Industry structure and developments
Economic and market overview
The last decade has been a transformative one for the Indian economy. In 2014, India was the worlds 10th largest economy and now it has grown to become the 5th largest. The country has managed to overcome setbacks due to COVID-19, buck global recessionary trends, overcome risks and challenges posed by volatile logistics and supply chains, while contending with inflationary tendencies and rising interest rates.
Even as the pace of change accelerates, the global economy is tracking a measured yet definite road to recovery. Demonstrating resilience, growth is expected to maintain a subdued yet stable pace, with growth in employment and incomes held by favorable demand on both demand and supply side. Global inflation is forecast to decline steadily, from 6.8% in 2023 to 5.9% in 2024 and 4.5% in 2025, while core inflation is set to decline gradually.
The impact of international trade as a growth driver is reducing, with global trade growth dropping to 0.6% in 2023; but is expected to recover to 2.4% in 2024. Shift in consumer spending from goods to services, rising geopolitical tensions, supply chain disruptions, and the lingering effects of the pandemic have emerged as key factors impeding global trade.
The International Monetary Fund (IMF)s baseline forecast has the world economy growth being maintained at the same rate as 2023, at 3.2% in 2024 and 2025. Advanced economies are expected to rise modestly from 1.6% to 1.7% in 2024, and to 1.8% in 2025, but this will be offset by modest slowdown in emerging economies from 4.3% in 2023 to 4.2% in 2024 and 2025. However, over a five-year horizon, global growth is forecast at 3.1%, which is a historical low over several decades.
Developing countries face high levels of external debt and rising interest rates, making access to international capital markets difficult. Theres a decline in official development assistance and foreign direct investment for low-income countries.
India, the third-largest economy in Asia, grew 8.4% in the third quarter for FY 2023-24 as opposed to a growth rate of 7.6% recorded for the second quarter of the same financial year. This comes on the back of double-digit growth in the manufacturing sector (11.6%), followed by a good growth rate of the construction sector (9.5%). The National Statistical Offices second advance estimates have pegged Indias real GDP growth in FY 2023-24 to be 7.6% as against growth rate of 7.0% in FY 2022-23. The strong growth trajectory is expected to continue in FY 2024-25 backed by robust domestic demand stemming from continued growth in business and consumer confidence levels. Based on this, the IMFs growth projections were raised by 30 basis points to 6.8% in its update to the World Economic Outlook (WEO) in April 2024.
The Indian economy is better placed than ever to take on the challenges of growth because of the policies adopted and infrastructure foundations implemented in the last decade. The central government has built infrastructure at a historically unprecedented rate, and it has taken the overall public sector capital investment from H 5.6 Lakhs Crores in FY15 to H 18.6 Lakhs Crores in FY24, as per budget estimates. That is a rise of 3.3X, reinforcing the governments thrust on infrastructure development that is equitable and inclusive, through enhanced capital expenditure. This aligns with the governments focus on the four Is of Infrastructure, Investment, Innovation and Inclusion over the next 25 years. The country has witnessed transformative physical and digital infrastructure growth in the last ten years.
While the Reserve Bank of India held interest rates at 6.5% as of April 2024, retail inflation had also eased to 4.85% in March 2024. The Index of Industrial (IIP) production saw an IIP value of 153.5 in January, the highest in FY 2023-24.
The power sector remains in focus as a critical service powering industrial and economic growth. Indias installed power capacity is expected to reach 616 GW by 2027 and to 900 GW by 2032, up from 442 GW in March 2024.
Expecting this increase in demand for power, and the continuing need to expand and strengthen the grid, National Committee on Transmission (NCT) has approved about 10 new transmission projects worth over H 6,600 Crores, allowing them to receive bids.
Underscoring efforts to transition to a clean-energy future, India added a record 18.48 GW of renewable energy capacity in FY 2023-24, a 21% increase over capacity addition in FY 2022-23. At ~11% growth, renewable power including large hydro grew from 172 GW to 191 GW in FY 2022-23. The Government has put in place an ambitious plan to grow 191 GW to over 650 GW including BESS growing at a CAGR of over 19% per annum from FY 2023-24 to FY 2031-32.
The government is betting big on solar to play a key role in achieving Indias renewable energy targets. With an allocation of H 24,000 Crores, the governments Production Linked Incentive (PLI) scheme will help achieve manufacturing capacity of Giga Watt scale by promoting innovation and incentivizing technologies that aid production of high efficiency solar PV modules.
To further harness the potential of renewable energy from solar and wind energy, the Cabinet approved the Scheme for Viability Gap Funding (VGF) for development of Battery Energy Storage Systems (BESS) in September 2023. By providing financial support of up to 40% of the capital cost as budgetary support in the form of VGF, a total of 4,000 megawatt-hour (MWh) of BESS projects are to be developed by FY 2030-31. To ensure that the benefits reach consumers, a minimum of 85% of the BESS project capacity will be made available to Distribution Companies (Discoms) to bring down the cost of storage.
Power sector overview
Consistent sectoral reforms and new policy initiatives have underlined a period of rapid transformation across Indias electricity supply chain. Greater thrust on integration of renewables and advanced digital technologies have enabled India to take powerful strides toward its decarbonization objectives. However, there is more to be done to expand and modernize power grid infrastructure, given the pace of economic expansion and urbanization that the country is experiencing. Grid modernization must be a key area of consistent focus to lay a strong foundation to power Indias growth.
This growth must be balanced with consideration for a clean energy future. The Paris Agreement sets a worldwide goal of limiting global warming to 1.5 ?C above pre-industrial levels. With the impacts of climate change becoming increasingly frequent and more severe every year, reaching this goal has become even more imperative. As the largest source of greenhouse gas emissions, the energy sector needs to accelerate efforts to by finding multiple pathways to decarbonize. According to the ‘CO2 emissions in 2023 report published by the International Energy Agency (IEA) in March 2024, global energy-related CO2 emissions grew by 1.1% in 2023, increasing by 410 million tonnes (Mt) taking total emissions to a record level of 37.4 billion tonnes (Gt). Emissions from coal accounted for more than 65% of such increase.
Investment in the energy sector, especially in clean energy, is growing but not at a pace sufficient to meet Indias net- zero emissions goal by 2070. As per the International Energy Agencys (IEA) updated Net Zero Roadmap released in October 2023, limiting global warming to 1.5?C will require annual clean energy investment to reach nearly H 375. 21 Lakhs Crores ($ 4.5 trillion) by 2030. In January 2024, R.K. Singh, then Minister of Power and New & Renewable Energy stated that an investment of H 17.05 Lakhs Crores ($ 204.16 billion) is in the pipeline for the power and renewable energy sector. As per independent energy think tank Embers ‘Beyond Tripling report published in November 2023, India would need an investment of H 24.43 Lakhs Cores ($ 293 billion) between 2023 and 2030 to meet the 14th National Electricity Plan targets. An additional investment of H 91,718 Cores ($ 110 billion) would be required to align with the IEAs net zero pathway.
A ‘build big mentality will enable the electricity transmission and distribution grids to expand by around two million kilometers each year to 2030 to meet the net zero goals. While much of the momentum today is in small, modular clean energy technologies like solar PV and batteries, these alone are not sufficient to deliver net zero emissions. It will also require new, smarter, and repurposed infrastructure networks, large quantities of low-emissions fuels, more nuclear power, and large land areas for renewables. Rapid progress in carbon capture, utilization, and storage (CCUS), hydrogen and hydrogen-based fuels, and sustainable bioenergy will also be critical to achieving net zero emissions.
To mitigate the impact of climate change, the Indian government has made focused efforts to promote the use of renewable energy and shift away from coal. This has resulted in renewable energy sources, including large hydropower, having a combined installed capacity of 190.57 GW as of March 2024.
In FY 2023-24, India added a record renewable energy capacity of 18.56 GW, over 21% higher than 15.27 GW a year ago. During the period, the total renewable energy installed capacity sees solar at the top of the chart at 81.81 GW, followed by about 46 GW of wind energy, 10.9 GW of biomass cogeneration, and 5 GW of small hydro (up to 25 MW capacity each). Installed solar energy capacity has increased by 30 times in the last nine years.
The Central Electricity Authority (CEA) released its roadmap last year to integrate over 500 GW of renewable capacity by 2030. An annual capacity addition of 50 GW for the next six years will be required to meet this target. Digitalization will help speed up the integration of renewables, keeping the focus on grid stability and flexibility to absorb the influx of renewables.
On the demand side, in FY 2023-24, peak demand increased by 12.7% to 2,43,271 MW in FY 2023-24 from 2,15,888 MW during the same period in FY 2022-23.
All India peak shortage has reduced to 1.4% (3,340 MW) with respect to 4.0% (8,657 MW) during the same period the previous year. This could be credited to the governments efforts to transform the power sector from power-deficient to power- sufficient by adding 1,94,394 MW of generation capacity in the past nine years.
The present installed capacity of power generation is around 4,41,970 MW. Out of the total generation capacity of 25,911 MW added in the current year FY 2023-24, 5,948 MW is from fossil fuel sources and 19,963 MW is from non-fossil fuel sources. During the year, 18,563 MW of renewable capacity consisting of 15,033 MW of solar, 3,254 MW of wind, 139 MW of biomass, 59 MW of small hydro and 78 MW of large hydro generation capacity has been added.
Demand increased on the back of the success of country-wide electrification - every village and household has been electrified. The availability of power in rural areas has increased from 12 hours in 2015 to 20.6 hours and in urban areas it has increased to 23.8 hours.
Grid expansion continued to cater the increasing demand for power. During 2023, 14,390 km of transmission lines, 61,591 MVA of transformation capacity and 4,290 MW Inter-regional Transfer Capacity have been added. In the last nine years, with the addition of 1,87,849 ckm (64.48% increase), the transmission network of 4,79,185 ckm has evolved as the largest national synchronous grid in the world. The total inter-regional capacity to transfer power from one region to another is enhanced to 1,16,540 MW (224.17% increase) from 35,950 MW in the last nine years. Total transformation capacity (220 kV & above) is 12,13,313 MVA (128.69% increase) with an addition of 6,79,327 MVA in the last nine years. Investments in grid expansion continue, with the National Committee on Transmission (NCT) issuing the green signal for four new Interstate transmission system (ISTS) projects valued at H 737 Crores.
Further investments have been lined up to strengthen transmission and distribution, scheduled to take place by 2027. Inter-regional transmission capacity is expected to reach 1,43,850 MW; to meet the requirements of substations, transmission lines, etc. for renewables an estimated investment of H 2.44 Lakhs Crores will be done at a rate of H 1.07 Cr/MW; to facilitate renewable energy and wider distribution of power, plans are for the HVDC circuit to grow to 23,675 ckm with a carrying capacity of 12,000
MW. Additionally, more than 30 STATCOM projects have been lined up for installation along transmission networks with a total budget of H 1.1 Lakhs Crores for reactive circuits by 2027.
Several schemes and incentives are in place, that form key steps in the right direction to bring in cutting-edge clean energy technology and address increasing, long-term power demand.
The governments Production Linked Incentive (PLI) Scheme for National Program on High-Efficiency Solar PV Modules and Viable Gap Funding scheme for BESS projects intend to increase generation and storage of renewable energy.
The Strategic Interventions for Green Hydrogen Transition (SIGHT) Program is a major financial measure under the Mission with an outlay of H 17,490 Crores. The program consists of two distinct financial incentive mechanisms to support the domestic manufacturing of electrolyzers and the production of Green Hydrogen. Request for Selection (RfS) has been issued for the Selection of Green Hydrogen Producers for Setting up Production Facilities of 450,000 tons for Green Hydrogen in India under the Strategic Interventions for Green Hydrogen Transition (SIGHT) Scheme (Mode-1-Tranche-I). Request for Selection (RfS) has been issued for the Selection of Electrolyser Manufacturers (EM) for Setting up 1.5 GW annual Electrolyser Manufacturing Capacities under SIGHT Scheme (Tranche-I).
The Offshore Wind Energy Lease Rules, 2023 to regulate the allocation of offshore wind sea blocks to developers have been notified in September 2023. A revised strategy for development of offshore wind energy projects has been issued, indicating a bidding trajectory for installation of 37 GW capacity of Off-shore Wind Energy.
The PM Surya Ghar: Muft Bijli Yojana scheme provides free electricity to one Crores households that opt to install rooftop solar electricity units. Under the said scheme, the households will be able to get 300 units of electricity for free every month. The scheme focuses on the household segment with up to 3 kW system, which covers most of the residential consumers in India.
The power sector further sees increasing demand from industry, data centers and transportation.
Industry demand for power is being revived through private CAPEX investments in hydrogen, steel, O&G and cement that have aggressive expansion plans with opportunities of over H 4000 Crores in FY 2024.
With digitalization only gathering speed across sectors, data center capacity in India is expected to double to ~1,700-1,800 MW by FY 2024-25, powered by a data boom, digital adoption and local data storage mandates. Data center capacity is expected to double by 2025 with investments from major players to the tune of H 40,000 Crores, as per a report by Crisil. As per NASSCOM, investments in data centers in India will reach H 41,690 Crores ($ 5 billion) per annum by 2025 .
Transportation is led by the electrification of vehicles, modernization of railways and expansion of metro rails and urban rail.
Policy focus on EV manufacturing supported by new tax incentives will position India as an EV manufacturing destination while boosting domestic sales. FY 2023-24, India saw an impressive 41% annual increase in sales with 1.66 million EVs sold, averaging 4,562 EVs per day, a marked uptake from the 3,242 daily sales in FY 2022-23. March alone set a new monthly record with over 1.97 Lakhs units sold, partly owing to the rush to buy before the end of the FAME-II subsidy scheme. Introduction of the Electric Mobility Promotion Scheme 2024, with a budget of H 500 Crores, will continue to support the purchase of electric two- and three-wheelers until July 2024.
Modernization, electrification and expansion dominate the efforts of the rail sector, both for railways and urban transit metro rail.
As a main driver for the PM GatiShakti scheme that lays out a massive budget of H 100 Lakhs Crores, new railway corridors have been announced by the Central Government to enhance connectivity between ports, industry and high traffic commuters. With 94% electrification of its broad-gauge network, the Railways are racing to meet the 100% electrification goal and achieve the Indian Railway target of net zero by 2030. In addition, railway modernization is being driven by safety and developments in high-speed rail and high-density corridors.
Indias metro rail network is well on the way to becoming the worlds second largest, expanding at an unprecedented pace. Expansion is planned at a rate of 175 to 200 km per annum over the next seven years. The metro network is set to expand from the current operational 851 km to around 1,985 km over the next five to seven years, taking Indias investment in metros to H 6,838 Crores.
With the accelerated pace of urbanization, industrialization and electrification, Indias power consumption is expected to rise by 6.1% in 2024 when it is expected to surpass the power demands of Japan and Korea combined.
Segment and product wise performance
Operational overview
As the pace of change accelerates on every front, electricity will be the backbone of the energy system. With India set to take its place as the fastest growing G20 country, the power sector must balance clean energy with maximum growth impact. With approximately five years to 2030, India is drawing close to realizing the first phase of meeting its renewable energy targets. Hitachi Energy India Limited has been at the forefront of enabling the many pathways to energy transition across geographies and segments to ensure a sustainable energy future for all.
Since commencing standalone operations in 2019, Hitachi Energy India Limited has played a strong role in ensuring a resilient, flexible grid, adapting with new technologies and offering customers the benefits of digitalization. Over the FY 2023-24, the overarching energy transition in India has been driving broad-based order momentum. Your Companys 360? framework for collaborative energy transition included leading the conversations, working with customers and suppliers, as well academia to unify the vision for Indias clean-energy future. Hitachi Energy India Limiteds priorities through the four quarters were focused around strengthening market leadership in core segments while also expanding orders in service, exports and digital, and harnessing new segments and markets.
On the business front, the emphasis was on striving towards sustainable operations and operational excellence across manufacturing and functional processes, optimizing order backlog execution for revenue and profitability accretion, overcoming external supply chain constraints, driving focus on cash, and most importantly, continuing to reinforce a culture of health, safety and environment by percolating the safety mindset across all levels of project sites and factories.
Lastly, keeping sustainable progress at the heart of our efforts, the focus was also on profitable and sustainable growth initiatives, partnering with customers and suppliers as well as upskilling and cross-skilling talent to accelerate towards a sustainable and agile energy transition.
Your Company is proud to report that at the close of FY 2023-24, total orders stood at H 5,536.3 Crores, up 14% (excluding HVDC) from the corresponding last twelve months, while revenue stood at H 5,246.8 Crores with a 17% increase during the same period. This underscores its commitment to build and deliver sustainable shareholder value.
Health, safety and sustainability
At Hitachi Energy India Limited, the active management of health, safety, and environmental performance is at the core of everything we do and the basis of our license to operate. Your Company places health and well-being at the heart of its operations to create an empowering and rewarding work environment for all employees. It recognizes that a holistic approach to employee health and well-being can foster a thriving workforce and increase employee engagement, productivity, and talent retention.
In keeping with the Companys ‘Zero Harm Policy, emphasis was placed on Life-saving Rules (LSR) across the organization. Constant LSR trainings, workshops and activities have helped raise awareness on safety and build a safety culture. Safety by design is also emphasized with digitalization being applied whenever possible to create safe environments and encourage safe behaviors.
Health and wellness were prioritized through initiatives that support physical and mental health and well-being. These include medical assistance as well as year-long programs that encourage mental wellness. In addition, leadership awareness sessions at various levels reinforced the need to prioritize health.
As we help customers, partners and communities move towards a carbon-neutral future, your Company has strengthened its commitment to being environmentally sustainable with our Sustainability 2030 initiative.
As a first-step target to pursue carbon-neutrality in the Companys own operations, your Company has made the shift to 100% fossil-free electricity. This was achieved through various initiatives such as solar roof top installations at Maneja and Doddaballapur factories which have an installed capacity of 932 kW and 600 kW meeting ~20-30% of electricity requirement of each factory. Mysuru factory entered into power purchase agreements (PPA) which enabled sourcing renewable electricity to meet nearly 90% of the facilitys electricity requirement. The carbon emissions due to consumption of remaining grid electricity has been offset by purchasing International Renewable Energy Certificates I- REC.
Apart from electricity initiatives were taken to transition to low- carbon fuels in Mysuru, Maneja and Halol. At Mysuru, biofuel in the form of waste paddy husk and waste dust from board manufacturing are used as alternate fuels to furnace oil for the boilers. Maneja and Halol replaced LPG with low carbon PNG for their operations. Maneja also replaced their old R22-based 22 TR HVAC system with R410A HVAC which has high COP (Co- efficient of Performance) thereby avoiding 20 tCO2e emission per annum.
The Company has also invested in many energy conservation initiatives. At Maneja, an energy monitoring system has been installed to monitor electricity consumption patterns. Seven HT/LT substations and 53 energy meters are connected to the smart energy monitoring system. This facilitates real time data on energy consumption patterns, allowing actions to be taken to reduce energy consumption per unit of production.
Lighting improvements were made by replacing conventional lights to LED at Mysuru and Halol. Additionally, replacement of old equipment such as five S/D starters and faulty capacitors and chiller at Mysuru helped increase energy efficiency.
A dedicated 5.5 kW compressor for the casting plant at Savli has also resulted in considerable energy savings.
Various process improvements were also made for energy savings including automating the operation of HVAC by installing Bluetooth-based time switch; motorizing MCCB and wiring modification in the canteen at Maneja; stopping fresh air circulation in ovens by turning off burners and provision of thermal insulation to the hot lines, as well as stopping the operation of spray nozzle pumps of AHUs during the monsoon and winter at Halol.
Our sites have also migrated to battery operated forklifts to reduce dependency on diesel.
Our project sites have also taken initiatives to make their operations clean using solar power. At Mumbai Infeed HVDC project site 15 kW; 545-watt Mono PERC modules (24 nos) are used to power the staff office. Six sets of solar-based mobile charging equipment, with three lights and two USBs are installed in rest sheds and at the worker colony. Further, seven CNG vehicles are used for site transportation instead of petrol or diesel vehicles. Six of the GPQS project sites use solar roof top for their offices and worker sheds.
The above initiatives have resulted in nearly 88% reduction in our emissions and 9% reduction in energy consumption since 2019.
The Company has also taken several measures to reduce water consumption. Water is an important resource that needs to be conserved since most regions in India are water stressed. At Maneja, 23 water meters are installed in the water distribution network to map water consumption pattern of individual factories and their utilities are tracked for leakage. This has resulted in reduction of water wastages by 132 kl/Day which is 28.43% of total water consumption. In the Maneja canteen, rejected water from the RO Plant is used in cleaning of washing of utensils and floors which has resulted in saving of fresh water to ~14 kl/Day (4.56% of total water consumption).
Savli has arrested water leakages and has optimized water usage resulting in reduction of fresh water consumption by 30.8% compared to last year.
Rejected RO water and STP treated water were used for sanitation purposes at Mysuru and Doddaballapur respectively.
The company has taken several steps to minimize waste across in its operations by reducing, re-using and recycling. Nearly 65,000 paper cups were eliminated per month at Peenya and Doddaballapur facilities resulting in avoidance of ~5MT of waste generation. Board dust reused as biofuel in the boiler in the form of briquettes at Mysuru. From Jan 2021 - Dec 2023, 712 MT of dust was re-used and not disposed as waste. Waste paddy husk used in boilers at Mysuru and the resulting boiler dust from paddy husk is reused as soil conditioner thereby promoting circularity. At Peenya, wood waste is reused to make various articles such as planter boxes, pen stands etc. preventing their disposal.
Overall, the company has invested ~ H 1.4 Crores on various environmental initiatives.
Your Company is also among the first to form a board-level ESG committee for an integral link between sustainability and business strategy while enabling course correction when needed.
New technologies; new capabilities
Your Companys sustained focus on Research & Development to foster impactful innovations is further bolstered by continued access to cutting edge research at a global level. Such R&D activities are carried out externally across facilities and technology centres across the globe as well as at a local business level.
A culmination of these efforts will enable your Company to consolidate its position as a market leader in pioneering digital technologies.
In a bid to expand its capabilities and offerings in the year under review, your Companys High Voltage business hub office was inaugurated to serve as the nodal point for the Business Unit.
Technology enhancements to the industry-leading SAM600 and the Lumada asset performance management software solution have helped improve the demonstrative range of digital capabilities at the macro and micro levels. By addressing basic and critical requirements for accelerated digital adoption and better asset management at the digital substation and individual asset layers, your Company is continually augmenting the breadth of its current portfolio.
During the period under review, global entity Hitachi Energy Ltd. acquired controlling stake in eks Energy from Powin in order to broaden capabilities in advanced power electronics and energy management software.
The HVDC and Power Quality factory was inaugurated in Chennai in February 2023 to build capacity in tandem with the steady rise in HVDC projects locally and globally - a key cog in the transition to clean energy. By leveraging long-standing know-how in energizing Indias landmark power superhighways, your Company overcame a series of engineering and other challenges to begin assembly of G5 HVDC converters as part of the Mumbai Infeed Project. Production for type testing and validation will mark the first phase.
Discussion on financial performance with respect to operational performance Performance during the reporting period
Your Companys success results from its focused strategy, diversified portfolio, relentless pursuit of improving the bottom- line, and balancing operational complexity and efficiencies to preserve the growth momentum. While the year witnessed challenges such as external supply chain risks, food and oil supply shocks, the chips & electronics shortage, the semiconductor crunch eased but inventory backlog issues persisted.
The order pipeline was led by data centers and renewables, along with digitalization, electrification and transmission projects, backed by robust growth in exports and service orders. The Company closed the year with an order backlog at H 7,229.5 Crores, which provided a strong future revenue visibility. Orders for FY 2023-24 were up by ~14% YoY over the corresponding period of FY 2022-23, excluding HVDC. During the year under review, your Company had some significant order wins including, but not limited to:
Renewable evacuation and integration:
• 400 kV GIS export orders from Singapore & Greece
• Exide Energy: 220 kV GIS S/S and Dry Type Transformers
• Alfanar Energy: 2 x 220 kV / 33 kV AIS S/S
• Linxon Sweden: 245 kV AIS Switchgear a/c Tanzania SGR
• Tata Power Solar: 220 kV / 33 kV AIS substation
• Ayana Renewable: 300 MW EBOS & 4000 kV AIS S/S for Bikaner
• Bhutan Power: 66 kV GIS S/S
• Techno Electric: 2 x CRP+SAS packages for 765 kV S/S
• Adani Green: 220 kV & 400 kV AIS S/S
• MEIL: 9 x 400 kV GIS & 400 kV reactors for a national hydro power company
• BHEL: 9 x 400 kV GIS for distribution company in east India
• REE Spain: 16 x 66 kV GIS Green corridors & state networks:
• Sterlite Power: 600MVAr Fatehgarh-3 Statcom
• 400kV GTs for Ratle Hydro electric project
• PGCIL: 6 x 500 MVA 765 kV transformers
• UPPTCL: 4 x 765 kV Transformers
• Eiffage France: 220 kV & 110 kv Transformers for Senegal
• Prime Group: 330/145 kV LTB/IT/DS order for Azerbaijan
Transport:
• Chittaranjan Locomotive Works: 157 x LOT 6500 Traction transformers
• Banaras Locomotive Works: 47 x LOT6500 - Traction transformers
• Alstom: Traction Transformer for DMRC & CMRL
• L&T: Automation & 132 kV GIS for CMRL
• L&T: Dry and Power Transformers for CMRL Phase II Data centers:
• Adani: Power Transformer order for Microsoft Datacenters
• Adani Connex: 220 kV GIS Substations at Pune for Microsoft DC
Automation & digitalization:
• Linxon Sweden: Automation package for Tanzania SGR
• Bhutan Power System Operator (BPSO): SCADA EMS System at NLDC Bhutan
Your Company booked orders for the financial period under review - April 2023 to March 2024 - total of H 5,536.3 Crores, and revenue was H 5,246.8 Crores. Profit-before-tax was H 221.7 Crores and profit-after- tax H 163.8 Crores.
Service
With over H 83,383 Crores (10 BUSD) installed base in India across generation, transmission and industrial electric power systems, Hitachi Energy India Limited recognizes that leveraging this existing infrastructure will prove to be a good start to addressing the energy transition goals. By identifying the unique roadblocks and requirements in every customers journey to sustainability, the Companys expert service teams chart out individual customer and asset roadmaps. This enables them to provide customized solutions in a phased manner, covering the entire lifecycle of all energy assets while enabling long-term business planning. Working closely with its customers, your Company helps them manage and safeguard asset performance to ably fulfil business requirements.
Service proved to be a consistent growth lever for the Company, with orders for renewable studies proving industry intent towards the energy transition, as well as trainings and upskilling also preparing the workforce. HVDC studies and spares dominated across the year, as well as products for industry and utilities. Services were also seen to grow in demand from other countries such as Maldives, Qatar, Bhutan and Saudi Arabia. Besides other traditional products, SCADA also saw replacement and service related orders.
Over FY 2023-24, service orders were up by 43% YoY, and accounted for 8% of your Companys revenue. Service orders included replacement equipment, Annual Maintenance Contracts (AMCs) and upgrades, as well as innovative solutions like RelCare and RelScan for remote condition monitoring and maintenance.
Exports
Hitachi Energy India Limited has been persistently strengthening its local capabilities to amplify its vision of ‘make in India for India and the rest of the world. The Companys long history of technology and manufacturing has contributed to a solid base of expertize and operational excellence that is being leveraged to play a greater role in the regional power sector, and as a manufacturing and engineering hub for the rest of the world. Your Company has strengthened local capabilities towards servicing the demand for exports. This has resulted in steady growth in the contribution of exports to the order book, constituting 25% of the annual work orders.
Orders flowed in from established export markets of Asia, Middle East and Africa as well as some countries in Europe. Indias rise as a favorable manufacturing and assembly hub as well as a strong technology player, global price sensitivities and supply chain complications have led many countries to source from here. Hitachi Energy India Limiteds deep local footprint and wide- ranging expertize, energized by top quality in power products and technologies led to several new and repeat customers.
By expanding strategic partnerships with the existing customer base and making headway into new areas of collaboration with its existing and new customer base supported by service requests, the export order book is witnessing a steady uptrend.
Over the year FY 2023-24, your Companys export orders were up by 43%. Exports of transformers, power quality technologies and other key products to markets like Middle East, Southeast Asia and neighboring countries in South Asia accounted for around 25% of the order book.
These came from countries including but not limited to Singapore, Greece, Tanzania, Morocco, Bhutan, Indonesia, UAE, Guyana, France, Azerbaijan, Spain and Portugal. Your Company also received the largest-ever single order for disconnectors for a project in Guyana.
The demand came in from the renewable and rail segments as well as automation packages in Africa. Besides this, exports also included transmission orders in Asia, power quality in Europe and US markets, and automation packages in Africa. Export orders were also drive by surge in demand for transformers and high- voltage products. Orders for transformers came from Europe and African markets, while demand for power quality solutions were from South and Central America, Africa, US and Europe.
Your Companys strategy of making in India for India and the world has ensured steady order inflows from across 80 countries to its global feeder factories in five products from Hitachi Energys portfolio. Hitachi Energy India Limiteds newly established factories including the HV Power Quality and HVDC factory are expanding their export order contribution.
Business units and operations
Hitachi Energy India Limited operates through four business units namely Grid Automation, Grid Integration, Transformers and High-Voltage Products that produce power grid solutions through a variety of equipments, ranging from substation automation solution to power transformers. The solutions ensure quality power supply to the customers for operations in
the field of transmission networks, utilities, transport networks, renewable energy, data-centers, industries and many other enterprizes. Hitachi Energy India Limited operates on a sustainable businessmodel that supports Carbon-Neutral and Net-Zero Operations by implementing modern technologies at offices and sites that save energy and consume green power. The operations to manufacture world-class equipments and provide best in class services requires capital investment to expand the manufacturing units, strengthening the production through a sustainable growth model. With a vision to provide the customers with solutions, products and services, Hitachi Energy India Limited intends to operate with profitability in its operation by continuously upgrading the existing products and introducing new products in market through modern R&D practices to meet the demands of customers.
Operational excellence
Hitachi Energy India Limited continues to seek to maximum efficiencies in converting the significant order backlog to revenue, while in the short term staying agile regarding the evolving situation on trade routes. Nevertheless, such execution when coupled with operational excellence across manufacturing and functional processes will result in value accretion. This was achieved by your Company through various efforts that included setting standard operational process through LOM (Leading Operating Model) deployment, and process visibility and transparency through digital project reviews. Further efficiencies were achieved by removing waste through QOT (Kaizen) culture. Lean 6-Sigma culture development was reinforced through capability building and employee engagement, which helped also drive customer focus. Enhanced customer value was driven by deep understanding of customer expectations and management of perceptions with proactive feedback from tender to execution. Additionally, customer value was delivered while optimizing costs through design optimization, DtV (Design to value) and excellence in supply chain management (SCM).
Hitachi Energy India Limited places sustainability at the heart of the Companys purpose - advancing a sustainable energy future for our partners and customers. However, with intent to demonstrate commitment towards sustainability, focus has been on making the operations sustainable, and minimizing the environmental footprint of the Company. Since embarking on the journey towards net-zero in 2021, the Company has today achieved 45% reduction in our carbon footprint to enable a sustainable energy future - for todays generations and those to come.
The journey to Net Zero by 2030 requires consistent efforts and various teams have initiated considered programs, in addition to company-wide actions. At the Companys largest manufacturing location, Maneja, a Sustainability Master Class was conducted to develop a larger pool of specialists who can advance the operations to net zero. Additionally, at the Kudus Site (Mumbai HVDC), a 15kW roof top solar has been installed which will reduce 458 tons of CO2 per year. Solar based mobile charging facilities in rest sheds and workforce colonies at the site that can power multiple devices at a time are also introduced at Kudus. The project has also committed to transition to the services of EV cab provider starting from Delhi-NCR.
Hitachi Energy India Limited consistent efforts were acknowledged and recognized for excellence in Health, Safety, and Environment practices by our discerning customers across verticals. Reinforcing the belief that at Hitachi Energy India Limited, safety is the basic license to operate, the Company observed HSE week in November 2023 with the theme of "Do the Right Thing. In appreciation for the focus on safety, the Company received ‘Certificate of Appreciation for contribution towards improving the OHS culture in MP Power Transmission Package-II Ltd. The Company was appreciated for its good HSE practices during warranty period of HVDC Station at Raigarh, Chhattisgarh.
Collaboration is central to making the energy transition possible. Through the 360? framework for collaborative energy transition the Company led industry discussion on the energy transition across the entire value chain of the energy industry in India and region at multiple forums and platforms.
Through the year, Hitachi Energy India Limited has partnered with various industry stakeholders - from technology interactions with customers to them visiting the Companys factories. Training and learning programs for over 50 students from Industrial Training Institute (ITI), Kayavarohan were conducted at the Maneja facility, ensuring that all stakeholders are working in tandem towards the same goal.
The continued efforts of your Company have further cemented the Companys reputation as a reliable partner and a pioneer in power technologies, which was recognized by ET Energy award. The work of your Company continues to be recognized by customers and industry peers. Hitachi EnergyTEC Training & Experience center in Maneja was recognized by CEA as category- I (Grade B) for imparting training in operation and maintenance of the transmission and distribution segment of power sector.
Safety, integrity and quality
At Hitachi Energy India Limited, safety, integrity and quality form the foundation of your Company. An unwavering commitment to these three principles has helped build its operations around this culture so employees can internalize and feel empowered to champion them in any situation.
Your Companys Sustainability 2030 commitments set out ‘Zero Harm as one of the key priorities. The focus is to apply safety first in every situation to ensure that there is no possibility of an incident. These ‘safety barriers are defined by its flagship Life-Saving Rules (LSRs) initiative, applicable to all employees, full-time and on contract, across our locations. The mandatory LSR - eLearning course aims to create greater awareness and enables employees to understand the true meaning of being safe at work, keenly evaluate their understanding of safety practices, correctly assess and take decisions in critical situations, and the impact of not taking correct action at the right time.
Through periodic shopfloor demonstrations, donation drives, and life support trainings, your Company ensures consistent engagement with a focus on employee well-being by emphasizing the essential LSRs. It also employs multiple platforms and formats to underscore HSE behaviors that drive world-class performance across teams - ‘Do the right thing, during the annual Safety Week observation. Reinforcing through training is a proven route to inculcating the safety mindset. This was enabled through sessions on behavior-based safety, occupational health & general health, and electrical safety by the Karnataka State Safety Institute and risk assessment & ABRA, first aid, operating machinery, working at height and fall protection, defensive driving and AED training for employees, trainees, and contractors.
Your Company continues to receive recognition and appreciation from customers, partners and industry peers for its superlative OHS culture through the entire project life cycle and for driving the HSE mindset along the energy value chain.
At Hitachi Energy India Limited, health and well-being encompass the trio of physical health, mental health, and occupational health. This Health Wheel has enabled your Company to approach health and well-being more holistically and effectively implement policies and standards. The health flagship program ‘Mind Matters continues to address the different dimensions of organizational and employee mental well-being to enable all our employees to thrive.
Through leadership development programs such as the HSE Masterclass attended by over 700 managers globally, the two- year Functional Development Program for all the HSE, Security, and Sustainability practitioners and the Advanced Functional Development Program for the Top 50 HSE, Security, and Sustainability leaders, your Company has built HSE into the very fabric of the organization.
Digitalization continues to play a key role in Safety, as demonstrated by the Digital Kit - a fully immersive remote support solution to customers for various service requirements of high-voltage products. It utilizes a mixed-reality experience to give service experts a real-time view as seen by the technician on-site. This has enabled effective and timely resolution of issues while increasing safety and efficiency and reducing the environmental impact of on-site visits.
Integrity drives all decisions at your Company. Adhering to the single, universal Hitachi Group Code of Ethics and Business Conduct enables leaders and employees to make decisions and take actions consistent with the Hitachi Group Identity and Values. The aim of ‘living with integrity is for everyone in the organization to feel comfortable, empowered and free to speak up should they encounter an integrity issue, with speak- up channels available. All concerns reported are subjected to appropriate investigation, follow-up, and brought to full closure, adhering to the zero-tolerance policy for any violations. The outcome of all the concerns is reported to the Audit Committee.
As a responsible organization, your Company is committed to delivering the highest standards of quality. Your Company strives to deliver timely and quality products, systems, and services that meet or exceed customer expectations along with the Companys employees, partners and suppliers. The focus is to continually enhance customer experience by understanding their specific needs and offering tailor-made solutions while motivating employees to hone key skills through continuous training and development to create greater value.
Initiatives and collaborations
Your Company continues to take targeted steps to offer next- gen solutions and digital capabilities to its existing and potential customers while actively collaborating with Indian industry and academia.
Your Company continues to further its Net Zero ambitions by using 100% fossil-free electricity in its operations. It has replaced diesel generators with solar panels to power its site offices and introduced rooftop solar at its factory in Maneja. The Company has switched to clean piped natural gas from high-speed diesel for ovens and dryers at manufacturing facilities. It has maintained its Zero Liquid Discharge approach across locations and continued on its path to reduce freshwater consumption.
Waste flow mapping projects have been initiated at five locations to manage and reduce waste and improve resource efficiency, ultimately mitigating air and water pollution. Other ongoing projects include the water conservation project at the Maneja factory where reuse of RO-rejected water has resulted in the reduction of 13.7 kiloliters of fresh-water usage. The Advanced Energy Monitoring System at Maneja integrates seven power substations, 63 energy, water and gas flow meters to monitor resource consumption in real-time.
A survey for rainwater harvesting and recharge pits at the factories in Halol and Doddaballapur was completed in November 2023. The Company has also replicated the water- saving project models from Maneja at the Power Quality factory in Doddaballapur. It has planned to install the first-ever OpEx model 609kWp rooftop solar plant for Hitachi Energy India Limiteds facilities, reducing dependency on external power sources by 40-50% once commissioned. The Company has also eliminated single-use plastic and paper cups at the factory. It has made the retrofitting of emission control devices (RECD) mandatory on 11 diesel generator (DG) sets to ensure a minimum 70% reduction in particulate matter.
An environmental performance dashboard enables location-wise tracking of greenhouse gas emissions, energy consumption, freshwater use and waste generated and disposed.
Solar-based mobile charging facilities that can power multiple devices at the same time have been installed in rest sheds and the workforce colony.
Green initiatives have also been undertaken at HVDC project sites, with ~460 tons of CO2 avoided. Your Company is going one step further by developing specialists who can advance net zero in its operations through the Sustainability Master Class at Maneja.
Upcoming projects include technical assessment and feasibility of EV charging points at Doddaballapur, identification of pilot projects to reuse wood waste in packing, replacement of diesel operated fork-lift truck (FLT) with electric FLT, utilizing metal waste in the Companys operation and Battery Energy Storage System as DG backup at Doddaballapur.
Your Company recognizes that the journey to net zero has to involve all stakeholders. Hence, it has embraced a 360? framework for collaborative energy transition - leading global thought leadership conversations, industry-focused customer events, nurturing the supplier ecosystem, the interaction of the Hitachi Energy India Limited with government and key customers, and industry training initiatives.
In line with the Companys strategic CSR roadmap, Hitachi Energy India Limited has consolidated its partnership with top- tier research institutes such as IIT Roorkee. Several initiatives were flagged off at the campus such as presenting electric vehicles to the institute to enable green mobility and inaugurating a 200 kVA microgrid with battery energy storage facilitating a smart energy management system.
Research and development (R&D)
Your Companys legacy of innovation and deep expertize in the power technology sector have enabled it to continually provide enhanced value to customers, foresee industry trajectory, anticipate the next phase of growth and stay ahead of the curve.
Its focus and targeted actions towards sustainability while staying at the forefront of the clean energy tech and digital-led revolution have helped it consolidate its position as a leader in this sector. Encompassing every customers journey in its entirety - right from site reviews, customized solutions, maintenance cycles, technical handholding, and planning for the future today - helps us go beyond creating value to becoming a strategic partner in their growth journey.
As a testament to your Companys commitment to innovation, it has received numerous R&D and innovation awards. O P Naidu, Senior Principal Engineer at Hitachi Energy India Limited attended and presented three technical papers at 2023 IEEE PES 15th Asia-Pacific Power Engineering Conference, Chiang Mai, Thailand. His paper titled "Single Ended Fault Location Method for Lines Connected with Inverter Based Renewable Resources" is received the Best Paper Award. Aarthi V, R&D engineer was awarded the prestigious Grid India Power System Award (GIPSA) 2024 award for her M.Tech thesis project; GIPSA aims to explore breakthroughs and recognizes outstanding research achievements in Power Systems.
The ability to consistently innovate and steer the course of industry in a direction that not only takes the entire ecosystem to the next level but also safeguards the future of generations now and those to come has served well to position your Company as a global industry thought leader.
To understand this your Companys R&D activities are conducted globally in R&D and technology centers and are then locally embedded in businesses. This approach leverages local competence to create social, environmental, and economic value on a global scale. By developing new and localized products, features, and solutions, your Company can secure existing revenue streams while creating additional revenue by increasing customer engagement and installed bases.
Your Companys large pool of expert technologists, shopfloor specialists, solution providers, technicians and R&D teams, capacity to innovate and investment in the creation of modern technologies have ensured it remains a well-regarded voice in the industry now and in the years to come. It remains committed to identifying and developing key power grid technologies that will enable a digital-led future more focused on renewable energy sources. During the financial year 2023-24 your Company has paid Rs.190.71 Crores as royalty and technology fees to Hitachi Energy Ltd.
Responsible governance
The Companys governance structure plays a crucial role in shaping the decision-making process, ensuring that it is aligned with our strategic objectives and the interests of all the Stakeholders at large.
Our governance structure, aligned with global Code of Ethics and Business Conduct, is crucial in supporting the delivery of our strategic objectives while ensuring ethical conduct and transparency at every level. Further, our corporate governance framework also promotes ethical practices throughout the organization, while transparent communication ensures effective engagement with Stakeholders. Your Company is also certified for ISO:37001:2016 for Anti-bribery management systems. For more details on governance please refer to the Corporate Governance which form a part of Boards Report.
Talent
Investing in building a culture and supportive ecosystem to support lifelong learning has enabled your Company to build a diversified talent pool of multifaceted professionals - at our factories and technology centers. Its success is a measure of investment in training and upskilling to attract, develop, retain and support the career journeys of the right talent. By fostering a work environment of inclusive leadership, transparency and sense of belonging, the organization is home to a highly motivated and engaged workforce.
To lead the energy transition in this time of accelerated pace of change, every industry requires people who are well informed, who will guide the transitions and impacts that they wish to achieve. Hitachi Energy India Limited believes that it is the people and talent that will enable this change in the industry, and as such has many initiatives that develop a strong and agile talent pool that is engaged and committed to customers.
In line with the commitment to foster a culture of lifelong learning, Hitachi Energy India Limited provides a diverse array of learning avenues, including digital platforms equipped with global and local programs. Besides in-house learning and development (L&D) programs, the Company also works with external partners and trainers to ensure a highly skilled workforce.
A focus on leadership development in FY 2023-24 benefited over 400 leaders. They were equipped with the tools to excel in their roles, collaborate with their teams and drive innovation within the organization. Self-paced learning through the digital learning platform Percipio has also seen increased engagement with over 3947 courses taken by employees. Knowledge-sharing platforms were also provided and many enthusiastic employees joined these platforms to share and learn from each other.
In addition, efforts were also made to create and nurture an inclusive workforce, that promotes diversity in gender, age and culture. ExcelHer, a program designed to nurture and empower the Companys women leaders, was launched, to provide tailored support and development opportunities to thrive in their careers.
Diversity 360, launched in 2019, is also designed to help the Company embrace differences in creativity, skills, culture, experience, ethnicity, sexual orientation, religion, education, background, and gender to create a robust organization designed for long-term success. Under the four work streams - Leadership Pillars, Female Acceleration, Live Diversity & Inclusion, and Attract & Grow - various initiatives are rolled out.
The Leadership Pillars model was co-created and validated with the International Institute for Management Development (IMD), and helps managers to create a culture and environment that enables diversity of thought to thrive for sustainable growth. The Female Acceleration program aims at building a strong business succession pool of potential leaders and experts for key roles. The interventions are designed to follow the progress of women in the company, from increasing gender diversity recruitment, diverse external hires and experienced professionals, pipeline planning, and policy-level structural integration. Through the 2nd career program, periodic review of policy and benefits, a suite of options to enable flexibility, and ensure equal opportunities without bias, your Company has successfully integrated diversity into everyday working practices.
The ‘Live Diversity & Inclusion work stream envisages the cultural basis for collaboration and inclusiveness by imparting training programs, creating Employee Resource Groups, bridging the generational gap, and strengthening efforts in reasonable accommodation and accessibility for disability. In addition, ‘Attract and grow talent spotlights the Company values of purpose and social innovation. By covering the entire early talent landscape spectrum, right from high school to university graduates, through relevant training, internship, mentoring, as well as offering experiential opportunities, it allows students to learn about the business to explore and accelerate their careers. In a bid to expand its academic initiatives, your Company recently strengthened collaboration with IIT Roorkee by inaugurating the C-MAC lab to enable a sustainable energy future for all.
The Companys performance management system is aligned with the business goals and strategy, recognizing exceptional performance and talent, and exposure to global culture through placements in other countries via the global mobility program.
As your Company looks ahead, it remains steadfast in its commitment to guiding its employees in charting their learning agendas in alignment with market requirements, ensuring that they possess the skills necessary to navigate an ever-evolving landscape successfully.
Corporate social responsibility
Your Company is committed to sustainable and inclusive development of the communitys social capital through active engagement. Through social surveys organized through NGO partners, the grievances of the community are received. Corporate Social Responsibility (CSR) projects are identified and implemented in the following focus areas:
• Promote gender equality and empower women in the engineering workforce
• Endorse education, employability & healthcare
• Social impact projects to collaborate with communities to provide innovative off-grid solutions to improve access to electricity in the country, especially in rural areas for its development
• Aid in sustainable development goals
Some of the main initiatives conducted over the year are below:
Diversity and Education: Your Company is sponsoring 200 girl students hailing from economically backward families from Tier II & III cities across the country pursuing engineering courses in BE/ B. Tech for four years. The students receive a yearly scholarship along with a laptop supported by several trainings spread over four years on soft skill development, technical and employable skills, mentoring for career goals, offsite training, factory visits, internship and employment opportunities to eligible candidates. Women employees from the Company are actively involved in mentoring and conducting training for the students.
The organization is also sponsoring, for a period of six years, 500 girl students from economically backward families in Tier II & III cities pursuing STEM courses in 11th Grade. The students receive a yearly scholarship, along with one-on-one mentoring, trainings in soft skill development, career planning and technical skills.
Smart learning and clean drinking water in government schools: Your Company is supporting the Gujarat governments ‘Sarva Siksha Abhiyan initiative. It has converted two classrooms in each of the five government schools in the villages of Gujarat for digital teaching by providing large screen monitors with interactive CPU and also refurbished the classrooms. The organization is also providing drinking water and has upgraded the campus and other facilities at the Government School in Maneja, Vadodara.
Healthcare
Your Company has contributed to addressing different facets of healthcare across locations in the country. It has augmented ICU facilities in several government hospitals with ICU beds and medical equipment in Karnataka and Gujarat. It has also contributed to a full-fledged 10-bed pediatric ICU facility in Savli, Gujarat and Mysuru to support infants in and around surrounding districts. The organization has provided a hematology lab and fully-equipped ambulances at the government hospital in Vadodara. It has funded development and deployment of mobile deep-freeze patented design vaccine / immunization carriers to remote villages in Karnataka and Tamil Nadu. It continues to maintain all medical equipment supplied to government hospitals for three years. Your Company also provides financial support to children below 14 years in need of critical / emergency surgical and medical assistance across the country.
Environment and urban afforestation: In recognition of its responsibility towards the environment, your Company has undertaken key initiatives during the year. This includes the maintenance of 10,000 sq ft of urban forest developed from dry land in Vadodara city. Over 3,000 native saplings were planted, involving government school children and also developed a play area and a paved walkway. This has enabled offsetting about 66 tons of CO2 per year. Your Company is in the process of developing another dry area of 10,000 sq ft into an urban forest. It is also involved in the development and maintenance of greenery along 2 km stretch of metro median and the National Highway in Bengaluru as well as design and development of a traffic circle with greenery, water body and local cultural murals at Vadodara.
Smart Infrastructure: The organization is supporting government universities such as NIT Warangal, IIT Roorkee, IIT Kharagpur, IIT Madras and other top-tier universities by developing smart and digital laboratories under various areas of electrical engineering applications to support Masters and Research Scholars. It is conducting hackathons at Government Universities to promote sustainable energy for all, felicitating winners with cash rewards and sponsoring winning projects. Your Company is sponsoring interactive industry-academia programs by inviting students to Hitachi Energy India Limiteds factories/ business locations for technical trainings. It has provided e-carts at several Universities for convenient in-campus commute of students and faculty members, thereby reducing the use of personal vehicles and CO2 emissions.
Material developments in human resources/ industrial relations front
Human resources
A journey as intricate, long-running, and requiring focused commitment as the energy transition, needs the collective involvement to move towards this objective with the same dedication, speed, perception, and capability. Hitachi Energy India Limited has taken a multi-pronged approach to ensure that its employees are well-equipped to nurture this vision right down to the last person in the factory and at site.
To be at the forefront of a market that is swiftly embracing eco- efficient energy technologies requires a workforce that is well- skilled to anticipate and usher in the future. Accordingly, your Company has instituted a lifelong learning culture that ensures employees can explore a longstanding yet richly diverse and rewarding career path. They are empowered to not only gain a broader range of skills in their area of expertize but also branch out their portfolio to learn and adeptly evolve into newer roles on the route to a clean energy future. A comprehensive Rewards and Recognition framework recognizes the pioneering spirit, distinctive problem-solving, and exceptional contributions of your Companys multi-generational workforce. These key efforts have ensured that Hitachi Energy India Limited continues to retain its top researchers, technologists, and engineers who are helping shape the future of energy.
By inculcating a company-wide philosophy of diversity and inclusivity right from hiring practices, your Company has ensured that it can welcome and nurture the brightest minds in the business from across industry and academia.
Hitachi Energy India Limited strongly believes that its versatile and multi-skilled employees have been instrumental in building an expansive range of industry-leading customized and innovative solutions. Their efforts have helped mark your Companys voice as one of trust and influence in the business.
The organization believes in creating a secure environment that cares for employees well-being. Health and safety is the foremost priority and throughout the period under review, the Company has endeavored to ensure a safe working environment in all premises, undertaking several wellness initiatives. The Company also paid attention to the governance of various processes and initiatives across the organization and ensured industrial relations remained cordial and harmonious across all manufacturing locations.
People well-being
With an aim to be a world-class leader in health, safety and environment to protect people, communities, and the planet, among your Companys top commitments is to foster positive health and well-being work environments. By embedding health and well-being into the core of its operations, the focus is to create an empowering and rewarding work environment for all employees.
Hitachi Energy India Limited seeks to improve well-being at the workplace by referencing and implementing key international principles from the World Health Organization, as well as relevant international conventions and standards such as those governed by the International Labor Organization.
By incorporating the Hitachi Energy global Health Wheel, your Company has taken a 360-degree approach by covering the physical, mental and occupational aspects of health and well- being at the workplace. This has enabled the organization to foster a thriving workforce and increase employee engagement, productivity, and talent retention.
To promote physical well-being, participation-based wellness programs are regularly organized to motivate behavioral change, drive engagement, and promote better health practices. Proactive mental well-being management is well-integrated into the latest strategy through the award-winning ‘Mind Matters flagship program. Occupational health is addressed by ensuring safe workplaces and working conditions by complying with the applicable occupational health and industrial hygiene standards.
With health and well-being fully embedded in its management system, the organizations Employee Health and Well-being Policy aims to support and contribute to providing a healthy and supportive environment for all employees. Health and well-being standards are measured through a diversified lens ranging from occupational health, well-being and resilience, to ergonomics and human factors, industrial hygiene, and health risks assessment.
Multiple awareness sessions on health and well-being were organized in different office locations and factories to create awareness around key topics. Annual medical check-ups and camps were set up through the year to promote physical well-being.
Learning and development
Hitachi Energy India Limited is committed to fostering a culture of lifelong learning. Its belief in the transformative power of continuous education drives employees to chart their learning journeys, aligning with both present requirements and future aspirations. The organization provides a diverse array of learning avenues, including digital platforms equipped with global and local programs.
Over 400 leaders benefited from the in-house upskilling programs, equipping them with the tools to excel in their roles, collaborate with their teams and drive innovation within the organization. Your Company has witnessed remarkable engagement on the digital learning platform Percipio, with over 3947 courses taken by eager learners seeking to expand their knowledge horizons. On the knowledge-sharing platforms provided to employees, your Company saw many enthusiastic employees joined these platforms to share and learn from each other.
Furthermore, with the launch of Excel Her, a program designed to nurture and empower the Companys women leaders, they are provided with tailored support and development opportunities to thrive in their careers.
As your Company looks ahead, it remains steadfast in its commitment to guiding its employees in charting their learning agendas in alignment with market requirements, ensuring that they possess the skills necessary to navigate an ever-evolving landscape successfully.
Diversity and inclusion
The complexities of dynamic environmental challenges that your Company is helping to solve requires the worlds most creative and determined people. To build this kind of team with a mindset to make a difference, it launched Diversity 360 in 2019. This vision embraces differences in creativity, skills, culture, experience, ethnicity, sexual orientation, religion, education, background, and gender to create a robust organization designed for long- term success. Translating the vision to the employees involves working with purpose and thinking big to make real impact, achieving more together because collaboration propelled by diversity leads to great innovation, and energizing careers by inspiring progress.
By launching a series of programs, interventions, and events, Diversity 360 has been brought to life. With the focus of integrating it into the entire employee experience, this people- centered approach includes four key workstreams:
• ‘Leadership Pillars a unique leadership model co- created and validated with the International Institute for Management Development (IMD) that embeds the DEI strategy into everyday behaviors, policies and leadership decisions. It holds a strong belief that leaders are the key to creating a culture and environment that enables diversity of thought to thrive for sustainable growth. By connecting employees to four fundamental pillars of Purpose, People, Potential, and Performance, they play an integral role in helping them develop and grow in their careers. Since launch, over 85% of the organizations people managers have completed the training to understand this concept, with around 40% at an advanced level.
• ‘Female Acceleration with a 25% gender diversity ambition across Hitachi Energys entities globally by 2025. The focus is on building a strong business succession pool of potential leaders and experts for key roles. This is enabled through various development programs, global employee networks, partnerships, and benefits with a goal to ensure female colleagues at every level feel empowered, supported, valued, and respected. Right from increasing gender diversity intake through recruitment of early career female hires, diverse external hires and experienced professionals, pipeline planning to identify female talent and create talent bench strengths and enablement of talent through key initiatives and exposure, policy-level structural integration, women form a critical link to business success. Through the 2nd career program, periodic review of policy and benefits, a suite of options to enable flexibility, and ensuring equal opportunities without bias, your Company has successfully integrated diversity into everyday working practices.
• Through ‘Live Diversity & Inclusion, your Company lays down the cultural basis for collaboration and inclusiveness where unique strengths are embraced, respected, and used to drive it forward. By imparting training programs to become aware of unconscious bias and interrupt associated behaviors, enabling and celebrating authenticity by respecting all areas of diversity through an inclusive culture, creating Employee Resource Groups to advance the DEI agenda, bridging the generational gap through the generational inclusion focus, and strengthening efforts in reasonable accommodation and accessibility through Disability Inclusion enables DEI to be a daily commitment.
• ‘Attract and grow talent spotlights the Company values of purpose and social innovation. By covering the entire early talent landscape spectrum, right from high school to university graduates, through relevant training, internship, mentoring, as well as offering experiential opportunities, it allows students to learn about the business to explore and accelerate their careers. For internal talent, the organizations culture of lifelong learning with world-class training and focused development programs provides immense opportunities for personal growth and global mobility to help employees reach their full potential. The vast learning resources portfolio includes tools, systems, platforms, courses and programs that individuals can explore and adjust for self-paced learning and as per their desired career growth trajectory. To emphasize this, over 10,000 employees engaged in the Percipio skill development online learning with more than 46,400 hours spent on 95,700+ completed sessions.
Finance
Your Companys focus on market trends and keeping track of high growth segments, as well as operational excellence, strong manufacturing capability and customer connections were instrumental in delivering sustained performance in April 2023 - March 2024.
Your Company generated total orders of H 5,536.3 Crores in FY 2023-24, increased by ~14% YoY over the corresponding period for FY 2022-23, while excluding HVDC orders.
The revenue for FY 2023-24 stood at H 5,246.8 Crores with a 17% increase during the same period last financial year.
The first two quarters of the year were impacted by supply limitations such as delays in procurement of semiconductors and other key electronic components. While continually monitoring the situation, the company also deployed strategic initiatives to mitigate the impact of supply chain turbulence to the extent possible.
Your Companys net profit stood at H 163.8 Crores against H 93.9 Crores in FY 2022-23. Order backlog was at of H 7,229.5 Crores at year-end. The Board has also recommended an equity dividend of 200% amounting to H 4 per share of face value H 2 each.
At H 350.2 Crores or 6.7% Operational EBIDTA was a result of a favorable revenue mix, operational excellence and digitalization efforts. Profit before tax stood at H 221.7 Crores, up 69.5% YoY and profit after tax was at H 163.8 Crores, up 74.4% YoY.
Your Companys current ratio was at 1.16 and interest coverage ratio at 5.31, showing strength in its balance sheet and its ability to maximize capital. Your Companys debtor turnover ratio was 3.44, indicating its robust collection processes. However, your Company is also discussing potential repayment mechanisms to clear historical overdue.
Inventory turnover stood at 3.99. Your Companys Operating EBITA was 5.0%, while the net profit margin was at 3.1%.
In FY 2023-24, the interest cost borne by your Company was H 46.6 Crores. As on March 31,2023, your Company had a net debt of H 22.0 Crores. In terms of foreign currency exposure - for imports and exports - your Company continued to conservatively hedge at the point of commitment to protect the contract margins.
Details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations thereof:
Key financial ratios
| FY 2023-24 | FY 2022-23 | |
| Particulars | April 1, 2023 to March 31, 2024 | April 1, 2022 to March 31, 2023 |
| Debtors Turnover | 3.44 | 3.04 |
| Inventory Turnover | 3.99 | 3.75 |
| Interest Coverage Ratio | 5.31 | 4.37 |
| Current Ratio | 1.16 | 1.16 |
| Debt Equity Ratio* | 0.11 | 0.23 |
| Operating Profit Margin (%) | 6.67 | 5.65 |
| Net Profit Margin (%) | 3.12 | 2.09 |
Disclosure of accounting treatment: Your Company followed IND-AS and has detailed its accounting policy in Note 2 of the financial statements.
*Debt Equity Ratio = Short term borrowing / total equity
Funds generated from the Companys operations and financing activities are utilized to deliver long-term sustainable growth and value creation to its stakeholders. Hitachi Energy India Limited will continue investing in capex expansion, supporting its new-age manufacturing sites and supply chain, enabling your Company to deliver superior products to its customers.
Strategic Pillars
Hitachi Energy India Limited wants to grow sustainably but also profitably by expanding business operations. The Company is committed to delivering faster than market growth. . In doing so, capital expenditure is increased on various business units; additionally, there is a focus to launch new products in digital and AIS and the Company is working on building local capabilities on e-Mobility and energy storage. Other business units are also expanding and showing promise, such as PGGAs new digital products, which are ready for market launch. Similarly, the PGHV unit has made quick inroads into the market with its advanced products and services. Globally, Hitachi Energy has acquired Global Logic to build advanced digital products, and which can establish dominance in the digital space.
Additionally, your Company is also focused on sustainable practices. It prioritizes net-zero and carbon-neutral practices by making its offices carbon-neutral and running manufacturing sites on renewables power.
Risk and concerns
The pace of change today has only heightened the risks that corporates face. The World Economic Forums 2024 risk report frames four trajectories that are in motion which indicate risk along the way. These include climate change, demographic bifurcation, technological acceleration, and geostrategic shifts. The power sector is intrinsically connected to all these trajectories, making risk management a key factor for business resilience and growth.
Hitachi Energy India Limited manages risk via strong governance frameworks and risk management procedures. Furthermore, your Company is keeping a strict vigil on global issues like disturbance in the Red Sea and has taken appropriate measures to minimize the impact.
The risk management charter and policy of Hitachi Energy India Limited provides a framework for recognizing, prioritizing, mitigating, and overseeing significant risk events and action plans. The method was examined, the risks were determined, and mitigation measures were decided upon during the financial year.
Key risk areas were identified as supply chain interruptions, people, market and competition, cyber security, local content and competences, transformation project, quality, strategy, technology, finance, operations and systems, legal and regulatory, and human resources.
There are suitable assurance and monitoring procedures, such as crisis management training, yearly updating of crisis management plans, security plan risk, and business continuity plan, to assure the efficacy of the risk management framework.
At various levels, periodic evaluations of risks and their possible effects on business development, profitability, talent engagement, and market position are carried out based on the organizational structure matrix. Responses to significant operational risks are frequently carried out using information from internal and external assessments, internal performance reviews, and other sources.
Hitachi Energy India Limiteds risk management strategy aims to reduce negative effects, effectively take advantage of market possibilities and boost corporate competitiveness. Hitachi Energy India Limited is well-equipped to handle possible risks and guarantee long-term success because it prioritizes risk management and governance.
Internal control systems and their adequacy
Internal Controls (IC) in your Company have been designed to withstand and further the interest of all stakeholders by providing an environment which is conducive to conduct its operations. Your Companys IC environment is in place to take care of, inter alia, financial and operational risks.
Your Company maintains a holistic framework of internal control to that effect with elements like a Country Management Committee, Group Directives and Instructions, Local Management Instructions, Entity-Level Controls, Process Level Controls and Management Testing Programs. The same provides a platform for adequate control processes commensurate with the size of the Company.
A strong emphasis on integrity and ethics forms a part of your Companys work culture. An independent management testing team having expertize in the field, performs Internal Financial Control effectiveness testing.
Outlook for FY 2024-25
India is poised to emerge as the worlds third-largest economy by 2030. With an impressive 7.8% growth outlook for FY 2024 and a 6.8% forecast for FY 2025, India is top of the table among emerging markets. Policy reforms and initiatives, robust domestic demand, and growing capex investment have all contributed to the strong recovery post-pandemic. Other indicators such as growth in Private Final Consumption Expenditure (PFCE), GST collections, and industrial production expansion in the capital goods and consumer durables sectors signal a positive note for economic growth.
While urban consumption continues to be the key driver of consumption growth, rural demand has also shown a strong pick-up. These trends signal continued momentum in the coming months. The construction sector continued to receive a fillip from the focus on the development of physical infrastructure, reflected in the healthy growth rates of cement and steel production.
While inflationary pressures have balanced out due to tighter monetary policy aided by lower international commodity prices, the IMF has projected global growth to continue at 3.2% in 2024 and 2025. A slight acceleration is expected for advanced economies with growth expected to rise from 1.6% in 2023 to 1.7% in 2024 and 1.8% in 2025. The forecast for global growth five years from now—at 3.1% —is at its lowest in decades.
Global experts have indicated that high-interest rates, increased energy prices, and a slowdown in the worlds top two economies are responsible. Geopolitical risk and the wars in Ukraine and the Middle East could also contribute to a worsening global financial outlook, with a mild recession on the cards in some advanced economies. This could have far-reaching impacts on energy prices, food costs, international trade, and diplomatic ties.
However, Indias steady growth trajectory is expected to continue into FY 2025, aided by the accelerated pace of energy transition to renewable sources. As per IEA, electricity demand is likely to average growth of 6% every year through 2026 on the back of hectic economic activity, roughly equivalent to the UKs current consumption. Accounting for over 70% of primary energy demand, the electricity, industry, and transport sectors are responsible for 85% of energy-related Greenhouse Gas (GHG) emissions. Hence, there is an urgent need for a transition to clean energy for decarbonization of the grid, industry and transport to tackle close to 90% of emissions.
Energy transition projects are spread across segments, and their multiplier impact is only possible when brought together by a flexible, digital, and secure grid. Indias sheer size and its huge scope for growth means that its energy demand is set to grow by more than that of any other country in the coming decades - as per International Energy Agency (IEA), to continue its energy transition journey, India needs to add a grid the size of the European Union by 2040. Fundamental market drivers remain intact despite sporadic macro-economic challenges. This provides medium to long term opportunities for power technologies, especially in our identified high growth segments - renewables, HVDC, data centers, transport, etc.
Indias Net Zero 2070 ambition aims to reduce emission intensity of GDP and increase the capacity of renewable energy and non- fossil fuel sources in the power generation mix to 50% by 2030.
As per a joint EY-CII report, Indias renewable energy sector boasts over H 20.01 Lakhs Crores ($ 240 billion) in investment potential, solidifying its global leadership in innovation and manufacturing. With substantial growth expected in solar PV and ACC battery investments, Indias self-reliance in renewables technology is driven by low-cost financing, skilled workers, and round-the-clock affordable electricity, bolstered by export incentives.
The interim Union budget for FY 2024-25 made key allocations to give a boost to clean energy.
This is visible with the allocation of H 10,000 Crores in 2024-25 for grid-based solar power scheme, a significant jump from H 4,757 Crores in 2023-24. The launch of the PM Suryoday Yojana rooftop solar program in January 2024 will bring 10 million households under the ambit of the scheme with the provision of up to 300 units of free electricity every month.
With the Union budget slated to be announced during the last week of July 2024, your Company is hopeful that the governments support towards forwarding clean energy remains unabated.
Last year, the Union government introduced the countrys first- ever tender to allocate sites for offshore wind energy projects, currently limited to land-based wind projects. Around 7 GW is to be auctioned by FY 2024. In addition, Viability Gap Funding has been announced for the initial addition of up to 1 GW in offshore wind energy capacity.
The budget for the National Green Hydrogen Mission has been enhanced to H 600 Crores for FY 2024-25.
With a wide-ranging product portfolio, your Company is well-positioned to fulfill the demand arising from greater investments in capacity enhancement and digitalization by utilities, manufacturing, rail, e-mobility, and data centers. A wide-ranging product portfolio with a good mix of traditional and digital products and solutions - traction transformers, dry-type transformers, switchgears, SCADA systems, energy management systems, substations, power electronics-based HVDC, Flexible AC Transmission Systems (FACTS), city reliable power infeed, grid automation, microgrids, Battery Energy Storage Systems (BESS), electric systems for Green Hydrogen, Integrated Fleet Charging for EVs and electric buses, AI-ML based Asset Performance Management, Distributed Energy Resources Management, augmented by Hitachis world- class digital technologies ensure strong business potential for your Company.
The rise in generation capacity from varied renewable generation set-ups also requires enhancement of the transmission network as per the Central Electricity Authority (CEA), India requires a substantial investment of H 4.75 Lakh Crores by 2027 for developing its transmission infrastructure, including lines, substations, and reactive compensation. Goldman Sachs estimates that the transmission capex is expected to have the second largest share of over H 41.69 Lakhs Crores ($ 500 billion) of the total energy transition capex requirement of H 141.74 Lakhs Crores ($ 1.7 trillion) over the next 25 years. This presents a significant opportunity for the Companys core T&D business.
Currently, half of all HVDC links in India transmit power with Hitachi Energy India Limited technologies. With one HVDC project expected every year and two HVDC projects to be awarded in the next 12 months, your Company is well-prepared to meet such projects with proven expertize enabled by local manufacturing capacity.
For the offshore segment, a comprehensive range of products, solutions, and services help reduce costs, increase safety, and improve efficiency, including an innovative offshore portfolio of transformers that can operate in environments with salinity and hydrocarbon, extreme weather conditions like hurricanes, typhoons, winds, etc.
With greater focus on power system flexibility to reach Indias renewable energy targets, your Companys innovations in products and systems ably help manage power variability from renewable sources. Impetus to BESS and smart grids offers us an advantage as early entrants in this space.
Hitachi Energy India Limited. has been a long-standing trusted partner to the transport sector in India offering high-tech products and solutions for electrification of Railways, Metro projects, High-speed rail and e-mobility. From Energy Traction Transformers for Railways to power automation for metro rail systems, and innovative flash and fleet charging solutions Grid- eMotion™ Flash and GrideMotion™ Fleet, the Companys seamless solutions power sustainable transport. With a goal of 100% rail electrification, rolling stock upgrade, and 1,058 km of metro rail network in 27 cities offering an additional area of play, your Company sees immense potential to further enable clean mobility in India.
Data centers are set to double capacity by 2025. Hitachi Energy India Limited has the capability to power data centers of the future with reliable power and eco-efficient solutions. Moreover, tighter industry ESG pledges and greater cloud adoption necessitate rapid digitalization. Your Companys offerings of sustainable digital and power quality products & solutions ensure reliability, increase efficiency, and productivity through system design.
The Company has a complete range of power and distribution transformers and other power equipment, that supports utilities and industrials to maximize return on assets investment by ensuring high reliability, reducing life cycle costs, and ensuring optimized performance while lowering environmental impact. From power islanding solution to ensure reliable quality power for the worlds largest oil refinery in Gujarat to digital transformers in Indias oldest steel plants, digital substations for round-the- clock power to IT parks, your Company is energizing the pace of industrial transformation.
The Atmanirbhar Bharat campaign has provided several stimulus packages and incentives for domestic manufacturers to up the ante and manufacture at global standards. This has not only given an impetus to indigenous innovation but has also served to position India strategically in the global manufacturing and supply chain arena. Such policy-led support will also positively impact Hitachi Energy India Limited. to enhance our manufacturing capabilities, innovation strength, and digital-focused offerings in India across our 19 facilities in eight locations.
Opportunities and threats
As global economies move towards realizing their country- specific sustainability goals, coal continues to dominate the energy mix. In the absence of a well-planned transition roadmap, communities and local economies dependent on fossil fuel supply chains could be severely impacted by financial insecurity. It could also have a reverse effect with the road leading back to traditional fossil fuel sources if renewable energy development doesnt effectively anticipate and outpace future demand.
The Just Transition Declaration at the UN Climate Change Conference in Scotland (COP26), recognized the need to ensure that no one is left behind in the transition to net zero economies - particularly those working in sectors, cities and regions reliant on carbon-intensive industries and production.
Energy has been among the fastest-evolving industries globally in the last five years. Currently, the IEA estimates that energy employs 65 million people worldwide and accounts for 2% of global employment, relatively evenly distributed across fuel supply, power sector, and end uses. Half of this workforce is employed in clean energy technologies. The IEAs report, ‘Net Zero by 2050: A Roadmap for the Global Energy Sector (NZE Scenario), projects that the energy transition will create 14 million new jobs related to clean energy technologies and require the shift of around 5 million workers away from fossil fuel sectors. In addition to these new roles, 16 million workers will be required to shift to work in clean energy segments, requiring additional skills and training.
Shortage of skilled labor due to flux in the international labor market is leading to delays in projects. It becomes imperative to have better visibility into energy employment trends and provide requisite resources and training to upskill labor to transition from traditional to clean energy technologies.
According to the Asian Development Bank, attempting clean energy transition at the scale that India requires faces many challenges. These include access to affordable financing, lack of institutions that can deploy financing effectively in new low-carbon growth areas, and technology risks, apart from ensuring a just transition. Moreover, ensuring universal access to affordable clean energy is critical. Policies can be effective only when the resultant transition is inclusive and does not further isolate already energy-poor regions and communities. This puts the focus on developing efficient, reliable and scalable solutions that are affordable and economically priced.
Another key concern is that increasing digitalization across industries and sectors, including the power sector, has rendered critical energy infrastructure vulnerable. With non-traditional modes of conflict tactics on the rise, a key disruptor of energy supply and energy security thereby is the heightened risk of cyberattacks.
From core technologies like power transformers, and circuit breakers to eco-efficient solutions that deliver reliability, to consulting services, digitalization and automation - your Company straddles IT & OT with equal ease to ensure active contribution towards on-track net-zero targets.
Your Company sees opportunities for global and inter-regional links and upgrades of maturing HVDC stations. Additionally, with digital twins, remote monitoring, eco-efficient products and maintenance options, managing power infrastructure to ensure reliability and ease of maintenance is an area of opportunity.
Such a landscape while offering immense potential to your Company, with its local manufacturing and technological expertize and innovative capabilities, needs the entire partner ecosystem to work collaboratively to digitally accelerate a sustainable energy future for all. Hitachi Energy India Limited. is closely cooperating and co-creating pioneering tech and solutions, with our industry and academia partners, suppliers, customers, and other ecosystem collaborators by leveraging both digital and energy platforms.
Cautionary statement
Certain statements made in the Management Discussion and Analysis Report relating to the Companys business are forward- looking statements. These include all statements, other than those of performance highlights and historical facts, including those regarding the market and financial position, business strategy, and objectives for future operations. Forward-looking statements shall be identified by words such as anticipates, expects, intends, may, will, believes, estimates, outlook, and other words of similar meaning in connection with a discussion of future operational, environmental, social and financial performance. Forward-looking statements are necessarily dependent on projections and trends and constitute our current expectations based on reasonable assumptions. Actual results could differ from the projected in any forward-looking statements due to risks and uncertainties and other external factors.
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