United Heat Transfer Ltd Management Discussions

Industry structure and developments:

United Heat Transfer Limited (UHTL) operates within a critical segment of the capital goods industry, providing high-performance thermal engineering solutions including Heat Exchangers, Pressure Vessels, Columns, and Skids. We proudly serve a diverse range of process industries such as Oil & Gas, Petrochemicals, LNG, Fertilizers, Power, Water Treatment, and Pulp & Paper.

In FY 2024-25, we witnessed a continued surge in the capital expenditure (Capex) cycle both in India and globally, supported by renewed investment activity, especially in the infrastructure and energy transition space. India is increasingly being recognized as a dependable global manufacturing hub for complex and high-quality process equipment, thanks to its engineering expertise, expanding capacities, and robust quality control systems. Emerging energy trends are also playing a pivotal role. The global pivot towards hydrogen—particularly Blue and Green Hydrogen—as a sustainable energy alternative is unlocking fresh opportunities. Similarly, increased focus on Green Ammonia for use in fertilizers and energy is fostering demand for customized thermal processing equipment. According to the International Energy Agency (IEA), global hydrogen demand could reach over 500 million tonnes by 2050, further underscoring the massive scope in this domain. UHTL is well-positioned to capitalize on this momentum, bolstered by our proven engineering capabilities, quality commitment, and agile customer-centric approach.

Opportunities and Threats:

Opportunities:

The twin engines of global decarbonization and rising conventional energy demand in emerging economies are creating a fertile ground for our growth. The petrochemical, fertilizer, gas processing, and hydrogen sectors continue to demonstrate robust Capex investments. Indias push for self-reliance in chemicals and energy, coupled with policy-led initiatives like the National Green Hydrogen Mission (with an allocation of Rs19,744 crore), reinforces long-term demand.

We see particular strength in the specialty chemical segment, where demand for exotic alloy-based equipment is growing-leading to improved margins. Our capacity expansion in Talegaon enhances our ability to meet larger and more complex project needs. Moreover, with India targeting $300 billion in chemical and petrochemical output by 2025, the export potential for engineered thermal solutions remains substantial.

UHTL is aligned to ride this wave, with our solutions being a critical enabler in hydrogen production, gas processing, and process optimization—domains integral to the energy transition and circular economy.

Threats:

Geopolitical uncertainties, including global trade disruptions and supply chain imbalances, remain a key concern for companies with significant import/export exposure. Moreover, as a custom-engineered equipment manufacturer, we are highly dependent on skilled manpower. Attracting and retaining such talent, particularly on the shop floor, continues to be a challenge.

To address this, we are focusing on automation, digitization, and productivity enhancement across operations. Our investments in technology and skill development aim to ensure continuity in quality and delivery excellence.

Segment-wise or Product-wise Performance:

Shell & Tube Heat Exchangers remain the cornerstone of our business, contributing approximately 60% of annual revenue. With the expansion of our Talegaon facility strategically located near a major National Highway we are now better equipped to manufacture large-scale equipment, including Vessels and Columns, thereby diversifying our product mix.

We anticipate the Heat Exchanger product line will continue to contribute between 60%-65% of our revenues in the coming year. Our new design and sales office in Pune brings us closer to key clients and reinforces our responsiveness and technical support capabilities.

Our track record of on-time delivery a critical parameter in capital goods procurement continues to distinguish us globally as a Reliable and Trusted Partner.

Outlook:

Looking ahead, we remain optimistic about sustained Capex activity across sectors like petrochemicals, fertilizers, gas processing, hydrogen, and specialty chemicals. The push for energy security and climate goals is driving new Greenfield and Brownfield project announcements, particularly in developing economies.

Indias ambition to double its refining capacity by 2030, increase gas usage in the energy mix, and become a global hydrogen and petrochemicals hub will continue to present new opportunities. Furthermore, initiatives around coal/lignite gasification and synthetic fuels provide an additional layer of opportunity for thermal solution providers.

With a healthy pipeline and expanded capacity, UHTL is well-prepared to deliver on the growing and complex demands of the global energy and chemical sectors.

Risks and Concerns:

The Company has implemented a structured and proactive Risk Management Framework, enabling the identification, assessment, monitoring, and mitigation of key business risks. Our framework is embedded across functions and ensures alignment with operational and strategic objectives.

A dedicated Risk Management Committee of the Board and a robust Internal Audit Department continuously evaluate potential vulnerabilities ranging from operational inefficiencies and compliance risks to market and supply chain in accordance with the Risk Management Policy prepared as per the provisions of the Act and the Listing Regulations. Regular reviews of internal control mechanisms ensure they remain effective and adaptable. Where necessary, corrective actions are promptly initiated to uphold compliance, transparency, and business continuity.

Internal Control Systems and their Adequacy:

UHTLs Internal Control System is designed to provide reasonable assurance regarding the integrity of financial reporting, operational efficiency, regulatory compliance, and safeguarding of assets. The system is regularly audited and refined to adapt to changing business dynamics.

Our Internal Audit function evaluates adherence to policies and recommends process improvements. Reports are presented to the Audit Committee, and action plans are implemented across functional areas to strengthen our governance framework.

Discussion on Financial Performance with Respect to Operational Performance:

This discussion covers the financial results and other developments during the Financial Year 2024-25 in respect of the Company. Published result is as prepared on Indian Accounting Standards (IND AS). Highlights below given only for comparison.

Financial Highlights for Operating Performance of FY 2024-25: (Rs in Lakhs)

Perticulars	FY 2024-25	FY 2023-24
Revenue from Operation	6681.45	6019.31
EBITDA	1245.59	1389.31
PAT	530.29	623.85

Our revenue grew by 662.14 Lakh during FY 2024-25, reaching 6681.45 Lakhs. PAT, 623.85 Lakhs for FY 23-24 is including an Asset sale of 362.00 Lakhs, actual PAT derived from Operational Revenue is 261.74 Lakhs hence the net profit rose to 268.55 Lakhs as compared to earlier year i.e. FY 23-24, reflecting enhanced operational efficiency, strong order execution, and optimized cost structures.

A robust order book of 39.00 Crores as of 31st March 2025 ensures strong visibility for the coming fiscal year, underlining our resilience and market confidence.

Material Developments in Human Resources / Industrial Relations Front, Including Number of People Employed:

At United Heat Transfer Limited, we believe that people are our greatest asset. As of 31st March 2025, the company employed 130 permanent employees across various functions. Our HR initiatives focus on acquiring top talent, fostering continuous learning, and nurturing leadership. We have embraced digital transformation through e-learning platforms offering domain-specific and behavioral training modules.

We actively promote internal mobility, enabling employees to diversify their skill sets and grow within the organization. Our structured performance management system integrates career progression, compensation, and recognition to drive motivation and results.

A culture of open dialogue, inclusion, and transparency ensures that employees feel empowered and aligned with organizational goals. Our efforts toward leadership development and upskilling are strategically aligned with our growth roadmap.

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, including

Parameters	Numerator	Denominator	2024-25	2023-24	Explanation for Change in Ratio
Debtors Turnover Ratio (times)	Revenue from Operations	Average Debtors	4.21	5.86	Due to Increase in trade receivables for Sales mainly in last half year of reporting period
Inventory Turnover Ratio (times)	Cost of Goods Sold	Average Inventory	1.75	2.33
Interest Coverage Ratio (times)	EBIT	Finance Costs	3.11	2.87
Current Ratio (times)	Total Current Assets	Total Current Liabilities	2.36	1.07	Improved liquidity due to Reduced current liabilities
Debt Equity Ratio (times)	Total Debt	Equity	0.30	1.81	Significant reduction in borrowings due to increase in equity capital
Operating Profit Margin (%)	EBIT	Revenue from Operations	6.37	4.99	Measures taken to reduce material and direct cost.
Net Profit Margin (%)	Net Profit after Tax	Revenue from Operations	7.94	10.36	Last year there was Profit on Sale of Land & Building of Rs.362.11 Lakh.
Return on Net Worth (%)	Net Profit after Tax	Net Worth	11.04	3.28	Company has introduced IPO which increases Share Capital & Security Premium and leads to substantial increase in Net Worth.

Cautionary Statement:

This Management Discussion and Analysis contains forward-looking statements, which are based on certain assumptions and expectations of future events. Actual results may differ materially from those expressed or implied due to various risks and uncertainties.

The Company assumes no responsibility to publicly amend, modify, or revise any forward-looking statements based on subsequent developments, information, or events.