year 2012 makes a provision of ` 1,644.2 billion for defence services,
including ` 692 billion for capital expenditures on new infrastructure, weapons, aircraft and aero engines, heavy
and medium vehicles, as well as other types of equipment for the Indian armed forces and naval fleet. (Source:
Union Budget 2011-12, Government of India)
121
GoI has recently brought out Defence Production Policy under which preference will be given to indigenous
design, development and production of equipment / weapon systems / platforms required for defence. (Source:
Ministry of Defence Annual Report 2011)
SOLAR THERMAL AND SOLAR PHOTOVOLTAIC BUSINESS
In January 2010, the Prime Minister of India launched the Jawaharlal Nehru National Solar Mission
(JNNSM) with a target of 20,000 MW of grid solar power (based on solar thermal power generating systems
and solar photovoltaic technologies), 2,000 MW of off-grid capacity, including 20 million solar lighting systems
and 20 million sq. m. solar thermal collector area, by 2022. The JNNSM will be implemented in three phases.
The first phase is scheduled to end in March 2013, the second phase is scheduled to end in March 2017 and the
third phase is scheduled to end in March 2022. The target for the first phase is to set up 1,100 MW of grid-
connected solar plants including 100 MW of rooftop and small solar plants, 200 MW capacity equivalent off-
grid solar applications and 7 million sq. m. solar thermal collector area. (Source: MNRE website data as of
September 3, 2011)

122
THE BUSINESS
Unless otherwise stated, financial information included in this section for Financial Years 2011, 2010 and 2009
has been derived from our restated and audited consolidated financial statements as of and for the Financial
Years ended March 31, 2011, March 31, 2010 and March 31, 2009. For further information, see the section
titled Certain Conventions, Use of Financial Information and Market Data and Currency of Presentation
Financial Information.
In this section, unless the context otherwise requires, a reference to the Company is a reference to Bharat
Heavy Electricals Limited and unless the context otherwise requires, a reference to we, us and our
refers to Bharat Heavy Electricals Limited and its Subsidiaries and joint ventures, as applicable in the relevant
fiscal period, on a consolidated basis.
Overview
We are an integrated power plant equipment manufacturer and one of the largest engineering and manufacturing
companies in India in terms of turnover. We are engaged in the design, engineering, manufacture, construction,
testing, commissioning and servicing of a wide range of products and services in our power and industry
segments. We have 15 manufacturing divisions, two repair units, four regional offices, eight service centres and
15 regional centres and currently operate at more than 150 project sites across India and abroad. Since our
establishment by the GoI in 1964, we have been at the forefront of Indias indigenous heavy electrical
equipment industry with a sustained track record of earning profit since Financial Year 1972 and paying
dividends since Financial Year 1977.
We carry on our business in two business segments: the power segment and the industry segment.
Power Segment. In the power segment, we offer a wide range of products and systems for coal-based thermal,
gas-based thermal, nuclear and hydro power projects. We execute these projects either on a turnkey/EPC basis
or by engineering, supplying and executing main plant equipment, which comprises primarily boilers, turbines
and generators, as well as auxiliary equipment such as electrostatic precipitators (ESP), electrical equipment,
control and instrumentation systems, pumps and heaters. In the turnkey business, we design, engineer,
manufacture, procure, construct and commission projects in the power generation sector, wherein we take
turnkey responsibility to supply a range of equipment and services, including the BOP and civil works and any
other work that may be required under the contract for a project. In addition, we provide spare parts and after
sales services for the life cycle of a plant. Based on information from the CEA, we estimate that our share in
Indias total installed generating capacity from utility sets (excluding non-conventional capacity) of 155,409
MW is approximately 96,311 MW, or 62%, as of March 31, 2011 and that, in Financial Year 2011, power
generating sets manufactured by us contributed approximately 72% of the total power generated in India by
utility sets (excluding non-conventional capacity). We have the capability to deliver power generation
equipment of 15,000 MW per year, and expect to be able to increase this capability to 20,000 MW per year by
the end of Financial Year 2012 upon completion of our capacity enhancement plan. We have technical
collaboration agreements with a number of leading international manufacturers, including General Electric
Company, Alstom SA, Siemens AG and Mitsubishi Heavy Industries Ltd. In Financial Years 2010 and 2011,
our power segment operations accounted for 78.7% and 79.9%, respectively, of our total turnover.
Industry Segment. We design, manufacture, supply and offer services for a broad range of systems and
individual products for the following business areas: captive power plants, power transmission, rail
transportation, renewable energy, industrial products (electrical and mechanical) and others. In Financial Years
2010 and 2011, our industry segment operations accounted for 21.3% and 20.1%, respectively, of our total
turnover.
We have been exporting our power and industry segment products and services for approximately 40 years. As
of June 30, 2011, we have exported our products and services to more than 70 countries. As of June 30, 2011,
we had cumulatively installed capacity of over 8,500 MW outside of India in 21 countries, including Malaysia,
Iraq, the UAE, Egypt and New Zealand, and had approximately 5,200 MW in 19 countries under various stages
of execution. Our physical exports range from turnkey projects to after sales services and in Financial Years
2010 and 2011, accounted for 4.9% and 3.2%, respectively, of our total turnover.
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In Financial Year 2011, the contract value of new orders that we booked was ` 605,070 million. We book orders
as per the terms of the relevant contract. As of June 30, 2011, our Order Book stood at ` 1,596,000 million. Our
Order Book stood at ` 1,173,870 million as of March 31, 2009, ` 1,443,120 million as of March 31, 2010 and `
1,641,450 million as of March 31, 2011.

The following table sets forth the breakdown by segment of our total turnover for the periods indicated:
Financial Year Ended March 31,
2009 2010 2011 2009-2011
Turnover
(` ` ` `
million)
% of
total
Turnover
(` ` ` `
million)
% of
total
Turnover
(` ` ` `
million)
% of
total
Compound
annual
growth
rate (%)
Power segment 217,788 76.0 276,649 78.7 332,139 79.9 23.50
Industry segment 68,718 24.0 74,793 21.3 83,758 20.1 10.40
Total 286,506 100.0 351,442 100.0 415,897 100.0 20.48
From Financial Year 2009 to Financial Year 2011, our profit before tax grew at a compound annual growth rate
of 28.17%. Over the same period, our EBITDA grew from ` 54,416 million in Financial Year 2009 to ` 89,981
million in Financial Year 2011, a compound annual growth rate of 28.59%. The table below summarises our
financial results for the periods indicated:
Financial Year Ended March 31,
2009 2010 2011 2009-2011
(` ` ` ` millions) Compound
annual
growth rate
(%)
Turnover 286,506 351,442 415,897 20.48
EBITDA
(1)
54,416 77,900 89,981 28.59
EBITDA margin (%) 19.0 22.2 21.6 NA
Profit before tax 50,807 73,158 83,461 28.17
Profit after tax 32,672 48,351 54,991 29.74
(1)
Please refer to the section titled Managements Discussion and Analysis of Financial Condition and Results
of Operations on page 324 of this Draft Red Herring Prospectus.
We are a listed government company under the Companies Act. The GoI holds 67.72% of our outstanding
shares as of June 30, 2011, and is expected to hold 62.72% of our outstanding shares immediately after the
Offer. We are one of the nine Navratna public sector enterprises. The grant of the Navratna status by the
GoI in 1997 provided us with strategic and operational autonomy and enhanced financial powers to make
investment decisions up to certain specified limits without GoI approval. We received an Excellent rating
from the GoI in Financial Years 2007, 2008 and 2010. We were also awarded the Meritorious Award for
Research and Development, Technology Development and Innovation in Financial Year 2011 from the Standing
Conference of Public Enterprises (SCOPE), presented by the President of India, the Award for Excellence
and Outstanding Contribution to Public Sector Management (2008-09) in the Large Scale PSE Category in
Financial Year 2010 from SCOPE, presented by the Prime Minister of India and the IEI Industry Excellence
Award 2010 for Overall Business Excellence and Industry Practices.
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The following map shows our presence throughout India as of June 30, 2011.
Our Strengths
We believe that we have significant industry expertise and knowledge. In particular, we believe that the
following strengths enable us to compete successfully in our industry:
Well-positioned to capitalise on growing demand for power in India
With more than 40 years of operating experience as a specialised power generation and industrial systems and
products manufacturer, we believe that we have established a leading market position providing reliable and
high-quality products in the areas in which we operate. In our power segment operations, we have the capability
to deliver power generation equipment of 15,000 MW per year, and expect to be able to increase this capability
to 20,000 MW per year by the end of Financial Year 2012. Based on information from the CEA, we estimate in
Financial Year 2011, the power generated by BHEL manufactured sets contributed 72% of the total power
generated in India by utility sets (excluding non-conventional capacity). As per CEA, the GoIs 12
th
Five-Year
Plan envisages a tentative capacity addition of approximately 100,000 MW, with total investment in the Indian
power sector in the next five years of approximately ` 11,000 billion. We believe that we are well-positioned to
capitalise on the expected growth and expansion of the power sector in India.
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Diverse range of products and services serving a broad spectrum of businesses and adapted to customer
requirements
We offer a diverse range of high-quality products and services that serve a broad spectrum of businesses in the
industries in which we operate.
In the power segment, we offer a broad range of equipment and services based on the individual specifications
and requirements of our customers, for power plants in India and elsewhere. We design, manufacture and
service coal-fired, nuclear, gas combined cycle and hydro-electric generation equipment of various capacities.
Based on information from the CEA, we estimate that, as of March 31, 2011, power generating sets
manufactured by us represented approximately 62% of the total installed generating capacity from utility sets
(excluding non-conventional capacity) in India. We also supply complete systems tailored to the requirements of
our domestic and overseas customers for entire power stations, and we have an established track record for
executing power projects on a turnkey basis. In the industry segment, we design, manufacture, supply and offer
services for a broad range of systems and individual products for the following business areas: captive power
plants, power transmission, rail transportation, renewable energy, industrial products (electrical and mechanical)
and others. Internationally, we are particularly active in the Middle East, Southeast Asia and Africa, and have
been executing turnkey contracts since 1980.
By customising the equipment and services that we sell to the specific requirements of our customers, we are
able to adapt to the evolving needs of the industries and markets in which we operate. In addition, through our
eight service centres, strategically located throughout India, we provide our customers with a single window
facility for after sales services, including the supply of spare parts, renovation and modernisation, and
overhauling and maintenance of power plants, which allows our customers to extend the life of the power plants
they operate.
Significant focus on research and development and technological tie-ups leading to continuing technological
innovation
We spend a substantial amount of funds on research and development to develop new and better products that
address the needs of our customers and the markets in which we operate. These expenditures amounted to `
6,722 million, ` 8,019 million and ` 9,440 million in Financial Years 2009, 2010 and 2011, respectively,
representing 2.4%, 2.3% and 2.2%, respectively, of our turnover in those years. Our efforts in this area were
most recently recognised by Forbes magazine, which ranked us as the 9
th
most innovative company in the
world in July 2011.
Through our technical collaboration with global industry leaders such as Alstom SA, Siemens AG and
Mitsubishi Heavy Industries Ltd., we believe we were one of the first companies in India to work on super-
critical technology and indigenise this new technology for use in India. We believe that we are well-positioned
to be a market leader in this technology which we believe will become the predominant technology used in India
for power plants going forward. We are also actively involved in the GoI initiative for the development of ultra-
supercritical technology.
Strong and diversified Order Book
We have a strong and diversified Order Book. In Financial Year 2011, the contract value of new orders that we
booked was ` 605,070 million. As of June 30, 2011, our Order Book stood at ` 1,596,000 million. Our Order
Book stood at ` 1,173,870 million as of March 31, 2009, ` 1,443,120 million as of March 31, 2010 and `
1,641,450 million as of March 31, 2011.
In the power segment, our new orders in Financial Year 2011 comprised power generation equipment of 16,507
MW capacity. Our order inflow in the domestic power segment was split between the public (both at the central
and state levels) and private sectors in Financial Year 2011, representing 49% and 51%, respectively in MW
terms, reflecting the increased participation of the private sector in power projects. In the industry segment, our
Order Book comprises orders from companies in the Indian power sector as well as the rail and water
transportation, mining, electromechanical, oil and gas, cement and petrochemicals industries, among others.
In Financial Year 2011, we secured five orders for projects utilising super-critical technology capable of
generating 6,400 MW of power, which is a new business for us. We also added seven new customers in the
domestic and international markets in Financial Year 2011.
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Strong financial track record
We have a strong financial track record. Our turnover grew from ` 286,506 million in Financial Year 2009 to `
415,897 million in Financial Year 2011, representing a CAGR of 20.48%. Our EBIDTA grew from ` 54,416
million in Financial Year 2009 to ` 89,981 million in Financial Year 2011, representing a CAGR of 28.59%.
Our EBIDTA margin grew from 19.0% in Financial Year 2009 to 21.6% in Financial Year 2011. Our profit
after tax grew from ` 32,672 million in Financial Year 2009 to ` 54,991 million in Financial Year 2011,
representing a CAGR of 29.74%. Our net worth was ` 129,646 million as of March 31, 2009, ` 164,479 million
as of March 31, 2010 and ` 201,512 million as of March 31, 2011.
Our Order Book remained relatively stable through out the global financial crisis during 2007-2010, with the
contract value of new orders that we booked standing at ` 596,780 million in Financial Year 2009, ` 590,370
million in Financial Year 2010 and ` 605,070 million in Financial Year 2011. We have been able to achieve our
results with relatively limited use of debt.
We have a strong record of uninterrupted dividend distribution since Financial Year 1977, reflecting our strong
financial track record, with final dividends of 170% of par value paid in Financial Year 2009, 233% of par value
paid in Financial Year 2010 and 311.5% of par value paid in Financial Year 2011.
Experienced management team and operating team
Our senior management team and key management personnel possess extensive management skills, operating
experience and industry knowledge and are able to take advantage of market opportunities to formulate sound
business strategies and to execute them in an effective manner. With several members having been with us for
more than 30 years, our senior management team has shown its ability to steer us through different economic
cycles as demonstrated by our sustained track record of earning profit since Financial Year 1972 and paying
dividends since Financial Year 1977. We have also been able to attract many graduates from prestigious
domestic universities. Through cooperation with leading international companies, we believe that we have
assimilated international management practices and corporate governance standards.
Our Strategies
We intend to pursue the following principal strategies to exploit our competitive strengths and grow our
business:
Sustain leadership in the power sector
We have a strong strategic focus in the Indian power sector and plan to sustain our competitive edge by pursuing
capacity enhancement. We intend to complete our capacity enhancement plan by the end of Financial Year
2012, which will provide us with the capability to deliver power generation equipment of 20,000 MW per year.
We believe that this will enable us to address the anticipated market demand for power generation equipment
and to efficiently execute our existing Order Book.
We believe that we hold a leading position in the supply of power generation equipment in India. Based on
information from the CEA, we estimate that our share in Indias total installed generating capacity from utility
sets (excluding non-conventional capacity) of 155,409 MW is approximately 96,311 MW, or 62%, as of March
31, 2011, to which we intend to continue to make significant contributions, which we expect to execute in the
next five Financial Years. We continue to maintain and grow our strong position in private sector projects and
seek to make inroads in the UMPP sector. In our power transmission business, we are addressing opportunities
in the ultra high voltage (UHV) transmission segment by offering 765kV and 1,200kV equipment in order to
grow our Order Book for both loose equipment and turnkey substation projects. In addition, we plan to further
strengthen our presence in the extra high voltage (EHV) gas-insulated substations segment. We also intend to
grow our Order Book in the super-critical business over the next five years.
We have entered into several technical collaboration arrangements in order to develop and strengthen our power
generation equipment manufacturing capabilities. To retain our leadership in the power sector and further
expand our product and service offerings, we plan to continue to undertake other inorganic growth initiatives,
including strategic acquisitions, as well as technical and strategic collaborations, including partnerships with
127
SEBs through equity stakes in new power generation projects, which will enable us to secure supply
arrangements in relation to such projects.
Diversify through expansion in new growth areas and strategic partnerships
We intend to continue to target specific business sectors and industry segments in which we believe there is high
potential for growth and in which we enjoy competitive advantages. For example, we are currently focusing on
developing business in new areas such as solar power generation, nuclear power generation, urban
transportation, power transmission, wind energy generation and hydro-electric projects. To establish and
strengthen our position in these areas, we have entered into and intend to continue to enter into technical
collaborations with others.
We are also planning to expand in the area of renovation and modernisation of older thermal power projects.
According to CEA, under the 12
th
Five Year Plan, life extension works have been identified for 72 thermal units
with an aggregate capacity of 16,532 MW and renovation and modernisation works have been identified for 23
units with an aggregate capacity of 4,971 MW. A substantial part of the equipment required for these projects is
supplied by BHEL. Approximately 68% of the aggregate capacity planned for life extension works has been
supplied by BHEL and around 96% of the aggregate capacity planned for renovation and modernisation works
has been supplied by BHEL. Since we provided a substantial proportion of the capacity identified for this
purpose, we believe that we are strategically positioned to benefit from this opportunity.
In addition, we will continue to expand our international business and intend to firmly establish ourselves as an
EPC contractor in the global market, enhance proximity to prospective overseas customers by opening new
offices in target countries and continue to explore strategic associations with local subcontractors and suppliers
in order to enhance local participation in power projects which we undertake outside of India.
Strengthen product cost competitiveness and accelerate project execution
We intend to implement a number of strategic initiatives to strengthen our product cost competitiveness,
including, among others, expansion of our vendor base and leveraging low-cost manufacturing through
outsourcing low-technology areas, such as structural fabrication. We also plan to form joint ventures with
domestic steel manufacturers for the manufacture of critical steel materials such as cold-rolled grain-oriented
steel, which is currently imported.
Our planned capacity enhancement and upgrades to higher-range equipment require an agile supply chain and
shorter delivery cycles. To this end, we intend to continue implementing strategic initiatives such as expanding
our vendor base to reduce risk and cost, entering into long-term rate contracts for raw materials such as steel,
copper, cold-rolled grain-oriented steel and transformer oil and outsourcing low-technology or non-core
manufacturing processes. In addition, we plan to continue to leverage our IT services to improve cost and
delivery cycles through reverse auction and e-procurement. We believe that these initiatives will enable us to
execute projects more quickly.
To further improve our operational efficiencies, we will continue to actively pursue the implementation of ERP
across all our operations and other capability-building initiatives, including design to cost, lean
manufacturing, and purchase and supply management.
We also plan to continue our productivity enhancement initiatives, such as multi-skilling of employees and
continuing to improve the quality of delivery, as well as machine utilisation improvement strategies including
effective utilisation of critical machines through three-shift, 24-hour operations, improved machine maintenance
and upkeep, and redeployment of employees.
Enhance product and service lines through emphasis on R&D
We intend to continue to enhance our products and services through our focus on research and development,
both internally and through our technical collaborations. We plan to use the latest computer-aided design tools
and analytical software to complement our extensive research and development operations and ensure that we
remain ahead of market trends. To that end, we aim to maintain our R&D spending at the level of at least 2.3%
of our total turnover. Furthermore, we will attempt to remain enterprise resource planning-compliant, ensuring
that all our data and processes are organised into a unified system.
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To maintain our leading market position in India, we intend to try and develop innovative technologies, placing
a strong emphasis on the development and deployment of clean, low-carbon path technologies such as advanced
ultra super-critical technology, IGCC technology and renewable energy, as well as improve the energy
efficiency of all our existing products.
Our Businesses
Power Segment
We are one of Indias largest manufacturers in the power sector in terms of manufacturing capacity. Based on
information from the CEA, we estimate that our share in Indias total installed generating capacity from utility
sets (excluding non-conventional capacity) of 155,409 MW is approximately 96,311 MW, or 62%, as of March
31, 2011 and that in Financial Year 2011 power generating sets manufactured by us contributed approximately
72% of the total power generated in India by utility sets (excluding non-conventional capacity). We supply a
broad range of products and systems for thermal, nuclear, gas and hydro-based utilities. Due to our extensive
range of products and services, we are able to provide complete solutions from concept to commissioning to
meet customer requirements.
In Financial Years 2009, 2010 and 2011, our power segment operations generated turnover of ` 217,788
million, ` 276,649 million and ` 332,139 million, respectively, accounting for approximately 76.0%, 78.7%,
and 79.9%, respectively, of our total turnover in those periods and representing a CAGR of 23.50% from
Financial Year 2009 to Financial Year 2011.
Key products and services
We offer a broad range of equipment and services based on the individual specifications and requirements of our
customers, for power plants in India and elsewhere. We design, manufacture and service coal-fired, gas
combined cycle and hydro-electric power generation equipment of various capacities. We also provide
integrated systems and services in the form of turnkey power plant projects. The table below sets out our key
power segment products:
Category Key products
Thermal power plants Steam turbines, boilers and turbo generators of up to 800 MW rating for
fossil-fuel applications; capability to manufacture boilers and steam turbines
with super-critical steam cycle parameters and matching turbo generators of
unit size of higher rating
Condensers and heat exchangers meeting above requirement of turbo
generator sets of higher ratings
Boilers and related products
Boiler auxiliaries
Fans, air-preheaters, gravimetric feeders, pulverisers, electrostatic
precipitators, flue gas desulphurisation systems, steel chimneys for auxiliary
boilers, desalination and water treatment plants, guillotine gates and
dampers
Steam generators for utilities, ranging from 30 MW to 800 MW rating,
using coal, lignite, oil, natural gas or combination thereof; capability to
manufacture boilers with super-critical parameters of higher ratings unit size
Heat recovery steam generators (HRSG)
Chemical recovery boilers
Pressure vessels
Nuclear power plants Steam generators and turbines and matching turbo generators, condensers
up to 700 MW rating
Heat exchangers
Pressure vessels
Reactor vessels
Gas-based power plants Gas turbines of up to 280 MW (ISO advance class rating)
Gas turbine-based co-generation and combined cycle systems
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Category Key products
Hydro power plants Custom-built conventional hydro turbines of Kaplan, Francis and Pelton
types with matching generators, pump turbines with matching motor
generators up to 300 MW (in speed range of 200-300 rpm), bulb turbines
with matching generators up to 10 MW
High capacity pumps along with matching motors for lift irrigation schemes
(up to 150 MW)
Others Soot blowers, valves, piping systems, heat exchangers and pressure vessels,
condensers and heat exchangers, pumps
The contract value of new orders booked by our power segment business was ` 502,390 million in Financial
Year 2009, ` 449,630 million in Financial Year 2010 and ` 500,940 million in Financial Year 2011. In
Financial Year 2011, such new orders comprised power generation equipment of 16,507 MW capacity. In the
power segment, our Order Book stood at ` 1,046,610 million as of March 31, 2009, ` 1,241,260 million as of
March 31, 2010 and ` 1,420,810 million as of March 31, 2011.

Our key orders during Financial Year 2011 included:
a record volume of orders (nine turbine generator sets and seven steam generator sets) for super-critical
units of 660 MW, 700 MW and 800 MW, including (i) our first order for one unit of 700 MW from
Karnataka Power Corporation Ltd. for its thermal power plant at Bellary, Karnataka, (ii) our first order
from our joint venture company, Raichur Power Corporation Ltd., for two units of 800 MW for its
thermal power plant at Yermarus, Raichur, Karnataka and additional order for one unit of 800 MW for
its thermal power plant at Edlapur, Raichur, Karnataka, and (iii) an order against bulk tender for a
2x660 MW turbine generator package from NTPC Limited for its thermal power plant at Mauda,
Maharashtra;
repeat orders for 10 sets of 270 MW from Indiabulls Group for its thermal power plants at Nasik,
Maharashtra and Amravati, Maharashtra; and
order for two units of 500 MW for a thermal power plant in West Bengal.
Our principal customers in our power segment operations include major Indian public power generation
companies, such as NTPC Limited, Karnataka Power Corporation Ltd., NHPC Limited, Bhakra Beas
Management Board, Andhra Pradesh Power Generation Corporation Ltd, Gujarat State Electricity Corporation
Limited as well as major Indian private power generation companies, such as Indiabulls Power Ltd., Jaiprakash
Power Ventures Limited, Korba West Power Company Ltd., Jindal India Thermal Power Limited, Hinduja
National Power Corporation Limited and Jindal Power Limited. Notable new customers added in Financial Year
2011 included, Lalitpur Power Generation Company Limited and our joint venture company, Raichur Power
Corporation Ltd.
We have the capability to produce coal-fired power generation equipment with steam pressure parameters with
both sub-critical technology with unit capacities up to 600 MW and super-critical technology with unit
capacities up to 1,000 MW. Our power generation equipment products are generally large and technically
sophisticated, involving relatively long gestation periods from the signing of a contract to delivery and
installation.
According to CEA, thermal sets achieved a plant load factor (PLF) of 80.39% in Financial Year 2010. Based
on data from the CEA, we estimate that our PLF figure for such period is higher than the corresponding national
figure. All of the eight thermal power stations in India awarded with the Ministry of Powers Meritorious
Performance Awards in the category of Thermal Power Station Performance held in Financial Year 2010 have
been equipped with our power generation equipment.
The main components of a power plant, collectively known as the boiler, turbine and generator (the BTG),
cannot by themselves facilitate the production of power. They need a range of electrical, mechanical, control
and instrumentation systems and civil buildings to become a complete power plant. These other components
comprise the BOP package. For example, for a coal-fired thermal power plant, the BOP package generally
consists of:
Control and instrumentation;
Electrical transformers;
130
Switchgears (LT & HT);
Civil works;
Coal handling;
Ash handling;
Cooling water intake system / water systems;
Cooling tower;
Water treatment plant;
Chimney;
Substations power evacuation system;
Cables and pipes;
Heat ventilation and air conditioning (HVAC);
Fire protection system (FPS);
Compressed air system (CAS); and
Material handling system.
Power generation companies either place an EPC order for the complete plant, including BTG and BOP, with
one EPC contractor or they may place an order for the BTG with a manufacturer and buy the BOP package from
another supplier or individual components of the BOP package from multiple manufacturers/suppliers.
In addition to manufacturing BTG, we offer a broad range of integrated products and services. Our services also
include the development and manufacture of components and systems for power plants; planning, engineering
and construction of new power plants; and comprehensive servicing, retrofitting and modernisation of existing
facilities. Our turnkey projects involve the provision of a full range of EPC services ranging from concept to
commissioning of power plants. We supply integrated systems tailored to the requirements of our domestic and
overseas customers.
Industry Segment
In order to address the diverse requirements of our industrial customers in a focused manner, we established our
industry segment as a separate business segment in 1982. We design, manufacture, supply and offer services for
a broad range of systems and individual products, such as coal and gas-based captive power plants (including
co-generation and combined cycle plants), industrial boilers and auxiliaries, waste heat recovery boilers, gas
turbines, heat recovery steam generators, steam turbines and auxiliaries, pumps, HT motors, centrifugal
compressors, drive turbines, oil rigs, well heads and Christmas trees, transformers, reactors, switchgear,
insulators, photovoltaic modules, electric locomotives, track machines, electrical propulsion systems and others,
for power utilities and a number of other industries, including oil and gas, metallurgical and mining, as well as
process industries, such as cement, fertiliser, sugar and paper industries. Our industry segment operations
primarily comprise the following business areas: captive power plants, power transmission, rail transportation,
renewable energy and industrial products (electrical and mechanical). In Financial Years 2009, 2010 and 2011,
our industry segment operations generated turnover of ` 68,718 million, ` 74,793 million and ` 83,758 million,
respectively, accounting for 24.0%, 21.3% and 20.1%, respectively, of our total turnover in those periods and
representing a CAGR of 10.40% from Financial Year 2009 to Financial Year 2011.
The contract value of new orders booked by our industry segment business was ` 94,390 million in Financial
Year 2009, ` 140,740 million in Financial Year 2010 and ` 104,130 million in Financial Year 2011. In the
industry segment, our Order Book stood at ` 127,260 million as of March 31, 2009, ` 201,860 million as of
March 31, 2010 and ` 220,640 million as of March 31, 2011.
Our key orders during Financial Year 2011 included:
an order for a 3x150 MW BTG package with single cylinder reheat machines for a thermal power
plant in Haldia, West Bengal;
orders for state-of-the-art insulated-gate bipolar transistor (IGBT)-based AC/AC propulsion
equipment for 6,000 HP electric locomotives and 1,400 HP AC EMUs;
an order for three turbo blower packages with steam turbine drives for a steel plant in Bhilai,
Chhattisgarh;
an order for (above 800 kV) 6,000 MW ultra high-voltage multi-terminal DC transmission link, in
consortium with an international partner; and
orders for 36 transformers totaling 4,078 MVA, including 10 generator transformers of 330 MVA,
400 kV each.
131
Key customers in our industry segment operations include Indian Oil Corporation Ltd., Karnataka Power
Corporation Ltd., Oil India Limited (OIL), NTPC Limited, Steel Authority of India Limited (SAIL),
HPCL-Mittal Energy Ltd., Oil and Natural Gas Corporation (ONGC) and India Power Corporation (Haldia)
Limited, which became our customer in Financial Year 2011.
Captive Power Plants Business
Growth in industries such as metal, petrochemical, refining, fertiliser, paper, sugar, chemicals, cement and
textiles in India has created a need for reliable power through standalone captive power plants. To address their
power requirements, customers set up their own power plants, which are typically smaller than those supplied
by our power segment operations, with outputs ranging up to 150 MW (unit rating). Depending on customer
requirements, we bid for main equipments (such as turbines or boilers), BTG and EPC contracts.
In our captive power plants business, the contract value of new orders that we booked was ` 46,490 million in
Financial Year 2011.
Key products and services
In our captive power plants business, we offer similar types of products and services as in our power segment
operations. However, each captive power plant is specifically designed to meet the particular requirements of
each customer.
In addition to producing equipment sets, our captive power plants business offers complete integrated systems
and associated services on a turnkey basis. These include supplying turnkey projects for co-generation and
combined cycle plants and after sales services.
Power Transmission Business
Our power transmission business encompasses design, manufacture, supply and services for a broad range of
power transmission equipment and systems, including EHV and UHV switchyards and substations on a turnkey
basis, for both AC and DC power grids.
In our power transmission business, the contract value of new orders that we booked was ` 25,040 million in
Financial Year 2011.
Key products and services
Our key products and the markets segments served in this business are:
Key products Market segments
Power transformers (up to 1,200 kV)
Shunt reactors (up to 765 kV)
Dynamically controlled shunt reactors (up to 400 kV)
Medium and extra high voltage (EHV) switchgear
equipment
Instrument transformers (up to 1,200 kV)
Dry type transformers
Capacitors
Bushing
Bus duct
Insulators (up to 1,200 kV AC and up to 800 kV HVDC)
Thyristor converter/inverter equipment
SCADA control and protection panels
Flexible AC transmission systems (FACTS)
Power system analysis
Central and state utilities, state
electricity boards, IPPs, EPC
operators, private sector transmission
companies
In addition to manufacturing equipment sets, we design and commission systems such as indigenous 36 kV and
145 kV gas insulated substations and EHV AC, ultra high voltage (UHV) and HVDC substations.
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Rail Transportation Business
We provide electrical propulsion systems and controls to Indian Railways, which operates one of the worlds
largest railway networks. We also manufacture and supply electric locomotives to Indian Railways and diesel-
electric locomotives to cement, steel and fertiliser plants, thermal power stations, coal fields, ports and other
medium and large industries and metro rail transportation projects. We have also diversified into the area of
track maintenance machines and coach building for Indian Railways.
In our rail transportation business, the contract value of new orders that we booked was ` 12,240 million in
Financial Year 2011.
Key products and services
Our rail transportation business designs, manufactures and sells a broad range of locomotives and traction
equipment. Our key products and the markets segments served in this business are:
Category Key products Market segments
Rolling stock Electric locomotives (AC/DC) (5,000 HP)
Electric multiple unit (EMU) coaches
Railways
Diesel-electric shunting locomotives (up to 1,400
HP)
Cement, steel and fertiliser
plants, thermal power
stations, ports, metro
railways
Electrical
propulsion
equipment
3-phase AC/AC electric locomotives (6,000 HP)
(GTO / IGBT)
3-phase AC/AC diesel electric locomotives (4,000
HP)
Diesel electric multiple units (DEMU)
Diesel electric locomotives (up to 3,100 HP)
25 KV AC electric multiple units (EMU)
3-phase AC/AC EMU (GTO)
Kolkata Metro propulsion system
3-phase AC-AC EMU (IGBT)
Railways
Track machines Diesel electric tower car Railways
Renewable Energy Business
In keeping with the GoIs efforts to develop and promote renewable energy-based products on a sustainable
basis, we manufacture and supply solar photovoltaic (SPV) modules and systems, concentrated solar power
(CSP) power blocks and reverse osmosis (RO) based water treatment plants.
In our renewable energy business, the contract value of new orders that we booked was ` 1,160 million in
Financial Year 2011.
Key products and services
Our renewable energy business designs, manufactures and sells a broad range of equipment. Our key products
and the markets segments served in this business are:
Category Key products Market segments
Solar energy SPV modules and systems
Concentrated solar power blocks
Utilities, industries
Water treatment RO-based water treatment plants Utilities, industries
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Industrial Products (Electrical and Mechanical) Business
We also design, manufacture, supply and offer services for various types of industrial products, both electrical
and mechanical, for the power, oil and gas and metal, petrochemical, refining, fertiliser, paper, sugar, chemicals,
cement and textile industries.
In our industrial products business, the contract value of new orders that we booked was ` 11,660 million in
Financial Year 2011.
Key products and services
Our industrial products (electrical and mechanical) business designs, manufactures and sells a broad range of
industrial products. Our key products and the markets segments served in this business are:
Category Key products Market segments
Electrical
machines
All types of HT motors, including squirrel
cage motors, slip ring motors and
synchronous motors for safe / hazardous
areas
HT and LT alternators
Power plants, refineries,
petrochemicals, cement industry,
process industries, fertiliser, paper
industries, metal (ferrous and
non-ferrous) industries, pipeline (oil
and gas) projects, irrigation
Oil field
equipment
Onshore rigs, including deep drilling rigs,
super-deep drilling rigs (up to 9,000 m
depth), heli-rigs, work-over rigs (up to
6,100 m depth), mobile rigs (up to 3,000
m depth), desert rigs
Rig equipment, including draw works,
rotary tables, traveling blocks, swivels,
masts and sub structures, mud systems
and rig electrics
Well heads and Christmas trees (up to
10,000 psi rating), casing support systems,
mudline suspension systems and block
valves
State oil and gas companies, private
drilling companies
Centrifugal
compressors
Compressors for various process
applications
Refineries, petrochemicals,
fertilisers, steel plants, gas pipelines
Industrial Products Mechanical
We supplied 67 onshore drilling rigs and 17 work-over rigs to ONGC and OIL between 1977 and 1994. Out of
79 drilling rigs owned by ONGC and OIL currently in operation, 57 were supplied by us. Since 2002 we have
received orders from ONGC and OIL for refurbishment and upgradation of 50 of their ageing rigs, 37 of which
have been completed. In addition, we have supplied over 350 centrifugal compressors for various industries and
approximately 7,500 sets of well heads and Christmas trees for both onshore and offshore applications.
Industrial Product Electrical
We are engaged in the design, manufacture and supply of electrical motors for the power sector as well as
various industries, including oil and gas, cement and metals, and are a market leader for these products in terms
of manufacturing capacity in India. We are equipped for the design, manufacture and supply of HT motors for
power plants of up to 800 MW, which comprise the highest rating boiler feed pump (BFP) and cooling water
pump (CWP) motors manufactured in India, namely 17.5 MW BFP motors and 5.2 MW CWP motors.
Other Businesses
We also manufacture, supply and offer services for defence products, including 76/62 Super Rapid Gun Mounts
and integrated platform management systems for naval applications. In our other businesses, including defence
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and miscellaneous loose items, the contract value of new orders that we booked was ` 7,540 million in Financial
Year 2011.
International Operations
We have been exporting products and services in our power and industry segment for approximately 40 years.
As of June 30, 2011, we have exported our products and services to more than 70 countries. As of June 30,
2011, we had cumulatively installed generating capacity of over 8,500 MW outside of India in 21 countries,
including Malaysia, Iraq, UAE, Egypt and New Zealand, and had approximately 5,200 MW in 19 countries
under various stages of execution. Our international operations encompass a wide range of our power and
industry segment products and services, including thermal, hydro and gas-based turnkey power projects,
substation projects and rehabilitation projects, as well as a broad range of products (such as transformers,
compressors, valves, oil field equipment, electrostatic precipitators, photovoltaic equipment, insulators, heat
exchangers, switchgear equipment, castings and forgings) and after sales services. We are particularly active in
the Middle East, Southeast Asia and Africa and have been executing turnkey contracts since 1980. Our recently
completed projects outside of India include 2x126 MW gas turbine-based Siddhirganj peaking power plant in
Bangladesh, 4x126 MW gas turbine-based Sulaymanniah power project in Iraq, 2x42 MW gas turbine-based Al
Ghail power plant in UAE and 2x26 MW gas turbine generating sets for Oman Refinery Company in Oman.
In Financial Years 2009, 2010 and 2011, our physical exports contributed ` 18,722 million, ` 17,116 million
and ` 13,183 million, respectively, accounting for 6.5%, 4.9% and 3.2%, respectively, of our total turnover in
those periods. In Financial Year 2011, the contract value of new orders that we booked was ` 37,380 million,
comprising both power and industry segment products. Our Order Book for exports stood at ` 67,780 million as
of March 31, 2009, ` 86,670 million as of March 31, 2010 and ` 109,970 million as of March 31, 2011,
representing 5.8%, 6.0% and 6.7%, respectively, of our total Order Book as of such dates.
Production
We have 15 manufacturing units located throughout India. In our power segment operations, we have the
capability to deliver power generation equipment of 15,000 MW per year, and expect to be able to increase this
capability to 20,000 MW per year by the end of Financial Year 2012 when we complete our capacity
enhancement plan.
As of June 30, 2011, we had the following manufacturing units:
Location Product groups
Goindwal, Punjab Industrial valves
Haridwar, Uttarakhand Steam turbines
Turbo-generators
Condensers
Large size gas turbines
Castings and forgings
Rudrapur, Uttarakhand Bus ducts
Jhansi, Uttar Pradesh Transformers
Locomotives
Jagdishpur, Uttar Pradesh Ceramics, insulators
Stampings
Bhopal, Madhya Pradesh Hydroturbines and hydrogenerators
Steam turbines
Electrical machines
HV switchgear, control gear and rectifiers
Traction motors
Transformers, capacitors and bushings
Hyderabad, Andhra Pradesh Steam turbines, gas turbines and compressors for industrial and
utility applications
Turbo-generators
Heat exchangers
Pulverisers
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Location Product groups
Pumps
Oil field equipment
Bengaluru, Karnataka Ceramics, insulators
Control equipment
Semiconductors and photovoltaics
Industrial systems
Ranipet, Tamil Nadu Boiler house auxiliaries
Desalination products
Tiruchirappalli, Tamil Nadu Advance technology projects
Fluidised bed combustion (FBC) and heat recovery steam
generators (HRSG)
Fossil boilers
Piping systems
Valves and soot blowers
Order Book Position
Demand for our products and services is affected by, among other factors, the economic environment and
government policy in India and, to a lesser extent, in other parts of the world.
Our principal customers in our power segment operations are Indian public and private power generation
companies. In our industry segment operations, our customer base includes companies in the Indian power, rail
transportation, mining and metallurgy, oil and gas, cement, petrochemical, reverse osmosis (RO)-based water
treatment, irrigation and fertiliser industries, among others.
In our power segment operations, historically, orders from public sector companies constituted a substantial
majority of our orders, although in recent years orders from private sector companies have increased
significantly and constituted approximately 51% of all domestic power segment orders in Financial Year 2011
in MW terms.
As of June 30, 2011, our Order Book stood at ` 1,596,000 million. These orders are subject to cancellation and
modification provisions contained in various contracts.
Generally, our customer base is widely spread and we do not depend on a single customer for our business. The
exceptions are our rail transportation and defence businesses, where the GoI accounts for a substantial majority
of our orders.
Sales, Marketing and Customer Contracts
Our business activities vary widely in size from comparatively small projects to turnkey construction contracts
for new power plants. We sell the majority of our products and integrated systems in the Indian domestic
market. Physical exports accounted for approximately 3.2% of our total turnover in Financial Year 2011.
We obtain our sales contracts either through participating in open tenders for equipment supply contracts or
turnkey projects, or through bilateral negotiations with our customers. We sell all of our products and services
directly to customers.
We promote our products and services through regular interactions with our customers and advertising in print
and visual media. In addition, from time to time, we undertake marketing initiatives, such as organising
segment-wise customer events, participating in industry conferences and exhibitions at both national and
international levels, and making presentations of our products and services, including new developments, to our
customers, consultants and others.
In general, and specifically in case of competitive tenders, technical specifications and commercial terms and
conditions are typically provided by the customer. These terms and conditions include payment terms and price
basis, dispute resolution and milestone/completion dates. Based on tender / market conditions, the offer is made
with certain deviations, which are subsequently settled with the customer by mutual agreement before the
contract is awarded. Typically, our contracts are either for supply of products or services or are EPC contracts
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Our power segment sales contracts typically have a price variation clause, while a significant portion of our
industry segment orders are on a fixed price basis. Our sales contracts typically include terms of payment,
milestone schedules (including inputs from customers), statutory variation clauses and formulas for variations in
the exchange rates for the foreign exchange component of the contracts.
We typically offer a guarantee/warranty period for our projects, which generally ranges from 12 to 18 months
from the date of commissioning. We are also regularly required to provide either bank guarantees or corporate
guarantees of our performance under long-term contracts which generally cover a period that is co-terminous
with the warranty. We provision for these guarantees/warranties at the rate of 2.5% of revenue recognised from
such projects.
We are typically required by our customers to obtain specialised insurance during the execution of our projects
including contractors all risk (erection all risk) and contractors plant and machinery policies, which, in turn,
includes third party liability insurance policies. Generally, our projects are covered under our insurance policies
until completion of trial operations or testing. Upon the provisional taking-over of the unit by the project owner
customer, the unit becomes covered by its operation and maintenance insurance policy.

In accordance with the general practice in the industries in which we operate in India, substantially all of our
contracts with our customers require us to comply with certain minimum standard of service and for either
termination or payment of liquidated damages (capped at a particular percentage of the contract price) for any
failure or delay in meeting the agreed standards. In certain cases, we are also required to indemnify our
customers such as for a breach of any patents or any loss or injury caused to their other contractors or third
parties arising out of our operations that are caused solely by us.
Quality Control and Service
Quality Control
We focus on product quality in our manufacturing operations. Many of our products require very strict
tolerances and exact specifications. We use an extensive quality control system that is integrated into each step
of the manufacturing process. We have obtained ISO certifications for all our manufacturing facilities. We
recently upgraded our quality system to conform to the latest ISO 9001-2008 standard. The quality system is re-
certified by Bureau Veritas Certification India (P) Ltd. every three years with surveillance audits conducted
twice a year. Currently, all our certifications are valid.
For both turnkey projects and single products, a quality plan, which details specific steps to be taken and at
which stages of development, is typically approved by the customer or a third party consultant. Quality
inspections are carried out by us, third parties and the customer.
When testing our products, we subject them to higher pressure and strain than will be expected of them once in
use. We inspect our projects at each stage of development as per project-specific field quality plans to ensure
quality standards are being met throughout the process.
Service
Providing timely after sales services to our customers is a high priority for us. To meet our customers
requirements, we have a dedicated spare parts and services group with eight regional service centres
strategically located throughout India. Through these service centres, we provide our customers a single
window facility for after sales services, including the supply of spare parts, renovation and modernisation of
old sets (which allows our customers to extend the life, and improve performance, of the power plants they
operate), overhauling and maintenance of power plants, including supervisory services for servicing and trouble-
shooting work.
Suppliers
The principal raw materials that we use in our operations include steel, including cold-rolled grain-oriented steel
(CRGO) and cold-rolled non-grain-oriented steel, copper, castings and forgings, tubes and pipes.
We have internal procedures for the procurement of the goods and services that we require in our operations.
We procure a majority of the goods and services we need through an open / limited tender process, whereby we
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solicit bids from suppliers who meet our technical requirements and quality standards. In open / limited tenders,
we purchase goods and services from the lowest bidder.
We generally satisfy our raw material needs from sources within India, although we import certain raw materials
which are generally unavailable in India, such as CRGO, large size castings and forgings, higher sizes tubes and
pipes and boiler-quality thick steel plates. In addition, we may source materials and products from outside of
India to control costs and ensure product availability. Some high-end products are sourced from Europe, China,
the United States and Japan.
We also enter into rate contracts with our suppliers for one or two years duration. Our rate contracts may contain
a price variation clause, depending on the nature of the material and price fluctuations. Whenever possible, we
follow a lead agency concept for common items, whereby procurement requirements of all our units are
pooled together and tendered by one unit.
We also source various bought-out items and packages that we require for our power projects, including coal
handling and ash handling systems, ventilation equipment, DM water plants, cooling water systems, cooling
towers, compressed air systems, and fire fighting systems.
Research and Development
We place strong emphasis on innovation and creative development of new technologies. Our research and
development (R&D) efforts are aimed not only at improving the performance and efficiency of our existing
products, but also at using state-of-the-art technologies and processes to develop new products. Our Corporate
R&D division at Hyderabad leads our research efforts in a number of areas of importance to our product range.
Research and Product Development centres at all our manufacturing divisions play a complementary role. We
have recently introduced several state-of-the-art products, such as IGBT-based traction propulsion system, 765
kV and 1,200 kV transmission equipment and water and solar technologies. We are involved in the development
of IGCC technology. In Financial Years 2009, 2010 and 2011, our R&D expenses (excluding capital
expenditures on research equipment) were ` 6,722 million, ` 8,019 million and ` 9,440 million, respectively,
which accounted for 2.4%, 2.3% and 2.2%, respectively, of our turnover during such periods. Our efforts in this
area were most recently recognised by Forbes magazine, which ranked us as the worlds 9
th
most innovative
company (and the highest-ranked company in our industry) in July 2011.
As a result of our research and development efforts, as of June 30, 2011, we had 1,555 patents and copyrights
registered and filed in India and abroad. In Financial Year 2011, we filed 303 intellectual property rights
applications.
Joint Ventures and Subsidiaries
Joint Ventures and Technical Collaborations
In our operations, in order to grow our operations through vertical integration and gain access to new
technologies, we, from time to time, acquire equity stakes in existing companies or set up new companies in
partnership with various Indian and foreign companies. We benefit from such strategic partnerships as we
generally are the sole supplier for projects undertaken by such companies. As of the date of this Draft Red
Herring Prospectus, we have the following joint venture companies:
NTPC BHEL Power Projects Pvt. Ltd. (NBPPPL) We hold a 50% interest in NBPPPL, which
was incorporated in April 2008, with the remaining shares held by NTPC Limited, Indias largest
public sector power generation company. NBPPPL offers BOP equipment and carries out EPC
activities in the infrastructure sector, including the power sector;
Udangudi Power Corporation Ltd. (UPCL) We hold a 50% interest in UPCL, which was
incorporated in December 2008, with 50% held by Tamil Nadu Electricity Board. UPCL is in the
process of setting up a super-critical thermal power plant with capacity of 2x800 MW at Udangudi,
Tamil Nadu on a build-own-operate basis;
Raichur Power Corporation Ltd. (RPCL) We hold a 50% interest in RPCL, which was
incorporated in April 2009, with 50% held by Karnataka Power Corporation Ltd.. RPCL is in the
process of setting up super-critical thermal power plants with capacity of 2x800 MW at Yermarus,
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Raichur, Karnataka and 800 MW at Edlapur, Raichur, Karnataka on a build-own-operate basis. As of
the date of this Draft Red Herring Prospectus, RPCL is our only joint venture in the power generation
sector where project execution has already commenced. The Board of Directors of the Company on
March 30, 2011 approved the change in equity structure of the RPCL with Karnataka Power
Corporation Ltd. holding 50%, the Companys holding 26% and balance 24% to be offered to financial
institutions. Lender for the project has sought an extended lock in period for sale of Company shares in
RPCL extending to 2 years after the date of the commercial operation date of the project which the
Company has agreed.
Dada Dhuniwale Khandwa Power Limited (DDKPL) We hold a 50% interest in DDKPL, which
was incorporated in February 2010, with 50% held by M.P. Power Generation Company Ltd. DDKPL
is in the process of setting up a super-critical thermal power plant with capacity of 2x800 MW at
Khandwa, Madhya Pradesh on a build-own-operate basis;
Latur Power Company Ltd. (LPCL) We hold a 50% interest in LPCL, which was incorporated in
April 2011, with 50% held by Maharashtra State Power Generation Company Limited. LPCL is in the
process of setting up a gas-based combined cycle or super-critical thermal power plant with capacity of
1,500 MW or 2x660 MW, respectively, at Latur, Maharashtra on a build-own-operate basis; and

BHEL GE Gas Turbine Services Pvt. Ltd. (BGGTS) We hold 50% less one share in BGGTS,
which was incorporated in May 1997, with the remaining shares held by GE (Pacific) Mauritius Ltd., a
wholly owned subsidiary of General Electric Company. BGGTS provides after sales services on GE-
designed heavy duty gas turbines.
We also have two other joint venture companies Powerplant Performance Improvement Limited and Barak
Power Private Limited, which we have taken a decision to put in liquidation in Financial Years 2008 and 2011,
respectively.
The Board of Directors of the Company in its meeting on July 9, 2007 has decided to wind up
Powerplant Performance Improvement Limited. The Board of Directors of Barak Power Private Limited
in its meeting on August 18, 2011 gave their consent for striking off the name of the company and
Barak Power Private Limited has filed an application for striking off its name under Section 560 of the
Companies Act on September 16, 2011. Further, the Ministry of Corporate Affairs, vide its letter dated
September 26, 2011, has given a notice under section 560(3) of the Companies Act, 1956 that at the
expiration of thirty days from September 26, 2011 the name of Barak Power Private Limited unless
cause is shown to the contrary, will be struck off from the Register and the said company will be
dissolved.
We have provided for the diminution of the value of our investment in these entities in our financial
statements. For further information, please see the notes to our financial statements set in the section
titled Financial Information on page 196.
In addition, over the years, we have entered into numerous technical collaboration arrangements with leading
global manufacturing and engineering companies, such as General Electric Company of the United States,
Siemens AG of Germany, Alstom SA of France, Mitsubishi Heavy Industries Ltd. of Japan and ABB Group of
Switzerland. Under these arrangements, we obtain a license to use certain technologies to manufacture products
related to our power generation business and our other businesses from our collaborators under these
arrangements. As of September 26, 2011, we had collaboration agreements in place with the following partners:
Partner Products
Mitsubishi Heavy Industries Ltd., Japan Boiler feed, boosters, cooling water, condensate extraction pumps for
super-critical power plants
Alstom SA, France Once-through boilers
General Electric, USA Gas turbines
Siemens AG, Germany Steam turbines, TG, Axial/lateral condensers
Oto Melara, Italy 76/62 mm Super Rapid Gun Mounts
Sheffield Forgemasters, UK Forgings
Metso, Finland Control and instrumentation automation platforms
Nuovo Pignone, Italy Centrifugal compressors
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Partner Products
Vogt Power International, USA Heat recovery steam generators (HRSG)
GE India Industrial Water treatment equipment
TLT-Turbo GmbH, Germany Variable pitch axial flow fans
Subsidiaries
We also have two subsidiaries:
Bharat Heavy Plate and Vessels Ltd. This wholly-owned subsidiary, located in Visakhapatnam, was
established in 1966 and taken over by us in 2008, while it was in the BIFR process. A BIFR scheme is
being implemented for its revival. It provides process plant equipment, EPC projects and combustion
and oil and gas systems to the refining, petrochemicals, oil and gas, steel and metallurgy, power
generation, nuclear, defence and paper and pulp industries. We have taken an in-principle decision to
merge the Company with this entity. For further details, please refer Risk Factors The proposed
merger of our wholly-owned subsidiary Bharat Heavy Plate and Vessels Limited with us may have an
adverse impact on our operations and financial condition.
BHEL-Electrical Machines Ltd. We own 51% in this company with the remaining 49% held by the
Government of Kerala. This company, which was incorporated in January 2010, was set up to acquire
the Kasaragod unit of Kerala Electricals and Allied Engineering Co. Ltd. and manufacture alternators
for train engines and other rotating electrical machinery.
Intellectual Property
Our intellectual property rights are important to our business. We own certain trademarks and trade names,
including various BHEL monolingual and bilingual monograms, for which we have 26 registered trademarks
under various classes. We had 1,555 patents and copyrights registered and filed in India as of June 30, 2011. We
continuously seek new patents for products and technologies developed through our research and development
activities. We also have proprietary trade secrets, technology, know-how, processes and other intellectual
property rights, which are not registered. See the section titled Risk Factors Internal Risk Factors Failure
to protect our intellectual property rights and to keep our technical knowledge confidential could erode our
competitive advantage on page 30 of this Draft Red Herring Prospectus.
Health, Safety and Environment
We are committed to following best practices and complying with all applicable health, safety and
environmental legislation and other requirements in our operations in different jurisdictions. We have ISO-
14001 certification for environmental management and OHSAS-18001 certification for occupational health and
safety management systems.
To ensure effective implementation of our practices, we attempt to identify all hazards at the beginning of our
work on a project. Associated risks are evaluated and controls and methods are instituted, implemented and
monitored.

We have in the past had occurrences of accidents on our project sites, including accidents resulting in injury and
loss of life to our employees and contract workers. We believe that most accidents and occupational health
hazards can be prevented through systematic analysis and control of risks and by providing appropriate training
to stake holders, employees, subcontractors and communities. Our employees work towards eliminating or
minimising the impact of hazards to people and the environment. We strongly encourage the adoption of
occupational health and safety procedures as an integral part of our operations.
We are committed to protecting the environment by minimising pollution, waste and optimising fuel
consumption towards continual improvement of our environmental performance.
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Employees
As of June 30, 2011, we (excluding our joint ventures) had 48,545 employees.
Many of our employees have undergraduate degrees, and some have advanced degrees, including:
Education Level No. of Employees
Doctorate (technical) 44
Doctorate (non-technical) 32
Postgraduate (technical) 1,156
Postgraduate (non-technical) 2,333
Engineering graduate 9,476
Other professional degree (finance, medical, legal) 1,262
Engineering degree 6,743
Others 27,499
Total 48,545
Our employees perform a variety of functions, including:
Function No. of Employees
Management 310
Design and engineering 3,389
Project management 487
Marketing 1,750
Finance and accounts 1,388
Production / manufacturing 19,186
Legal and corporate officers 32
Human resources 2,978
Information technology 382
Others 18,643
Total 48,545
We have 82 registered trade unions under the Trade Unions Act, 1926 that represent 52.8% of our employees as
of June 30, 2011. We believe that we have good relations with our employees and trade unions. We have not
experienced any strikes, labour disputes or industrial action that had a material effect on our business.
We invest in continuing education and training programmes for our management staff and factory workers with
a view to constantly upgrading their skills and knowledge. We enter into individual employment contracts with
our employees when they join the Company that cover, among other things, confidentiality obligations for
commercial secrets.
We have several employee productivity enhancement initiatives in place, such as multi-skilling of employees,
effective utilisation of critical machines through three-shift, 24-hour operations and redeployment of employees.
Insurance
Our operations are subject to risks inherent in the engineering, procurement, construction and manufacturing
industry, such as equipment failure, work accidents, fire, earthquake, flood and other force majeure events, acts
of terrorism and explosions including hazards that may cause injury and loss of life, severe damage to and the
destruction of property and equipment and environmental damage.
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We may be subject to losses resulting from defects or damages arising from the engineering, procurement or
construction services we provide and the products we manufacture. We are typically required by our customers
to obtain specialised insurance in the nature of contractors all risk (erection all risk) and contractors plant and
machinery policies, including third party liability insurance policies to cover risks during execution of our
projects.
We generally maintain insurance covering our assets and operations at levels that we believe to be appropriate
and consistent with that typical for other similar businesses in India.
Information Technology
Our information technology is deployed in all functional areas of our operations. All our engineering centres are
equipped with workstations utilising advanced engineering software for design, modeling, analysis and drafting.
Our manufacturing units, service divisions, project sites and offices are linked by a company-wide multiprotocol
label switching-based telecommunications network. All our major divisions are ISO 27001 certified for securing
the information assets. Our senior management is able to review and monitor our project sites located
throughout India using our sophisticated video conferencing systems.
We have implemented an Enterprise Resource Planning (ERP) system at our unit level operations at some of
our major manufacturing units, and are currently planning for ERP across all our operations, which will allow us
to further improve our operational efficiencies.
Competition
The engineering and manufacturing industry in India is highly competitive. As one of Indias largest
engineering and manufacturing companies in terms of turnover focused on the power and industry sectors, we
believe that our experience in manufacturing products and providing customised services to our clients, industry
expertise and relationships and large client base enable us to be a preferred equipment and services provider for
the power and industry sectors in India.
In the Indian market, we face significant competition from certain domestic companies which have established
joint ventures with foreign partners, such as L&T-Mitsubishi Heavy Industries, Bharat Forge- Alstom and JSW-
Toshiba. We also face competition from a significant number of foreign companies, such as Shanghai Electric
Group Company Limited, Doosan Heavy Industries, SEPCO Electric Power, Harbin Power Plant Equipment
Group Corporation and Dongfang Electric Corporation, which compete primarily on price and delivery time. In
our industry segment operations, we compete with various companies, depending on the particular business line.
In our captive power plants business, our steam turbine generator sets compete primarily with those made by
Siemens Ltd. and Shin Nippon Machinery as well Chinese and European companies, our boilers compete
primarily with those made by Thermax Ltd., Ansaldo India, Cethar Vessels Ltd., ISGEC John Thompson,
ThyssenKrupp Industries India and several Chinese manufacturers and our GTG sets compete primarily with
those made by Siemens Ltd., Hitachi and GE. Our EPC power projects compete primarily with Thermax Ltd.,
Larsen & Toubro Limited, Cethar Vessels Pvt. Ltd., ThyssenKrupp Industries India, Tecpro Systems Limited,
Enmas GB Power Systems Projects Limited and Bharat Forge Limited.
In our rail transportation business, our traction electrics products compete primarily with those made by
Bombardier Inc., Medha Servo Drives Private Ltd., Siemens Ltd., Alstom and Crompton Greaves Ltd. In our
power transmission business, we compete primarily with ABB Ltd., AREVA, Siemens Ltd., Crompton Greaves
Ltd., EMCO and Larsen & Toubro Limited. In our renewable energy business, we compete primarily with Tata
BP Solar, Moser Baer Solar Limited and Lanco Solar. The main competitors for our electrical industrial
products are ABB Ltd., Crompton Greaves Ltd., WEG Electrics (I) Pvt. Ltd., Marathon Electric Motors India
and other HT motor manufacturers from Europe, South Korea and Taiwan, and our mechanical industrial
products compete primarily with those made by General Electric Oil & Gas Nuovo Pignone (GENP), Hitachi,
Ebara, Mitsubishi Heavy Industries ltd., Siemens AG and Dresser-Rand (compressors), Rolls Royce and GENP
(compressor stations), National Oilwell Varco, CPTDC, Drillmac S.P.A., Lanzhou LS National Oilwell
Petroleum Engineering Co. Ltd. (oil rigs) and UPET Romania, WOM Pvt. Ltd. and Praveen Industries (Well
heads and Christmas trees). Some of our competitors for defence products include Larsen & Toubro Limited, L-
3 Communications, Kirloskar Electric Company Limited and Kirloskar Oil Engines Limited.
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Property
Our registered office is located at BHEL House, Siri Fort, New Delhi-110049. Set forth below is a brief
summary of significant immoveable properties where our registered corporate offices and our regional offices
are situated.
Property/Location Own or Lease Nature of Property
Rights
Term of Lease
Registered & Head Office:
BHEL House, Siri Fort,
New Delhi 110049
Lease Allotment and Leasehold In perpetuity
Power Sector Nothern Region,
HRDI & PSNR Complex, Plot
No. 25, Sector 16A, Noida-
201301 (U.P.)
Lease Leasehold 99 years
Power Sector Eastern Region,
BHEL Bhawan, Plot No. 9/1,
DJ-Block, Sector II, Salt Lake
City, Kolkata-700091
Lease Leasehold 3 years lease, expiring
December 2012
Power Sector Southern Region,
No.690, Anna Salai, Nandanam,
Chennai-600035
Lease Leasehold Rental lease
Power Sector Western Region,
Shree Mohini Complex, 345
Kingsway, Nagpur-440001
Own - -
Awards and Accolades
We have received multiple awards and over the years.
For more information, please see the section titled History and Certain Corporate Matters Awards and
Recognitions on page 152.
Corporate Social Responsibility
We believe that corporate social responsibility is an integral part of our operations. We have established and
participated in various socio-economic and community development programmes to promote education,
improvement of living conditions and hygiene in villages and communities situated in the vicinity of our
manufacturing plants and project sites throughout India. We concentrate our efforts in the following areas: self-
employment generation, environmental protection, community development, education, health management and
medical aids, orphanages and homes for the elderly, infrastructural development and disaster/calamity
management.
Following a Government directive implemented in Financial Year 2011, from Financial Year 2011 onwards, we
have resolved to commit 0.5% of our profit after tax for the preceding Financial Year to corporate social
responsibility activities and initiatives.
From time to time, we provide financial contributions to people affected by floods and to various non-
governmental organisations, trusts and social welfare societies engaged in social development work in India.
Legal Proceedings
From time to time, we are involved in legal proceedings concerning matters arising in connection with
conducting our business. For details, see the section titled Outstanding Litigation and Material Developments
on page 324.
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REGULATIONS AND POLICIES
The following description is a summary of the relevant regulations and policies as prescribed by the GoI and
other regulatory bodies that are applicable to the business of the Company. The information detailed below has
been obtained from various legislations, including rules and regulations promulgated by regulatory bodies, and
the bye laws of the respective local authorities that are available in the public domain. The regulations set out
below may not be exhaustive and are merely intended to provide general information to the Bidders and neither
designed nor intended to substitute for professional legal advice. For details of government approvals obtained
by us, see the section titled Government and Other Approvals on page 377 of this Draft Red Herring
Prospectus.
Boilers Act, 1923, as amended (Boilers Act)
Boilers Act and the rules made thereunder i.e. the Indian Boiler Regulations, 1950, as amended, cover various
aspects of material and equipment utilized in the manufacture of boilers for use in India and the registration,
operation and repair of boilers in India. The object of the Boiler Act is to secure uniformity throughout India in
all technical matters connected with boiler regulations such as the standards of construction, maximum pressure,
etc. and to insist on the registration and regular inspection of all boilers throughout India. The owner of any
boiler which is not registered under the Boilers Act shall make an application alongwith the prescribed fees for
registration of the Boiler with the Inspector under the Boilers Act. Post receipt of application, the Inspector
examine the Boiler and report the result of examination to the Chief Inspector, who then registers the Boiler and
assigns a registration number and certificate to the owner of the Boiler. Penalties for violation of the Boilers Act
include fine or imprisonment of up to two years, or both.
Industrial (Development and Regulation) Act, 1955, as amended (the I(D&R) Act)
The I(D&R) Act has been liberalized under the New Industrial Policy dated July 24, 1991, and all industrial
undertakings are exempt from licensing except for certain industries such as distillation and brewing of
alcoholic drinks, cigars and cigarettes of tobacco and manufactured tobacco substitutes, all types of electronic
aerospace and defence equipment, industrial explosives including detonating fuses, safety fuses, gun powder,
nitrocellulose and matches and hazardous chemicals and those reserved for the small scale sector.

An industrial undertaking which is exempt from licensing is required to file an Industrial Entrepreneurs
Memorandum ("IEM") with the Secretariat for Industrial Assistance, Department of Industrial Policy and
Promotion, Ministry of Commerce and Industry, Government of India, and no further approvals are required.
Public Liability Insurance Act, 1991, as amended (the PLI Act)
The PLI Act imposes liability on the owner or controller of hazardous substances for any damage arising out of
an accident involving such hazardous substances. A list of hazardous substances covered by the legislation has
been enumerated by the Government by way of a notification. The owner or handler is also required to take out
an insurance policy insuring against liability under the legislation. The rules made under the PLI Act mandate
that the employer has to contribute towards the environment relief fund, a sum equal to the premium paid on the
insurance policies. The amount is payable to the insurer.
Approvals from Local Authorities
Setting up of a factory or manufacturing / housing unit entails the requisite planning approvals to be obtained
from the relevant Local Panchayat(s) outside the city limits and appropriate Metropolitan Development
Authority within the city limits. Consents are also required from the state pollution control board(s), the relevant
state electricity board(s), the state excise authorities, sales tax, among others, are required to be obtained before
commencing the building of a factory or the start of manufacturing operations.
Foreign Investment Regulations
The new industrial policy was formulated in 1991 to implement the Governments liberalisation programme and
consequent industrial policy reforms relaxed the industrial licensing requirements and restrictions on foreign
investment.
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Foreign investment in India is governed primarily by the provisions of the FEMA and the rules, regulations and
notifications thereunder, read with the presently applicable Consolidated FDI Policy (effective from April 1,
2011 to September 30, 2011) as issued by the Department of Industrial Policy and Promotion, (DIPP).
The RBI, in exercise of its powers under the FEMA, has notified the Foreign Exchange Management (Transfer
or Issue of Security by a Person Resident Outside India) Regulations, 2000, as amended (FEMA
Regulations) to prohibit, restrict, regulate, transfer by, or issue of security, to a person resident outside India.
At present, investments in manufacturing companies fall under the RBI automatic approval route for foreign
direct investment up to 100%.
Environmental Laws
The business of the Company is subject to various environment laws and regulations. The applicability of these
laws and regulations varies from operation to operation and is also dependent on the jurisdiction in which the
Company operates. Compliance with relevant environmental laws is the responsibility of the occupier or
operator of the facilities.
The operations of the Company require various environmental and other permits covering, among other things,
water use and discharges, stream diversions, solid waste disposal and air and other emissions. Major
environmental laws applicable to the business operations include:
The Environment (Protection) Act, 1986, as amended (the EPA)
The EPA is an umbrella legislation in respect of the various environmental protection laws in India. The EPA
vests the GoI with the power to take any measure it deems necessary or expedient for protecting and improving
the quality of the environment and preventing and controlling environmental pollution. This includes rules for,
inter alia, laying down the quality of environment, standards for emission of discharge of environment pollutants
from various sources as given under the Environment (Protection) Rules, 1986, inspection of any premises,
plant, equipment, machinery, examination of manufacturing processes and materials likely to cause pollution.
Penalties for violation of the EPA include fines up to ` 100,000 or imprisonment of up to five years, or both.
The imprisonment can extend up to seven years if the violation of the EPA continues.
There are provisions with respect to certain compliances by persons handling hazardous substances, furnishing
of information to the authorities in certain cases, establishment of environment laboratories and appointment of
Government analysts.
The Hazardous Wastes (Management and Handling) Rules, 1989 (the Hazardous Wastes Rules)
The Hazardous Wastes Rules aim to regulate the proper collection, reception, treatment, storage and disposal of
hazardous waste by imposing an obligation on every occupier and operator of a facility generating hazardous
waste to dispose such waste without adverse effect on the environment, including through the proper collection,
treatment, storage and disposal of such waste. Every occupier and operator of a facility generating hazardous
waste must obtain an approval from the Pollution Control Board. The occupier, the transporter and the operator
are liable for damages caused to the environment resulting from the improper handling and disposal of
hazardous waste. The operator and the occupier of a facility are liable for any fine that may be levied by the
respective State Pollution Control Board. Penalty for the contravention of the provisions of the Hazardous
Waste Rules includes imprisonment up to five years and imposition of fines as may be specified in the EPA or
both.
The Water (Prevention and Control of Pollution) Act, 1974, as amended (the Water Act)
The Water Act aims to prevent and control water pollution as well as restore water quality by establishing and
empowering the Central Pollution Control Board and the State Pollution Control Boards. Under the Water Act,
any person establishing any industry, operation or process, any treatment or disposal system, use of any new or
altered outlet for the discharge of sewage or new discharge of sewage, must obtain the consent of the relevant
State Pollution Control Board, which is empowered to establish standards and conditions that are required to be
complied with. In certain cases the State Pollution Control Board may cause the local Magistrates to restrain the
activities of such person who is likely to cause pollution. Penalty for the contravention of the provisions of the
Water Act include imposition of fines or imprisonment or both.
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The Central Pollution Control Board has powers, inter alia, to specify and modify standards for streams and
wells, while the State Pollution Control Boards have powers, inter alia, to inspect any sewage or trade effluents,
and to review plans, specifications or other data relating to plants set up for treatment of water, to evolve
efficient methods of disposal of sewage and trade effluents on land, to advise the State Government with respect
to the suitability of any premises or location for carrying on any industry likely to pollute a stream or a well, to
specify standards for treatment of sewage and trade effluents, to specify effluent standards to be complied with
by persons while causing discharge of sewage, to obtain information from any industry and to take emergency
measures in case of pollution of any stream or well. A central water laboratory and a state water laboratory have
been established under the Water Act.
The Water (Prevention and Control of Pollution) Cess Act, 1977, as amended (the Water Cess Act)
The Water Cess Act provides for levy and collection of a cess on water consumed by industries with a view to
augment the resources of the Central and State Pollution Control Boards constituted under the Water Act. Under
this statute, every person carrying on any industry is required to pay a cess calculated on the basis of the amount
of water consumed for any of the purposes specified under the Water Cess Act at such rate not exceeding the
rate specified under the Water Cess Act. A rebate of up to 25% on the cess payable is available to those persons
who install any plant for the treatment of sewage or trade effluent, provided that they consume water within the
quantity prescribed for that category of industries and also comply with the provision relating to restrictions on
new outlets and discharges under the Water Act or any standards laid down under the EPA. For the purpose of
recording the water consumption, every industry is required to affix meters as prescribed. Penalties for non-
compliance with the obligation to furnish a return and evasion of cess include imprisonment of any person for a
period up to six months or a fine of ` 1,000 or both and penalty for non-payment of cess within a specified time
includes an amount not exceeding the amount of cess which is in arrears.
The Air (Prevention and Control of Pollution) Act, 1981,as amended (the Air Act)
Pursuant to the provisions of the Air Act, any person, establishing or operating any industrial plant within an air
pollution control area, must obtain the consent of the relevant State Pollution Control Board prior to establishing
or operating such industrial plant. The State Pollution Control Board is required to grant consent within a period
of four months of receipt of an application, but may impose conditions relating to pollution control equipment to
be installed at the facilities. No person operating any industrial plant in any air pollution control area is
permitted to discharge the emission of any air pollutant in excess of the standards laid down by the State
Pollution Control Board.
The penalties for the failure to comply with the provisions of the Air Act include imprisonment of up to six
years and the payment of a fine as may be deemed appropriate. If an area is declared by the State Government to
be an air pollution control area, then, no industrial plant may be operated in that area without the prior consent
of the State Pollution Control Board.
The Noise Pollution (Regulation & Control) Rules 2000 (Noise Regulation Rules)

The Noise Regulation Rules regulate noise levels in industrial (75 decibels), commercial (65 decibels) and
residential zones (55 decibels). The Noise Regulation Rules also establish zones of silence of not less than 100
meters near schools, courts, hospitals, etc. The rules also assign regulatory authority for these standards to the
local district courts. Penalty for non-compliance with the Noise Regulation Rules shall be under the provisions
of the Environment (Protection) Act, 1986.
Laws relating to Employment
As part of business of the Company it is required to comply from time to time with certain laws in relation to the
employment of labour. A brief description of certain labour legislations which are applicable to the Company is
set forth below:
Factories Act, 1948, as amended (the Factories Act)
The Factories Act defines a factory to be any premises including the precincts thereof, on which on any day in
the previous 12 months, 10 or more workers are or were working and in which a manufacturing process is being
carried on or is ordinarily carried on with the aid of power; or where at least 20 workers are or were working on
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any day in the preceding 12 months and on which a manufacturing process is being carried on or is ordinarily
carried on without the aid of power. State governments prescribe rules with respect to the prior submission of
plans, their approval for the establishment of factories and the registration and licensing of factories.
The Factories Act provides that the occupier of a factory (defined as the person who has ultimate control over
the affairs of the factory and in the case of a company, any one of the directors) shall ensure the health, safety
and welfare of all workers while they are at work in the factory, especially in respect of safety and proper
maintenance of the factory such that it does not pose health risks, the safe use, handling, storage and transport of
factory articles and substances, provision of adequate instruction, training and supervision to ensure workers
health and safety, cleanliness and safe working conditions. If there is a contravention of any of the provisions of
the Factories Act or the rules framed thereunder, the occupier and manager of the factory may be punished with
imprisonment or with a fine or with both.
Employees (Provident Fund and Miscellaneous Provisions) Act, 1952, as amended (the EPF Act)
The EPF Act applies to factories employing over 20 employees and such other establishments and industrial
undertakings as notified by the GoI from time to time. It requires all such establishments to be registered with
the State provident fund commissioner and requires such employers and their employees to contribute in equal
proportion to the employees provident fund the prescribed percentage of basic wages and dearness and other
allowances payable to employees. The EPF Act also requires the employer to maintain registers and submit a
monthly return to the State provident fund commissioner.
Employees State Insurance Act, 1948, as amended (the ESIC Act)
The ESI Act, provides for certain benefits to employees in case of sickness, maternity and employment injury.
All employees in establishments covered by the ESI Act are required to be insured, with an obligation imposed
on the employer to make certain contributions in relation thereto. In addition, the employer is also required to
register itself under the ESI Act and maintain prescribed records and registers.
Payment of Gratuity Act, 1972, as amended (the Gratuity Act)
The Gratuity Act establishes a scheme for the payment of gratuity to employees engaged in every factory, mine,
oil field, plantation, port and railway company, every shop or establishment in which ten or more persons are
employed or were employed on any day of the preceding twelve months and in such other establishments in
which ten or more employees are employed or were employed on any day of the preceding twelve months, as
notified by the Central Government from time to time. Penalties are prescribed for non-compliance with
statutory provisions.
Under the Gratuity Act, an employee who has been in continuous service for a period of five years will be
eligible for gratuity upon his retirement, resignation, superannuation, death or disablement due to accident or
disease. However, the entitlement to gratuity in the event of death or disablement will not be contingent upon an
employee having completed five years of continuous service. The maximum amount of gratuity payable may
not exceed ` 1 million.
Minimum Wages Act, 1948, as amended (the MWA)
The MWA provides a framework for State governments to stipulate the minimum wage applicable to a
particular industry. The minimum wage may consist of a basic rate of wages and a special allowance; or a basic
rate of wages and the cash value of the concessions in respect of supplies of essential commodities; or an all-
inclusive rate allowing for the basic rate, the cost of living allowance and the cash value of the concessions, if
any. Workmen are to be paid for overtime at overtime rates stipulated by the appropriate government.
Contravention of the provisions of this legislation may result in imprisonment for a term up to six months or a
fine up to ` 500 or both.
Industrial Disputes Act, 1947, as amended (the ID Act)
The ID Act provides the procedure for investigation and settlement of industrial disputes. When a dispute exists
or is apprehended, the appropriate Government may refer the dispute to a labour court, tribunal or arbitrator, to
prevent the occurrence or continuance of the dispute, or a strike or lock-out while a proceeding is pending. The
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labour courts and tribunals may grant appropriate relief including ordering modification of contracts of
employment or reinstatement of workmen.
Payment of Bonus Act, 1965, as amended (the PoB Act)
The PoB Act provides for payment of minimum bonus to factory employees and every other establishment in
which 20 or more persons are employed and requires maintenance of certain books and registers and filing of
monthly returns showing computation of allocable surplus, set on and set off of allocable surplus and bonus due.
Contract Labour (Regulation and Abolition) Act, 1970, as amended (the CLRA Act)
In respect of each of its facilities, the Company uses the services of certain licensed contractors who in turn
employ contract labour whose number exceeds 20 in respect of each facility. Accordingly, the Company is
regulated by the provisions of the CLRA Act which requires the Company to be registered as a principal
employer and prescribes certain obligations with respect to welfare and health of contract labour. The CLRA
Act requires the principal employer of an establishment to which the CLRA Act applies to make an application
to the concerned officer for registration of the establishment. In the absence of registration, contract labour
cannot be employed in the establishment. Likewise, every contractor to whom the CLRA Act applies is required
to obtain a license and not to undertake or execute any work through contract labour except under and in
accordance with the license issued. The CLRA Act imposes certain obligations on the contractor in relation to
establishment of canteens, rest rooms, drinking water, washing facilities, first aid, other facilities and payment
of wages. However, in the event the contractor fails to provide these amenities, the principal employer is under
an obligation to provide these facilities within a prescribed time period. Penalties, including both fines and
imprisonment, may be levied for contravention of the provisions of the CLRA Act.
Apprentices Act, 1961, as amended (the Apprentices Act)
The Apprentices Act was enacted in 1961 for imparting training to apprentices i.e. a person who is undergoing
apprenticeship training in pursuance of a contract of apprenticeship. Every employer shall make suitable
arrangements in his workshop for imparting a course of practical training to every apprentice engaged by
him in accordance with the programme approved by the apprenticeship adviser. The central apprenticeship
adviser or any other person not below the rank of an assistant apprenticeship adviser shall be given all
reasonable facilities for access to each apprentice with a view to test his work and to ensure that the practical
training is being imparted in accordance with the approved programme.
The Building and Other Construction Workers Act, 1996, as amended (the BOCW Act)
The BOCW Act provides for regulating the employment and conditions of service of building and other
construction workers and also provides for their safety, health and welfare measures and other matters
connected therewith or incidental thereto.
The Building and Other Construction Workers Welfare Cess Act, 1996, as amended (the BOCWWC Act)
The object of this Act is to provide for the levy and collection of a cess on the cost of construction incurred by
employers with a view to augmenting the resources of the Building and Other Construction Workers Welfare
Boards constituted under the BOCWWC Act.
Fiscal Regulations
Foreign Trade (Development and Regulation) Act, 1992 (FTA)
FTA seeks to increase foreign trade by regulating the imports and exports to and from India. FTA read with the
Indian Foreign Trade Policy provides that no export or import can be made by a person or company without an
importer exporter code number unless such person or company is specifically exempt. An application for an
importer exporter code number has to be made to the office of the Joint Director General of Foreign Trade,
Ministry of Commerce. An importer-exporter code number allotted to an applicant is valid for all its branches,
divisions, units and factories.
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Foreign Trade Policy
Under the FTA, the Central Government is empowered to periodically formulate the Export Import Policy
(EXIM Policy) and amend it thereafter whenever it deems fit. All exports and imports have to be in
compliance with such EXIM Policy. The current EXIM Policy covers the period from 2009-2014. The iron and
steel industry has been extended various schemes for promotion of export of finished goods and import of
inputs. Duty Entitlement Pass Book (DEPB) Scheme has been extended up to September 2011.
The Duty exemption Scheme enables duty free imports of inputs required for production of export products by
obtaining Advance license (AL)
The Duty Remission Scheme enables post export replenishment/ remission of duty on inputs used in the export
product. This scheme consists of Duty Free Remission Certificate (DFRC) and Duty Entitlement Pass Book
(DEPB)
While DFRC enables duty free replenishment of inputs used for manufacturing of export products, under DEPB
Scheme, exporters on the basis of notified entitled rates are granted duty credit, which would entitle them to
import goods except Capital Goods, without duty. The current DEPB rates for saleable products to be
manufactured by us are ranging from 2% to 6%.
The imports of inputs under AL and DFRC for the products exported by the company are subject to Input and
Output norms as prescribed in EXIM Policy.
EPCG Scheme allows imports of capital goods at 0% duty subject to export obligation which is linked to the
amount of duty saved at the time of import of such capital Goods as per the provisions of EXIM Policy.
Excise Regulations
The Central Excise Act, 1944 seeks to impose an excise duty on excisable goods which are produced or
manufactured in India. The rate at which the said duty is sought to be imposed is contained in the Central Excise
Tariff Act, 1985. However, the Government has the power to exempt certain specified goods from excise duty,
by notification. Steel products are classified under Chapter 72 and 73 of the Central Excise Tariff Act and
presently attract an ad-valorem excise duty at the rate of 8% and also an Education Cess of 2% over the duty
element.
Customs Regulations
All imports in the country are subject to duties under the Customs Act, 1962 at the rates specified under the
Customs Tariff Act, 1975. However, the Government has the power to exempt certain specified goods from
excise duty, by notification. The current custom duty on non-alloy steel is 5% and the custom duty on iron and
steel is 10%.
Laws relating to Intellectual Property
In India, trademarks enjoy protection both statutory and under common law. The Trademarks Act, 1999, as
amended (Trademarks Act), the Copyright Act, 1957, as amended (Copyrights Act), The Patents Act,
1970, as amended (Patents Act), and the Designs Act, 2000, as amended (Designs Act), amongst others
govern the law in relation to intellectual property, including brand names, trade names and service marks, layout
and research works.
Trademarks Act
The Trade Marks Act provides for the application and registration of trademarks in India. The purpose of the
Trade Marks Act is to grant exclusive rights to marks such as a brand, label and heading and to obtain relief in
case of infringement for commercial purposes as a trade description. The registration of a trademark is valid for
a period of 10 years, and can be renewed in accordance with the specified procedure.
Application for trademark registry has to be made to Controller-General of Patents, Designs and Trade Marks
who is the Registrar of Trademarks for the purposes of the Trade Marks Act. The Trade Marks Act prohibits any
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registration of deceptively similar trademarks or chemical compound among others. It also provides for
penalties for infringement, falsifying and falsely applying trademarks.
Copyrights Act
The Copyrights Act governs copyright protection in India. Under the Copyright Act, copyright may subsist in
original literary, dramatic, musical or artistic works, cinematograph films, and sound recordings. Following the
issuance of the International Copyright Order, 1999, subject to certain exceptions, the provisions of the
Copyright Act apply to nationals of all member states of the World Trade Organization.
While copyright registration is not a prerequisite for acquiring or enforcing a copyright, registration creates a
presumption favoring ownership of the copyright by the registered owner. Copyright registration may expedite
infringement proceedings and reduce delay caused due to evidentiary considerations. Once registered, the
copyright protection of a work lasts for 60 years.
The remedies available in the event of infringement of a copyright under the Copyright Act include civil
proceedings for damages, account of profits, injunction and the delivery of the infringing copies to the copyright
owner. The Copyright Act also provides for criminal remedies, including imprisonment of the accused,
imposition of fines and seizure of infringing copies.
Patents Act
The purpose of a patent act in India is to protect inventions. Patents provide the exclusive rights for the owner of
a patent to make, use, exercise, distribute and sell a patented invention. The patent registration confers on the
patentee the exclusive right to use, manufacture and sell his invention for the term of the patent. An application
for a patent can be made by (a) person claiming to be the true and first inventor of the invention; (b) person
being the assignee of the person claiming to be the true and first inventor in respect of the right to make such an
application; and (c) legal representative of any deceased person who immediately before his death was entitled
to make such an application. Penalty for the contravention of the provisions of the Patents Act include
imposition of fines or imprisonment or both.
Designs Act
The objective of design law it to promote and protect the design element of industrial production. It is also
intended to promote innovative activity in the field of industries. The Controller General of Patents, Designs and
Trade Marks appointed under the Trademarks Act shall be the Controller of Designs for the purposes of the
Designs Act. When a design is registered, the proprietor of the design has copyright in the design during ten
years from the date of registration.
The Shops and Establishments Legislations
Under the provisions of local shops and establishments legislations applicable in the states in which
establishments are set up, establishments are required to be registered. Such legislations regulate the working
and employment conditions of the workers employed in shops and establishments including commercial
establishments and provide for fixation of working hours, rest intervals, overtime, holidays, leave, termination
of service, maintenance of shops and establishments and other rights and obligations of the employers and
employees. Our Companys offices have to be registered under the shops and establishments laws of the state
where they are located.
Competition Act, 2002, as amended (the Competition Act)
The Competition Act prohibits anti competitive agreements, abuse of dominant positions by enterprises and
regulates combinations in India. The Competition Act also established the Competition Commission of India
(the CCI) as the authority mandated to implement the Competition Act. The provisions of the Competition
Act relating to combinations were notified recently on March 4, 2011 and has come into effect on June 1, 2011.
Combinations which are likely to cause an appreciable adverse effect on competition in a relevant market in
India are void under the Competition Act. A combination is defined under Section 5 of the Competition Act as
an acquisition, merger or amalgamation of enterprise(s) that meets certain asset or turnover thresholds. There are
also different thresholds for those categorized as Individuals and Group. The CCI may enquire into all
combinations, even if taking place outside India, or between parties outside India, if such combination is likely
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to have an appreciable adverse effect on competition in India. Effective June 1, 2011, all combinations have to
be notified to the CCI within 30 days of the execution of any agreement or other document for any acquisition
of assets, shares, voting rights or control of an enterprise under Section 5(a) and (b) of the Competition Act
(including any binding document conveying an agreement or decison to acquire control, shares, voting rights or
assets of an enterprise); or the board of directors of a company (or an equivalent authority in case of other
entities) approving a proposal for a merger or amalgamation under Section 5(c) of the Competition Act. The
obligation to notify a combination to the CCI falls upon the acquirer in case of an acquisition, and on all parties
to the combination jointly in case of a merger or amalgamation.
Other regulations
In addition to the above, the Company is required to comply with the provisions of the Companies Act, and
FEMA and other applicable statutes imposed by the Centre or the State for its day-to-day operations.
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HISTORY AND CERTAIN CORPORATE MATTERS
The Company was incorporated on November 13, 1964 as a private limited company under the Companies Act.
Pursuant to a Board resolution dated December 24, 1991 and shareholders resolution passed at the EGM on
December 24, 1991, the Company was converted into a public limited company.
In June 1966, the Company acquired the assets from HEIL against allotment of 241,112 equity shares of the
Company with face value of ` 1,000 each aggregating to ` 241.11 million to the promoter of HEIL. Further, in
April 1974, HEIL was amalgamated with the Company pursuant to the order of the Company Law Board dated
March 27, 1974 under Section 396 of the Companies Act, having the appointed date as January 1, 1974. The
Company allotted 500,000 equity shares of the Company with face value of ` 1,000 each aggregating to total
sum of ` 500 million as consideration to the promoter of HEIL. Pursuant to a Company Law Board order dated
March 17, 1975, Indian Consortium for Power Projects Private Limited was amalgamated with the Company
under Section 396 of the Companies Act wef. January 1, 1975. In 1976, the Company acquired the entire
shareholding of the two Karnataka state government sick PSU's namely REMCO & MPL to make them the
wholly-owned subsidiaries of the Company. The purchase consideration for acquiring the shareholding of
REMCO and MPL was ` 17.5 million. Pursuant to the order of the Company Law Board dated May 21, 1980
under Section 396 of the Companies Act, REMCO and MPL were amalgamated with the Company.
In 1997, the Company was notified as a Navratna company by the GoI. As a Navratna company, the Company
is eligible for some enhanced delegation of powers to the Board.
For further information on the business of the Company including description of the activities, services,
products, market of each segment, the growth, exports and profit, technology, market, managerial competence
and the standing with reference to the prominent competitors, see the sections titled The Business and
Industry Overview on pages 122 and 103, respectively.
The Company is not operating under any injunction or restraining order.
Changes in Registered Office
The registered office of the Company was originally located at 5, Parliament Street, New Delhi 110001, India.
Following are the changes in the Registered Office of the Company since incorporation:
Effective date of change of
registered office
Address
July 24, 1973 Change of registered office from 5, Parliament Street, New Delhi 110001,
India to Hindustan Times House, 18-20 Kasturba Gandhi Marg, New Delhi
110001.
July 1, 1987 Change of registered office from Hindustan Times House, 18-20 Kasturba
Gandhi Marg, New Delhi 110001 to BHEL House, Siri Fort, New Delhi 110
049.
The change in the Registered Office was to ensure greater operational efficiency.
Major events
The following table illustrates the major events in the history of our Company.
Year Event
1964 The Company was incorporated as Bharat Heavy Electricals Limited
1966 Company acquired the assets from HEIL
1971 Company bagged its first export order for export of boilers (2x60 MW) for Tuanku Jafar Thermal
Power Station in Malaysia
1974 HEIL was amalgamated with the Company pursuant to the order of the Company Law Board dated
March 27, 1974
1976 Company acquired the entire shareholding of REMCO and MPL
1980 Company commissioned its first complete 120 MW BTG and sub-station unit on turnkey basis outside
India located at Tripoli West Power Station of Electricity Corporation, Libya.
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Year Event
1980 REMCO and MPL were amalgamated with the Company pursuant to the order of the Company Law
Board dated May 21, 1980
1991 Company awarded the contract for the complete design, manufacture, erection, testing and
commissioning of two 500kV between Rihand and Delhi (Dadri) convertor terminals for Rihand-
Delhi (Dadri) link.
1997 Company entered into a joint venture agreement with Siemens Aktiengesellschaft, Germany for setting
up of a joint venture company, pursuant to which PPIL was incorporated
1997 The Company entered into a joint venture agreement with GE Pacific (Mauritius) Limited, Mauritius for
incorporation of a private limited company, pursuant to which BGGTS was incorporated
2006 Company commissioned 624 MW western mountain gas turbine power project on EPC basis in Libya
(Companys largest gas-based power plant outside India).
2007 Company engineered, supplied and commissioned 6 X 170 MW (1020 MW) Tala Hydroelectric Project
Authority located at Bhutan (its largest hydro-based power plant by the Company outside India).
2007 Companys market capitalization crossed Rs. 1,000,000 million
2008 The Company entered into a joint venture agreement with PTC India Limited for setting up of a joint
venture company, pursuant to which BPPL was incorporated
2008 The Company entered into a joint venture agreement with Tamil Nadu State Electricity Board for
setting up of a joint venture company, pursuant to which UPCL was incorporated
2008 BHPVL was taken over by the Company as its wholly owned subsidiary
2009 The Company entered into a joint venture agreement with Karnataka Power Corporation Limited for
setting up of a joint venture company, pursuant to which RPCL was incorporated
2010 Company was awarded contract for supply of 420kN anti-fog disc insulators for Biswanath-Chariyali-
Agra HVDC project.
2010 The Company entered into a joint venture agreement with Madhya Pradesh Power Generating Company
Limited for setting up of a joint venture company, pursuant to which DDKPL was incorporated
2010 The Company entered into a joint venture agreement with Maharashtra State Power Generation
Company Limited for setting up of a joint venture company, pursuant to which LPCL was incorporated
2011 Company received order for on shore supply and service contract for 800 KV 6,000MW HVDC
Multi-Terminal System Package associated with north-east/eastern region northern/western region
interconnector - I project
2011 Incorporation of BHEL Electrical Machines Limited, subsidiary of the Company
Awards and Recognitions
(i) The Company received the SCOPE Meritorious Award for R&D, Technology Development and
Innovation in 2011.
(ii) The Company received the Essar Steel Infrastructure Excellence Award in 2011.
(iii) The Company received the Dalal Street Investment Journal Gentle Giant award in 2011.
(iv) The Company received the Intellectual Property Award in 2011.
(v) The Company received the Dainik Bhaskar India Pride Awards in the Business Bhaskar Growth Leader
category in 2011.
(vi) The Company received the India Shining Star CSR Award for outstanding CSR in Capital Goods
Sector at CSR Thought Leadership Conclave organized by Wockhardt Foundation, Mumbai in 2011.
(vii) The Company received the Golden Peacock Award for Occupational Health & Safety in 2011.
(viii) The Company received the award at the Dun & Bradstreet - Rolta Corporate Awards in the
Engineering/Capital Goods category in 2010.
(ix) The Company mentioned as the only PSU in the list of Asias Fab 50 Companies by the Forbes
magazine with a market value of over US$ 25 million in 2010.
(x) The Company received the ICWAI National Awards for Excellence in Cost Management in 2010.
(xi) The Company received the Talent Innovation Award under Global HR Excellence Award in 2010.
(xii) The Company received the award at the NDTV Profit Business Leadership Awards in the
Engineering category in 2010.
(xiii) The Company received the IEI Industry Excellence Award from the Institution of Engineers (India) in
2010.
(xiv) The Company received the Institution of Engineers Safety Innovation Award in 2010.
(xv) The Company received the award at the CII-Thomson Reuters Innovation Awards in the 'Hi-Tech
Corporate' category in 2010.
(xvi) The Company received the Golden Peacock Award for Excellence in Corporate Governance in 2010.
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(xvii) The Company received the award at the 4th ENERTIA AWARD for manufacturing excellence &
scale-up in power generation equipment & auxiliaries in the manufacturing in power sector category in
2010.
(xviii) The Company employees received the Prime Ministers Shram Awards in the following category
three in the Shram Shree category and one in the Shram Vir category in 2009.
(xix) The Company received the DSIJ (Dalal Street Investment Journal) Most Investor Friendly PSU Award
in 2009.
(xx) The Company received the ICWAI National Awards for Excellence in Cost Management in 2009.
(xxi) The Company received the Business Standard Star PSU of the Year Award in 2009.
(xxii) The Company received the SCOPE Award for Excellence and Outstanding Contribution to the Public
Sector Management in the large scale PSE category in 2009.
(xxiii) The Company received the EEPC India National Awards for Export Excellence 2007-08 as the Star
Performer Award for Outstanding Contribution to Engineering Exports in the Product Group Electric
Motors, Generators and Transformers and Parts Large Enterprise.
Accreditations and Certifications
The Company has received certifications and accreditations for its Registered Office and its manufacturing units
and regional offices. The certifications received by the Company include ISO 9001:2008 certification from
Bureau Veitas; ISO 14001:2004 and OHSAS 18001:2007 from Det Norske Veritas; ISO/IEC 17025:2005 from
National Accreditation Board for Testing and Calibration Laboratories, Department of Science and Technology;
and ISO / IEC 27001:2005 from STQC IT Certification Services, Ministry of Communications and Information
Technology, GoI. The details of units receiving theses certifications are as follows:
Accreditation / Certification Units / Regional Office Receiving
ISO 9001:2008 Registered Office, Bhopal Unit, Hardwar Unit,
Industry Sector, Ranipet Unit, Regional Operations
Division, and Rudrapur Unit, Tiruchirapalli Unit,
Transmission Business Group and Varanasi Unit
ISO 14001:2004 Bangalore Unit, Bhopal Unit, Goindwal Unit,
Haridwar Unit, Hyderabad Unit, Jagdishpur Unit,
Jhansi Unit, Noida Township, Power Sector Eastern
Region, Power Sector Northern Region, Power Sector
Southern Region, Power Sector Western Region,
Ranipet Unit, Regional Operations Division (Delhi),
Rudrapur Unit, Tiruchirapalli Unit and Varanasi Unit
OHSAS 18001:2007 Bangalore Unit, Bhopal Unit, Goindwal Unit,
Haridwar Unit, Hyderabad Unit, Jagdishpur Unit,
Jhansi Unit, Noida Township, Power Sector Eastern
Region, Power Sector Northern Region, Power Sector
Southern Region, Power Sector Western Region,
Ranipet Unit, Regional Operations Division (Delhi),
Rudrapur Unit, Tiruchirapalli Unit and Varanasi Unit
ISO/IEC 17025:2005 Haridwar Unit
ISO / IEC 27001:2005 Registered Office, Electronics Division Unit
(Bangalore), Bhopal Unit, Haridwar Unit, Hyderabad
Unit, Jhansi Unit, Power Sector Eastern Region,
Power Sector Northern Region, Power Sector
Southern Region, Power Sector Western Region,
Project Engineering Management (Noida), Ranipet
Unit and Tiruchirapalli Unit
The Main Objects of the Company:
1. (a) To carry on in India or in any part of the world, all kinds of business relating to electrical
goods and in particular to carry on business of manufacturing, storing, packing, distributing,
transporting, converting, repairing, installing and maintaining all kinds of electrical and
lighting/plants, and machinery, lamps fittings and apparatus and also appliances for the
application of power to every kind of purpose or use or capable of being used in connection
with the production, distribution, utilization, supply, accumulation, and storage, employment
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of power, and rendering assistance and services of all and every kind of any description,
buying, selling, exchanging, altering, importing and dealing in Hydraulic turbines and
generators, Generators for Diesel sets, Current and Potential transformers, Static Capacitors,
A.C, & D.C. Circuit breakers, Switch board and control desks, Direct Current machines
generators and Exciters, Welding generators, Motors; Traction Motors, (with associated
rectifiers transformers etc.) apparatus, and equipment, A.C. industrial motors, switch board
instruments, meters and relays, insulating material, Steam turbines and ancillary equipment
and such other goods as may be determined by the Company and their products of every
description, whether required for civil, commercial or military defence purposes and
requirements or otherwise to take over from Heavy Electrical (India) Limited its factories at
Hardwar, Hyderabad and Tiruchi with all their assets, liabilities and together with the benefit
of any collaboration agreements in connection therewith on such terms and conditions as may
be mutually agreed and to carry out the said projects.
(b) To manufacture, store, maintain, sell, buy, repair, alter, exchange, let on hire, export, import,
and deal in all kinds of articles and things (including all kinds of conveyance and all
components, parts, fittings, tools implements accessories/materials, and all articles and things
used or capable of being used in connection therewith in any way whatsoever) which may be
required for the purposes of any business of the Company or are commonly supplied or dealt
in by persons engaged in any such business and which may be capable of being profitably
dealt with in connection with any of the business of the Company.
(c) To act as agents for Government or other authorities or for any manufacturers, merchants and
others and to carry on agency business of every kind of any description connected with the
business of the Company.
(d) To generate, produce, store, accumulate, distribute, supply, hire and lease power and light.
(e) To supply any motive power or force for the production of light or for lighting, heating,
signaling, transmission or traction and for trading purposes of all kinds including the
application there of to tram cars, motors, carriages, ships, conveyances and other vehicles for
the purposes of cold storage or refrigeration.
(f) To establish, and carry on any system of lighting, and to enter into contracts of every kind for
lighting towns, streets, villages and works and buildings of all kinds, or to supply light and
power for the purpose of working mines or for any other purpose, and to undertake and carry
out the installation of any lighting or power works or system, and any works of construction in
connection there with.
(g) To undertake and execute contracts for works involving the supply or use of any machinery or
electrical or mechanical appliance, and to carry out any ancillary or other works comprised in
such contracts.
(h) To construct, manufacture, assemble, install, maintain, repair, acquire, dispose of and deal in
engines, machines, apparatus, appliances, equipment and plant of every kind capable of being
used for or in connection with the generation, production, supply, transmission,
transformation, accumulation, utilization, employment or application for any purpose of
electricity and the term "electricity" herein shall be deemed to include every form of power
directly or indirectly derived therefrom or which may hereafter be discovered in dealing with
electricity.
(i) To construct, manufacture, assemble, install, maintain, repair, acquire, dispose of and deal in
engines, machines, apparatus appliances, equipment and plant of every kind capable of being
used for in connection with the manufacture, generation, production, supply, transmission,
accumulation, utilisation, employment or application for any purpose of gas, chemical air or
water power.
(j) To acquire, establish, construct, provide and maintain and administer factories, township,
estates, railways siding, building yards, wells, water reservoirs, channels, pumping
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installations, purification plants, pipeline, landing grounds, hangars, garages, storage sheds
and accommodation of all description connected with the business of the Company.
(k) To establish, maintain and operate training institutions for electrical engineers, power
engineers, civil engineers, mechanical engineers, electricians and mechanics in India or in any
part of the world.
(l) To carry on the business of electrical, mechanical and civil engineering in all their branches in
India or in any part of the world.
(m) To carry on any other business or activity and do anything of any nature which may seem to
the Company capable of being conveniently carried on or done in connection with the above
or calculated directly or indirectly to enhance the value of or render more profitably any of the
Company's business or property.
2. To manufacture, buy, sell, exchange, install, work, alter, improve, manipulate, prepare for market,
import or export and otherwise deal in all kinds of plant and machinery, wagons, rolling stock,
apparatus, tools, utensils, substances, materials, and things necessary or convenient for carrying on any
of the business which the Company is authorised to carry on or which is usually dealt in by persons
engaged in such business.
3. To carry on the business of Electric Supply Company and to do all things incidental to such business.
4. To search for and to purchase or otherwise acquire from any Government, State or Authority, any
licences, concessions, grants, decrees, rights, powers and privileges whatsoever which may seem to the
Company capable, of being turned to account and to work, develop, carry out, exercise and turn to
account the same.
5. To purchase, sell, take or give on lease or in exchange or under amalgamation, licence or concession or
otherwise, absolutely or conditionally, solely or jointly with others and make, construct, maintain,
work, hire, hold, improve, alter, manage, let, sell, dispose of, exchange, roads, canals, water courses,
ferries, piers, aerodromes, lands, buildings, warehouses, works, factories, mills, workshops, railway
sidings tramways engines, machinery and apparatus, water rights, way leaves, trademarks, patents and
designs, privileges or rights of any description or kind.
6. To construct, execute, carry out, improve, work, develop, administer, manage, or control in India and
elsewhere, works and conveniences of all kinds, which expression in the Memorandum includes
railways, tramways, ropeways, docks, harbours, piers, wharves, canals, reservoirs, embankments,
irrigation, reclamation, improvement sewage, drainage, sanitary, water, gas, electric, light, power,
telephonic, telegraphic and power supply works and hotels, warehouses, markets and buildings, private
or public and all other works or conveniences whatsoever.
7. To apply for, tender, purchase, or otherwise acquire any contract and concessions for or in relation to
the construction, execution, carrying out, equipment, improvement, management, administration or
control of works and conveniences and to undertake, execute/carry out, dispose of or otherwise turn-to
account the same.
8. To enter into any contract or arrangement for the more efficient conduct of the business of the
Company or any part thereof and to sublet any contracts from time to time.
9. To establish, provide, maintain, and conduct or otherwise subsidise research and experimental
workshops for technical research and experiments, to undertake and carry on technical research,
experiments, and tests of all kinds, to promote studies and technical researches, investigations and
inventions by providing, subsidising, endowing, or assisting, workshops, libraries, lectures, meetings
and conferences and by providing or contributing to the remunerations of technical professors or
teachers and by providing or contributing to the awards of scholarships, prizes, grants to students or
otherwise and generally to encourage, promote and reward studies, researches, investigations,
experiments, tests inventions of any kind that may be considered likely to assist any business which the
Company is authorised to carry on.
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10. To take or otherwise acquire and hold shares in any other company having objects, altogether or in
part, similar to those of this Company and to underwrite solely or jointly with another, or others shares
in any such company. To take or otherwise acquire shares in any other company if the acquisition of
such shares seems likely to promote further or benefit the business or interest of this Company.
11. To acquire or take over with or without consideration and carry on the business of managers,
secretaries, treasurers and agents or managing agents by themselves or in partnership with others of
companies or partnership of concerns whose objects may be similar, in part or in whole to those of the
Company.
12. To carry on any other trade or business which may seem to the Company capable of being conveniently
carried on in connection with any of the Company's objects or calculated directly or indirectly to
enhance the value of or render profitable any of the Company's property or rights.
13. To acquire and undertake the whole or any part of the business, property and liabilities of any person,
firm or company carrying on any business, which the company is authorised to carry on, or possessed
of property suitable for the purposes of this company.
14. To let out on hire all or any of the property of the company whether immovable or movable including
all and every description of apparatus or appliances.
15. To enter into partnership or into any arrangement for sharing or pooling profits, amalgamation, union
of interests, co-operation, joint-venture, reciprocal concession or otherwise or amalgamate with any
person or company carrying on or engaged in or about to carry on or engage in any business or
transaction which the company is authorised to carry on or engaged in any business undertaking or
transaction which may seem capable of being carried on or conducted so as directly or indirectly to
benefit this Company.
16. To guarantee the payment of money unsecured or secured, to guarantee or become sureties for the
performance of any contracts or obligations.
17. To sell, let, exchange or otherwise deal with the undertaking of the Company or any part thereof for
such consideration as the company may think fit and in particular for shares, debenture, or securities of
any other company having objects altogether or in part similar-to those of this company and if thought
fit to distribute the same among the shareholders of this Company.
18. To pay for any properties, rights or privileges acquired by the Company, either in shares of the
Company or partly in shares and partly in cash, or otherwise.
19. To promote and undertake the formation of any institution or company for the purpose of acquiring all
or any of the property and liabilities of this company or for any other purpose which may seem directly
or indirectly calculated to benefit this Company or form any subsidiary company or companies.
20. To carry on any business which may seem capable of being carried on conveniently with the business
or objects of the Company and to acquire any interests in any industry or undertaking.
21. To lend money on mortgage of immovable property or an hypothecation or pledge of movable property
or without security to such persons and on such terms as may seem expedient and in particular to
customers of and persons having dealings with the Company.
22. To acquire or hold shares in any undertaking or Company.
23. To acquire the right to use or manufacture and to put up telegraphs, telephones, phonographs, radio
transmitting or receiving stations or sets, dynamos, accumulators and all apparatus in connection with
the generation, accumulation, distribution, supply and employment of electricity or any power that can
be used as substitute, therefore, including all cables, wires or appliances for connecting apparatus at a
distance with other apparatus and including the formation of exchanges or centres.
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24. To construct, maintain, lay down, carryout, work, sell, let on hire and deal in telephonic and all kinds of
works, machinery, apparatus, conveniences, and things capable of being used in connection with any of
the objects of the Company and in particular any cables wires lines, stations, exchanges, reservoirs,
accumulator, lamps, meters and engines.
25. To purchase or by any other means acquire and protect, prolong and renew, whether in India or
elsewhere, any patents, patent rights, brevets, invention, licences protections and concessions which
may appear likely to be advantageous or useful to the company and to use and turn to account and
manufacture under or grant licences or privileges in respect of the same and to spend money in
experimenting upon and testing and improving or seeking to improve any patents, inventions or rights
which the Company may acquire or-propose to acquire.
26. To obtain, order, or Act of Legislature in India, England, or other places, or order, Act or authority
from the authorities of any Country, State or dominion for enabling the Company to obtain all powers
and authorities necessary or expedient to carry out or extend any of the objects of the Company or for
any other purpose which may seem expedient and to oppose any proceedings on applications which
may seem calculated directly or indirectly to prejudice the company's interests.
27. To enter into any arrangements with the Government of India or any Local or State Government in
India or with the Government of any other state, Country or Dominion or with any authorities, local or
otherwise, or with Rulers, Chiefs, landlords or other persons that may seem conducive to the
Company's objects or any of them and to obtain from them any rights, power and privileges, licences,
grants and concessions which the Company may think it desirable to obtain and to carry out, exercise
and comply with any such arrangements rights, privileges and concessions.
28. To provide for the welfare of employees or ex-employees of the Company and the wives and families
or the dependents or connections of such persons by building or contributing to the building of houses,
dwellings, or chawls or by grants of money, pensions, allowances, bonus or other payments or by
creating and from time to time subscribing or contributing to Provident Fund and other associations,
institutions, funds, or trusts providing or subscribing or contributing towards places of instructions and
recreation, hospitals and dispensaries, medical and other attendance and other assistance as the
Company may think fit and to subscribe or otherwise to assist or to guarantee money to charitable,
benevolent, religious, scientific, national, public or other institutions or objects or purposes.
29. Subject to the provisions of Section 205(3) of the Companies Act, 1956, to distribute any of the
property of the company among the members in specie or kind so that no distribution amounting to a
reduction of capital be made except with the sanction (if any) for the time being required by law.
30. To make, draw, accept, endorse, execute and issue Cheques, Promissory Notes, Bills of Exchange,
Bills of Ladings, Debentures and other negotiable or transferable Instruments.
31. To invest and deal with the moneys of the Company in any securities, shares, investments, properties
movable or immovable and in such manner as may from time, be determined and to sell, transfer or
deal in with the same.
32. To borrow or raise money or to receive money on deposit at interest or otherwise in such manner as the
Company may think fit and in particular by the issue of debentures or debentures stock, perpetual or
otherwise, including debenture or debenture stock, convertible into shares of this Company or perpetual
annuities and in security of any such money so borrowed, raised or received, to mortgage, pledge or
charge the whole or any part of the property, assets or revenues of the Company, present or future,
including its uncalled capital, by assignment or otherwise or to transfer or convey the same absolutely
or in trust and purchase, redeem or pay off any such securities.
33. To remunerate any persons, firm, or company for services rendered or to be rendered in placing or
assisting to place or guaranteeing the placing of any of the shares in the Companys capital or any
debentures or debenture stock or other securities of the company or in or about, the formation or
promotion, of the company or the conduct of its business.
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34. To do all or any of the above things and all such other things as are incidental or may be thought
conducive to the attainment of the above objects or any of them as principals, agents, contractors,
trustees or otherwise and either alone or in conjunction with others.
Changes in the Memorandum of Association
Since the incorporation of the Company, the following changes have been made to the Memorandum of
Association:
Date of
Amendment
Details
February 21, 1966 The share capital of the Company was increased to ` 500,000,000 divided into 500,000
Equity Shares of ` 1,000 each
October 31, 1966 The share capital of the Company was increased to ` 650,000,000 divided into 650,000
Equity Shares of ` 1,000 each
March 26, 1971 The share capital of the Company was increased to ` 800,000,000 divided into 800,000
Equity Shares of ` 1,000 each
August 25, 1973 The share capital of the Company was increased to ` 850,000,000 divided into 850,000
Equity Shares of ` 1,000 each
January 1, 1974 The share capital of the Company was increased to ` 2,000,000,000 divided into
2,000,000 Equity Shares of ` 1,000 each
March 24, 1983 The share capital of the Company was increased to ` 3,250,000,000 divided into
3,250,000 Equity Shares of ` 1,000 each
December 23, 1991 The share capital of the Company were sub-divided into 325,000,000 Equity Shares of `
10 each
April 30, 2007 The share capital of the Company was increased to ` 20,000,000,000 divided into
2,000,000,000 Equity Shares of ` 10 each
September 20,
2011
The Authorised Share Capital of the Company was sub-divided into 10,000,000,000
Equity Shares of ` 2 each
Listing
The Government of India, vide its letter dated December 30, 1991, approved disinvestment of 20% of its
shareholding in the Company and also requested to take necessary action to apply for listing of equity shares of
the Company. Subsequently, disinvestment of 20% shareholding (out of then total 244,760,000 equity shares)
was made by GOI.
In 1992, the Company listed its equity shares on stock exchanges at Delhi, Madras, Calcutta, Bombay and
Ahmedabad. The equity shares of the Company were de-listed from stock exchanges at Delhi, Madras and
Ahmedabad on December 11, 2004, January 19, 2005 and January 28, 2005, respectively.
The Company filed necessary application with Calcutta Stock Exchange Association Limited (CSE) on 3rd
November 2004. Communication regarding delisting from CSE is still awaited. However, BHEL Scrip has not
been appearing in the list of securities listed on the CSE. At present, the Equity Shares are listed on BSE and
NSE.
Time and Cost Overrun
The Company is not a projects developer but undertakes the setting of the projects in the capacity of a
contractor, hence the Company is not in a position to provide details of time and cost overruns that may have
occurred since its incorporation in November 1964.
Defaults or Rescheduling of Borrowings with Financial Institutions/ Banks
There are no defaults or rescheduling of borrowings with financial institutions/ banks, conversion of loans into
equity in relation to the Company.
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Details regarding acquisition of business/undertakings, mergers, amalgamation, revaluation of assets
The Company has neither acquired any entity, business or undertakings nor undertaken any mergers,
amalgamation or revaluation of assets in the last fiscal.
Holding Company
We do not have a holding company.
Subsidiaries of the Company
The Company has two Subsidiaries, details of which are provided below. Except Bharat Heavy Plate and
Vessels Limited (BHPVL), none of the Subsidiaries have been declared a sick industrial company under the
provisions of the SICA. Also, no winding up proceedings are pending or have been initiated against any of the
Subsidiaries in accordance with the provisions of the Companies Act. Further, no application has been made in
respect of any of our Subsidiaries to the Registrar of Companies for striking off their respective names.

1. Bharat Heavy Plate and Vessels Limited (BHPVL)
BHPVL was incorporated on June 25, 1966 under the Companies Act. BHPVL is engaged in the business of
manufacturing of equipment for construction, execution, carrying out improvement, work, developing,
administration, manage and control the fertilizer, petroleum, petro-chemical and other heavy chemical plant
units. The authorised share capital of BHPVL is ` 350 million divided into 350,000 equity shares of ` 1,000
each and the paid up capital of BHPVL is ` 337.978 million (divided into 337,978 equity shares of ` 1,000
each). The Company, including through its nominees, holds 337,978 equity shares in BHPVL, i.e. 100% of the
issued and paid up capital of BHPVL.
Shareholding Pattern
The shareholding pattern of BHPVL as on June 30, 2011 is as follows:
Name of the Shareholder No. of equity shares of ` ` ` ` 1000
each
% shareholding
BHEL
Nominee:
Mr. S.S Gupta
337,976
2
100%
Negligible
BHPVL is an unlisted company and it has not made any public issue or a rights issue. It has been referred to
BIFR on August 23, 2004 based on the financial results for the year 2002-03 and declared as a sick company by
BIFR vide Ref 503/2004. BHPVL submitted Fully Tied Up Draft Rehabilitation Scheme (DRS) to BIFR
through Operating Agency (OA) being State Bank of India as per the directions of BIFR. BIFR has approved
DRS in its hearing dated October 21, 2010 and intimated sanction of the scheme vide its order dated November
10, 2010. Further, Board and BHPVL have given their in-principle approval on November 25, 2010 and
December 29, 2010, respectively, for initiating the process of merger of BHPVL with the Company with effect
from October 21, 2010, subject to obtaining the necessary approvals from Department of Heavy Industry,
Ministry of Heavy Industries and Public Enterprises and other concerned authorities.
2. BHEL Electrical Machines Limited (BHEL EML)
BHEL EML was incorporated on January 19, 2011 under the Companies Act and received a certificate for
commencement of business on March 7, 2011. BHEL EML is engaged in the business of manufacturing,
designing, storing, packing, distributing, selling, transporting, repairing, installing and all types of alternators for
train engines and other rotating electrical machines for all types of commercial, non commercial, civil, defence,
industrial or non industrial use. The authorised share capital of BHEL EML is ` 150 million divided into
15,000,000 equity shares of ` 10 each and the paid up capital of BHEL EML is ` 105 million (divided into
10,500,000 equity shares of ` 10 each). The Company, including through its nominees, holds 5,355,000 equity
shares in BHEL EML, i.e. 51% of the issued and paid up capital of BHEL EML.
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Shareholding Pattern
The shareholding pattern of BHEL EML as on June 30, 2011 is as follows:
Name of the Shareholder No. of equity shares of ` ` ` ` 10 each % shareholding
BHEL and its following Nominees:

1. Varinder Pandhi
2. Gopalakrishnan Lakshmanan
3. Inderpal Singh
5,354,700
100
100
100
51%
Government of Kerala and its
following Nominees:
1. K.C. Vijayakumar
2. Babu Abraham Stewart
3. Kerala Electrical & Allied
Engg. Co. Ltd.
48800
100
100
5,096,000
49%
BHEL EML is an unlisted company and it has not made any public issue or a rights issue.
The key terms of the joint venture agreement entered into between the Company and Government of Kerala
(GoK) on September 8, 2010 are set forth below:
Share capital and subscription: The initial authorized share capital of BHEL EML shall be subscribed in
the ratio of 51:49 by the Company and GoK respectively. In the event of issue of any further shares, it shall
be offered to both the parties exclusively who may subscribe to it in the proportion of their shareholding
and if one party fails to subscribe to its entitlement, the same shall be offered to the other party.
Board of directors: The board of directors of BHEL EML shall have a minimum of three and a maximum
of twelve directors. The Company shall have a right to nominate two directors and GoK shall have the right
to nominate one director on the board of BHEL EML.
Transfer and encumbrance of shares: Neither party shall transfer, sell, assign, mortgage or otherwise
encumber its shareholding or voting rights for an initial period of four years from the date of registration of
BHEL EML without the prior written consent of the other party. Thereafter, in case of sale of its shares by
either party, the other party shall have a right of first refusal and in the event that the other party does not
exercise its right of first refusal, the shares can be sold to a third party.
Termination: Either party can terminate this agreement in certain events including breach of terms,
compulsory/voluntary liquidation or insolvency of the other party.
Joint Ventures
1. Powerplant Performance Improvement Limited (PPIL)
The Company entered into a joint venture agreement with Siemens Aktiengesellschaft, Germany
(Siemens) on July 10, 1997 for incorporation of a joint venture company. Plant Performance
Improvement Private Limited (PPIPL) was incorporated as a private limited company under the
Companies Act on May 6, 1997. The registered office of PPIL is situated at 4A Ring Road, I.P. Extension,
New Delhi - 110002, India.
The authorised share capital of PPIL is Rs. 60 million divided into 6,000,000 equity shares of Rs. 10 each.
The issued, subscribed and paid-up share capital of PPIL is Rs. 40 million consisting of 4,000,000 equity
shares of Rs. 10 each. As on March 31, 2011, the Company held 199,999 equity shares of Rs. 10 each
constituting 50% less one share of the equity shares of PPIL.
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2. NTPC BHEL Power Projects Private Limited (NBPPPL)
The Company entered into a joint venture agreement with NTPC for setting up of a joint venture company
on December 17, 2007. Subsequently, the Company entered into supplementary agreements dated January
11, 2008 and July 20, 2011 with NTPC. NBPPPL was incorporated as a private limited company under the
Companies Act on April 28, 2008. The registered office of NBPPPL is situated at NTPC Bhawan, Core-7,
Scope Complex 7, Institutional Area, Lodi Road, New Delhi - 110003, India.
The authorised share capital of NBPPPL is Rs. 3,000 million divided into 300,000,000 equity shares of Rs.
10 each. The issued, subscribed and paid-up share capital of NBPPPL is Rs. 500 million consisting of
50,000,000 equity shares of Rs. 10 each. As on March 31, 2011, the Company held 25,000,000 equity
shares of Rs. 10 each constituting 50% of the equity shares of NBPPPL.
The key terms of the agreement are set forth below:
Share capital and subscription: Unless otherwise mutually agreed and so long as BHEL and NTPC are
the only shareholders, the Company and NTPC shall subscribe to 50% each in the paid up capital of
NBPPPL and shall arrange for the subscription to the equity capital and confirm and maintain the same.
In the event NBPPPL issues further shares, such issue shall be made in such a way that the equity
shareholding of NTPC and the Company, put together is reduced to 50% of the post issue paid-up
capital of the NBPPPL.
Board of directors: The board of directors of NBPPPL shall comprise of not less than two directors and
not more than sixteen directors.
Affirmative vote: The affirmative vote of at least two directors appointed or represented by the
Company and NTPC will be required in certain matters of NBPPPL.
Transfer and encumbrance of shares: Neither Company nor NTPC shall sell its shareholding to any
third party, unless such shares have been offered to the other party. If the other party does not accept
such shares nor designates any person for the purchase of shares, the selling party shall be free to
transfer such shares to a third party provided the price at which they are offered shall not be more
favourable than the price at which they were offered to the other party.
Non-Compete: NTPC and the Company shall ensure that NBPPPL does not quote or submit an offer
for any project, tender, enquiry where either NTPC or the Company may be bidding/negotiating. In
view thereof, NBPPPL shall obtain consent of the concerned party (ies) before submission of the offer
and if reply is not received within 10 working days after receipt of the request from NBPPL, it would
be presumed that the Company or NTPC is not bidding/negotiating for the said tender/project.
Termination: Either party can terminate this agreement in certain events, including breach of terms,
compulsory/voluntary liquidation or insolvency of the other party.
3. Barak Power Private Limited (BPPL)
The Company entered into a joint venture agreement with PTC India Limited on August 30, 2008 for
setting up of a joint venture company. Subsequently, BPPL was incorporated as a private limited company
under the Companies Act on September 1, 2008. The registered office of BPPL is situated at 2
nd
Floor,
NBCC Tower, 15 Bhikaji Cama Place, New Delhi - 110066.
The authorized, issued, subscribed and paid-up share capital of BPPL is Rs. 1 million divided into 100,000
equity shares of Rs. 10 each. As on March 31, 2011, the Company held 50,000 equity shares of Rs. 10 each
constituting 50 % of the equity shares of BPPL. Further, Ministry of Corporate Affairs vide its letter dated
September 26, 2011 has given a notice under section 560(3) of the Companies Act, 1956 that at the
expiration of thirty days from September 26, 2011 the name of Barak Power Private Limited unless cause is
shown to the contrary, will be stuck off from the Register and the said company will be dissolved.

162
The key terms of the agreement are set forth below:
Share capital and subscription: The Company and PTC shall subscribe to 50% each in the paid up
capital of BPPL. If BPPL proposes to increase its share capital, the Company and PTC can subscribe to
shares of the enhanced equity of BPPL through itself and/or other companies/state
corporations/utilities/affiliates/associates.
Board of directors: Unless otherwise determined by BPPL, the board of directors of BPPL shall have a
minimum of two and a maximum of twelve directors. Any shareholder holding more than 10%
shareholding of BPPL shall be entitled to nominate a director on the board of BPPL. Further changes in
the number of directors of BPPL shall be in proportion to the equity shareholding on the parties with
their consent.
Affirmative vote: The affirmative vote of at least one of the directors appointed or represented by the
Company and PTC will be required in certain matters of BPPL.
Transfer of shares: In case of sale of its shares by either party, the other party shall have a right of first
refusal and in the event that the other party does not exercise its right of first refusal, the shares can be
sold to a third party provided the price at which they are offered shall not be more favourable than the
price at which they were offered to the other party nor the designated person(s) which are authorised
and willing to acquire shares.
Non Compete: BPPL shall not compete with either the Company or PTC in their respective business
areas, without their prior written consent.
Termination: Either party can terminate this agreement in certain events including breach of terms,
compulsory/voluntary liquidation or insolvency of the other party. In addition, if the shareholding of
PTC or BHEL in BPPL voluntarily falls below 5% of the paid up capital of the company, all rights of
such party under this agreement shall cease.
4. Udangudi Power Corporation Limited (UPCL)
The Company entered into a joint venture agreement with Tamil Nadu State Electricity Board (TNEB)
on November 26, 2008 for setting up of a joint venture company. Subsequently, UPCL was incorporated as
a public limited company on December 26, 2008, under the Companies Act and received the certificate for
commencement of business on August 31, 2009. The registered office of UPCL is situated at No 144, Anna
Salai TNEB Complex, Chennai 600 002.
The authorised share capital of UPCL as on March 31, 2011 was Rs. 2,000 million divided into
200,000,000 equity shares of Rs. 10 each. The issued, subscribed and paid-up share capital of UPCL is Rs.
650 million consisting of 65,000,000 equity shares of Rs. 10 each. As on March 31, 2011, the Company
held 32,500,000 equity shares of Rs. 10 each constituting 50% of the equity shares of UPCL.
The key terms of the agreement are set forth below:
Share capital and subscription: The initial authorized share capital of UPCL will be subscribed to
equally by TNEB and the Company. The enhancement of equity capital of the UPCL shall be done
through allotment to financial institutions, who would subscribe to 48% of the share capital of UPCL.
Post allotment to financial institutions, the shareholding of TNEB and the Company shall be 26% each.
If UPCL issues any further shares beyond the enhancement contemplated above, UPCL shall first offer
such shares to the existing shareholders in proportion of the equity share held by them. If one
shareholder fails to subscribe to its entitlement, the same shall be offered to the other shareholder(s).
Board of directors: The board of directors of UPCL shall have a minimum of 4 and a maximum of 12
directors with equal nominations from both TNEB and the Company. The chairman of TNEB shall
always be the chairman of UPCL, and the executive director/ CEO shall be nominated by TNEB.
163
Affirmative vote: The affirmative votes of all the directors appointed or represented by TNEB and the
Company will be required in certain matters.
Roles and responsibilities of the Parties: UPCL shall reserve at least 75% of the power generated for
the Tamil Nadu Electricity Board for which the payment shall be made at the rates fixed by Tamil
Nadu Electricity Regulatory Commission/Central Electricity Regulatory Commission, from time to
time. Order for main plant equipment for the project shall be placed on the Company by UPCL on
nomination basis subject to benchmarking of the equipment price to international levels after making
adjustment for site conditions and specifications.
Transfer and encumbrance of shares: Neither party shall transfer, sell, assign, mortgage or otherwise
encumber its shareholding or voting rights for an initial period of five years from the date of
incorporation of UPCL nor until the commencement of commercial operations of the first unit
whichever is later. In case of sale of its shares by either party, the other party shall have a right of first
refusal and in the event that the other party does not exercise its right of first refusal, the shares can be
sold to a third party.
Termination: Either party can terminate this agreement in certain events including breach of terms,
compulsory/voluntary liquidation or insolvency of the other party.
5. Raichur Power Corporation Limited (RPCL)
The Company entered into a joint venture agreement with Karnataka Power Corporation Limited
(KPCL) on January 12, 2009 for setting up of a joint venture company. Subsequently, RPCL was
incorporated as a public limited company under the Companies Act on April 15, 2009 and received its
certificate of commencement on June 5, 2009. The registered office of RPCL is situated at No. 22/23,
Sudarshan Complex, Sheshadri Road, Bangalore, Karnataka - 560 009.
The authorised share capital of RPCL as on March 31, 2011 was Rs. 20,000 million divided into
2,000,000,000 equity shares of Rs. 10 each. The issued, subscribed and paid-up share capital of RPCL was
Rs. 6630.46 million consisting of 663,046,624 equity shares of Rs. 10 each. As on March 31, 2011, the
Company held 331,523,312 equity shares of Rs. 10 each constituting 50% of the equity shares of RPCL.
The Board of Directors of the Company on March 30, 2011 approved the change in equity structure of the
RPCL with KPCL holding 50%, the Company holding 26%, and balance 24% to be offered to financial
institutions.
The key terms of the agreement are set forth below:
Share capital and subscription: The initial authorized share capital of RPCL will be subscribed to
equally by KPCL and the Company. The enhancement of equity capital of the RPCL shall be done
through allotment to financial institutions, who would subscribe to 48% of the share capital of RPCL.
Post allotment to financial institutions, the shareholding of KPCL and the Company shall be 26% each,
respectively. If RPCL issues any further shares beyond the enhancement contemplated above, RPCL
shall first offer such shares to the existing shareholders in proportion of the equity share held by them.
If one shareholder fails to subscribe to its entitlement, the same shall be offered to the other
shareholder(s).
Board of directors: The board of directors of RPCL shall have a minimum of four and a maximum of
twelve directors, with equal nomination from KPCL and the Company. The management and the day-
to-day affairs of the company shall vest with managing director, who shall be nominated by KPCL and
the chairman of RPCL shall be nominated by the Company, provided they continue to be the
shareholders of RPCL.
Roles and responsibilities of the Parties: The power generated in the project shall be reserved for
Karnataka Power Corporation Limited/ESCOMs of Karnataka, for which they shall make payment at
rates fixed by Karnataka Electricity Regulatory Commission/Central Electricity Regulatory
Commission as the case may be. Order for main plant equipment for the project shall be placed by
RPCL on the Company on nomination basis subject to benchmarking of the equipment price to
international levels after making adjustments for site conditions & specifications.
164
Affirmative vote: The affirmative votes of all the directors appointed or represented by KPCL and
BHEL will be required in certain matters of RPCL.
Transfer and encumbrance of shares: Neither party shall transfer, sell, assign, mortgage or otherwise
encumber its shareholding or voting rights for an initial period of five years from the date of
incorporation of RPCL or until the commencement of commercial operations of the projects.
Thereafter, neither BHEL nor KPCL shall not sell or otherwise transfer either all or any part of their
shares owned by them in RPCL to any third party unless the said shares have been offered to the other
party.
Termination: Either party can terminate this agreement in certain events including breach of terms,
compulsory/voluntary liquidation or insolvency of the other party.
6. Dada Dhuniwale Khandwa Power Limited (DDKPL)
The Company entered into a joint venture agreement with Madhya Pradesh Power Generating Company
Limited (MPPGCL) January 28, 2010 for setting up of a joint venture company. Subsequently, DDKPL
was incorporated as a public limited company under the Companies Act on February 25, 2010 and received
the certificate for commencement of business on June 8, 2010. The registered office of DDKPL is situated
at Shed No.7, MPSEB Complex, Rampur, Jabalpur, Madhya Pradesh - 482008.

The authorised share capital of DDKPL is Rs. 700 million divided into 70,000,000 equity shares of Rs. 10
each. The issued, subscribed and paid-up share capital of DDKPL is Rs.450 million consisting of
45,000,000 equity shares of Rs. 10 each. As on date, the Company holds 22,500,000 equity shares of Rs. 10
each constituting 50% of the equity shares of DDKPL.
The key terms of the agreement are set forth below:
Share capital and subscription: The initial authorized share capital of DDKPL will be subscribed to
equally by MPPGCL and the Company. Further, enhancement of equity capital of the DDKPL shall be
done through allotment to financial institutions, who would subscribe to 48% of the share capital of
DDKPL. Post allotment to financial institutions, the shareholding of MPPGCL and the Company shall
be 26% each, respectively. If DDKPL issues any further shares beyond the enhancement contemplated
above, DDKPL shall first offer such shares to the existing shareholders in proportion of the equity
shares held by them. If one shareholder fails to subscribe to its entitlement, the same shall be offered to
the other shareholder(s).
Board of directors: The board of directors of DDKPL shall have a minimum of four and a maximum of
twelve directors, with equal nomination from MPPGCL and the Company. The management and the
day-to-day affairs of the company shall vest with managing director, who shall be nominated by
MPPGCL, provided MPPGCL holds minimum 26% shares of the DDKPL. The chairman of DDKPL
shall be nominated by the Company provided it continues to hold 26% shares of DDKPL.
Roles and responsibilities of the Parties: DDKPL shall reserve at least 85% of power generated for
Madhya Pradesh Power Generating Company Limited/DISCOMs of Madhya Pradesh, the payment for
which shall be made at the rates fixed by Madhya Pradesh Electricity Regulatory Commission/Central
Electricity Regulatory Commission, from time to time through an escrow account. DDKPL should
place the orders for BTG and their associated equipment with the Company on nomination basis
subject to benchmarking of the equipment price to international levels after making adjustment for site
conditions and specifications.
Affirmative vote: The affirmative vote of all the directors appointed or represented by the Company and
MPPGCL will be required in certain matters of DDKPL.
Transfer and encumbrance of shares: Neither party shall transfer, sell, assign, mortgage or otherwise
encumber its shareholding or voting rights for an initial period of five years from the date of
incorporation of DDKPL or until the commencement of commercial operations of the first unit of the
project, whichever is earlier. The Company and MPPGCL agree that after the initial lock-in there will
be a restriction on transfer of shares in whole or in part, whereby neither the Company nor MPPGCL
165
shall not sell or otherwise transfer either all or any part of their shares owned by them in DDKPL to
any third party unless the said shares have been first offered to the other party or their designated
persons to purchase the shares.
Termination: Either party can terminate this agreement in certain events including breach of terms,
compulsory/voluntary liquidation or insolvency of the other party
7. Latur Power Company Limited (LPCL)
The Company entered into a joint venture agreement with Maharashtra State Power Generation Company
Limited (MAHAGENCO) on November 11, 2010 for setting up of a joint venture company.
Subsequently, LPCL was incorporated as a public limited company under the Companies Act on April 6,
2011 and received the certificate for commencement of business on July 12, 2011. The registered office of
LPCL is situated at Prakashgad, 2
nd
Floor, Plot No. G-9, Anant Kanekar Marg, Bandra (East), Mumbai 400
051.

The authorised share capital of LPCL is Rs. 50 million divided into 5,000,000 equity shares of Rs. 10 each.
The issued, subscribed and paid-up share capital of LPCL is Rs. 50 million divided into 5,000,000 equity
shares of Rs. 10 each. The Company holds 25 million equity shares of Rs. 10 each constituting 50% of the
equity shares of LPCL.
The key terms of the Agreement are set forth below:
Share capital and subscription: The initial authorized share capital of will be subscribed to equally by
MAHAGENCO and the Company. The enhancement of equity capital of the LPCL shall be done
through allotment to financial institutions, who would subscribe to 48% of the share capital of LPCL.
Post allotment to financial institutions, the shareholding of MAHAGENCO and the Company shall be
26% each, respectively. If LPCL issues any further shares beyond the enhancement contemplated
above, LPCL shall first offer such shares to the existing shareholders in proportion of the equity share
held by them. If one shareholder fails to subscribe to its entitlement, the same shall be offered to the
other shareholder(s).
Board of directors: The board of directors of LPCL shall have a minimum of 4 and a maximum of 12
directors, with equal nominations from both MAHAGENCO and the Company. The management and
the day-to-day affairs of the company shall vest with managing director, who shall be nominated by
MAHAGENCO. The chairman of LPCL shall be nominated by the Company out of the directors
nominated by the Company.
Affirmative vote: The affirmative vote of a majority of directors, including all the directors appointed or
represented by MAHAGENCO and the Company, will be required in certain matters of LPCL.
Transfer and encumbrance of shares: Neither party shall transfer, sell, assign, mortgage or otherwise
encumber its shareholding or voting rights for an initial period of five years from the date of
incorporation of LPCL or until the commencement of commercial operations of the project, once
completed, whichever is later. Thereafter, neither the Company nor MAHAGENCO shall sell or
otherwise transfer either all or any part of their shares owned by them in LPCL to any third party unless
the said shares have been offered to the other party.
Roles and responsibilities of the Parties: LPCL shall reserve at least 85% of power generated for
Maharashtra Power Trading Corporation Limited/DISCOMs of Maharashtra, the payment for which
shall be made at the rates fixed by Maharashtra Electricity Regulatory Commission/Central Electricity
Regulatory Commission, from time to time through an escrow account. Company will set up the
project as the nominated EPC contractor/main plant equipment supplier for installing the main plant
and other associated equipment on mutually agreed terms and conditions, subject to equipment price
being benchmarked against international competitive price levels after making adjustments for site
conditions and specifications.
Termination: Either party can terminate this agreement in certain events including breach of terms,
compulsory/voluntary liquidation or insolvency of the other party.
166
8. BHEL GE Gas Turbine Services Private Limited (BGGTS)
The Company entered into a joint venture agreement dated July 8, 1997 with GE Pacific (Mauritius)
Limited, Mauritius (GEPM), a 100% owned subsidiary of General Electric Company (GEC)for
incorporation of a private limited company (JVA). Additionally, the Company has entered into a
members voting agreement dated July 8, 1997 (MVoA); BHEL trademark agreement dated November 6,
1997 with GEPM; BHEL parts distributorship agreement dated November 6, 1997 with BGGTS; agreement
to utilise the joint venture company dated November 6, 1997 and personnel management agreement with
GEC and BGGTS dated November 6, 1997. BGGTS was incorporated as a private limited company under
the Companies Act on May 5, 1997. The registered office of BGGTS is situated at Gumidelli Towers, 6
th
Floor, 1-10-39 to 44, Begaumpet Airport Road, Hyderabad 500 016.
The authorised share capital of BGGTS is Rs. 70 million divided into 7,000,000 equity shares of Rs. 10
each. The issued, subscribed and paid-up share capital of BGGTS is Rs. 47.6 million consisting of
4,760,000 equity shares of Rs. 10 each. As on March 31, 2011, the Company held 2,379,999 equity shares
of Rs. 10 each constituting 50% less one share of the equity shares of BGGTS.
The key terms of the JVA are set forth below:
Share capital and subscription: The initial authorized share capital of BGGTS shall be subscribed such
that GEPM holds 50% of the share capital plus one share and the Company holds 50 % of the share
capital less one share.
Termination: The JVA may be terminated by either party, inter alia, in following events: (a) in case of
material change in the ownership or control of either party which is detrimental to the interests of the
other; or (b) if BGGTS does not source after sales market spares parts, repair services etc in accordance
with the agreement; (c) if BGGTS elects to terminate the Technology and Trademark Agreement; or
(d) if the License Agreement is not extended beyond its initial duration or (e) failure by a party to
perform material obligations and such failure remaining uncured for a period of 60 days. If the JVA is
terminated, either party shall request dissolution of BGGTS.
The key terms of the MVoA are set forth below:
Board of directors: The board of directors of BGGTS shall comprise of six directors with equal
nomination from both parties. The Chairman of the board shall be nominated by the Company from
amongst the Company nominated board members. The full time GEPM nominated board director shall
be nominated as Managing Director and the full-time Company nominated director shall be the Joint
Managing Director.
Affirmative vote: The affirmative vote of at least one member appointed or represented by the Company
and GEPM will be required in certain matters of BGGTS.
Transfer and encumbrance of shares: In the event that a party wishes to sell its shares in BGGTS
(Transferor), it shall offer its entire shareholding to the other party or its designated person
(Transferee) at a price determined in accordance with the agreement and if the Transferee refuses to
purchase the shares, it can offer it to a third party, provided that if the price of the offer is modified, the
Transferor shall first offer the shares at the revised price to the Transferee. Only if the Transferee
neither accepts nor refuses to purchase the shares within the offer period, the Transferor shall be free to
sell all, and not less than all, of its shares to only one other person for cash at a price not lower than the
price offered to the Transferee. Moreover, in the event that the shares are acquired in violation of the
aforementioned procedure, the Remaining Member (Transferee)shall have the right to purchase at 10%
of book value or the contract price of the shares acquired, whichever is lower, any or all of the shares
purported to have been thus acquired.
In addition, neither party is allowed to pledge, mortgage, hypothecate nor otherwise encumber any of
its shares without the prior written consent of the other party.
167
Management Deadlock: In the event of a management deadlock, the managing director, appointed by
GEPM, shall be appointed as the chairman and exercise a second vote to resolve a deadlock in all
matters except the matters which require an affirmative vote of at least one of the directors appointed
by each party.
Termination: Unless terminated earlier by agreement of the parties, the MVoA shall terminate upon
dissolution of BGGTS.

BHEL Electrical Machines Limited (BHEL EML)