Directors Report of Hindustan Aeronautics Ltd.

Mar 31, 2025

Your Board of Directors takes great pleasure in presenting the
Report on the performance of the Company ("the Company"
or "HAL"), and its Audited Financial Statements for the
Financial Year ended March 31, 2025, together with Reports of
the Statutory Auditors and the Comptroller & Auditor General
of India (C&AG) thereon.

FINANCIAL HIGHLIGHTS

The financial highlights for the year ended March 31, 2025 are
summarised as under:

Particulars	2024-25	2023-24
Revenue from Operations	30,98,092	30,38,084
Turnover	30,10,465	28,16,185
Exports	39,992	31,059
Profit Before Tax (PBT)	10,82,001	10,19,897
Provision for Tax	2,50,321	2,60,393
Profit After Tax (PAT)	8,31,680	7,59,504
R&D Expenditure	2,48,233	2,82,624
Earnings/ Share (in '') (Face value of '' 5 each)	124.36	113.57
Book Value / Share (in '')	520.99	434.32

During the year, the Revenue from Operations of the Company
has increased by 2% to '' 30,98,092 Lakh from '' 30,38,084
Lakh in the previous year. The turnover of the Company has
increased by 7% to '' 30,10,465 Lakh from '' 28,16,185 Lakh
in the previous year. The Profit before Tax for the year has
increased by 6% to '' 10,82,001 Lakh from '' 10,19,897 Lakh
in the previous year. The Profit After Tax (PAT) has increased by
10% to '' 8,31,680 Lakh from '' 7,59,504 Lakh in the previous
year.

PRODUCTION HIGHLIGHTS

During the year, the Company has produced new Aircraft and
Helicopters, covering Light Combat Aircraft (LCA) Tejas Mk1A,
LCA Tejas Trainer, Dornier Do-228, Advanced Light Helicopter
(ALH) Dhruv and Light Utility Helicopter (LUH) in addition to
the production of New Engines and Accessories, at its various
Divisions. The Company has also carried out Repair and
Overhaul of Aircraft & Helicopters and Engines in addition to
providing required spares support to the customers.

ORDER BOOK POSITION

The Order Book position of the Company stands at
'' 1,89,30,200 Lakh as on March 31, 2025.

During the year, the Company has received manufacturing
contracts of over '' 1,02,00,000 Lakh and ROH Contracts of
over '' 17,50,000 Lakh. Major Orders bagged include Contracts
for supply of LCH to Indian Army (IA) and Indian Air Force (IAF),
Su 30 MKI to IAF, Mid Life Upgrade of Dornier- 228 to IAF, AL-
31FP engine to IAF.

DIVIDEND

During the year, your Company has declared and paid interim
dividend of '' 25 per share of '' 5 each (500%) for the financial
year 2024-25, amounting to '' 1,67,193.75 Lakh.

To comply with the Guidelines of Department of Investment
and Public Asset Management (DIPAM) on Capital restructuring
with respect to payment of minimum dividend, the Board of
Directors of the Company has recommended a final dividend of
'' 15/- per share of '' 5 each. The Final Dividend if approved by
the shareholders, would involve cash outflow of '' 1,00,316.25
Lakh.

Thus, the total dividend including final dividend for the financial
year 2024-25 would be ''40/- per equity share (800%),
amounting to '' 2,67,510 Lakh.

In terms of the provisions of Regulation 43A of the SEBI
(Listing Obligations and Disclosure Requirements) Regulations,
2015 [SEBI (LODR) Regulations] and the Guidelines of DIPAM,
the Company has formulated a Dividend Distribution Policy
and the same is available on the Company''s website at
https://hal-india.co.in/backend/wp-content/uploads/2023/07/
Dividend-Distribution-Policy 13.02.2025.pdf

CAPEX

In order to maintain the state of the art infrastructure and
technologies to meet Aerospace Standard and also to develop
systems/platforms for meeting the requirements of the Defence
Forces and to become Atmanirbhar, the Company has incurred
Capital Expenditure (CAPEX) of '' 2,02,584 Lakh in FY 2024¬
25 (PY '' 2,16,786 Lakh). The investments are mainly towards
Green Field Helicopter project at Tumakuru, augmentation of
facilities of LCA, ROH of SU-30, ROH of AL-31FP Engine etc.
besides the regular replacement and rationalisation of the
existing facilities.

RESERVES

During the year, '' 92,176 Lakh was transferred to Research &
Development Reserve, '' 18,435 Lakh to Indigenisation Fund
Reserve and '' 4,69,032 Lakh to General Reserve.

BORROWINGS

As on March 31, 2025, short term and long term borrowings
of the Company was Nil.

INTERNAL FINANCIAL CONTROLS

Your Company has in place adequate internal financial controls
with reference to financial reporting.

A detailed note on internal control system and their adequacy
is provided in the Management Discussion and Analysis Report.

LOANS, GUARANTEES AND INVESTMENTS

Details of Loans, Guarantees and Investments as covered under
the provisions of Section 186 of the Companies Act, 2013
(''''the Act") form part of Notes to the Financial Statements.

RELATED PARTY TRANSACTIONS

During the year, your Company has entered into transactions
with related parties after obtaining approval of the Audit
Committee and/ or Board, as the case may be.

Since, Audit Committee was not in valid constitution w.e.f.
December 28, 2024, all proposals requiring recommendation/
approval of the Audit Committee were put up directly to the
Board.

As per the threshold mentioned in the Related Party Transactions
(RPTs) Policy, there were no material related party transactions
with any of the related parties.

The disclosures related to RPTs in accordance with the
applicable accounting standards are provided in Clause
No. 45A of the Notes to the financial statements. Details of
contract(s) or arrangement(s) with related parties referred to
in Section 188(1) of the Companies Act read with Rule 8(2) of
the Companies (Accounts) Rules, 2014, in the prescribed form
AOC-2, is attached to this Report as Annexure-I.

CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements of the Company for the
year ended March 31, 2025 have been prepared in accordance
with the provisions of Section 129(3) of the Companies Act
and applicable Accounting Standards, and form part of this
Report.

Pursuant to the first proviso of Section 129(3) of the Companies
Act read with Rule 5 of the Companies (Accounts) Rules,
2014, a separate statement containing salient features of the
Financial Statements of Subsidiaries / Associate / Joint Venture
Companies in Form AOC-1 is appended to this Report, which
forms part of the Financial Statements. The separate Audited
Financial Statements in respect of the Subsidiaries are also
available on the website of the Company at www.hal-india.
co.in

SUBSIDIARY/ ASSOCIATE/ JOINT VENTURE COMPANIES

As on March 31, 2025, your Company has 2 Subsidiaries
including 1 Wholly Owned Subsidiary and 19 Joint Venture

Companies (JVCs) including 7 Not-for-Profit Companies
(Section 8 Companies).

During the year, following JVCs (Section 8 Companies) have
been formed:

1. Electronic Warfare (Defence) Testing Foundation has been
incorporated on May 21, 2024 with equity contribution of
20% (23,480 equity shares of '' 1,000 each) for setting up
of Defence Testing Infrastructure under Electronic Warfare
domain with government financial assistance in the state
of Tamil Nadu;

2. Communication (Defence) Testing Foundation has been
incorporated on May 31, 2024 with equity contribution of
25% (26,131 equity shares of '' 1,000 each) for setting up
of Defence Testing Infrastructure under communication
domain with government financial assistance in the state
of Uttar Pradesh;

3. Advanced Materials (Defence) Testing Foundation has been
incorporated on June 4, 2024 with equity contribution of
20% (27,320 equity shares of '' 1,000 each) for setting
up of Defence Testing Infrastructure for Mechanical and
Material Testing with government financial assistance in
the state of Uttar Pradesh;

4. UAS Testing Foundation has been incorporated on June
21, 2024 with equity contribution of 33.33% (50,000
equity shares of '' 1,000 each) for setting up of Defence
Testing Infrastructure for Unmanned Aerial System (UAS)
with government financial assistance in the state of Uttar
Pradesh; and

5. System Testing and Research for Advanced Materials
Foundation has been incorporated on September 18,
2024 with equity contribution of 20% (20,000 equity
shares of '' 100 each) for setting up of Defence Testing
Infrastructure for Mechanical & Material Testing with
government financial assistance in the state of Tamil Nadu.

Due to non-performance of Infotech HAL Ltd, a JVC, an
application for its voluntary winding up had been submitted
to NCLT on March 19, 2024. Winding-up Order from NCLT is
awaited.

Pursuant to the provisions of Section 134(3)(q) of the Companies
Act read with Rule 8(1) of the Companies (Accounts) Rules,
2014, a Report on the performance and financial position of
each of the JVCs and Subsidiary Companies is attached to this
Report as Annexure-II.

SIGNIFICANT ACHIEVEMENTS

Significant achievements of the Company during the year are
as follows:

? 1^st Defence PSU to achieve the prestigious "Maharatna"

status on October 12, 2024.

? First AL-31FP Engine under 240 engines contract was
handed over to Indian Air Force on September 30, 2024,
ahead of schedule.

? Received Directorate General of Civil Aviation (DGCA)
Certification for Upgraded Dhruv Civil ALH on November
20, 2024.

? Delivered first Gas Generator (GG-01) module for
CE-20, Cryogenic Engine from Integrated Cryogenic
Manufacturing Facility (ICMF).

? Mistral-2 Missile Firing Trial conducted successfully on
LCH Prachand, at the Integrated Test Range, Chandipur,
Odisha, on December 2, 2024.

? Supplying of 12 types of riveted structures, four types of
welded propellant tankages, and two types of feedlines,
four fully integrated L-40 liquid boosters, to ISRO for its
GSLV-F15 NVS-02 Mission.

? Received Certification from Centre for Military

Airworthiness and Certification (CEMILAC) for
HTT-40 Trainer Aircraft in presence of Hon''ble Raksha
Rajya Mantri, during Aero India-2025.

CURRENT PROJECTS AND PROGRAMS

During the year, the Company has produced the Light Combat
Aircraft (LCA) Tejas Mk1A & Mk1 Aircraft, Do-228 Aircraft,
Advanced Light Helicopter (ALH) Dhruv, Light Utility Helicopter
(LUH), engines, accessories and aerospace structures against
various customer orders.

To ensure timely delivery to customers, production capacity is
being ramped up in a phased manner for the major Projects
namely, manufacturing of LCA at Bangalore and Nasik plants,
manufacturing of LCH at Tumakuru plant, manufacturing
& ROH of AL-31FP engines and manufacturing of ALH at
Bangalore.

DESIGN AND DEVELOPMENT PROGRAMS

To meet the future requirements of Indian defence forces and
non-military aerospace market in India, the Company continued
to boost the "Atmanirbhar Bharat Abhiyan" of Govt. of India
with its focused efforts towards design & development of
products and acquiring technologies & capabilities.

The Company has made considerable progress towards the
realization of indigenous programmes viz. Basic Trainer Aircraft
(HTT-40), Light Combat Aircraft (LCA) MK1A, Light Utility
Helicopter (LUH), Indian Multi-Role Helicopter (IMRH) and
development of engines. The progress achieved in respect of
these Projects during the year is as under:

BASIC TRAINER AIRCRAFT (HTT-40)

HTT-40 is the Basic Trainer aircraft indigenously designed and
developed by HAL. HTT-40 would be used for basic flight

training, aerobatics, instrument flying and close-formation
flights whereas its secondary roles would include navigation
and night flying. Two flying prototypes and one Structural Test
Specimen (STS) have been built.

The Company has received the Certification from CEMILAC in
February, 2025. Two production lines have been established
at Aircraft Division, Bangalore and Aircraft Manufacturing
Division, Nasik, delivery planned to commence from FY 2025¬
26 onwards.

LIGHT COMBAT AIRCRAFT (LCA) Mk 1A

LCA Mk1A is an advanced variant of indigenously developed
LCA Mk1 equipped with Active Electronically Scanned Array
(AESA) Radar, unified Electronic Warfare (EW) suite, Mission
Computer (MC), Digital Map Generator (DMG), Smart
Multi-function Display (SMFD), Software Defined Radio (SDR),
Combined Interrogator and Transponder (CIT), Advanced Radio
Altimeter and capable to fire ASTRA and ASRAAM missiles.

The design and development activities for LCA Mk1A systems
were undertaken and design validation trials on LCA Mk1A
are in the advanced stages for achieving Type Certification.
Concurrently, series production activities are also being
progressed to facilitate delivery of aircraft from FY 2025-26
onwards.

LIGHT UTILITY HELICOPTER (LUH)

LUH is a new generation helicopter in the 3-Ton class
incorporating the state-of-the-art technology features like
Glass Cockpit with Multi-Function Displays (MFD) and powered
by single Turbo Shaft engine with sufficient power margin
to cater to demanding high altitude missions. Three flying
prototypes have been built and were extensively flight tested.

INDIAN MULTI ROLE HELICOPTER (IMRH) AND DECK
BASED MULTI ROLE HELICOPTER (DBMRH)

The Company has undertaken design and development of
IMRH, a Medium Lift Helicopter of 13-ton class primarily for
high altitude troop and cargo transport. The sea variant of
IMRH is named as Deck Based Multi Role Helicopter (DBMRH).

IMRH and DBMRH are being designed to meet the requirement
of all the three military services. Its future extension roles
like, off shore operations, utility, VVIP transport will help the
Company to diversify into Civil market.

The preliminary design studies of IMRH has been completed.
The Company is progressing with the D&D activities as a Lead
agency by adapting the following strategy for development:

? Design, development and production of Airframe,
Mechanical Systems, Electrical & Avionics, Automatic
Flight Control System, Mission System and Weapons
Integration through Indian Private Sector.

? Design, development and supply of Rotor & Transmission
system for IMRH & DBMRH through global OEMs.

? Design, development and production of Engines for
IMRH/DBMRH through a Joint venture Company "SAFHAL
Helicopter Engines Pvt Ltd".

SU-30 MKI INDIGENOUS UPGRADE

To enhance the operational capabilities of IAF, as Lead
System Integrator, the Company has undertaken design and
development for indigenous upgrade of Su-30MKI.

The Aircraft upgrade involves revamp of avionic architecture
with integration of Indigenous systems like Mission Computer,
Improved Sensors viz. AESA Radar, Electro Optic / Infra-Red (EO/
IR), Improved EW suite, Indigenous weapon control systems
and weapons, Higher Size displays, Sensor fusion, Net Centric
warfare capability and other associated indigenous avionic
systems.

UTILITY HELICOPTER-MARITIME (UH-M)

To enable stowage in Indian Navy ships, Utility Helicopter -
Maritime (UH-M), a 5.7 tonne dedicated Helicopter is being
developed for deck-based operations with all four Main Rotor
Blades foldable, for reducing its size.

Design and Development activities are progressing with internal
funding. Preliminary Design Review (PDR) has been completed
and further design review of major systems like Traversing
system and other LRUs is progressing. Flight tests on UH-M
Prototypes are planned in FY 2025-26.

25 kN TURBOFAN ENGINE (HTFE-25)

The Company has undertaken Design and development of a
25kN thrust class turbofan engine, which can be used on Basic/
Advanced military trainers, on small business jets and also large
UAV applications. The engine can be used on a 5-ton weight
class aircraft in single engine configuration and on aircraft of
up to nine- ton weight class with twin-engine configuration.
Two core engines and one full engine have been built and
tested. Core engine tested for light up, acceleration and speeds
up to 99.5%. Further trials are under progress.

1200 kW TURBOSHAFT ENGINE (HTSE-1200)

Design and development of a 1200 kW Turbo shaft engine
is being undertaken for 3 to 6-ton category helicopters. Two
prototype engines (Jet mode engine & Power mode engine)
have been built. Components like radial straightener, diffuser,
and rear bearing support have been 3-D printed and evaluated
in the Jet mode version engine. Power mode engine run up
to a power level of 600 kW. Further trials are under progress.

RESEARCH AND DEVELOPMENT ACHIEVEMENTS

During the year, the Company has incurred a total R&D
expenditure of ''2,48,233 Lakh, which is 8.25 % of the

Turnover. The Company has transferred a sum of '' 92,176
Lakh (15% of Operating PAT) to R&D reserve for contribution
to R&D corpus.

The significant R&D achievements are as under:

? To enhance departure characteristics and spin resistance
across the flight envelope, Hindustan Jet Trainer (HJT-36),
HAL''s flagship jet trainer aircraft, has been renamed as
''Yashas'' following extensive modifications.

? First flight of indigenous Automatic Flight Control System
(AFCS) for LUH, carried out on August 30, 2024 and further
evaluation trials towards certification are progressing.

? Site Acceptance Test (SAT) of the first Jaguar DARIN III
Fixed Base Full Motion Simulator (FBFMS) completed.

? HAL has been identified as the Centre of Excellence for
Design, Development and Upgrade of flight simulators for
both fixed wing and rotary wing platforms.

? HAL has received export orders from M/s Lockheed Martin,
USA for design, development and Supply of SIL units of
CIT for Indian Navy''s MH60R program.

? HAL is developing AESA radar for UH-M platform in design
consultancy with LRDE, DRDO.

? HAL developed Full Authority Digital Engine Control
(FADEC) has been cleared for flight test.

? HAL has completed development of Software Defined
Radio (SDR), latest development in aviation communication.

? Combat Air Teaming Systems (CATS) was displayed in
Aero India 2025.

? HAL obtained ITSO certification from DGCA for VHF Radio
used for Voice communication in ATC frequency band.

? Flight trials of indigenously designed & developed Nose
Landing Gear Actuator completed successfully on Do-228,
on January 10, 2025.

? First run of improved PTAE-7 engines in TWIN engine
configuration for CATS-W application completed on
November 21, 2024.

? Design & Development of Mission Management System
for DO-228 aircraft completed.

? Release trials of RudraM-III weapon from modified
Su-30MKI aircraft successfully carried out.

During the year, the Company has filed 208 IPR applications,
out of which, 94 IPRs have been granted.

Further, out of total number of 2620 IPRs filed by the Company,
1127 IPRs have been granted so far (Patents - 371, Industrial
Designs - 171, Copyrights - 583, Trademark - 2).

New Initiatives:

During the year, the Company has entered into following major
strategic partnerships and collaborations:

? Manufacturing of GE-414 aero-engines for LCA Mk2
Aircraft in India through ToT with General Electric (GE),
USA.

? Airframer contract with SAFHAL Helicopters Engines
Pvt. Ltd. (a JVC with Safran Helicopter Engines, France)
for design, development, manufacture and support of
Engines for IMRH and DBMRH.

? Contract with Safran Aircraft Engines (SAE), for export of
ring forgings for LEAP engines.

? Establishing up to 6 yearly C Checks facility for A-320 family
of aircraft at Nasik in collaboration with M/s Airbus, France.
It is intended to establish an integrated MRO hub in India
for providing one stop MRO solutions to commercial
airlines.

During the year, the Company has taken many R&D initiatives
for providing customised and superior technology solutions
through indigenous Design & Development for both Fixed and
Rotary Wing platforms. Some development initiatives are as
under:

? Level D Full Flight Simulator (FFS) for Civil Hindustan-228
aircraft for Pilots training.

? Directional Infra-Red Counter-Measure (DIRCM) for LCH.

? Smart Multi-Function Display (SMFD), Software for Mission
Computer (MC), Head Up Display & Up-Front Control
Panel and Control Display Unit for Su-30 MKI indigenous
upgrade.

? Environment Control & Fuel Monitoring system- Electronic
Unit (ECFM-EU), Radio Altimeter (RAM), VHF Omni¬
Range / Instrument Landing System (VOR/ILS), Tactical Air
Navigation (TACAN) for LCA Mk2.

The Company is leveraging Artificial Intelligence (AI) in various
aspects of defense systems development for reducing Pilot
Workload, enhancing Situation Awareness, Safety & Fleet
availability for Fixed Wing and Rotary Wing platforms.

The Company has also taken initiatives in Industry 4.0 & Quality
4.0 in selected areas.

BOARD AND ITS COMMITTEE MEETINGS

During the year, 13 (Thirteen) Board Meetings were held and
the maximum interval between any two meetings was not
more than 120 days.

The details of meetings of the Board and Committees thereof
held during the year are furnished in the Corporate Governance
Report, which forms part of this Report.

COMMITTEES OF THE BOARD

As on March 31,2025, the Board has five Statutory Committees
namely Audit Committee, Nomination & Remuneration
Committee, Corporate Social Responsibility & Sustainable
Development Committee, Stakeholders Relationship
Committee and Risk Management Committee. However,
due to non-appointment of requisite number of Independent
Directors, Audit Committee and Nomination & Remuneration
Committee were not in valid constitution.

A detailed note on the composition, terms of reference and
meetings of the Board and its Committees is provided in the
Corporate Governance Report.

CHANGES IN BOARD OF DIRECTORS AND KEY
MANAGERIAL PERSONNEL

During the year, following changes took place in the Board of
Directors and Key Managerial Personnel (KMP) of the Company:

Appointment

? Dr. D K Sunil, Director (Engineering and R&D) was
appointed as Chairman and Managing Director (CMD)
w.e.f. September 09, 2024.

? Shri Shalabh Tyagi, Joint Secretary (P&C), DDP, MoD
was appointed as Government Nominee Director w.e.f.
September 10, 2024.

? Dr. Rajalakshmi Menon, DS&DG, DRDO was appointed
as Government Nominee Director w.e.f. September 13,
2024.

? Shri Barenya Senapati, Executive Director (Finance) was
appointed as Director (Finance) w.e.f. October 22, 2024
and as CFO w.e.f. November 14, 2024.

? Shri Ravi K, Executive Director (Corporate Planning) was
appointed as Director (Operations) w.e.f. November 26,
2024.

Cessation

? Shri C B Ananthakrishnan ceased as Director (Finance) &
CFO due to superannuation on August 31, 2024.

? Shri Jayadeva E P ceased as Director (Operations) due to
superannuation on August 31, 2024.

? Shri T Natarajan ceased as Government Nominee Director
due to withdrawal of Nomination w.e.f. September 10,
2024.

? Shri M Z Siddique ceased as Government Nominee Director
due to withdrawal of Nomination w.e.f. September 13,
2024.

? Dr. Divya Gupta ceased as Independent Director on
completion of her tenure w.e.f. December 27, 2024.

? Shri Atasi Baran Pradhan ceased as Director (HR) due to
superannuation on February 28, 2025.

DECLARATION OF INDEPENDENCE

Declarations from Independent Directors of the Company
have been received, confirming that the Independent Director
met the criteria of independence as prescribed under Section
149(6) of the Companies Act and Regulation 25(8) of the SEBI
(LODR) Regulations.

COMPANY''S POLICY ON DIRECTORS'' APPOINTMENT AND
REMUNERATION

The appointment, tenure and remuneration of Functional
Directors including Chairman and Managing Director (CMD)
are determined by the Government of India. The Terms
& Conditions of appointment, including the period of
appointment, the Scale of Pay and other entitlements are
notified by the Government of India.

Government Nominee Directors are appointed by the
Department of Defence Production, Ministry of Defence and
they are not entitled to any remuneration / sitting fees.

Independent Directors are appointed by the Government of
India and they are entitled to sitting fees for attending the
Board / Committee meetings as prescribed by the Board in line
with the Companies Act and Rules made thereunder.

As per Gazette Notification No GSR 463 (E) dated June 5, 2015
of the Ministry of Corporate Affairs (MCA), the Company,
being a Government Company, is not required to frame a
Policy on Directors'' appointment and remuneration, including
criteria for determining qualifications etc. under Section 134(3)
(e) of the Companies Act.

BOARD EVALUATION

Pursuant to the Gazette Notification No GSR 463 (E) dated
June 5, 2015 of the MCA, formal annual evaluation by the
Board of its own performance, its Committees and individual
directors, are exempted for the Company.

However, the performance of the Functional Directors is
evaluated by the Independent Directors in their meeting. The
performance evaluation of Independent Directors is carried out
by the Board without the presence of Independent Directors.

ANNUAL RETURN

In accordance with the provisions of the Companies Act,
Annual Return in the prescribed format has been hosted on
website of the Company at https://hal-india.co.in/backend/wp-
content/uploads/2025/07/Draft-MGT-7.pdf

COMPLIANCE WITH SECRETARIAL STANDARDS

The Company complies with all applicable mandatory
Secretarial Standards issued by the Institute of Company
Secretaries of India.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION,
FOREIGN EXCHANGE EARNINGS AND OUTGO

Your Company being a defence Central Public Sector
Enterprise (CPSE), the disclosure of information with respect
to conservation of energy, technology absorption, foreign
exchange earnings and outgo under the provisions of Section
134(3)(m) read with Rule 8(3) of the Companies (Accounts)
Rules, 2014, is exempted vide Notification GSR No.680 (E)
dated September 4, 2015.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Pursuant to the provisions of Section 135 of the Companies
Act, Companies (Corporate Social Responsibility Policy) Rules,
2014 & Amendment thereof and DPE Guidelines, the Company
has undertaken various activities during the year as per its CSR
Policy. The projects / programmes / activities taken up are in
line with Schedule VII of the Companies Act. The thrust areas
under CSR are Health care, Education, Skill Development,
Rural Development, Women Empowerment, Promotion of
Sports, etc. The other areas in which support extended were
contribution of vehicles and Assistive Devices to Divyangjans,
Organizing camps for early detection of Cancer among
Women, addressing Malnutrition and Stunting amongst
Children, provisioning of portable hand held X-Ray Machines
for screening of patients under National TB Elimination
Programme (NTEP), Setting up of Green Gyms, Sanitation etc.
The Company has spent an amount of '' 16,711 Lakh under
CSR for the Financial Year 2024-25 against the CSR budget/
obligation of '' 14,411 Lakh.

The Corporate Social Responsibility Policy, Composition of the
Committee and CSR Projects/ Activities of the Company is
available on the Company''s website at https://hal-india.co.in/
investors/corporate-social-responsibility-2. Salient features of
the Policy form part of the Annual Report.

Annual Report on CSR activities undertaken by the Company
during the year, pursuant to Section 135 of the Companies
Act read with Companies (Corporate Social Responsibility
Policy) Rules, 2014, as amended, is attached to this Report as
Annexure-III.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT

In terms of Regulation 34(2)(f) of SEBI (LODR) Regulations,
the Company has prepared Business Responsibility and
Sustainability Report (BRSR) on Environment, Social and
Governance (ESG) parameters in the prescribed format for
the year 2024-25 and attached to this Report, along with
reasonable assessment or assurance Report of BRSR Core,
received from Independent Assessment or Assurance Provider.

DEVELOPMENT AND IMPLEMENTATION OF RISK
MANAGEMENT POLICY

The Company has a Board approved Risk Management Policy,
in place. The Policy aims at elimination or reduction of risk
exposures through identification and analysis of various types
of risks and facilitating timely action for taking risk mitigation
measures.

In line with Regulation 21 of the SEBI (LODR), Regulations,
the Board of Directors had constituted the Risk Management
Committee for monitoring and reviewing of the risk
management plan and such other functions as it may deem
fit, including Financial, Operational, ESG, Cyber Security and
Business Continuity Plan, etc.

SIGNIFICANT AND MATERIAL ORDERS

During the year, no significant and material orders were passed
by the Regulators or Courts or Tribunals which impact the
going concern status and operation of the Company in future.

PUBLIC DEPOSITS

Your Company has not accepted any deposit during the year.
Further, there was no outstanding deposit and/or unpaid or
unclaimed principal amount or interest against any deposit
either at the beginning or at the end of the year 2024-25.

ISSUE OF EQUITY SHARES WITH DIFFERENTIAL RIGHTS

During the year, the Company has not issued any equity shares
with differential rights as to dividend, voting or otherwise.

MATERIAL CHANGES SUBSEQUENT TO THE DATE OF
FINANCIAL STATEMENTS

No material change / commitment of the Company has
occurred after the end of the year 2024-25 and till the date of
this report, which affect the financial position of the Company.

PARTICULARS OF EMPLOYEES AND RELATED
DISCLOSURES

Pursuant to Gazette Notification No. G.S.R. 463 (E) dated
June 5, 2015 issued by the MCA, disclosure of particulars
of employees drawing remuneration in excess of the limits
specified under provisions of Section 197 of the Companies Act
and the relevant Rules thereof, are exempted for the Company.

MOU WITH GOVERNMENT

Your Company has signed Memorandum of Understanding
(MoU) with the Ministry of Defence (MoD), Government of
India (GoI) for the year 2024-25, the performance rating of
which is awaited.

However, your Company has achieved "Excellent" performance
rating with a score of 92.50 for the year 2023-24.

INDIGENISATION AND ATMANIRBHAR BHARAT

Concerted efforts are undertaken by the Company to enhance
self-reliance, boost innovation, improve national security and
economic growth. Towards this, some of the key initiatives
taken by the Company are as under:

? Complex Aircraft systems, LRUs & other critical items are
identified for indigenisation under Positive Indigenisation
Lists (PILs).

? Creation of a dedicated indigenisation fund by transfer of
3% Operating Profit after Tax of the Company, to offer
further impetus towards indigenisation.

? A total of 3,215 items (including 51 PILs items) have been
indigenised, resulting into anticipated annual Foreign
Exchange saving of around '' 25,800 Lakh.

? NIL value PSO (Project Sanction Orders) for 60 items are
released to Indian Industry Partners there by taking this
number to a total of around 660 items for indigenisation
under Make-II.

? During the year, approx. 2,000 items are uploaded on
Srijan Portal (an Indigenisation portal) for inviting Indian
Industry Partners to participate in the indigenisation
programs of the Company. This number stand at around
27,000 in total.

? Taking forward the vision of Atmanirbharta and to sensitize
Indian Industry Partners for opportunities available for
indigenisation and their enhanced participation in the
Company''s indigenisation programs, 34 various vendor
development programs/ seminars/ webinars/ conclaves/
exhibitions covering wide spectrum of vendors across the
Country were conducted/ participated by the Company.

EXPORTS

During the year, the Company has achieved approx. 29%
higher exports in comparison to previous Financial Year. To
boost export, following initiatives have been taken by the
Company:

? The Company participated in leading international Air &
Defence Shows including Defence Services Asia (DSA)-
2024 (Malaysia), Farnborough International Air Show
(FIA)-2024 (UK), Egypt International Air Show (EIAS)-
2024, Selangor Aviation Show (SAS)-2024 (Malaysia),
Africa Aerospace & Defence (AAD)-2024 (South Africa),
Asian Defense and Security (ADAS)-2024 (Philippines),
Vietnam International Defence Expo (VIDEX)-2024. Flying
& Static display of Do-228 and ALH were undertaken
during Selangor Aviation Show (SAS)-2024 (Malaysia) and
Egypt International Air Show (EIAS)-2024 respectively.

? Customer Demonstration Flights (CDFs) on HAL''s
platforms and visits to HAL facilities were extended to the
prospective overseas customers during Aero India 2025.

? Imparting trainings to Guyana Defence Forces requisite for
operating HAL supplied Hindustan-228 aircrafts.

? Successfully completed major overhaul of one ALH
helicopter of Mauritius Police Force.

? HAL''s exportable products have been enlisted on the Aero
Expo portal—a virtual international exhibition platform of
aviation sector.

VENDOR DEVELOPMENT

During the year, the Company has taken several vendor
development initiatives to increase the number of vendors.

The Company has conducted 46 Vendor Development
Programmes, of which 08 were for Micro & Small
Enterprises (MSEs) owned by SC/ST Entrepreneurs & Women
Entrepreneurs, 03 was meant exclusively for MSEs owned
by SC/ST Entrepreneurs, 04 was meant exclusively for MSEs
owned by Women Entrepreneurs while the balance 31 were
for across all categories.

The Company has registered with RXIL, Mynd Solution and also
A TReDS Ltd. for enabling payments through TReDS platform
to MSMEs. A total of 83 Invoices worth of '' 5,400 Lakh were
uploaded and discounted on TReDS platforms.

The Company has registered with MSME SAMBANDH portal
and the procurement details are being updated monthly
in this Portal. The Company has also registered with MSME
SAMADHAAN and CHAMPION portal and the same is being
monitored regularly for resolution of payment or procedural
complaints of MSEs, if any.

The Company has implemented companywide e-Procurement
system through its own e-Procurement portal which is adopted
for tenders issued outside GeM portal. A 24X7 e-Procurement
help desk has been established to provide information, support,
training, operational issues/clarifications to the vendors.

To encourage ''Make in India'' and promote manufacturing
and production of goods & services in India, the Company
has implemented the Public Procurement (Preference to Make
in India), Order 2017, and its amendments thereof, issued
by Department for Promotion of Industry and Internal Trade
(DPIIT).

PROCUREMENT THROUGH GeM PORTAL

The Company has implemented companywide procurement
through GeM portal. All efforts are continuously being made
to persuade the potential domestic suppliers (covering area of
Goods, Services and Outsourcing) to on-board them on the
GeM Portal.

During the year, more than 14,278 orders were placed through
GeM portal amounting to '' 3,86,900 Lakh.

PROCUREMENT FROM MICRO & SMALL ENTERPRISES
(MSEs)

The Company has implemented the Public Procurement
Policy for Micro and Small Enterprises (MSEs) Order, 2012 &
its amendments issued by Ministry of MSME vide order No.
21(22)-2018-MA dated November 9, 2018. The Company has
achieved 53% of procurement from MSEs in the year 2024-25,
which is more than the mandated procurement of 25% from
MSE entrepreneurs (excluding specific defence procurement as
per Sl.No.14 of the policy).

During the year, the total value of procurement (including
outsourcing) made from MSEs was '' 2,59,300 Lakh.

The Company has made payment to all its MSE vendors within
the specified time in compliance with Micro, Small and Medium
Enterprises Development (MSMED) Act, 2006.

INTEGRITY PACT (IP)

Your Company has system of signing of Integrity Pact (IP)
with vendors for all procurement of Goods, Services & Works
/ contracts having value of '' 5 Crore and above. Only those
vendors/ bidders, who commit themselves to IP with the
Company would be considered competent to participate in
the bidding process. Further, to encourage competition in
procurement and to reduce processing lead time, the Company
has implemented the Omnibus Integrity Pact with effect from
January 1, 2018. This Omnibus IP shall be valid upto 5 years
and the same can be proposed by bidder for consideration
against any offers submitted by the vendor during the validity
period of Omnibus IP.

HUMAN RESOURCE DEVELOPMENT

The strength of employees as on March 31, 2025 stood at
23,999.

As on March 31, 2025, a total of 4,019 Apprenticeship were
engaged in the Company in various Trades, which forms
11.56% of the total manpower strength including contractual
staff.

EMPLOYEE WELFARE

The Company continues to provide a wide range of welfare
measures for employees and their families, including
comprehensive Medical Facilities, Housing Facilities, Educational
Facilities for employees'' children and Sports Facilities, among
others. Further, various initiatives are also being taken to
support employee well-being and overall development. In line
with this, the Company has introduced HAL Sabbatical Scheme
for employees enabling them to take leave for self-renewal,
skill development, or personal pursuits, offering flexibility to
address social obligations, family support needs, or wellness
journeys.

In furtherance of its employee-centric approach, the Company continues to provide financial security through the Group Life
Insurance Policy of '' 10 Lakh for all employees. Additionally, the Financial Assistance Scheme offers monthly monetary support
ranging from '' 15,000/- p.m. to '' 50,000/- p.m., based on the Grade/Scale of the employee, to dependents of deceased
employees, reaffirming the Company''s dedication to comprehensive employee welfare beyond the workplace.

REPRESENTATION OF SC/STs RECRUITED / PROMOTED:

Representation of SC/STs in the total strength of the Company as on March 31, 2025 is as under:

Category (Grade / Scale of Pay)	Total Strength	as on	Number of SCs as on		Number of STs as on
	31.3.2024 31.3.2025		31.3.2024	31.3.2025	31.3.2024	31.3.2025
Group - A (Grade - II & above)	7,454	7,265	1,355	1,329	473	465
Group - B (Grade-I)	12	125	2	23	1	7
Group - C (Scale-3 to Special Scale)	16,299	16,608	2,920	2,991	1,315	1,341
Group - D (Scales - 1 & 2)
(i) Excluding Safai Karmacharis	1	1	-	-	-	-
(ii) Safai Karmacharis	-	-	-	-	-	-
Total	23,766	23,999	4,277	4,343	1,789	1,813

Recruitments made during the period April 1, 2024 to March 31, 2025 and the SC/STs amongst them.

Category (Grade / Scale of Pay)	Total number of	No. of Reservations made for		No. of Posts filled by appointment of
	Post filled	SCs	STs	SCs	STs
Group - A (Grade - II & above)	58	8	2	8	1
Group - B (Grade-I)	16	1	-	1	-
Group - C (Scale-3 to Special Scale)	1,057	205	95	192	72
Group - D (Scales - 1 & 2)
(i) Excluding Safai Karmacharis	-	-	-	-	-
(ii) Safai Karmacharis	-	-	-	-	-
Total	1,131	214	97	201	73

Vacancy based Promotions made during the period April 1, 2024 to March 31, 2025 and the SC/STs amongst them.

Category (Grade / Scale of Pay) Total number	No. of Reservations made for		No. of Posts filled by Promotion of
Promoted	SCs	STs	SCs	STs
Group - A (Grade - II & above) 1,174	NA	NA	192	76
Group - B (Grade-I) 105	14	7	14	7
Group - C (Scale-3 to Special Scale) -	-	-	-
Group - D (Scales - 1 & 2)
(i) Excluding Safai Karmacharis -	-	-	-	-
(ii) Safai Karmacharis -	-	-	-	-
Total 1,279	14	7	206	83

EMPLOYEE RELATIONS (ER) / INDUSTRIAL RELATIONS (IR)

The Employee Relations / Industrial Relations Scenario remained peaceful & cordial during the year. Effective communication
between the Management and the Trade Unions / Associations paved way for maintenance of industrial harmony and to eliminate
any scope of conflicts & misunderstandings. Meetings with the representatives of the Recognized Unions / Officers Associations at
the Divisional, Complex & Corporate Levels were held periodically to discuss various issues and its resolutions.

Plant Level, Shop Level and various bi-partite Committees with
representatives from the Management / Union are functioning
in the Divisions to discuss & resolve production related &
other matters. In order to address Employee Grievance /
Representations, Grievance Redressal Mechanisms are also in
place in the Company. Employee Grievance Redressal Portal
has been launched during the year for employees to submit
their Grievances online.

WOMEN EMPOWERMENT

Women Empowerment & Leadership Programs are being
conducted by the Company. The main objective of the
programs is to enhance self-awareness & self-management,
enhance competencies to drive business results, enhance ability
to influence & harness the power of effective networking and
to build essential leadership competencies. At present, around
82 Women Employees hold Senior Management posts i.e.,
above Grade VII.

HAL is a Corporate Life Member of Women in Public Sector
(WIPS) Forum. Women employees are encouraged to
participate in programmes / activities of WIPS Forum. The
Company has been conferred with "Second Place for Best
Enterprise Award", under Maharatna Category during the 35^th
National Meet of WIPS Forum held on February 17-18, 2025 at
Vigyan Bhawan, New Delhi.

Ladies Clubs / Families Welfare Associations are also functioning
at different locations to take up various philanthropic / socio¬
cultural activities. Women''s Day is celebrated on 8^th March
every year.

PROHIBITION OF SEXUAL HARASSMENT OF WOMEN AT
WORKPLACE

The Sexual Harassment of Women at Workplace (Prevention,
Prohibition and Redressal) Act, 2013 has been notified in the
Company. In line with the Guidelines received from time to
time, necessary actions have been taken to prevent Sexual
Harassment of Women at Workplace. The HAL CDA Rules
applicable to Officers and the Certified Standing Orders
applicable to Workmen have the required provisions in this
regard.

Internal Complaints Committees as per Section 4 of the Act
have been constituted. Information for the year 2024-25 in
terms of Section 22 of the Act and Schedule V of SEBI (LODR)
Regulation 2015, is as indicated below:

(i)	Number of Cases pending as on : 01.04.2024	Nil
(ii)	Number of Complaints of Sexual :	5
	Harassment received in the
	Financial Year 2024-25

(iii)	Number of Complaints disposed of during the Financial Year 2024-25	: 3
(iv)	Number of Cases pending as on	: 2
	31.03.2025 & its status	[Inquiry
		completed &
		Report awaited]

Awareness Programme on Sexual Harassment were also
conducted at Divisions / Offices during the year.

RAJBHASHA IMPLEMENTATION

The Company is constantly taking efforts to implement
Official Language in all the Divisions/ Offices effectively as
per directives issued by Dept. of Official Language, Ministry
of Home Affairs and Dept. of Defence Production, Ministry of
Defence. The inspection reports pertaining to Parliamentary
Committee inspections and compliance reports related to the
assurances given to the Committees are being forwarded to
the concerned Authorities/ Offices in time after reviewing the
report at the Corporate Office level.

The meetings of Official Language Implementation Committee
in all the Divisions including Corporate Office are being
conducted regularly. Guidelines issued by the Dept. of Official
Language, Ministry of Home Affairs, New Delhi are being
circulated to all the Divisions/ Offices, to make aware of latest
orders pertaining to implementation of Official Language. The
periodical reports are also being sent online as per directives
issued by the Department of Official Language, Ministry of
Home Affairs, New Delhi.

Hindi Incentive Scheme has been implemented effectively in
the Company. Further, In-House Hindi Magazines are being
published by the Divisions/ Offices to motivate the employees.
In accordance with the Official Language guidelines, Hindi
workshops and seminars are also being conducted on various
topics from time to time by the Company, so that Employees
could do their routine work in Hindi as far as possible.

The Inspection meetings were successfully done by Committee
of Parliament on Official Language at various Divisions of the
Company such as Kanpur Division, ACD, Aircraft Division and
Liaison Office, New Delhi.

During the year, Company has organized two days National
Seminar on Technical Terminology in Indian Languages in
coordination with CSTT, New Delhi under the aegis of Town
Official Language Implementation Committee, (Undertakings),
Bangalore and two half-yearly meetings of Town Official
Language Implementation Committee, (Undertakings),
Bangalore has also been organized under the Chairmanship
of HAL. Further, the Company has conducted 5 days Technical
Translation Training Programme exclusively for the Official
Language professional of the Company by Central Translation

Bureau, New Delhi. Akhil Bharatiya Kavi Sammelan was also
organized to popularize Hindi in ''C'' region.

INFORMATION TECHNOLOGY (IT) INITIATIVES

During the year, your Company has taken many IT initiatives
towards adopting the latest technology, increasing customer
satisfaction, implementing paperless processes and improving
Cyber security. Some of the major IT initiatives and achievements
of the Company during the year are:

? Project Parivartan - upgrade of ERP system: Project
Parivartan was conceptualised for upgradation of existing
IFS to the higher version (IFS Apps 10) and deployment
in a centralised new generation hardware with built-in
redundancy and establishment of disaster recovery site at
Bangalore. Initial phases of the project such as Business
process as-is study, To-be process finalisation, Project
Office & Hardware setup and Process demonstrations have
been completed. Development of customisations, reports
and dashboards are in progress.

? Integrated Communication System for LAN &
internet: To take forward the digital transformation,
an integrated system has been evolved where critical
information will be made available to top executives in a
secured manner on demand at faster pace.

? Infrastructure Modernisation: IT infrastructure in the
Company have been modernised by replacing obsolete
desktop machines and undertaking 3486 MS Office
Licenses.

? Implementation of Maya OS & Chakravyuh server:

Maya OS is a hardened Linux OS developed by CIRA
(Cyber Information Research Agency) with several
advanced security implementations in place which reduces
the probability of impact during any security breach.
As per recommendation of CIRA, Maya OS has been
deployed in 700 internet facing machines. For windows
based machines, log collector has been installed in 1216
machines, which helps to monitor the security aspects
centrally by CIRA.

? Implementation of e-Office: With a view to achieve
paperless office and enabling document movement in
digital form across organisation, e-Office system has been
implemented.

AWARDS & RECOGNITIONS

During the year, your Company has received various Awards
and Recognitions. Some of the important accolades conferred
to the Company are as under:

? "Outstanding PSU of the year" awarded at All India
Management Association (AIMA) Managing award
ceremony on April 23, 2024 at New Delhi.

? First prize in the "33^rd National Award for Innovative
Training & Skill Development Practices" from Indian
Society for Training & Development (ISTD) on April 10,

2024 at New Delhi.

? First prize in the "Swacchta Pakhwada Award - 2023"
organized by DDP, MoD during December, 2023, which
was announced on June 18, 2024.

? Gold award at the "ET Government PSU Leadership
& Excellence Awards 2024" in the category of ''Skill
Development & Capacity Building'' during the 5^th National
PSU Summit held at New Delhi on June 21, 2024 for its
outstanding initiatives towards Critical Skill Transfer (CST).

? "Rajbhasha Kirti Puraskar" First prize for the year 2023-24
among the Public Sector Undertakings category of Region
''C'' for excellence in implementation of Official Language
during the Hindi Day and 4^th All India Official Language
Conference organized at New Delhi on September 14,
2024.

? Dun & Bradstreet award for being "India''s Top Value
Creator 2024 - Defence" during the Dun & Bradstreet- G7
CR Technologies ''India''s Top 500 Value Creators'' summit
held on November 29, 2024 in Mumbai.

? Platinum award for "Operational Performance Excellence"
as well as Bronze award for "Corporate Social Responsibility
and Sustainability" at 14^th PSE Excellence award event
held on December 12, 2024 in New Delhi.

? "IEI Industry Excellence Award 2024" (Platinum Award)
under Engineering Manufacturing and Processing
Category for demonstrating Outstanding Performance
with High Order of Business Excellence. The award was
presented by The Institution of Engineers (India) (IEI) in an
event held at Kolkata on December 19, 2024.

? "Aerospace and Defence Awards 2025" under the
category "Outstanding Contribution in Aerospace
Industry" instituted by "SAP Media Worldwide Ltd"
during the 10^th Aerospace & Defence Awards ceremony
held on February 09, 2025 at Bengaluru.

? "Sunrise Sector Pioneer Award" at Global Investors Meet

2025 for leading Aerospace and Defence Innovation on
February 13, 2025.

? Conferred with the certificate of appreciation for the
successful indigenisation of VPX-135 Single Board
Computer for Light Combat Aircraft in association with
M/s Mistral Solution Pvt. Ltd, Bangalore during the
indigenisation event "Samarthya" held during Aero
India 2025, Bangalore in the presence of Hon''ble Raksha
Mantri.

VIGILANCE

The Company has a well establishment and dedicated Vigilance
Department headed by Chief Vigilance Officer (CVO). To
uphold high ethical standards, transparency, accountability and
responsibility in the workplace, the Company has implemented
various initiatives. Towards this, vigilance officers are posted
at various Divisions and Offices of the Company. Preventive
vigilance has been the thrust area of the Vigilance Department
during the current year.

Some of the key activities that have been carried out by
Vigilance Department during the year are as under:

i. Preventive Vigilance: 191 complaints were handled, 341
regular scrutiny/surprise checks and 06 CTE type intensive
examinations were carried out across the Company. Four
system studies were also carried out on various topics and
system improvement suggestions were made.

A total of 190 awareness sessions were conducted on
various topics. Key note address by eminent speakers
were organized to spread vigilance awareness among
employees on various topics.

ii. Vigilance Publications: Two in-house vigilance
e-magazines were published, as under:

? "Marg Darshan Vol.XXI" Issue No.1, an annual
magazine was released during Vigilance Awareness
Week (VAW) 2024 on the theme "Gender Dimension
in Fighting Corruption".

? "Vishleshan IV-A compendium of Vigilance

Interventions" - a preventive vigilance initiative
wherein an attempt is made to bring out the deviations
noticed by vigilance department in certain areas and
system improvement suggestions implemented to
improve the area.

iii. System Improvement measures: Based on the

recommendations of vigilance, several system

improvements have been implemented by the
management in the areas of HR, IMM, stores, works
and finance etc. Some of major system improvement
undertaken such as Sensitization of guidelines - provisions
applicable to MSME; Online Employee grievance redressal
system, Police Verification of Contractual Employees,
Calculation of Liquidated Damages (LD) on account
of delay in completion of works, Monitoring of Estate
Management, Procurement on proprietary basis, R&D
project and content management portal, Vigilance
Guidelines for Recruitment Activities, Directive on use
of Remote Access Software and Rate contract terms &
conditions for procurement, supply of In-house pharmacy.

iv. Vigilance Awareness Week: Vigilance Awareness
Week was conducted throughout the organization from
October 28, 2024 to November 03, 2024 on the theme
"Culture of Integrity for Nation''s Prosperity". In order to
spread wider awareness and to promote transparency,
accountability & integrity amongst employees, other
stakeholders and school children, various activities and
events were conducted.

Further, three months'' campaign was also carried out
from August 16, 2024 to November 15, 2024 in the areas
of:

? Capacity Building programs,

? Identification and Implementation of Systemic
Improvement measures,

? Updation of Circulars /Guidelines /Manuals

? Disposal of Complaints

? Dynamic Digital Presence

v. Capacity Building Program for Vigilance Officers:

26^th annual conference of vigilance officers of the
Company was conducted during October, 2024, as
a part of capacity building measures, which provides
a platform for vigilance professionals for knowledge
sharing, adoption of transparent policies etc. Also training
programs are conducted for officers and staff in premier
training institutions of the Country.

vi. Digital Initiatives: The R&D project & content
management portal and Online Employee grievance
redressal system in the Company was launched in
December, 2024, as part of digital initiatives.

QUALITY INITIATIVES AND FLIGHT SAFETY

? During the year, DGCA has granted fresh approval to
various divisions of the Company for the following:

a) CAR 21 - POA "Production Organisation Approval"
granted to Engine Division, Bangalore.

b) CAR 145 - MOA "Maintenance Organisation
Approval" granted to Helicopter-MRO Division,
Bangalore and Avionics Division, Korwa.

? During the year, various divisions of the Company
have been awarded fresh approvals by the authority
of the National Aerospace and Defence Contractors
Accreditation Program (NADCAP) Management Council
for special processes, which are as under:

a) Hardening process & Tempering process at Accessories
Division, Lucknow.

b) Sulphuric Acid Anodising at Avionics Division,
Hyderabad.

c) Sulphuric Acid Anodizing & Magnesium Chromating
at TAD-Kanpur.

d) Chemical processes at Aircraft Division, Bangalore.

? As per Govt. of India initiative of 100 days 100 projects
for Quality 4.0 in 2024, 10 Quality 4.0 projects were
successfully completed on-time by the Company.

? Institute of Printed Circuit (IPC) training has been
conducted by Institute of Printed Circuit India for HAL
employees working in Electrical & Electronics field and
certified 161 employees of the Company during the year.

? 263 Operators have been approved by DGAQA across
HAL divisions for self-verification of inspection stages to
empower the Operators for intermediate inspection stages
and less complex inspection stages as per Guidelines on
Operator Self-Verification Program (CQAG 9015).

? Conducted 18 training programs/workshops at customer
bases/field units and 70 training programs/workshops at
HAL premises for Customers on critical aircraft systems.

? During the year, Internal Corporate Quality Audit has been
successfully Completed for 18 Manufacturing & Overhaul
Divisions, 10 R&D Centres, 4 PBL Bases of ICG and 5 IAF
Bases.

? HAL & DGAQA have jointly released a guideline for
Approval of Supplier/ Sub-contractor & its Quality
Management System (CQAG-9017: ASQMS) enabling
Suppliers/ Sub-contractors to clear and supply Products
produced by them under "Certificate of Confirmity
(COC)". During Aero India 2025, M/s Godrej & Boyce
Mfg. Co. Ltd, Mumbai has been approved under ASQMS
by HAL Accessories Division, Lucknow.

? Trained HAL officers by accreditation body to conduct
audits for AS9100 compliance across the divisions to
ensure the product meets the highest standards of Safety
and Quality. The total number of auditors available across
the HAL Divisions are:

a) Lead Auditors - 10 Officers

b) Internal Auditors - 691 Officers

? LCA-Tejas Division, Bangalore has developed AI Based
solution for Snag Disposition Information Management
System.

? A fully automated system has been developed and
integrated with SCADA (Supervisory Control and Data
Acquisition) system with Heat Treatment furnaces to
control & monitor the furnaces parameters online without

human intervention and to eliminate the errors at TAD
Kanpur, Engine Division, Koraput and Engine Division,
Bangalore.

? Foundry & Forge Division, Bangalore has established
Rapid Quench Heat Treatment (RQHT) facility and the
facility is integrated with Industry 4.0 features utilizing
SCADA system for comprehensive record management,
documentation and process control. Key features of
this facilities are 3 Axis Robotic Manipulator, automated
loading and unloading which will result in 133% increase
in working volume and improvement in productivity by
4-6 folds.

AUDITORS
Statutory Auditors

HAL being a CPSE, Statutory Auditors of the Company were
appointed by the Comptroller & Auditor General of India
(C&AG). M/s Gupta Nayar & Co, Chartered Accountants,
Bengaluru was appointed as Statutory Auditors for auditing
the Accounts of the Company for the year and 17 firms of
Chartered Accountants were appointed as Branch Auditors.
The Auditors'' Report does not contain any qualification,
reservation or adverse remarks.

The Auditors'' Report on financial statements for the year
2024-25 and comments of the Comptroller & Auditor General
of India (C&AG) under Section 143(6) of the Companies Act
are attached to this Report, which is self-explanatory.

Cost Auditors

The Company has appointed M/s Murthy & Co. LLP, Cost
Accountants, Bengaluru as Cost Auditors for conducting the
Cost Audit of the Company for the year 2024-25. The Company
maintains cost records as specified by the Central Government
under Section 148(1) of the Companies Act, which are audited
by Cost Auditors.

Internal Auditors

The Company has appointed 13 firms of Chartered Accountants
and 1 Cost Accountant firm for carrying out internal audit of
the Company for the year 2024-25.

Secretarial Auditors

In pursuant to the provisions of Section 204 of the Companies
Act, 2013, the Board of Directors has appointed, M/s. DPSP
& Associates, Practicing Company Secretaries, Bengaluru as
Secretarial Auditors of the Company for the year 2024-25.

The Secretarial Audit Report is annexed to this Report as
Annexure - IV. The management''s reply on the qualification
of the Secretarial Auditor, form part of Secretarial Audit Report,
which is self-explanatory.

As per Regulation 24A of the SEBI (LODR) Regulations, the
Company has filed the Annual Secretarial Compliance Report
for the year 2024-25, signed by the Secretarial Auditor with
the BSE Limited and National Stock Exchange of India Limited
within the stipulated time.

CORPORATE GOVERNANCE REPORT

In terms of Regulations 34 read with Schedule V of SEBI
(LODR) Regulations and DPE Guidelines, a report on Corporate
Governance for the year 2024-25 along with Compliance
Certificate on Corporate Governance issued by the Secretarial
Auditor of the Company, is attached to this Report.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

As per Regulations 34(2)(e) of the SEBI (LODR) Regulations, the
Management Discussion and Analysis Report (MDAR) forms
part of the Annual Report.

VIGIL MECHANISM

The Company has a Whistle Blower Policy approved by the
Board. The details of the Whistle Blower Policy are explained
in the Corporate Governance Report and the same is hosted on
the Company''s website at www.hal-india.co.in/investors

Employees are encouraged to raise any of their concerns by
way of whistle blowing and none of the employees have been
denied access to the Chairman of the Audit Committee.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(3)(c) of the Companies
Act, your Directors state that:

(a) In the preparation of the annual accounts for the year
ended March 31, 2025, the applicable accounting
standards have been followed along with proper
explanation relating to material departures;

(b) the directors have selected such accounting policies and
applied them consistently and made judgments and
estimates that are reasonable and prudent, so as to give a
true and fair view of the state of affairs of the Company
as on March 31, 2025 and of the profit and loss of the
Company for the year ended on that date;

(c) the directors have taken proper and sufficient care for
the maintenance of adequate accounting records in
accordance with the provisions of this Act for safeguarding
the assets of the Company and for preventing and
detecting fraud and other irregularities;

(d) the directors have prepared the annual accounts on a
"going concern" basis;

(e) the directors have laid down internal financial controls
which are being followed by the Company and that
such internal controls are adequate and are operating
effectively;

(f) the directors have devised proper systems to ensure
compliance with the provisions of all applicable laws and
that such systems were adequate and operating effectively.

ACKNOWLEDGEMENT

Your Directors are extremely thankful and acknowledge the
excellent support extended by the Government of India, in
particular the Ministry of Defence, Department of Defence
Production, Defence Acquisition and Defence Finance as
well as other Ministries of the Government of India in all the
endeavours of the Company.

Your Directors also place on record their sincere appreciation
towards the Company''s valued customers, in particular the
Indian Defence Services, for the support and confidence
reposed by them in the Management of the Company, and
look forward to the continuance of this mutually supportive
relationship in the future.

The Company wishes to place on record its appreciation for
the co-operation extended and services provided by the
Comptroller & Auditor General of India (C&AG), the Principal
Director of Commercial Audit & Ex-officio Member, Audit
Board, Statutory/ Internal Auditors, Cost Auditors, Secretarial
Auditor, Bankers, Collaborators, JV Partners and Suppliers.

Your Directors are also thankful to the shareholders for
the trust and confidence reposed in the Company and look
forward to their continued support to propel the Company to
greater heights.

Your Directors also wish to place on record their deep sense
of appreciation for the committed services by the Company''s
Executives and Workmen for progress and prosperity of the
Company.

For and on behalf of the Board of Directors
Hindustan Aeronautics Limited

Ly.

(Dr. D K Sunil)

Chairman and Managing Director

Place : Bengaluru
Date : July 21, 2025

---

Mar 31, 2024

The Board of Directors takes great pleasure in presenting the Report on the performance of the Company ("the Company" or "HAL"), and its Audited Financial Statements for the Financial Year ended March 31, 2024, together with Reports of the Statutory Auditors and the Comptroller & Auditor General of India (C&AG) thereon.

FINANCIAL HIGHLIGHTS

The financial highlights for the year ended March 31, 2024 are summarised as under:

(Rs. in Lakh except per equity share data)

PARTICULARS	| 2023-24	2022-23
Revenue from Operations	30,38,084	26,92,785
Turnover	28,16,185	26,36,056
Exports	31,059	29,371
Profit Before Tax (PBT)	10,19,897	6,49,294
Provision for Tax	2,60,393	68,177
Profit After Tax (PAT)	7,59,504	5,81,117
R&D Expenditure	2,82,624	2,49,433
Earnings/ Share (in '') (Face value of ''5 each)	113.57	86.89
Book Value / Share (in '')	434.32	351.48

CAPEX

In order to maintain the state of the art infrastructure and technologies to meet Aerospace Standard and also to develop systems/platforms for meeting the requirements of the Defence Forces and to become Atmanirbhar, the Company has incurred Capital Expenditure (CAPEX) of ''2,16,786 Lakhs in FY 202324 (PY ''2,08,173 Lakhs). The investments are mainly towards Green Field Helicopter project at Tumakuru, augmentation of facilities of LCA, ROH of SU-30, ROH of AL-31FP Engine etc. besides the regular replacement and rationalisation of the existing facilities.

During the year, the Revenue from Operations of the Company has increased by 12.82% to ''30,38,084 Lakh from ''26,92,785 Lakh in the previous year. The turnover of the Company has increased by 7% to ''28,16,185 Lakh from ''26,36,056 Lakh in the previous year. The Profit before Tax for the year has increased by 57% to ''10,19,897 Lakh from ''6,49,294 Lakh in the previous year. The Profit after Tax (PAT) has increased by 31% to ''7,59,504 Lakh from ''5,81,117 Lakh in the previous year.

PRODUCTION HIGHLIGHTS

During the year, the Company has produced new aircraft and helicopters, covering Light Combat Aircraft (LCA) Tejas Mk1A, LCA Tejas Trainer, Do-228, Advanced Light Helicopter (ALH) Dhruv and Light Utility Helicopter (LUH) in addition to the production of new engines and accessories, at its various Divisions. The Company has also overhauled various aircraft & helicopters and engines during the year.

ORDER BOOK POSITION

The Order Book position of the Company stands at ''94,129 Crore as on March 31, 2024.

During the year, the Company received manufacturing contracts of over ''19,000 Crores and ROH Contracts of over 15,000 Crores, contributing to an outstanding order book of ''94,129 Crores as on March 31, 2024. Major Orders bagged include Contracts for supply of ALH to Indian Army and Indian Coast Guard, RD-33 engine to Indian Air Force, Dornier-228 Mid Life Upgrade to Indian Navy, Dornier-228 to Indian Coast Guard, 6 sets of LM2500 Gas Turbines (GT) and Gas Turbine Auxiliary Equipment (GTAE) for NGMV Program of Cochin Shipyard Ltd and 2 Nos. of Hindustan 228 export to Guyana Defence Forces.

DIVIDEND

During the year, your Company has declared and paid interim dividend of ''22 per share of ''5 each (440%) for the financial year 2023-24, amounting to ''1,47,130.50 Lakh.

The Board of Directors of the Company has recommended a final dividend of ''13 per share of ''5 each to comply with the Guidelines of Department of Investment and Public Asset Management (DIPAM) on Capital restructuring with respect to payment of minimum dividend. The Final Dividend if approved by the shareholders, would involve cash outflow of ''86,940.75 Lakhs.

Thus, the total dividend including final dividend for the financial year 2023-24 would be ''35 per equity share (700%), amounting to '' 2,34,071.25 Lakh.

In terms of the provisions of Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 [SEBI (LODR) Regulations] and the Guidelines of DIPAM, the Company has formulated a Dividend Distribution Policy and the same is available on the Company''s website at https://hal-india.co.in/backend/wp-content/uploads/2023/02/Dividend Distribution Policv.pdf

SUB-DIVISION OF EQUITY SHARES

During the year, the Company has sub-divided 1 (One) Equity Share of face value of ''10 (Rupees Ten Only) each into two Equity Shares of face value of ''5 (Rupees Five only) each fully paid up.

Financial Statements of Subsidiaries / Associate / Joint Venture Companies in Form AOC-1 is appended to this Report, which forms part of the Financial Statements. The separate Audited Financial Statements in respect of the Subsidiaries are also available on the website of the Company at www.hal-india. co.in.

SUBSIDIARY/ ASSOCIATE/ JOINT VENTURE COMPANIES

As on March 31, 2024, your Company has two Subsidiaries including one Wholly Owned Subsidiary and fourteen Joint Venture Companies (JVCs) including two Not-for-Profit Companies (Section 8 Companies).

During the year, one new 50:50 Joint Venture Company has been incorporated on November 9, 2023 with the name SAFHAL Helicopter Engines Pvt Ltd with Safran Helicopter Engines SAS, France to carry out business of indigenous design, development, certification, production, sale & support of helicopter engines with one of the first opportunities identified as engine for Indian Multi Role Helicopter (IMRH) & Deck Based Multi Role Helicopter (DBMRH) projects.

Further, Infotech HAL Ltd, a Joint Venture Company has submitted an application to NCLT on March 19, 2024, towards winding up of the JV due to its non-performance for a long time.

Pursuant to the provisions of Section 134(3)(q) of the Companies Act read with Rule 8(1) of the Companies (Accounts) Rules, 2014, a Report on the performance and financial position of each of the Joint Venture Companies and Subsidiary Companies is attached to this Report as Annexure-II.

SIGNIFICANT ACHIEVEMENTS

During the year, the Company has maintained the growth momentum and achieved all-round improved performance. Significant achievements of the Company during the year are as follows:

? The first LCA Tejas twin seater was handed over to the Indian Air Force (IAF) in the presence of Raksha Rajya Mantri.

? The first production series of LCA Mk1A fighter has completed its Maiden flight.

? The Export Contract with Guyana Defence Forces for supply of 2 Nos. Hindustan-228 aircraft was signed in FY 2023-24 and due to proactive approach of the Company, both the aircraft were supplied in record time within a month of signing of contract.

? The first Mid Life Upgraded (MLU) Dornier aircraft fitted with Pollution Surveillance System (PSS) was handed over to ICG.

? Delivered 30 types of riveted structure, six types of welded structure and satellite''s bus structure Rover, Lander and Castings & Forgings for Chandrayaan-3.

RESERVES

During the year, ''92,718 Lakh was transferred to Research & Development Reserve, ''18,544 Lakh was transferred to Indigenization Fund Reserve and ''4,42,763 Lakh to General Reserve.

BORROWINGS

As on March 31, 2024, short term and long term borrowings of the Company was Nil.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has an Internal Control System commensurate with the size, scale and complexity of its operations. The Company has in place adequate internal financial controls for ensuring efficient conduct of its business. A detailed note on internal financial controls is provided in the Management Discussion and Analysis Report.

During the year, an Independent Chartered Accountant firm was appointed to review and report on the effectiveness of Internal Financial Controls (IFC) in the Company. The firm has submitted its Report confirming the existence of effective Internal Control System.

LOANS, GUARANTEES AND INVESTMENTS

Details of Loans, Guarantees and Investments as covered under the provisions of Section 186 of the Companies Act, 2013 (''''the Act") form part of Notes to the Financial Statements.

RELATED PARTY TRANSACTIONS

During the year, your Company has entered into transactions with related parties after obtaining approval of the Audit Committee and/or Board, as the case may be. As per the threshold mentioned in the Related Party Transactions (RPTs) Policy, there were no material related party transactions with any of the related parties. The disclosures related to RPTs in accordance with the applicable accounting standards are provided in Clause No. 45A of the Notes to the financial statements. Details of contract(s) or arrangement(s) with related parties referred to in Section 188(1) of the Companies Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014, in the prescribed form AOC-2, is attached to this Report as Annexure-I.

CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements of the Company and its Joint Venture Companies & Subsidiary Companies for the year ended March 31, 2024 have been prepared in accordance with the provisions of Section 129(3) of the Companies Act and applicable Accounting Standards, and form part of this report.

Pursuant to the first proviso of Section 129(3) of the Companies Act read with Rule 5 of the Companies (Accounts) Rules, 2014, a separate statement containing salient features of the

? Delivered 10 types of riveted structures and 5 types of welded propellant tankages for PSLV C57 (Aditya L1) mission and PSLV C58 (XPoSAT) mission.

? Handed over first ''Closed Inter Tank Structure (C32)'' and first ''Development Service Module'' for the Gaganyaan Experimental Mission of ISRO.

? Received DGCA approval under ''CAR21 Subpart G'' for series production of Hindustan-228 aircraft and ''Maintenance Type Training Certificate'' under CAR147 category B1 and B2 for imparting AME type rated licence on Hindustan-228 aircraft.

CURRENT PROJECTS AND PROGRAMS

During the year, the Company has produced the Light Combat Aircraft (LCA) Tejas MK1A & MK1 aircraft, Do-228 aircraft, Advanced Light Helicopter (ALH) Dhruv, Light Utility Helicopter (LUH), engines, accessories and aerospace structures against various customer orders.

During the year, a New Design and Test facility at Aero Engine Research & Development Centre in Bangalore was inaugurated on December 29, 2023, to accelerate Research and Development of aero-engines.

The Company has also undertaken Design and Development of the Indian Multi Role Helicopter (IMRH) and Weapon systems integration on ALH & LCH.

DESIGN AND DEVELOPMENT PROGRAMS

The Company continued to boost the "Atmanirbhar Bharat Abhiyan" of Govt. of India with its focused efforts towards design and development of products, technologies and capabilities to meet the future requirements of Indian defence forces and non-military aerospace market in India.

The Company has considerably progressed towards the realization of indigenous programmes viz. Basic Trainer Aircraft (HTT-40), Light Utility Helicopter (LUH), Light Combat Aircraft (LCA MK1A), Indian Multi-Role Helicopter (IMRH) and Development of Engines. The progress achieved in respect of these projects during the year are as under:

? BASIC TRAINER AIRCRAFT (HTT-40)

HTT-40 is the Basic Trainer Aircraft indigenously designed and developed by the Company. HTT-40 would be used for basic flight training, aerobatics, instrument flying and close-formation flights whereas its secondary roles would include navigation and night flying. Features of the aircraft include Air-conditioned cockpit, Tandem seating, Zero-Zero ejection seats and Multifunction Displays. A total of 3 prototypes have been built which includes two flying prototype and one Structural Test Specimen (STS).

During the year, Propeller vibration survey completed, Inverted spin demonstration completed, all system

Certification were obtained and Approved Release to Service Document (RSD) received from CEMILAC. Production activities are in advanced stages against the Contract for supply of said aircraft.

? LIGHT COMBAT AIRCRAFT (LCA Mk1A)

LCA Mk1A is an advanced variant of indigenously developed LCA MK1 equipped with Mission Computers (MC), Digital Map Generator (DMG), Smart Multi-function Displays (SMFD), Combined Interrogator and Transponder (CIT), Advanced Radio Altimeter and integrated with Air to Air and Air to Ground weapons.

The design and development activities for LCA Mk1A systems were undertaken and certification activities are progressing. Concurrently, series production activities are also being progressed. The first production series fighter Aircraft of LCA Mk1A completed its maiden flight. Further, software fine-tuning and flight tests for weapon trials are being progressed to facilitate delivery of aircraft.

? LIGHT UTILITY HELICOPTER (LUH)

The LUH is a single engine, 3 Ton weight class helicopter having Glass Cockpit with Multi-Function Displays. The LUH is intended to meet different role requirements including high altitude operation. Three flying prototypes have been built and were extensively flight tested.

Work on Automatic Flight Control System (AFCS), Autorotation, Emergency Flotation System (EFS), Helmet Mounted Display System (HMDS) is progressing for completion in 2024-25.

? INDIAN MULTI ROLE HELICOPTER (IMRH)

The Company has undertaken design and development of IMRH, a Medium Lift Helicopter of 13 Ton class primarily for high altitude troop and cargo transport. The sea variant of IMRH is named Deck Based Multi Role Helicopter (DBMRH).

IMRH and DBMRH would be designed to meet the requirement of all the three military services and its future extension will cater to offshore operations, utility, VVIP transport etc., roles will help diversify into Civil market.

The preliminary design studies of IMRH has been completed. HAL is progressing with the D&D activities as a Lead agency.

? UTILITY HELICOPTER-MARITIME (UH-M)

Utility Helicopter - Maritime (UH-M) is a 5.7 Ton dedicated Helicopter for deck based operations with all four Main Rotor Blades foldable, to enable stowage in Navy''s ships.

Ministry of Defence accorded Acceptance of Necessity (AoN) for procurement of Utility Helicopter-Maritime.

Design and Development activities are progressing with internal funding. Preliminary Design Review (PDR) has been completed and further design review of major systems like Traversing system and other LRUs is progressing.

? 25 kN TURBOFAN ENGINE (HTFE-25)

Design and Development of a 25kN thrust class turbofan engine, which can be used on Basic/ Advanced military trainers, on small business jets and also large UAV applications is under progress. The engine can be used on a 5 Ton weight class aircraft in single engine configuration and on aircraft of up to 9 Ton weight class with twin-engine configuration. Two core engines have been produced so far and are undergoing development trials.

? 1200 kW TURBOSHAFT ENGINE (HTSE-1200)

The 1200kW Turbo shaft engine would be used as power plant for 3 to 6 Ton category helicopters. One Technology Demonstrator of HTSE-1200 engine has been built and presently under testing.

RESEARCH AND DEVELOPMENT ACHIEVEMENTS

During the year, the Company has incurred a total R&D expenditure of ''2,82,624 Lakh which is 10.04 % of the Turnover and has transferred a sum of ''92,718 Lakh (15% of Operating PAT) to R&D Reserve for contribution to R&D corpus.

The significant R&D achievements are as under:

? Indigenously designed and developed HTT-40 Basic Trainer Aircraft received the Release to Service Document (RSD) from CEMILAC in January, 2024.

? The Light Combat Aircraft (LCA) Naval Trainer Prototype NP5 successfully completed its maiden flight on August 18, 2023.

LCA Navy flight testing activities will provide vital inputs towards design and development of the upcoming Naval aircraft project "Twin Engine Deck Based Fighter" (TEDBF).

? The indigenous Beyond Visual Range (BVR) air-to-air missile, successfully fired from Light Combat Aircraft (LCA), off the coast of Goa on August 23, 2023.

During the year, HAL has filed 186 Intellectual Property Right (IPR) applications which make cumulative number of 2,413 IPRs filed by Company. Further, 270 IPRs have been granted during the year taking cumulative IPRs held by the organization to 1,026 (Patents - 348, Industrial Designs - 136, Copyrights - 540, Trademark - 2)

BOARD AND ITS COMMITTEE MEETINGS

During the year, 12 (Twelve) Board Meetings were held and the maximum interval between any two meetings was not more than 120 days.

The details of meetings of the Board and Committees thereof held during the year are furnished in the Corporate Governance Report, which forms part of this Report.

COMMITTEES OF THE BOARD

As on March 31,2024, the Board has five Statutory Committees namely Audit Committee, Nomination & Remuneration Committee, Corporate Social Responsibility & Sustainable Development Committee, Stakeholders Relationship Committee and Risk Management Committee.

A detailed note on the composition, terms of reference and meetings of the Board and its Committees is provided in the Corporate Governance Report.

CHANGES IN BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

During the year, following changes took place in the Board of Directors and Key Managerial Personnel (KMP) of the Company:

Appointment

? Shri M Z Siddique was appointed as Govt. Nominee Director on the Board of the Company w.e.f July 18, 2023.

? Shri Atasi Baran Pradhan was appointed as Director (HR) on the Board of the Company w.e.f July 19, 2023.

Cessation

? Dr. Tessy Thomas ceased as Govt. Nominee Director on the Board of the Company due to withdrawal of Nomination w.e.f May 8, 2023.

DECLARATION OF INDEPENDENCE

Declarations from Independent Directors of the Company have been received, confirming that they met the criteria of independence as prescribed under Section 149(6) of the Companies Act and Regulation 25(8) of the SEBI (LODR) Regulations.

COMPANY''S POLICY ON DIRECTORS'' APPOINTMENT AND REMUNERATION

The appointment, tenure and remuneration of Functional Directors including Chairman and Managing Director (CMD) are determined by the Government of India. The Terms & Conditions of appointment, including the period of appointment, the Scale of Pay and other entitlements are notified by the Government of India.

Government Nominee Directors are appointed by the Department of Defence Production, Ministry of Defence and they are not entitled to any remuneration / sitting fees.

Independent Directors are appointed by the Government of India and they are entitled to sitting fees for attending the Board / Committee meetings as prescribed by the Board in line with the Companies Act and Rules made thereunder.

In view of the Gazette Notification No GSR 463 (E) dated June 5, 2015 of the Ministry of Corporate Affairs (MCA), the Company, being a Government Company, is not required to frame a Policy on Directors'' appointment and remuneration, including criteria for determining qualifications etc. under Section 134(3)(e) of the Companies Act.

BOARD EVALUATION

Pursuant to the Gazette Notification No GSR 463 (E) dated June 5, 2015 of the MCA, formal annual evaluation by the Board of its own performance, its Committees and individual directors, are exempted for the Company, as the performance of Directors is evaluated by the Administrative Ministry. However, the performance of the Functional Directors are evaluated by the Independent Directors in their meeting.

The performance evaluation of Independent Directors are carried out by the Board without the presence of Independent Directors.

ANNUAL RETURN

In accordance with the provisions of the Companies Act, Annual Return in the prescribed format has been hosted on website of the Company at https://hal-india.co.in/backend/wp-content/uploads/2024/07/Form MGT 7-2023-24-draft-1.pdf

COMPLIANCE WITH SECRETARIAL STANDARDS

The Company complies with all applicable mandatory Secretarial Standards issued by the Institute of Company Secretaries of India.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

Your Company being a defence Central Public Sector Enterprise (CPSE), the disclosure of information with respect to conservation of energy, technology absorption, foreign exchange earnings and outgo under the provisions of Section 134(3)(m) read with Rule 8(3) of the Companies (Accounts) Rules, 2014, is exempted vide Notification GSR No.680 (E) dated September 4, 2015.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Pursuant to the provisions of Section 135 of the Companies Act, Companies (Corporate Social Responsibility Policy) Rules, 2014 & Amendment thereof and DPE Guidelines, the Company has undertaken various activities during the year as per its CSR Policy. The projects / programmes / activities taken up are in line with Schedule VII of the Companies Act. The thrust areas under CSR are Healthcare, Skill Development, Education, Enhancing Employability through Training, etc. The other areas in which support extended were Environment Sustainability, Sports Development, Rural Infrastructure Development, Sanitation etc. The Company has spent an amount of ''1 1,998 Lakhs under CSR for the year as against the CSR budget/ obligation of ''10,931 Lakhs.

The Corporate Social Responsibility Policy, Composition of the Committee and CSR Projects/ Activities of the Company are available on the Company''s website at https://hal-india.co.in/ investors/corporate-social-responsibility-2 Salient features of the Policy form part of the Annual Report.

Annual Report on CSR activities undertaken by the Company during the year, pursuant to Section 135 of the Companies Act read with Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended, is attached to this Report as Annexure-III.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT

In terms of Regulation 34(2)(f) of SEBI (LODR) Regulations, the Company has prepared Business Responsibility and Sustainability Report (BRSR) on Environment, Social and Governance (ESG) parameters in the prescribed format for the year 2023-24 and attached to this Report, along with reasonable assurance Report of BRSR Core, received from Independent Assurance Provider.

DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY

The Company has a Board approved Risk Management Policy, in place. The Policy aims at elimination or reduction of risk exposures through identification and analysis of various types of risks and facilitating timely action for taking risk mitigation measures.

In line with Regulation 21 of the SEBI (LODR), Regulations, the Board of Directors had constituted the Risk Management Committee for monitoring and reviewing of the risk management plan and other such functions as it may, deem fit including ESG, Cyber Security and Business Continuity Plan, in line with applicable laws.

SIGNIFICANT AND MATERIAL ORDERS

There are no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and the operation of the Company in future.

PUBLIC DEPOSITS

Your Company has not accepted any deposit during the year. Further, there was no outstanding deposit and/or unpaid or unclaimed principal amount or interest against any deposit either at the beginning or at the end of the year 2023-24.

ISSUE OF EQUITY SHARES WITH DIFFERENTIAL RIGHTS

During the year, the Company has not issued any equity shares with differential rights as to dividend, voting or otherwise.

MATERIAL CHANGES SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENTS

No material changes / commitment of the Company have occurred after the end of the year 2023-24 and till the date of this report, which affect the financial position of the Company.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

Pursuant to Gazette Notification No. G.S.R. 463 (E) dated June 5, 2015 issued by the MCA, the provisions of Section 197 of the Companies Act and the relevant Rules, regarding disclosure of particulars of employees drawing remuneration in excess of the limits specified, are exempted for the Company.

MOU WITH GOVERNMENT

Your Company has signed Memorandum of Understanding (MoU) with the Ministry of Defence (MoD), Government of India (GoI) for the year 2023-24, the performance rating of which is awaited.

However, your Company has achieved "Excellent" performance rating with a score of 91.50 for the year 2022-23.

INDIGENISATION AND ATMANIRBHAR BHARAT

The Company has put in concerted effort on indigenisation of components, accessories and systems required to manufacture as well as repair & overhaul of aircraft, engine and associated accessories. To reduce dependence on imports, savings in foreign exchange and manage obsolescence, every year, HAL indigenizes various items/ components and systems of foreign origin fitted on HAL platforms through in-house capabilities or with the help of local vendors, thus fostering self-reliance through ''Make in India''.

In line with the Atmanirbhar Bharat Abhiyan of Govt. of India, during the year, the Company has indigenised 2,046 Nos. of items with anticipated annual foreign exchange saving of ''385 Crore. To align with national priorities and ensure inclusive growth, the Company has been also encouraging Indian private sector participation in the indigenization/ Make in India efforts to undertake various high value systems/equipment of foreign origin fitted on HAL platforms.

The other major initiatives / achievements during the year are as under:

> Creation of a dedicated Indigenisation fund:

The Company has created a dedicated indigenization fund by transferring 3% of its operating profit after tax every year. This fund will be used for carrying out indigenization activities and will provide further impetus for indigenization.

> Identification of critical items for indigenization and inclusion in the Positive Indigenisation Lists issued by MoD:

In a major initiative, the Company has identified and made a comprehensive roadmap for indigenization of complex aircraft Systems, LRUs & other critical Items across its major platforms. These items are planned to be indigenized in the next 4-5 years in a phased manner through

participation of Indian Private Industries and Government Agencies involving Academia. 430 such imported items are included in the Four PILs (PIL-1: 23, PIL-2: 22, PIL-3: 360, PIL-4:25) issued by DDP, MoD. During the year, 59 PIL items (cumulatively 71) have been indigenized.

> Uploading of imported items in Srijan Defence Portal:

Ministry of Defence (MoD) has developed and launched Srijan Defence Portal (an indigenization portal) to support Indian Industries with opportunities for Make in India in Defence. The Company has so far uploaded around

25.000 Nos. of imported items in the portal for information to private vendors and their likely participation in the indigenisation programmes of the Company.

Private vendors are showing interest for indigenisation of items uploaded in the portal. The Company is continuously interacting with the interested vendors and briefing them about the various opportunities available in the Company for indigenization.

> Indigenisation through Make-II Procedure:

HAL''s Make-II programme is a step towards supporting the ''Atmanirbhar Bharat'' & ''Make in India'' mission. HAL''s Make-II (Industry Funded) procedure is in compliance of the Make-II framework promulgated by MoD and envisages the assured order quantity after successful development of items through private vendors. The Company has identified the items to be indigenized through Make-II procedure and uploaded on the Srijan Defence Portal. Expression of Interest (EoIs) of these items are being issued in phased manner to take up for indigenisation under Make-II. So far, the Company has issued EoIs for around

1.000 items and Project Sanction orders have been placed for around 600 items for indigenisation under Make-II.

> Organising / participation in Seminars, Conferences and Exhibitions on Indigenisation / Vendor Development program

During the year, to sensitize Indian Vendors for opportunities available for indigenization and their enhanced participation in indigenization programmes, the Company has conducted/ participated in more than 40 Nos. of vendor development programs / seminars / exhibitions at Divisional level. Participants were also briefed about the Indigenisation procedure and support provide by the Company during indigenization.

OUTSOURCING

As part of the "Make in India" drive and the Atmanirbhar Bharat Abhiyan, HAL has been nurturing & developing a vibrant indigenous aerospace & defence ecosystem. In its path of moving towards being a lead integrator, HAL has been striving to develop Tier-II and gradually Tier-I suppliers over a period of

time while retaining the core areas as prime integrators. HAL has comprehensively reviewed its outsourcing procedures to address the issues noticed and to enhance the ease of doing business with HAL, from the vendors'' perspective. An updated version of the Outsourcing Manual (Rev 05-2024) was issued in March, 2024.

EXPORTS

To boost export, following initiatives have been taken by the Company during the year:

> Two Hindustan-228 aircraft were supplied to Guyana Defence Force, well ahead of the contractual delivery commitment.

> HAL Regional Office was established in Kuala Lumpur, Malaysia on July 1 1, 2023 to facilitate close defence industrial collaboration between India and Malaysia. The Regional Office symbolizes the potential for closer defence industrial collaboration between India and Malaysia and is intended to serve as a hub for the HAL''s engagement with the wider South-East Asian region.

> Letter of Intent (LoI) was signed between HAL and the Ministry of Defence of The Republic of Argentina in Bengaluru on July 20, 2023, on productive cooperation and acquisition of Light and Medium Utility Helicopters for the armed forces of the Argentine Republic.

> The Company participated in various International Air Shows including Paris Air Show-2023, Dubai Air Show-2023, Langkawi International Maritime and Aerospace Exhibition (LIMA)-2023, Egypt Defence Expo (EDEX)-2023 to showcase its products in the International forum. Light Utility Helicopter (LUH) was for the first time showcased in an International event in LIMA 2023.

VENDOR DEVELOPMENT

During the year, the Company has taken several vendor development initiatives to increase the number of vendors.

The Company has conducted 31 Vendor Development Programmes, of which 3 were for Micro & Small Enterprises (MSEs) owned by SC/ST Entrepreneurs & Women Entrepreneurs, 1 was meant exclusively for MSEs owned by SC/ST Entrepreneurs while the balance 27 were for across all categories.

The Company has registered with RXIL, Mynd Solution and also with A TReDS Ltd. for enabling payments through TReDS platform to MSMEs, and payments are being made through these platforms. All efforts are also being made to bring the MSMEs on TReDS platform.

The Company has registered with MSME SAMBANDH portal and the procurement details are being updated monthly in this Portal. The Company has also registered with MSME SAMADHAAN portal and the same is being monitored regularly for resolution of payment complaints of MSEs, if any.

The Company has implemented companywide e-Procurement system through its own e-Procurement portal which is adopted for tenders issued outside GeM portal. A 24X7 e-Procurement help desk has been established to provide information, support, training, operational issues / clarifications to the vendors.

The Company has implemented the Public Procurement (Preference to Make in India), Order 2017 and its amendments thereof issued by Department for Promotion of Industry and Internal Trade (DPIIT) to encourage ''Make in India'' and promote manufacturing and production of goods & services in India.

PROCUREMENT THROUGH GeM PORTAL

The Company is a part of GeM Portal & implemented companywide GeM procurement. A detailed procedure for vendor registration were obtained from GeM and informed the same to all prospective domestic suppliers for on-boarding on GeM Portal.

All efforts are continuously being made to persuade the potential domestic suppliers (covering area of Goods, Services and Outsourcing) to on-board them on the GeM Portal.

The Company is taking up all procurements which are available in GeM Portal and invariably followed/ensured by all the buying groups. Also, the Company is taking up several procurements through BoQ Module and Custom Bid Module for those items which are not available in GeM Portal and strive to achieve a sizable procurement through GeM Portal.

During the year, 16,469 orders were placed through GeM portal amounting to ''2,903 Crore.

PROCUREMENT FROM MICRO & SMALL ENTERPRISES (MSEs)

The Company has implemented the Public Procurement Policy for Micro and Small Enterprises (MSEs) Order, 2012 & its amendments issued by Ministry of MSME vide order No.21 (22)-2018-MA dated November 9, 2018. HAL has achieved more than the mandated procurement of 25% from MSE entrepreneurs (excluding specific defence procurement as per Sl.No.14 of the Policy).

During the year, the total value of procurement including outsourcing made from MSEs is ''2,134 Crore.

INTEGRITY PACT (IP)

Your Company has system of signing of Integrity Pact (IP) with vendors for all procurement of Goods, Services & Works / contracts having value of ''5 Crore and above. Only those Vendors / bidders, who commit themselves to IP with the HAL would be considered competent to participate in the bidding process. Further, to encourage competition in HAL procurement and to reduce processing lead time, HAL has implemented the Omnibus Integrity Pact with effect from January 1, 2018. This Omnibus IP shall be valid upto 5 years and the same can

be proposed by bidder for consideration against any offers submitted by the vendor during the validity period of Omnibus IP.

HUMAN RESOURCE DEVELOPMENT

The strength of employees as on March 31, 2024 stood at 23,766.

As on March 31, 2024, a total of 3,661 Apprenticeship were engaged in the Company in various Trades, which forms 10.55% of the total manpower strength including contractual staff.

EMPLOYEE WELFARE

The Company continues to extend welfare benefits to the employees and their dependents in the form of comprehensive Medical Facilities, Housing Facilities, Canteen Facilities (for employees only), and Educational facilities for employee''s Children, Sports Facilities, etc. Pursuant to introduction of

HAL Sabbatical Scheme for Executives, in recognition of the need for introduction of such facility for Workmen, HAL Sabbatical Scheme for Workmen was also introduced wherein the Scheme allows Workmen to take leave for self-renewal, skill development, or the pursuit of personal interests and also offers flexibility to employees to address social obligations, support family members, or embark on wellness journeys during the leave period.

The Company also extends the Group Life Insurance Policy of ''10 Lakhs on behalf of its employees and also the Financial Assistance Scheme which provides for monthly monetary support ranging from ''15,000/- p.m. to ''50,000/- p.m. depending upon the Grade / Scale of the employees, to the dependents of the deceased employees.

REPRESENTATION OF SC/STs

The position regarding representation of Scheduled Castes / Scheduled Tribes (SC / STs) is as follows:

EMPLOYEE RELATIONS (ER) / INDUSTRIAL RELATIONS

The Employee Relations Scenario in the Company has remained peaceful & cordial during the year. Smooth relations were maintained between the Management and the Unions / Associations by effective communication, so as to eliminate any scope for conflicts & misunderstandings and thus Industrial Harmony were maintained. Regular Meetings with the representatives of the Recognized Unions / Officers Associations at the Divisional, Complex & Corporate Levels were held to discuss and resolve issues.

Plant Level & Shop Level Committees with representatives from the Management / Trade Unions are functioning in the Divisions to discuss & resolve production related matters. In order to address employees issues / grievances, Grievance Redressal Mechanisms are also in place in the Company.

WOMEN EMPOWERMENT

Women Empowerment & Leadership Programs are being conducted by HAL. The main objective of the programs is to enhance self-awareness & self-management, enhance competencies to drive business results, enhance ability to influence & harness the power of effective networking and to build essential leadership competencies. At present, around 73 Women Employees hold Senior Management posts i.e., above Grade VII.

HAL is a Corporate Life Member of Women in Public Sector (WIPS) Forum. Women employees are encouraged to participate in programmes / activities of WIPS Forum. The 34^th Annual Conclave (National Meet) of WIPS was held in HAL, Bengaluru on 12^th & 13^th February, 2024 on the Theme "Women - The Future of Sustainable Growth". During the event, HAL was awarded the "Best Performing Enterprise Award" in Navaratna Category.

Ladies Clubs / Families Welfare Associations are also functioning at different locations to take up various philanthropic / sociocultural activities. Women''s Day is celebrated on 8^th March every year.

PROHIBITION OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE

The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 has been notified in the Company. In line with the Guidelines received from time to time, necessary actions have been taken to prevent Sexual Harassment of Women at Workplace. The HAL CDA Rules applicable to Officers and the Certified Standing Orders applicable to Workmen have the required provisions in this regard.

Internal Complaints Committees as per Section 4 of the Act have been constituted. Information for the year in terms of Section 22 of the Act, is as indicated below:

(i)	Number of Cases pending as on 01/04/2023	: Nil
(ii)	Number of Complaints of Sexual Harassment received in the Financial Year 2023-24	: 1
(iii)	Number of Complaints disposed of during the Financial Year 2023-24	: 1
(iv)	Number of Cases pending as on 31/03/2024 & its status	: Nil
Awareness Programme on Sexual Harassment conducted at Divisions / Offices during the year.		were also

RAJBHASHA IMPLEMENTATION

The Company is constantly taking efforts to implement Official Language in all the Divisions/ Offices effectively as per directives issued by Dept. of Official Language, Ministry of Home Affairs and Dept. of Defence Production.

Hindi Incentive Scheme has been implemented effectively amongst the Divisions of HAL. Further, In-House Hindi Magazines are being published by the Divisions/ Offices of HAL to motivate the employees. In accordance with the Official Language guidelines, Hindi Workshops and Seminars are also being conducted on various topics from time to time, so that employees could do their routine work in Hindi as far as possible.

During the year, the responsibility of Town Official Language Implementation Committee (TOLIC), (Undertakings), Bangalore has been entrusted to Hindustan Aeronautics Limited by Department of Official Language, Ministry of Home Affairs, New Delhi. Under the Chairmanship of HAL, propagation and use of Official Language (Hindi) is being carried out for Bengaluru based 72 Member Offices / Undertakings.

The Joint Regional Official Language Conference of the South & South-West Regions was organized on January 19, 2024 in HAL Management Academy, Bengaluru by the Department of Official Language, Ministry of Home Affairs with the joint collaboration of TOLICs of Banks, Central Govt. Offices and Undertakings. The in-house OL magazine ''Nabharatna'' of HAL Corporate Office was released by the Minister of State for Home affairs during the inaugural ceremony.

The meetings of Official Language Implementation Committee in all the divisions of HAL including Corporate Office are being conducted regularly. Necessary new guidelines issued by the Dept. of Official Language, Ministry of Home Affairs, New Delhi are also being circulated to all the divisions of HAL to create awareness on latest orders pertaining to implementation of Official Language. The periodical reports are also being sent online as per directives issued by the Department of Official Language, Ministry of Home Affairs, New Delhi.

The inspection reports pertaining to Parliamentary Committee inspections on Official Language and compliance related to the assurances given to the Committees are being sent to the concerned Authorities / Offices on time after reviewing the report at the Corporate level.

New website of the Company has been launched this year and it is being updated in bilingual at Corporate Office level.

INFORMATION TECHNOLOGY (IT) INITIATIVES

During the year, your Company has taken many IT initiatives towards adopting the latest technology, increasing customer satisfaction, implementing paperless processes and improving Cyber security. Some of the major IT initiatives and achievements of the Company during the period are:

? Project Parivartan: upgrade of ERP system: Project Parivartan was conceptualised for upgradation of existing IFS to the higher version (IFS Apps 10) and deployment in a centralised new generation hardware with built-in redundancy and establishment of disaster recovery site at Bangalore.

? Launch of HAL New Website: New Website of the Company has been designed and developed using latest technologies with focus on Products, Services and R&D capabilities of HAL.

? Centralised Internet and Firewall: Cyber Security being of paramount concern in defence organisations, the Company has implemented centralized Internet

framework with deployment of centralised Firewall. One high speed internet facility (IGbps) has been made available through the central firewall to the Bangalore based divisions connected in a ring architecture towards achieving better economy and management.

? BRSR Portal: The Company has developed the portal for uploading the relevant data and back-up documents for BRSR Core by all the Divisions for preparation of BRSR. BRSR portal provides automated calculations of various metrics required for submitting the report based on the data pertaining to parameters such as Energy, Water, Waste, Air Emission etc. Portal also has a provision to capture associated evidence with respect to data points.

? Implementation of ISO 27001 certification: As part of strengthening the cyber security posture of the Company, initiatives undertaken for ISO 27001 certification for all Production Divisions, R&D Centres and Offices of the Company.

? Implementation of Maya OS: As per recommendation of Cyber Information Research Agency (CIRA), Maya OS has been deployed in 70 internet facing machines at Corporate Office and planned to be extended to all Divisions of the Company.

AWARDS & RECOGNITIONS

During the year, your Company has received various Awards

and Recognitions. Some of the important accolades conferred

to the Company are as under:

? ''CSI Cyber Security Awards 2023'' under the category ''Outstanding Police/Law, Enforcement Initiative/Defence Sector'' by CSI Mumbai Chapter in association with IIT Bombay.

? Prestigious ''Organisational Excellence Award'' by Project Management Associates (PMA), India for HAL''s remarkable achievements in managing indigenous projects LCA and HTT-40.

? ''Heavy & Medium Engineering -Defence'' category award by Dun & Bradstreet during ''PSU and Government Summit 2023''.

? ''India''s Top Value Creator award'' under Defence category by Dun & Bradstreet during Top 500 Value Creators Summit 2023.

? ''PSE Excellence Awards'' instituted by Indian Chamber of Commerce under Operational Performance Excellence, Contribution of Women & differently abled in PSEs, Corporate Governance and CSR & Sustainability categories.

? ''IEI Industry Excellence Award 2023'' (Platinum) under Engineering Manufacturing and Processing Category for demonstrating outstanding performance with a high order of Business Excellence.

? ''Best Contributor to Atmanirbhar Bharat - Manufacturing / OEMs'' award received at the Wings India 2024 at Hyderabad.

? ''INDIA Public Sector Enterprises Awards'' for Excellence for being "Best Strategic Central Public Sector Enterprise of India - Aerospace & Defence".

VIGILANCE

Vigilance Department of the Company is headed by Chief Vigilance Officer (CVO), an IRAS officer. Vigilance Officers are posted across Divisions and Complex Offices of the Company including Corporate Office. Preventive Vigilance has been the thrust area of the Vigilance Department and the same received focussed attention during the current year. Vigilance setup in the Company has been continuously endeavouring to bring transparency, fairness and equity in all transactions and processes of the Company through creating a sense of awareness on system and procedure through awareness campaign and training program.

Some of the key activities that have been carried out by Vigilance Department during the year are as under:

i. Preventive Vigilance:

? 389 complaints were handled, 388 regular scrutiny/ surprise checks and 15 CTE type intensive examinations were carried out across the Company. 4 system studies were carried out on various topics like procurement of shelf life items with focus on total procurement and its utilization/non-utilization during the last 3 years, study on high value machines purchased in last 5 years - receipt, installation, commissioning & prove out and its utilization, study on CAMC/AMC executed in last 5 years for maintenance/service of high value machines and their breakdown profile and study of payment recommendations made to CPPC by the division and system improvement suggestions were made.

? A total of 114 awareness sessions were conducted on various topics. Key note address by eminent speakers were organized to spread vigilance awareness among employees on various topics.

ii. Vigilance Publications: Three in-house Vigilance e-magazines were published, as under:

? "Marg Darshan", an annual magazine was released during VAW 2023 on the theme "Corruption free India for a developed Nation" covering articles from internal and external writers as a part of efforts towards spreading preventive vigilance concepts.

? "Vishleshan-III", a compendium of vigilance interventions was published. Vishleshan-III is a

compendium of selected cases bearing vigilance angle, set of case studies to succinctly draw up the mistakes made in a process and highlight lessons to be learnt and system improvements to be made to avoid the same mistakes in future.

? A comic book on "PIDPI" was also published and released during VAW 2023.

iii. System Improvement measures: Based on the recommendations of vigilance, several system improvements have been issued by the management in the areas of HR, IMM, stores, works and finance etc. like guidelines on custom clearance of imported consignments, maintenance of BGs, EMD & SD details in IFS, Standard operating procedure for making returnable material gate passes, engagement of contract labour, HAL travelling allowance rules (Inland), store credit for raw materials etc.

iv. Vigilance Awareness Week: Vigilance awareness week was conducted throughout the organization in nine different geographical locations across Country from October 30 to November 5, 2023, on the theme "Say no to corruption; Commit to the Nation". Awareness campaign comprising of in-house and public outreach activities were conducted to spread awareness among employees & general public.

v. Management Audit of Vigilance Unit (MAVU)

The following improvements were implemented based on the suggestions made by MAVU Audit team:

? Uniformity in Charge memorandum and differentiation of major and minor Disciplinary proceedings;

? Training on capacity building for IO/POs and officers dealing with framing of charge sheet;

? Rotation of officials posted in sensitive areas;

? Updation of manuals;

? Implementation of e-office module.

QUALITY INITIATIVES AND FLIGHT SAFETY

? Third-Party Inspection (TPI) model for inspection activities at vendor premises has been successfully deployed. As on date, eight TPI bodies have been empanelled by the Company to carry out inspection of outsourced components on behalf of Divisions at the premises of subcontractors. 8^th TPI body has been empanelled during the year, in-coordination with DGAQA HQ New Delhi.

? Two Quality Conclaves were held during the year, with an objective to foster a culture of zero tolerance towards lapses and to strengthen our Quality System.

? NADCAP approval for various special processes viz. Chemical Processing, Heat Treating, etc. have been obtained by different Divisions of the Company to enhance consistency & reliability of special processes.

? Quality Circle teams from different Divisions have participated in State/ Chapter, National and International level competitions of CCQC/NCQC/ICQCC 2023 and have won 30 ''Gold'', 14 ''Excellence'', 9 ''Par Excellence'' and 1 ''Silver'' category awards. This has resulted in learning from interactions with different Quality Circle teams from other companies.

? Conducted 27 training programs/workshops at customer bases/field units and 78 training programs/workshops at HAL premises on critical aircraft systems. This has resulted in knowledge sharing and enhanced skill set & increased availability of equipment at customer end.

? Implementation of Industry 4.0 is being adopted at New Helicopter Factory Tumakuru on pilot project basis. Further, Industry 4.0 is also introduced in various divisions for implementation of AI based inspection system & online data fetching through Bluetooth technology thus encouraging a paperless manufacturing system.

? A fully automated Process Shop has been established at Accessories Division, Lucknow with an integrated SCADA (Supervisory Control and Data Acquisition) control system. The processing line is capable of performing number of process sequences without human intervention with online monitoring and recording of processing parameters. An online system has also been developed by Avionics Division, Korwa for Graphical Analysis of Bath solutions and trend monitoring of Anodization & Passivation process.

? Digital Dashboards and Online Portals have been developed towards paperless office for recording, measuring and monitoring of various quality parameters and generation of related reports and formats.

? Flight Safety Capsule was conducted at HMA to bring awareness about Flight Safety and Maintenance Safety among the young Officers of HAL. Also, a course on Human Factors in Aviation was conducted at Nashik, Engine Division and MRO as per DGCA guidelines for Officers and Workmen.

AUDITORS Statutory Auditors

HAL being a CPSE, Statutory Auditors of the Company were appointed by the Comptroller & Auditor General of India (C&AG). M/s A John Moris & Co., Chartered Accountants, Bengaluru was appointed as Statutory Auditors for auditing the Accounts of the Company for the year and 17 firms of Chartered Accountants were appointed as Branch Auditors.

The Auditors'' Report does not contain any qualification, reservation or adverse remarks.

The Auditors'' Report on financial statements for the year 2023-24 and comments of the Comptroller & Auditor General of India (C&AG) under Section 143(6) of the Companies Act are attached to this Report, which is self-explanatory.

Cost Auditors

The Company has appointed M/s Murthy & Co. LLP, Cost Accountants, Bengaluru as Cost Auditors for conducting the Cost Audit of the Company for the year 2023-24. The Company maintains cost records as specified by the Central Government under Section 148(1) of the Companies Act, which are audited by Cost Auditors.

Internal Auditors

The Company has appointed 14 firms of Chartered Accountants for carrying out internal audit of the Company for the year 2023-24.

Secretarial Auditor

In terms of Section 204(1) of the Companies Act, the Company has engaged M/s. DPSP & Associates, Company Secretaries, Bengaluru to conduct Secretarial Audit of the Company for the year 2023-24. The Secretarial Audit Report is annexed to this Report as Annexure - IV and forms part of Annual-Report.

The management''s reply on the qualification of the Secretarial Auditor, form part of Secretarial Audit Report, which is selfexplanatory.

Annual Secretarial Compliance Report

As per Regulation 24A of the SEBI (LODR) Regulations, the Company has filed the Annual Secretarial Compliance Report for the year 2023-24 with the BSE Ltd and National Stock Exchange of India Limited within the stipulated time.

CORPORATE GOVERNANCE REPORT

In terms of Regulations 34 read with Schedule V of SEBI (LODR) Regulations and DPE Guidelines, a report on Corporate Governance for the year 2023-24 along with Compliance Certificate on Corporate Governance issued by the Secretarial Auditor of the Company, is attached to this Report.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

As per Regulations 34(2)(e) of the SEBI (LODR) Regulations, the Management Discussion and Analysis Report (MDAR) forms part of the Annual Report of the Company.

VIGIL MECHANISM

The Company has a Whistle Blower Policy approved by the Board. The details of the Whistle Blower Policy are explained in the Corporate Governance Report and the same is hosted on the Company''s website at www.hal-india.co.in.

Employees are encouraged to raise any of their concerns by way of whistle blowing and none of the employees have been denied access to the Chairman of the Audit Committee.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(3)(c) of the Companies Act, your Directors state that:

(a) In the preparation of the annual accounts for the year ended March 31, 2024, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(b) the directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as on March 31, 2024 and of the profit and loss of the Company for the year ended on that date;

(c) the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) the directors have prepared the annual accounts on a "going concern" basis;

(e) the directors have laid down internal financial controls which are being followed by the Company and that such internal controls are adequate and are operating effectively;

(f) the directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

ACKNOWLEDGEMENT

Your Directors are extremely thankful and acknowledge the excellent support extended by the Government of India, in

particular the Ministry of Defence, Department of Defence Production, Defence Acquisition and Defence Finance as well as other Ministries of the Government of India in all the endeavours of the Company.

Your Directors also place on record their sincere appreciation towards the Company''s valued customers, in particular the Indian Defence Services, for the support and confidence reposed by them in the Management of the Company, and look forward to the continuance of this mutually supportive relationship in the future.

The Company wishes to place on record its appreciation for the co-operation extended and services provided by the Comptroller & Auditor General of India (C&AG), the Principal Director of Commercial Audit & Ex-officio Member, Audit Board, Statutory/ Internal Auditors, Cost Auditors, Secretarial Auditors, Bankers, Collaborators, JV Partners and Suppliers.

Your Directors are also thankful to the shareholders for the trust and confidence reposed in the Company and look forward to their continued support to propel the Company to greater heights.

Your Directors also wish to place on record their deep sense of appreciation for the committed services by the Company''s Executives and Workmen for progress and prosperity of the Company.

---

Mar 31, 2023

Your Board of Directors takes great pleasure in presenting their Report on the performance of the Company ("the Company" or "HAL"), and its Audited Financial Statements for the Financial Year ended March 31, 2023, together with Reports of the Statutory Auditors and the Comptroller & Auditor General of India (C&AG) thereon.

FINANCIAL HIGHLIGHTS

The financial highlights for the year ended March 31, 2023 are summarised as under:

('' in Lakh except per equity share data)
PARTICULARS	2022-23	2021-22
Turnover	26,36,056	24,36,166
Exports	29,371	16,796
Profit Before Tax (PBT)	6,49,294	5,23,115
Provision for Tax	68,177	14,465
Profit After Tax (PAT)	5,81,117	5,08,650
R&D Expenditure	2,49,433	1,96,691
Earnings/ Share (in '')	173.79	152.11
Book Value / Share (in '')	702.96	576.10

During the year under review, the turnover of the Company increased by 8% to ''26,36,056 Lakh from ''24,36,166 Lakh of the previous year. The Profit before Tax for the year increased by 24% to ''6,49,294 Lakh from ''5,23,115 Lakh in the previous year. The Profit after Tax (PAT) increased by 14% to ''5,81,117 Lakh from ''5,08,650 Lakh in the previous year.

PRODUCTION HIGHLIGHTS

During the year, the Company has produced 22 numbers of new Aircraft and Helicopters, covering LCA Tejas, Dornier Do-228, ALH Dhruv, Light Combat Helicopter (LCH) and Light Utility Helicopter (LUH) in addition to the production of 51 New Engines and Accessories, at its various Divisions. The Company has also overhauled 216 Aircraft / Helicopters and 535 engines during the year.

ORDER BOOK POSITION

During the year, the Company has bagged contracts for production and supply of 70 Nos. of HTT-40 Basic Trainer Aircraft on March 6, 2023 and 6 Nos. of Dornier 228 Aircraft on March 10, 2023.

The Order Book position of the Company stands at '' 81,78,400 Lakh as on March 31, 2023.

DIVIDEND

During the year, your Company has declared and paid 1^st interim dividend of ''20 per share of ''10 each (200 %) for the financial year 2022-23, amounting to '' 66,877.50 Lakh.

Further, the Company has also declared and paid 2^nd interim dividend of '' 20 per share of ''10 each (200 %) for the financial year 2022-23, amounting to '' 66,877.50 Lakh.

The Board of Directors of the Company has recommended a final dividend of ''15/- per share of '' 10 each to comply with the Guidelines of Department of Investment and Public Asset Management (DIPAM) on Capital restructuring with respect to payment of minimum dividend. The Final Dividend if approved by the shareholders, would involve cash outflow of ''50,158 Lakhs.

Thus, the total dividend including final dividend for the financial year 2022-23 would be ''55/-per equity share (550%), amounting to ''1,83,913 Lakhs.

In terms of the provisions of Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 [SEBI (LODR) Regulations] and the Guidelines of DIPAM, your Company has formulated a Dividend Distribution Policy and the same is available on the Company''s website at https://hal-india. co.in/Common/Uploads/DMS/Dividend Distribution Policy.pdf

CAPEX

In order to maintain the state of the art infrastructure and technologies to meet Aerospace Standard and also to develop systems/platforms for meeting the requirements of the Defence Forces and to become Atmanirbhar Bharat, HAL has incurred Capital Expenditure (CAPEX) of ''2,08,173 Lakhs in FY 202223 ( PY ''1,62,174 Lakhs). The investments are mainly towards Green Field Helicopter project at Tumakuru, augmentation of facilities of LCA, ROH of SU-30, ROH of AL-31 FP Engine etc. besides the regular replacement and rationalisation of the existing facilities.

OFFER FOR SALE (OFS)

To achieve the mandatory threshold of 25% minimum public shareholding in the Company, Government of India (GoI) had offered 3.5% (1,17,03,563) equity shares of the Company to non-Retail Investors and Retail Investors on March 23-24, 2023, out of its shareholding of 75.15% in the Company, through Offer for Sale (OFS) by Stock Exchange Mechanism. Consequent to the OFS, the GoI shareholding as on March 31, 2023 stands at 71.65%.

Apart from above, as part of the OFS, GoI had also allotted 37,632 equity shares to the eligible employees of the Company during April, 2023 under Employee OFS. Consequent to the Employee OFS, the GoI shareholding stands at 71.64%.

RESERVES

During the year under review, ''53,881 Lakh was transferred to Research & Development Reserve, ''10,776 Lakh was transferred to Indigenization Fund Reserve and '' 3,59,576 Lakh to General Reserve.

BORROWINGS

As on March 31,2023, the short term and long term borrowings of the Company was Nil.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The Company has in place adequate internal financial controls for ensuring efficient conduct of its business. A detailed note on internal financial controls is provided in the Management Discussion and Analysis Report.

LOANS, GUARANTEES AND INVESTMENTS

Details of Loans, Guarantees and Investments as covered under the provisions of Section 186 of the Companies Act, 2013 (''''the Act") form part of Notes to the Financial Statements.

RELATED PARTY TRANSACTIONS

During the year, your Company has entered into transactions with related parties. In line with Related Party Transactions (RPTs) Policy, approval of the Audit Committee and Board, as the case may be was obtained for RPTs. As per the threshold mentioned in the Policy, there were no material related party transactions with the Company''s Promoters, Directors, Management or their relatives, which could have had a potential conflict with the interests of the Company. The disclosures related to RPTs in accordance with the applicable accounting standards are provided in Clause No. 45A of the Notes to the financial statements. Details of contract(s) or arrangement(s) with related parties referred to in Section 188(1) of the Companies Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014, in the prescribed form AOC-2, is attached to this Report as Annexure-I.

CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements of your Company and its Joint Venture Companies & Subsidiary Companies for the year ended March 31, 2023 have been prepared in accordance with the provisions of Section 129(3) of the Companies Act and applicable Accounting Standards, and form part of this report.

Pursuant to the first proviso of Section 129(3) of the Companies Act read with Rule 5 of the Companies (Accounts) Rules, 2014, a separate statement containing salient features of the Financial Statements of Subsidiaries / Associate / Joint Venture Companies in Form AOC-1 is appended to this report, which forms part of the Financial Statements. The separate Audited Financial Statements in respect of the Subsidiaries are also available on the website of the Company at www.hal-india.co.in.

SUBSIDIARY/ ASSOCIATE/ JOINT VENTURE COMPANIES

As on March 31, 2023, your Company has two Subsidiaries including one wholly owned Subsidiary and thirteen Joint Venture Companies (JVCs) including two Not-for-Profit Companies (Section 8 Companies).

Pursuant to the provisions of Section 134(3)(q) of the Companies Act read with Rule 8(1) of the Companies (Accounts) Rules, 2014, a Report on the performance and financial position of each of the Joint Venture Companies and Subsidiary Companies is attached to this Report as Annexure-II.

SIGNIFICANT ACHIEVEMENTS

Significant achievements of the Company during the year are as follows:

• The state-of-the-art Integrated Cryogenic Engine Manufacturing Facility (ICMF) of the Company was inaugurated by Hon''ble President of India, in Bengaluru on September 27, 2022. The facility will cater to the entire Rocket Engine Manufacturing under one roof for ISRO, it will also boost self-reliance in manufacturing of Hi-thrust Rocket engines.

• HAL''s New Helicopter Factory in Tumakuru was dedicated to the nation by Hon''ble Prime Minister of India on February 6, 2023.

• Successfully completed the production of 15 Light Combat Helicopters (LCH) against the 15 LCH contract ahead of contract schedule.

• Handed over the last of the 16 ALH MKIII (Maritime role) order to the Indian Coast Guard (ICG) on November 15, 2022. During the event, a Letter of Intent (LoI) for nine more helicopters was received from ICG.

• The first flight of the LCA Mk1A prototype (LCA SP-25 modified for MK1A features) was conducted on May 20, 2022, which is the major milestone towards LCA MK1A program.

• Successfully produced 4 Do-228 aircraft in advance against the contract for supply 6 Do-228 to IAF

• The maiden arrested landing and ski-jump take-off from the indigenous aircraft carrier INS Vikrant was carried out by the LCA Navy MK1 aircraft on February 6, 2023.

• Delivered the first set of hardware for Gaganyaan mission (first unmanned mission) as well as the 150^th HAL made Satellite Bus-structure to ISRO on April 4, 2022. HAL also delivered the Crew Module Fairing (CMF) and HEM-Thrust Transfer Structure (HTS) hardware for ''Human Spaceflight Program'' to Indian Space Research Organization (ISRO) on August 17, 2022 in Bengaluru.

• Build of LCA Navy MK I Trainer prototype aircraft NP5 (3^rd Naval prototype) completed and engine ground run carried out on January 16, 2023.

• Design & development of Indigenous Mission Management System (MMS) integrated on DO-228 (ICG) and flight testing commenced from August 25, 2022.

• Solid State Flight Data Recorder (SSFDR) / Cockpit Voice Recorder (CVR) for Cheetah, Chetak and Cheetal helicopter has designed and developed. ''Type Approval'' for this system has been accorded by CEMILAC. The ''Flight Clearance'' for deployable Flight Data Recorder (FDR) and Interface Computer for DO-228 aircraft as also accorded by RCMA (Korwa).

CURRENT PROJECTS AND PROGRAMS

During the year, the Company has produced Light Combat Aircraft (LCA) Tejas, Dornier Do-228 Aircraft, Advanced Light Helicopter (ALH) Dhruv, Light Combat Helicopter (LCH), Light Utility Helicopter (LUH), engines, accessories and aerospace structures against the various customer orders. To boost the Atmanirbharta in defence, the Company has indigenously designed and developed two products namely HTT-40 Basic Trainer Aircraft and LUH Mkl. The Company has received contract for supply of 70 HTT-40 aircraft in March, 2023.

During the year, the Company has commenced manufacturing of helicopter at New Helicopter Factory, Tumakuru. The Company has also established facilities for manufacturing of semi cryogenic and cryogenic engine components at Integrated Cryogenic Engine Manufacturing Facility (ICMF). The facility will cater to the entire Rocket Engine Manufacturing under one roof for ISRO, it will also boost self-reliance in manufacturing of Hi-thrust Rocket engines.

The Company has achieved a significant milestone towards civil aviation segment and Regional Connectivity Scheme UDAN with the first commercial flight of HAL''s civil Do-228 held on April 12, 2022 at Dibrugarh-Pasighat route. The Company has progressed on bringing improvements in civil Do-228 / Hindustan 228-201 aircraft and attained Type Certification with latest FAR 23 certification requirement from DGCA. Further, Hindustan 228-201LW with Maximum Take Off Weight of 5695 Kgs has also been approved by DGCA in January, 2023. With this modification, the aircraft would fall in the Sub 5700 kg aircraft category.

DESIGN AND DEVELOPMENT PROGRAMS

The Company continued to boost the "Atmanirbhar Bharat Abhiyan" of Govt. of India with its focused efforts towards design and development of products, technologies and capabilities to meet the future requirements of Indian defence forces and non-military aerospace market in India. The Company has considerably progressed towards the realization of our indigenous programmes viz. Basic Trainer Aircraft (HTT-40), Light Utility Helicopter (LUH), Light Combat Aircraft (LCA)- MK1A, Indian Multi-Role Helicopter (IMRH) and Development of Engines. The progress achieved in respect of these projects during the year is given below:

• BASIC TRAINER AIRCRAFT (HTT-40)

HTT - 40 is the Basic Trainer aircraft currently being indigenously designed and developed by HAL. HTT-40 would be used for basic flight training, aerobatics, instrument flying and close-formation flights whereas its secondary roles would include navigation and night flying. Features of the aircraft include Air conditioned cockpit, Tandem seating, Zero-Zero ejection seats and Multifunction Displays. The program was taken up with internal funding. A total of 3 prototypes have been built which includes two flying prototype and one Structural Test Specimen (STS).

During the year, HTT-40 successfully completed erect spin certification flights, and PSQR validation trials. All systems certified to PSQR and FAR 23. Airworthiness certificate for Aircraft obtained. First Inverted Spin tests was carried out in March, 2023. HAL has bagged the contract for supply of 70 HTT-40 aircraft on March 6, 2023.

• LIGHT COMBAT AIRCRAFT (LCA) Mk 1A

LCA Mk1A is an improved variant of indigenously developed LCA MK1, presently being developed by HAL. It has additional features and improvements such as Self Protection Jammer, Active Electronically Scanned Array (AESA) RADAR, Beyond Visual Range (BVR) Missile and maintainability improvements etc.

LCA Mk1A development activities are under progress. Aircraft modification completed with integration of AESA Radar, EW Suite, and upgraded Open Architecture Computer (OAC) software. Flight testing commenced on May 20, 2022.

• LIGHT UTILITY HELICOPTER (LUH)

The LUH is a single engine, 3 Ton weight class helicopter having Glass Cockpit with Multi-Function Displays. The LUH is intended to meet different role requirements including high altitude operation which is specific requirement of our Defence Services. Three flying prototypes have been built and were extensively flight tested. Initial Operational Clearance (IOC) for LUH IAF Version was accorded on February 7, 2020 and for the Indian Army Version on February 5, 2021.

Integration of Automatic Flight Control System (AFCS) is progressing and will be completed by December, 2023. HAL has produced first LUH Mk-I in July, 2022 against the Letter of Intent (LoI) for 12 helicopters.

• INDIAN MULTI ROLE HELICOPTER (IMRH)

The Company has under taken the design and development of 10-15 ton class IMRH for Indian Air Force, Indian Army and Indian Navy. The Naval variant of IMRH is christened Deck Based Multi Role Helicopter (DBMRH).

IMRH and DBMRH would be designed to meet the requirement of all the three military services and its future extension to civil market to cater to off shore operations, utility, VVIP transport etc., to enlarge the helicopter business through production as well as MRO activities.

Currently, the preliminary design activities are under progress. HAL has completed Phase 1 of wind tunnel testing of IMRH-IAF scaled model and results are satisfactory. Phase-2 of Wind Tunnel testing are under progress.

• 25 kN TURBOFAN ENGINE (HTFE-25)

Design and development of a 25kN thrust class turbofan engine, which can be used on Basic/ Advanced military trainers, on small business jets and also large UAV applications is under progress at HAL. The engine can be used on a 5-ton weight class aircraft in single engine configuration and on aircraft of up to nine- ton weight class with twin-engine configuration. Two core engines have been produced so far and are undergoing development trials.

• 1200 kW TURBOSHAFT ENGINE (HTSE-1200)

The 1200KW Turbo shaft engine would be used as power plant for 3 to 6-ton category helicopters. One technology demonstrator of HTSE-1200 engine was built and is presently under testing.

• HAWK-i

Hawk-i is the indigenously upgraded Hawk Mk 132 aircraft with enhanced operational and training capabilities. Hawk-i is now equipped with new suite of Avionics like improved Radio Altimeter (RADALT), Identification of Friend & Foe (IFF Mk XII), Solid State Digital Video Recording System (SSDVRS), Counter Measure Dispensing System (CMDS), Softnet Radio, Integrated Communication System (INCOM), Data Transfer System (DTS), Smart Anti-Airfield Weapon (SAAW), Radar Warning Receiver (RWR), Voice Activated Command System (VACS), Integrated Control Unit (ICU) & Head Up Display (HUD) .

RESEARCH AND DEVELOPMENT EFFORTS

During the year, indigenously designed and developed HTT-40 Basic Trainer Aircraft and LUH were unveiled by Hon''ble Prime Minister.

The R&D efforts of the Company have resulted in successful first flight of ALH with two segmented Main Rotor Blades and Pre-Cone Main Rotor Head developed to address the stringent stowage dimension requirement of Indian Navy, first Inverted Spin tests of HTT-40, first flight of LCA Mk1A and maiden arrested landing & ski-jump take-off by LCA Navy MK1 aircraft out from the indigenous aircraft carrier INS Vikrant.

The Company is also undertaking the development of aero engine, starter engines, avionics and accessories. Towards this, a major achievement of the Company is development of the

gas turbine starter engine GTSU-127E for ADA and successful built of a Technology Demonstrator (TD) unit. The TD unit was tested for light-up, acceleration and initial performance and the results are as anticipated in the design stage.

During the year, the Company has incurred a total R&D expenditure of ''2,49,433 Lakh, which is 9.46% of the Turnover. The Company has transferred a sum of ''53,881 Lakh (15% of Operating PAT) to R&D reserve for contribution to R&D corpus during the year 2022-23.

During the year, HAL has filed 192 IPR applications which make cumulative number of 2224 IPRs filed by company. Further, 116 IPRs have also been granted during the year taking cumulative IPRs held by the organization to 748. (Patents - 154, Industrial Designs - 115, Copyrights - 477, Trademark - 2).

BOARD AND ITS COMMITTEE MEETINGS

During the year, 12 (Twelve) Board Meetings were held and the maximum interval between any two meetings was not more than 120 days.

The details of meetings of the Board and Committees thereof held during the year are furnished in the Corporate Governance Report, which forms part of this Report.

COMMITTEES OF THE BOARD

As on March 31,2023, the Board has five Statutory Committees namely Audit Committee, Nomination & Remuneration Committee, Corporate Social Responsibility & Sustainable Development Committee, Stakeholders Relationship Committee and Risk Management Committee.

A detailed note on the composition, terms of reference and meetings of the Board and its Committees is provided in the Corporate Governance Report.

CHANGES IN BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

The following changes took place in the Board of Directors and Key Managerial Personnel (KMP) of your Company during the financial year:

Appointment

• Shri Deepak Abasaheb Shinde appointed as Part -Time Non-Official (Independent Director) on the Board of the Company w.e.f April 28, 2022.

• Shri Jayadeva E P appointed as Director (Operations) on the Board of the Company w.e.f June 10, 2022.

• Shri Rajeev Prakash appointed as Govt. Nominee Director on the Board of the Company w.e.f September 14, 2022.

• Dr D K Sunil appointed as Director (Engg and R&D) on the Board of the Company w.e.f September 29, 2022.

• Shri T Natarajan appointed as Govt. Nominee Director on the Board of the Company w.e.f December 23, 2022.

• Shri Shailesh Bansal appointed as Company Secretary of the Company w.e.f. March 28, 2023.

Cessation

• Shri Arup Chattterjee ceased as Director (Engg and R & D) on the Board of the Company due to his superannuation on June 30, 2022.

• Shri R Madhavan ceased as Chairman and Managing Director on the Board of the Company due to his superannuation on July 31, 2022.

• Shri Alok Verma ceased as Director (HR) on the Board of the Company due to his superannuation on November 30, 2022.

• Shri Chandraker Bharti ceased as Govt. Nominee Director on the Board of the Company due to withdrawal of Nomination w.e.f September 14, 2022.

• Shri Rajeev Prakash ceased as Govt. Nominee Director on the Board of the Company due to withdrawal of Nomination w.e.f December 23, 2022.

• Shri G V Sesha Reddy, ceased as Company Secretary of the Company due to his superannuation on October 31, 2022.

DECLARATION OF INDEPENDENCE

Declarations from the Independent Directors of the Company have been received, confirming that they met the criteria of independence as prescribed under Section 149(6) of the Companies Act, 2013 and Regulation 25(8) of the SEBI (LODR) Regulations.

COMPANY''S POLICY ON DIRECTORS'' APPOINTMENT AND REMUNERATION

The appointment, tenure and remuneration of Functional Directors including Chairman and Managing Director (CMD) are determined by the Government of India. The Terms & Conditions of appointment, including the period of appointment, the Scale of Pay and other entitlements are notified by the Government of India.

Government Nominee Directors are appointed by the Department of Defence Production, Ministry of Defence and they are not entitled to any remuneration / sitting fees.

Independent Directors are appointed by the Government of India and they are entitled to sitting fees for attending the Board / Committee meetings as prescribed by the Board in line with the Companies Act and Rules made thereunder.

In view of the Gazette Notification No GSR 463 (E) dated June 5, 2015 of the Ministry of Corporate Affairs (MCA), your Company, being a Government Company, is not required to frame a Policy on Directors'' appointment and remuneration, including criteria for determining qualifications etc. under Section 134(3)(e) of the Companies Act.

BOARD EVALUATION

Pursuant to the Notification No. 463 (E) dated June 5, 2015 issued by the Ministry of Corporate Affairs, the statement indicating the manner in which formal annual evaluation has been made by the Board of its own performance and that of its Committees and individual directors is not required for your Company, as the performance of directors is evaluated by the Administrative Ministry. The performance evaluation of Independent Directors was carried out by the entire Board.

ANNUAL RETURN

In accordance with the provisions of the Companies Act, 2013, the Annual Return in the prescribed format has been hosted on website of the Company at https://hal-india.co.in/Common/ Uploads/DMS/Draft MGT 7 2022 23.pdf

COMPLIANCE WITH SECRETARIAL STANDARDS

The Company complies with all applicable mandatory Secretarial Standards issued by the Institute of Company Secretaries of India.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

As a defence Central Public Sector Enterprise (CPSE), your Company was granted exemption vide Notification GSR No.680 (E) dated September 4, 2015, from the disclosure of information with respect to conservation of energy, technology absorption, foreign exchange earnings and outgo under the provisions of Section 134(3)(m) read with Rule 8(3) of the Companies (Accounts) Rules, 2014.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Pursuant to the provisions of Section 135 of the Companies Act and Companies (Corporate Social Responsibility Policy) Rules, 2014 and Amendment thereof & DPE Guidelines, the Company has undertaken various activities during the year as per its CSR Policy. The projects / programmes / activities taken up are in line with Schedule VII of the Companies Act. The thrust areas under CSR are Healthcare, Skill Development, Education, Enhancing Employability through Training, etc. The other areas in which support extended were Environment Sustainability, Sports Development, Rural Infrastructure Development, Sanitation etc. The Company has spent an amount of ''10,328 Lakhs under CSR for the Financial Year 2022-23 against the CSR budget/ obligation of '' 9,707 Lakhs.

The Corporate Social Responsibility Policy, Composition of the Committee and CSR Projects/ Activities of the Company is available on the Company''s website at https://hal-india. co.in/Corporate%20Social%20Responsibility/M 412. Salient features of the Policy form part of the Annual Report.

Annual Report on CSR activities undertaken by your Company during the year 2022-23, pursuant to Section 135 of the Companies Act, 2013 read with Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended, is attached to this Report as Annexure-III.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT

In terms of amendment dated May 05, 2021 to Regulation 34(2)(f) of SEBI (LODR) Regulations, the Company has prepared Business Responsibility and Sustainability Report (BRSR) for the year 2022-23 on Environment, Social and Governance (ESG) parameters in the prescribed format and attached to this Report.

DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY

The Company has a Board approved Risk Management Policy, in place. The policy aims at elimination or reduction of risk exposures through identification and analysis of various types of risks and facilitating timely action for taking risk mitigation measures.

In line with Regulation 21 of the SEBI (LODR), Regulations, 2015, the Board of Directors had constituted the Risk Management Committee for monitoring and reviewing of the risk management plan and other such functions as it may, deem fit including ESG, Cyber Security and Business Continuity Plan, in line with applicable laws.

SIGNIFICANT AND MATERIAL ORDERS

There are no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and the operation of the Company in future.

PUBLIC DEPOSITS

Your Company has not accepted any deposit during the year. Further, there was no outstanding deposit and/or unpaid or unclaimed principal amount or interest against any deposit either at the beginning or at the end of the Financial Year 2022-23.

ISSUE OF EQUITY SHARES WITH DIFFERENTIAL RIGHTS

During the year, the Company has not issued any equity shares with differential rights as to dividend, voting or otherwise.

MATERIAL CHANGES SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENTS

No material changes / commitment of the Company have occurred after the end of the Financial Year 2022-23 and till the date of this report, which affect the financial position of the Company.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

The provisions of Section 197 of the Companies Act and the relevant Rules regarding particulars of employees drawing remuneration in excess of the limits specified are exempted for Government Company, in view of the Gazette Notification No. G.S.R. 463 (E) dated June 5, 2015 issued by the Ministry of Corporate Affairs, Government of India.

MOU WITH GOVERNMENT

Your Company is signing Memorandum of Understanding (MoU) every year with the Ministry of Defence (MoD), Government of India (GoI).

The Company has achieved "Excellent" performance rating with a score of 92.83 for the financial year 2021-22 against MoU signed with the Ministry of Defence, Government of India.

INDIGENISATION AND ATMANIRBHAR BHARAT

The Company has put in concerted effort on indigenisation of components, accessories and systems required to manufacture as well as repair & overhaul of aircraft, engine and associated accessories. Every year, HAL indigenizes various items/ components and systems of foreign origin fitted on HAL platforms through in-house capabilities or with the help of local vendors to reduce dependence on imports, savings in foreign exchange and manage obsolescence, thus fostering self-reliance through ''Make in India''.

In line with the Atmanirbhar Bharat Abhiyan of Govt. of India, HAL indigenised 1298 no. of items which may lead to annual foreign exchange saving of '' 160.30 Crore during the FY 2022-23. To align with national priorities and ensure inclusive growth, HAL has been also encouraging Indian private sector participation in the indigenization/ Make in India efforts to undertake various high value systems/equipment of foreign origin fitted on HAL platforms.

The other major initiatives / achievements during the year are as under:

0 Creation of a dedicated Indigenisation fund:

The Company has created a dedicated indigenization fund by transfer of 3% operating profit after tax of the Company every year from the FY 2022-23. This fund will be used for carrying out indigenization activities and will provide further impetus for indigenization.

0 Identification of critical items for indigenization and inclusion in the Positive Indigenisation Lists (PIL) issued by MoD:

In a major initiative, the Company has identified and made a comprehensive roadmap for indigenization of complex aircraft Systems, LRUs & other critical Items across its major

platforms. These items are planned to be indigenized in the next 4-5 years in a phased manner through participation of Indian Private Industries and Government Agencies involving Academia. Such 430 imported items are included in the four PILs (PIL-1: 23, PIL-2: 22, PIL-3: 360, PIL-4: 25) issued by DDP, MoD. Indigenisation of these items will be a significant milestone towards Atmanirbharta in Defence Sector.

0 Indigenisation through Company Funds (similar to Make-I concept) :

Indigenization activity at HAL has, hitherto, been primarily driven by the need to address the challenges posed by obsolescence of bought-out items pertaining to legacy fleets and supply-chain constraints arising from various geo-political events. In certain specific cases, indigenization was also taken up to counter the threat of exorbitant price increase by foreign OEMs. HAL is utilizing internal funds to address all these challenges.

In the recent years, indigenization has been actively endorsed as a strategy to increase self-reliance, in sync with the GoI policy of promoting ''Atmanirbhar Bharat''. Accordingly, some high value critical items are also being taken-up for indigenization with internal funds.

In this procedure Development cost is being borne by HAL and supply orders are placed on need basis.

0 Indigenisation through Make-II Procedure:

HAL''s Make-II programme is a step towards supporting the ''Aatmanirbhar Bharat'' & ''Make in India'' mission. HAL''s Make-II (Industry Funded) procedure is in compliance of the Make-II framework promulgated by MoD and envisages the assured order quantity after successful development of items through private vendors. HAL has identified items to be indigenized through Make-II procedure and uploaded in the Srijan Defence Portal. EoIs of these items are being issued in phased manner to take up for indigenisation under Make-II and so far, HAL has issued EoIs for around 900 items and Nil value Project Sanction order is placed for around 500 items for indigenisation under Make-II.

0 Uploading of imported items in Srijan Defence Portal:

MoD has developed and launched Srijan Defence Portal (an indigenization portal) to support Indian Industries with opportunities for Make in India in Defence. HAL has uploaded so far around 19000 nos. of imported items in the portal for information to private vendors and their likely participation in the indigenisation programmes of HAL.

0 Organising / participation in Seminars, Conferences and Exhibitions on Indigenisation / Vendor Development program

The Company has conducted / participated in more than 30 nos. of vendor development programs / seminars / exhibitions at Divisional level during the current financial year to sensitize Indian Vendors for opportunities available at HAL for indigenization and their enhanced participation in indigenization programmes.

Details of testing facilities available at HAL which could be utilized by private industries are hosted in HAL''s website and can be accessed through www.hal-india.co.in.

OUTSOURCING

As part of the "Make in India" drive and the Atmanirbhar Bharat Abhiyan, HAL has been nurturing & developing a vibrant indigenous aerospace & defence ecosystem. In its path of moving towards being a lead integrator, HAL has been striving to develop Tier-II and gradually Tier-I suppliers over a period of time while retaining the core areas as prime integrators. HAL has been taking up outsourcing diligently even in the new, up and coming projects, so as to turn the suppliers into reliable business partners over time.

EXPORTS

Initiatives taken to boost Exports during the year are as under:

0 One passenger variant Do-228 (PVD) aircraft was handed over to Mauritius Police Force within a record time of 6 months from the date of signing of the contract, well ahead of the contractual delivery commitment.

0 Delivery of one ALH MKIII helicopter to Mauritius Police Force ahead of contractual delivery schedule.

0 Imparting Phase-II flying training on Chetak Helicopter for six officers of Nigerian Army Aviation.

0 Signed contract between HAL and Argentine Air Force for Engine repair and Spares support for 2 ton class helicopter.

BUSINESS DEVELOPMENT

The following Initiatives taken for Business Development during the year:

0 HAL Hindustan 228-201 aircraft attained Type Certification from DGCA. This is the first Type Certified fixed wing aircraft complying with latest FAR 23 certification requirement.

0 Received approval for type training on Civil Do-228 aircraft from Civil Aviation Authority of Nepal under NCAR147.

VENDOR DEVELOPMENT

During the year, the Company has taken several vendor development initiatives to increase the number of vendors.

During the year, the Company has conducted 35 Vendor Development Programmes, out of which, 6 were for Micro & Small Enterprises (MSEs) owned by SC/ST Entrepreneurs & Woman Entrepreneurs. The balance 29 were for across all categories. .

The Company has registered with RXIL, Mynd Solution and A TReDS Ltd. for enabling payments through TReDS platform to MSMEs. All efforts are made to bring the MSMEs on TReDS platform.

The Company has registered with MSME SAMBANDH portal and the procurement details are being updated monthly in this Portal. The Company has also registered with MSME SAMADHAAN portal and the same is being monitored regularly for resolution of payment complaints of MSEs, if any.

Your Company is a part of Public Procurement Portal, Government e-Marketplace (GeM portal) and registered as a Buyer in GeM Portal and taking up procurement of items which are available in GeM Portal. Also procuring several items which are not available in GeM Portal utilizing Custom Bid Module/ BoQ Module extensively. All our vendors are being persuaded to on board on the GeM portal to utilize the facilities available in the GeM portal.

HAL has implemented companywide e-Procurement system through its own e-Procurement portal which is adopted for tenders issued outside GeM portal. A 24X7 e-Procurement help desk has been established to provide information, support, training, operational issues/clarifications to the vendors.

HAL has implemented the Public Procurement (Preference to Make in India), Order 2017 and its amendments thereof issued by Department for Promotion of Industry and Internal Trade (DPIIT) to encourage ''Make in India'' and promote manufacturing and production of goods & services in India.

PROCUREMENT FROM MICRO & SMALL ENTERPRISES (MSEs)

The Company has implemented the Public Procurement Policy for Micro and Small Enterprises (MSEs) Order, 2012 & its amendments thereof issued by Ministry of MSME. The Company has achieved more than the mandated procurement of 25% from MSE entrepreneurs (excluding specific defence procurement as per Sl.No.14 of the policy). During the year, the total value of procurement including\ outsourcing made from MSEs is '' 1,78,240 Lakh.

INTEGRITY PACT (IP)

Your Company has system of signing of IP with vendors for all procurement of Goods, Services & Works / contracts having value of '' 5 Crore and above. Only those Vendors / bidders, who commit themselves to IP with the HAL would be considered competent to participate in the bidding process. Further, to encourage competition in HAL procurement and to reduce processing lead time, HAL has implemented the Omnibus Integrity Pact with effect from January 1, 2018. This Omnibus IP shall be valid upto 5 years and the same can be proposed by bidder for consideration against any offers submitted by the vendor during the validity period of Omnibus IP.

HUMAN RESOURCE DEVELOPMENT

The strength of employees as on March 31, 2023 stood at 24,457.

As on March 31, 2023, a total of 3618 Apprentices were engaged in the Company, comprising 10.31 % of the total employee strength including contractual staff.

EMPLOYEE WELFARE

Company continues to extend welfare benefits to the employees and their dependants by way of comprehensive Medical Facilities, Housing Facilities, Canteen Facilities (for employees only), Educational facilities for employee''s Children, Sports Facilities, etc. Further, Company had taken Group Life Insurance Policy of '' 10 Lakhs on behalf of employees and also introduced Financial Assistance Scheme to provide regular monthly monetary support ranging from '' 15,000/- p.m. to '' 50,000/- p.m. depending upon the Grade / Scale of employee, to the dependents of deceased employees.

REPRESENTATION OF SC/STs The position regarding representation of Scheduled Castes / Scheduled Tribes (SC / STs) is as follows: Representation of SC/STs in the total strength of the Company as on January 1, 2022 and January 1, 2023
Category (Grade / Scale of Pay)	Total Strength as on		Number of SCs as on		Number of STs as on
	1.1.2022	1.1.2023	1.1.2022	1.1.2023	1.1.2022	1.1.2023
Group - A (Grade - II & above )	7,843	7,602	1,396	1,369	482	473
Group - B (Grade-I)	19	13	2	2	2	1
Group - C (Scale -3 to Special Scale)	17,801	17,035	3,114	3,022	1,364	1,326
Group - D (Scales - 1 & 2 )
(i) Excluding Safai Karmacharis	5	4	1	1	-	-
(ii) Safai Karmacharis	-	-	-	-	-	-
Total	25,668	24,654	4,513	4,394	1,848	1,800
Recruitments made during the period January 1, 2022 to December 31, 2022 and the SC/STs amongst them
Category (Grade / Scale of Pay)		Total	No. of Reservations		No. of Posts filled by
		number of	made for		appointment of
		Post filled	SCs	STs	SCs	STs
Group - A (Grade - II & above )		92	13	7	15	7
Group - B (Grade-I)		-	-	-	-	-
Group - C (Scale - 3 to Special Scale)		8	1	-	4	-
Group - D (Scales - 1 & 2)
(i) Excluding Safai Karmacharis		-	-	-	-	-
(ii) Safai Karmacharis		-	-	-	-	-
Total		100	14	7	19	7
Vacancy - based Promotions made during the period January 1, 2022 to December 31, 2022 and the SC/STs amongst them
Category (Grade / Scale of Pay)		Total	No. of Reservations		No. of Posts filled by
		number	made for		Promotion of
		Promoted	SCs	STs	SCs	STs
Group - A (Grade - II & above )		1176	NA	NA	198	75
Group - B (Grade-I)		-	-	-	-	-
Group - C (Scale - 3 to Special Scale)		-	-	-	-	-
Group - D (Scales - 1 & 2 )
(i) (i) Excluding Safai Karmacharis		-	-	-	-	-
(ii) Safai Karmacharis		-	-	-	-	-
Total		1176	-	-	198	75

EMPLOYEE RELATIONS (ER) / INDUSTRIAL RELATIONS

The Employee Relations / Industrial Relations Scenario remained peaceful & cordial during the year. Effective communication between the Management and the Trade Unions / Associations paved way for smooth relations / maintenance of industrial harmony and to eliminate any scope of conflicts & misunderstandings. Meetings with the representatives of the Recognized Unions / Officers Associations at the Divisional, Complex & Corporate Levels were held periodically to discuss various issues.

(i)	Number of Cases pending as on 01/04/2022 :	Nil
(ii)	Number of Complaints of Sexual Harassment : received in the Financial Year 2022-2023 :	1
(iii)	Number of Complaints disposed of during the : Financial Year 2022-2023 :	1
(iv)	Number of Cases pending as on 31/03/2023 : & its status :	Nil

Plant Level & Shop Level Committees with representatives from the Management / Union are functioning in the Divisions to discuss & resolve production related matters. In order to address Employee Grievance / Representations, Grievance Redressal Mechanisms are also in place in the Company.

RAJBHASHA IMPLEMENTATION

The Company is constantly taking efforts to implement Official Language in all the Divisions/ Offices effectively. During the year, many initiatives have been taken such as printing of all Technical Manuals, Form-Formats in bilingual.

As per directions given by First Sub-Committee, Committee of Parliament on Official Language (CPOL) during the inspections, necessary directives have been issued to all the Divisions/Offices of HAL to maintain expenditure towards the advertisements and publicity as per Official Language guidelines.

Apart from this, Employees are being motivated through publication of In-house magazine ''Nabharatna'' at Corporate Office. ''HAL Connect'' - a weekly e-magazine is also being issued in bilingual for encouraging the Employees to read technical literature in Hindi also. Around 15-16 In-House Hindi Magazines are also being published by the Divisions of HAL on annual basis.

Hindi Incentive Scheme has been implemented effectively. Further, Hindi roster related information pertaining to knowledge of Hindi of the Employees is being updated for the purpose of preparing time bound programme to train our Employees, who have no working knowledge of Hindi, from forthcoming training session.

The periodical reports are also being sent and uploaded as per directives issued by the Department of Official Language, Ministry of Home Affairs, New Delhi in this regard. As per the Official Language guidelines, Hindi workshops are also being conducted on various topics, so that Employees could do their routine work in Hindi effectively.

HAL website is being updated in bilingual from time to time at Corporate Office level. Inspections of various divisions related to Official Language have been done successfully during the year. The Officers from all the Divisions including Corporate Office are attending TOLIC Meetings during the year. The actions on minutes of TOLIC meetings are also carried out as per the decisions taken in the meeting.

The inspection reports pertaining to inspections of Ministry of Defence, Ministry of Home Affairs and compliance reports related to assurances given to the Committee of Parliament on Official Language are being sent to the concerned authorities/ offices in time after reviewing the report at the Corporate Office level.

The meetings of Official Language Implementation Committee in all the divisions of HAL including Corporate Office are being conducted regularly. Necessary guidelines issued by the Dept.

of Official Language, Ministry of Home Affairs, New Delhi are also being circulated to all the divisions of HAL to make aware of latest orders pertaining to implementation of Official Language.

WOMEN EMPOWERMENT:

Women Empowerment & Leadership Programs are being conducted by HAL. The main objective of the programs is to enhance the Self-Awareness & Self - Management, Managing Relationships, enhancing Business Leadership Skills, etc. Equal Opportunities are provided to Women Employees at all levels for advancement in their career. Around 60 Women Employees hold Senior Management posts i.e., above Grade VII.

HAL is a Corporate Life Member of the Women in Public Sector (WIPS) Forum. Women employees are encouraged to participate in programmes / activities of WIPS Forum. All statutory welfare amenities have been extended to women employees.

Ladies Clubs / Families Welfare Associations are also functioning at different locations to take up various philanthropic / sociocultural activities. Women''s Day is celebrated on 8^th March every year.

PROHIBITION OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE

The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 has been notified in the Company. In line with the Guidelines received from time to time, necessary actions have been taken to prevent Sexual Harassment of Women at Workplace. The HAL CDA Rules applicable to Officers and the Certified Standing Orders applicable to Workmen have the required provisions in this regard.

Internal Complaints Committees as per Section 4 of the said Act have been put in place. Information for the year 20222023 in terms of Section 22 of the Act, is as indicated below:

Awareness Programme on Sexual Harassment were also conducted at Divisions / Offices during the year.

INFORMATION TECHNOLOGY (IT) INITIATIVES

During the year, your Company has taken many IT initiatives towards adopting the latest technology, increasing customer satisfaction, implementing paperless processes and improving cyber security. Some of the major IT initiatives and achievements of the Company during the period are:

• HAL Website : The Company has taken Initiative to revamp the website to serve as a digital platform for marketing, suppliers, employees and other stake holders with new features such as dynamic content management, multilanguage support, browser & device independent web structure, real-time stock price, employee/retiree section etc.

• Customer Relationship Management Initiatives:

Towards development of customer relationship management, the Company has developed a centralised portal for registering customer complaints and the dashboard for quick supply of ARS items by providing a single screen view of the current stock position of ARS parts.

• Paperless Initiatives: A project management portal has been developed for providing a platform for collaboration, transparency and timely resolution of design and production related issues between Design and Production Divisions.

Further, Online portal for evaluation of Indirect Labour performance for monthly incentive of indirect labour and Online Claim Bills Realization System (e-CBRS) has also been developed.

• Infrastructure & Cyber Security

0 As part of strengthening the cyber security posture of the Company, initiatives undertaken for ISO 27001 certification for all Production Divisions, R&D Centres and Offices of HAL. Twenty two (22) Divisions/R&D Centres / Offices have completed the certification in the current financial year.

0 I mplementation of cloud based secure medium for sharing sensitive information with external agencies.

AWARDS & RECOGNITIONS

During the year, your Company has received various Awards

and Recognitions. Some of the important accolades conferred

to the Company are as under:

• Raksha Mantri Award for Excellence in Defence and Aerospace Sector for the year 2021-22 under "Raksha Anveshan Ratna" Award (Institutional Award) category for the project titled "Development of Indigenous Automatic Flight Control System (AFCS) for the Light Combat Helicopter (LCH).

• "IIIE Performance Excellence Award-2022" conferred for the outstanding contribution made by the Company towards excellence in performance.

• Prime Minister''s Award for excellence in administration under the category Innovation-Central to the team "Innovation for Defence Excellence (i-DEX) of Department of Defence Production, Government of India."

• Dun & Bradstreet PSU award in the ''Heavy & Medium Engineering (Central PSUs)'' category during ''PSU and Government Summit 2022''.

• "MRO Excellence Award" from the MRO Association for setting up the Airport Infrastructure at Nashik and third party

MRO under the convergence mission of Govt. of India.

• "IEI Industry Excellence Award 2022" under ''Engineering Manufacturing and Processing'' category for demonstrating outstanding performance with a high order of business excellence.

• "Governance Now PSU Award" under the categories Nation Building and PSU IT Award (Digital PSU and Use of emerging technologies - Enterprise Security sub categories) amongst the Navratna Companies.

• "Business Standard Annual Award for Corporate Excellence 2022" under the category "Star PSU of the year".

• "ICC PSE Excellence Award" under the category "Inclusivity - Contribution of Women and differently abled in PSEs".

VIGILANCE

Your Company has a well-established Vigilance Department headed by the Chief Vigilance Officer (CVO). Vigilance Officers and Staff are posted to the Corporate Office and all the Divisions and Complex Offices of the Company.

The major vigilance activities carried out by Vigilance department are as under:

i. Preventive Vigilance:

0 During the period, 391 complaints were handled, 462 regular scrutiny/ surprise checks and 28 CTE type intensive examinations were carried out across the Company. Five system studies were carried out on various topics like scrap disposal, insourcing purchase orders, implementation of PPI order placed on class I & II vendor and check of Minimum Local Contact (MLC) certified by the vendors, procurement of shelf life items with focus on total procurement and its utilization/non utilization, study on LC payments -delivery schedule and applicability of liquidated damages etc.

0 A total of 87 awareness sessions were conducted on various topics. Key note address / talk by eminent speakers were organized to spread vigilance awareness among employees on various topics like preventive vigilance through preventive forensics, online banking transactions and related frauds, financial frauds in commercial procedure, maintaining professionalism, transparency and accountability in public procurement, PIDPI, complaint handling policy and sensitization on the ill effects of corruption etc.

ii. Vigilance Publications: Three in-house Vigilance e-magazines were published during the year, as under:

0 "Marg Darshan", a bi-annual magazine was circulated during the year on the theme "Independent India @ 75: self-reliance with integrity" and "Leveraging

technology to prevent corruption" covering articles from internal and external writers as a part of efforts towards spreading preventive vigilance concepts.

0 "Vishleshan-II", a compendium of vigilance interventions was also published during the year. Vishleshan-II is a compendium of selected cases bearing a vigilance angle, set of case studies to succinctly draw up the mistakes made in a process and highlight lessons to be learnt and system improvements to be made to avoid the same mistakes in future.

0 "Do''s & Don''ts", a compendium of HAL rules and regulations was also published during the year.

iii. System Improvement measures: Based on the recommendations of vigilance, several system improvements have been issued by the management in the areas of HR, IMM, stores, works and finance etc like verification of education / caste certificates, guidelines for preparing material adequacy and issue of raw material, guidelines for Annual Maintenance Contract (AMC) of plant & machinery including test equipment, declaration of value for insurance purpose repair and return cases, procedure for payment of royalty, remittance of PF & ESI, engagement of external enquiry officers for conducting departmental enquiries, submission of false declaration for availing Company medical facility and improvements in weigh bridge operations etc.

iv Vigilance Awareness Week: Vigilance awareness week was conducted throughout the organization at all divisions of HAL in nine different geographical locations across country from October 31, 2022 to November 6, 2022, on the theme "Corruption free India for a developed Nation". Awareness campaign comprising of in-house and public outreach activities were conducted to spread awareness among employees & general public.

QUALITY INITIATIVES AND SAFETY

• Third-Party Inspection (TPI) model for inspection activities at vendor premises has been successfully deployed. As on date, seven TPI bodies have been empanelled by HAL to carry out inspection of outsourced components on behalf of HAL Divisions at the premises of sub-contractors. The 7^th TPI body was empanelled in FY 2022-23 in-coordination with DGAQA, HQ New Delhi. Further, five HAL Divisions have placed orders to the TPI bodies for inspection related activities.

• Operator Self Verification program in coordination with DGAQA, has been introduced for empowering shop operators / technicians to carry out inspection under delegation for non-critical inspection stages leading to pride of ownership of one''s work and increased awareness towards quality.

• HAL TAD Kanpur, Hyderabad & Korwa divisions have received additional Nadcap certifications in ''Chemical Processing'' for chromic acid anodizing, painting and chromate conversion coating respectively which will increase the process reliability and enhance business prospects for the organization.

• HAL Avionics Division, Hyderabad has been certified under the Occupational Health and Safety Management System in accordance with ISO 45001:2018 which will promote safe and environment friendly working conditions.

• Avionics Division, Korwa has obtained Production Organization Approval (POA) as per Civil Aviation Requirements (CAR-21) Subpart G from DGCA for Solid State Cockpit Voice & Flight Data Recorder and Control Unit for Hindustan 228-01 & Do-228-01 aircrafts. This will enhance the support for the Company in Civil Aviation endeavors.

AUDITORS

Statutory Auditors

HAL being a CPSE, Statutory Auditors of the Company were appointed by the Comptroller & Auditor General of India (C&AG). M/s A. John Moris & Co., Chartered Accountants, Bengaluru was appointed as Statutory Auditors for auditing the Accounts of the Company for the year 2022-23 and 17 firms of Chartered Accountants were appointed as Branch Auditors. The statutory auditors'' report does not contain any qualification, reservation or adverse remarks.

The Auditors'' Report on financial statements for the financial year 2022-23 and comments of the Comptroller & Auditor General of India (C&AG) under Section 143(6) of the Companies Act are attached to this Report, which is self-explanatory.

Cost Auditors

Your Company has appointed M/s GNV & Associates, Cost & Management Accountants as Cost Auditors for conducting the Cost Audit of the Company for the year 2022-23. The Company maintains cost records as specified by the Central Government under Section 148(1) of the Companies Act, which are audited by Cost Auditors.

Internal Auditors

The Company has appointed 14 (fourteen) Nos. of Chartered Accountant firms for carrying out internal audit of the Company for the year 2022-23.

Secretarial Auditor

In terms of Section 204(1) of the Companies Act, the Company has engaged M/s. DPSP & Associates, Company Secretaries, Bengaluru to conduct Secretarial Audit of the Company for the year 2022-23. The Secretarial Audit Report is annexed to this Report as Annexure - IV and forms part of Annual-Report.

The management''s reply on the qualification of the Secretarial Auditor, form part of Secretarial Audit Report, which is selfexplanatory.

Annual Secretarial Compliance Report

The Company has filed the Annual Secretarial Compliance Report for the year 2022-23 with the BSE Ltd and National Stock Exchange of India Limited. The report was received from a Practising Company Secretary and filed within the stipulated time as specified under Regulation 24A of the SEBI (LODR) Regulations.

CORPORATE GOVERNANCE REPORT

In terms of Regulations 34 read with Schedule V of SEBI (LODR) Regulations and DPE Guidelines, a report on Corporate Governance for the year ended March 31, 2023 has been prepared and annexed to this Report. The Company''s Secretarial Auditor has issued a Certificate on Corporate Governance, which is appended to the Corporate Governance Report.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

As per Regulations 34(2)(e) of the SEBI (LODR) Regulations, the Management Discussion and Analysis Report (MDAR) forms part of the Annual Report of the Company.

VIGIL MECHANISM

The Company has a Whistle Blower Policy approved by the Board. The details of the Whistle Blower Policy are explained in the Corporate Governance Report and the same is hosted on the Company''s website at www.hal-india.co.in.

Employees are encouraged to raise any of their concerns by way of whistle blowing and none of the employees have been denied access to the Chairman of the Audit Committee.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(3)(c) of the Companies Act, your Directors state that:

(a) In the preparation of the annual accounts for the year ended March 31, 2023, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(b) the directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as on March 31, 2023 and of the profit and loss of the Company for the year ended on that date;

(c) the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) the directors have prepared the annual accounts on a "going concern" basis;

(e) the directors have laid down internal financial controls which are being followed by the Company and that such internal controls are adequate and are operating effectively;

(f) the directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

ACKNOWLEDGEMENT

Your Directors are extremely thankful and acknowledge the excellent support extended by the Government of India, in particular the Ministry of Defence, Department of Defence Production, Defence Acquisition and Defence Finance as well as other Ministries of the Government of India in all the endeavours of the Company.

Your Directors also place on record their sincere appreciation towards the Company''s valued customers, in particular the Indian Defence Services, for the support and confidence reposed by them in the Management of the Company, and look forward to the continuance of this mutually supportive relationship in the future.

The Company wishes to place on record its appreciation for the cooperation extended and services provided by the Comptroller & Auditor General of India (C&AG), the Principal Director of Commercial Audit & Ex-officio Member, Audit Board, Statutory/ Internal Auditors, Cost Auditors, Secretarial Auditors, Bankers, Collaborators, JV Partners and Suppliers.

Your Directors are also thankful to the shareholders for the trust and confidence reposed in the Company and look forward to their continued support to propel the Company to greater heights.

Your Directors also wish to place on record their deep sense of appreciation for the committed services by the Company''s Executives and Workmen for progress and prosperity of the Company.

For and on behalf of the Board of Directors

Hindustan Aeronautics Limited

(C B Ananthakrishnan)

Director (Finance) & CFO Chairman and Managing Director (Addl charge)

Place : Bengaluru Date : July 19, 2023

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Mar 31, 2022

Your Board of Directors takes great pleasure in presenting the 59^th Annual Report on the performance of your Company ("the Company" or "HAL"), and its Audited Financial Statements for the Financial Year ended March 31, 2022, together with Reports of the Statutory Auditors and the Comptroller & Auditor General of India (C&AG) thereon.

FINANCIAL HIGHLIGHTS

The financial highlights for the year ended March 31, 2022 are summarised as under:

('' in Lakh except per equity share data)
PARTICULARS	2021-22	2020-21
Turnover	24,36,166	22,50,096
Exports	16,796	23,980
Profit Before Tax (PBT)	5,23,115	4,27,738
Provision for Tax	14,465	1,03,793
Profit After Tax (PAT)	5,08,650	3,23,945
R&D Expenditure	1,96,691	1,68,740
Earnings/ Share (in '')	152.11	96.88
Book Value / Share (in '')	576.10	459.59

During the year under review, the turnover of the Company increased by 8% to '' 24,36,166 Lakh from '' 22,50,096 Lakh of the previous year. The Profit before Tax for the year increased by 22% to '' 5,23,115 Lakh from '' 4,27,738 Lakh in the previous year. The Profit after Tax (PAT) increased by 57% to '' 5,08,650 Lakh from '' 3,23,945 Lakh in the previous year.

PRODUCTION HIGHLIGHTS

During the year, the Company has produced 34 numbers of new Aircraft and Helicopters, covering LCA Tejas, Dornier Do-228, ALH Dhruv and Light Combat Helicopter (LCH) in addition to the production of 80 New Engines and Accessories, at its various Divisions. The Company has also overhauled 207 Aircraft / Helicopters and 506 engines during the year.

ORDER BOOK POSITION

During the year, the Company has bagged a contract for production and supply of 15 Light Combat Helicopters (LCH) on March 30, 2022.

The Order Book position of the Company stands at '' 82,15,400 Lakh as on March 31, 2022.

DIVIDEND

During the year, your Company has declared and paid 1^st interim dividend of ''14 per share of ''10 each (140 %) for the financial year 2021-22, amounting to '' 46,814 Lakh.

Further, the Company has also declared and paid 2^nd interim dividend of '' 26 per share of ''10 each (260 %) for the financial year 2021-22, amounting to '' 86,941 Lakh.

The Board of Directors of the Company has recommended a final dividend of '' 10 per share of '' 10 each to comply the Guidelines of Department of Investment and Public Asset Management (DIPAM) on Capital restructuring with respect to payment of minimum dividend. The Final Dividend if approved by the shareholders, would involve cash outflow of '' 33,439 Lakh.

Thus, the total dividend including final dividend for the financial year 2021-22 would be '' 50 per equity share (500%), amounting to '' 167,194 Lakh.

In terms of the provisions of Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 [SEBI (LODR) Regulations] and the Guidelines of DIPAM, your Company has formulated a Dividend Distribution Policy and the same is available on the Company''s website at https://hal-india. co.in/Common/Uploads/DMS/Dividend Distribution Policy.pdf

RESERVES

During the year under review, ''31,596 Lakh was transferred to Research & Development Reserve and ''3,57,986 Lakh to General Reserves.

BORROWINGS

As on March 31,2022, the short term and long term borrowings of the Company was Nil.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The Company has in place adequate internal financial controls for ensuring efficient conduct of its business. A detailed note on internal financial controls is provided in the Management Discussion and Analysis Report.

LOANS, GUARANTEES AND INVESTMENTS

Details of Loans, Guarantees and Investments as covered under the provisions of Section 186 of the Companies Act, 2013 form part of Notes to the Financial Statements.

RELATED PARTY TRANSACTIONS

During the year, your Company has entered into transactions with related parties. In line with Related Party Transactions (RPTs) Policy, approval of the Audit Committee and Board, as the case may be was obtained for RPTs. As per the threshold mentioned in the Policy, there were no material related party transactions with the Company''s Promoters, Directors, Management or

their relatives, which could have had a potential conflict with the interests of the Company. The disclosures related to RPTs in accordance with the applicable accounting standards are provided in Clause No. 45A of the Notes to the financial statements. Details of contract(s) or arrangement(s) with related parties referred to in Section 188(1) of the Companies Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014, in the prescribed form AOC-2 is attached to this Report as Annexure-I.

CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements of your Company and its Joint Venture Companies and Subsidiary Companies for the year ended March 31, 2022 have been prepared in accordance with the provisions of Section 129(3) of the Companies Act and applicable Accounting Standards, and form part of this report.

Pursuant to the first proviso of Section 129(3) of the Companies Act read with Rule 5 of the Companies (Accounts) Rules, 2014, a separate statement containing salient features of the Financial Statements of Subsidiaries / Associate / Joint Venture Companies in Form AOC-1 is appended to this report, which forms part of the Financial Statements. The separate Audited Financial Statements in respect of the Subsidiaries are also available on the website of the Company at www.hal-india. co.in.

SUBSIDIARY/ ASSOCIATE/ JOINT VENTURE COMPANIES

As on March 31, 2022, your Company has two Subsidiaries including one wholly owned Subsidiary and fourteen Joint Venture Companies (JVCs) including two Not-for-Profit Companies (Section 8 Companies).

Pursuant to the provisions of Section 134(3)(q) of the Companies Act read with Rule 8(1) of the Companies (Accounts) Rules, 2014, a Report on the performance and financial position of each of the Joint Venture Companies and Subsidiary Companies is attached to this Report as Annexure-II.

SIGNIFICANT ACHIEVEMENTS

Significant achievements of the Company during the year are as follows:-

• HAL has bagged a contract for production and supply of 15 Light Combat Helicopters (LCH) on March 30, 2022.

• Handed over 75^th ROH Su-30 MKI aircraft to IAF on January 25, 2022. HAL has overhauled 20 Su-30MKI aircraft attaining the peak capacity envisaged against capacity augmentation project in the current year.

• Completed Mid-Life upgrade of two Do-228 aircraft for Coast Guard in 2021-22 against deliveries originally scheduled to start from 2022-23 as per Contract.

• Commenced Performance Based Logistics (PBL) operations of ALH Mk III (MR) on February 10, 2022 for the first batch of ALH Mk III (MR) inducted by CG under PBL support regime.

• The green field helicopter factory of HAL at Tumakuru is in place, with stage 1 & stage 2 infrastructure facilities at an investment of '' 47,637 Lakh by the company.

• The Company has made investment of ''1,20,000 Lakh in UP Defence Industrial Corridor (UPDIC) towards enhancement of capacity & capability at Lucknow, Korwa and Kanpur Divisions of HAL.

• In-line with Government''s vision to boost defence exports to friendly foreign countries, the Company has signed the contracts with Government of Mauritius (GoM) for export of one passenger variant Do-228 (PVD) on September 10, 2021 and for one Advanced Light Helicopter (ALH) Mk III helicopter on January 19, 2022. Further, HAL has already completed the production and delivery of this Do-228 PVD for Mauritius ahead of contractual delivery commitment.

• The Intermediate Jet Trainer (IJT), designed and developed by HAL for stage -II training of IAF pilots has successfully demonstrated the capability to carry out six turn spins, to the LH and RH sides, which is the most crucial stage in flight trials.

• RCMA cleared the introduction of foldable Tail boom and Horizontal Stabilizer on ALH Mk-III Wheel Version as a Technology Demonstrator.

• Indigenously designed and developed ''Air Data Computer ADC 3600A CVL1 (ADC-ITSOA)'' which is ''Environmentally Qualified'' with in-house developed application software certified for civil platforms of aircraft and helicopters.

• Integrated SPICE 2000 weapon on Mirage 2000 aircraft with Mission Computer MC2 which is designed and developed by the Company, through MIL 1 553 Bus.

• The Company has successfully integrated and flown ''Lithium Main Battery'' on HTT-40 and making it first time in the continent using lithium battery for military aviation.

• Indigenously designed and developed Solid State Weapon Control System (SSWCS) for management of weapons on Jaguar aircraft as a replacement to the ageing Armament Main unit (AMU).

• Successfully completed the design, development and certification of Solid State Cockpit Voice and Flight Data Recorder (SSCVFDR) and Control Unit (CU) for Hindustan-228 aircraft.

• The Company has in-house developed multi-platform adaptable generic simulator, which is capable of flight simulations for predictions and replay of flight dynamics

with designer''s synthetic input as well as Pilot-in-loop inputs for various platforms using the same cockpit controls and associated peripherals utilizing mature and accurate 6DOF model of the respective aircraft.

• The heaviest Semi-Cryogenic propellant tank (SC120-LOX) ever fabricated by HAL was delivered to Indian Space Research Organization (ISRO) on October 5, 2021.

CURRENT PROJECTS AND PROGRAMS

During the year, the Company has produced Light Combat Aircraft (LCA) Tejas, Dornier Do-228 Aircraft (both civil & military), Advanced Light Helicopter (ALH) Dhruv, Light Combat Helicopter (LCH), engines, accessories and aerospace structures against the various customer orders. HAL has launched production of Light Utility Helicopter (LUH) against Letter of Intent (LoI) received from customers.

As a major step towards civil operations, the Company also signed a lease agreement with Alliance Air Aviation Limited on September 26, 2021 for the supply of two Civil Do-228 aircraft for regional operations in Arunachal Pradesh, aimed at giving boost to India''s Regional Connectivity Scheme (RCS). First commercial flight on the Dibrugarh-Pasighat route commenced on April 12, 2022 by Alliance Air Aviation Limited.

The Company has also embarked on DGCA Type Certification (TC) of 19 seater Hindustan-228 aircraft, a Do-228 Civil variant. The first flight of the aircraft was held on December 26, 2021 and Type Certificate from DGCA has been received on May 19, 2022.

DEVELOPMENT PROGRAMS

The Design team of the Company has made continuous efforts to propel the development programs by developing various technologies and significantly moved towards the realization of the projects viz. Basic Trainer Aircraft (HTT-40), Light Utility Helicopter (LUH), Light Combat Aircraft (LCA)- MK1A, Indian Multi-Role Helicopter (IMRH) and Development of Engines. The progress achieved in respect of these projects during the year is given below:-

• BASIC TRAINER AIRCRAFT (HTT-40)

HTT - 40 is the Basic Trainer aircraft currently being indigenously designed and developed by HAL. HTT-40 would be used for basic flight training, aerobatics, instrument flying and close-formation flights whereas its secondary roles would include navigation and night flying. Features of the aircraft include Air conditioned cockpit, Tandem seating, Zero-Zero ejection seats and Multifunction Displays. The aircraft has the capability to be converted to armed / weaponised version at a later stage. The program has been taken up with internal funding. A total of 3 prototypes have been built which includes two flying prototype and one Structural Test Specimen (STS).

During the year, the aircraft has successfully completed erect spin certification. All PSQR performances met with AUW

3050kg. Controls optimized and 9 Turn Spins demonstrated on clean aircraft. The PSQR validation trials by IAF completed. In February, 2021, Request for Proposal (RFP) for HTT-40 aircraft received from IAF and response has been submitted in April 2021 which is presently under evaluation.

• LIGHT COMBAT AIRCRAFT (LCA) Mk 1A

LCA Mk1A is an improved variant of indigenously developed LCA MK1, presently being developed by HAL. It has additional features and improvements such as Self Protection Jammer, Active Electronically Scanned Array (AESA) RADAR, Beyond Visual Range (BVR) Missile.

Contract for the supply of 83 LCA Mk1A to IAF was signed during Aero India 2021 and production activities have been launched.

• LIGHT UTILITY HELICOPTER (LUH)

The LUH is a single engine, 3 Ton weight class helicopter having Glass Cockpit with Multi-Function Displays. The helicopter is capable of flying at 220 Kmph; service ceiling of 6.5 Km and a range of 350 Km with 500 kg payload. Three flying prototypes have been built and were extensively flight tested. Initial Operational Clearance (IOC) for LUH IAF Version was accorded on February 7, 2020 and for the Indian Army Version on February 5, 2021.

During the year, Hot and High altitude flight trials with new tail rotor system to further improve performance requirement completed at Leh. The Company received Letter of Intent (LoI) for 12 helicopters and production activities have commenced.

The green field helicopter factory at Tumakuru for manufacturing of LUH is also in place.

• INDIAN MULTI ROLE HELICOPTER (IMRH)

The Company has undertaken the design and development of 10-15 ton class IMRH for Indian Air Force, Indian Army and Indian Navy. The Naval variant of IMRH is christened Deck Based Multi Role Helicopter (DBMRH).

IMRH and DBMRH would be designed to meet the requirement of all the three military services and its future extension to civil market to cater to off shore operations, utility, VVIP transport etc., to enlarge the helicopter business through production as well as MRO activities.

Currently, the preliminary design phase is under progress. HAL has completed Phase 1 of wind tunnel testing of IMRH-IAF scaled model and results are satisfactory. Phase-2 of Wind Tunnel testing are under progress.

In a significant boost to Prime Minister''s vision on ''Aatmanirbhar Bharat Abhiyan'', 18 major platforms have been identified by the Ministry of Defence for industry led R&D under various routes, wherein private industry will be encouraged to take up design and development of military platforms and equipment. The Indian Multi Role Helicopter (IMRH) is identified as one of

these 18 platforms to be taken up through Special Purpose Vehicle (SPV) model. Accordingly, HAL has issued the Expression of Interest (EoI) in April, 2022 for selection of SPV Partner.

• 25 kN TURBOFAN ENGINE (HTFE-25)

Design and development of a 25kN thrust class turbofan engine, which can be used on Basic/ Advanced military trainers, on small business jets and also large UAV applications is under progress at HAL. The engine can be used on a 5-ton weight class aircraft in single engine configuration and on aircraft of up to nine- ton weight class with twin-engine configuration. Two core engines have been produced so far and are undergoing development trials. Cold weather trials and Hot weather high altitude trials were completed at Leh.

Full engine (Technology Demeonstrator) has been built and first run completed successfully. Completion of acceleration trials upto 55% of the speed achieved.

• 1200 kW TURBOSHAFT ENGINE (HTSE-1200)

The 1200KW Turbo shaft engine would be used as power plant for 3 to 6-ton category helicopters. One technology demonstrator of HTSE-1200 engine was built and it is presently under testing.100% speed run achieved on core engine. Sea level trials of core engine completed successfully.

High altitude cold weather trials of Jet Mode Engine at Leh and High altitude hot weather trials of Jet Mode Engine at Leh, South Pullu and Khardung-La completed. Run of Power mode engine to 80% of the speed achieved.

• HAWK-i

Hawk India (Hawk-i) is the indigenously upgraded Hawk Mk 132 aircraft with enhanced operational and training capabilities. All design and software development activities completed. Development of all Avionics LRUs (Viz. RADALT, IFF Mk XII, SSDVRS, CMDS, Softnet Radio, INCOM, DTS, SAAW, R118 RWR, VACS, ICU & CSIO-HUD) completed. Flight trials also completed. The aircraft is being offered to IAF and other prospective customers.

RESEARCH AND DEVELOPMENT EFFORTS

HAL has continued its efforts towards Design and Development of new platforms/ products / technologies and activities to enhance its capability with a view to bring technological superiority to its products and in order to cope up with the future technological challenges. These efforts have resulted in successful demonstration of deck based operations capability and integration of Medical Intensive Care Unit (MICU) on ALH MkIII, capability of IJT to carry out LH and RH side six turn spins and completed the erect spin certification flight trials on HTT-40 aircraft. HAL is also progressing the design & development of Combat Air Teaming System (CATS) Warrior, which was

launched during Aero India 2021 and HAL has commenced ''Low Speed Wind Tunnel Tests''.

During the year, the Company has incurred a total R&D expenditure of '' 1,96,691 Lakh which is 8.07% of the Turnover. The company has transferred a sum of '' 31,596 Lakh (10% of Operating PAT) to R&D reserve for contribution to R&D corpus during the year 2021-22.

During the year, HAL has filed 102 IPR applications which make cumulative number of 2031 IPRs filed by Company. Further, 147 IPRs have also been granted during the year taking cumulative IPRs held by the organization to 611. (Patents - 64, Industrial Designs - 102, Copyrights - 443, Trademark - 2).

BOARD AND ITS COMMITTEE MEETINGS

During the year, 12 (Twelve) Board Meetings were held and the maximum interval between any two meetings was not more than 120 days.

The details of meetings of the Board and Committees thereof held during the year are furnished in the Corporate Governance Report, which forms part of this Report.

COMMITTEES OF THE BOARD

As on March 31,2022, the Board has five Statutory Committees namely Audit Committee, Nomination & Remuneration Committee, Corporate Social Responsibility & Sustainable Development Committee, Stakeholders Relationship Committee and Risk Management Committee.

A detailed note on the composition, terms of reference and meetings of the Board and its Committees is provided in the Corporate Governance Report.

CHANGES IN BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

The following changes took place in the Board of Directors and of Key Managerial Personnel (KMP) of your Company during the financial year:

Appointment

Dr. Divya Gupta, was appointed as Part -Time Non-Official (Independent Director) on the Board of the Company w.e.f December 28, 2021.

Cessation

• Rear Adml K C Sekhar and Dr Malla Reddy ceased as Independent Director on the Board of the Company due to Completion of their tenure on July 23, 2021.

• Shri M S Velpari ceased as Director (Operations) on the Board of the Company due to his superannuation on February 28, 2022.

DECLARATION OF INDEPENDENCE

The Company has received declarations from the Independent Directors of the Company under the Companies Act confirming that they met the criteria of independence as prescribed under Section 149(6) of the Companies Act and Regulation 25(8) of the SEBI (LODR) Regulations and they have also complied with the Code for Independent Directors as prescribed in Schedule IV of the Act.

COMPANY''S POLICY ON DIRECTORS'' APPOINTMENT AND REMUNERATION

The appointment, tenure and remuneration of Functional Directors including Chairman and Managing Director (CMD) are determined by the Government of India. The Terms & Conditions of appointment, including the period of appointment, the Scale of Pay and other entitlements are notified by the Government of India.

Government Nominee Directors are appointed by the Department of Defence Production, Ministry of Defence and they are not entitled to any remuneration / sitting fees.

Independent Directors are appointed by the Government of India and they are entitled to sitting fees for attending the Board / Committee meetings as prescribed by the Board in adherence with the statutory Rules and Regulations.

In view of the Gazette Notification No GSR 463 (E) dated June 5, 2015 of the Ministry of Corporate Affairs (MCA), your Company, as a Government Company, is not required to frame a Policy on Directors'' appointment and remuneration, including criteria for determining qualifications etc. under Section 134(3) (e) of the Companies Act.

BOARD EVALUATION

Pursuant to the Notification No. 463 (E) dated June 5, 2015 issued by the Ministry of Corporate Affairs, the statement indicating the manner in which formal annual evaluation has been made by the Board of its own performance and that of its committees and individual directors is not required for your Company, as the performance of directors is evaluated by the Administrative Ministry.

ANNUAL RETURN

In accordance with the provisions of the Companies Act, 2013, the Annual Return in the prescribed format has been hosted on website of the Company at https://hal-india.co.in/Common/ Uploads/DMS/Form MGT 7 21 22.pdf

COMPLIANCE WITH SECRETARIAL STANDARDS

The Company complies with all applicable mandatory secretarial standards issued by the Institute of Company Secretaries of India.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

As a defence Central Public Sector Enterprise (CPSE), your Company was granted exemption vide Notification GSR No.680 (E) dated September 4, 2015, from the disclosure of information with respect to conservation of energy, technology absorption, foreign exchange earnings and outgo under the provisions of Section 134(3)(m) read with Rule 8(3) of the Companies (Accounts) Rules, 2014.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Pursuant to the provisions of Section 135 of the Companies Act and Companies (Corporate Social Responsibility Policy) Rules, 2014 and Amendment thereof & DPE Guidelines, the Company has undertaken various activities during the year as per its CSR Policy. The projects / programmes / activities taken up are in line with Schedule VII of the Companies Act. The thrust areas under CSR are healthcare including combating against COVID-19, Skill Development for Employment Enhancement & Self Employment, Education etc. The other areas in which support extended were Sanitation, Drinking Water, Environment Sustainability, Sports Development etc. The Company has spent an amount of ''7,827 Lakh under CSR for the Financial Year 2021-22 against the CSR budget/ obligation of ''8,100 Lakh.

The Corporate Social Responsibility Policy, Composition of the Committee and CSR Projects/ Activities of the Company is available on the Company''s website at https://hal-india. co.in/Corporate%20Social%20Responsibility/M 412. Salient features of the Policy form part of the Annual Report.

Annual Report on CSR activities undertaken by your Company during the year 2021-22, pursuant to Section 135 of the Companies Act, 2013 read with Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended, is attached to this Report as Annexure-III.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT

In terms of amendment dated May 05, 2021 to Regulation 34(2)(f) of SEBI (LODR) Regulations, the Company has prepared Business Responsibility and Sustainability Report (BRSR) for the year 2021-22 on Environment, Social and Governance (ESG) parameters in the prescribed format and appended to this Report.

DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY

The Company has a Board approved Risk Management Policy, in place. The policy aims at elimination or reduction of risk exposures through identification and analysis of various types of risks and facilitating timely action for taking risk mitigation measures. The policy envisages that all programs, project

reviews will highlight the progress of risk mitigation plans till the closure and signing off the mitigation plans.

In line with Regulation 21 of the SEBI (LODR), Regulations, 2015, the Board of Directors had constituted the Risk Management Committee for monitoring and reviewing of the risk management plan and other such functions as it may, deem fit including cyber security, in line with applicable laws.

SIGNIFICANT AND MATERIAL ORDERS

There are no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and the operation of the Company in future.

PUBLIC DEPOSITS

Your Company has not accepted any deposit during the year. Further, there was no outstanding deposit and/or unpaid or unclaimed principal amount or interest against any deposit either at the beginning or at the end of the Financial Year 2021-22.

ISSUE OF EQUITY SHARES WITH DIFFERENTIAL RIGHTS

During the year, the Company has not issued any equity shares with differential rights as to dividend, voting or otherwise.

MATERIAL CHANGES SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENTS

No material changes / commitment of the Company have occurred after the end of the Financial Year 2021-22 and till the date of this report, which affect the financial position of the Company.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

The provisions of Section 197 of the Companies Act and the relevant Rules regarding particulars of employees drawing remuneration in excess of the limits specified are exempted for Government Company, in view of the Gazette Notification No. G.S.R. 463 (E) dated June 5, 2015 issued by the Ministry of Corporate Affairs, Government of India.

MOU WITH GOVERNMENT

Your Company signs annual Memorandum of Understanding (MoU) with the Ministry of Defence (MoD), Government of India (GoI).

The Company has achieved "Excellent" performance rating with a score of 93.49 for the financial year 2020-21 against MoU signed with the Ministry of Defence, Government of India.

INDIGENISATION

The Company has put in concerted efforts on indigenisation of components, accessories and systems required to

manufacture as well as repair & overhaul of aircraft, engine and associated accessories. Every year, HAL indigenizes various items/ components and systems of foreign origin fitted on HAL platforms through in-house capabilities or with the help of local vendors to reduce dependence on imports, savings in foreign exchange and manage obsolescence, thus fostering self-reliance through ''Make in India''.

In line with the Atmanirbhar Bharat Abhiyan of Govt. of India, HAL indigenised 1412 no. of items with anticipated annual foreign exchange saving of ''159.6 Crore during the FY 2021-22. To align with national priorities and ensure inclusive growth, HAL has been also encouraging Indian private sector participation in the indigenization/ Make in India efforts to undertake various high value systems/equipment of foreign origin fitted on HAL platforms.

The other major initiatives / achievements during the year are as under:

> Indigenisation under MoD''s ''Shelf of Projects'' scheme:

MoD''s ''Shelf of Projects'' is an ambitious scheme to enhance indigenous capability in the country in defence sector where in key projects involving high technologies have been identified for indigenization in a given time frame. The Company has identified major items for ''Shelf of Projects'' scheme to be developed indigenously for its rotary platforms. Upon successful prototype development and final acceptance after trial and testing, there will be an embargo on import for these items. In this regard, the Company has started vendor outreach activities for indigenous development of these items. This initiative is an important step towards self-reliance in Defence Sector.

> Indigenisation of Major LRUs of various Platforms:

During the year, the Company has also taken initiative for indigenous development of Line Replaceable Units (LRUs) currently being imported for its major platforms. In this regard, the Company has put concerted efforts towards finalization of roadmap for indigenisation of LRUs. These items are planned to be indigenized through In-house, Make-I, Make-II, DRDO/ ADA route etc. in the coming years.

> Indigenisation through Make-II procedure:

The Company has already started indigenization through HAL Make-II (Industry Funded) procedure which is in compliance of the Make-II framework promulgated by MoD and envisages the assured order quantity after successful development of items through private vendors. The Company has made significant progress in this regard and has issued Expression of Interest (EoI) for around 800 nos. of items cumulatively in a phased manner to take up for indigenisation.

changes were made to the existing HAL Outsourcing manual,

to ease up the process of taking up Outsourcing through GeM.

EXPORTS

Initiatives taken to boost Exports during the year are as under:

> Concluded contracts with Mauritius Police Force under Government of India supported EXIM Bank Line of Credit for supply of following platforms:

(a) one Passenger Variant Do-228 (PVD) aircraft and

(b) one Advanced Light Helicopter (ALH) Mk.III helicopter

> The contract of Do-228 was exchanged between High Commissioner of India to Mauritius and Minister of Foreign Affairs, Govt. of Mauritius during an official ceremony at Mauritius held on September 13, 2021.

> Signed Contract with Nigerian Army Aviation for ab-initio training of six helicopter pilots and the training was completed successfully. Follow-on Contract for Phase 2 Training has also been signed by Nigerian Army.

> Light Combat Aircraft (LCA), Tejas was shortlisted by Royal Malaysian Air Force (RMAF) and an RFP was issued to HAL. The RFP was responded and presently the evaluation of the proposal for 18 nos. LCA FLIT for RMAF is under progress.

BUSINESS DEVELOPMENT

The following Initiatives taken for Business Development

during the year:

> HAL is in discussion with Lockheed Martin Corporation-USA, Boeing-USA, IAI-Israel, Saab Aeronautics-Sweden, Airbus-Germany, Dassault Aviation-France, Rolls Royce-UK, GE Engines-USA and others for possible business co-operation in manufacturing of system, subsystem, final assembly & integration of aircraft in India under Indigenization and Atmanirbhar scheme of GoI.

> MoU with Rolls Royce for extending RoH services for Adour 871 Engine operating overseas.

> Signed License agreement for repair and overhaul of LM2500 Marine Gas Turbines operated by South East Asian countries.

> MoU signed between HAL and Lockheed Martin towards meeting Offset commitments related to Indian MoD procurements.

> Interaction with Boeing for ToT/Co-development projects, under offsets, for refinement of HAL platforms with a view to enhance customer comfort.

> HAL and Alliance Air signed Dry Lease Agreement for two Do-228 aircraft on September 26, 2021 which are now being operated in N-E region.

> Uploading of imported items in Srijan Defence Portal:

In continuation of its effort to support Indian Industries with opportunities for Make-In-India in Defence, the Company has uploaded cumulatively more than 13000 nos. of imported items in Srijan Defence Portal of MoD, GoI.

> Organising/ participation in Seminars, Conferences and Exhibitions on Indigenisation / Vendor Development program

To keep abreast Indian Vendors for opportunities available at HAL for indigenization, the Company organized and participated in number of seminars/ conferences/ vendor development meets mainly through virtual mode. Participants were also briefed about the Indigenisation procedure and support provided by the Company during indigenization.

INITIATIVE FOR ATMANIRBHAR BHARAT

During the year, the Company has produced 34 new aircraft/ helicopters which includes 30 indigenous aircraft/ helicopters (namely ALH, LCH and LCA), which is an immense contribution towards Atmanirbharat. These are state-of-the-art platforms in its class, the development of which has obviated the need for importing platforms from abroad, thus not only saving significant FE to the country but ensuring availability of lifecycle support within the country. Accordingly, operations of HAL by way of manufacturing and overhaul of aircraft, engines and accessories in India, has been resulting in annual FE saving to the tune of USD 2 Billion to the Country, year on year.

As a continuous pursuit towards greater self-reliance, imported LRUs, systems, components etc fitted on indigenous platforms are being taken up for indigenization under various routes through in-house as well as private industry involvement under Make I, Make II etc. In FY 2021-22, a total of 1412 items have been indigenized.

OUTSOURCING

As part of the "Make in India" drive and the Atmanirbhar Bharat Abhiyan, HAL has been nurturing and developing a vibrant indigenous aerospace & defence ecosystem. In its path of moving towards being a lead integrator, HAL has been striving to develop Tier-II and gradually Tier-I suppliers over a period of time while retaining the core areas as prime integrators. HAL has been taking up outsourcing diligently even in the new, and upcoming projects, so as to turn the suppliers into reliable business partners over time.

Furthermore, to provide the required impetus and to address the concerns in taking up Outsourcing through GeM portal, training/ knowledge sharing sessions were organized for the officers concerned. Outsourcing vendors were requested and encouraged to on-board the GeM portal. Necessary policy

> HAL is progressing on the design & development of Amphibian variant of Do-228 aircraft, considering the requirement for such aircraft in domestic and international markets.

VENDOR DEVELOPMENT

During the year, the Company has taken several vendor development initiatives to increase the number of vendors.

During the year, the Company has conducted 21 Vendor Development Programmes, of which 19 were for Micro & Small Enterprises (MSEs) & 2 were for MSEs owned by SC/ST Entrepreneurs.

The Company has registered with RXIL and Mynd Solution for enabling payments through TReDS platform to MSMEs. HAL has already made payments through RXIL & Mynd platform. All efforts are made to bring the MSMEs on TReDS platform.

The Company has registered with MSME SAMBANDH portal and the procurement details are being updated monthly in this Portal. The Company has also registered with MSME SAMADHAAN portal and the same is being monitored regularly for resolution of payment complaints of MSEs, if any.

Your Company is a part of Public Procurement Portal, Government e-Marketplace (GeM portal) and registered as a Buyer in GeM Portal and taking up procurement of items which are available in GeM Portal. Also procuring several items which are not available in GeM Portal utilizing Custom Bid Module/ BoQ Module extensively. All our vendors are being persuaded to on board on the GeM portal to utilize the facilities available in the GeM portal.

HAL has implemented company-wide e-Procurement system through its own e-Procurement portal for all tenders valuing more than ''2 lakhs. A 24X7 e-Procurement help desk has been established to provide information, support, training, operational issues/clarifications to the vendors.

HAL has implemented the Public Procurement (Preference to Make in India), Order 2017 and its amendments issued vide letter No.P-45021/2/2017-PP(BE-II) dt.May 29, 2019 by Department for Promotion of Industry and Internal Trade (DPIIT) to encourage ''Make in India'' and promote manufacturing and production of goods & services in India.

PROCUREMENT FROM MICRO & SMALL ENTERPRISES (MSEs)

The Company has implemented the Public Procurement Policy for Micro and Small Enterprises (MSEs) Order, 2012 & its amendments issued by Ministry of MSME vide Order No.21

(22)-2018-MA dated November 9, 2018. The Company has achieved more than the mandated procurement of 25% from MSE entrepreneurs (excluding specific defence procurement as per Sl.No.14 of the policy). During the year, the total value of procurement including\ outsourcing made from MSEs is ''1,18,554 Lakh.

INTEGRITY PACT (IP)

Your Company has system of signing of IP with vendors for all procurement of Goods, Services & Works / contracts having value of '' 5 Crore and above. Only those Vendors / bidders, who commit themselves to IP with the HAL would be considered competent to participate in the bidding process. Further, to encourage competition in HAL procurement and to reduce processing lead time, HAL has implemented the Omnibus Integrity Pact with effect from January 1, 2018. This Omnibus IP shall be valid upto 5 years and the same can be proposed by bidder for consideration against any offers submitted by the vendor during the validity period of Omnibus IP.

HUMAN RESOURCE DEVELOPMENT

The strength of employees as on March 31, 2022 stood at 25,412.

As on March 31, 2022, a total of 3324 Apprentices were engaged in the Company, comprising 9.2% of the total employee strength including contractual staff.

EMPLOYEE WELFARE

Company extends welfare benefits to the employees and their dependents by way of comprehensive Medical Facilities, Housing Facilities, Canteen Facilities (for employees only), and Educational facilities for employee''s Children, Sports Facilities, etc.

Keeping in view the COVID-19 pandemic which had unfolded an unprecedented situation creating a sense of uncertainty among people, the Company had introduced a Scheme during June 2021, which would be effective from 01/01/2020, to ensure regular monthly monetary support ranging from '' 15,000/- PM to '' 50,000/- PM depending upon the Grade / Scale of the employee, to the dependent family members of the deceased employees upto the notional date of superannuation thereby enabling them to lead a normal life. Further, to provide an opportunity to Executives to avail Leave in the form of Sabbatical, HAL Sabbatical Scheme has also been introduced during the year in the Company. The Scheme provides an Officer to avail Leave without pay upto a maximum period of 2 (two) years in maximum of 2 (two) spells during the service in the Company.

EMPLOYEE RELATIONS (ER) / INDUSTRIAL RELATIONS

The Employee Relations Scenario remained peaceful and cordial during the year. Smooth relations were maintained between the Management and the Unions / Associations by having effective communication, so as to eliminate any scope of conflicts and misunderstandings and thus facilitate maintenance of Industrial Harmony. Meetings with the representatives of the Recognized Unions / Officers Associations at the Divisional, Complex & Corporate Levels were held to discuss various issues.

Plant Level & Shop Level Committees with representatives from the Management / Union are functioning in the Divisions to discuss and resolve production related matters. In order to address Employee Grievance / Representations, Grievance Redressal Mechanisms are also in place in the Company.

RAJBHASHA IMPLEMENTATION

In accordance with the Guidelines issued by Department of Official Language, Ministry of Home Affairs, New Delhi, constant efforts are being made by all the Divisions of the Company towards implementation of the Official Language Policy (OL Policy).

HAL Corporate Office was conferred with ''Rajbhasha Nishpadan Sreshthta Puraskar'' for 2020-21 by Town Official Language Implementation Committee (Undertakings), TOLIC, Bengaluru.

Inspection of HAL Corporate Office was done by Committee of Parliament on Official Language on December 30-31, 2021. In this inspection, HAL Corporate Office was the Nodal Office for this Inspection.

As an Initiative in Official Language Implementation and to make aware of the Employees towards Statutory rules of Official Language, an OL Online Quarterly E-Margdarshika Rajbhasha Karyanvayan -Gati Evam Disha, is being published from April 2021. In addition HAL Connect E-news Letter is also being issued in bilingual on weekly basis.

In accordance with the Guidelines issued by the Department of Official Language, Ministry of Home Affairs, New Delhi, efforts have been made to prepare all the HAL Manuals in bilingual. Additionally, all the Form/ Formats being used in HAL have also been made in bilingual for day to day use in Official work.

A Special Hindi Webinar/ Workshop on ''Bhashini - An Introduction and its Use'' was organized for OL Staff and nominated Employees on March 10, 2022.

Hindi Fortnight was celebrated from September 14 to September 28, 2021 by all the Divisions of the Company as per directives issued by Department of Official Language, Ministry of Home Affairs, New Delhi.

Employees are being encouraged through Monthly Incentive Scheme related to Official Language. Efforts have been made to make Executive Notings in bilingual in our E-Filing System.

The progress made towards OL Implementation by the Divisions of the Company was reviewed at Corporate level. Inspections of various Divisions related to Official Language have been conducted successfully by Corporate Office from time to time to provide guidance in this regard.

The Department of Official Language, Ministry of Home Affairs have assigned the responsibilities of Town Official Language Implementation Committee (TOLIC) to the Nasik Division of the Company and they are conducting TOLIC Meetings successfully.

PROHIBITION OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE

The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 has been notified in the Company. In line with the Guidelines received from time to time, necessary actions have been taken to prevent Sexual Harassment of Women at Workplace. The HAL CDA Rules applicable to Officers and the Certified Standing Orders applicable to Workmen have the required provisions in this regard.

Internal Complaints Committees as per Section 4 of the Act have been put in place. Information for the year 2021-2022 in terms of Section 22 of the Act, is as indicated below:

(i)	Number of Cases pending as on 01/04/2021 :	4
(ii)	Number of Complaints of Sexual : Harassment received in the Financial Year 2021-2022	1
(iii)	Number of Complaints disposed of during : the Financial Year 2021-2022	5
(iv)	Number of Cases pending as on 31/03/2022 : & its status	-

In line with the Govt.''s directions, Awareness Programme on Sexual Harassment were also conducted at Divisions / Offices on December 09, 2021 to commemorate the 8^th Anniversary of the notification of Legislation on Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

INFORMATION TECHNOLOGY (IT) INITIATIVES

During the year, your Company has taken many IT initiatives towards improving digital journey. Some of the major IT initiatives and achievements of the Company during the period are:

• Project Parivartan - ERP upgradation: Project Parivartan aimed at Centralization and standardization of ERP System across the Company is being implemented. Various milestones that have been completed during current Financial Year include finalization of Project Charter, establishment of test & development environment, As-is study and documentation of business processes.

• Implementation of Budgetary Quotation (BQ) Portal for IAF: An online BQ portal was implemented Companywide for receipt of IAF budgetary quote request, assignment to Divisions, estimation of cost, approval of BQ and intimation of quote in online mode to IAF

• Hosting of CRM Website for Do-228 Support for Civil Customers: An online System for supporting Do 228 Civil operations has been developed and hosted on HAL Website to facilitate direct online placement of RMS Orders for spares / services, capture of customer issues/ queries and resolution.

• Online Claim System for Defence Customers:

An online system for submitting of claim by HAL and acknowledgement by payment agency has been conceptualized and development is under progress. The System will facilitate submission of claim invoice and other supporting documents and capture payment status in online mode. This will facilitate a speedy and paperless mode for processing of bills and tracking status of payments.

• HAMS - HAL Aviation Maintenance Software has been implemented for Performance Based Logistics (PBL) Contract of ALH for Indian Cost Guard. This fully inhouse developed software comprised of modules such as Fleet Management, Flight Operations, Maintenance Management, Quality & Safety, Inventory Management, Human resources and Document Management.

• Paperless Office: Paperless Office initiative has been started across the Company with the objective of elimination of hard copy approvals and reports.

• System for financial assistance for dependents of deceased employees: A software system developed and implemented to provide financial assistance to the families of the deceased employees for capturing of requests, verification and payment in paperless mode on fast track basis.

• IoT- Integration: Few initiatives have been undertaken towards Internet of Things (IoT) Integration at various Divisions of HAL as under.

- System to capture the process parameters during manufacturing operations in online mode by directly reading the recorders data.

- Monitoring the Temperature and Humidity of Shelf Life item stores on Real Time basis with in-house developed IoT Device.

- Automatic controlling of ovens for recording temperature during operation and alerting the user after completion of operation.

• Cyber Security: Secured Web gateway is being deployed for protecting the IT mobile assets.

AWARDS & RECOGNITIONS

During the year, your Company has received various Awards

and Recognitions. Some of the important accolades conferred

to the Company are as under:

• Third Prize in "National Water Awards" - 2020-21 under "Best Industry for CSR activities" category instituted by Ministry of Jal Shakti, Department of Water Resources, River Development and Ganga Rejuvenation.

• Wings India Award 2022 under "Aviation Innovation Award" category by FICCI.

• "The Institution of Engineers (India) (IEI) Industry Excellence Award 2021" by virtue of demonstrating a higher order of business excellence.

• "Vayoshreshtha Samman - 2021" Award under the Category "Best Public Sector Organisation in promoting the well-being and welfare of Senior Citizens" by the Ministry of Social Justice and Empowerment.

• Awarded 1^st Rank (Gold Category) under CPSE category by GeM Team for the order value placed by the Company through the GeM portal.

• "51^st EEPC (Engineering Exports Promotion Council) India National Awards" for Star Performers for the year 201819 in the product Group Defence Related items.

VIGILANCE

Your Company has a well-established vigilance department headed by the Chief Vigilance Officer (CVO). Vigilance Officers and Staff are posted to the Corporate Office and all the Divisions and Complex Offices of the Company.

The major vigilance activities carried out by Vigilance department are as under:

i. Preventive Vigilance:

> System studies were carried out in various areas and appropriate measures were suggested to streamline the procedures.

> A total of 47 sessions were conducted on various topics. Key Note address / Talk by eminent speakers was organized to spread Vigilance awareness among employees.

> Monthly Lecture/Achievers Series - A new initiative of monthly lecture/achievers series has been commenced to spread awareness among stake holders on the topics related to vigilance administration, personality development, etc. from distinguished contributors / speakers in the field.

ii. Vigilance Publications:

> Two volumes of in-house Vigilance e-magazine "Marg Darshan" was circulated during the year on the theme "Vigilant India Prosperous India" and "Enriching Organization Culture through Values and Ethics" were published covering articles from internal & external writers as a part of efforts towards spreading preventive vigilance concepts.

> "Vishleshan", a compendium of vigilance interventions was also published during the year. Vishleshan is a compendium of select cases bearing a vigilance angle set of case studies to succinctly draw up the mistakes made in a process and highlight lessons to be learnt and system improvements to be made to avoid the same mistakes in future.

iii. System Improvement measures: Based on the recommendations of Vigilance, several system improvements have been issued by the Management in the areas of lodging claims with insurance company, estimation and finalization of RFQ/PO, procurement system, vendor registration, payment of HRA, engagement of contract labour, verification of caste certificates, nonengagement of Ex-employees who have been dismissed/ removed from the services of the Company on contract basis, etc.

iv. Vigilance Awareness Week: Vigilance Awareness Week was conducted throughout the Organization at all divisions of HAL in nine different geographical locations across country from October 26, 2021 to November 1, 2021, on the theme "Independent India @ 75: Self Reliance with Integrity".

v. During the period, 510 complaints were handled, 424 regular scrutiny, 93 surprise checks and 24 CTE checks were carried out across the Company.

QUALITY INITIATIVES AND SAFETY

• Nadcap certification has been obtained by Accessories Division Lucknow and Avionics Division Hyderabad. Both the divisions have been accredited for chemical processing.

• Standardization of documents for Quality Management System has progressed further through the formulation of two more Corporate Quality Assurance Guidelines CQAG-

9014 and CQAG-9015 on FOD Management System and Operator Self Verification Program respectively. CQAG-

9015 on Operator Self Verification Program has been formulated in co-ordination with DGAQA HQ for joint release.

• Utilisation of Third Party Inspection Agencies has also been started by Engine Division Bangalore (in addition to LCA & Helicopter Divisions) for inspection of outsourced components to support the cause of "Make in India" initiative and optimum utilization of HAL inspectors in core areas of manufacturing/assembly. Empanelment process for 7^th TPI agency is under progress in coordination with DGAQA HQ New Delhi.

• As part of digitization of quality functions, online DGAQA Memo generation & clearance by RDAQA offices has successfully commenced in 17 Production divisions.

• Quality Management System of AMD Nasik and Engine Division Bangalore have been additionally certified to AS9110C which stipulates the QMS requirements of Aviation Maintenance Organization.

• Under the Azadi ka Amrit Mahotsav celebration to mark the 75^th anniversary of India''s independence, four enriching

Webinars were conducted at the level of Corporate Quality during Quality month of November 2021 involving senior most officers from DGAQA, CEMILAC, IAF, Army, ICG along with experts from Industry and Academia.

• Conducted in-house training programs and workshops at customer bases/field units on critical/AOG prone systems, to update customer knowledge.

• To bring in improvement in flight safety culture in our company, six officers are getting trained in "Aerospace Safety and Accident Investigation Course" per year with approval of Air HQ.

AUDITORS Statutory Auditors

HAL being a CPSE, Statutory Auditors of the Company were appointed by the Comptroller & Auditor General of India (C&AG). M/s. Maharaj N.R. Suresh and Co., LLP, Chartered Accountants, Bengaluru was appointed as Statutory Auditors for auditing the Accounts of the Company for the year 202122 and 18 firms of Chartered Accountants were appointed as Branch Auditors. The statutory auditors'' report does not contain any qualification, reservation or adverse remarks.

The Auditors'' Report on financial statements for the financial year 2021-22 and comments of the Comptroller & Auditor General of India (C&AG) under Section 143(6) of the Companies Act are appended to this Report.

Cost Auditors

Your Company has appointed M/s. GNV & Associates, Cost & Management Accountants as Cost Auditors for conducting the Cost Audit of the Company for the year 2021-22. The Company maintains cost records as specified by the Central Government under Section 148(1) of the Companies Act, which are audited by Cost Auditors.

Internal Auditors

The Company has appointed 14 (fourteen) Nos. of Chartered Accountant firms for carrying out internal audit of the Company for the year 2021-22.

Secretarial Auditor

In terms of Section 204(1) of the Companies Act, the Company has engaged M/s. DPSP & Associates, Company Secretaries, Bengaluru to conduct Secretarial Audit of the Company for the year 2021-22. The Secretarial Audit Report is annexed to this Report as Annexure - IV and forms part of Annual-Report.

The management''s reply on the qualification of the Secretarial Auditor, form part of Secretarial Audit Report, which is selfexplanatory.

(d) the directors have prepared the annual accounts on a "going concern" basis;

(e) the directors have laid down internal financial controls which are being followed by the Company and that such internal controls are adequate and are operating effectively;

(f) the directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

ACKNOWLEDGEMENT

Your Directors are extremely thankful and acknowledge the excellent support extended by the Government of India, in particular the Ministry of Defence, Department of Defence Production, Defence Acquisition and Defence Finance as well as other Ministries of the Government of India in all the endeavours of the Company.

Your Directors also place on record their sincere appreciation towards the Company''s valued customers, in particular the Indian Defence Services, for the support and confidence reposed by them in the Management of the Company, and look forward to the continuance of this mutually supportive relationship in the future.

The Company wishes to place on record its appreciation for the cooperation extended and services provided by the Comptroller & Auditor General of India (C&AG), the Principal Director of Commercial Audit & Ex-officio Member, Audit Board, Statutory/ Internal Auditors, Cost Auditors, Secretarial Auditors, Bankers, Collaborators, JV Partners and Suppliers.

Your Directors are also thankful to the shareholders for the trust and confidence reposed in the Company and look forward to their continued support to propel the Company to greater heights.

Your Directors also wish to place on record their deep sense of appreciation for the committed services by the Company''s Executives and Workmen for progress and prosperity of the Company.

For and on behalf of the Board of Directors Hindustan Aeronautics Limited

(R. Madhavan)

Chairman and Managing Director

Place : Bengaluru Date : July 15, 2022

Annual Secretarial Compliance Report

The Company has filed the Annual Secretarial Compliance Report for the year 2021-22 with the BSE Ltd and National Stock Exchange of India Limited. The report was received from a Practising Company Secretary and filed within the stipulated time as specified under Regulation 24A of the SEBI (LODR) Regulations.

CORPORATE GOVERNANCE REPORT

In terms of Regulations 34 read with Schedule V of SEBI (LODR) Regulations and DPE Guidelines, a report on Corporate Governance for the year ended March 31, 2022 has been prepared and annexed to this Report. The Company''s Secretarial Auditor has issued a certificate on Corporate Governance, which is appended to the Corporate Governance Report.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

As per Regulations 34(2)(e) of the SEBI (LODR) Regulations, the Management Discussion and Analysis Report (MDAR) forms part of the Annual Report of the Company.

VIGIL MECHANISM

The Company has a Whistle Blower Policy approved by the Board. The details of the Whistle Blower Policy are explained in the Corporate Governance Report and the same is hosted on the Company''s website at www.hal-india.co.in.

Employees are encouraged to raise any of their concerns by way of whistle blowing and none of the employees have been denied access to the Chairman of the Audit Committee.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(3)(c) of the Companies Act, your Directors state that:

(a) In the preparation of the annual accounts for the year ended March 31, 2022, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(b) the directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as on March 31, 2022 and of the profit and loss of the Company for the year ended on that date;

(c) the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

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Mar 31, 2019

BOARD'S REPORT

To the Members,

Your Board of Directors takes great pleasure in presenting their 56th Annual Report on the performance of the Company, together with the Audited Financial Statements for the financial year ended 31st March, 2019, along with Reports of the Statutory Auditors and the Comptrollers; Auditor General of India (C&AG) thereon.

Financial Highlights

The financial highlights for the year ended 31st March, 2019 are summarised as under:

Â	Â	(Rs. in lakh)
PARTICULARS	2018-19	2017-18
Turnover	19,70,455	18,28,386
Exports	40,504	31,402
Profit Before Tax (PBT)	3,62,764	3,23,985
Provision for Tax	1,34,520	1,25,243
Profit After Tax (PAT)	2,28,244	1,98,742
R&D Expenditure	1,46,440	1,61,186
Earnings/ Share (in Rs.)	68.26	56.15*
Book Value /Share (in Rs.)	324	284

*Earnings per Share is calculated based on the weighted average number of equity shares outstanding

During the year under review, the turnover of the Company increased by 7.8 per cent, to Rs. 19,70,455 lakh from Rs. 18,28,386 lakh of the previous year. The Profit Before Tax for the year increased by 12 per cent to Rs. 3,62,764 lakh from Rs. 3,23,985 lakh in the previous year. The Profit After Tax (PAT) increased by 14.8 per cent to Rs. 2,28,244 lakh from Rs. 1,98,742 lakh in the previous year.

Production Highlights

During the year 2018-19, your Company produced 41 new Aircraft and Helicopters. Additionally, we produced 102 New Aero-Engines and Accessories.

During the year 2018-19 your Company overhauled 213 platforms of various aircraft. Further, 560 Russian and western origin aero-engines were overhauled by the Company during the year under review.

Dividend

The Board of Directors of the Company has formulated a Dividend Distribution Policy keeping in view the provisions of Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI (LODR) Regulations), the Companies Act, 2013 (Companies Act) and Guidelines issued by the Department of Public Enterprises (DPE Guidelines) and the Department of Investment and Public Asset Management (DIPAM). The Policy is available on the Company's website at https://hal-india.co.in/Common/ Uploads/DMS/Dividend Distribution Policy.pdf

During the year, your Company has paid interim dividend of Rs. 19.80 per share of Rs. 10 each (198 per cent) for the financial year 2018-19, totaling to Rs. 66,209 lakh, excluding dividend distribution tax of Rs. 13,609 lakh. No Final dividend has been recommanded by the Board for the financial year 2018-19.

Reserves

During the year under review, Rs. 21,488 lakh was transferred to Research & Development Reserve and Rs. 1,26,938 lakh to General Reserve.

Borrowings

As on 31st March, 2019, the short term and long term borrowings of the Company stood at Rs. 10,000 lakh and Rs. 4,05,801 lakh respectively.

Indian Accounting Standards

The Financial Statements have been prepared in compliance with Indian Accounting Standards (Ind AS) and provisions of the Companies Act.

Internal Financial Controls

The Company has in place adequate internal financial controls with reference to its financial statements. A detailed note on internal financial controls is provided in the Management Discussion and Analysis Report.

Significant Achievements

The Company has achieved several milestones during the year under review. A few of which are highlight as under:

Light Combat Helicopter (LCH) successfully completed all weapon integration and firing tests in January, 2019 and is ready for induction. Initial Operational Clearance (IOC) of LCH for Army version was accorded by CEMILAC on 15th February, 2019.

The maiden flight of third prototype (PT3) of Light Utility Helicopter (LUH) was successfully conducted on 14th December, 2018.

Advanced Light Helicopter (ALH) blade folding capability was demonstrated to customer on 19th December, 2018 on CG 855 helicopter. This is the First ALH manufactured for Coast Guard under 16th ALH contract of Coast Guard.

The LCA Tejas successfully completed mid-air refuelling trial by Wet (actual) engagement on 10th September, 2018.

Successfully accomplished 100 per cent running of HTFE-25 core-2 engine with Inlet Guide Vane (IGV) modulation in March, 2019.

Indigenously designed and developed (nation's first ever) Gas Turbine Electrical Generator (GTEG-60) Auxiliary Power Unit (APU) to start the main engines of AN-32 Military Transport aircraft was flown successfully on 11th February, 2019.

Astra Missile was successfully test fired by the IAF on 26th September, 2018.

The LCA Naval Prototype - 2 (NP2), safely executed the first contact of the HAL-designed and developed Arrester Hook System (AHS) with arresting wire at moderate taxi-in speed on 2nd August, 2018.

The first FOC standard Rear Fuselage Assembly of LCA Tejas has been completed. This is one of the major modules of LCA and jig out was done on 11th February, 2019, and Final Operational Clearance (FOC) of LCA received on 20th February, 2019.

The first Mirage 2000 aircraft upgraded to IOC standard with indigenous modification kits was delivered by the Company to the IAF on 1st January, 2019.

The Company successfully flew the Light Utility Helicopter (LUH) on 29th December, 2018.

Current Projects and Programs

During the year, the Company continued to carry out the production and supply of various type of aircraft held with IAF and aerospace structures to fulfil the requirements of our esteemed customers.

The Company has also continued its endeavour to design and develop new platforms towards contributing to new revenue lines for the Company.

Development Programs

The Company has achieved significant progress in various R&D / Development Projects, such as the Basic Trainer Aircraft (HTT-40), Light Combat Helicopter (LCH), Light Utility Helicopter (LUH), Light Combat Aircraft (LCA), Jaguar Darin III Upgrade, Mirage 2000 Upgrade, Hawk-i, UAV and Development of Engines. A project update for each of them is listed below:

(I) Fixed Wing Aircraft Combat Aircraft (a) Light Combat Aircraft (LCA) - Tejas

The LCA - Tejas is an indigenously designed and developed 'Make in India' fighter aircraft. It is the smallest and lightest multi-role supersonic single engine fighter in its class in the world.Tejas has thus far completed over 4250 test flights, of which 523 were carried out during the year under review, towards Final Operational Clearance (FOC). Its Maiden Midair Refueling Trial was successfully completed with the Wet (actual) engagement in September, 2018. This capability provides the IAF a much desired advantage during combat operations. Aeronautical Development Agency (ADA) also handed over the Drawing Applicability List (DAL) and equipment Standard of Preparation (SOP) documents towards FOC configuration, to the Company on 31st December, 2018. It was duly cleared by the Centre of Military Airworthiness & Certification (CEMILAC) to proceed with the production of FOC-standard aircraft. More recently, the FOC was issued on 20th February, 2019, which has now enabled the Company to take up production activities towards delivery of fighters against the FOC contract. The Company has earlier completed production of all the fighters against the IOC contract.

(b) LCA Mk 1A

The Company has undertaken the design and development of LCA Mk 1A, which will have additional features like an EW Suite, Active Electronically Scanned Array (AESA) RADAR and Beyond Visual Range (BVR) Missile. A Request for Proposal (RFP) was received from Air HQ for manufacturing and supply of 83 LCA Mk 1A on 20th December, 2017. The Company submitted the Technical & Commercial proposal on 13th March, 2018. The contract is expected to be finalised during the financial year 2019-20 and once finalised will be a significant boost to the order book position of the Company and will pave the way for the large scale induction of this indigenous combat aircraft to Services.

Trainer Aircraft

(a) Hindustan Turboprop Trainer (HTT - 40)

Aircraft Upgrades (a) Mirage 2000

HTT - 40 is the Basic Trainer Aircraft (BTA) currently being designed and developed indigenously by the Company. The aircraft would be used for basic flight training, aerobatics, instrument flying and close-formation flights with its secondary roles including navigation and night flying. A total of three prototypes have been built, with two flying prototypes and one Structural Test Specimen (STS). The two flying prototypes are undergoing flight trials with 260 cumulative test flights completed towards certification. The STS ultimate test was completed for Ultimate load (165 per cent).

HTT - 40 completed Stall tests and achieved acceptable stall characteristics. It also completed hot weather, Sea level, Cross wind, Range& Endurance, and Night Flying trials. Aircraft successfully entered and recovered from a two turn spin using conventional controls in November, 2018. Further spin tests are under progress.

Once certified, the aircraft will ensure availability of an indigenous platform in this segment. Further with 0-0 ejection seat, the aircraft has better safety features compared to the currently operational imported variant. Being an indigenous product it will also provide greater maintenance support and reduced dependence on exports at a much lower life cycle cost. The customer has evinced interest in the Aircraft and the Company is likely to get future orders once the Aircraft is fully certified.

Service Use Clearance was accorded by RCMA for the FOC upgraded Mirage 20001/TI aircraft on 29th May 2018. In-house developed MC2 Mission Computer has been cleared for service use and series upgrade commenced during the year 2018-19. Provisional clearance for DASH IV Helmet was also accorded by RCMA during the year. The first upgraded Mirage 2000 aircraft to IOC standard with indigenous modification kits was delivered by the Company to IAF on 1st January, 2019.

(b) Jaguar DARIN III

Final Operational Clearance (FOC) Weapon trials carried out in May 2018. During the year, Service Clearance & Production clearance for Jaguar DARIN-III Mission Computer (MC) has been received and series manufacturing commenced in March, 2019. Clearances for all LRUs obtained from RCMA except for RWR,.TCU & Lighting panel (Trainer). So far 436 flight trails have been completed and the programme is moving closer to FOC.

(c) Hawk Upgrade-"Hawk-i

Hawk India (Hawk-i) is the indigenously-upgraded Hawk Mk 132 aircraft with enhanced operational and training capabilities. Flight evaluation of Radio Altimeter (RADALT), IFF Mk-XII, Solid State Digital Video Recording System (SSDVRS), Softnet Radio and ICU completed.

The Company has successfully integrated indigenous Smart Anti Airfield Weapon (SAAW), an aircraft-launched advanced precision strike weapon on Hawk-i aircraft, and completed its first sortie on 12th February, 2019. Spin & Stall trials of Hawk-i with CMDS modification were carried out up to two spins. Spin data analysis was completed and the report submitted to RCMA. Implementation of full Hawk Mk 132 functionalities through RTOS is in progress. So far, a total of 71 sorties have been completed.

(II) Helicopters

(a) Light Combat Helicopter (LCH)

The LCH is a dedicated combat helicopter designed and developed indigenously by the Company. It has the distinction of being the first attack helicopter to land at Siachen. Four Technology Demonstrators (TDs) have  been built and were extensively flight tested this year. A total of 1,498 flights have been carried out so far, of which 291 flights were completed during the year 2018-19. LCH has successfully completed all development trials including weapon (Turret Gun, Rocket System and Air to Air Missile) integration tests and is ready for operational induction awaiting orders. The quote was submitted by the Company in March, 2018 against RFP for the supply of an initial batch of 15 helicopters and order is awaited. Initial Operational Clearance (IOC) of LCH for Army version was accorded by CEMILAC on 15th February,2019. The commercial discussions are in final stage with the customer and the contract is excpected to be finalised during the financial year 2019-20.

(b) Light Utility Helicopter (LUH)

The LUH is a single engine, new generation 3-ton weight class helicopter, incorporating state-of-the-art technology features, planned to replace Cheetah and Chetak helicopters being operated by the Indian Armed Forces. During the year, the first flight of the third prototype (PT-3) of LUH was carried out on 14th December, 2018. All three prototypes are currently under flight trials with a total of 245 flighttests completed, of which 154 flights were carried out during the year. LUH has also completed envelope expansion trials. Cold Weather trials. Sea level flights with maximum all up weight and Hot weather trials. Further, development flights are under progress towards certifications.

(Ill) Aero Engines

(a) 25 KN Hindustan Turbofan Engine (HTFE-25)

Design and development of a 25kN thrust class turbofan engine, which can be used on Basic/Advanced military trainers, on small business jets and also large UAV applications is under progress. The engine can be used on a 5-ton weight class aircraft in single engine  configuration and on aircraft of up to 9-ton weight class with twin-engine configuration. Two core engines have been produced so far and are undergoing development trials. So far 339 runs have been completed on Core-1 and Core-2 engines, of which 96 runs were completed in 2018-19. HTFE-25 was successfully completed cold light up at 14°C with spark igniters and achieving 100 per cent max speed with and without IGV modulation. HTFE-25 engine was also successfully tested with a Technology demonstrator of Servo based Fuel Measuring Unit (FMU).

The Company has taken up the design and development of 'After burner Technology 'for HTFE-25 aero engine. The afterburner module was mounted on the PTAE engine followed by a successful demonstration of the basic afterburner technology using a fixed area propelling nozzle for HTFE-25 engine, in March, 2019.

(b) 1200 KW Turboshaft Engine (HTSE-1200)

The 1200KW Turbo shaft engine would be used as power plant for 3 to 6-ton category helicopters. One technology demonstrator of HTSE-1200 engine was built and is currently under testing. Sea level testing was conducted in DefExpo-2018 and a maximum speed of 76 per cent of engine has been achieved.

Technology demonstrators of Effusion Cooled Combustor and High Efficiency Compressor were developed and built for HTSE-1200 engine and successfully tested on the engine. Directionally Solidified Gas Generator (GG) Turbine blades were also successfully developed for the engine. So far 250 runs have been completed successfully.

Once certified, the above engine programmes promise self-reliance in the critical field of aero engines and availability of core engine technological capabilities within the country.

Order Book Position

We are pleased to report that the Order Book position of your Company as on 31st March, 2019 stands at Rs. 58,588 crore.

Loans, Guarantees and Investments

Details of Loans, Guarantees and Investments are covered under the provisions of Section 186 of the Companies Act and form part of notes to the Financial Statements provided in this Annual Report.

Related Party Transactions

There were no significant related party transactions with the Company's promoters. Directors, Management or their relatives, which could have had a potential conflict with the interests of the Company. All Related Party Transactions were placed before the Audit Committee and the Board, wherever applicable, for approval. Information pursuant to Section 188(2) of the Companies Act and Rule 8(2) of the Companies (Accounts) Rules, 2014 on contract(s) or arrangement(s) with related parties referred to in Section 188(1) of the Companies Act is attached to this Report as Annexure-l.

Consolidated Financial Statements

The consolidated financial statements of your Company and its joint venture and subsidiary companies for the year ended 31st March, 2019 have been prepared in accordance with the provisions of Section 129(3) of the Companies Act and applicable Accounting Standards, and form part of this report.

Pursuant to the first proviso of Section 129(3) of the Companies Act read with Rule 5 of Companies (Accounts) Rules, 2014, a separate statement containing salient features of the financial statements of subsidiaries/associate/joint venture companies in Form AOC-1 is appended to this report, which forms part of the Financial Statements.

Subsidiary/Associate/Joint Venture Companies

As on 31st March, 2019, your Company has two Subsidiaries and fourteen Joint Venture Companies (JVCs) including two not-for-profit companies (Section 8 Companies). Naini Aerospace Limited, a wholly owned subsidiary of the Company is engaged in the business of manufacturing looms for aircraft and helicopters. During the year, your Company has made a further investment of Rs. 2,000 lakh in equity shares of the Company.

Pursuant to the provisions of Section 134(3)(q) of the Companies Act read with Rule 8(1) of the Companies (Accounts) Rules, 2014, a Report on the performance and financial position of each of the Joint Venture and Subsidiary Companies is provided herewith and annexed as Annexure II.

Annual Return

In accordance with the provisions of Section 92(3) and Section 134(3)(a) of the Companies Act read with Rules 12(1) of the Companies (Management and Administration) Rules, 2014, the extract of the Annual Return of the Company is made available on the Company website at http://www.hal-india.co.in/investors/Annual Reports.

Secretarial Standards

The Company complies with all applicable mandatory secretarial standards issued by the Institute of Company Secretaries of India.

Meetings of the Board

During the year, 11 (eleven) Board Meetings were held and the maximum interval between any two meetings was not more than 120 days. The details of meetings of the Board and Committees thereof held during the year are furnished in the Corporate Governance Report, which forms part of this Report.

Changes in Board of Directors and Key Managerial Personnel

The following changes took place in the Board of Directors and of Key Managerial Personnel (KMP) of your Company during the financial year:

S.N.	Name of the Director	Designation	Date of Appointment	Date of Cessation
1	Dr. C.P. Ramanarayanan	Govt. Nominee Director	01.05.2018	19.06.2018 (Nomination withdrawn)
2	Shri Chandraker Bharti	Govt. Nominee Director	15.05.2018	-
3	Shri D.K. Venkatesh	Director (Engg. and R&D)	-	31.05.2018 (Superannuation)
4	Shri Arup Chatterjee	Director (Engg. and R&D)	01.06.2018	-
5	Dr. Tessy Thomas	Govt. Nominee Director	02.07.2018	-
6	Dr.S. Malla Reddy	Independent Director	24.07.2018	-
7	Rear Adml. K.C. Shekar (Retd.)	Independent Director	24.07.2018	-
8	Shri C.V.Ramana Rao	Director (Finance) & CFO	-	31.07.2018 (Superannuation)
9	Shri C.B. Ananthakrishnan	Director (Finance) & CFO	01.08.2018	-
10	Shri T. Suvarna Raju	Chairman and Manging Director	-	31.08.2018 (Superannuation)
11	Shri R. Madhavan	Chairman and Manging Director	01.09.2018	-

On completion of tenure of Ms. Dipali Khanna, Part-Time Non-Official (Independent) Director on 7th January, 2019, the Ministry of Defence, DDP, re-appointed her for a period of one year w.e.f. 8th January, 2019.

Committees of the Board

As on 31st March, 2019, the Board had five Statutory Committees namely Audit Committee, Nomination & Remuneration Committee, Corpoate Social Responsibility & Sustainable Development Committee, Stakeholders Relationship Committee and Risk Management Committee.

A detailed note on the composition of the Board and its Committees is provided in the Corporate Governance Report.

Declaration from Independent Directors

The Company has received necessary declarations from each Independent Director of the Company under the Companies Act stating that the Independent Directors of the Company  met with the criteria of their independence laid down in Section 149(6) of the Companies Act and Regulation 25(8) of the SEBI (LODR) Regulations.

Company's Policy on Directors' Appointment and Remuneration

The appointment, tenure and remuneration of Directors (Functional Directors including CMD) are determined by the Government of India. Selection is made by the Public Enterprises Selection Board (PESB). The Terms & Conditions of appointment, including the period of appointment, the Scale of Pay and other entitlements are notified by the Government of India.

Government Nominee Directors are appointed by the Department of Defence Production, Ministry of Defence and they are not entitled to any remuneration / sitting fees.

Independent Directors are appointed by the Government of India and they are entitled to sitting fees for attending the Board / Committee meetings as prescribed by the Board in adherence with the statutory rules and regulations.

In view of the Gazette Notification No GSR 463 (E) dated 5th June, 2015 of the Ministry of Corporate Affairs (MCA), your Company, as a Government Company, is not required to frame a policy on Directors' appointment and remuneration, including criteria for determining qualifications etc. under Section 134(3)(e) of the Companies Act.

Board Evaluation

Pursuant to the Notification No. 463 (E) dated 5th June, 2015 issued by the Ministry of Corporate Affairs, the statement indicating the manner in which formal annual evaluation has been made by the Board of its own performance and that of its committees and individual directors is not required for your Company, as the performance of directors is evaluated by the Administrative Ministry.

The performance evaluation of the Independent Directors was carried out by the entire Board and found to be satisfactory. The Board opined that all Independent Directors fulfil the conditions specified in the Companies Act and SEBI (LODR) Regulations, and are independent of the management.

The performance of non-independent directors and Board as a whole was reviewed by the Independent Directors during the year.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

As a defence Central Public Sector Enterprise (CPSE), your Company was granted exemption by MCA vide Notification GSR No.680 (E) dated 4th September, 2015. from the disclosure of information with respect to conservation of energy, technology absorption, foreign exchange earnings and outgo under the provisions of Section 134(3)(m) read with Rule 8(3) of the Companies (Accounts) Rules, 2014.

Outsourcing

The Company has embarked on a path to be a lead integrator of aircraft and helicopter platforms on par with the global OEMs, Outsourcing had been taken up diligently even in upcoming platforms including LCA, HTT - 40, LUH, LCH etc.

Development and Implementation of Risk Management Policy

The Company has a Board approved Risk Management Policy in place. The policy aims at elimination or reduction of risk  exposures through identification and analysis of various types of risks and facilitating timely action for taking risk mitigation measures. The policy envisages that all programs & project reviews will highlight the progress of risk mitigation plans until the closure and signing off the mitigation plans.

Corporate Social Responsibility (CSR)

Your Company, as a responsible Corporate, has been driven by a vision of a developed India, underlining its commitment to give back to the society and environment. This has influenced the design and implementation of the Company's CSR plans.

Pursuant to the provisions of Section 135 of the Companies Act and Companies (Corporate Social Responsibility Policy) Rules, 2014 & DPE Guidelines, the Company has undertaken various activities as per the CSR Policy. The projects / programmes / activities were taken up in line with Schedule VII of the Companies Act.

The Corporate Social Responsibility Policy of the Company is available on the Company's website at https://hal-india.co.in/ Common/Uploads/DMS/CSR_Policy.pdf. Salient features of the Policy form part of the Annual Report.

A separate Report on CSR activities undertaken by your Company during the year 2018-19 is enclosed as Annexure-lll.

Business Responsibility Report

SEBI (LODR) Regulations stipulate that the annual report shall include a Business Responsibility Report describing the initiatives taken by the listed entity from an environmental, social and governance perspective in the format specified. Accordingly, the Business Responsibility Report for the year 2018-19 has been drawn up and appended to this Report.

Significant and Material Orders

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and the Company's operation in the future.

Public Deposits

During the year, your Company has not received any deposits from the public.

Maintenance of Cost Records

Your Company maintains cost records as specified by the Central Government under Section 148(1) of the Companies Act.

Transfer of Shares

During the year under review, 400 equity shares of Rs. 10 each were transferred from Nominees of the President of India to the President of India.

Issue of Equity Shares with Differential Rights

During the year, the Company has not issued any equity shares with differential rights as to dividend, voting or otherwise.

Particulars of Employees and Related Disclosures

The provisions of Section 197 of the Companies Act and the relevant Rules do not apply to your Company, in view of the Gazette Notification No. G.S.R. 463 (E) dated 5th June, 2015 issued by the Ministry of Corporate Affairs, Government of India.

MoU with Government

Your Company continues to sign the annual Memorandum of Undertaking (MoU) with the Ministry of Defence, Government of India.

The performance of the Company for the year 2017-18 has been rated as "Excellent" in terms of MoU with the Government. MoU rating for the year 2018-19 is under review by the Government.

Events subsequent to the date of Financial Statements

There are no material changes and commitments affecting the financial position of the Company, that have occurred between 31st March, 2019 and date of signing of this Report.

Research and Development Efforts

During the year, the Company continued to focus its efforts towards development of new platform, technology and activities to enhance its capability with a view to bring technological superiority to its products and in order to cope with the future technological challenges. Towards the progress of the R&D efforts, the Company has incurred a total expenditure of Rs. 1,46,440 lakh for the year 2018-19 which is 7.43 per cent of the turnover.

The Company continues to work with premier R&D organisations like DRDO laboratories, CSIR-NAL, the IITs and IISc towards self-reliance in the Aviation field. The Company has established chairs at IIT Madras, IIT Roorkee, IIT Kharagpur, IIT Bombay, IIT Kanpur and IISc Bangalore to enhance its R&D efforts.

The Company has transferred a sum of Rs. 21,488 lakh (10 per cent of Operating PAT) to the R&D reserve for contribution to the R&D corpus during the year 2018-19.

During the year, the Company filed 82 IPR applications, making a total of 1,621 IPRs filed by Company. 70 IPRs were granted during the year, taking the total IPR held by the organization to 178.

Exports

The Company has achieved export sales of Rs. 40,504 lakh. The major exports include supply of one Do-228 aircraft to Seychelles People's Defence Forces, Structural Work Packages,

Forgings, Castings and Rolled Rings to major Aerospace OEMs and Repairables, Spares & Services to foreign aircraft operators.

Towards enhancing its brand and showcasing its products and capabilities, the Company participated in leading international Air Shows/Exhibitions, including Defexpo-2018 (lndia),ARMY-2018 (Moscow), Farnborough Air Show 2018 (UK), Africa Aerospace & Defence (South Africa), DEFPOL-2018 (Vietnam), Indo Defence Exhibition-2018 (Indonesia), EDEX-2018 (Egypt), Aero India 2019, and LIMA 2019 (Malaysia).The Company is also making efforts to secure export orders for aircraft and helicopter platforms arising out of bilateral Defence Cooperation agreements signed between the Government of India and the respective Countries.

With an objective to enhance business opportunities, your Company's focus is on securing long term projects towards meeting the entire global requirements, through Offset programs accrued from the Indian Defence Capital Acquisition. Various strategic initiatives were taken to establish and progress business framework/agreement with the OEMs.

Vendor Development

During the year, the Company conducted 27 vendor development programmes, of which eight were for Micro & Small Enterprises (MSEs) owned by SC/ST Entrepreneurs.

The Company has registered with RXIL and M1 exchange for enabling payments through TReDS platform. The Company has already made payments through TReDS-RXIL platform. All efforts are made to bring the MSEs on TReDS platform. Currently, several vendors are registered with TReDS platform and efforts are being made to bring other vendors also on the portal. The Company has also registered with MSME SAMADHAAN portal and the same is being monitored regularly for resolution of grievances of MSEs, if any. The procurement details are being updated monthly in "MSME SAMBANDH" Portal.

The Company has implemented the Purchase Preference Policy (Make in India) w.e.f 1st July, 2018 in line with provisions indicated in Public Procurement (Preference to Make in India), Order 2017 issued by the Department of Industrial Policy and Promotion (DIPP) to encourage 'Make in India' and promote manufacturing and production of goods and services in India.

The Company has registered on DPE portal and the weekly data is regularly uploaded w.r.t procurement from MSME through GeM portal and payment through TReDS platform.

Procurement from Micro & Small Enterprises (MSEs)

During the year, the total value of procurement including outsourcing made from MSEs was Rs. 73,389 lakh.

Indigenisation

The Company's endeavour to boost the indigenisation programme is consistently progressing to achieve self reliance in the field of Aeronautics. Obsolescence management, savings in foreign exchange and cost reduction of various items for manufacture and ROH of Aircraft and Helicopters are the consideration for Indigenisation. During the year, the number of items indigenized is 1,566 and total foreign exchange saving is Rs.11,767 Lakhs.

Make In India Initiatives HAL's "Make in India" Portal

In support of the Make in India programme, the Company has listed over 350 imported systems and subsystems used in its projects, including ALH, LCA, Do-228 and Jaguar. Private industries are invited to come forward for indigenous production of these systems, leading to import substitution.

The Company has also hosted more than 100 Tools, Testers and Ground Equipment for manufacturing/ ROH / maintenance of SU-30 MKI on its website under the Make in India program.

Make-ll Framework and Indigenisation Policy

The Company is in the process of implementing the following policy/ Framework promulgated by MoD:

Framework for implementation of 'Make-ll' Procedure at DPSUs;

Policy Initiatives for Indigenisation of Components and Spares Used in Defence Platforms for DPSUs.

Human Resource Development

The number of employees as on 31st March, 2019 stood at 28,345.

During the year 2018-19, opportunities for Officers to build their knowledge-based competencies were supported. Ten Officers were sponsored for M.Tech programmes at the Defence Institute of Advanced Technology, Pune/ Indian Institutes of Technology and 5 Officers were sponsored for a PG Diploma in Public Policy & Management at the Indian Institute of Management, Bangalore. One Officer was sponsored for the 74th Staff Course at the Defence Staff College, Wellington, Tamil Nadu. Four Officers were sponsored for Ph.D Programmes at the IISc, Bangalore and IITs. As on 31st March, 2019, a total of 4,105 Apprentices were engaged in the Company, comprising 10.29 per cent of the total employee strength including contractual staff.

Employee Welfare

The Company continues to extend welfare benefits to the employees and their dependants including comprehensive Medical Facilities, Housing Facilities, Canteen Facilities (for employees only). Educational Facilities for Employees Children, and Sports Facilities.

REPRESENTATION OF SC/STs

The position regarding representation of Scheduled Castes / Scheduled Tribes (SC/STs) is as follows: Representation of SC/STs in the total strength of the Company as on 1st January, 2018 and 1st January, 2019

Category	Total Strength as on		Number of SCs as on		Number of STs as on
(Grade / Scale of Pay)	1.1.2018	1.1.2019	1.1.2018	1.1.2019	1.1.2018	1.1.2019
Group –A (Grade -II & above)	8,807	8,554	1,557	1,516	529	514
Group -B (Grade -I)	43	31	8	4	4	2
Group -C (Scale - 3 to Special Scale)	20,354	19,972	3,501	3,501	1,473	1,463
Group -D (Scales -1 &2)	Â	Â	Â	Â	Â	Â
(i) Excluding Safai Karmacharis	15	15	4	4	-	-
(ii) Safai Karmacharis	Â	Â	Â	Â	Â	Â
Total	29,219	28,572	5,070	5,025	2,006	1,979

Recruitments made during the period 1st January, 2018 to 31st December, 2018 and the SC/STs amongst them

Category (Grade / Scale of Pay)	Total number of posts filled	No. of Reservations made for		No. of Posts filled by appointment of
Â		SCs	STs	SCs	STs
Group -A (Grade- II & above)	22	-	-	2	1
Group -B (Grade - I)	-	-	-	-	-
Group - C (Scale-3 to Special Scale)	233	64	35	55	22
Group -D (Scales -1 &2)	Â	Â	Â	Â	Â
(i) Excluding Safai Karmacharis	-	-	-	-	-
(ii) Safai Karmacharis	-	-	-	-	-
Total	255	64	35	57	23

Vacancy-Based Promotions made during the period 1st January, 2018 to 31st December, 2018 and the SC/STs amongst them.

Category (Grade / Scale of Pay)	Total number Promoted	No. of Reservations made for		No. of Posts filled by Promotion of
Â		SCs	STs	SCs	STs
Group -A (Grade- II & above)	1,272	NA	NA	203	67
Group -B (Grade- I)	-	-	-	-	-
Group - C (Scale-3 to Special Scale)	-	-	-	-	-
Group -D (Scales -1 &2)	Â	Â	Â	Â	Â
(i) Excluding Safai Karmacharis	-	-	-	-	-
(ii) Safai Karmacharis	-	-	-	-	-
Total	1,272	-	-	203	67

Employee Relations (ER) / Industrial Relations

The Employee Relations Scenario in the Company has been peaceful and cordial during the year. Smooth relations were maintained between the Management and the Unions / Associations by effective communication Meetings with the representatives of the recognised Unions / Officers Associations at the Divisional, Complex & Corporate Levels were held to discuss issues.

Plant Level & Shop Level Committees with representatives from the Management & Workmen / Union Representatives are functioning in the Divisions to discuss and resolve production-related issues and other related matters. Grievance Redressal Mechanisms are in place to address Employee / Public Grievance / Representations in the Company.

Rajbhasha Implementation

In accordance with the Guidelines issued by the Department of Official Language, Ministry of Home Affairs, New Delhi, vigorous efforts are being made by all the Divisions of the Company towards implementation of the Official Language Policy (OL Policy) of the Government of India. To bring awareness about the OL Policy & Technical Facilities developed in the field of Official Language, a two-day Training Programme on 'Usage of Technical Terminology & OL Policy' was organised in April 2018 for Bengaluru-based Divisions and Offices with the help of the Commission for Scientific & Technical Terminology, Ministry of HRD, Gol. A seminar was organised for all the Divisions of the Company on 21st April, 2018 and an OL Policy Booklet was released on this occasion. Hindi Fortnight was celebrated from 14th September to 28th September 2018 by all the Divisions of the Company that saw enthusiastic participation by the employees. The 16th All HAL Hindi Utsav was organised between 5th December, 2018 and 8th December, 2018. More than 300 Workmen / Officers took part in the various competitions organised during the Utsav.

During the year, Hindi Language Training (Prabodh, Praveen and Pragya courses) were organised for the Bengaluru Divisions with the cooperation of the Central Hindi Teaching Institute (CHTI), Bengaluru. A Training Session was conducted on filing up of Quarterly Progress Report (QPR) on 15th March, 2019.

The progress made towards OL Implementation by the Divisions of the Company was reviewed by the Hindi Margdarshan Samiti at the Corporate level. Inspections of various Divisions related to Official Language have been conducted successfully by the Department of Official Language / Ministry of Defence during the year.

Prohibition of Sexual Harassment of Women at Workplace

The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 has been notified in the Company. In line with the Guidelines received from time to time, necessary actions have been taken to prevent Sexual Harassment of Women at Workplace. The HALCDA Rules applicable to Officers and the Certified Standing Orders applicable to Workmen have the required provisions in this regard.

Internal Complaints Committees as per Section 4 of the Act have been put in place. Information for the year 2018, in terms of Section 22 of the Act, is as indicated below:

(i)	Number of Cases pending as on 1st January, 2018	2
(ii)	Number of Complaints of Sexual Harassment received in the year 2018	2
(iii)	Number of Complaints disposed off during the year 2018	3
(iv)	Number of Cases pending as on 31st December, 2018 & its status	1 Case was pending at the ICC Inquiry stage as on 31st December, 2018. However, the case was subsequently closed on 27th February, 2019.

Information Technology (IT) Initiatives

Your Company has taken up many IT initiatives to ensure Customer delight, Process Improvement and IT Security. Towards enhancing customer experience, a Flight Operations & Safety (FOS) portal was launched, to record and track actions related to accidents. The portal is integrated with Quality & Customer Service dashboards to follow up on issues related to these. The portal is also integrated with internal mailing system for automated reports on incidents/ accidents.

As part of employee enablement in the Company, an Employee Self Service (ESS) portal that facilitates automation of address proof, salary certificate, NOC etc., has been developed. The system has the provision to digitally sign the certificate by the issuing authority thereby providing for a paperless system with compliance to IT Security. In continuation with the efforts towards a performance appraisal for Officers, we have shifted Workmen performance appraisals online. Two portals have been launched for productivity improvement, viz., a

Task Management application, and a Meeting Management application for scheduling meetings with both external/ internal stakeholders. Both portals are configured with SMS/ mail alerts for faster collaboration.

On the infrastructure front, a Multi Protocol Label Switching (MPLS) Wide Area Network covering 16 locations of the Company has been established for high speed data transfer.

Your Company has been keen towards improving the IT Security posture by implementing best practices and complying with applicable guidelines. As part of this, details of all IT Assets in the Company have been collected and published on the IT Asset management portal. A set of directives for Mobile Device Security has been framed to prevent leakage of information from mobile devices accessing the Company's server/ network on the internet. The Electronic Information Asset Protection Guidelines, a set of directives to protect users from the risks emanating from sharing of confidential data outside the Company Network was also framed during this period.

Awards & Recognitions

During the year, your Company received various Awards and Recognitions. Some of the important awards conferred to the Company are as under:

• Golden Peacock Innovative Product / Service Award for the year 2018 for the project "Repair of Non ToT Test Equipment ARM-RLSU (SNK-30 MK) used for Checking of Radar Complex of Su-30 MKI Aircraft, during the Global Convention held between 17th and 19th April, 2018 at Dubai.

• Star Performer Award for the year 2016-17 in the Product Group - Defence Related Items, Large Enterprise, was presented by the Engineering Export Promotion Council (EEPC) India on 31st May, 2018 at New Delhi.

• The Gold Trophy in recognition of outstanding contribution to Skill Development was awarded to your Company in the Best PSU- Public Sector Training Programme" category, during the Summit-cum-Awards function on Skilling India, organised by ASSOCHAM on 1st November, 2018 at New Delhi.

• 41st EEPC Southern Region Export Award for 'Excellence in Export of Engineering Services' for the year 2016-17 on 28th December, 2018.

• "Governance Now" 6th PSU Award for Technology Adaptation under Navratna Category at New Delhi on 17th January, 2019.

• The Apex India CSR Excellence Awards 2018 in the Aerospace Sector, for outstanding achievement in CSR

Management of the Kumudvathi River Rejuvenation project was awarded by the Apex India Foundation, on 18th February 2019 at New Delhi.

• The HAL CSR Project "Kumudvathi River Rejuvenation" was declared as the joint winner under the Water & Sanitation category during the CSR Rotary Karnataka Conference 2019 organised by "The Rotary District 3190", on 15th February, 2019 in Bengaluru.

Vigilance

The Vigilance Department of the Company is headed by the Chief Vigilance Officer (CVO), an IPoS Officer on deputation from the Govt. of India. Vigilance Officers and Staff are posted to the Corporate Office and all the Divisions and Complexes of the Company.The Vigilance Department has been certified as ISO 9001: 2015 compliant, an initiative for delivering Quality Vigilance work. The Quality Management System (QMS) has been designed to effectively implement Quality Policies through Quality Objectives.

During the year, the Vigilance Department handled 313 complaints; and 1,123 Surprise/ Routine checks & CTE Type inspections were carried out in the Divisions in corruption-prone areas. Based on the outcome of checks/inspections and complaints, 34 cases were taken up for further investigation. The investigations on 27 cases were concluded with 14 cases referred for disciplinary action, six cases for administrative action while seven cases were closed with nothing adverse found during investigation.

During the year, final orders awarding 3 major penalties, 8 minor penalties, 25 advisory, 5 counselling, 1 warning and 2 exoneration were issued by the concerned disciplinary authorities.

Preventive and Proactive Vigilance has been the thrust area of the Vigilance Department. Some of the major initiatives by the Department during the year were:

• Amendment to Purchase Manual: Vigilance took initiative and organised a brainstorming session on the prevailing Supply Chain Management of the Company. As a result, 16 amendments were issued to the Purchase Manual which will help Managers in the decision-making and procurement process.

• System studies were carried out to streamline procedure for:

• Engagement of job contract labour/ skilled contract labour vis-a-vis their attendance and payments;

• Management of HAL schools including engagement of teachers;

• Procurement of medicines;

• Measures towards cost efficiency and cost reduction.

• Sensitisation on Vigilance: 76 (Seventy six) sessions were conducted to sensitise the HAL fraternity to be vigilant and join hands in curbing corruption. Workshops were held across the Divisions on Vigilance-related topics.

• Workshops: Several workshops were conducted with important functionalities/stakeholders in areas like Material Management, Finance, HR, Service Contracts, and Work Contracts.

Fraud Reporting

During the year, a fraud involving misappropriation of funds of Rs. 1,876 lakh by a Company Official in Koraput Division of the Company was reported. The matter is under investigation by the CBI. The details of the same are covered under Clause 21 of Note No. 49 of the financial statements.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(3)(c) of the Companies Act, your Directors state that:

(a) In the preparation of the annual accounts for the year ended 31st March 2019, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(b) the directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as on 31st March, 2019 and of the profit and loss of the Company for the year ended on that date;

(c) the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) the directors have prepared the annual accounts on a "going concern" basis;

(e) the directors have laid down internal financial controls which are being followed by the Company and that such internal controls are adequate and are operating effectively;

(f) the directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively;

AUDITORS

Statutory Auditors

The Statutory Auditors of your Company were appointed by the Comptroller& Auditor General of India (C&AG). M/s. Maharaj N.R. Suresh & Co., Chartered Accountants, Bengaluru were appointed as Statutory Auditors for auditing the Accounts of the Company for the year 2018-19 and 18 firms of Chartered Accountants were appointed as Branch Auditors.

The notes on the financial statements referred to in the Auditors' Report are self-explanatory and do not call for any further comments.

Auditors' Report

The Auditors' Report on financial statements for the financial year 2018-19 and comments of the Comptroller & Auditor General of India (C&AG) under Section 143(6) of the Companies Act are appended to this Report. The statutory auditors' report does not contain any qualification, reservation or adverse remarks.

Cost Auditor

M/s. KPR & Associates, Cost Accountants were appointed as Cost Auditors for conducting the Cost Audit of the Company for the year 2018-19.

Secretarial Auditor

In terms of Section 204(1) of the Companies Act, the Company has engaged Shri S. Viswanathan, Practicing Company Secretary, Bengaluru to conduct Secretarial Audit of the Company for the year 2018-19. The Secretarial Audit report is annexed to this Report as Annexure - IV and forms part of Annual-Report. The said report does not contain any qualification, reservation or adverse remarks.

Annual Secretarial Compliance Report

The Company has filed the Annual Secretarial Compliance Report for the year 2018-19 with the BSE Ltd and National Stock Exchange of India Limited. The report was received from Practising Company Secretary and filed within the stipulated time as specified under Regulation 24A of the SEBI (LODR) Regulations.

Corporate Governance

Your Company has taken firm and structured initiatives to maintain the highest standards of Corporate Governance and its practices which are valued by our stakeholders. The practices emanate from the need to position multi-layered checks and balances at various levels to ensure transparency of its operations and in the decision making process.

In terms of SEBI (LODR) Regulations and DPE Guidelines, a report on Corporate Governance for the year ended 31st March, 2019 along with a certificate from the Company's Secretarial Auditor confirming compliance of applicable laws, rules and regulations is included in this Annual Report.

Management Discussion and Analysis Report

As per Regulations 34(2)(e) of the SEBI (LODR) Regulations, the Management Discussion and Analysis Report (MDAR) forms part of the Annual Report of the Company.

Vigil Mechanism

The Company has a Whistle Blower Policy approved by the Board and the same is made available on the Company's website.

Employees are encouraged to raise any of their concerns by way of whistle blowing and none of the employees have been denied access to the Audit Committee.

Quality Initiatives and Safety

Quality Management System in all the Production Divisions and Research & Design Centers of the Company has been successfully transitioned to the latest version of International Aerospace Standard AS9100D. Overhaul Division was certified for AS9110C on "Requirements for Aviation Maintenance Organization". Additionally, all Production Divisions and Research & Design Centers are approved by the Directorate General of Aeronautical Quality Assurance (DGAQA) as per their latest document "Approval of Firm and its Quality Management System" (AFQMS), Issue-ll dated June 2018. Production Divisions catering to Civil Customers are approved by the Director GeneraI of Civil Aviation (DGCA) as a Production/ Maintenance Organization, while Production Divisions that are exporting products and services were also certified to the National Aerospace Defence Contractors' Accreditation Program (NADCAP) with approvals from OEMs such as Airbus, Boeing, Turbomeca, and Rolls Royce. HAL Laboratories is accredited to IS17025 by the National Accreditation Board for Testing and Calibration Laboratories (NABL).

The Research & Design Centers of the Company continue to hold the Design Organization Approval from the Centre for Military Airworthiness & Certification (CEMILAC) and Recognition of in-house R&D from the Department of Scientific & Industrial Research (DSIR), Ministry of Science & Technology, Government of India. The R&D Centre engaged in the development of Software is certified to Capability Maturity Model Integration for Development Maturity Level 3 (CMMI MLS) by KPMG, USA.

Quality improvement through employees' participation is being encouraged by practicing concepts such as Quality

Circles, Quality Improvement Teams and Six Sigma Project Teams in the Divisions. Twenty six Quality Circle teams of 135 members, participated in the National Convention of Quality Circles (NCQC-2018) held at Gwalior in December, 2018.

Standardisation of QMS has been achieved in many areas through three additional Corporate Quality Assurance Guidelines. Of these, two guidelines are protected by the registration of copyright with the Registrar of Copyrights, New Delhi.

Five Inspection Agencies have been approved by the Company as Third Party Inspection Bodies to carry out inspections on behalf of the Company at the premises of the sub-contractors of Production Divisions and R&D Centres.

A Corporate Quality Digital Desk has been established for real time data management and monitoring of Quality related information and issues of all the divisions. The performance of all Divisions is being mapped and monitored on the basis of Quality Performance Indicators derived from Quality Rating Manual released by the DGAQA.

To enhance the knowledge level of Officers in Aircraft Accident Investigation, the IAF was approached to increase vacancies in the Aerospace Safety & Accident Investigation (AS&AI) course. Consequently, the course can now accommodate six Officers from the earlier two. The Company has conducted a Flight Safety and Accident Investigation capsule on 5th December, 2018 as part of the Post Graduate Diploma in Aviation Management course.

Acknowledgement

The Board places on record its sincere appreciation towards the Company's valued customers, in particular the Defence Services, for the support and confidence reposed by them in the Management of the Company, and look forward to the continuance of this mutually supportive relationship in the future.

Your Directors acknowledge with a deep sense of appreciation, the valuable support and cooperation received from the Government of India in particular the Ministry of Defence, Department of Defence Production, Defence Acquisition and Defence Finance as well as other Ministries of the Government of India in all the endeavours of the Company.

The Company wishes to place on record its appreciation for the cooperation extended and services provided by the Comptroller & Auditor General of India (C&AG), the Principal Director of Commercial Audit & Ex-officio Member, Audit Board, Statutory Auditors, Bankers, Collaborators, JV Partners and Suppliers.

Your Directors are also thankful to the shareholders for their faith and continued support in the endeavours of the Company.

Your Directors also wish to place on record their deep sense of appreciation for the committed services by the Company Executives, Staff and Workers for progress and prosperity of the Company.

For and on behalf of the Board of Directors
Â	Hindustan Aeronautics Limited
Â	(R. Madhavan)
Â	Chairman & Managing Director
Place : Bengaluru	Â
Date : 27th July, 2019	Â

Annexure-I to Board's Report

Form No. AOC-2

(Pursuant to clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014)

Form for disclosure of particulars of contracts/arrangements entered into by the company with related parties referred to in sub-section (1) of section 188 of the Companies Act, 2013 including certain arms length transactions under third proviso thereto

1. Details of contracts or arrangement or transactions not at arm's length basis:

SI. No	Name (s) of the related party	Nature of relationship	Nature of contracts/ arrangements /transactions	Duration of the contracts; arrangements /transactions	Salient terms of the contracts or ' arrangements or transactions including the value, if any	Justification for entering into such contracts or arrangements or transactions	Date(s) of approval by the Board	Amount paid as advances, if any:	Date on which the special resolution was passed in General Meeting as required under first provision to Section 188
1	M/s. HALBIT Avionics Pvt Ltd, Bangalore	Joint Venture	Technical support at customer base on single tender basis	1 year	Provisioning & awarding Contract at a total value of Rs. 42.48 Lakhs for Onsite Technical Support for HAWK Training Aids at AFS Kalaikunda and INS Dega	As items were supplied & installed by OEM - M/s. HALBIT, technical support to be provided/availed by them only.	30th June 2018	Â	Â
2	M/s. Naini Aerospace Limited, Allahabad,	Subsidiary	Fabrication of ALH Looms, Manufacturing & Assembly of Sub- Assembly Bottom Structure and Transmission & Engine Deck and Mfg & Assy. of ALH Coupling Jig Work on Nomination basis	1 year	Fabrication of ALH Looms (5 Sets), Manufacturing & Assembly of Sub-Assembly (5 sets), Bottom Structure and Transmission & Engine Deck and Mfg & Assy. Of 6 sets of ALH Coupling Jig Work at a total value of Rs. 6.90 Crs for 41 ALH Program.	Development of Subsidiary as a source for fabrication/supply of looms, Jigs & Assemblies on Nomination basis as per DPR/Business plan approved by Board	13th August 2018	Â	Â
3	M/s. Naini Aerospace Limited, Allahabad	Subsidiary	Fabrication of ALH Looms on Nomination basis	1 year	Placement of purchase orders for fabrication of 3 types ALH Looms (5 sets each) at a total value of Rs. 0.48 Crs. for 41 ALH Program	Development of Subsidiary as a source for fabrication/supply of looms on Nomination basis as per DPR/Business plan approved by Board	8th January .2019	Â	Â
4	M/s. Naini Aerospace Limited, Allahabad	Subsidiary	Fabrication of LCA Looms on single developed source basis	2 year	Placement of purchase orders at a total value of Rs. 7.18 Crs. for manufacture and supply of 10 sets of Looms (344 types) for LCA Project	Development of Subsidiary as a source for fabrication/supply of looms on single developed source basis	18th March 2019	Â	Â

2. Details of material contracts or arrangements or transactions at arm's length basis.

SI No	Name(s) of the related party	Nature of relationship	Nature of con tracts/ arrangements / transactions	Duration of the contracts / arrangements / transactions	Salient terms of the contracts or arrangements or transactions including the value, if any	Date(s) of approval by the Board, if any	Amount paid as advances, if any:	Remarks
Â	Â	Â	Â	Nil	Â	Â	Â	Â

 

Â	For and on behalf of Board of Directors
Â	Hindustan Aeronautics Limited
Date : 27th July, 2019	(R. Madhavan)
Place: Bengaluru	Chairman & Managing Director

Annexure- II to Board's Report

REPORT ON THE FINANCIAL PERFORMANCE OF THE JOINT VENTURE AND SUBSIDIARY COMPANIES

(a) HAL has established 12 (twelve) commercial Joint Venture Companies (JVCs) in collaboration with leading international aviation and Indian Organizations and 2 (two) subsidiary Companies. Besides, the Company also formed 2 (two) Section-8 (non-profit) Companies.

During the year under review, the total turnover reported by the JVCs is Rs. 449.32 Crore, as per details given below:

SI No.	Name of the JVCs	HAL share holding (%)	( Turnover	(Amount in Rs. Crore) Profit Before Tax
i	BAeHAL Software Ltd.	49	16.09	(2.13)
ii	Indo Russian Aviation Ltd.	48	90.20	20.98
iii	Safran HAL Aircraft Engines Pvt. Ltd.	50	106.88	11.76
iv	Samtel HAL Display System Ltd.	40	17.41	(2.31)
V	HAL-Edgewood Technologies Pvt. Ltd.	50	0.63	(0.21)
vi	HALBIT Avionics Pvt. Ltd.	50	4.05	(9.20)
vii	Infotech HAL Ltd.	50	9.09	1.29
viii	HATSOFF Helicopter Training Pvt. Ltd.	50	38.96	(7.74)
ix	TATA-HAL Technologies Ltd.	50	5.53	0.17
X	International Aerospace Manufacturing Pvt. Ltd.	50	155.45	1.48
xi	Multi-RoleTransport Aircraft Ltd.**	50	0.00	(10.12)
xii	Aerospace & Aviation Sector Skill Council (AASSC) *	50	0.32	(0.56)
xiii	Helicopter Engines MRO Private Ltd.	50	0.68	(2.71)
xiv	Defence Innovation Organisation*	50	-	-
Â	Name of the Subsidiaries	Â	Â	Â
XV	Indo Russian Helicopters Limited**	50.5	-	(0.49)
xvi	Naini Aerospace Limited	100	4.03	(12.95)
Â	TOTAL	Â	449.32	(13.35)

Note: Figures in brackets 0 indicate loss * Section-8 (non-profit) Companies. ** Not commenced operation

(b) During the current financial year, 2 (two) JVCs viz. Indo Russian Aviation Ltd and International Aerospace Manufacturing Pvt Ltd. have together paid a dividend of Rs. 1.815 Crs. to HAL.

SI. No.	Name of JVCs	Rs. In Crs
1	Indo Russian Aviation Ltd	1.73
2	International Aerospace Manufacturing Pvt Ltd	0.085
Â	Total	1.815

 

Â	For and on behalf of Board of Directors
Â	Hindustan Aeronautics Limited
Place : Bengaluru	(R. Madhavan)
Date : 27th July, 2019	Chairman & Managing Director

Annexure-lll to Board's Report

ANNUAL REPORT ON CORPORATE SOCIAL RESPONSIBILITY (CSR) ACTIVITIES FOR THE FINANCIAL YEAR 2018-19

1. A BRIEF OUTLINE OF THE COMPANY'S CSR POLICY, INCLUDING OVERVIEW OF PROJECTS OR PROGRAMS UNDERTAKEN AND A REFERENCE TO THE WEB-LINK TO THE CSR POLICY AND PROJECTS OR PROGRAMS

Brief outline of Company's CSR Policy:

In conformity with the provisions laid down under Section 135 of the Companies Act, 2013 and the Rules there under notified by the Ministry of Corporate Affairs on CSR, the CSR & SD Committee of the Board had redrafted / modified the CSR Policy which was approved by the Board of Directors of the Company at its 380* Meeting held on 27/11/14, which is amended from time to time. A brief outline of the CSR Policy is as follows:

> The Budget allocation for the CSR Projects will be two (2) percent of the Average Net Profits of the Company made during the three immediately preceding Financial Years. Average Net Profits shall be calculated in accordance with the provisions of Section 198 of the Companies Act, 2013.

> Preference is given to the local area and areas around the Divisions / Complexes where it operates, for spending the amount earmarked for Corporate Social Responsibility Projects / Activities.

> Conducting a base line survey is not a mandatory provision; accordingly, the Divisions / Complexes may opt for other methods, including use of its own in-house expertise and resources for need assessment studies. In this regard, it is to be noted that the Gram Sabhas and Panchayati Raj institutions at the village level are important and reliable sources for assessing the social, economic & environmental needs in rural areas. Therefore, as far as possible, they should be consulted in planning CSR Projects/Activities.

> The Divisions will choose CSR Projects / Activities, in line with the themes specified in Schedule VII of the Companies Act, 2013.

> The Divisions may take up long gestation Projects for reaping the maximum benefits and impact towards the Social, Economic & Environment status in the locations identified under CSR Projects. For easy implementation, long-term CSR plans should be broken down into medium-term & short-term plans.

> While implementing CSR Projects, it is mandatory to comply with the Rules / Regulations / Laws of the State. However, expenditure on such compliance / statutory measures will not be covered under CSR's financial component and would be considered as mainstream business spend / expenditure.

> Contribution of any amount directly or indirectly to any Political Party shall not be considered as a valid CSR Activity.

> The Divisions / Complexes will not take up Projects / Activities required to be implemented by the Government and / or for which Central / State Government Schemes have been sanctioned, as it could result in unnecessary duplication.

> The CSR Policy along with the CSR Projects / Activities to be undertaken is being displayed on the Company's Website, as per the particulars specified in the Act.

> The CSR Projects / Activities that benefit only the employees of the Company and their families will not be considered as a valid CSR Project / Activity.

> The surplus arising out of the CSR Projects / Activities shall not form part of the Business Profits of the Company.

Overview of the CSR Projects or Programmes undertaken during 2018-19:

The Projects were implemented with a view to bring in wholistic development, improve the quality of life of the socially & economically backward groups and marginalized & weaker Sections of the Society.

The Company has been taking up CSR Projects / Activities in the vicinity of the Divisions based on identified needs and availability of funds. An overview of some of the CSR Projects implemented during 2018-19 is indicated below:

a) Organic Waste Management Plant (Conversion of Municipal Waste & Food Waste to Bio Gas) at Nasik in line with the Swachh Bharat Mission:

The Organic Waste in and around the villages of Ojhar was dumped in pits, which was a breeding ground for mosquitoes and other insects. The area with foul smell was causing health hazards to the people living in the nearby villages. In order to overcome the problem and also to facilitate cleaner environment, recycle garbage and save energy, the Company undertook the Project of Organic Waste Management Plant under its CSR initiative. The main objective of the Project was to maintain high standards of hygiene / sanitation, environmental sustainability by way of disposal of Organic Waste under Swachh Bharat Mission, in and around the areas of Ojhar village, Niphad Taluk of Nasik District. The plant was inaugurated in November, 2018. It is one of the biggest Organic Waste Management Plants in the Taluk as on date.

The Plant is having a capacity to convert 5 Tonnes of Organic Waste per day. The waste collected from the areas in and around Ojhar village is being brought to a centralized location and segregated into pre-cooking and post cooking waste. The said waste after processing in the plant produces Bio gas, which in turn generates electricity. The electricity generated is re-used to run the plant. The excess electricity generated is distributed through Grid for Street Lights. As on date, the said Project is running at its peak capacity.

b) SAI-HAL Sports Training Centre - Koraput, Odisha State:

In its endeavour to identify and nurture tribal / local Rural Sports talent, the SAI-HAL Sports Training Centre is established at HAL, Koraput Division with technical support and posting of Coaches from the Sports Authority of India (SAI) [MoU with the Sports Authority of India (SAI) was signed during 2010, under its CSR initiatives]. Koraput Division had provided free training in Archery, Football & Athletics to 48 tribal students of undivided Kalahandi Balangir & Koraput (KBK) region, during 2018-19.

One of the Athletes, Shri Surendra Khora had bagged Gold Medal in 600 meter race in the 30th East Zone Athletic Championship held at Patna in September 2018. He had also bagged Gold Medal in 800 meter race in the "Under-16" age group category in the 66th State Athletic Meet held at Cuttack, Odisha during December, 2018.

The Division had successfully conducted the 7th State level Archery Prize Money Championship during the year. HAL, Koraput Division has also undertaken construction of a 400 meters, 8 lane athletic track at the Training Centre.

c) Installation of Water ATMs and Hand Pumps for Safe Drinking Water

In order to provide safe drinking water to the public who are coming to the City from nearby areas. Transport Aircraft Division (TAD), Kanpur of the Company had undertaken the Project of setting up of water ATMs at a cost of around Rs. 45 Lakhs in Public Places of Kanpur.

The Division has also installed 40 Hand Pumps at various nearby villages which not only benefitted the general public but also the poor and the needy.

d) Healthcare:

HAL Koraput Division had been providing inpatient and outpatient Healthcare facilities to the inhabitants of adopted villages. Medical/Health camps were organized in the vicinity of most of the Divisions of HAL. Regular Ambulance visits to the villages is an ongoing activity in some of the Divisions.

e) Kumudavathi River Rejuvenation Programme (Development of 4 Mini Watersheds at Mahadevpura,Torehosapalya, Motaganahalli & Kavalpalya Taluk, Bengaluru Rural District), Karnataka:

During 2014-15, the International Association for Human Values (IAHV), a sister Organization of the Art of Living Foundation, a Non-profit NGO, Bengaluru had approached HAL to support in rejuvenating the dried up River Basin of Kumudavathi. They had prepared an Action Plan to rejuvenate the River by using satellite remote sensing data with integrated thematic map analysis. Keeping in view the benefit which would accrue to a large population of the society, the Company had decided to associate in the Project for revival of the dried up natural water resource, during 2014-15.

7 Mini Watersheds out of the total 18 were implemented from 2014-15 to 2017-18. 4 Mini Watersheds were constructed during 2018-19. The cost incurred towards the construction of 11 Mini Watersheds was Rs. 14.39 Crores. Remaining 7 Water sheds have been completed by other Organisations at a cost of Rs. 7.04 Crores. The Project was completed by March, 2019.

The outcome of this rejuvenation project has been the revival of defunct bore wells, increase in the ground water level and irrigation tanks. This has resulted in various agri-horticulture developments in the region and a significant increase in natural vegetation and biodiversity. The Project would benefit a population of around 73,000.

f) Construction of Toilets in Public Places / Schools under Swachh Bharat Mission:

In line with the Government Policy on Swachh Bharat Mission, the Company had taken up construction of Toilets in Government Schools in the vicinity of its Units. The Company had constructed around 460 Toilets during the year 2018-19. 333 Toilets, 224 Urinals & 218 Washbasins were constructed in Bangalore itself in the past 5 years, benefiting more than 11,000 Students in various Government Schools, at a cost of Rs. 6.32 crores.

SHE Toilets:

Avionics Division, Hyderabad of the Company in association with the Greater Hyderabad Municipal Corporation (GHMC) had taken up a unique initiative of construction of SHE Toilets which would also benefit the Self Help Groups (SHGs). Salient features of the Project are as given below:

> GHMC formed Women Self Help Groups and they would manage the facility;

> SHE Toilets are also having facility for differently abled women and also facility/room for baby feeding;

> SHE Toilets not only serves its basic purpose but also helps in employment and revenue generation for Self Help Group Members in terms of sale of products in the adjoining facility/stall.

Tata Nest Toilets:

The Tata Nest Toilets, a non-profit organisation is empanelled with Ministry of Urban Development, Government of India. Based on the request received from the Zonal Commissioner (CSR), Greater Hyderabad Municipal Corporation (GHMC), West Zone, Cyberabad, Avionics Division, Hyderabad had installed Tata Nest Toilets in two Government Schools at a cost of Rs.5 lakhs, benefiting about 580 students, as part of Swachh Vidyalaya under Swachh Bharat Mission.

g) Clean Cooking Solutions (Livelihood Enhancement Project) -

Avionics Division, Korwa of the Company, as part of its CSR Projects / Activities in Barauliya Village which is at a distance of 10 Kms from the Division, had formed a Self Help Group (SHG), viz., Jai Matadi Urja for introducing clean cooking solutions for livelihood enhancement. Under the project, agricultural waste is collected and shredded in a machine. The shredded pieces are recycled into fuel pellets with the help of a Fuel Pellet Making Machine. These bio-degradable fuel pellets are used in specially designed stoves for cooking which do not generate any smoke. The stove has a rechargeable battery to drive a fan which helps in combustion.

The Division has installed one Fuel Pellet Making Machine with a Shredder at a cost of Rs. 5.55 Lakhs. Around 400 stoves (each costing Rs. 1900/-) have been distributed to Below Poverty Line households, in coordination with the Village Pradhan.

The salient features of the Project are:-

> Recycling of agricultural waste, like dried leaves and branches;

> Generation of Smoke Free Fuel Pellets;

> Smokeless Stoves have helped the health of the villagers;

> Generation of employment to the rural youth by way of selling the Fuel Pellets.

h) HAL Football Academy, Bangalore:

HAL Sports Club Bangalore, a pioneer in promoting sports had produced national level Football players in the past who had kept the HAL flag flying high. HAL team had participated in the prestigious l-League also.

To bring back the past glory, HAL as part of Corporate Social Responsibility (CSR) had started a Football Academy at Bangalore to spot / identify and nurture young talent in Football through professional tie-ups. The Academy for 'Under-15' was inaugurated in February 2016 and 'Under-18' coaching had commenced from August 2016. Efforts are also underway to form a National Football Academy in collaboration with the Sports Authority of India & AII India Football Federation.

The aim is to spot talent at a young age and develop players of exceptional calibre and prepare them for tough domestic and International tournaments. In addition to professional grooming, emphasis is also given on holistic Personality Development for the young players. Carefully selected players are being provided professional coaching.

Proper Infrastructure is one of the fundamental requirements in this regard. Keeping this in mind, HAL has developed two (2) FIFA standard football grounds, one with Artificial Turf and another with Natural Turf at Bangalore, which would help in development of individual skills. A third party agency is being finalised for running the Football Academy. The grounds can be used for training of other team(s), also. These grounds are also expected to be used by various top teams for training like l-League and Foreign teams when they visit Bangalore for tournaments or exhibition matches

The Academy is formed with aim to develop a pool of talent with the infrastructure developed by HAL. In the long run, the Academy would become a 'Centre of Excellence' in Football.

i) HAL CARES:

A Compendium of CSR Activities "HAL CARES" was published during the year. 'HAL CARES' is derived from the Company's enduring values of Compassion, Assistance, Respect, Ethics &Sustainability. These values drive the CSR activities that benefit thousands of individuals in various parts of the Country. The Compendium is focussed on important issues that afflict the Society today, viz.. Water Conservation, Cleanliness, Environment Protection, Healthcare etc. HAL is actively participating in the Sustainable Development of the Society by taking up projects aimed at rejuvenating the natural resources -Kumudavathi River Rejuvenation Project; environment protection - Installation of Solar Street Lights/Solar Power Projects (grid connected / off-grid) &Wind Power Projects. By focussing on sustainable projects, the Company is not only addressing the needs of today but also on securing a legacy for tomorrow. Change demands a call for action and this Compendium illustrates the significant steps that the Company has taken towards fulfilling commitment to the sustained growth of the nation.

The Compendium also brings out various CSR Projects taken up by the Company in spheres like Rural Infrastructure Development, Education, Skill Development, Healthcare, Sanitation & Toilets under Swachh Bharat Abhiyan, Sports Development etc.

2. COMPOSITION OF THE CSR & SD COMMITTEE AS ON 31st MARCH 2019 WAS AS UNDER:

Smt. Dipali Khanna, Independent Director, Member& Chairperson;

Shri V M Chamola, Director (HR), Member;

Shri Sunil Kumar, Director (Operations), Member;

Shri C B Ananthkrishnan, Director (Finance), Member;

Shri G V Sesha Reddy, Company Secretary, Secretary;

3	AVERAGE NET PROFIT OF THE COMPANY FOR THE LAST THREE FINANCIAL YEAR (2015-16, 2016-17 & 2017-18):	Rs. 3371.00 Crs
4	(a) PRESCRIBED CSR EXPENDITURE (2% OF THE AMOUNT AS IN ITEM 3 ABOVE :	Rs. 67.42 Crs
Â	(b) Revenue generated during 2017- 18 from the Wind Power Plant of 6.3 MW established at Davanagere, Karnataka utilizing CSR Funds, which was commissioned in 2015-16 under CSR:	Rs. 9.32 Crs
Â	(c) Total Budget (a+b) :	Rs. 76.74 Crs
5	DETAILS OF CSR SPENT DURING THE FINANCIAL YEAR :	Rs. 72.46 Crs
Â	Total amount to be spent during the Financial Year :	Rs. 76.74 Crs
Â	Amount unspent, if any :	Rs. 4.28 Crs

Manner in which the amount was spent during the Financial Year is detailed in Appendix-A

6. IN CASE THE COMPANY HAS FAILED TO SPEND THE TWO PER CENT OF THE AVERAGE NET PROFIT OF THE LAST THREE YEARS OR ANY PART THEREOF, THE COMPANY SHALL PROVIDE THE REASONS FOR NOT SPENDING THE AMOUNT IN ITS BOARD'S REPORT

There was a shortfall in expenditure of Rs. 4.28 crores against the actual CSR Budget of Rs. 76.74 Crores. Reasons for the shortfall are given below:

a) Establishment of a Centralized Kitchen at Semiliguda, Koraput District, Odisha for feeding 25000 children in Govt. and Govt. aided Schools under the Mid-Day Meal programme at a Budgeted amount of Rs. 9.80 crores could not be commenced during the year due to delay in finalization of the MoU, sanction of land from State Govt., finalizing the Tripartite Agreement between State Govt. of Odisha, Akshaya Patra Foundation & HAL, delay in obtaining approvals etc. The project will commence during the year 2019-20.

b) Construction of Skill Development Centre cum Multipurpose Halls in Nasik and Dhule Districts of Maharashtra at a Budgeted amount of Rs. 7.00 Crores could not progress as per the schedule (commenced in the month of March 2019) due to delay in obtaining approvals / clearances from the concerned Authorities.

7. RESPONSIBILITY STATEMENT:

The Responsibility Statement of the CSR&SD Committee of the Board of Directors of the Company is reproduced below: The Implementation & Monitoring of the CSR Policy is in compliance with the CSR Objectives and Policy of the Company.

(V.M. Chamola)	(Dipali Khanna)
Director (HR)	Chairperson, CSR & SD Committee

Appendix A

CSR ANNUAL REPORT 2018-19

Â	Â	Â	Â	Â	Â	Â	Â	Â	Rs.in Lakhs
Name of the Division/ Office	SI. No.	CSR Project / Activity Identified	Sector in which the project is covered	Projects or Programmes 1) Local area or other 2)Specify the State and District where Projects or Programs were undertaken	Amount Outlay (Budget) Project or Programe-wise	Amount Spent on the Projects or Programmes Direct Expenditure on Projects or Programmes	Administrative overhead Expenditure	Cumulative expenditure up to the reporting period	Mode of Implementation ( Direct or through implementing Agencies)
Corporate Office	1	Establishment of HAL -IISc Skill Development Centre	II	IISc New Campus at Challakere, Chitradurga Dist, Karnataka	1970.00	1638.00	0.00	1638.00	IISc, Bangalore
Â	2	Sponsorship of 5 M.Tech Students of CTARA, IIT- Bombay	II	IIT Bombay	40.00	36.24	0.00	36.24	IIT-Bombay
Â	3	Expenditure incurred towards training of Apprentice Trainees over and above the minimun statutory limit of 2.5% upto 10% of the total strength of the establishment including the Contractual Staff.	Â	Divisions of HAL	1100.00	1807.16	0.00	1807.16	Direct
Â	4	Administrative Expenses	_	Bangalore, Karnataka	51.29	0.00	51.29	51.29	Direct
Â	Â	Sub Total	Â	Â	3161.29	3481.40	51.29	3532.69	Â
TTI, Bangalore	1	Centre of Excellence [Carry Forward Project of 2017-18 expenditure incurred in 2018-19]	II	TTI-Bangalore, Karnataka	195.62	195.62	0.00	195.62	Direct
Â	Â	Sub Total	Â	Â	195.62	195.62	0.00	195.62	Â
FMD, Bangalore	1	21 Toilets under Swachh Vidyalaya for Govt. Schools in Chikkaballapura Dist.	I	Chikkaballapura District, Karnataka	110.00	51.99	0.00	51.99	Direct
Â	2	30Toilets under Swachh Vidyalaya for Govt. Schools in Doddaballapura Dist.	Â	Doddaballapura District, Karnataka
Â	3	Development of Kumudavathi River Rejuvenation Project (on going Project) 4 Mini Watersheds . [The expenditure incurred in 2018-19 is inclusive of the Carry Forward Budget of 2017-18]	IV	Bangalore Rural District, Karnataka	400.00	257.16	0.00	257.16	International Association Human Values (IAHV) a Sister Organization of Art of Living
Â	4	Foot Ball Academy at Bangalore	VII	Bangalore Urban District, Karnataka	30.00	35.08	0.00	35.08	Direct
Â	5	Gallery in Football Ground [The expenditure incurred in 2018-19 is inclusive of the Carry Forward Budget of 2017-18]	VII	Bangalore Urban District, Karnataka	150.00	304.30	0.00	304.30	Direct
Â	6	Administrative Expenses	_	Bangalore, Karnataka	30.05	0.00	30.05	30.05	Direct
Â	7	Carry Forward Projects of 2017-18 (expenditure incurred in 2018-19)	-	Chikkaballapura District, Doddaballapura District, Bangalore Rural & Urban District, Karnataka	44.91	44.91	0.00	44.91	Direct
Â	Â	Sub Total	Â	Â	764.96	693.44	30.05	723.49	Â

 

Name of the Division/ Office	SI. No.	CSR Project / Activity Identified	Sector in which the project is covered	Projects or Programmes 1) Local area or other 2)Specify the State and District where Projects or Programs were undertaken	Amount Outlay (Budget) Project or Programe-wise	Amount Spent on the Projects or Programmes Direct Expenditure on Projects or Programmes	Administrative overhead Expenditure	Cumulative expenditure up to the reporting period	Mode of Implementation ( Direct or through implementing Agencies)
Barrackpore	1	Development of Orphanage Home/Old age Home	III	24 Parganas (North), West Bengal	3.50	3.50	0.00	3.50	Apnapan Orphanage /Old Age Home, Barrackpore
Â	2	Construction of low cost Household Toilets for BPL under Swachha Bharat Mission	X	24 Parganas (South), West Bengal	5.33	5.32	0.00	5.32	Gram Panchayat
Â	3	Rural Development - Development of Self Help groups (SHG) by constructing cottage with water facility & furniture for running Community Based Tourism for Livelihood	X	24 Parganas (South), West Bengal	15.42	8.04	0.00	8.04	Gram Panchayat
Â	4	Promoting special education for the differently abled Children	III	24 Parganas (North), West Bengal	0.50	0.50	0.00	0.50	Anandapuri Hindu Primary School, Barrackpore
Â	5	Providing Training on Community Based Tourism to SHG for running the Cottage for livelihood	III	24 Parganas (South), West Bengal	0.25	0.25	0.00	0.25	Gram Panchayat
Â	6	Carry Forward Projects of 2017-18 (expenditure incurred in 2018-19)	-	24 Parganas, West Bengal	11.83	11.83	0.00	11.83	Direct
Â	Â	Sub Total	Â	Â	36.83	29.44	0.00	29.44	Â
Lucknow	1	Rural Development Projects (Roads / Multipurpose Shed, Water Supply etc. In villages)	X	Barabanki / Lucknow District, Uttar Pradesh	49.00	36.14	0.00	36.14	Direct
Â	2	Construction Work / Renovation Work at Schools	II&X	Barabanki / Lucknow District, Uttar Pradesh	169.00	119.41	0.00	119.41	Direct
Â	3	Medical Camps & Services	I	Barabanki / Lucknow District, Uttar Pradesh	20.00	18.50	0.00	18.50	Direct
Â	4	Skill Development Project	II	Barabanki / Lucknow District, Uttar Pradesh	52.00	44.01	0.00	44.01	Direct
Â	5	Administrative Expenses	_	Lucknow District, Uttar Pradesh	54.58	0.00	54.58	54.58	Direct
Â	6	Carry Forward Projects of 2017-18 (expenditure incurred in 2018-19)	-	Barabanki / Lucknow District, Uttar Pradesh	62.06	62.06	0.00	62.06	Direct
Â	Â	Sub Total	Â	Â	406.64	280.12	54.58	334.70	_

 

Name of the Division/ Office	SI. No.	CSR Project / Activity Identified	Sector in which the project is covered	Projects or Programmes 1) Local area or other 2)Specify the State and District where Projects or Programs were undertaken	Amount Outlay (Budget) Project or Programe-wise	Amount Spent on the Projects or Programmes Direct Expenditure on Projects or Programmes	Administrative overhead Expenditure	Cumulative expenditure up to the reporting period	Mode of Implementation ( Direct or through implementing Agencies)
Hyderabad	1	Construction of Class Rooms to GUPS	II	Kasargod District, Kerala	20.00	20.00	0.00	20.00	District Administration Kasaragod
Â	2	Indoor Stadium for trainings promotion of Kabaddi & Badminton	VII	Kasargod District, Kerala	23.00	23.00	0.00	23.00	District Administration Kasaragod
Â	3	Public Toilets at Kanhangad	I	Kasaragod District, Kerala	7.00	7.00	0.00	7.00	District Administration Kasaragod
Â	4	Construction of Kitchen Block (88 Sq. mtrs) at ZPHS. Siddapur	II	RR District, Telangana	8.00	8.00	0.00	8.00	District Administration Ranga Reddy
Â	5	Construction of Toilets (75 Sq. mtrs) at ZPHS, Siddapur	I	RR District, Telangana	10.00	10.00	0.00	10.00	District Administration Ranga Reddy
Â	6	Construction of Stage (185 Sq. mtrs.) in ZPHS, Siddapur	II	RR District, Telangana	12.00	12.00	0.00	12.00	District Administration Ranga Reddy
Â	7	Construction of underground sump in ZPHS, Siddapur	II	RR District, Telangana	0.85	0.85	0.00	0.85	District Administration Ranga Reddy
Â	8	Construction of site works in ZPHS, Siddapur	II	RR District, Telangana	3.00	3.00	0.00	3.00	District Administration Ranga Reddy
Â	9	Construction of Bus Shelter at Devunibanda Thanda	X	RR District, Telangana	2.56	1.63	0.00	1.63	District Administration Ranga Reddy
Â	10	Construction of UPS School Dinning Hall cum Kitchen at Gantlavelly	II	RR District, Telangana	12.29	7.99	0.00	7.99	District Administration Ranga Reddy
Â	11	Construction of Compound wall to crematorium at Gantlavelly	X	RR District, Telangana	2.00	1.30	0.00	1.30	District Administration Ranga Reddy
Â	12	Construction of Compound wall to dumping yard at Gantlavelly	X	RR District, Telangana	4.00	2.60	0.00	2.60	District Administration Ranga Reddy
Â	13	Construction of Compound Wall to Anganwadi Building at Gantlavelly	X	RR District, Telangana	4.00	2.60	0.00	2.60	District Administration Ranga Reddy
Â	14	Construction of Compound wall to Primary School Building at Devunibanda Tanda	II	RR District, Telangana	5.60	3.64	0.00	3.64	District Administration Ranga Reddy

 

Name of the Division/ Office	SI. No.	CSR Project / Activity Identified	Sector in which the project is covered	Projects or Programmes 1) Local area or other 2)Specify the State and District where Projects or Programs were undertaken	Amount Outlay (Budget) Project or Programe-wise	Amount Spent on the Projects or Programmes Direct Expenditure on Projects or Programmes	Administrative overhead Expenditure	Cumulative expenditure up to the reporting period	Mode of Implementation ( Direct or through implementing Agencies)
Â	15	Construction of Compound wall to veterinary building at Gantlavelly	X	RR District, Telangana	5.00	3.25	0.00	3.25	District Administration Ranga Reddy
Â	16	Construction of Community Hall at Gantlavelly	X	RR District, Telangana	15.00	9.75	0.00	9.75	District Administration Ranga Reddy
Â	17	Construction of SchoolToilet Blocks for Boys and Girls in Upper Primary School at Gantlavelly	I	RR District, Telangana	12.00	7.80	0.00	7.80	District Administration Ranga Reddy
Â	18	Sports kits / material to UPS at Gantlavelly	VII	RR District, Telangana	1.00	0.65	0.00	0.65	District Administration Ranga Reddy
Â	19	(60) Dual Desks in UPS Gantlavely and Devunibanda Tanda	II	RR District, Telangana	2.50	1.63	0.00	1.63	District Administration Ranga Reddy
Â	20	Digitalization of 7 Class Rooms at Gantlavelly	II	RR District, Telangana	2.00	1.30	0.00	1.30	District Administration Ranga Reddy
Â	21	Constructions of additional class rooms in ZPHS at Chinchalpet	II	Vikarabad District, Telangana	25.00	16.25	0.00	16.25	District Administration Ranga Reddy
Â	22	LCD Projectors (3 nos.) and S-type chairs (330) to EWRC Training Centre Skill Development	II	RR District, Telangana	10.00	10.00	0.00	10.00	District Administration Ranga Reddy
Â	23	Imparting Police Recruitment (Physical Fitness & Mental Ability) training to under privileged youth	II	RR District, Telangana	15.00	9.75	0.00	9.75	District Administration Ranga Reddy
Â	24	Organic Waste Composting Machine-Bio Mechanisation	I	Cyberabad, Hyderabad Telangana	24.76	24.76	0.00	24.76	Zonal Commissioner, GHMC
Â	25	SHE Toilets at West Zone, Cyberabad area of GHMC	I	Cyberabad, Hyderabad/ Telangana	10.44	10.44	0.00	10.44	Zonal Commissioner, GHMC
Â	26	Tata Nest Toilets	I	West Zone Hyderabad / Telangana	5.00	5.00	0.00	5.00	Zonal Commissioner, GHMC
Â	27	Construction of 8 Nos. Class Rooms &Two Toilets in ZPHS Kothapet	II	Medchal District, Telangana	60.00	18.00	0.00	18.00	District Administration Medchal
		Two unitsToilets in ZPHS Kothapet	Â	Â
Â	28	Administrative Expences	Â	Hyderabad, Telangana	16.41	0.00	16.41	16.41	Direct
Â	Â	Sub Total	Â	Â	318.41	222.19	16.41	238.60	Â

 

Name of the Division/ Office	SI. No.	CSR Project / Activity Identified	Sector in which the project is covered	Projects or Programmes 1) Local area or other 2)Specify the State and District where Projects or Programs were undertaken	Amount Outlay (Budget) Project or Programe-wise	Amount Spent on the Projects or Programmes Direct Expenditure on Projects or Programmes	Administrative overhead Expenditure	Cumulative expenditure up to the reporting period	Mode of Implementation ( Direct or through implementing Agencies)
Kanpur	1	Adopt ion of wild animals /birds of Kanpur Zoological Park	IV	Kanpur District, Uttar Pradesh	10.00	10.00	0.00	10.00	Kanpur Zoo
Â	2	Wholesome development (Toilets for Ladies & Gents, Community Centre, Renovation of School Building, Drinking Water, Roads, Medical Camps etc.) of villages nearby to HAL TAD Kanpur	X	Kanpur District, Uttar Pradesh	30.00	28.59	0.00	28.59	Direct
Â	3	Swachh Bharat Action Plan - Provisioning and Construction of Toilets in Govt. Schools, Public places and nearby Areas of HAL Kanpur	Â	Kanpur District, Uttar Pradesh	50.00	37.27	0.00	37.27	Direct
Â	4	Procurement of Artificial Limbs &Tools for Differently Abled persons registered with V R C (Govt. of India) Kanpur through ALIMCO	Â	VRC (Govt, of India) Kanpur & ALIMCO, Kanpur, Kanpur District Uttar Pradesh.	15.00	13.53	0.00	13.53	VRC Kanpur
Â	5	Skill Development: Imparting vocational training & distribution of tool kits to the needy people to help them become self reliant [Through Institute of Entrepreneurship Development (IED), Govt. of U.P.]	Â	Kanpur District, Uttar Pradesh	20.00	19.81	0.00	19.81	IED, Lucknow
Â	6	Installation of Water ATMs at Public Places in Kanpur Nagar	I	Kanpur District, Uttar Pradesh	45.00	21.83	0.00	21.83	Direct
Â	7	Renovation Work at Public Library including provisioning of Books, Rack Facilities, etc.,	V	Kanpur District, Uttar Pradesh	15.00	13.27	0.00	13.27	Direct
Â	8	Renovation and other allied works (i.e., Solar Power Plant of 5 KW) at Govt. Orphanage for Girls	III	Kanpur District, Uttar Pradesh	20.00	18.42	0.00	18.42	Direct
Â	9	Restoration of historical site and beautification of "Sher Shah Suri" Pond adjacent to TAD-Kanpur	V	Kanpur District, Uttar Pradesh	10.00	11.63	0.00	11.63	Direct /Kanpur Nagar Nigam
Â	10	Development of Play Ground and Conduct of Sports in Rural Village near HAL Kanpur	VII	Kanpur District, Uttar Pradesh	10.00	13.22	0.00	13.22	Direct
Â	11	Administrative Expenses	_	Kanpur District, Uttar Pradesh	16.00	_	16.00	16.00	Direct
Â	12	Carry Forward Projects of 2017-18 (expenditure incurred in 2018-19)	-	Kanpur District, Uttar Pradesh	75.00	130.96	0.00	130.96	Direct
Â	Â	Sub Total	Â	Â	316.00	318.53	16.00	334.53	Â

 

Name of the Division/ Office	SI. No.	CSR Project / Activity Identified	Sector in which the project is covered	Projects or Programmes 1) Local area or other 2)Specify the State and District where Projects or Programs were undertaken	Amount Outlay (Budget) Project or Programe-wise	Amount Spent on the Projects or Programmes Direct Expenditure on Projects or Programmes	Administrative overhead Expenditure	Cumulative expenditure up to the reporting period	Mode of Implementation (Direct or through implementing Agencies)
Korwa	1	Construction / Repairing / resurfacing of roads in nearby villages [The expenditure incurred in 2018-19 is inclusive of the Carry Forward Budget of 2017-18]	X	Amethi District, Uttar Pradesh	45.00	50.40	0.00	50.40	Direct
Â	2	Construction of Community Centre [The expenditure incurred in 2018-19 is inclusive of the Carry Forward Budget of 2017-18]	X	Amethi District, Uttar Pradesh	80.00	73.63	0.00	73.63	Direct
Â	3(a)	School renovation works - Civil works [The expenditure incurred in 2018-19 is inclusive of the Carry Forward Budget of 2017-18]	Â	Amethi District, Uttar Pradesh	25.00	27.61	0.00	27.61	Direct
Â	3(b)	School Renovation -provision of school furniture, where renovation works undertaken in previous years	II	Amethi District, Uttar Pradesh	10.00	29.46	0.00	29.46	Direct
Â	4	Literacy, livelihood projects, safe drinking water, etc. through external agency [The expenditure incurred in 2018-19 is inclusive of the Carry Forward Budget of 2017-18]	Â	Amethi District, Uttar Pradesh	40.00	20.94	0.00	20.94	Direct
Â	5	Construction of Rural Markets (Sabji & Non-veg) in the nearby villages	X	Amethi District, Uttar Pradesh	20.00	14.02	0.00	14.02	Direct
Â	6	Administrative Expenses	_	Amethi District, Uttar Pradesh	25.00	_	24.07	24.07	Direct
Â	7	Carry Forward Projects of 2017-18 (expenditure incurred in 2018-19)	-	Amethi District, Uttar Pradesh	40.45	40.45	0.00	40.45	Direct
Â	Â	Sub Total	Â	Â	285.45	256.51	24.07	280.58	Â

 

Name of the Division/ Office	SI. No.	CSR Project / Activity Identified	Sector in which the project is covered	Projects or Programmes 1) Local area or other 2)Specify the State and District where Projects or Programs were undertaken	Amount Outlay (Budget) Project or Programe-wise	Amount Spent on the Projects or Programmes Direct Expenditure on Projects or Programmes	Administrative overhead Expenditure	Cumulative expenditure up to the reporting period	Mode of Implementation (Direct or through implementing Agencies)
Nasik	1	Repairs to Service Road from NH3 to Sakora Village	X	Nasik District, Maharashtra	112.00	47.23	0.00	47.23	Direct
Â	2	Construction of toilets near Fruit Market, Ojhar	X	Nasik District, Maharashtra	40.00	13.93	0.00	13.93	Direct
Â	3	Construction of ZP school Building at Kokangaon	X	Nasik District, Maharashtra	50.00	69.71	0.00	69.71	Direct
Â	4	Providing medical facilities to nearby tribal villages	'	Nasik District, Maharashtra	30.00	2.62	0.00	2.62	Direct
Â	5	Skill Development ITI, Kalwan	II	Nasik District, Maharashtra	78.00	21.18	0.00	21.18	Direct
Â	6	Provision of Infrastructure facility to ZP Schools	X	Nasik District, Maharashtra	10.00	7.63	0.00	7.63	Direct
Â	7	Provision of Computer, Projectors to ZP schools	II	Nasik District, Maharashtra	5.00	5.48	0.00	5.48	Direct
Â	8	Repairs of Check Dams in Nasik District	II	Nasik District, Maharashtra	25.00	15.08	0.00	15.08	Direct
Â	9	Construction of Skill Development Centre cum Multipurpose Hall in Dhuliya & Nasik District	II	Dhulia District, Maharashtra	500.00	252.00	0.00	252.00	Direct
Â	10	Construction of skill development centre cum multipurpose hall in Nasik	II	Nasik District, Maharashtra	200.00	103.00	0.00	103.00	Direct
Â	11	Administrative Expenses	_	Nasik District, Maharashtra	60.00	0.00	60.00	60.00	Direct
Â	12	Carry Forward Projects of 2017-18 (expenditure incurred in 2018-19)	-	Nasik District, Maharashtra	150.00	92.83	0.00	92.83	Direct
Â	Â	Sub Total	Â	Â	1260.00	630.69	60.00	690.69	Â
Koraput	1	Imparting Education to poor children in and around Sunabeda, Koraput in Schools	II	Koraput District, Odisha	500.00	500.00	0.00	500.00	Direct
Â	2	SAI-HAL Sports Training Centre at Koraput	VII	Koraput District, Odisha	60.00	56.89	0.00	56.89	Direct
Â	3	Development of 400 Meters Athletics Track at SAI-HAL Sports Training Centre, Sunabeda	VII	Koraput District, Odisha	150.00	48.52	0.00	48.52	Direct
Â	4	Organizing village Sports tournaments and supply of Sports / Fitness equipment to adopted villages	VII	Koraput District, Odisha	10.00	6.52	0.00	6.52	Direct
Â	5	Providing Health care facilities to the inhabitants of Adopted Villages and health camps in the surrounding villages	I	Koraput District, Odisha	40.00	42.29	0.00	42.29	Direct

 

Name of the Division/ Office	SI. No.	CSR Project / Activity Identified	Sector in which the project is covered	Projects or Programmes 1) Local area or other 2)Specify the State and District where Projects or Programs were undertaken	Amount Outlay (Budget) Project or Programe-wise	Amount Spent on the Projects or Programmes Direct Expenditure on Projects or Programmes	Administrative overhead Expenditure	Cumulative expenditure up to the reporting period	Mode of Implementation (Direct or through implementing Agencies)
Â	6	Skill Development /Vocational Training through CIPET or any other Institutions	II	Koraput District, Odisha	45.00	42.19	0.00	42.19	CIPET Bhubaneswar & Balalsore
Â	7	Construction of Internal village CC Road with Drain in Dumuriput Village under Swachh Bharat Mission	I&X	Koraput District, Odisha	62.00	41.45	0.00	41.45	Direct
Â	8	Construction of internal village CC road with drain and cleaning of natural stream based pond & its development at Sanabadigaon village under Swachh Bharat Mssion	I&X	Koraput District, Odisha	52.00	39.16	0.00	39.16	Direct
Â	9	Rural Development Projects in the surrounding villages viz Construction of Community hall, School building, Dining Room, Toilets, development of play ground, open well etc	X	Koraput District, Odisha	62.00	25.46	0.00	25.46	Direct
Â	10	Plantation of 45000 Fruit bearing and ornamental saplings in the surrounding villages	IV	Koraput District, Odisha	10.00	7.82	0.00	7.82	Direct
Â	11	Promotion of tribal arts and culture of Koraput District by supporting District Administration, Koraput in organizing State Level Tribal Fair" PARAB".	V	Koraput District, Odisha	10.00	10.00	0.00	10.00	Direct
Â	12	Empowering women through promotion of Self Help Groups	III	Koraput District, Odisha	5.00	1.05	0.00	1.05	Direct
Â	13	Assistance to differently abled schools like MANAS, Orphanage school, Old age Home and administrative overheads	III	Koraput District, Odisha	7.00	2.23	0.00	2.23	Direct
Â	14	Administrative Expenses	_	Koraput District, Odisha	41.09	_	41.09	41.09	Direct
Â	15	Carry Forward Projects of 2017-18 (expenditure incurred in 2018-19)	-	Koraput District, Odisha	20.29	20.29	0.00	20.29	Direct
Â	Â	Sub Total	Â	Â	1074.38	843.87	41.09	884.96	Â
Â	Â	Grand Total	Â	Â	7819.58	6951.81	293.49	7245.30	_

Annexure- IV to Board's Report

FORM MR-3

SECRETARIAL AUDIT REPORT FOR THE FINANCIAL YEAR ENDED ON 31st MARCH, 2019

[Pursuant to Section 204(1) of the Companies Act, 2013 and Rule No.9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014]

To,

The Members,

HINDUSTAN AERONAUTICS LIMITED

15/1, CUBBON ROAD, BANGALORE - 560001

I have conducted the Secretarial Audit of the compliance of applicable statutory provisions and the adherence to good corporate practices by HINDUSTAN AERONAUTICS LIMITED

(CIN:L35301KA1963GOI001622) (hereinafter called the Company). Secretarial Audit was conducted in a manner that provided me a reasonable basis for evaluating the corporate conducts/statutory compliances and expressing my opinion thereon.

I have examined the books, minute books, forms and returns filed and other records maintained by the Company for the financial year ended, 31st March, 2019 made available to me.

Based on my verification of the Company's books, papers, minute books, forms and returns filed and other records maintained by the Company and also the information provided by the Company, its officers, agents and authorized representatives during the conduct of Secretarial Audit, I hereby report that, in my opinion, the Company has, during the audit period covering the financial year ended 31st March, 2019, complied with the statutory provisions listed hereunder and also that the Company has proper Board-processes and compliance-mechanism in place to the extent, in the manner and subject to the reporting made hereinafter:

(i) The Companies Act, 2013 (the Act) and the Rules made thereunder;

(ii) The Securities Contracts (Regulation) Act, 1956 ('SCRA') and the Rules made thereunder;- From the date the said Act and Rules are applicable to the Company.

(iii) The Depositories Act, 1996 and the Regulations and Bye-laws framed thereunder;- The Company has demated the entire shares and has complied with the provisions of the Act and Regulations.

(iv) Foreign Exchange Management Act, 1999 and the Rules and Regulations made thereunder to the extent of Foreign Direct Investment, Overseas Direct Investment and External Commercial Borrowings, wherever applicable.

(v) The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 (SEBI) from the date the said Act and Regulations and Guidelines are applicable to the Company.

a) The Securities and Exchange Board of India (Substantial Acquisition of Shares and Take overs) Regulations, 2011 -Nil

b) The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015

c) The Securities and Exchange Board of India (Share based Employee benefit) Regulations, 2014

d) The Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015

I have also reviewed the systems and mechanisms established by the Company for ensuring compliances under other applicable Acts, Laws, Rules, Regulations, Guidelines applicable to the Company and categorized under the following major heads/ groups:

1. Industrial (Development and Regulation) Act, 1951 as amended "I(D&R)ACT"

2. Foreign Trade (Development and Regulation) Act, 1992, Foreign Trade Policy (2015-2020) and Foreign Trade (Exemption from Application of Rules in Certain cases) Order 1993.

3. Defence Procurement Procedure, 2016

4. The Aircraft Act, 1934 and the Aircraft Rules, 1937

5. Arms Act,1959 and Arms Rules 1962

6. Explosives Act, 1884

7. Prevention of Corruption Act, 1988

8. Official Secrets Act, 1923

9. Intellectual Property Laws

10. The Legal Metrology Act, 2009

11. The Legal Metrology (Approval of Models)Rules, 2011

12. Trade Marks Act, 1999

13. The Patents Act, 1970

14. Indian Copyright Act, 1957 and Copyright Rules, 1957

15. The Design Act, 2000

16. Environmental Laws

a) The Environment (Protection Act), 1986

b) The Air ( Prevention & Control of Pollution) Act, 1981

c) The Water (Preventions Control of Pollution) Act, 1974

d) The Water (Prevention & Control of Pollution) Cess Act, 1977

e) The Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016

f) Manufacture, Storage and Import of Hazardous Chemical Rules, 1989

g) The Noise Pollution (Regulation & Control) Rules, 2000 h) Public Liability Insurance Act, 1991

i) Other applicable statues imposed by Centre or the State Government from time to time.

17. Labour Laws, Rules and Regulations applicable to the employees of the Company, including Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

18. Indian Contracts Act, 1872.

I have also examined compliance with the applicable clauses of the Secretarial Standards issued by the Institute of Company Secretaries of India.

I Report that during the period under review, the Company has complied with the provisions of the applicable Other Acts, Rules, Regulations, Guidelines and Secretarial Standards, etc. mentioned above.

I have not examined compliance by the Company with applicable financial laws, like direct and indirect tax laws and maintenance of financial records and books of accounts, since the same are subject to review by statutory financial audit, CAG Audit and Internal Audit.

I further report that the Board of Directors of the Company is duly constituted with proper balance of Executive Directors, Non-Executive Directors, Independent Directors and Women Directors.

The Company has constituted following Statutory Committees.

1) Audit Committee

2) CSR & Sustainable Development Committee

3) Stakeholders Relationship Committee

4) Nomination and Remuneration Committee

5) Risk Management Committee

Adequate notice is given to all Directors to schedule the Board Meetings, agenda and detailed notes on agenda are sent in 7 days in advance, and a system exists for seeking and obtaining further information and clarifications on the agenda items before the meeting and for meaningful participation at the meeting.

The Minutes of Meetings of the Board and its Sub Committees and of Shareholders are maintained properly.

I further report that there are adequate systems and processes in the Company commensurate with the size and operations of the Company to monitor and ensure compliance with other applicable laws, rules, regulations and guidelines.

Â	S.Viswanathan
Â	Practicing Company Secretary
Â	ACS No: 5284
Â	CP No: 5284
Place: Bengaluru	Â
Date: 4th May, 2019	Â
Encl: Annexure A	Â

Annexure A

To

The Members

HINDUSTAN AERONAUTICS LIMITED

My report of even date is to be read along with this letter.

1) Maintenance of secretarial record is the responsibility of the management of the Company. My responsibility is to express an opinion on these secretarial records based on my audit.

2) I have followed the audit practices and process to obtain reasonable assurance about the correctness of the contents of the secretarial records. The verification was done on test basis to ensure that correct facts are reflected in secretarial records. I believe that the process and practices, I followed provide a reasonable basis for my opinion.

3) I have not verified the correctness and appropriateness of financial records and Books of Accounts of the Company.

4) Wherever required, I have obtained the Management representation about the compliance of laws, rules and regulations and happening of events, etc.

5) The compliance of the Corporate and other applicable laws, rules, regulations, standards is the responsibility of management. My examination was limited to the verification of procedure on test basis.

6) The Secretarial Audit report is neither an assurance as to the future viability of the Company nor of the efficacy or effectiveness with which the management has conducted the affairs of the Company.

Â	S. Viswanathan
Â	Practicing Company Secretary
Â	ACS No: 5284
Â	CP No: 5284
Place: Bengaluru	Â
Date: 4th May, 2019	Â

 

---

Mar 31, 2018

Board’s Report

Dear Shareholders,

The Board of Directors takes pleasure in presenting their 55^th Annual Report on the performance of the Company, together with the Audited Financial Statements for the financial year ended 31^st March, 2018 and reports of the Statutory Auditors and the Comptroller and Auditor General of India thereon.

Financial Results and Performance Highlights:

The financial highlights for the year ended 31^st March, 2018 are summarized as under:

(RS, in Lakhs)

PARTICULARS	1 2017-18 1	2016-17
Turnover	18,28,386	17,60,379
Exports	31,402	46,502
Profit Before Tax (PBT)	3,32,284	3,58,258
Provision for Tax	1,25,243	96,695
Profit After Tax (PAT)	2,07,041	2,61,563
R&D Expenditure	1,61,186	1,28,373
Earnings/ Share	58.50	72.35
Book Value / Share	360	347

During the year under review, the Company''s turnover increased to RS,18,28,386 Lakhs from RS,17,60,379 Lakhs in FY 2016-17. Profit Before Tax for the year is RS,3,32,284 Lakhs as against RS,3,58,258 Lakhs in the previous year. The Profit After Tax (PAT) for the year is RS,2,07,041 Lakhs.

Dividend

During the year, your Company paid first interim dividend of RS,23.92 per share of RS,10 each (239%) on 9^th March, 2018 and second interim dividend of H8.25 per share (83%) on 31^st March, 2018, totaling to RS,1,07,587 Lakhs, excluding dividend tax of RS,21,902 Lakhs.

Amount Transferred to Reserves

An amount of RS,16,723 Lakhs was transferred to Research & Development Reserve for the year 2017-18.

Further, an amount of RS,58,118 Lakhs was transferred to General Reserves for the year 2017-18.

Buy back of Shares

During the year, the Company bought back 2,71,12,500 equity shares of RS,10/- each from the President of India at an offer price of RS,339.88 per share and paid total buy back consideration of RS,92,150 Lakhs excluding buy-back tax of RS,20,636 Lakhs on 19^th December, 2017.

Disinvestment and Listing on Stock Exchanges

The Company made Initial Public Offering (IPO) of 3,41,07,525 Equity Shares of RS,10/- each through an Offer for Sale by the President of India, acting through the Department of Defence Production, Ministry of Defence, Government of India. The shares of the Company were listed on both BSE Ltd. and National Stock Exchange of India Ltd on 28^th March, 2018.

Indian Accounting Standards

The Financial Statements have been prepared in compliance with Indian Accounting Standards (Ind-AS) and provisions of the Companies Act, 2013.

Internal Financial Controls

The Company has in place adequate internal financial controls with reference to financial statements. A detailed note on internal financial controls is provided in the Management Discussion and Analysis Report.

Significant Achievements

The Financial Year 2017-18 was an eventful year and various goals set in the beginning of the year were successfully accomplished.

- Production of 40 aircraft and helicopters:

o Production of fixed wing aircraft - LCA Tejas, Dornier Do-228 and Su-30 MKI. o Civil certification of Dornier Do-228 o Production of Rotary Wing aircraft - Advanced Light Helicopter (ALH) Dhruv, Rudra and Cheetal helicopter.

- Overhaul of 220 aircraft/helicopters

- Engines:

- Production of 105 new engines; o Substantial progress on the Company''s new offerings Hindustan Turbo Fan Engine - 25 (HTFE) and Hindustan Turbo Shaft Engine (HTSE) 1200 with successful engine runs;

- Overhaul of 550 engines

- Continuation of export activities

- Space:

- Manufacture of 146 new aero-structures.

- Successful production of the tallest ever Pay Load Fairing, which protected the fragile GSAT-19 satellite and other sensitive crucial equipment for Geosynchronous Satellite Launch Vehicle (GSLV) Mk III

- India''s heaviest rocket during the launch phase.

- Make-in-India: To provide major boost to defence manufacturing and Government''s ''Make-in-India'' initiative, HAL invited Expression of Interest (EOI) for identification of Indian Partner for manufacturing of indigenous Advanced Light Helicopter (ALH) -Dhruv (Civil version) through Transfer of Technology (ToT) for civil sector in February, 2018.

Program Developments:

The Company achieved significant progress in various R&D / Development Projects viz. Basic Trainer Aircraft (Hindustan Turbo Trainer HTT-40), Light Combat Helicopter (LCH), Light Utility Helicopter (LUH), Light Combat Aircraft (LCA) - Tejas, Jaguar Darin III Upgrade, Mirage 2000 Upgrade, Hawk-i, Mini UAV and the development of engines.

(I) Fixed Wing aircraft:

Combat Aircraft

(a) Light Combat Aircraft (LCA) - Tejas:

The LCA - Tejas is an indigenously designed and developed ''Make in India’ fighter aircraft. It is the smallest and lightest multi-role supersonic single engine fighter in its class. Tejas completed 442 test flights during the year, moving closer to Final Operational Clearance (FOC). Furthermore, hot refuelling (single point pressure refuelling of the aircraft while in operation) on Tejas was carried out successfully on 26^th February, 2018 followed by a sortie. This capability will give the Indian Air Force (IAF) much desired advantage during combat operations.

HAL has taken up Design and Development of LCA MK1A which will have additional features like Self Protection Jammer, Active Electronically Scanned Array (AESA) RADAR and Beyond Visual Range(BVR) Missile.

The world''s fastest supersonic missile, BrahMos was successfully test fired from IAF’s frontline fighter, Su-30 Mkl for the first time on 22^nd November, 2017. HAL integrated the heavy weight missile on Sukhoi-30 overcoming technical challenges to bolster IAF''s combat capabilities.

Transport Aircraft:

(c) Dornier Do-228:

HAL Dornier Do-228 is a multipurpose transport aircraft already in service with the Indian Armed Forces. Do-228 received the Certificate of Airworthiness from Directorate General of Civil Aviation (DGCA) for its civil variant on 21^st December, 2017. This certification will enable the aircraft to be used as a passenger transport aircraft and give a boost to the Government''s Ude Desh Ka Aam Nagrik (UDAN) initiative under the Regional Connectivity Scheme (RCS). HAL has successfully produced two civil variants and they are DGCA certified.

Trainer Aircraft:

(d) Hindustan Turboprop Trainer (HTT - 40)

HTT-40 is the Basic Trainer Aircraft (BTA) currently being indigenously designed and developed by HAL. The aircraft would be used for basic flight training, aerobatics, instrument flying and close-formation flights whereas its secondary roles would include navigation and night flying. Two prototypes have been produced and are undergoing flight trials towards certification. HTT-40 has so far completed 153 test flights cumulatively. Flight with Anti-Spin Parachute System (ASPS) was carried out successfully on 27^th February, 2018 as part of its activities towards IOC.

Aircraft Upgrades:

(e) Mirage 2000:

On the aircraft upgrade front, Mirage 2000 upgrade was successfully completed and Service clearance certificate (FOC) from Centre for Military Airworthiness & Certification (CEMILAC) received on 29^th May, 2018. A cumulative of 170 test flights is completed.

(f) Jaguar DARIN III:

The first flight of Jaguar DARIN (Display, Attack, Range and Inertial Navigation) III aircraft with AESA (Active Electronically Scanned Array) Radar was conducted on 10^th August, 2017 giving the IAF''s main stay strike aircraft a tremendous boost.

The AESA Radar, which is used in most modern combat aircraft, has improved features like multi target tracking, frequency agility, and higher bandwidth of operation, interleaved modes of operation, higher accuracies and resolution in addition to Higher Mean Time Between Failures (MTBF). The multi-mode radar is capable of air-to-air, air-to-ground and air-to-sea tracking and engagement. HAL has already provided a crucial upgrade with DARIN III (electronics system upgrade) earlier.

Aircraft modifications and flight trials towards Final Operational Clearance completed. A cumulative of 347 test flights have been completed.

(g) Hawk Upgrade - "Hawk-i”

Hawk India (Hawk-i) is the indigenously upgraded Hawk Mk 132 aircraft with enhanced operational and training capabilities. The Hon''ble Defence Minister dedicated Hawk-i to the Nation on 26^th August, 2017.

Hawk-i was flown with HAL developed indigenous Real Time Operating System (RTOS) on 11^th December, 2017. HAL''s RTOS performance is benchmarked with other commercially off-the-shelf RTOS available around the world in avionics domain and is found to be at par.

(II) Helicopters:

(a) Light Combat Helicopter (LCH):

The LCH is a dedicated combat helicopter indigenously designed and developed by HAL. HAL received the Initial Operation Clearance (IOC) certificate from the Centre for Military Airworthiness & Certification (CEMILAC) for successfully developing Light Combat Helicopter (LCH) on 26^th August, 2017 in the presence of the Hon''ble Defence Minister. The production activities were also initiated on the same day. The indigenously designed and developed LCH has the distinction of being the first attack helicopter to land at Siachen, 4700 metres above the sea level with a payload of 500 kg. Four Technology Demonstrators (TD) are currently under extensive flight-testing. Cumulative of 1274 flights have been carried out, so far out of which 252 flights were completed in 2017-18. The LCH achieved a milestone of 1000^th flight on 6^th June, 2017.

Following the launch of production, the maiden flight of indigenously developed Automatic Flight Control System (AFCS) integrated on LCH was conducted successfully on 31^st January, 2018. The indigenous AFCS will replace the expensive imported system bringing cost advantage besides enhancing technology base.

(b) Advanced Light Helicopter (ALH) Weapon System Integration (WSI) - Rudra

The ALH-WSI-Rudra is the weaponries version of the battle proven ALH Dhruv helicopter. The helicopter is integrated with Turret Gun, Rocket and Air to Air Missile. The helicopter is also integrated with particle separator for operation in desert. The helicopters are inducted into Indian Air Force and Indian Army. Intermediate Infra Red (IR) seeker evaluation trials were completed during January, 2018.

(c) Light Utility Helicopter (LUH)

The LUH is a single engine, new generation 3-ton weight class helicopter, incorporating state-of-the-art technology features, planned to replace Cheetah and Chetak helicopters being operated by the Indian Armed Forces. Two prototypes have been produced and are being used for certification activities. LUH has so far completed a cumulative of 133 test flights out of which 59 flights have been carried out in FY 2017-18.

(III) Aero Engines:

(a) 25 kN Hindustan Turbofan Engine (HTFE-25)

Design and development of a 25kN thrust class turbofan engine, which can be used on Basic/ Advanced military trainers, on small business jets and also large UAV applications is under progress at HAL. The engine can be used on a 5-ton weight class aircraft in single engine configuration and on aircraft of up to nine-ton weight class with twin-engine configuration. Two core engines have been produced so far and are undergoing development trials. So far 255 runs have been completed.

(b) 1200 KW Turboshaft Engine (HTSE-1200)

The 1200KW Turbo shaft engine would be used as power plant for 3 to 6-ton category helicopters. HTSE-1200 engine technology demonstrator is assembled and inaugural test run successfully carried out on 12^th February, 2018. 150 runs have been completed successfully

(IV) Mini UAV (8 kg class):

HAL''s UAV programs are aimed at meeting the emerging requirements of Military, Para-Military, Police and Civil Sectors. The first Mini UAV was handed over to Central Armed Police Forces (CAPF) on 7^th September, 2017 in the presence of the Hon''ble Defence Minister and the Hon''ble Home Minister. Further, the UAV was equipped with Gimbal stabilized medium resolution camera on 10^th February, 2018. Parachute recovery system proven on Mini UAV and seven successful recoveries using parachute was carried out.

New Orders:

The Order Book position of your Company as on 31^st March, 2018 is H61,123 crores.

- The order book comprises the following major programmes to be liquidated.

- Su-30 MKI for Indian Air Force (25 Nos).

- Light Combat Aircraft (LCA) in Initial Operation Clearance (12 Nos) and Final Operation Clearance for Indian Air Force (20 Nos).

- Dornier Do-228 aircraft for Indian Navy (12 Nos) and for Indian Air Force (4 Nos).

- Advanced Light Helicopters for Indian Navy (16 Nos) and Indian Coast Guard (16 Nos). New order for 41 Advanced Light Helicopters (ALH) Dhruv received from the Indian Army (40 Nos) and Indian Navy (1 No) in August, 2017.

- Cheetal Helicopter for Indian Air Force (10 Nos) and Indian Army (6 Nos).

- An order for 8 Chetak Helicopters received from Indian Navy in August, 2017.

- AL-31 FP Engines (used in Su-30 MKI Aircraft) to Indian Air Force.

- ROH task for aircraft /helicopter/engines for one year.

- Anticipated Order:

- Light Combat Aircraft (LCA)

- Tejas in Mark (Mk) 1A: An RFP for 83 LCA MK1A configuration was received from the Indian Air Force (IAF) on 21^st December, 2017.

- Light Combat Helicopters (LCH): An RFP for 15 LCHs was received from the Indian Air Force (10 Nos) and the Indian Army (5 Nos) on 22^nd December, 2017.

Particulars of Loans, Guarantees or Investments

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 form part of notes to the Financial Statements provided in this Annual Report.

Related Party Transactions

There were no significant related party transactions with the Company''s promoters, Directors, Management or their relatives, which could have had a potential conflict with the interests of the

Company. All Related Party Transactions were placed before the Audit Committee / Board, as applicable, for approval. Information pursuant to Section 188(2) of the Companies Act, 2013 and Rule 8(2) of the Companies (Accounts) Rules, 2014, with related parties referred to in Section 188(1) of the Companies Act, 2013 is attached to this report as Annexure-I.

Consolidated Financial Statements

The consolidated financial statements of your Company and its joint venture and subsidiary companies for the year ended 31^st March, 2018 has been prepared in accordance with the provisions of Section 129(3) of the Companies Act, 2013 and applicable Accounting Standards and form part of the Annual Report.

Pursuant to first proviso of Section 129(3) of the Companies Act, 2013 read with Rule 5 of Companies (Accounts) Rules, 2014, a separate statement containing salient features of the financial statements of subsidiaries / associate / joint venture companies in Form AOC-1 is appended to this report, which shall form part of the Financial Statements.

Subsidiary/ Associate/ Joint Venture Companies

At the beginning of the year we had one subsidiary and 13 (thirteen) associate companies.

During the year, the following changes have taken place:

(I) Defence Innovation Organization

Defence Innovation Organization is a Joint Venture (a Section 8 Company) formed with Bharat Electronics Limited (BEL) having 50:50 equity participation, on 10^th April, 2017. This is an initiative of the Government to create an eco system to foster innovation and technology development in defence.

(II) Indo-Russian Helicopter Limited

Indo-Russian Helicopters Ltd. (IRHL), a joint venture between HAL, Russian Helicopters and Rosoboronexport was incorporated on 2^nd May, 2017 with 50.5% holding by your Company and 49.5% by Russian partners for manufacture and supply of Kamov Ka-226T helicopters in India. The subsidiary was formed pursuant to Inter Governmental Agreement (IGA) signed by the Government of India with their Russian counterparts.

Pursuant to the provisions of Section 134(3)(q) read with Rule 8 (1) of the Companies (Accounts) Rules, 2014 report on the performance and financial position of each of the Joint Venture and Subsidiary Companies as per provisions of the Companies Act, 2013 is provided herewith and annexed as Annexure II.

Annual Return of the Company

In accordance with the provisions of Section 92(3) and Section 134(3)(a) of the Companies Act, 2013 read with Rules 12(1) of the Companies (Management and Administration) Rules, 2014, the Annual Return of the Company is uploaded on the website of the Company www.hal-india.co.in/investors.

Board and Number of Meetings of the Board

The composition of the Board of Directors of the Company as on 31^st March, 2018 was 10 (ten) directors comprising of 5 (five) Executive Directors (functional directors including CMD) and 5 (five) Non-executive directors (Independent directors including woman director). During the year, 11 (eleven) Board Meetings were held and the maximum interval between any two meetings was not more than 120 days. The details of meetings of the Board and Committees thereof held during the year is furnished in Corporate Governance Report, which forms part of this Report.

Changes in Board of Directors and Key Managerial Personnel

The following changes took place in the Directors and Key Managerial Personnel (KMP) of your Company during the year:-

- Shri P S Krishnan, Shri Pradipta Banerji, Shri Gopabandhu Pattanaik and AVM (R) D K Pande, AVSM, VSM ceased to be Independent Directors w.e.f 4^th May, 2017 on completion of their tenure.

- Shri V Somasundaran, Shri Arun Kumar Sinha & Dr J K Bajajwere appointed as Independent Directors w.e.f 11^th September, 2017.

- Shri Sunil Kumar was appointed as Director (Operations) with effect from 16^th October, 2017.

- Shri Arun Kumar Sinha ceased to be Independent Director upon resignation w.e.f 22^nd January, 2018.

- Shri V Somasundaran ceased to be Independent Director upon resignation w.e.f 6^th February, 2018.

- Shri Chandraker Bharti, ceased to be Government Nominee Director w.e.f 1^st March, 2018 due to withdrawal of nomination by the Government of India.

- Shri Anil Kumar, Shri Neelakanta Iyer R and Shri Siddharth were appointed as Independent Directors w.e.f 5^th March, 2018.

Changes occurred after 31^st March, 2018 till the date of signing of this report are as under:

- Dr. C.P. Ramanarayanan, DG, Aeronautical Systems, DRDO was appointed as Government Nominee Director w.e.f 1^st May, 2018.

- Shri Chandraker Bharti, Joint Secretary (Aerospace), MoD was appointed as Government Nominee Director w.e.f 15^th May, 2018.

- Shri D. K. Venkatesh, Director (Engg. and R &D) ceased as Director upon superannuation on 31^st May, 2018.

- Shri Arup Chatterjee was appointed as Director (Engg. and R &D) with effect from 1^st June, 2018.

- Dr. C.P. Ramanarayanan, DG, Aeronautical Systems, DRDO ceased as Government Nominee Director w.e.f 19^th June, 2018 on withdrawal of nomination by the Government of India.

Committees of the Board

As on 31^st March, 2018, the Board had four Statutory Committees, the Audit Committee, the Nomination & Remuneration Committee, CSR & SD Committee and Stakeholders Relationship Committee.

A detailed Note on the composition of the Board and its Committees is provided in the Corporate Governance Report.

Declaration from Independent Directors

The Company has received necessary declaration from each Independent Director of the Company under Section 149(7) of the Companies Act, 2013 stating that the Independent Directors of the Company met with the criteria of their independence laid down in section 149(6) of the Companies Act, 2013.

Company’s Policy on Directors’ Appointment and Remuneration.

The appointment, tenure and remuneration of Directors (Functional Directors including CMD) are determined by the Government of India. Selection is made by the Public Enterprises Selection Board (PESB). The Terms & Conditions of appointment, including the period of appointment, the scale of pay and other entitlements are notified by the Government of India.

Government Nominee Directors are appointed by the Department of Defence Production, Ministry of Defence and they are not entitled to any remuneration / sitting fees.

Independent Directors are appointed by the Government of India and they are entitled to sitting fees for attending the Board / Committee meetings as prescribed by the Board in adherence with the statutory rules and regulations.

Your Company being a Government Company the requirement for framing policy on Directors'' appointment and remuneration including criteria for determining qualifications etc under section 134(3)(e) of the Companies Act, 2013, do not apply in view of the Gazette notification No GSR 463 (E) dated 5^th June, 2015 of the Ministry of Corporate Affairs (MCA) Notification.

Board Evaluation

Pursuant to the Notification No. 463 (E) dated 5^th June, 2015 issued by Ministry of Corporate Affairs, your Company being a Government Company the statement indicating the manner in which formal annual evaluation has been made by the Board of its own performance and that of its committees and individual directors is not required as the performance of directors is evaluated by the Administrative Ministry.

The performance evaluation of the Independent Directors was carried out by the entire Board at its 415^th board meeting held on 30^th May, 2018. The Directors expressed satisfaction with the evaluation process. The performance of non-independent directors and Board as a whole was reviewed by Independent Directors during the year.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

Your Company being a defence CPSE, the disclosure of information with respect to conservation of energy, technology absorption, foreign exchange earnings and outgo under the provisions of Section 134(3)(m) read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is not required as the Ministry of Corporate Affairs vide Notification GSR No.680 (E) dated 4^th September, 2015 has granted exemption to Defence Public Sector Undertakings.

Development and Implementation of Risk Management Policy

Pursuant to Regulation 21 of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, your Company has developed and rolled out a comprehensive Risk Management Policy. The policy aims at elimination or reduction of risk exposures through identification and analysis of various types of risks and facilitating timely action for taking risk mitigation measures.

Corporate Social Responsibility (CSR)

Your Company as a responsible corporate has always been committed towards creating a favourable environment to bring about inclusive growth in the society. The Company is fully engaged in ensuring equitable and sustainable growth especially in the area of its operations besides complying with government directives to discharge its social responsibility as a leading Indian corporate.

Pursuant to the provisions of Section 135 of the Companies Act, 2013 and Companies (Corporate Social Responsibility Policy) Rules, 2014 & Guidelines of Department of Public Enterprises (DPE), the Company has undertaken various activities as per the CSR Policy of the Company. The projects / programmes / activities are taken up in line with Schedule VII of the Companies Act, 2013.

The Board of Directors of your Company has constituted the Committee on Corporate Social Responsibility & Sustainable Development (CSR & SD) (Disclosed in Corporate Governance Report) in line with the provisions of Section 135 of the Companies Act, 2013. The Committee has formulated and recommended to the Board, CSR Policy indicating the projects / activities to be undertaken by the Company as specified in Schedule VII of the Companies Act, 2013.

The Corporate Social Responsibility Policy of the Company is posted on the Company''s website www.hal-india.co.in.

A separate report on Corporate Social Responsibility (CSR) activities undertaken by your Company during the year 2017-18 is enclosed as Annexure-III.

Business Responsibility Report

SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, stipulates that the annual report shall contain a Business Responsibility Report describing the initiatives taken by the listed entity from an environmental, social and governance perspectives in the format specified. Accordingly, the Business

Responsibility Report for the year 2017-18 has been drawn up and appended to this Report.

Significant and Material Orders

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and the Company''s operation in future.

Public Deposits

During the year, your Company has not received any deposit from public.

Issue of Equity Shares with Differential Rights

During the year, the Company has not issued any equity shares with differential rights as to dividend, voting or otherwise.

Particulars of Employees and Related Disclosures

Your Company being a Government Company, the provisions of Section 197 of the Companies Act, 2013 and relevant Rules do not apply in view of the Gazette notification dated 5^th June, 2015 issued by Government of India, Ministry of Corporate Affairs.

MoU with Government

Your Company has been signing a Memorandum of Undertaking (MoU) every year with the Ministry of Defence, Government of India.

The performance of the Company for the year 2016-17 has been rated as “Excellent” in terms of MoU with the Government and based on the provisional assessment, the Company maintains the “Excellent Rating” for the year 2017-18 as well.

Credit Rating

During the year, M/s Credit Analysis & Research Limited has granted your company a credit rating of CARE AAA/A1 for Long Term and Short Term facilities amounting to RS,2,500 Crs.

India Ratings & Research Private Ltd has granted your company a credit ratings of ''IND AAA/ Stable'' for working capital fund based facilities amounting up to RS,450 Crs and ''IND A1 '' for non fund based working capital facilities amounting to RS,2,050 Crs.

Event subsequent to the date of Financial Statements

Material changes and commitments affecting the financial position of the Company, which have occurred between 31^st March, 2018 and date of signing of this Report are - Nil.

Research and Development Efforts

During the year, your Company continued to focus its efforts on new platforms'' development, technology development and capability enhancement. These activities are taken up with a view to bring technological superiority to the products and to cope up with the future technological challenges that are required for development of new products and product enhancements. Towards the progress of the R&D efforts, your Company has incurred a total expenditure of RS,1,61,186 Lakhs for the year 201718, which is 9% of the Turnover.

HAL is jointly working with premier R&D organizations like DRDO Laboratories, CSIR-NAL and CIPET towards self-reliance in the aviation field. The Company also works closely with premier educational institutes and has established chairs at IIT Madras, IIT Roorkee, IIT Kharagpur, IIT Bombay, IIT Kanpur and IISc Bangalore to enhance its R&D efforts.

The Company has transferred a sum of H16,723 Lakhs (10% of Operating PAT) to R&D reserve for contribution to R&D corpus during the year 2017-18.

Exports

Company’s major exports during the year include:

- Supply of second Do-228 aircraft in maritime role to Seychelles People''s Defence Force and Periodic Maintenance of first Do-228 aircraft of Seychelles People’s Defence Force at HAL facility,

- Repair & Overhaul of Turbomeca 2B2 engine of Mauritius Police Force,

- Supply of aero-structures to France (A320 Passenger Doors to Airbus and Engine Kits to Safran Engines), Germany (Do-228 Structures to RUAG for their ongoing Do-228 NG program), USA (Gunbay Doors and Wire harness to Boeing''s F-18 fighter aircraft program),

- Supply of indigenously designed and developed Avionics (Radar Computers, Mission Computers, Display Processors to Su-30 aircraft), Rolled Rings to Rolls Royce''s ongoing engine programs and Forgings & Castings to diverse countries. These orders enabled HAL to continue its association with aircraft programmes of these major OEMs while meeting stringent reliability, quality and delivery specifications.

- The Export Sales of the Company during the year is H314 Cr.

Over the years, the Company has exported the Aircraft platforms namely Advanced Light Helicopter (ALH)-Dhruv, Cheetal, Cheetah, Chetak, Lancer Helicopters and Do-228 aircraft to overseas customers in Nepal, Afghanistan, Mauritius, Seychelles, Namibia, Ecuador and Suriname. The Company has registered its footprint, over the years, in more than 20 Countries.

In order to ensure that the Customers attain the level of technical competency to handle the maintenance activities independently in future, the Company has deputed its technical experts to Customer Sites for providing product support. Training programmes were also conducted for Customer Pilots, Ground/ Air Crews and Technicians at HAL site. The Company has also provided maintenance and overhaul services to cover the life cycle requirements of HAL products.

High-level delegations from various Countries visited HAL facilities and have conveyed their appreciation of HAL''s aircraft platforms and facilities. As a follow-up of the visits, technical proposals were submitted to various countries and are being pursued. In addition, the Company is making efforts to secure export orders for aircraft and helicopter platforms arising out of bilateral Defence Cooperation Agreements between the Government of India and the respective Countries.

HAL’s brand image and identity was strategically projected by showcasing its products and capabilities while participating in leading international Air Shows/Exhibitions. The Company participated in LAAD 2017-Brazil, Paris Air Show-2017, MAKS 2017-Moscow and Defence & Security 2017-Thailand. Your Company also participated in Wings India 2018 held at Hyderabad.

HAL is interacting with OEMs of Aerospace and Defence Sector and has also signed Letter of Intent to be their Indian Offset Partner to utilize the opportunities arising out of Offset obligations to enhance exports, increase self reliance and also acquire new capabilities & technologies. HAL has been exploring opportunities in the following areas:

- Export of Work Packages

- Export of Avionics and Systems

- Transfer of Technology etc.

Currently, HAL is exporting A-320 Forward Passenger Doors; Weapons Bay and Gun Bay Door of F-18; Wire harness of F-18 aircraft; Avionics and Systems for SU-30 etc., as part of various Offset Contracts.

Procurement from Micro & Small Enterprises (MSEs)

Your Company has been providing increased thrust on enhancing procurement from MSEs and is implementing Public Procurement Policy for Micro & Small Enterprises (MSEs) as per the guidelines / notification issued by the Ministry of MSEs. During the year 2017

18, the total value of procurement including outsourcing made from MSEs is RS,58,997 Lakhs.

Vendor Development Initiatives

Private vendors are being partnered in various projects of HAL including new projects such as LCH, LUH, HTT-40 etc., to turn them into reliable established partners over time. Your Company has got around 2000 registered sub-contractors.

Your Company has been conducting several vendor development programs including programs for MSE/SC/ST vendors to increase the participation of private vendors in the manufacturing programmes. The Company has also been participating in various programs organized by MSME, CII, NSIC and making presentations covering HAL procedures, opportunities available, and requirement from the vendors.

The fifth edition of Global Vendors’ Meet was organized at Ghatage Convention Centre, Bengaluru on 12^th December, 2017. A total of 37 Foreign and 53 Indian vendors participated in the meet.

Indigenization / Make in India

In order to achieve self-reliance, the Company has consistently focused and given emphasis on indigenous development of Platforms/Systems/LRUs, Maintenance Spares, Castings/ Forgings etc. Obsolescence of items / LRUs / Raw Materials for ageing aircraft like MiG-21, Jaguar & Kiran and current aircraft like Su-30 MKI etc. are also managed through Indigenization.

Further, the Company has hosted more than 400 imported systems and sub systems of mechanical, electrical, avionics & instrumentation category on HAL''s portal. This can be accessed at www.hal-india.co.in under Make in India.

The Company has also hosted more than 100 Nos. of Tools, Testers and Ground Equipment (TTGE) for Sukhoi-30 MKI on its website under ''Make in India'' for maintenance, repair and indigenization by Indian vendors.

Based on the above efforts towards Indigenization / Make-in-India, more than 2000 items are indigenized during the year. Further, more than 25 No. of items are taken up for indigenous development from the list of imported Systems / Tools / Testers and Ground Equipment hosted on the HAL website under Make-in-India.

Additionally, details of testing facilities of HAL which could be utilized by private industries are also hosted on the website and can be accessed through www.hal-india.co.in.

So far, more than 40 vendors have utilized the HAL test facilities. Human Resource Development

As on 31^st March, 2018, your Company had 29,035 employees. The Company has a scientific manpower plan aligned to the business plans of the Company.

With a view to enrich the academic base of the Company, Sponsorship for Post Graduate Programme in Public Policy and Management (PGPPM) at IIM, Bangalore has been introduced for Officers. The Programme is a one-yearfull time residential course and commenced from the Academic Year 2017-18 onwards with sponsorship of 5 officers. Further, during the year 2017-18, 14 Officers were sponsored for Post Graduate Programmes at Cranfield University, UK; Indian Institute of Technology (IITs) at Roorkee, Madras, Bombay & Kharagpur to provide opportunities to the Officers to build their knowledge based competencies. Another 3 Officers were sponsored for Ph.D Programmes at IITs and 1 Officer was sponsored for the MS (Systems Engg.) at SupAero, France. In addition to the above, 90 Executives were imparted Training at least One Week duration in Centres of Excellence (IITs, IIMs, NITs, ICAI, XLRI, etc).

Representation of SC / STs

Representation of SC / STs in the total Strength of the Company as on 1^st January 2017 and 1^st January 2018

Category	Total Strength as on		Number of SCs as on		Number of STs as on
(Grade / Scale of Pay)	1.1.2017	1.1.2018	1.1.2017	1 1.1.2018	1.1.2017	1 1.1.2018
Group - A (Grade - II & above )	9041	8807	1599	1557	541	529
Group - B (Grade-I)	92	43	17	8	7	4
Group - C (Scale -3 to Special Scale)	20507	20354	3545	3501	1470	1473
Group - D (Scales - 1 & 2 ) (i) Excluding Safai Karmacharis	18	15	5	4
(ii) Safai Karmacharis	-	-	-	-	-	-
Total	29658	29219	5166	5070	2018	2006

As on 31^st March, 2018, 4,514 Apprentices were engaged in the Company.

Leadership Development Program

As a part of the continued efforts towards building Organizational capabilities, 31 Officers in the Senior Management Level were nominated for Leadership Development Programs in collaboration with IIM-Ahmadabad during the year.

Revision of Pay Scale of Executives

In line with the Presidential Directives issued by the Department of Defence Production vide letter dated 10^th November, 2017, Pay Revision of Board Level and below Board Level Executives of your Company was effected during November 2017, w.e.f. 01/01/17, in line with the Dept. of Public Enterprises (DPE) OMs dated: 03/08/2017, 04/08/2017 & 07/09/2017.

Employee Welfare

Your Company continues to extend welfare benefits to the employees and their dependants by way of comprehensive Medical Facilities, Housing Facilities, Canteen Facilities (for employees only), Educational Facilities for employee''s Children, Sports Facilities, etc.

Employee Relations (ER) / Industrial Relations

Recruitments made during the period 1^st January, 2017 to 31^st December, 2017 and the SC & STs amongst them:

Category	Total	No. of Reservations		No. of Posts filled by
(Grade / Scale of Pay)	number of	made for		appointment of
	Post filled	SCs	STs	SCs	STs
Group - A (Grade - II & above )	83	18	9	14	8
Group - B (Grade-I)	7	-	-	-	2
Group - C (Scale -3 to Special Scale)	291	68	33	73	31
Group - D (Scales - 1 & 2 )
(i) Excluding Safai Karmacharis	-	-	-	-	-
(ii) Safai Karmacharis	-	-	-	-	-
Total	381	86	42	87	41

Vacancy based Promotions made during the period 1^st January, 2017 to 31^st December, 2017 and the SC & STs amongst them:

Category	Total	No. of Reservations		No. of Posts filled by
(Grade / Scale of Pay)	number	made for		Promotion of
	Promoted	SCs	STs	SCs	STs
Group - A (Grade - II & above )	1277	NA	NA	211	76
Group - B (Grade-I)	1	-	-	-	-
Group - C (Scale -3 to Special Scale)	-	-	-	-	-
Group - D (Scales - 1 & 2 )
(i) Excluding Safai Karmacharis	-	-	-	-	-
(ii) Safai Karmacharis	-	-	-	-	-
Total	1278	-	-	211	76

The Employee Relations Scenario in the Company has been peaceful, healthy and cordial. The Company has been maintaining meaningful and effective communication between the Management and the Unions / Associations in order to reduce and eliminate any scope for conflicts and misunderstandings, achieve better understanding and thus facilitate maintenance of Industrial Harmony. Regular Meetings with the representatives of the recognized Unions / Officers Associations at the Divisional, Complex & Corporate Levels were held to discuss issues.

Plant Level and Shop Level Committees with representatives from the Management and Workmen / Union Representatives are functioning in the Divisions to discuss and resolve production related issues and other related matters. In order to address Employee / Public Grievance / Representations, Grievance Redressal Mechanisms are also in place in the Company.

Implementation of Official Language Policy

All out efforts are being made for implementation of the Official Language (OL) Policy of the Government of India. The IT wing of Department of Official Language, Gol, conducted a special Hindi workshop for OL officials on 26^th July, 2017 at HAL. The aim was to make the OL officials aware of technical facilities developed in the field of official language. Decisions taken by the Apex Committee are implemented at Company level. Inspections of various Divisions related to Official Language have been conducted successfully by the Department of Official Language / Ministry of Defence during this year.

Prohibition of Sexual Harassment of Women at Workplace

The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 has been notified in the Company. In line with the Guidelines received from time to time, necessary actions have been taken to prevent Sexual Harassment of Women at Workplace. The HAL CDA Rules applicable to Officers and the Certified Standing Orders applicable to Workmen have the required provisions in this regard.

Internal Complaints Committees as per Section 4 of the Act have been put in place. Information for the year 2017 in terms of Section 22 of the Act, is as indicated below:

(i) Number of Cases pending as on 01/01/2017 - 4

(ii) Number of Complaints of Sexual Harassment received in the year 2017 - 3

(iii) Number of Complaints disposed of during the year 2017 - 5

(iv) Status of pending cases (2) as on 31/12/2017 - Of the two pending Cases, Enquiry was under progress before the Internal Complaints Committee (ICC) in one Case. In the other Case, the ICC had submitted the Report to the Disciplinary Authority on 30.12.17 and the same was under examination by the Disciplinary Authority for appropriate actions.

Information Technology (IT) Initiatives

To align with the Digital India initiative of the Government of India, your Company has undertaken the following key initiatives to enhance customer service/ satisfaction, improve processes and quality consciousness through innovative use of IT:

- Customer Delight:

In order to effectively track responses of all customer queries/letters by Customer Service Team, a monitoring portal “Commitment Monitoring Portal” is launched. A portal for handling Customer enquiries is also developed for Customer Service Team, which helped in tracking pending Customer RFQ.

As a part of “Gaganshakti” exercise by the Indian Air Force, a Real time monitoring portal for tracking Rotables identified by IAF was developed and launched.

- Process Improvements:

i. A Quality Dashboard is developed for monitoring of Defect Investigation (DI) and Premature Withdrawal Report (PWR) of repairable sent by the customers to the Divisions. This has helped in faster clearance of repairable items in the Divisions.

ii. Manual File system is being replaced with e-File system, which is being rolled out across the Company. Time based OTP has been used for ensuring security during e-File transmission.

iii. KPI Dashboard (with 47 KPIs) is developed for monitoring the trends of Key Performance Indicators (KPIs) across various Divisions in the areas like IMM, Customer Service, HR, MSD, Manufacturing and Quality.

iv. A centralized program is undertaken for implementation of GST at all Business units. This involved creation of new Tax codes, update of Customer/ Vendor/ Product Master, New invoice formats and development of reports for uploading data to GSTIN portal.

- IT Infrastructure:

To strengthen and to provide high speed Fibre connectivity across Bangalore based Divisions and Data centre, a MAN (Metropolitan Area Network) is completed. MAN network enables Centralization of IT Services, effective monitoring and managing critical systems of the Company.

Awards & Recognitions

During the year, your Company has received various Awards and Recognitions. Some of the important accolades received during the year are placed at Annexure- IV.

Vigilance

Vigilance in HAL is an ISO 9001-2008 certified Department, headed by the Chief Vigilance Officer, an IPoS Officer on deputation from the Govt of India. Vigilance Officers and Staff are positioned in Corporate Office and all the Divisions & Complexes of the Company.

102 Sensitization sessions, with an aim to bring in more awareness amongst the HAL fraternity, were held in various Divisions. Topics were:

- Transparency in Public Procurement

- CDA Rules

- Filling & Filing of APRs

- Works & Contract Services

- Common Irregularities in Civil Works

- Purchase Procedure

- GST

- Best Practices on Project Management

- Tender Guidelines

- Cyber Security

- Problem areas of contract management

- Role of Vigilance Functionaries

- Complaint Handling Policy

- Vigilance Angle

- Lokpal & Lokayukta Act,

- Online Vigilance Clearance and other Vigilance related matters.

During the period, Vigilance Department has conducted several workshops with important functionalities/stake holders like Material Management, Finance, HR, Service Contracts, Work Contracts, etc.

Vigilance Awareness Week for the year 2017 was observed throughout HAL from 30^th October, 2017 to 4^th November, 2017 on the theme “My Vision - Corruption Free India”.

Guidelines issued by CVC on Leveraging of Technology, information pertaining to the following aspects are being hosted on HAL Website:-

(a) Hosting of all Tenders valuing above RS,10 Lakhs

(b) E-Procurement

(c) Vendor Directory

(d) E-payment to vendors

(e) Contracts /Purchase Orders awarded on nomination/single tender basis.

(f) Corruption Risk Management Policy

(g) Online filling and submission of APRs through IFS.

As stipulated by CVC and MoD, Integrity Pact has been introduced for the POs/ Contracts valuing more than RS,5 Crores.

Directors’ Responsibility Statement

Pursuant to the provisions of Section 134(3)(c) of the Companies Act, 2013 your directors state that:-

(a) In the preparation of the annual accounts for the year ended 31^st March 2018, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(b) The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as on 31^st March, 2018 and of the profit and loss of the Company for the year ended on that date;

(c) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) The Directors have prepared the annual accounts on a “going concern” basis;

(e) The Directors have laid down internal financial controls which are being followed by the Company and that such internal controls are adequate and are operating effectively;

(f) The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Auditors Statutory Auditors

The Statutory auditors of your Company are appointed by the Comptroller & Auditor General of India (C&AG). M/s. S. Venkatram & Co., Chartered Accountants, Bangalore was appointed as Statutory Auditors for auditing the Accounts of the Company for the year 2017-18 and 18 firms of Chartered Accountants were appointed as Branch Auditors.

The notes on the financial statements referred to in the Auditors’ Report are self-explanatory and do not call for any further comments.

Cost Auditor

M/s. KPR & Associates, Cost Accountants was appointed as Cost Auditors for conducting the Cost Audit of the Company for the year 2017 -18.

Secretarial Auditor

In terms of Section 204(1) of the Companies Act, 2013, the Company has engaged M/s. S. Viswanathan, Practicing Company Secretary, Bengaluru to conduct Secretarial Audit of the Company for the financial year 2017-18. The Secretarial Audit report is annexed to this Report as Annexure - V and forms part of Annual-Report. The said report does not contain any qualification, reservation or adverse remarks.

Auditors’ Report

The Auditors’ Report on financial statements for the financial year 2017-18 and comments of the Comptroller & Auditor General of India (C & AG) under Section 143(6) of the Companies Act, 2013 are appended to this Report. The statutory auditors'' report does not contain any qualification, reservation or adverse marks.

During the year, no fraud has been reported by the Auditors under section 143(12) of the Companies Act, 2013 read with Rule 13 of the Companies (Audit and Auditors) Amendment Rules, 2015.

Corporate Governance

Your Company has taken firm and structured initiatives to maintain highest standards of Corporate Governance and its practices which are valued by our stakeholders. The practices emanate from the need to position multi-layered checks and balances at various levels to ensure transparency of its operations in the decision making process.

In terms of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 and guidelines of Department of Public Enterprises (DPE), a report on Corporate Governance for the year ended 31^st March, 2018 along with a certificate from the Company’s Secretarial Auditor confirming compliance of conditions forms part of this report.

Management Discussion and Analysis Report

As per the terms of Regulations 34(2)(e) of the SEBI Listing Regulations, the Management Discussion and Analysis Report (MDAR) forms part of the Annual Report of the Company.

Vigil Mechanism

The Company has a Whistle Blower Policy approved by the Board and the same is placed on the website of the Company.

The employees are encouraged to raise any of their concerns by way of whistle blowing and none of the employees have been denied access to the Audit Committee.

Quality Initiatives and Safety

Quality Management System (QMS) in all Production Divisions and Research & Design Centres of HAL are accredited to International Aerospace Standard AS9100. Further, all Production Divisions and Research & Design Centres are approved by Directorate General of Aeronautical Quality Assurance (DGAQA) as per the requirements of their document “Approval of Firm and its Quality Management System” (AFQMS). Production Divisions catering to Civil Customers are approved by Director General of Civil Aviation (DGCA) as Production/Maintenance Organization.

Divisions that are exporting products and services are certified to National Aerospace Defence Contractors'' Accreditation Program (NADCAP) and have approvals from OEMs like Airbus, Boeing, Turbomeca, Rolls Royce etc. HAL Laboratories are accredited to IS17025 by National Accreditation Board for Testing and Calibration Laboratories (NABL).

The Research & Design Centres of HAL continue to hold Design Organization Approval from Centre for Military Airworthiness & Certification (CEMILAC) and Recognition of in-house R&D from Department of Scientific & Industrial Research (DSIR), Ministry of Science & Technology, Government of India.

Quality improvement through employees'' participation is being encouraged by practicing concepts such as Quality Circles, Quality Improvement Teams, Lean Resource Teams and Six Sigma Project Teams in the Divisions. 10 Quality Circle teams comprising more than 50 members, participated in National Convention Quality Circles (NCQC) held at Mysore in December 2017. Nine Quality Circles won awards under PAR EXCELLENCE category and one Quality Circle won award under EXCELLENT category.

Operator''s conferences and workshops at customer bases to address fleet specific operational problems continue to be organized HAL.

Joint Quality Audits (JQA) by IAF were concluded for Mirage-2000, MiG-29, SU-30 and Hawk fleets during the year. Observations/ Recommendations of JQA are being addressed to improve the system and processes in order to enhance product quality.

Standardization of Quality Procedures has been achieved through nine Corporate Quality Assurance Guidelines while four of these guidelines have been protected through registration of copyright with the Registrar of Copyrights, New Delhi.

In the financial year 2017-18, all Aircraft / helicopter Divisions at four flying locations have maintained a good flight safety record and there has been no flying accident. However, on 27^th June, 2018, one Su-30 MKI produced by the Company crashed during a sortie at Ozar (Nashik) Airport and the same has been reported to the Stock Exchanges.

To enhance the knowledge level of HAL Officers participating in Aircraft Accident Investigation, the Indian Air Force was approached to increase vacancy in Aerospace Safety & Accident Investigation (AS&AI) course. IAF has increased the vacancy from two Officers to six Officers per year. HAL also conducted a Flight Safety and Accident Investigation course from 13^th to 16^th June, 2017 and 50 Officers from different Divisions participated in the course.

In order to bring awareness on the procedure of Defect Investigation and various facilities and infrastructure available at HAL Divisions, a presentation was made by HAL during “Aerospace Safety Conclave” held at Air HQ, New Delhi on 23^rd March, 2018 to officers from IAF, IA, IN and ICG.

Acknowledgement

The Board places on record its sincere appreciation towards the Company''s valued customers, in particular the Defence Services, for the support and confidence reposed by them in the Management of the Company and look forward to the continuance of this mutually supportive relationship in future.

Your Directors acknowledge with a deep sense of appreciation, the valuable support and cooperation received from the Government of India in particular the Ministry of Defence, Department of Defence Production, Defence Acquisition and Defence Finance as well as other Ministries of the Government of India in all the endeavours of the Company.

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

Your Directors are also thankful to the shareholders for their faith and continued support in the endeavours of the Company.

Your Directors also wish to place on record their deep sense of appreciation for the committed services by the Company Executives, Staff and Workers for progress and prosperity of the Company.

For and on behalf of Board of Directors

Hindustan Aeronautics Limited

(T. Suvarna Raju)

Chairman & Managing Director

Place : Bengaluru

Date : 30^th June, 2018