Harsha Engineers International Ltd Management Discussions

THE GLOBAL ECONOMY

The global economy has demonstrated noteworthy resilience, characterised by steady growth and a rapid slowdown in inflation. This journey has been marked by significant challenges such as post-pandemic supply-chain disruptions, an energy and food crisis triggered by the Russia-Ukraine conflict, and a surge in inflation. Notably, the rise in inflation was followed by synchronised monetary policy tightening.

Global growth, which reached 3.2% in 2023, is forecasted to remain steady through 2024 and 2025. However, this falls short of the historical average of 3.8%, owing to restrained monetary policies, diminished fiscal aid, and sluggish productivity growth. On the other hand, global headline inflation is expected to moderate, decreasing from an annual average of 6.8% in 2023 to 5.9% in 2024 and further to 4.5% in 2025. This decline can be attributed to a more front- loaded decrease in advanced economies. Inflation is expected to return to near pre-pandemic levels sooner than in emerging markets and developing economies.

Advanced economies are poised for a slight uptick, primarily driven by the economic recovery in the Euro Zone. The growth rates in such economies are projected to climb from 1.6% in 2023 to 1.7% in 2024 and 1.8% in 2025. In contrast, emerging markets and developing economies are expected to sustain stable growth at 4.2% during 2024 and 2025. However, regional disparities still exist, with the growth moderation in Asia counterbalanced by growth in the Middle East, Central Asia, and Sub-Saharan Africa.

Outlook

The global economic environment is currently balanced, though there are some lingering uncertainties. Instances of geopolitical tension, such as those in Ukraine, Gaza, Iran and Israel, could disrupt energy exports in the Middle East, potentially leading to increased crude oil prices. These, in turn, could increase the likelihood of higher interest rates and lower asset values. Furthermore, divergent rates of price decreases in major economies could cause currency fluctuations, thereby impacting financial sectors. The combination of high interest rates, household debt levels, and adjustments to fixed-rate mortgages could strain financial stability.

INDIAN ECONOMY

Indias economy has been remarkably resilient to global economic challenges, exhibiting sustained growth over the past three years. This growth has been supported by strict policy measures, regulations, and the gradual recovery of the private sector. Currently, the country is positioned for further progress, driven by significant investments in emerging sectors, ongoing government expenditure, and efficiency improvements due to advancements in digitalisation and infrastructure.

In 2023-24, India is GDP grew at 8.2%, signifying a strong trajectory of economic advancement. However, looking ahead at the next fiscal year, there is a note of caution, with GDP growth expected to grow between 6.5%-7%. This anticipated slowdown is due to a tightening of the monetary and fiscal policies, which was essential to bring inflation down. Despite such challenges, Indias economic vitality is backed by various factors, including strengthening consumer buying power due to lower inflation, a thriving start-up culture, anticipated strong agricultural outputs, and a resurgence in private capital spending. Additionally, efforts by the Government to boost rural incomes and increase infrastructure spending reinforce the countrys position as the worlds fastest-growing major economy.

Outlook

Going forward, the Indian economy is poised to reach greater heights in the coming years. Projections suggest that it will touch the USD 7 trillion mark by 2031, solidifying its standing to emerge as the worlds third- largest economy. This growth is likely to be driven by capital and productivity enhancements, which, in turn, would be facilitated by a comprehensive integration of digital and physical infrastructure. Furthermore, the manufacturing sector is expected to undergo a resurgence. This boost is forecasted to result from global opportunities, supportive domestic policies, and a focus on transitioning to green energy.

The future holds the possibility of a strong growth in capital expenditure, propelled by industrial strength and effective infrastructure development. This positive trajectory is likely to be supported several factors such as the robust financial health of Indian companies, consistent revenue growth, and a favourable outlook for commodity prices. Additionally, the Governments Production Linked Incentive (PLI) scheme aims to enhance Indias manufacturing capabilities on the global stage, facilitated by a strong banking sector and innovative financing options.

(Source: Press Information Bureau - Indian Economy Estimates)

INDUSTRY OVERVIEW

Global Bearings Market

Bearings find extensive application across a wide spectrum of equipment and machinery, spanning automotive components, agricultural machinery, household appliances and defence and aerospace systems. In 2023, the global bearing market was valued at USD 120.98 billion, and is projected to register a compound annual growth rate (CAGR) of 9.5% from 2024 to 2030.

In 2023, the automotive segment dominated the bearing market, accounting for a market share of 49.0%. This major contribution can be owed to the vast production in global the automotive industry. Additionally, the heightening demand for vehicles with technologically advanced solutions is driving vehicle manufacturing, which in turn necessitates the supply of instrumented products. Geographically, the Asia-Pacific region dominated the bearing market in 2023, accounting for a revenue share of 40%. The region is also expected to witness the fastest revenue growth, with a projected reach of more than USD 98.20 billion by 2030. China is another major market for bearings, and the sales in the country is expected to increase significantly in the coming years. This trend is likely to be propelled by the rapid expansion of machinery and motor vehicle production. Alongside, there is strong estimated aftermarket for industrial equipment and motor vehicle repair.

(Source: https://www.grandviewresearch.com/industry- analysis/bearings-market)

Indian Bearings Market

The Indian bearings market, valued at USD 2,179.9 million in 2023, is expected to witness substantial growth, reaching USD 6,714.8 million by 2032. This growth, estimated to expand at a CAGR of 13.5% between 2024 and 2032, reflects a strong and steady upward trend.

In 2023, Western India, especially Maharashtra and Gujarat played a significant role in the bearings market, constituting 54.5% of the total market revenue. This dominance of the region can be credited to its position as a major automotive manufacturing hub. Moreover, since more than 60% of bearing revenue is generated from the automotive sector in India, this concentration creates a lucrative business for bearing manufacturers.

The growth of the bearing industry has been primarily propelled by global economic progress, driving the increased demand for bearings across various sectors. Additionally, the rise in demand for customised bearings has spurred growth in the industry, with other sectors seeking tailored solutions to meet specific requirements. The growth has also been facilitated by the increased need for high-performance bearings. This has been due to a shift towards producing bearings with greater durability and efficiency. Furthermore, technological upgrades have also enabled the production of more advanced bearings, contributing to bolstered growth in the industry. The expanding renewable energy market, particularly the wind sector, has also been a key growth driver, as it is witnessing the demand for increasingly sophisticated bearings to support wind turbines. As these factors continue to stimulate growth in the bearing industry, manufacturers are expected to invest more in localising their products. This, in turn, will contribute to reducing imports and promoting domestic production. Overall, the bearing industry is expected to continue growing despite potential challenges to near-term growth, driven by a range of factors likely to persist in the long term.

(Source:https://www.astuteanalytica.com/industry-report/india-bearings-market#:~:text=India%20bearings%20market%20size%20was,the%20forecast%20period%202024%2D2032.)

Global Stamping Market

Stamping is a metal manufacturing process that transforms flat metal sheets into specific shapes and sizes. It encompasses various techniques such as blanking, coining, and bending. Stampers are the machines used for the process, which also utilise computer tools to create designs. Notably, there are four primary types of stamping, viz. progressive die stamping, four-slide stamping, transfer die stamping, and deep draw stamping. The procedure to be used for any particular product is selected based on the product requirements.

In 2023, the size of the global metal stamping market was estimated at USD 236.83 billion, and is projected to expand at a CAGR of 4.2% from 2024 to 2030. Increasing investments in the construction industry, especially in Asia-Pacific, are propelling the demand for stamped metal parts. Moreover, the burgeoning demand for customised products in various industries is expected to benefit the stamping market. Stamping is also an easier procedure to apply, which makes for another key growth driver for this manufacturing process. Furthermore, the automation of the stamping procedure is anticipated to drive efficiency and reduce production costs. Overall, these growth drivers are projected to contribute significantly to the increased growth of the stamping market in the coming years.

(Source: https://www.grandviewresearch.com/industry-analysis/ metal-stamping-market)

Indian Stamping Market

The India automotive stamping market was valued at USD 4,655.9 million in 2023, and is expected to record a CAGR of 4.4% from 2023 to 2030. This expansion has been primarily fuelled by the robust growth of Indias automotive industry, characterised by a significant increase in car production and sales. India is positioned to emerge as a leader in the stamping market of the Asia- Pacific region. Several factors are likely to contribute to this growth, including the escalating demand for stamped components across diverse industries, the adoption of innovative technologies, government initiatives aimed at fostering domestic manufacturing, and the presence of a skilled workforce coupled with competitive labour costs.

(Source: https://www.coherentmarketinsights.com/ market-insight/india-automotive-stamping-market- 3161#:~:text=The%20India%20Automotive%20Stamping%20 Market,flat%20metal%20into%20desired%20shapes.)

Global Solar Industry

The global solar power market is projected to grow from USD 253.69 billion in 2023 to USD 436.36 billion by 2032, exhibiting a CAGR of 6% in the forecast period. Power generation in recent years has been directly impacted by the rising population in developing countries. With the increase in carbon reduction efforts, power generation through renewable sources is being considered the most feasible substitution for conventional power sources such as oil and coal products. Notably, this shift towards renewable energy is increasing at a healthy rate. As the costs associated with solar energy systems continue to decline, they are becoming increasingly competitive within the energy generation industry. Heightening investments in solar energy technologies are expected to further drive down component prices. As such, solar energy systems are set to become more cost-effective than traditional coal or gas power plants.

The imperative to explore alternative sources of power generation and reduce reliance on fossil fuels is also poised to escalate the demand for solar energy systems. This underlines the pivotal role of solar energy in the transition towards sustainable energy solutions.

(Source: https://www.fortunebusinessinsights.com/industry- reports/solar-power-market-100764)

Indian Solar Industry

India has made remarkable strides in the field of solar energy, currently ranking fourth globally in solar power capacity. Over the past five years, the country has undergone a monumental transformation, witnessing a substantial increase in the solar installed capacity from 21,651 MW to 70,096 MW as of 2023. With ambitious targets and policies like the Production Linked Incentive (PLI), India is working towards achieving 500 GW of renewable energy capacity by 2030.

Central to the countrys commitment to promoting the use of solar energy is the Solar Park Scheme. This scheme is aimed at establishing 50 solar parks each with a capacity of 500 MW and above, cumulatively totalling around 38 GW by 2025-26. Solar parks are pivotal hubs for solar energy generation, capable of attracting investments and fostering a favourable environment for solar power infrastructure development.

Importantly, India has set forth ambitious targets to spearhead the renewable energy revolution. These include achieving 500 GW of renewable energy capacity by 2030, which would meet 50% of its energy needs from renewable sources by the same year. Also, the country targets to reduce the projected carbon emissions by 1 billion tonnes by 2030. India even aims to decrease the carbon intensity of its economy by less than 45%, in its aspiration to become a net-zero carbon country by 2070.

(Source: https://www.investindia.gov.in/team-india-blogs/ indias-solar-power-revolution-leading-way-renewable- energy#:~:text=India%20currently%20stands%204th%20 globally,to%2070%2C096%20MW%20in%202023.)

COMPANY OVERVIEW

Founded in 1986, the Harsha Group aims to provide efficient engineering solutions and maximise the impact of engineering on society. Today, Harsha Engineers international Limited (also referred to as ‘HEIL or ‘Harsha Engineers or ‘the Company) leads the Indian precision bearing cage manufacturing sector, boasting a market share of 50-60% in the organised segment. On a global scale, the Company holds around 6.5% market share in organised bearing cages for brass, steel, and polyamide.

The Companys diverse range of bearing cages spans from 20mm to 2,000mm in diameter. its product line includes brass, bronze, bushing and polyamide cages, along with steel cages and stamped components. Additionally, the Company offers comprehensive turnkey solutions for solar photovoltaic needs in the solar engineering, procurement, and construction sector.

With the evolution of engineering and the growing demand for bearings, the Company is continuing to serve its clients with utmost precision in its products. Utilising its in-house product development and innovation centre, the Company has developed 344 new products in 2023-24.

Global Precision Engineering Solutions Provider

Harsha Engineers offers a varied product lineup, crafting bearing cages in different sizes and materials. it excels in manufacturing precision components, welded assemblies, brass castings, and bushings. With robust manufacturing processes and adeptness in new product development, the Companys market presence extends to over 30 countries across five continents in 2023-24. This ensures the creation of diversified revenue streams geographically and among customers.

Collaborations with International Bearing Producers

Harsha Engineers has forged strong alliances with leading global bearing manufacturers across automotive, railways, aviation, construction, and other industries.

Their expertise, advanced manufacturing facilities, and dedication to quality ensure repeat orders and long-term contracts. By prioritising customer satisfaction and transparent transactions, the Company accommodates diverse needs, innovates new products, and is able to venture into new markets, highlighting its operational excellence and attracting prospective clients.

Expertise in Tooling Manufacturing, Design Development, and Automation

Drawing upon decades of precision engineering expertise and strategically positioned production facilities, Harsha Engineers seamlessly meets the unique and rigorous demands of its global clientele. It harnesses cutting- edge manufacturing technology to deliver comprehensive services across the entire product lifecycle, encompassing design, development, and manufacturing. While specialising in bearing cages, the Company also offers a diverse range of precision components such as welded assemblies, brass castings, and bushings. its expansive market presence spans across multiple continents, ensuring diversified revenue streams both geographically and among customers.

Opportunities

CHINA+1

in todays global business landscape, the demand for alternatives to products manufactured in China is on the rise. This shift creates a substantial opportunity for india. With its operational advantages and seasoned management team, HEIL is well-placed to capitalise on this trend. The Companys strategic positioning and deep expertise enables it to effectively address the evolving needs of businesses seeking reliable and high-quality engineering solutions.

IMPROVED WIND MARKET IN EUROPE

The surge in wind power investments across Europe is driving substantial growth for HEIL, a leading supplier of high-quality bearing cages and bronze bushes for wind turbines. HEILs competitive edge is further strengthened by our production facility in Romania. With innovative designs and well-planned manufacturing capabilities, we are well positioned to meet the increasing demands of wind power original equipment manufacturers (OEMs) as the market continues to expand.

GROWING DEMAND FROM JAPANESE AUTOMAKERS

The demand for HEILs products from major Japanese automakers has steadily increased in recent years, fuelled by our rising production, emphasis on quality and innovation, and expansion into emerging markets. Our expertise and ability to provide customised components position the Company well to meet the automakers discerning requirements and become a strategic partner in their growth.

BRONZE BUSHING

We specialise in producing bronze bushes primarily used within the gearboxes of wind turbines, especially in planetary axles. Our focus is on advancing our expertise across various bronze alloys, with a specific emphasis on aluminium and tin bronze. These bushes are central components, and their precise machining is crucial for ensuring optimal wind turbine performance. We have achieved proficiency in addressing the complete spectrum of bushes, covering a wide range of outer diameters (OD) and heights. Our capabilities extend from 200mm to 600mm in OD and 200mm to 800mm in height.

MOVING MANUFACTURING TO BEST COST LOCATIONS

At HEIL, we are poised to capitalise on the relocation trend of the bearing and bearing cage businesses from Europe to India. Our favourable cost structure, combined with our strong relationships with top global manufacturers, position us perfectly to seize this opportunity.

INCREASING POPULARITY OF EVS

We are strategically positioned to leverage the growing EV segment due to our expertise in developing customised bearing cages. Our in-house tool and design facilities, advanced machinery, specialised cleaning equipment, and software enable us to manufacture precision stamping components and tailored steel cages specifically for the EV industry. This competitive advantage positions us well to capture opportunities in the expanding EV market.

RISING EMPHASIS ON SUSTAINABILITY

The urgent climate change crisis requires industries to adopt innovative and resource-efficient business models that minimise dependence on physical resources. At HEIL, we play a pivotal role in assisting our customers in transitioning towards a circular economy by offering a range of products and solutions. Additionally, we are actively working to decrease CO₂ emissions originating from our factories and supply chain, underscoring our commitment to environmental sustainability.

OPERATIONAL OVERVIEW

Harsha Engineers holds the distinction of being the largest manufacturer of precision bearing cages in the organised sector, ranking among the top manufacturers globally leveraging its in-house expertise, it excels in designing and developing advanced tooling, facilitating the production of precision bearing cages, bushings and intricate stamped components. At present, the Company has successfully diversified its product portfolio and enhanced the manufacturing processes for its different bearing cages, bushings and stamped components. These outcomes can be primarily attributed to its robust design, development, and technological capabilities. The following are the highlights for the key products of Harsha Engineers:

The Company holds a substantial market share in the bearing cage market, having produced over 6,494 lakh bearing cages, including other products.

Harsha Engineers specialises in manufacturing bronze bushes that are primarily used in wind turbine gearboxes, particularly in planetary axles. The Company focusses on further advancing its expertise in various bronze alloys, particularly Aluminum and Tin Bronze. It excels in producing a wide range of bushes, with capabilities spanning from 200 mm to 600 mm in outer diameter and 200 mm to 800 mm in height.

For the stamping and specialised component segment, Harsha Engineers has established a dedicated unit equipped with machinery and tools for complex stamping. The Company is also developing components for the compressor industry, including bearing seals and stamping.

With over a decade of experience in the EPC business, Harsha Engineers offers in-house design, engineering, procurement, project management, installation and commissioning of solar power projects along with O&M services. The Company has installed and commissioned more than 500 MW ground mounted and rooftop solar power projects across India till March 31, 2024.

The Company has made substantial strides in green power generation through its diverse renewable energy initiatives. The 1.6 MW solar rooftop installation at the Companys India plants produced a total of 1.64 million units of energy during 2023-24.

The 1 MW solar ground-mounted installation in Tarapur generated a total of 1.06 million units of energy during the same period.

The existing 1.25 MW windmill at Kalyanpur continues to operate, producing a total of 1.2 million units of green power in 2023-24.

The hybrid power project at Pipaliya, wind turbine generator (WTG) with a capacity of 2.7 MW, along with a solar power plant rated at 0.675 MW AC and 1.0125 MW DC solar power plant, generated 7.86 million units and 2.51 million units of energy respectively during 2023-24.

FINANCIAL OVERVIEW

Particulars	Standalone			Consolidated
	For the year ended March 31, 2024	For the year ended March 31, 2023	For the year ended March 31, 2022	For the year ended March 31,2024	For the year ended March 31,2023	For the year ended March 31,2022
Revenue from Operations	1,08,094	1,02,472	95,645	1,39,230	1,36,402	1,32,148
Profit before Depreciation and Tax	19,450	19,561	16,261	19,007	20,324	16,199
Less: Depreciation	2,685	2,331	1,962	3,932	3,612	3,536
Profit for the Year before Taxation	16,765	17,230	14,299	15,075	16,712	12,663
Provision for Taxation Less: Current Year Tax Less: Deferred Tax	3,771 303	3,863 528	3,325 366	3,797 135	3,846 538	3,325 143
Profit after Taxation	12,691	12,839	10,608	11,143	12,328	9,195
Add: Other Comprehensive Income for the Year	400	(748)	144	400	(748)	144
Total Comprehensive Income for the Year	13,091	12,091	10,752	11,543	11,580	9,339

Revenue from Operations

Harsha Engineers witnessed a growth of 5.49% in standalone revenue from operations for the year 2023-24, with an increase from Rs. 1,02,472 lakhs in 2022-23 to Rs. 1,08,094 lakhs in 2023-24.

Similarly, in terms of the consolidated revenue from operations, there was a growth of 2.07% in 2023-24, as it rose from Rs. 1,36,402 lakhs in 2022-23 to Rs. 1,39,230 lakhs in 2023-24.

Profit after Tax

In the year 2023-24, Harsha Engineers decreased a minor degrowth of (1.15)% in standalone profit after tax, of Rs. 12,691 lakhs from Rs. 12,839 lakhs. Furthermore, the Companys consolidated Profit after Tax (PAT) decreased to Rs. 11,143 lakhs in 202324 from Rs. 12,328 lakhs in 2022-23, showcasing a decrease of (9.61)%.

Total Comprehensive Income

Harsha Engineers standalone total comprehensive income experienced a rise of 8.27%, increasing from Rs. 12,091 lakhs in 2022-23 to Rs. 13,091 lakhs in 2023-24. Similarly, its consolidated total comprehensive income decreased by (0.32) %, Rs. 11,543 lakhs in 2023-24 from Rs. 11,580 lakhs in 2022-23.

Financial Ratios (Consolidated)

Key Financial Ratios	2023-24	2022-23	2021-22
Current Ratio (Times)	2.91	2.90	1.64
Debt-to-Equity Ratio (Times)	0.15	0.17	0.74
Debt Service Coverage Ratio (Times)	7.69	6.94	2.00
Return on Equity Ratio (%)	9.92%	15.47%	19.13%
Inventory Turnover Ratio (Times)	3.78	3.59	4.07
Return on Capital Employed (%)	14.26%	20.92%	25.17%
Net Profit Ratio (%)	8.00%	9.04%	6.96%

RISK MANAGEMENT

Harsha Engineers has implemented a robust risk management framework to identify and evaluate its business risks and opportunities systematically. To enhance its resilience, Harsha Engineers has updated its Risk Management Framework in line with the recommendations of the Risk Management Committee, as approved by the Board of Directors during their meetings on May 1, 2024, and May 16, 2024, respectively. This framework aims to enhance transparency, minimise adverse impacts on the Companys business objectives, and strengthen its competitive advantage. It includes comprehensive documentation and reporting processes, ensuring a structured approach to risk management. Within this framework, diverse risk models are employed to identify risk trends, assess exposure levels, and analyse potential impacts across the Company and its various business segments. This comprehensive approach enables it to proactively manage risks, capitalise on opportunities, and safeguard its operations, while maximising value creation.

Risk	Impact on Company	Mitigation Strategy
Geopolitical Risk	Escalating geopolitical tensions in Europe have reverberated across global businesses, with a pronounced effect on the European market. Consequently, Harsha Engineers faces a looming threat to its profitability due to the adverse repercussions on businesses within this region.	Leveraging its extensive geographical footprint and varied customer base, the Company enjoys a diversified revenue stream. Moreover, it tailors its expansion strategies to meet the evolving demands of clients across India, Europe, the Americas, and China. These initiatives involve extending operations to boost market penetration and capitalise on growth opportunities.
Risk due to Fluctuations in Raw Material Prices	Harsha Engineers profitability may be directly influenced by the fluctuating prices of the raw materials it procures, owing to their volatile nature.	To mitigate the volatility of raw material prices, the Company implements several measures. It sources raw materials from suppliers in the open market that adhere to customer-set standards. The Company adopts a flexible approach in its supplier relationships, avoiding long-term commitments or firm contracts. Additionally, it employs a pass-through mechanism for raw materials with most customers.
A Shrinking Need for Traditional Internal Combustion Engines	With the rising preference for electric vehicles as the primary mode of transportation, the automotive sector is experiencing a notable shift. Consequently, there is likely to be a decline in demand for internal combustion engines (ICEs), a trend projected to persist and intensify in the foreseeable future.	As Harsha Engineers does not produce needle bearing cages, which are integral engine components, the surge in electric vehicle adoption is unlikely to directly affect its operations negatively. However, the escalating demand for electric vehicles is driving a need for precision engineering solutions, offering the Company an opportunity to broaden its market presence. Furthermore, the Companys stamping segment is poised to capitalise on the growth of the electric vehicle market, presenting significant benefits.
Risk due to Foreign Currency Fluctuations	Harsha Engineers may be exposed to currency fluctuations due to its operations across various countries through export and import activities, which may affect its product pricing and profitability.	The Company engages in forward contracts and in long-term premium paid options contracts to partially mitigate its foreign currency risks.
Human Resource Risk	Harsha Engineers ability to deliver value hinges on its capacity to attract, retain, and nurture a skilled workforce. The absence of a requisite talent pool can significantly impede the Companys overall performance.	The Company utilises ample human resources to support its existing operations and anticipated expansion, especially at the managerial level. It is dedicated to enhancing operational efficiency by decreasing employee costs as a percentage of revenue from operations.
Compliance Risk - Increasing Regulatory Requirements	Harsha Engineers may have to face penalties as stipulated by relevant provisions and regulations owing to the failure to fulfil obligations.	The Company ensures strict adherence to regulatory mandates and adopts a proactive approach to compliance management. To that end, it conducts ongoing monitoring and assessment of regulatory changes, coupled with regular compliance monitoring and reporting procedures.
Competition Risk	The Company faces ongoing competitive risks, as increased competition may impact factors such as profit margins and market share	Through its continuous efforts to enhance the Companys brand reputation, it focusses on design, quality, cost-effectiveness, timely delivery, market share expansion, and superior customer service to be at an age over its competitors.

HUMAN RESOURCES

Harsha Engineers acknowledges the vital role that is played by its employees in shaping its culture and making its business successful. By aligning policies, initiatives, and training programmes with its vision and mission, the Company fosters a harmonious work environment. Valuing its employees, it offers competitive compensation, attractive benefits, and favourable conditions to motivate its workforce. The Company invests in engagement, communication, and involves employees in decision-making to enhance value and reduce attrition. Through effective practices, leadership support, and employee management, it develops and optimises its human capital, thereby benefiting both its employees and the organisation. The Companys commitment to employee engagement has led to achieving its goals for 2023-24. As of March 31, 2024, the Company had 1,731 employees on its payroll.

CSR INITIATIVES

At Harsha Engineers, CSR is more than a commitment-it is a core aspect of the Companys operations. As a responsible corporate citizen, the Company is dedicated to supporting society at large. Aligning with its vision, Harsha Engineers strives to add value to its stakeholders by transcending business objectives and enhancing community well-being. The Companys contributions to social sector development encompass several pioneering initiatives, implemented through active engagement with stakeholders both within the Company and in the broader community. The Companys CSR efforts are mainly dedicated towards people with intellectual and development disabilities, education, health, environment and disaster response.

SUSTAINABILITY

The Company is strongly dedicated to maintaining sustainability, integrating principles of environmental, social, and governance into its business operations. During 2023-24, it implemented several initiatives to progress its offers towards upholding sustainability and responsible behaviour across the organisation. These initiatives encompassed taking measures to conserve water, planting trees, maintaining a clean and safe work environment, reducing carbon emissions through shared transportation, practicing responsible sourcing, promoting safety and health, and emphasising compliance with sustainable product materials. These actions emphasise the Companys commitment to impacting the environment, society, and stakeholders positively, while ensuring its long-term success through ethical business practices.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Harsha Engineers has aligned its internal control systems with the nature, size, and complexity of its operations. Recognising its evolving needs, the Company has bolstered the focus of the internal audit department and expanded its scope to encompass various areas, including corporate governance policy establishment, internal control framework implementation, internal audits, management audits, IT audits, policy drafting and implementation, environmental law compliance, and statutory compliance review and reporting.

A robust internal control system is maintained to safeguard assets against unauthorised use or disposition and ensure the authorisation, recording, and swift reporting of transactions. The Company conducts regular reviews to assess the adequacy of internal control systems, aimed at promoting transparency and adequacy in financial and other records, as well as reliable resources for preparing financial reports and handling data. The adequacy and effectiveness of the internal control environment are periodically reviewed by the Harsha Engineers Audit Committee. The Committee oversees the implementation of audit recommendations, particularly those pertaining to enhancing the Companys risk management policies and systems.

CAUTIONARY STATEMENT

Certain statements in the MDA section concerning future prospects may be forward-looking statements which involve a number of underlying identified/non-identified risks and uncertainties that could cause actual results to differ materially.

In addition to the foregoing changes in the macro-environment, a global pandemic like Covid-19 may pose an unforeseen, unprecedented, unascertainable and constantly evolving risk(s), inter-alia, to the Company and the environment in which it operates. The results of these assumptions made, relying on available internal and external information, are the basis for determining certain facts and figures stated in the report. Since the factors underlying these assumptions are subject to change over time, the estimates on which they are based are also subject to change accordingly. These forward-looking statements represent only the Companys current intentions, beliefs or expectations, and any forward-looking statement speaks only, as of the date on which it was made. The Company assumes no obligation to revise or update any forwardlooking statements, whether as a result of new information, future events, or otherwise.