BHEL Signs MoU with Ministry of Heavy Industries for FY26, Sets ₹33,700 Cr Production Target

New Delhi, December 22, 2025: Bharat Heavy Electricals Limited (BHEL), a leading public sector engineering and manufacturing enterprise, has signed a Memorandum of Understanding (MoU) with the Ministry of Heavy Industries for the financial year 2025–26, outlining key performance targets and compliance parameters for the year.

The MoU has been executed in line with the Department of Public Enterprises (DPE) framework for performance evaluation of Central Public Sector Enterprises (CPSEs) and covers BHEL’s consolidated operations.

Key Financial and Operational Targets

Under the MoU, BHEL has committed to a value of production of ₹33,700 crore for FY 2025–26. The company has also set a capital expenditure target of ₹234 crore, aimed at strengthening manufacturing capabilities and infrastructure.

Exports and income from overseas operations are targeted at ₹600 crore, while BHEL plans to reduce import consumption by 10 per cent compared to the previous year, measured as a percentage of revenue from operations.

In terms of profitability and efficiency, the MoU sets the following benchmarks:

• EBITDA margin: 9.91 per cent of total income

• Return on Net Worth: 7.48 per cent

• Asset Turnover Ratio: 52.86 per cent

BHEL has also committed to ensuring 100 per cent total return to shareholders, to be evaluated at the end of the financial year as per MoU guidelines.

Focus on R&D, MSMEs and Digital Procurement

The agreement places strong emphasis on innovation and inclusive growth. BHEL will spend 55 per cent of its current year Profit Before Tax (PBT) on research and development, including innovation initiatives.

Procurement through the Government e-Marketplace (GeM) is targeted at 37 per cent of total procurement, while trade receivables are to be maintained within 90 days of revenue from operations.

The MoU also mandates compliance with MSME procurement norms, including:

• 25 per cent procurement from MSEs

• 4 per cent from SC/ST-owned MSEs

• 3 per cent from women-owned MSEs

Governance, CSR and Compliance Parameters

Part-II of the MoU outlines compliance parameters related to corporate governance, CSR expenditure, timely payments to MSMEs under the MSMED Act, onboarding on TReDS platforms, leadership development, workplace health and safety initiatives, and monetisation of surplus non-core assets.

Failure to comply with these parameters will result in full deduction of the assigned marks, reinforcing accountability and transparency.

Performance Evaluation Framework

The performance will be evaluated on a weighted scoring system totaling 100 marks, with proportional marking for achievements between 50 per cent and 100 per cent of targets. Targets based on estimates may be revised by DPE upon receipt of audited figures.

The MoU was digitally generated through the MoU Dashboard and signed by the CMD/MD of BHEL and the Secretary, Ministry of Heavy Industries.