HLE Glascoat Ltd

Dear Stakeholder,

It is with great honor that I present the Managing Director's Message for the Annual Report for the fiscal year ending March 31, 2024. Despite a challenging year, I am pleased to report that HLE Glascoat has once again delivered a strong performance. I am delighted to share with you the Auditor's and Board's Reports, along with the Annual Audited Financials for FY 2023-24. Our strategic acquisitions and expansions have further solidified our position, making us the undisputed leader in our field. HLE Glascoat continues to expand its horizons, building on a legacy of sustained growth. With your unwavering support, we have strengthened our foundation, ensuring that our growth is both rapid and sustainable. Our focus remains on creating long-term value for our stakeholders through a commitment to sustainable business practices.

Economic and Industry Overview

The global economy is expected to experience a synchronized rebound in 2025, as election uncertainties ease and central banks in the West likely announce rate cuts later in 2024. India is anticipated to see improved capital flows, boosting private investment and a rebound in exports.

For 2025, the IMF projects India?s growth rate at 6.5%, driven by strong domestic demand and a growing working-age population. Key factors include the continuity of domestic policy reforms, reduced uncertainties in the United States post-elections, and more synchronized global growth in a low-inflation environment. As India accelerates toward becoming the world?s third-largest economy, its consumer market is also set to become the world?s third-largest by 2027, reflecting a shift toward aspirational spending.

The engineering sector, a cornerstone of India?s industrial landscape, accounts for 27% of the country?s total factories and 63% of overall foreign collaborations. Demand for engineering services is fueled by capacity expansions in industries such as infrastructure, energy, mining, and manufacturing. India holds a competitive advantage in manufacturing costs, market knowledge, technology, and innovation across various engineering sub-sectors. The sector?s strategic importance is underscored by its deep integration with other industry segments. Initiatives by AICTE to modernize engineering curricula in areas like AI, IoT, robotics, and data science will further enhance the sector?s competitiveness.

India?s pharmaceutical industry, the third-largest globally by volume and 14^th by value, contributes around 1.72% of the country?s GDP. The market is projected to reach $130 Billion by 2030, driven by a focus on innovative therapies.

In the chemical industry, India ranks 14^th in exports and 8^th in imports globally, excluding pharmaceuticals. The industry is expected to grow at a CAGR of 11-12% by 2027, increasing India?s share in the global specialty chemicals market. The Department of Chemicals & Petrochemicals is also expected to introduce a Production Linked Incentive (PLI) scheme for the sector, further boosting growth.

HLE Glascoat continues to benchmark its products against international standards, ensuring compliance with stringent quality norms and delivering superior products to our customers. Our brand is synonymous with trust and reliability, reinforcing our strong customer relationships over the years.

Business Performance

Despite the challenges faced during FY 2023-24, your company achieved commendable results. The standalone revenue from operations was Rs. 59,070.85 Lakhs, compared to Rs. 64,944.35 Lakhs in FY 2022-23. Consolidated revenue from operations for FY 2023-24 stood at Rs. 96,792.02 Lakhs, up from Rs. 93,202.3 Lakhs in the previous year.

The consolidated EBITDA for FY 2023-24 was Rs. 12,087.70 Lakhs, compared to Rs. 14,507.30 Lakhs in FY 2022-23. Despite market challenges, we maintained an EBITDA margin of 12.5%, thanks to stringent cost controls and a focus on operational efficiencies. The Profit after Tax for FY 2023-24 was Rs. 4,088.90 Lakhs, compared to Rs. 6,980.70 Lakhs in FY 2022-23. Although margins were impacted by challenging market conditions, our prudent management enabled us to navigate these difficulties effectively.

Impact of Thaletec Acquisition

In December 2021, HLE Glascoat acquired 100% equity in Thaletec GmbH, a highly reputed and profitable German company specializing in innovative solutions and technology for glass-lined equipment. This acquisition has significantly enhanced our product portfolio, particularly in glass-lined products and solutions, by introducing more advanced glass quality and technology. Thaletec?s research and development capabilities have bolstered our innovation pipeline, allowing us to offer more advanced automation solutions to our customers, improving efficiency and productivity. The acquisition has also strengthened our presence in the European market, providing access to new customers and markets. Thaletec Inc., USA, a subsidiary of Thaletec GmbH, has provided us with a platform to enter the US market, where we have received an encouraging response.

Impact of Kinam Engineering Industries Acquisition

In August 2023, H LE Glascoat acquired a majority stake in Kinam Engineering Industries, a leading manufacturer of various types of heat exchangers and process equipment. Kinam?s products complement our existing product lines, creating significant synergies between the two companies. This acquisition is expected to enhance operational efficiencies, streamline business processes, and optimize resource utilization. By combining our strengths, we anticipate increased territorial coverage, improved competitiveness, a broader customer network, and deeper penetration of European and American markets. This partnership is poised to create substantial value for all stakeholders.

Key Focus Areas and Business Outlook

While the remainder of 2024 may be marked by global financial uncertainties, HLE Glascoat remains confident in its ability to sustain its growth trajectory. We are optimistic about our strong order book, both domestically and internationally.

The Thaletec acquisition has provided us with advanced glass technology, complementing our existing product offerings and strengthening our position in Europe. The positive reception of Thaletec products in India indicates new growth opportunities. Similarly, the Kinam acquisition will allow us to leverage each other?s marketing and post-sales networks, promoting complementary products and expanding our market share in filtration, drying, glass-lined equipment, and heat exchangers globally.

HLE Glascoat remains committed to innovation, quality improvement, and customer-centricity—core values that drive our business. Our recent acquisitions have opened new avenues for growth, ensuring that we continue to build on our position as a strong industry leader.

Corporate Social Responsibility

H LE Glascoat recognizes the importance of corporate social responsibility (CSR) and has undertaken extensive charitable activities, particularly in the areas surrounding our Maroli plant. Through the Yashaswati Foundation, a Section 8 Company, we have made CSR contributions that exceed statutory requirements. Our initiatives focus on eradicating hunger, poverty, and malnutrition; promoting education, art, and culture; providing healthcare and destitute care; and supporting environmental sustainability and rural development projects.

Acknowledgements

I would like to express my sincere gratitude to our Board members for their guidance and support, and to all stakeholders for the trust they have placed in HLE Glascoat. I also extend my heartfelt thanks to our dedicated team members, whose contributions have been instrumental in our journey of growth and success. At HLE Glascoat, we remain confident that our culture of understanding and delivering comprehensive solutions, backed by solid R&D, will lead to an even brighter and more prosperous future.