Hind Rectifiers Ltd Management Discussions

Global Economy Overview

Indian Economy

The year 2025 continues to be a pivotal period for India, reflecting a blend of determination and adaptability amid evolving global economic conditions. Even as inflation rises and global demand fluctuates, India has stayed on course, driven by key developments that have fueled its growth. The countrys ability to stay strong through these challenging times has strengthened its standing, making India one of the fastest-growing economies worldwide. With projections from the World Bank estimating a 6.7% GDP growth for both 2025-2026 and 2026-2027, Indias economy is on track to outpace the global average of 2.7%. This growth is being driven by a thriving services sector, increasing consumption in rural areas, and a revitalized manufacturing landscape.

Indias economic optimism is largely fueled by the sustained strength of its core sectors. The services industry continues to be a powerhouse, contributing a significant share to the countrys overall output. By 2024-2025, it is expected to make up 55% of the total GVA. Rural consumption also holds steady, supported by a thriving agricultural sector. At the same time, exports in the manufacturing sector, especially in electronics and pharmaceuticals, are on the rise, reflecting Indias increasing presence in global value chains.

Rising crude oil prices and fluctuating currencies have continued to exert inflationary pressure. Yet, the governments proactive measures have played a crucial role in stabilizing food supply chains, ensuring that inflation remains within control.

Through thoughtful regulation and timely interventions, the nation has kept inflation manageable, even amid persistent economic challenges. Indias equity market has made significant strides, now standing as the fourth largest in the world, with a market capitalization close to USD 5 trillion. Despite foreign investor pullbacks and market corrections in late 2023, local institutions have stepped in to uphold market stability, showcasing the depth and durability of Indias financial system. Indias rise on the global stage is becoming more pronounced as companies increasingly turn to the ‘China +1 strategy to diversify their supply chains. This shift not only enhances Indias appeal as a destination for investment but also highlights its growing importance in global trade and its potential to lead in manufacturing.

Indian Electrical Components and Equipment Market Overview

The total electrical equipment market in India covers a broad spectrum, from industrial & commercial automation solutions, transmission & distribution equipment, heavy industries, infrastructure, lighting, and electro mechanical systems like motors, and HVAC systems, among others. As the demand for automation rises, energy efficiency becomes more critical, and urbanization and industrialization continue at a fast pace, the entire electrical equipment market is on track for impressive growth. The entire electrical equipment market is valued at USD 89,859.7 million. Growing electricity demand, alongside government support for modernizing power infrastructure and integrating renewable energy, will continue to boost growth in this market.

Hirect currently operates in a niche segment of this entire electrical equipment market. Hence this vast market offers several opportunities for the growth of the Company and its products.

Company Overview

Hind Rectifiers Limited (referred to as ‘Hirect, or ‘the Company), established in 1958 through a strategic partnership with Westinghouse Brake & Signal Company Ltd., UK, stands as a premier manufacturer of power electronics and railway transportation systems. Originally focused on manufacturing small semiconductors and rectifiers, Hirect steadily expanded its capabilities over the decades to develop a comprehensive portfolio of electrical and electronic components tailored for the Indian Railways. Renowned for its expertise in design, development, and manufacturing, the Company has played a significant role in advancing power conversion and railway electrification technologies. From Colaba, Mumbai, the Company expanded its horizons to a sprawling 20,000 sq. meter facility in Bhandup. Over the years, Hirects product range has grown to include high-performance power silicon diodes, battery chargers, advanced high-voltage rectifiers, and state-of-the-art railway traction equipment. A key player in Indias ambitious railway electrification projects, the Company powers rail networks with top-tier solutions. Moreover, Hirects expanding footprint in industrial power electronics, defence, and renewable energy positions it for continued growth across various sectors.

Product Portfolio

Hirect presents an extensive suite of power electronics and railway transportation solutions, serving diverse sectors like railway, industrial applications, defence, and renewable energy. The Companys product range is carefully designed to enhance power efficiency, reliability, and overall performance across these industries. Currently, the Company is developing nearly 20 new products for the railway and industrial sectors, with new applications emerging in power electronics, signaling, and telecommunications, enabling expansion into additional market segments.

Railway Systems

Hirect is a trusted partner in the railway sector, providing state-of-the-art electrification and propulsion systems that support the growth and modernization of metro networks, high-speed rail, and Indian Railways. The Companys advanced solutions are built to deliver unparalleled performance, reliability, and efficiency across a variety of applications:

Industrial Power Solutions

Hirect provides state-of-the-art power conversion and rectification systems for industries like power, steel, cement, paper, chemical, hydrogen, electroplating, and other process automations. The total relevant power conversion Transformer-Rectifier Sets market in India stands at approximately Rs. 2,000 crore. Hirect has global Quality & Safety certification for certain range of products and is actively exporting to more than 30 countries globally.

Heres a closer look at what the Company offers:

Performance Review

Key Ratios

(The variance explanation is provided for ratios showing a change of more than 25%.)

Risk and Mitigation

Hirect adopts a structured approach to risk management, ensuring thorough identification, evaluation, and mitigation of operational risks.

Guided by a risk-based annual audit plan, which receives approval from the Audit Committee, the internal audit function zeroes in on key risk areas across the Companys operations. Regular internal audits and management reviews are conducted, with their outcomes being periodically assessed by the Audit and Risk Management Committees. These reviews are integral to strengthening governance, reducing risks, and boosting overall operational efficiency, ensuring Hirect remains effective and in line with regulatory obligations.