Hindustan Aeronautics Ltd

Dear Shareholders,

I am pleased to share your Company's annual performance highlights for the Financial Year 2024-25; a year marked by significant achievements and sustained production, reinforcing the Company's strategic role in India's defence and aerospace sector.

During the year, the Company achieved the prestigious MAHARATNA status, the first among Defence PSUs in recognition of its strong financial performance, R&D and strategic initiatives. This achievement would not have been possible without the strong commitment of our people, the trust of our esteemed customers, support from the government and backing of our shareholders. I, on behalf of the Board of Directors, sincerely thank each one of you for your invaluable contributions.

During FY 25, the global defence and aerospace industry faced several challenges in the supply chain due to geopolitical tensions. Despite these setbacks, Indian defence production grew at a faster pace during the year, fueled by the Government's 'Aatmanirbhar' initiatives, expanding India's global footprint and boosting economic growth.

The Indian defence industry is poised for a major shift in the coming years. The Government's thrust on strengthening the Indian defence ecosystem through new public-private partnerships, technological innovation and increased defence spending will boost indigenous defence manufacturing to a new high. India aims to reach '3 Lakh Crore in defence production by 2029.

As the largest Defence PSU in India, your Company is fully prepared and committed to supporting the expanding defence ecosystem to make India selfsufficient in this sector.

On the financial parameters, the Company recorded an all-time high turnover of Rs.30,105 Crore for FY 2024-25 driven by consistent order execution and growing demand for indigenous defence platforms. The Company's operational resilience and agility led to a 7% growth from the previous year, despite disruptions in the supply chain. The Profit Before Tax for the year increased by 6% to Rs.10,820 Crore from Rs.10,199 Crore in the previous year. The Profit after Tax (PAT) increased by 10% to Rs.8,317 Crore from Rs.7,595 Crore in the previous year. As of March 2025, the order book position of the Company stood at a healthy Rs.1,89,302 Crore. The Company has received many new orders aggregating to Rs.1,25,280 Crore.

The Company paid an interim dividend of Rs.25/- per equity share of face value of '5/- each for the FY 2024-25, totaling to Rs.1,672 Crore. Further, the Board of Directors of the Company has recommended a final dividend of Rs.15/- per share of Rs.5/- each for approval of shareholders, with a cash outflow of Rs.1,003 Crore. On approval of shareholders, the total cash outflow for payment of dividend for the FY 2024-25 would be Rs.2,675 Crore.

The Company made significant strides during FY 25:

• The Hindustan Turbo Trainer (HTT-40) aircraft received a Certification from the Centre for Military Airworthiness and Certification (CEMILAC) during Aero India-2025, marking a resounding success for HAL's design capabilities.

• The Company's flagship product, Advanced Light Helicopter Dhruv's upgraded civil variant, received the Directorate of Civil Aviation (DGCA) certification. With this, the Company hopes to address the growing demand in the civil aviation space, an emerging opportunity in India.

• The Company supplied structural assemblies to ISRO for its GSLV-F15 NVS-02 Mission. This Mission successfully placed the NVS- 02 satellite into a Geosynchronous Transfer Orbit, for providing accurate Position, Velocity and Timing service to users in India.

• Indigenously developed Software Defined Radio (SDR), has been flight tested on ALH Dhruv.

• The first Gas Generator (GG-01) module for CE-20, Cryogenic engine was also delivered from the Integrated Cryogenic Manufacturing Facility (ICMF).

• Mistral-2 Missile Firing trial was successfully conducted on the Light Combat Helicopter (Prachand) at the Integrated Test Range, Chandipur, Odisha.

• The first AL-31FP engine under the 240-engine contract was also handed over to the Indian Air Force ahead of schedule.

• The first Jaguar DARIN III Fixed Base Full Motion Simulator (FBFMS) has been commissioned.

Additionally, we have taken several initiatives to ensure growth:

• The Company signed a Manufacturing License Agreement (MLA) with GE for the production of Engines for LCA Mk 2 under Transfer of Technology (ToT) in India.

• The Company also signed a longterm contract with Safran Aircraft Engines (SAE), for the export of ring forgings for LEAP engines.

The Company incurred Capital Expenditure (CAPEX) of Rs.2,026 Crore during FY 2024-25 (PY Rs.2,168 Crore). The investments were mainly towards the Green Field Helicopter project at Tumakuru, augmentation of facilities of LCA, ROH of SU-30, ROH of AL-31FP Engine etc. besides the regular replacement and rationalisation of the existing facilities.

In line with its strategic goals, the Company has a robust CAPEX plan for the next five years, with an estimated outlay of Rs.14,000 to Rs.15,000 Crore. This investment will focus on expanding manufacturing capacities and setting up Repair and Overhaul (ROH) facilities for various platforms including development of manufacturing infrastructure for the LCA Mk2, GE-414 engines and Indian Multi Role Helicopter (IMRH) engines, along with facilities to support Design and Development (D&D) activities for the IMRH, Advanced Medium Combat Aircraft (AMCA) and other related projects.

The Company has incurred Rs.2,482 Crore on R&D during FY 2024-25, which is 8.25 % of the turnover. The Company also transferred a sum of Rs.922 Crore to R&D reserve for contribution to R&D corpus.

The future of the Indian aerospace industry is promising. The integration of advanced technologies such as Unmanned Aerial Vehicles (UAVs), Artificial Intelligence (AI), Predictive Maintenance, Cybersecurity, Additive manufacturing and the Internet of Military Things (IoMT) is set to revolutionise the industry, enhancing operational capabilities and safety.

Your Company has taken 86 projects towards the implementation of Industry 4.0 and Quality 4.0 initiatives aimed at digitalisation of manufacturing technologies and the integration of physical and digital domains across various areas. The Company has driven IT transformation by implementing an information accessibility framework to accelerate the decision-making process. The Company is leveraging Artificial Intelligence (AI) in selected aspects of defence systems development to reduce pilot workload, enhance situation awareness, safety and fleet availability for fixed-wing and rotary-wing platforms.

HAL is driving self-reliance through the indigenous development of mission-critical systems. This includes advanced avionics like Smart Multi-Function Displays (SMFD), Software Defined Radio (SDR), Automatic Flight Control Systems (AFCS) and Mission Computers, along with engine development programmes such as the Hindustan Turbo Fan Engine-25 for trainers, Hindustan Turbo Shaft Engine-1200 for helicopters and small gas turbines for Unmanned Aerial Vehicles. The Combat Air Teaming System (CATS), featuring manned-unmanned teaming platforms like the CATS Warrior (loyal wingman), represents HAL's foray into next-generation aerial warfare.

Indigenous projects like Light Combat Aircraft Mk1A, ALH, Light Combat Helicopter Prachand, Light Utility Helicopter and HTT-40 will continue to be the main revenue source of the company. The futuristic projects like LCA Mk 2, AMCA, IMRH, Twin Engine Deck Based Fighter (TEDBF) etc. will ensure technological lead of the company in the years to come and keep our production lines busy during the next decade.

We will continue to support Start-up Companies, SMEs/ MSMEs, Tier-II and Tier-III vendors to achieve self-reliance "Aatmanirbharta" in aerospace and defence. During the FY 2024-25, HAL has placed Purchase Order for Rs.2,593 Crore on 2,436 MSME Vendors, an increase of 21.50% over the previous year.

We are strengthening our footprint in exports by supplying aircraft like H-228 to Guyana, Do-228 to Seychelles and Mauritius, helicopters to Nepal, Maldives, Mauritius, Suriname and Namibia. The Company has exported Ring Forgings of super alloys to UK and USA, Su-30 avionics to Malaysia.

The Company is committed to its social responsibility and has implemented various CSR projects to integrate the social and business goals sustainably in line with Schedule VII of the Companies Act, 2013. During the year, the Company has spent Rs.167 Crore against the CSR budget of Rs.144 Crore in the thematic areas of education, health care, sports, skill development, rural development, livelihood enhancement etc. About 10% of the total expenditure was spent in Aspirational Districts benefiting rural and tribal communities. The Company has sanctioned a major project viz. construction of a High-Performance Sports Science Centre at the Sports Authority of India, Bengaluru, which will go a long way in enabling India to increase its medal tally significantly in the Olympics and other international events. Other projects include Project Vidushi which aims at improving the infrastructure of Kasturba Gandhi Balika Vidyalayas that are located near HAL Divisions, providing state-of-the-art high value medical equipment to Government Hospitals, construction of Government School Buildings and upgradation of infrastructure of Government ITI's etc.

HAL is actively shaping its role in Environmental, Social and Governance (ESG) initiatives focusing on integrating sustainability into its core business. During the year, 1.5MW of renewable energy was commissioned by the Company and the cumulative capacity installed is 35.35 MW. The Company has also installed 14.70 MW capacity wind power plants in Karnataka. The Company met 37% of its electricity requirement from renewable energy sources.

Our HR commitment to developing technologically advanced and globally competitive talent remains at the core of our strategy. With a robust workforce where over 50% possess a decade of aerospace expertise, we continue to prioritise our people as our greatest asset. Through decisive actions in 2024-25 we continued to build a high-performing, growth-oriented workforce. Through structured and targeted training and development programmes, the existing leadership pipeline was strengthened across levels.

Our Leadership Development Programme (LDP) in partnership with IIM-Ahmedabad and Aerospace Valley -France, with six batches successfully completed so far, aims at providing leadership pipeline for the future. Our Skill Development initiatives included partnerships with CMTI for Advanced Manufacturing Technology and Industry 4.0/5.0 programmes, thereby creating a future-ready workforce.

Recognition and development remained paramount through structured reward schemes, celebrating exemplary performance and by establishing sabbatical programs enabling self development. Our inclusive approach was reinforced by granting special leave provisions for employees under Persons with Benchmark Disabilities (PWBD) category while our industry leadership was demonstrated through hand-holding support extended to other new DPSUs through workshops. Employee welfare continued to be strengthened with enhanced pension contributions from 7% to 10% for workmen and the introduction of a National Pension Scheme providing greater financial flexibility. These targeted measures have strengthened employee engagement and retention.

Your Company always strives to conduct the business with integrity, in an ethical and transparent manner to attain the highest standard of Corporate Governance practice in the letter & spirit by framing & implementing various policies & procedures mandated under the Companies Act and SEBI (LODR) Regulations, DPE Guidelines, Public Procurement Policy, CVC Guidelines, MoD directives issued from time to time. The Company has established systems and procedures to ensure that its Board of Directors is well informed about the policies of the company, to enable them to discharge their responsibilities and to enhance the overall value of all stakeholders. Your company has been continuously rated 'Excellent' grade for the past 23 years with respect to MoU signed with Department of Public Enterprises.

I take this opportunity to extend my sincere gratitude to the Department of Defence Production, Defence Acquisition Council, Defence Finance, Department of Civil Aviation and our valuable customers viz., the Indian Air Force, Indian Army, Indian Navy, Indian Coast Guard, Border Security Force, ISRO, other Global Aviation Companies and private industry.

I thank DGAQA, CEMILAC, Principal Controller of Defence Accounts, Principal Director of Commercial Audit, C&AG, Auditors, Bankers, Legal Advisors, Collaborators, Suppliers, Shareholders and other Agencies and acknowledge their contributions to the Company's achievements.

I am grateful, once again, to the members of the Board for their valuable guidance and acknowledge the immense contribution and dedication of the employees at all levels.