Swan Defence and Heavy Industries Ltd

- Nikhil Merchant Dear Shareholders,

It's an honor to share with you our vision and milestones achieved since taking over the management control in January 2024, as well as highlight the strategic path forward for your Company. We are at a pivotal moment for both the global maritime industry and India's place within it, and there could not be a better opportunity for your Company to focus on meeting the needs of ship owners and operators, and heavy fabrication customers, globally.

With the unprecedented growth in global seaborne trade, the demand for new fleets is driving an impressive orderbook of over 4,600 vessels worldwide. Leading shipbuilding nations are facing substantial backlogs, opening unique opportunities for Indian shipyards, including your Company's, to provide competitive offers.

Your company has one of the largest infrastructure facilities in the world, equipped with an expansive dry dock measuring 662 x 65 m with vessel building capacity of 400,000 DWT. The dry dock can be split into multiple slots, hence delivering multiple vessels at a time.

Your company's fabrication capacity of 144,000 tonnes annually across a 2.5 Million sq. ft. Block Construction Site (BCS), is more than the cumulative fabrication capacity of most yards in India. The semi-automatic fabrication line can produce complex, high-quality block structures that meet international standards. The pipe shop is also the largest in India with a capacity of 1000 pipe spools per day.

Additionally, the extensive offshore fabrication facility spans 750 x 265 m, with a floor strength exceeding 25 tonnes per sq. m, allowing us to efficiently produce large-scale offshore structures for sectors such as offshore wind, and oil and gas.

As we focus on yard restoration including critical infrastructure such as the dry dock and goliath crane, we have also strategically planned for ramping the shipbuilding and offshore capabilities to be ‘future-ready'. This includes significant equipment upgrades and new certifications that make your Company compliant with international standards.

One of the key milestones of your Company was achieved when ship repair operations commenced in August 2024 with the Indian Coast Guard as the first customer. As per near term plans, we will be docking two more vessels in November 2024.

To drive your company's expansion and reinforce its market presence, the business development activities are well underway. Through proactive outreach to both domestic and international players, we are strengthening our pipeline, with many opportunities now in advanced stages. We are also leveraging the advantageous location, extensive infrastructure, and cost-effective operations to position your company as the go-to choice for clients worldwide.

Your company is actively seeking partnerships with leading design agencies and international shipyards, which will allow the team to gain crucial expertise, expedite production timelines, and ensure your company remains at the cutting edge of the industry. With an existing stake in the design house Conceptia, your Company has additionally signed MoUs and framework agreements with both global and Indian design agencies. Further, your company is building a robust supply chain through OEM networks, which will bolster its resilience and help with competitive pricing.

Beyond shipbuilding, we are excited to expand our footprint into offshore projects. With an immediate focus on heavy steel fabrication and offshore fabrication for oil and gas players, we are in discussions regarding potential work sharing, and additional equipment and infrastructure manufacturing requirements, among others.

Your Company's skilled workforce of over 1,100+ on-ground manpower (both on-roll and contractual) is strong and growing. It is the foundational strength of the overall business and we are investing heavily in their well-being, training, and development to ensure a secure and sustainable work environment.

As we look to the horizon, we're not only investing in the present but also preparing for the future. Over the next 15 years, we foresee $35 billion in opportunities across domestic defense, commercial shipbuilding, and repair markets.

With offshore wind energy on a rapid growth trajectory, we see immense potential for growth in fabricating wind turbine foundations and subsea structures. By entering the renewable energy space, we are aligning ourselves with global efforts to reduce carbon emissions while diversifying our portfolio.

Through the Ship Building Financial Assistance Policy, we are seeing the benefits of structured financial support, aimed particularly at the future-ready vessels essential for sustainable growth. In line with the government's overall initiatives for green shipping, we are exploring options for producing vessels powered by sustainable fuels such as hydrogen, ammonia, and methanol. These green technologies are at the forefront of your Company's growth strategy, not only to address current environmental demands but also to position it as a leader in the next era of shipbuilding. Through the ongoing partnerships with OEMs and other stakeholders, we are advancing innovations in areas such as automation, propulsion efficiency, and emission control technologies.

Your Company's commitment to innovation and sustainability will be central to its success. We are investing in automated fabrication processes, robotics, and the latest in IT systems to enhance precision, reduce lead times, and meet global quality standards. With plans to adopt best-in-class digital platforms, we're setting the stage for seamless operations that maximize both productivity and client satisfaction.

While we remain aware of the challenges that lie ahead, our resilience is unwavering. With a clear focus on strategic partnerships, operational efficiencies, and sustainable practices, we are confident in your Company's ability to navigate the complexities of this industry. The global market is calling for reliable, innovative, and environmentally responsible shipbuilders, and your company is primed to answer that call.

I would also like to take this opportunity to extend my heartfelt and immense gratitude to all our stakeholders, including our team members, clients, and partners, for their support and confidence in our Company. As we advance, let us keep your Company's core values of excellence, innovation, and integrity at the forefront of all we do. Together, with dedication and vision, we are building not just ships, but a legacy of growth, leadership, and impact for India on the global maritime stage.

Thank you!