Hindusthan Urban Infrastructure Ltd Management Discussions

Annual Overview

The global economy in FY 2024-25 continued to face significant headwinds due to ongoing geopolitical tensions, persistent supply chain disruptions, and the evolving trade conflict between major economies, particularly between the United States and China. These challenges have adversely affected global trade flows and contributed to mounting inflationary pressures across several regions. In response, central banks·led by the US Federal Reserve·have implemented aggressive interest rate hikes in an effort to rein in inflation. Despite these measures, many advanced and developing economies are experiencing subdued growth, raising concerns over a potential global recession.

Amidst this global uncertainty, the Indian economy has demonstrated remarkable resilience. It continues to be one of the strongest and fastest-growing major economies globally, outpacing many of its peers including those in Europe and China. According to the World Bank, Indias GDP growth is at 6.5% for FY 2024-25, with a projected growth rate of 6.3% to 6.8% for FY 2025-26, making it the fastest-growing major economy in the world.

Indias robust macroeconomic fundamentals, policy reforms, and improving domestic demand have contributed positively to industrial growth across sectors. This broad-based economic momentum has had a favorable impact on the electrical and insulator manufacturing industry, in which the Company operates.

1. Industry Structure and Developments

The Indian power sector remains one of the most diversified and dynamic in the world, encompassing conventional sources such as coal, natural gas, hydro, and nuclear power, alongside a rapidly expanding portfolio of renewable energy sources including wind and solar. The sector is poised for robust growth in the coming years, driven by the Government of Indias unwavering focus on achieving universal electricity access, especially in rural and underserved regions.

Indias power sector is further strengthened by various flagship initiatives such as “Make in India,”the development of Smart Cities, and enhanced industrial and infrastructure capacities·all of which demand a stable, reliable, and scalable power supply. These efforts are complemented by increased private sector participation and a significant policy thrust on renewable energy and sustainability, reinforcing Indias commitment to a cleaner, greener energy future.

As of 2025, Indias total installed power generation capacity stands at 476 GW, with a transformative shift toward non-fossil fuel-based sources. Approximately 49% of the total capacity·235.7 GW·is now derived from non-fossil sources, including 226.9 GW from renewable energy and 8.8 GW from nuclear power. While thermal (coal-based) power still plays a critical role in meeting base-load demands, its share in the overall capacity mix is gradually declining.

Notably, Indias nuclear power capacity has almost doubled from 4.78 GW in 2014 to 8.78 GW as of June 3, 2025. The Government of India has set a long-term target of achieving 100 GW of nuclear power capacity by the year 2047 reflecting a clear commitment to diversifying the countrys energy mix.

India currently ranks 7th in the Renewable Energy Country Attractiveness Index, underscoring its rising global leadership and investment potential in the clean energy space. The ongoing structural reforms and policy focus are expected to further catalyze the sectors transformation, creating significant opportunities for stakeholders across the power and allied industries, including the insulator and electrical equipment manufacturing segment in which the Company operates.

2. Opportunities & Threats

The Indian power sector presents an investment opportunity worth 40,00,000 crore (US$ 461.95 billion) over the next decade, driven by rising demand, infrastructure upgrades, and the transition to clean energy. The Government of Indias focus on attaining ‘Power for all has accelerated capacity addition in the country.

Indian Railways aims for full electrification by FY26, progressing towards net-zero emissions by 2030 with 1.04 lakh crore investments. The Indian Railways is set to achieve 100% electrification by the financial year 2026 (FY26), reinforcing its commitment to sustainability

At the same time, the competitive intensity is increasing at both the market and supply sides. A further threat of elimination of Anti- Dumping Duty on import of insulators from China may adversely impact the domestic insulators market.

3. Segment-wise or Product-wise Performance Insulator Division

During the financial year 2024-25, the Insulator Division reported a 24.90% increase in revenue from operations, rising from 211.85 Crores in FY 2023-24 to 264.61 Crores in FY 2024-25. However, the division recorded a loss before interest and tax of 34.11 Crores, compared to a profit of 3.22 Crores in the previous year. The decline in profitability was primarily due to increased input costs, pricing pressures, and other operational challenges.

Conductor Division

Revenue from operations in the Conductor Division witnessed a significant decline of 94.00%, falling from 12.73 Crores in FY 2023-24 to 0.76 Crores in FY 2024-25. Despite the sharp drop in turnover, the division reported a profit before interest and tax of 6.98 Crores, as against 0.96 Crores in the preceding year. The improved profitability was driven by effective cost rationalization and settlement of long-pending claims or contracts.

Real Estate Division

The Real Estate segment recorded a 1700% decline in revenue, from 8.94 Crores in FY 2023-24 to 742 Crores in FY 202425. Consequently, profit before interest and tax decreased to 4.12 Crores, compared to 5.15 Crores in the previous year. The moderation in earnings was attributed to lower sales volume and a more cautious market environment.

4. Future Outlook

Indias power sector is on the cusp of a major transformation, propelled by rising demand, an accelerating transition to sustainable energy sources, and continued government emphasis on infrastructure development. The evolving energy landscape presents a compelling combination of emerging trends, strong policy support, and structural reforms that are expected to shape the sector over the coming decade.

India boasts one of the most diverse power generation portfolios globally, comprising conventional sources such as coal, hydro, gas, and nuclear energy, alongside a rapidly growing share of renewable energy. This sector plays a critical role in driving the nations economic expansion, industrialization, and long-term sustainability goals.

Current Energy Mix (as on FY 2025-26)

Below is the composition of Indias total installed power generation capacity:

Thermal Power:

• Coal: 212,368 MW (45.4%)

• Lignite: 6,620 MW (1.4%)

• Natural Gas: 20,132 MW (4.3%)

• Diesel: 589 MW (0.1%)

Renewable Energy:

• Hydro: 47,728 MW (10.2%)

• Wind: 51,300 MW

• Solar: 110,900 MW

• Other Renewables (including biomass and small hydro): 10,168 MW (2.2%)

Nuclear Energy:

• Nuclear: 8,080 MW (1.7%)

Key Trends and Future Developments

• Renewable Energy Shift: There is a decisive policy and market-driven shift towards increasing the share of renewables· particularly solar and wind energy·in the overall energy mix. This is aligned with Indias commitment to achieving net- zero emissions and reducing dependence on fossil fuels.

• Capacity Additions: According to data released by the Ministry of New and Renewable Energy (MNRE), significant capacity additions in wind and solar energy have been recorded in the first quarter of FY 2025-26, reinforcing momentum toward clean energy adoption.

• Per Capita Power Consumption: Indias per capita electricity consumption is steadily rising and is currently estimated at approximately 1,200 kWh per annum, driven by rapid urbanization, digitalization, and enhanced rural electrification.

• Long-Term Projections: As per the National Electricity Plan, Indias total installed power generation capacity is projected to reach 900,422 MW by 2031-32, with a substantial portion expected to be derived from carbon-free and renewable sources.

5. Company Strategy Going Forward

In alignment with Indias evolving power and infrastructure landscape, the Company has developed a forward-looking strategy aimed at enhancing operational efficiency, strengthening market presence, and driving sustainable value creation across all business segments.

Insulator Division

The Company aims to consolidate its leadership position in the insulator segment by:

• Expanding product range and capacity to cater to the rising demand from power transmission and distribution utilities.

• Focusing on high-performance, technologically advanced insulators to serve both domestic and international markets.

• Enhancing operational efficiency through automation, process optimization, and improved supply chain management.

• Strengthening relationships with public sector undertakings (PSUs), state electricity boards, and private infrastructure players.

Conductor Division

Given the declining revenue in this segment, the Company has adopted a focused turnaround strategy:

• Reviewing the business model and product mix to target niche and value-added conductor products.

• Leveraging its technical expertise and existing manufacturing setup to revive business through selective, high-margin orders.

• Exploring opportunities under government-led rural electrification and smart grid initiatives to regain market share.

Real Estate Division

The Comany intends to optimize its real estate portfolio through:

• Focused development and monetization of existing land assets in high-potential areas.

• Strategic partnerships or joint ventures with reputed developers to unlock value without additional capital exposure.

• Exploring commercial and warehousing projects aligned with industrial and logistic demands in key locations. Sustainability and Innovation

Across all divisions, the Company remains committed to sustainability, digital transformation, and long-term value creation by:

• Reducing its environmental footprint through energy-efficient operations and waste management practices.

• Investing in R&D for product innovation and backward integration to enhance quality and cost competitiveness.

• Embracing digitization for improved governance, real-time monitoring, and better customer engagement.

The Company continues to adopt a prudent yet progressive approach in navigating market uncertainties, capitalizing on growth opportunities, and delivering stakeholder value. Management remains confident that its diversified portfolio, operational resilience, and long-term strategic vision will enable sustained growth and profitability in the coming years.

Emerging Trends

Trend	Description
Renewable Energy Expansion	Solar and wind leading capacity additions
Green Hydrogen	Early adoption phase, but high future potential
Smart Grids & Digitalization	Integration of AI, IoT, smart meters
Energy Storage Systems	Battery and pumped hydro storage scaling up
Electric Vehicles (EVs)	New load centres driving distributed power demand

Opportunities

• Investment Potential: $250-300 billion by 2030

• Export Potential: Renewable tech, smart grid systems

• Innovation: Grid flexibility, AI for demand forecasting

• Rural & Off-Grid Markets: Expansion of decentralized energy

The Indian power sector stands at a critical juncture. With the right mix of innovation, investment, and policy reform, India can lead the global energy transition while meeting its domestic demand sustainably. The future will be shaped by how effectively the country navigates the challenges of energy access, reliability, and de-carbonization.

From this perspective, the Company has obtained approval from the good reputed government Utilities to supply the insulators like Disc, porcelain long rods, Solid core Post & Hollow insulators which helps to increase market shares in domestic market.

In response to the ongoing geopolitical volatility, the company is maintaining a close watch on global developments to proactively mitigate potential disruptions similar to those experienced during the Russia-Ukraine and Israel Middle east conflict. This strategic vigilance is essential to ensure business continuity, supply chain resilience, and informed market positioning.

Capitalizing on the current strained relations between the United States and China, the company has intensified its focus on the US market, identifying and leveraging emerging opportunities. Significant progress has already been made in establishing a stronger foothold, reflecting the companys agility and responsiveness to global shifts.

In parallel, the company is strategically expanding its presence in key South East Asian markets-namely Vietnam, Malaysia, and the Philippines. These regions present robust growth potential in the Transmission Line sector, and the move aligns with our long-term vision of geographic diversification and tapping into infrastructure-driven economies. This multi-pronged international approach is expected to strengthen our global footprint and drive sustained growth in the medium to long term.

6. Risks and Concerns

The Company operates in a dynamic and competitive environment, and several external and internal factors may pose challenges to its growth and profitability. The key risks and concerns identified for the year under review are as follows:

• Intensifying Market Competition: Increasing competition from domestic and international players, particularly in the insulator and electrical equipment segment, may exert pressure on margins and affect the Companys market share.

• Volatility in Raw Material and Energy Costs: A significant rise in the cost of key raw materials, including metals and ceramics, along with an increase in power and fuel costs, may lead to higher production expenses, potentially impacting the profitability of the Company.

• Cyclical Nature of the Power Sector: The power infrastructure sector is inherently cyclical, with fluctuations in capital investment and demand, which may result in inconsistent order inflows and affect the overall financial performance.

• Customer-Side Project Delays: Any delay in project execution or funding issues at the customers end·particularly in government and PSU projects·can affect order fulfillment and working capital cycles.

• Policy and Regulatory Changes: The recent removal of anti-dumping duty on the import of insulators from China poses a significant threat to domestic manufacturers. This development may lead to increased competition from low-cost imports, thereby affecting pricing and sales volumes in the Indian insulator market.

The Company continuously monitors these risks and adopts appropriate mitigation strategies through proactive planning, cost optimization, customer diversification, and close engagement with stakeholders. However, some risks remain beyond the Companys direct control and could impact operational and financial performance.

7. Internal Control Systems and Their Adequacy

The Company has established a robust internal control system and procedures commensurate with its size, scale, and complexity of operations. These controls are designed to ensure the orderly and efficient conduct of business, adherence to corporate policies, safeguarding of assets, prevention and detection of fraud and errors, accuracy and completeness of accounting records, and timely preparation of reliable financial information.

The internal control framework facilitates compliance with applicable statutory and regulatory requirements, while supporting the Companys continued focus on revenue growth and operational excellence. Key strategic actions undertaken during the year include cost rationalization, value engineering, competitive sourcing, and improved credit discipline·all of which have contributed to greater operational efficiency.

The Audit Committee of the Board plays an active oversight role in strengthening internal controls. Internal Audit Reports, covering critical operational and financial areas, are reviewed periodically by the Audit Committee. Recommendations and observations from these audits are acted upon promptly, and necessary corrective measures are implemented to enhance control effectiveness.

The Company remains committed to continuously upgrading its internal control environment through regular process reviews, technology enhancements, and the adoption of industry best practices to ensure sustainable growth and governance compliance.

8. Human Resources and Industrial Relations

The Company continues to foster an open, transparent, and collaborative work environment that encourages teamwork, accountability, and alignment with business objectives. It firmly believes that human capital is one of the most critical enablers of sustainable growth and long-term success.

To strengthen human resource management, the Company has implemented structured systems and procedures aligned with industry best practices. These initiatives are aimed at enhancing employee engagement, streamlining HR processes, and ensuring compliance with organizational goals.

The Company focuses on attracting, nurturing, and retaining talent by offering competitive compensation packages, a conducive work environment, and ample opportunities for career progression. Structured training programs, skill development initiatives, and well-defined succession planning have been introduced to ensure continuous professional growth and future readiness of employees.

During the year under review, industrial relations remained cordial across all manufacturing units and offices. The management acknowledges the contribution of its workforce and remains committed to maintaining a harmonious and productive work environment.

9. Financial/ Operational performance

Covered under the separate head of the Boards Report.

10. Cautionary Statement

This report is prepared in compliance with the requirements of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and is intended to provide information to the shareholders of the Company. It should not be construed as an offer, invitation, or solicitation for any investment or as a guarantee of future performance. The statements made in this report describing the Companys objectives, projections, estimates, expectations, or predictions may be “forward-looking statements” within the meaning of applicable securities laws and regulations.

Actual results may differ materially from those expressed or implied due to various risks and uncertainties. Key factors that may affect the Companys performance include, but are not limited to:

• Domestic and global economic conditions impacting demand, supply, and pricing;

• Fluctuations in raw material and fuel costs;

• Delays in execution of projects by customers;

• Changes in government policies, regulatory frameworks, tax laws, and other statutes;

• Competitive pressures in domestic and international markets.

The Company assumes no obligation to publicly update or revise any forward-looking statements, whether due to new information, future events, or otherwise. Readers are therefore cautioned not to place undue reliance on these statements.

	For and on behalf of the Board of Directors
	Sd/-
	(Raghavendra Anant Mody)
Place: New Delhi	Chairman
Date: 13th August, 2025	DIN:03158072