11. Provisions and Contingent liabilities

Provisions

(i) Claims for liquidated damages against the Company
are recognized in the financial statements based
on the management's assessment of the probable
outcome with reference to the available information
supplemented by experience of similar transactions.

(ii) The Company provides for anticipated costs for
warranties when it recognizes revenues on the
related products or contracts and maintain the same
throughout the warranty period. The provision is
based on historical experience / technical assessment.

(iii) When it is probable that total contract costs will
exceed total contract revenue, the expected loss is
recognised immediately.

(iv) Other provisions are recognized if, as a result of
a past event, the Company has a present legal or
constructive obligation that can be estimated reliably,

and it is probable that an outflow of economic
benefits will be required to settle the obligation.

However, where the effect of time value of money is
material, provisions are determined and maintained
by discounting the expected future cash flows,
wherever applicable.

Contingent liabilities

Contingent liabilities are possible obligations that arise
from past events and whose existence will only be
confirmed by the occurrence or non-occurrence of one
or more future events not wholly within the control of
the Company. Where there is present obligation arising
from the past event but it is not probable that an outflow
of economic benefits will be required, or the amount
cannot be estimated reliably, the obligation is disclosed
as a contingent liability, unless the probability of outflow
of economic benefits is remote (where no disclosure is
required). Contingent liabilities are disclosed on the basis
of judgment of the management/ independent experts.
These are reviewed at each balance sheet date and are
adjusted to reflect the current management estimate.

12. Government Grants

Government grants are recognized only when there
is reasonable assurance that the conditions attached
to them shall be complied with, and the grants will be
received.

In case of depreciable assets, the cost of the assets
is shown at gross value and grant thereon is taken to
deferred income which is recognized as income in the
Statement of Profit and Loss over the useful life of the
asset.

Where the Company receives non-monetary grants,
the asset and the grant are accounted for at fair value
of assets and are treated as deferred income. Deferred
income is recognized in the statement of profit and loss
on a systematic and rational basis over the useful life of
the asset.

Government grants related to revenue are recognized on
a systematic basis in the statement of profit and loss over
the periods necessary to match them with the related
costs which they are intended to compensate.

13. Income Taxes

Income tax expense comprises current tax and deferred
tax.

Current income tax

Income tax expense is recognized in statement of profit
and loss except to the extent that it relates to items
recognized in other comprehensive income or directly in
equity.

Current tax is the expected tax payable on the taxable
income for the year, using tax rates (tax laws) enacted or
substantively enacted by the end of the reporting period
and includes adjustment on account of tax in respect of
previous years.

Deferred tax

Deferred tax is recognized using the balance sheet
method, providing for temporary difference between
the carrying amount of an asset or liability for financial
reporting purpose at the reporting date and its tax base.

Deferred tax is measured at the tax rates that are expected
to apply when the temporary differences are either
realised or settled, based on the laws that have been
enacted or substantively enacted by the end of reporting
period.

A deferred tax asset is recognized to the extent that it is
probable that future taxable profit will be available against
which the temporary difference can be utilized.

The carrying amount of Deferred tax assets are reviewed
at each reporting period and are reduced to the extent
that it is no longer probable that sufficient taxable profit
will be available to allow all or part of the deferred tax
asset to be utilised.

14. Impairment of Assets

Impairment of financial assets

The loss allowance in respect of trade receivables,
contract assets and lease receivables are measured at an
amount equal to lifetime expected credit losses.

The loss allowance in respect of all other financial assets,
which are required to be impaired, are measured at an
amount equal to lifetime expected credit losses if the
credit risk on that financial instrument has increased
significantly since initial recognition. However, if, at the
reporting date, the credit risk on a financial instrument
has not increased significantly since initial recognition,
the loss allowance is measured at an amount equal to
12-month expected credit losses.

Impairment of Non- Financial Assets

The carrying amount of cash generating units is reviewed
at each reporting date where there is any indication of
impairment. An impairment loss is recognized in the
statement of profit and loss where the carrying amount
exceeds the recoverable amount of the cash generating
units.

Impairment losses recognised in prior periods are
assessed at each reporting date for any indications that
the loss has decreased or no longer exists.

An impairment loss is reversed if there has been a change
in the estimates used to determine the recoverable
amount. An impairment loss is reversed only to the extent
that the asset's carrying amount does not exceed the
carrying amount that would have been determined, net
of depreciation or amortisation, if no impairment loss had
been recognised.

15. Segment Reporting

Revenue and expenses are identified to segments on the
basis of their relationship to the operating activities of the
segment. Revenue, expenses, assets and liabilities which
are not allocable to segments on a reasonable basis, are
included under “Unallocated revenue/ expenses/ assets/
liabilities".

16. Non-derivative financial instruments

Non derivative financial instruments are classified as : -

- Financial assets, measured at (a) amortized cost and (b)
fair value through Profit and Loss (“FVTPL").

- Financial liabilities carried at amortized cost.

Initially, all financial instruments are recognized at their
fair value. Transaction costs are included in determining
the carrying amount, if the financial instruments are not
measured at FVTPL. Financial assets are derecognized
when substantial risks and rewards of ownership of the
financial asset have been transferred. In cases where
substantial risks and rewards of ownership of the financial
assets are neither transferred nor retained, financial
assets are derecognized only when the Company has
not retained control over the financial asset. Financial
liabilities are derecognized when contractual obligations
are discharged or cancelled or expired.

Non-derivative financial assets are subsequently
measured as below:

A. Amortized cost -

“Financial Instruments at amortized cost" are subsequently
measured at amortized cost using the effective interest
rate (EIR) method. Amortized cost is calculated by taking
into account any discount or premium on acquisition
and fees or costs that are an integral part of the EIR.
The EIR amortization is included in finance income in
the statement of profit and loss. The losses arising from
impairment are recognized in the statement of profit and
loss.

B. FVTPL Category -

Financial instruments classified in this category are
subsequently carried at fair value with changes recorded
in the statement of profit and loss. Directly attributable
transaction costs are recognised in statement of profit
and loss as incurred.

Non-derivative financial liabilities are subsequently

measured as below:

Subsequent to initial recognition, non-derivative financial
liabilities are measured at amortised cost using the
effective interest method.

17. Cash and Cash Equivalents

Cash and cash equivalents comprise cash at bank and
on hand. It includes term deposits and other short-term
money market deposits with original maturities of three
months or less that are readily convertible to known
amounts of cash and which are subject to an insignificant
risk of changes in value.

18. Dividend

The Company recognises a liability to pay dividend to
equity shareholders when the distribution is authorised,
and the distribution is no longer at the discretion of the
Company. As per the corporate laws in India, a distribution
is authorised when it is approved by the shareholders.
A corresponding amount is recognised directly in equity.

19. Earnings per share

Basic earnings per equity share is computed by dividing
the net profit attributable to the equity shareholders of
the Company by the weighted average number of equity
shares outstanding during the period. Diluted earnings per
share is computed by dividing the net profit attributable to
the equity shareholders of the Company by the weighted
average number of equity shares considered for deriving
basic earnings per equity share and also the weighted
average number of equity shares that could have been
issued upon conversion of all dilutive potential equity
shares.

20. Investment Property

Investment properties are properties (land or building or
part of building or both) held to earn rental income and/or

for capital appreciation. It does not include property held
for use in the production or supply of goods or services or
for administrative purposes, nor it includes property held
for sale in the ordinary course of business.

These are initially measured at cost, including related
transaction costs and, where applicable, borrowing costs
as per accounting standards. After initial recognition,
investment properties are carried at cost less accumulated
depreciation and accumulated impairment losses, if any.
Though measured at cost, the fair value of investment
properties is disclosed in the notes to the financial
statements, based on a valuation by an independent
qualified valuer. Subsequent expenditure is capitalized
if it is probable that future economic benefits will flow
to the company and the cost of the expenditure can be
reliably measured. Day-to-day repairs and maintenance
are expensed off when incurred.

Investment properties are depreciated in accordance to
the category of asset that it belongs to and the life of the
asset shall be as conceived for the same in line with the
policy on PPE.

Properties are transferred to or from investment property
only when there is a clear change in use, supported by
evidence. Transfers between investment property, and
owner-occupied property do not change the carrying
amount of the property transferred and they do not
change the cost of that property for measurement
or disclosure purposes. An investment property is
derecognized upon disposal or when it is permanently
withdrawn from use and no future economic benefits
are expected from its use or disposal. Any gain or loss
arising from derecognition (the difference between net
disposal proceeds and carrying amount) is recognized in
the Statement of Profit and Loss.

(i) The provision for impairment in value of investment in NTPC-BHEL Power Projects Private Limited has been made to the extent of D50.00 Crore (upto previous
year D50.00 Crore) based on the net financial position. BHEL Board of Directors in its 566^th meeting held on 28^th January 2025 approved the annulment of in¬
principle approval for pursuing the winding up of NBPPL accorded by BHEL Board of Directors in its 494^th meeting held on 08.02.2018 and accorded in-principle
approval for taking up the implementation of 1x800 MW AUSC Technology based Technology Demonstration Plant (TDP) by NBPPL

(ii) Investment in Neelanchal Ispat Nigam Limited (NINL) has been disposed in F.Y. 2022-23 and an amount of D26.22 Crores has been received till F.Y. 2023-24,
Balance amount including interest of D5.93 Crores net of TDS received in current F.Y. 2025-26

(iii) BHEL has provided a Corporate Guarantee amounting to D662 Cr., limiting to the liabilities to 49% of Financial Incentive of D1350 Cr. to the President of India
for discharge of obligations payable to the Authority by the Bharat Coal Gasification & Chemicals Ltd. (BCGCL), a joint venture company formed by Coal India
Limited (CIL) and Bharat Heavy Electricals Limited (BHEL), under Coal Gasification Plant Development and Production Agreement dated 12.03.2025

For additions and deduction under each of the above specific heads, SOCIE (Statement of Changes in Equity) may be referred.

Nature and purpose of reserves:

(a) Capital reserve: It represents mainly the excess of net assets taken, over the cost of consideration paid during amalgamation of the then
subsidiary company (HPVP) with BHEL.

(b) Capital redemption reserve: The Company has recognised Capital Redemption Reserve on buy back of equity shares from its general
reserve.The amount in capital redemption reserve is equal to nominal amount of equity shares bought back.

(c) General reserve: This represents accumulation of profits retained by Company to meet future (known/unknown) obligations.

(d) Retained earnings: Retained earnings are profits that Company has earned till date, less transfer to general reserve, dividends or other
distributions to shareholders.

(e) Re-measurement of net defined benefit plans: Differences between the interest income on plan assets and the return actually achieved,
and any changes in the liabilities over the year due to changes in actuarial assumption or experience adjustments within the plans, are
recognised in 'Other comprehensive income' and these are subsequently not to be reclassified to the Statement of Profit and Loss.

Note [33]

The Company had taken over Amorphous Silicon Solar Cell Plant (ASSCP), Gurgaon on April 1, 1999 from Ministry of New and
Renewable Energy (MNRE) on lease for a period of 30 years. The formal lease agreement with the Ministry of New and Renewable
Energy (MNRE) is yet to be finalised.

Note [34]

Balance shown under Trade receivables, Trade payables, contractors' advances, deposits and stock / materials lying with
sub-contractors/ fabricators are subject to confirmation, reconciliation & consequential adjustment, if any. The Company is in
the business of long term construction contracts, bills are raised on the customers as per contract in line with billing schedule
approved by the customer and the reconciliation is carried out on ongoing basis & provisions made, wherever considered
necessary. Final reconciliation with customer is done on completion of project (Trial Operation and PG Test completed). Trade
Receivable of Completed Projects stand at 14162 Crore (Previous Year 16051 Crore). Out of completed contracts, the projects
reconciled with customers have outstanding trade receivables of 13507 Crore (previous year 14278 Crore).

Note [35]

Disclosure on Leases - Ind AS 116

Lease Commitments - Company as Lessee

The company's significant leasing agreements are in respect of land, building and EDP equipments. The company has entered
into a rate contract for lease arrangement for computer items, printers, video conferencing equipments and peripherals. Assets
taken on lease are capitalised and disclosed separately as Right-of-use assets in the property, plant and equipment. The lease
rentals are allocated between interest, maintenance and principal value. The interest and maintenance charges are charged to
Statement of Profit and Loss and principal amount is adjusted to lease obligations.

Note [36]

Disclosure on 'Employee benefits' - Ind AS 19

A. The Company has following Schemes in the nature of Defined Benefits plans:

i) Gratuity Scheme

ii) Post Retirement Medical Scheme

iii) Provident Fund Scheme

iv) Travel claim on Retirement

(i) Gratuity (Funded Plan)

The Company has a defined benefit gratuity plan. Every employee who has rendered continuous service of five years or
more is entitled to gratuity at 15 days salary (15/26 X last drawn basic salary plus dearness allowance) for each completed
year of service subject to a maximum limit of 125 Lakhs [PY 120 Lakhs].The gratuity liability arises on account of future
payments, which are required to be made in the event of retirement, death in service or withdrawal. The liability has been
assessed using projected unit credit actuarial method.

B. Long term Leave Liability (Encashable Leave -EL /Half Pay Leave-HPL) - (Unfunded Plan)

The company provides for earned leave benefit and half pay leave to the employees of the company which accrue half yearly
at 15 days (maximum) and 10 days respectively. The earned leave is encashable while in service subject to fulfilment of certain
conditions. On retirement/superannuation, earned leave & half pay leave put together upto a maximum of 300 days is encashable
subject to company policies & leave encashment rules. The leave liability has been treated as other long term benefits and has
been assessed using projected unit credit actuarial method.

Note [40]

Disclosure pursuant to Ind AS-107 [Financial Instruments - Accounting
Classifications and Fair value measurements]

a. The Fair value of cash and cash equivalents, bank balances, loans, trade receivables, trade payables, security deposit, financial guarantee and
others reasonably approximates their carrying amount. Trade receivables are evaluated after taking into consideration for Expected Credit
Losses. Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique.

Fair value hierarchy

The fair value of financial instruments have been classified in following categories depending on the inputs used in the
valuation technique.

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e.,
as prices) or indirectly (i.e., derived from prices)

Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs)

Financial Risk Management

Objectives and Policies

The company's activities are exposed to different financial risks arising out of natural business exposures to any company operating
in the sector. The management of financial risk has always been an integral part of the company's business strategies and policies.
The company reviews and aligns its policies and guidelines from time to time to address the financial risks in line with the needs
and expectations of its various stakeholders. Exposure risk from the use of financial instruments can be categorized as under:

a. Credit risk

b. Liquidity risk

c. Market risk

This note presents information about the Company's exposure to each of the above risks, the Company's objectives, policies
and processes for measuring and managing risk, and management of Company's capital. Further quantitative disclosures are
included throughout these financial statements.

Risk management framework

BHEL has in place a Board approved Risk Management Charter & Policy which provides overall framework for Risk Management
in the company. The objective of the charter is to ensure that the risks are being properly identified, assessed and effectively
managed by adopting suitable risk mitigation measures. The company has 3-layer risk management framework. At the first
level, the Board Level Risk Management Committee (BLRMC) of the company is assigned with responsibility of reviewing the
company's Risk Governance structure, Risk Assessment & Risk Management framework, Guidelines, Policies and Processes
thereof. Risk Management Steering Committee (RMSC) at the second level is responsible for adopting & implementing the risk
management framework and leading the risk management initiative across the company. Chief Risk Officer (CRO) being the
convener of BLRMC & RMSC is responsible for periodic reporting on risk management to Board/ BLRMC. Key risks being faced
by the company are analysed starting from Unit level for their respective areas to prepare risk mitigation plans and to ensure
implementation.

a) Management of Credit Risk

Credit risk is considered as an integral part of risk reward balance of doing business. BHEL is involved in setting up of power
projects pertaining to Government sector (State utilities, PSUs, Railways and other govt. departments etc.) and private sectors
in India and abroad. The projects are generally funded by Financial Institutions/ banks or payments are covered by Letter of
Credit (LC). The project duration ranges from 3 to 5 years and payments are generally realised in stages as per the terms of
the contract including advance, progress payments, milestone (including intermediate) payments and also retentions which
are released on completion of such projects. Since majority customers' profile pertains to Government sector, constituting
80% of total receivables coupled with the fact that the company itself is a CPSE, credit risk is relatively low. In respect of
private sector customers , the payment terms are mainly through LC. The company has well established review mechanism
for receivables at various levels within organisation to ensure proper attention and focus for realisation in line with the
company policies, procedures and guidelines. The company uses expected credit loss model to assess the impairment
loss or gain and the disclosure of the same is made elsewhere. Further, adequate provisions are maintained to address
any eventuality.

(i) Exposure to credit risk

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at
the reporting date was:

The company makes investments out of surplus funds as per policy of the company duly approved by the Board and in line with
the DPE guidelines. Credit risk on cash and cash equivalents and term deposits is very limited as the company generally invests
in deposits with financially strong banks and financial institutions.

b) Management of Liquidity risk

The Company manages liquidity risk by maintaining sufficient cash and cash equivalents including term deposits and the availability
of Funding through an adequate amount of credit facilities to meet obligations as and when due. Robust cash management
system and regular monitoring of cash flows enables management to plan and maintain adequate sources to finance its funds
requirement throughout the year. Besides adequate cash and bank balances, company enjoys credit facilities. The company
is able to meet all its fund requirements from internal resources i.e. the funds generated from operations and also through
short-term borrowings for better treasury management operations.

The following are the contractual maturities of non-derivative financial liabilities, based on contractual cash flows:

c) Management of Market risk

The Company is exposed to certain currency, commodity, interest rate risks arising from its operations. The company
has foreign exchange risk management policy to cover the foreign exchange risks.To insulate the company against major
commodity price fluctuation, framework agreements including price pass through claims are being entered regularly with
supply chain partners including suppliers and customers. Surplus funds generated from operation are kept invested in short
term deposits with PSU Banks or large sized private banks only and in debt based schemes of public sector mutual funds,
thereby minimizing any chance of risk.

Capital Management

The company's objective, while managing capital is to continue business as a going concern, safeguard,preserve and enhance its
capital to provide maximum return to shareholders, benefits to other stakeholders and to maintain an optimal capital structure
to reduce the cost of capital. The Board of Directors also montiors the level of dividends to equity shareholders. The Company
monitors capital, using a medium term view and long term view, on the basis of a number of financial ratios generally used by
industry as well as by the rating agencies. The Company is not subject to externally imposed capital requirements. The Company's
capital structure is managed against the various financial ratios as required to maintain highest credit ratings.

Note [41]

Operating Segments

The Segments have been identified as 'Power' and 'Industry', based on the orders booked by the respective business sectors.
These segments are driven by the three business sectors i.e. Power Sector, Industry sector, International Operations.

The Power segment comprises mainly thermal, gas, hydro and nuclear power plant businesses, related spares & services business
apart from new businesses of coal to chemicals, emission control equipment and spares for Non-BHEL sets.

The Industry segment caters to major equipment supplies and EPC works for a variety of sectors including transportation,
transmission, defence & aerospace, captive power, renewables, downstream oil & gas, energy storage, and electric mobility,
among others.

The order booked by International operation group is taken to Power or Industry as the case may be.

The Company's Committee of functional Directors has been identified as Chief Operating Decision maker (CODM).

Note [45]

As per SEBI (Listing obligations & Disclosure Requirements) Regulations, 2015, the requisite details of loans and advances in the nature of loans,
given by the Company are given below:

i) No loans have been given (other than loans to employees), wherein there is no repayment schedule or repayment is beyond seven
years; and

ii) There are no loans and advances in the nature of loans, to firms/companies, in which directors are interested.

Note [46]

Assets and Liabilities are classified between Current and Non-current considering 12 months period as operating Cycle.

Note [47]

The company has no transactions with companies struck off under section 248 of the Companies Act, 2013 or Section 560 of the Companies
Act, 1956.

Note [48]

There were no charges or satisfaction yet to be registered with Registrar of Companies beyond the statutory period.

Note [49]

The Company is complying with the number of layers prescribed under clause(87) of section 2 of the Act read with Companies(restriction on
number of layers ) Rules, 2017.

Note [50]

No Scheme of Arrangements has been approved by the Competent Authority in terms of sections 230 to 237 of the Companies Act, 2013.

Note [51]

The Company has no transactions that has been surrendered or disclosed as income during the year in the tax assessments under the Income
Tax Act,1961 which is unrecorded in the books of accounts.

Note [52]

The Company has not traded or invested in Crypto currency or Virtual currency during the financial year.

Note [53]

Figures have been rounded off nearest to D in Crore with two decimal.

Note [54]

Previous year's figures have been regrouped/ rearranged wherever considered necessary.

Note [55]

The Board of Directors has authorised to issue the Financial Statements 2025-26 in its meeting held on May 04, 2026.