Harsha Engineers International Ltd

CHAIRMAN'S COMMUNIQUE

Every component we manufacture and every system we design, is a testament to our focus on quality and excellence. We believe that perfection is not just a goal but a continuous pursuit, and we have taken significant strides in enhancing our capabilities and expanding our horizons

Dear Stakeholders,

This year, as India marked a monumental achievement in space exploration, we too have celebrated significant milestones in our journey at Harsha Engineers. Our commitment to being ‘Engineered with Precision Crafted for Perfection' has been the cornerstone of our progress. Just as India's space mission was meticulously planned and executed with an eye for detail, our approach has been to apply the same level of precision and dedication to our engineering solutions.

Every component we manufacture and every system we design, is a testament to our focus on quality and excellence. We believe that perfection is not just a goal but a continuous pursuit, and we have taken significant strides in enhancing our capabilities and expanding our horizons. Our team's relentless dedication has enabled us to innovate and refine our processes, ensuring that we deliver nothing short of perfection to our clients and partners. As we celebrate our achievements, we remain committed to pushing the boundaries of what is possible, setting new benchmarks in the industry, and crafting a future defined by excellence.

The Big Picture

The global business environment has been particularly challenging this fiscal year due to high inflation and geopolitical tensions stemming from the ongoing Ukraine war and the recent Middle East conflict. The Indian displayed a resilient performance in 2023-24 amidst global uncertainties and domestic challenges. Economic activity rebounded very well following the pandemic- induced slowdown, supported by robust domestic demand, structural reforms, and accommodative monetary policy. Key sectors such as manufacturing, services, and agriculture showed resilience, contributing to a broad-based recovery.

India's long-term growth prospects have been significantly bolstered by government initiatives in infrastructure development, digital transformation, and healthcare. Initiatives like Aatmanirbhar Bharat and Make in India, and various production-linked incentive (PLI) schemes are positioning the country as a global manufacturing hub. These initiatives are particularly impactful for India's bearing cages market, which serves diverse sectors such as automotive, railways, windmills, heavy machinery, and aerospace.

The construction of multiple expressways and highways has driven the demand for commercial vehicles and heavy machinery, further boosting the market for bearing cages. However, inflationary pressures, especially in food and fuel prices, present challenges for managing inflation. Looking ahead, continued reforms, investment in human capital, and productivity enhancement will be vital for achieving sustainable and inclusive growth. The recent elections affirm the mandate for the continuity of longterm reforms.

The railway sector's remarkable transformation from reliance on imported coaches to a robust domestic production landscape underscores the success of the ‘Make in India' campaign. This initiative has been instrumental in attracting foreign direct investments (FDIs) and fostering a vibrant industrial ecosystem, paving the way for a new era of innovation and excellence.

Global leaders in the railway industry have recognised the potential of the ‘Make in India' vision and strategically aligned their operations to capitalise on India's growing market opportunities. By establishing businesses and forming joint ventures within the country, these multinational companies not only support domestic manufacturing but also contribute significantly to the country's economic growth. This collaborative approach facilitates knowledge transfer, technology sharing, and skill development, creating a dynamic environment that benefits both local and international stakeholders. The synergy between foreign companies and domestic entities exemplifies the transformative power of partnerships, reinforcing India's position as a hub for advanced railway technology and production.

On a similar trend, the Indian automobile industry has continued to grow steadily, showing remarkable resilience despite economic fluctuations and regulatory challenges. In 2023-24, the industry saw significant progress, with passenger vehicle (PV) production reaching 4.9 million units, spurred by strong domestic demand. The twowheeler sector also made a strong comeback, with production increasing by 10% to 21.4 million units. While the commercial vehicle (CV) segment experienced modest growth, it remains a key area for strategic expansion, particularly in international markets.

Now, let me bring to your attention some promising developments in the bearing market. The global ball bearing market reached a size of USD 43.7 billion in 2023. According to projections, this market is expected to grow to USD 62.0 billion by 2032, at a CAGR of 3.8% during the period from 2024 to 2032. This growth is being driven by several key factors, including the increasing demand for machinery and equipment, the rising adoption of automation and robotics across industries for process optimisation and enhanced productivity, and ongoing technological advancements aimed at improving the durability and efficiency of ball bearings. These trends present significant opportunities for growth and innovation in the industry. We are well-positioned to capitalise on these developments, given our expertise in precision bearing cages and expanding product portfolio.

Engineered with Precision

At HEIL, we pride ourselves on being India's largest manufacturer of precision bearing cages. With four strategically located manufacturing facilities and an extensive network of warehouses worldwide, we are committed to delivering our high-quality products to over 25 countries across five continents.

Our dedication to innovation and excellence has enabled us to diversify into complex and specialised precision stamped components, expanding our capabilities and product offerings. We are equipped to manufacture bearing cages with diameters ranging from 20mm to 2,000mm, showcasing our versatility and technical prowess. Since our inception, we have manufactured over 7,500 products, a demonstration to our experience and reliability in the industry.

With a 6.5% market share in the global organised bearing brass, steel, and polyamide cages market, we are a trusted partner to the top six global bearing manufacturers.

Our commitment to excellence is reflected in our ability to offer full-service capabilities under one roof. We streamline every aspect of the production process, from initial product design support and tooling design to tooling manufacturing, development, testing, and precise measurement. This integrated approach ensures that we efficiently meet the diverse needs of our clients while maintaining the highest standards of quality and reliability in the global market.

As we move forward, our focus is on enhancing our capacity to meet the increasing demands of our customers and delivering exceptional precision engineering solutions. We provide top-tier products and services, aiming to sustain our leadership position in the industry. The adoption of the China+1 strategy by global industry leaders has been highly beneficial for the Company, and we expect this trend to continue. We look forward to actively supporting the growth of distinguished businesses seeking to expand their presence in India, contributing to their success and our mutual advancement.

Commitment to Sustainability

Our strategy to integrate sustainability into our growth trajectory reflects our core values and long-term vision. We are committed to sustainability across all facets of our operations, fostering a culture of accountability and excellence. Our dedication to environmental stewardship is evident in our progressive efforts towards renewable energy, water conservation, and waste management.

We are also continuously developing and introducing more efficient and eco-friendly products across all our divisions.

Our leadership is deeply engaged in sustainability initiatives, championing a culture of inclusivity and active participation. This commitment extends to our employees, who are encouraged to contribute to our sustainability goals through various initiatives. Our employee engagement programmes promote environmental awareness, support for green practices, and participation in sustainability-driven projects.

Our CSR programmes are a key component of this engagement, enabling us to contribute meaningfully to areas aligned with our values. Through these programmes, we aim to make a positive impact on the communities we serve, reflecting our commitment to a sustainable and inclusive future.

Concluding Note

Looking forward, we are enthusiastic about the opportunities on the horizon. We will keep investing in innovation and leveraging emerging technologies to enhance efficiency, improve customer experiences, and explore new growth avenues. As we focus on our strategic priorities, the future promises even greater achievements. Our commitment to innovation and development digitalisation, and strategic partnerships will drive innovation and solidify our position as a leading motion technology company.

As a representative of the Board of Directors, I would like to express my heartfelt gratitude to our shareholders for their trust in HEIL. I also take this opportunity to extend my appreciation to the hardworking management team, dedicated employees, supportive bankers, and all the stakeholders for their valuable contribution towards the Company's growth.