Hindustan Aeronautics Ltd

Dear Members,

Your Board of Directors takes great pleasure in presenting the Report on the performance of the Company ("the Company" or "HAL"), and its Audited Financial Statements for the Financial Year ended March 31, 2025, together with Reports of the Statutory Auditors and the Comptroller & Auditor General of India (C&AG) thereon.

The financial highlights for the year ended March 31, 2025 are summarised as under:

During the year, the Revenue from Operations of the Company has increased by 2% to Rs.30,98,092 Lakh from Rs.30,38,084 Lakh in the previous year. The turnover of the Company has increased by 7% to Rs.30,10,465 Lakh from Rs.28,16,185 Lakh in the previous year. The Profit before Tax for the year has increased by 6% to Rs.10,82,001 Lakh from Rs.10,19,897 Lakh in the previous year. The Profit After Tax (PAT) has increased by 10% to Rs.8,31,680 Lakh from Rs.7,59,504 Lakh in the previous year.

During the year, the Company has produced new Aircraft and Helicopters, covering Light Combat Aircraft (LCA) Tejas Mk1A, LCA Tejas Trainer, Dornier Do-228, Advanced Light Helicopter (ALH) Dhruv and Light Utility Helicopter (LUH) in addition to the production of New Engines and Accessories, at its various Divisions. The Company has also carried out Repair and Overhaul of Aircraft & Helicopters and Engines in addition to providing required spares support to the customers.

The Order Book position of the Company stands at Rs.1,89,30,200 Lakh as on March 31, 2025.

During the year, the Company has received manufacturing contracts of over Rs.1,02,00,000 Lakh and ROH Contracts of over Rs.17,50,000 Lakh. Major Orders bagged include Contracts for supply of LCH to Indian Army (IA) and Indian Air Force (IAF), Su 30 MKI to IAF, Mid Life Upgrade of Dornier- 228 to IAF, AL- 31FP engine to IAF.

During the year, your Company has declared and paid interim dividend of Rs.25 per share of Rs.5 each (500%) for the financial year 2024-25, amounting to Rs.1,67,193.75 Lakh.

To comply with the Guidelines of Department of Investment and Public Asset Management (DIPAM) on Capital restructuring with respect to payment of minimum dividend, the Board of Directors of the Company has recommended a final dividend of Rs.15/- per share of Rs.5 each. The Final Dividend if approved by the shareholders, would involve cash outflow of Rs.1,00,316.25 Lakh.

Thus, the total dividend including final dividend for the financial year 2024-25 would be '40/- per equity share (800%), amounting to Rs.2,67,510 Lakh.

In terms of the provisions of Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 [SEBI (LODR) Regulations] and the Guidelines of DIPAM, the Company has formulated a Dividend Distribution Policy and the same is available on the Company's website at https://hal-india.co.in/backend/wp-content/uploads/2023/07/ Dividend-Distribution-Policy 13.02.2025.pdf

In order to maintain the state of the art infrastructure and technologies to meet Aerospace Standard and also to develop systems/platforms for meeting the requirements of the Defence Forces and to become Atmanirbhar, the Company has incurred Capital Expenditure (CAPEX) of Rs.2,02,584 Lakh in FY 202425 (PY Rs.2,16,786 Lakh). The investments are mainly towards 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.

During the year, Rs.92,176 Lakh was transferred to Research & Development Reserve, Rs.18,435 Lakh to Indigenisation Fund Reserve and Rs.4,69,032 Lakh to General Reserve.

As on March 31, 2025, short term and long term borrowings of the Company was Nil.

Your Company has in place adequate internal financial controls with reference to financial reporting.

A detailed note on internal control system and their adequacy is provided in the Management Discussion and Analysis Report.

Details of Loans, Guarantees and Investments as covered under the provisions of Section 186 of the Companies Act, 2013 (''the Act") form part of Notes to the Financial Statements.

During the year, your Company has entered into transactions with related parties after obtaining approval of the Audit Committee and/ or Board, as the case may be.

Since, Audit Committee was not in valid constitution w.e.f. December 28, 2024, all proposals requiring recommendation/ approval of the Audit Committee were put up directly to the Board.

As per the threshold mentioned in the Related Party Transactions (RPTs) Policy, there were no material related party transactions with any of the related parties.

The disclosures related to RPTs in accordance with the applicable accounting standards are provided in Clause No. 45A of the Notes to the financial statements. Details of contract(s) or arrangement(s) with related parties referred to in Section 188(1) of the Companies Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014, in the prescribed form AOC-2, is attached to this Report as Annexure-I.

The Consolidated Financial Statements of the Company for the year ended March 31, 2025 have been prepared in accordance with the provisions of Section 129(3) of the Companies Act and applicable Accounting Standards, and form part of this Report.

Pursuant to the first proviso of Section 129(3) of the Companies Act read with Rule 5 of the Companies (Accounts) Rules, 2014, a separate statement containing salient features of the Financial Statements of Subsidiaries/Associate/Joint Venture Companies in Form AOC-1 is appended to this Report, which forms part of the Financial Statements. The separate Audited Financial Statements in respect of the Subsidiaries are also available on the website of the Company at www.hal-india. co.in

As on March 31, 2025, your Company has 2 Subsidiaries including 1 Wholly Owned Subsidiary and 19 Joint Venture Companies (JVCs) including 7 Not-for-Profit Companies (Section 8 Companies).

During the year, following JVCs (Section 8 Companies) have been formed:

1. Electronic Warfare (Defence) Testing Foundation has been incorporated on May 21, 2024 with equity contribution of 20% (23,480 equity shares of Rs.1,000 each) for setting up of Defence Testing Infrastructure under Electronic Warfare domain with government financial assistance in the state of Tamil Nadu;

2. Communication (Defence) Testing Foundation has been incorporated on May 31, 2024 with equity contribution of 25% (26,131 equity shares of Rs.1,000 each) for setting up of Defence Testing Infrastructure under communication domain with government financial assistance in the state of Uttar Pradesh;

3. Advanced Materials (Defence) Testing Foundation has been incorporated on June 4, 2024 with equity contribution of 20% (27,320 equity shares of Rs.1,000 each) for setting up of Defence Testing Infrastructure for Mechanical and Material Testing with government financial assistance in the state of Uttar Pradesh;

4. UAS Testing Foundation has been incorporated on June 21, 2024 with equity contribution of 33.33% (50,000 equity shares of Rs.1,000 each) for setting up of Defence Testing Infrastructure for Unmanned Aerial System (UAS) with government financial assistance in the state of Uttar Pradesh; and

5. System Testing and Research for Advanced Materials Foundation has been incorporated on September 18, 2024 with equity contribution of 20% (20,000 equity shares of Rs.100 each) for setting up of Defence Testing Infrastructure for Mechanical & Material Testing with government financial assistance in the state of Tamil Nadu.

Due to non-performance of Infotech HAL Ltd, a JVC, an application for its voluntary winding up had been submitted to NCLT on March 19, 2024. Winding-up Order from NCLT is awaited.

Pursuant to the provisions of Section 134(3)(q) of the Companies Act read with Rule 8(1) of the Companies (Accounts) Rules, 2014, a Report on the performance and financial position of each of the JVCs and Subsidiary Companies is attached to this Report as Annexure-II.

Significant achievements of the Company during the year are as follows:

• 1^st Defence PSU to achieve the prestigious "Maharatna" status on October 12, 2024.

• First AL-31FP Engine under 240 engines contract was handed over to Indian Air Force on September 30, 2024, ahead of schedule.

• Received Directorate General of Civil Aviation (DGCA) Certification for Upgraded Dhruv Civil ALH on November 20, 2024.

• Delivered first Gas Generator (GG-01) module for CE-20, Cryogenic Engine from Integrated Cryogenic Manufacturing Facility (ICMF).

• Mistral-2 Missile Firing Trial conducted successfully on LCH Prachand, at the Integrated Test Range, Chandipur, Odisha, on December 2, 2024.

• Supplying of 12 types of riveted structures, four types of welded propellant tankages, and two types of feedlines, four fully integrated L-40 liquid boosters, to ISRO for its GSLV-F15 NVS-02 Mission.

• Received Certification from Centre for Military Airworthiness and Certification (CEMILAC) for HTT-40 Trainer Aircraft in presence of Hon'ble Raksha Rajya Mantri, during Aero India-2025.

During the year, the Company has produced the Light Combat Aircraft (LCA) Tejas Mk1A & Mk1 Aircraft, Do-228 Aircraft, Advanced Light Helicopter (ALH) Dhruv, Light Utility Helicopter (LUH), engines, accessories and aerospace structures against various customer orders.

To ensure timely delivery to customers, production capacity is being ramped up in a phased manner for the major Projects namely, manufacturing of LCA at Bangalore and Nasik plants, manufacturing of LCH at Tumakuru plant, manufacturing & ROH of AL-31FP engines and manufacturing of ALH at Bangalore.

To meet the future requirements of Indian defence forces and non-military aerospace market in India, the Company continued to boost the "Atmanirbhar Bharat Abhiyan" of Govt. of India with its focused efforts towards design & development of products and acquiring technologies & capabilities.

The Company has made considerable progress towards the realization of indigenous programmes viz. Basic Trainer Aircraft (HTT-40), Light Combat Aircraft (LCA) MK1A, Light Utility Helicopter (LUH), Indian Multi-Role Helicopter (IMRH) and development of engines. The progress achieved in respect of these Projects during the year is as under:

HTT-40 is the Basic Trainer aircraft indigenously designed and developed by HAL. HTT-40 would be used for basic flight training, aerobatics, instrument flying and close-formation flights whereas its secondary roles would include navigation and night flying. Two flying prototypes and one Structural Test Specimen (STS) have been built.

The Company has received the Certification from CEMILAC in February, 2025. Two production lines have been established at Aircraft Division, Bangalore and Aircraft Manufacturing Division, Nasik, delivery planned to commence from FY 202526 onwards.

LCA Mk1A is an advanced variant of indigenously developed LCA Mk1 equipped with Active Electronically Scanned Array (AESA) Radar, unified Electronic Warfare (EW) suite, Mission Computer (MC), Digital Map Generator (DMG), Smart Multi-function Display (SMFD), Software Defined Radio (SDR), Combined Interrogator and Transponder (CIT), Advanced Radio Altimeter and capable to fire ASTRA and ASRAAM missiles.

The design and development activities for LCA Mk1A systems were undertaken and design validation trials on LCA Mk1A are in the advanced stages for achieving Type Certification. Concurrently, series production activities are also being progressed to facilitate delivery of aircraft from FY 2025-26 onwards.

LUH is a new generation helicopter in the 3-Ton class incorporating the state-of-the-art technology features like Glass Cockpit with Multi-Function Displays (MFD) and powered by single Turbo Shaft engine with sufficient power margin to cater to demanding high altitude missions. Three flying prototypes have been built and were extensively flight tested.

The Company has undertaken design and development of IMRH, a Medium Lift Helicopter of 13-ton class primarily for high altitude troop and cargo transport. The sea variant of IMRH is named as Deck Based Multi Role Helicopter (DBMRH).

IMRH and DBMRH are being designed to meet the requirement of all the three military services. Its future extension roles like, off shore operations, utility, VVIP transport will help the Company to diversify into Civil market.

The preliminary design studies of IMRH has been completed. The Company is progressing with the D&D activities as a Lead agency by adapting the following strategy for development:

• Design, development and production of Airframe, Mechanical Systems, Electrical & Avionics, Automatic Flight Control System, Mission System and Weapons Integration through Indian Private Sector.

• Design, development and supply of Rotor & Transmission system for IMRH & DBMRH through global OEMs.

• Design, development and production of Engines for IMRH/DBMRH through a Joint venture Company "SAFHAL Helicopter Engines Pvt Ltd".

To enhance the operational capabilities of IAF, as Lead System Integrator, the Company has undertaken design and development for indigenous upgrade of Su-30MKI.

The Aircraft upgrade involves revamp of avionic architecture with integration of Indigenous systems like Mission Computer, Improved Sensors viz. AESA Radar, Electro Optic/Infra-Red (EO/ IR), Improved EW suite, Indigenous weapon control systems and weapons, Higher Size displays, Sensor fusion, Net Centric warfare capability and other associated indigenous avionic systems.

To enable stowage in Indian Navy ships, Utility Helicopter - Maritime (UH-M), a 5.7 tonne dedicated Helicopter is being developed for deck-based operations with all four Main Rotor Blades foldable, for reducing its size.

Design and Development activities are progressing with internal funding. Preliminary Design Review (PDR) has been completed and further design review of major systems like Traversing system and other LRUs is progressing. Flight tests on UH-M Prototypes are planned in FY 2025-26.

The Company has undertaken Design and development of a 25kN thrust class turbofan engine, which can be used on Basic/ Advanced military trainers, on small business jets and also large UAV applications. The engine can be used on a 5-ton weight class aircraft in single engine configuration and on aircraft of up to nine- ton weight class with twin-engine configuration. Two core engines and one full engine have been built and tested. Core engine tested for light up, acceleration and speeds up to 99.5%. Further trials are under progress.

Design and development of a 1200 kW Turbo shaft engine is being undertaken for 3 to 6-ton category helicopters. Two prototype engines (Jet mode engine & Power mode engine) have been built. Components like radial straightener, diffuser, and rear bearing support have been 3-D printed and evaluated in the Jet mode version engine. Power mode engine run up to a power level of 600 kW. Further trials are under progress.

During the year, the Company has incurred a total R&D expenditure of '2,48,233 Lakh, which is 8.25 % of the Turnover. The Company has transferred a sum of Rs.92,176 Lakh (15% of Operating PAT) to R&D reserve for contribution to R&D corpus.

The significant R&D achievements are as under:

• To enhance departure characteristics and spin resistance across the flight envelope, Hindustan Jet Trainer (HJT-36), HAL's flagship jet trainer aircraft, has been renamed as 'Yashas' following extensive modifications.

• First flight of indigenous Automatic Flight Control System (AFCS) for LUH, carried out on August 30, 2024 and further evaluation trials towards certification are progressing.

• Site Acceptance Test (SAT) of the first Jaguar DARIN III Fixed Base Full Motion Simulator (FBFMS) completed.

• HAL has been identified as the Centre of Excellence for Design, Development and Upgrade of flight simulators for both fixed wing and rotary wing platforms.

• HAL has received export orders from M/s Lockheed Martin, USA for design, development and Supply of SIL units of CIT for Indian Navy's MH60R program.

• HAL is developing AESA radar for UH-M platform in design consultancy with LRDE, DRDO.

• HAL developed Full Authority Digital Engine Control (FADEC) has been cleared for flight test.

• HAL has completed development of Software Defined Radio (SDR), latest development in aviation communication.

• Combat Air Teaming Systems (CATS) was displayed in Aero India 2025.

• HAL obtained ITSO certification from DGCA for VHF Radio used for Voice communication in ATC frequency band.

• Flight trials of indigenously designed & developed Nose Landing Gear Actuator completed successfully on Do-228, on January 10, 2025.

• First run of improved PTAE-7 engines in TWIN engine configuration for CATS-W application completed on November 21, 2024.

• Design & Development of Mission Management System for DO-228 aircraft completed.

• Release trials of RudraM-III weapon from modified Su-30MKI aircraft successfully carried out.

During the year, the Company has filed 208 IPR applications, out of which, 94 IPRs have been granted.

Further, out of total number of 2620 IPRs filed by the Company, 1127 IPRs have been granted so far (Patents - 371, Industrial Designs - 171, Copyrights - 583, Trademark - 2).

During the year, the Company has entered into following major strategic partnerships and collaborations:

• Manufacturing of GE-414 aero-engines for LCA Mk2 Aircraft in India through ToT with General Electric (GE), USA.

• Airframer contract with SAFHAL Helicopters Engines Pvt. Ltd. (a JVC with Safran Helicopter Engines, France) for design, development, manufacture and support of Engines for IMRH and DBMRH.

• Contract with Safran Aircraft Engines (SAE), for export of ring forgings for LEAP engines.

• Establishing up to 6 yearly C Checks facility for A-320 family of aircraft at Nasik in collaboration with M/s Airbus, France. It is intended to establish an integrated MRO hub in India for providing one stop MRO solutions to commercial airlines.

During the year, the Company has taken many R&D initiatives for providing customised and superior technology solutions through indigenous Design & Development for both Fixed and Rotary Wing platforms. Some development initiatives are as under:

• Level D Full Flight Simulator (FFS) for Civil Hindustan-228 aircraft for Pilots training.

• Directional Infra-Red Counter-Measure (DIRCM) for LCH.

• Smart Multi-Function Display (SMFD), Software for Mission Computer (MC), Head Up Display & Up-Front Control Panel and Control Display Unit for Su-30 MKI indigenous upgrade.

• Environment Control & Fuel Monitoring system- Electronic Unit (ECFM-EU), Radio Altimeter (RAM), VHF OmniRange/Instrument Landing System (VOR/ILS), Tactical Air Navigation (TACAN) for LCA Mk2.

The Company is leveraging Artificial Intelligence (AI) in various aspects of defense systems development for reducing Pilot Workload, enhancing Situation Awareness, Safety & Fleet availability for Fixed Wing and Rotary Wing platforms.

The Company has also taken initiatives in Industry 4.0 & Quality 4.0 in selected areas.

During the year, 13 (Thirteen) Board Meetings were held and the maximum interval between any two meetings was not more than 120 days.

The details of meetings of the Board and Committees thereof held during the year are furnished in the Corporate Governance Report, which forms part of this Report.

As on March 31,2025, the Board has five Statutory Committees namely Audit Committee, Nomination & Remuneration Committee, Corporate Social Responsibility & Sustainable Development Committee, Stakeholders Relationship Committee and Risk Management Committee. However, due to non-appointment of requisite number of Independent Directors, Audit Committee and Nomination & Remuneration Committee were not in valid constitution.

A detailed note on the composition, terms of reference and meetings of the Board and its Committees is provided in the Corporate Governance Report.

During the year, following changes took place in the Board of Directors and Key Managerial Personnel (KMP) of the Company:

• Dr. D K Sunil, Director (Engineering and R&D) was appointed as Chairman and Managing Director (CMD) w.e.f. September 09, 2024.

• Shri Shalabh Tyagi, Joint Secretary (P&C), DDP, MoD was appointed as Government Nominee Director w.e.f. September 10, 2024.

• Dr. Rajalakshmi Menon, DS&DG, DRDO was appointed as Government Nominee Director w.e.f. September 13, 2024.

• Shri Barenya Senapati, Executive Director (Finance) was appointed as Director (Finance) w.e.f. October 22, 2024 and as CFO w.e.f. November 14, 2024.

• Shri Ravi K, Executive Director (Corporate Planning) was appointed as Director (Operations) w.e.f. November 26, 2024.

• Shri C B Ananthakrishnan ceased as Director (Finance) & CFO due to superannuation on August 31, 2024.

• Shri Jayadeva E P ceased as Director (Operations) due to superannuation on August 31, 2024.

• Shri T Natarajan ceased as Government Nominee Director due to withdrawal of Nomination w.e.f. September 10, 2024.

• Shri M Z Siddique ceased as Government Nominee Director due to withdrawal of Nomination w.e.f. September 13, 2024.

• Dr. Divya Gupta ceased as Independent Director on completion of her tenure w.e.f. December 27, 2024.

• Shri Atasi Baran Pradhan ceased as Director (HR) due to superannuation on February 28, 2025.

Declarations from Independent Directors of the Company have been received, confirming that the Independent Director met the criteria of independence as prescribed under Section 149(6) of the Companies Act and Regulation 25(8) of the SEBI (LODR) Regulations.

The appointment, tenure and remuneration of Functional Directors including Chairman and Managing Director (CMD) are determined by the Government of India. The Terms & Conditions of appointment, including the period of appointment, the Scale of Pay and other entitlements are notified by the Government of India.

Government Nominee Directors are appointed by the Department of Defence Production, Ministry of Defence and they are not entitled to any remuneration/sitting fees.

Independent Directors are appointed by the Government of India and they are entitled to sitting fees for attending the Board/Committee meetings as prescribed by the Board in line with the Companies Act and Rules made thereunder.

As per Gazette Notification No GSR 463 (E) dated June 5, 2015 of the Ministry of Corporate Affairs (MCA), the Company, being a Government Company, is not required to frame a Policy on Directors' appointment and remuneration, including criteria for determining qualifications etc. under Section 134(3) (e) of the Companies Act.

Pursuant to the Gazette Notification No GSR 463 (E) dated June 5, 2015 of the MCA, formal annual evaluation by the Board of its own performance, its Committees and individual directors, are exempted for the Company.

However, the performance of the Functional Directors is evaluated by the Independent Directors in their meeting. The performance evaluation of Independent Directors is carried out by the Board without the presence of Independent Directors.

In accordance with the provisions of the Companies Act, Annual Return in the prescribed format has been hosted on website of the Company at https://hal-india.co.in/backend/wp- content/uploads/2025/07/Draft-MGT-7.pdf

The Company complies with all applicable mandatory Secretarial Standards issued by the Institute of Company Secretaries of India.

Your Company being a defence Central Public Sector Enterprise (CPSE), the disclosure of information with respect to conservation of energy, technology absorption, foreign exchange earnings and outgo under the provisions of Section 134(3)(m) read with Rule 8(3) of the Companies (Accounts) Rules, 2014, is exempted vide Notification GSR No.680 (E) dated September 4, 2015.

Pursuant to the provisions of Section 135 of the Companies Act, Companies (Corporate Social Responsibility Policy) Rules, 2014 & Amendment thereof and DPE Guidelines, the Company has undertaken various activities during the year as per its CSR Policy. The projects/programmes/activities taken up are in line with Schedule VII of the Companies Act. The thrust areas under CSR are Health care, Education, Skill Development, Rural Development, Women Empowerment, Promotion of Sports, etc. The other areas in which support extended were contribution of vehicles and Assistive Devices to Divyangjans, Organizing camps for early detection of Cancer among Women, addressing Malnutrition and Stunting amongst Children, provisioning of portable hand held X-Ray Machines for screening of patients under National TB Elimination Programme (NTEP), Setting up of Green Gyms, Sanitation etc. The Company has spent an amount of Rs.16,711 Lakh under CSR for the Financial Year 2024-25 against the CSR budget/ obligation of Rs.14,411 Lakh.

The Corporate Social Responsibility Policy, Composition of the Committee and CSR Projects/ Activities of the Company is available on the Company's website at https://hal-india.co.in/ investors/corporate-social-responsibility-2. Salient features of the Policy form part of the Annual Report.

Annual Report on CSR activities undertaken by the Company during the year, pursuant to Section 135 of the Companies Act read with Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended, is attached to this Report as Annexure-III.

In terms of Regulation 34(2)(f) of SEBI (LODR) Regulations, the Company has prepared Business Responsibility and Sustainability Report (BRSR) on Environment, Social and Governance (ESG) parameters in the prescribed format for the year 2024-25 and attached to this Report, along with reasonable assessment or assurance Report of BRSR Core, received from Independent Assessment or Assurance Provider.

The Company has a Board approved Risk Management Policy, in place. The Policy aims at elimination or reduction of risk exposures through identification and analysis of various types of risks and facilitating timely action for taking risk mitigation measures.

In line with Regulation 21 of the SEBI (LODR), Regulations, the Board of Directors had constituted the Risk Management Committee for monitoring and reviewing of the risk management plan and such other functions as it may deem fit, including Financial, Operational, ESG, Cyber Security and Business Continuity Plan, etc.

During the year, no significant and material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and operation of the Company in future.

Your Company has not accepted any deposit during the year. Further, there was no outstanding deposit and/or unpaid or unclaimed principal amount or interest against any deposit either at the beginning or at the end of the year 2024-25.

During the year, the Company has not issued any equity shares with differential rights as to dividend, voting or otherwise.

No material change/commitment of the Company has occurred after the end of the year 2024-25 and till the date of this report, which affect the financial position of the Company.

Pursuant to Gazette Notification No. G.S.R. 463 (E) dated June 5, 2015 issued by the MCA, disclosure of particulars of employees drawing remuneration in excess of the limits specified under provisions of Section 197 of the Companies Act and the relevant Rules thereof, are exempted for the Company.

Your Company has signed Memorandum of Understanding (MoU) with the Ministry of Defence (MoD), Government of India (GoI) for the year 2024-25, the performance rating of which is awaited.

However, your Company has achieved "Excellent" performance rating with a score of 92.50 for the year 2023-24.

Concerted efforts are undertaken by the Company to enhance self-reliance, boost innovation, improve national security and economic growth. Towards this, some of the key initiatives taken by the Company are as under:

• Complex Aircraft systems, LRUs & other critical items are identified for indigenisation under Positive Indigenisation Lists (PILs).

• Creation of a dedicated indigenisation fund by transfer of 3% Operating Profit after Tax of the Company, to offer further impetus towards indigenisation.

• A total of 3,215 items (including 51 PILs items) have been indigenised, resulting into anticipated annual Foreign Exchange saving of around Rs.25,800 Lakh.

• NIL value PSO (Project Sanction Orders) for 60 items are released to Indian Industry Partners there by taking this number to a total of around 660 items for indigenisation under Make-II.

• During the year, approx. 2,000 items are uploaded on Srijan Portal (an Indigenisation portal) for inviting Indian Industry Partners to participate in the indigenisation programs of the Company. This number stand at around 27,000 in total.

• Taking forward the vision of Atmanirbharta and to sensitize Indian Industry Partners for opportunities available for indigenisation and their enhanced participation in the Company's indigenisation programs, 34 various vendor development programs/ seminars/ webinars/ conclaves/ exhibitions covering wide spectrum of vendors across the Country were conducted/ participated by the Company.

During the year, the Company has achieved approx. 29% higher exports in comparison to previous Financial Year. To boost export, following initiatives have been taken by the Company:

• The Company participated in leading international Air & Defence Shows including Defence Services Asia (DSA)- 2024 (Malaysia), Farnborough International Air Show (FIA)-2024 (UK), Egypt International Air Show (EIAS)- 2024, Selangor Aviation Show (SAS)-2024 (Malaysia), Africa Aerospace & Defence (AAD)-2024 (South Africa), Asian Defense and Security (ADAS)-2024 (Philippines), Vietnam International Defence Expo (VIDEX)-2024. Flying & Static display of Do-228 and ALH were undertaken during Selangor Aviation Show (SAS)-2024 (Malaysia) and Egypt International Air Show (EIAS)-2024 respectively.

• Customer Demonstration Flights (CDFs) on HAL's platforms and visits to HAL facilities were extended to the prospective overseas customers during Aero India 2025.

• Imparting trainings to Guyana Defence Forces requisite for operating HAL supplied Hindustan-228 aircrafts.

• Successfully completed major overhaul of one ALH helicopter of Mauritius Police Force.

• HAL's exportable products have been enlisted on the Aero Expo portal—a virtual international exhibition platform of aviation sector.

During the year, the Company has taken several vendor development initiatives to increase the number of vendors.

The Company has conducted 46 Vendor Development Programmes, of which 08 were for Micro & Small Enterprises (MSEs) owned by SC/ST Entrepreneurs & Women Entrepreneurs, 03 was meant exclusively for MSEs owned by SC/ST Entrepreneurs, 04 was meant exclusively for MSEs owned by Women Entrepreneurs while the balance 31 were for across all categories.

The Company has registered with RXIL, Mynd Solution and also A TReDS Ltd. for enabling payments through TReDS platform to MSMEs. A total of 83 Invoices worth of Rs.5,400 Lakh were uploaded and discounted on TReDS platforms.

The Company has registered with MSME SAMBANDH portal and the procurement details are being updated monthly in this Portal. The Company has also registered with MSME SAMADHAAN and CHAMPION portal and the same is being monitored regularly for resolution of payment or procedural complaints of MSEs, if any.

The Company has implemented companywide e-Procurement system through its own e-Procurement portal which is adopted for tenders issued outside GeM portal. A 24X7 e-Procurement help desk has been established to provide information, support, training, operational issues/clarifications to the vendors.

To encourage 'Make in India' and promote manufacturing and production of goods & services in India, the Company has implemented the Public Procurement (Preference to Make in India), Order 2017, and its amendments thereof, issued by Department for Promotion of Industry and Internal Trade (DPIIT).

The Company has implemented companywide procurement through GeM portal. All efforts are continuously being made to persuade the potential domestic suppliers (covering area of Goods, Services and Outsourcing) to on-board them on the GeM Portal.

During the year, more than 14,278 orders were placed through GeM portal amounting to Rs.3,86,900 Lakh.

The Company has implemented the Public Procurement Policy for Micro and Small Enterprises (MSEs) Order, 2012 & its amendments issued by Ministry of MSME vide order No. 21(22)-2018-MA dated November 9, 2018. The Company has achieved 53% of procurement from MSEs in the year 2024-25, which is more than the mandated procurement of 25% from MSE entrepreneurs (excluding specific defence procurement as per Sl.No.14 of the policy).

During the year, the total value of procurement (including outsourcing) made from MSEs was Rs.2,59,300 Lakh.

The Company has made payment to all its MSE vendors within the specified time in compliance with Micro, Small and Medium Enterprises Development (MSMED) Act, 2006.

Your Company has system of signing of Integrity Pact (IP) with vendors for all procurement of Goods, Services & Works/contracts having value of Rs.5 Crore and above. Only those vendors/ bidders, who commit themselves to IP with the Company would be considered competent to participate in the bidding process. Further, to encourage competition in procurement and to reduce processing lead time, the Company has implemented the Omnibus Integrity Pact with effect from January 1, 2018. This Omnibus IP shall be valid upto 5 years and the same can be proposed by bidder for consideration against any offers submitted by the vendor during the validity period of Omnibus IP.

The strength of employees as on March 31, 2025 stood at 23,999.

As on March 31, 2025, a total of 4,019 Apprenticeship were engaged in the Company in various Trades, which forms 11.56% of the total manpower strength including contractual staff.

The Company continues to provide a wide range of welfare measures for employees and their families, including comprehensive Medical Facilities, Housing Facilities, Educational Facilities for employees' children and Sports Facilities, among others. Further, various initiatives are also being taken to support employee well-being and overall development. In line with this, the Company has introduced HAL Sabbatical Scheme for employees enabling them to take leave for self-renewal, skill development, or personal pursuits, offering flexibility to address social obligations, family support needs, or wellness journeys.

In furtherance of its employee-centric approach, the Company continues to provide financial security through the Group Life Insurance Policy of Rs.10 Lakh for all employees. Additionally, the Financial Assistance Scheme offers monthly monetary support ranging from Rs.15,000/- p.m. to Rs.50,000/- p.m., based on the Grade/Scale of the employee, to dependents of deceased employees, reaffirming the Company's dedication to comprehensive employee welfare beyond the workplace.

The Employee Relations/Industrial Relations Scenario remained peaceful & cordial during the year. Effective communication between the Management and the Trade Unions/Associations paved way for maintenance of industrial harmony and to eliminate any scope of conflicts & misunderstandings. Meetings with the representatives of the Recognized Unions/Officers Associations at the Divisional, Complex & Corporate Levels were held periodically to discuss various issues and its resolutions.

Plant Level, Shop Level and various bi-partite Committees with representatives from the Management/Union are functioning in the Divisions to discuss & resolve production related & other matters. In order to address Employee Grievance/Representations, Grievance Redressal Mechanisms are also in place in the Company. Employee Grievance Redressal Portal has been launched during the year for employees to submit their Grievances online.

Women Empowerment & Leadership Programs are being conducted by the Company. The main objective of the programs is to enhance self-awareness & self-management, enhance competencies to drive business results, enhance ability to influence & harness the power of effective networking and to build essential leadership competencies. At present, around 82 Women Employees hold Senior Management posts i.e., above Grade VII.

HAL is a Corporate Life Member of Women in Public Sector (WIPS) Forum. Women employees are encouraged to participate in programmes/activities of WIPS Forum. The Company has been conferred with "Second Place for Best Enterprise Award", under Maharatna Category during the 35^th National Meet of WIPS Forum held on February 17-18, 2025 at Vigyan Bhawan, New Delhi.

Ladies Clubs/Families Welfare Associations are also functioning at different locations to take up various philanthropic/sociocultural activities. Women's Day is celebrated on 8^th March every year.

The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 has been notified in the Company. In line with the Guidelines received from time to time, necessary actions have been taken to prevent Sexual Harassment of Women at Workplace. The HAL CDA Rules applicable to Officers and the Certified Standing Orders applicable to Workmen have the required provisions in this regard.

Internal Complaints Committees as per Section 4 of the Act have been constituted. Information for the year 2024-25 in terms of Section 22 of the Act and Schedule V of SEBI (LODR) Regulation 2015, is as indicated below:

Awareness Programme on Sexual Harassment were also conducted at Divisions/Offices during the year.

The Company is constantly taking efforts to implement Official Language in all the Divisions/ Offices effectively as per directives issued by Dept. of Official Language, Ministry of Home Affairs and Dept. of Defence Production, Ministry of Defence. The inspection reports pertaining to Parliamentary Committee inspections and compliance reports related to the assurances given to the Committees are being forwarded to the concerned Authorities/ Offices in time after reviewing the report at the Corporate Office level.

The meetings of Official Language Implementation Committee in all the Divisions including Corporate Office are being conducted regularly. Guidelines issued by the Dept. of Official Language, Ministry of Home Affairs, New Delhi are being circulated to all the Divisions/ Offices, to make aware of latest orders pertaining to implementation of Official Language. The periodical reports are also being sent online as per directives issued by the Department of Official Language, Ministry of Home Affairs, New Delhi.

Hindi Incentive Scheme has been implemented effectively in the Company. Further, In-House Hindi Magazines are being published by the Divisions/ Offices to motivate the employees. In accordance with the Official Language guidelines, Hindi workshops and seminars are also being conducted on various topics from time to time by the Company, so that Employees could do their routine work in Hindi as far as possible.

The Inspection meetings were successfully done by Committee of Parliament on Official Language at various Divisions of the Company such as Kanpur Division, ACD, Aircraft Division and Liaison Office, New Delhi.

During the year, Company has organized two days National Seminar on Technical Terminology in Indian Languages in coordination with CSTT, New Delhi under the aegis of Town Official Language Implementation Committee, (Undertakings), Bangalore and two half-yearly meetings of Town Official Language Implementation Committee, (Undertakings), Bangalore has also been organized under the Chairmanship of HAL. Further, the Company has conducted 5 days Technical Translation Training Programme exclusively for the Official Language professional of the Company by Central Translation

Bureau, New Delhi. Akhil Bharatiya Kavi Sammelan was also organized to popularize Hindi in 'C' region.

During the year, your Company has taken many IT initiatives towards adopting the latest technology, increasing customer satisfaction, implementing paperless processes and improving Cyber security. Some of the major IT initiatives and achievements of the Company during the year are:

• Project Parivartan - upgrade of ERP system: Project Parivartan was conceptualised for upgradation of existing IFS to the higher version (IFS Apps 10) and deployment in a centralised new generation hardware with built-in redundancy and establishment of disaster recovery site at Bangalore. Initial phases of the project such as Business process as-is study, To-be process finalisation, Project Office & Hardware setup and Process demonstrations have been completed. Development of customisations, reports and dashboards are in progress.

• Integrated Communication System for LAN & internet: To take forward the digital transformation, an integrated system has been evolved where critical information will be made available to top executives in a secured manner on demand at faster pace.

• Infrastructure Modernisation: IT infrastructure in the Company have been modernised by replacing obsolete desktop machines and undertaking 3486 MS Office Licenses.

• Implementation of Maya OS & Chakravyuh server:

Maya OS is a hardened Linux OS developed by CIRA (Cyber Information Research Agency) with several advanced security implementations in place which reduces the probability of impact during any security breach. As per recommendation of CIRA, Maya OS has been deployed in 700 internet facing machines. For windows based machines, log collector has been installed in 1216 machines, which helps to monitor the security aspects centrally by CIRA.

• Implementation of e-Office: With a view to achieve paperless office and enabling document movement in digital form across organisation, e-Office system has been implemented.

During the year, your Company has received various Awards and Recognitions. Some of the important accolades conferred to the Company are as under:

• "Outstanding PSU of the year" awarded at All India Management Association (AIMA) Managing award ceremony on April 23, 2024 at New Delhi.

• First prize in the "33^rd National Award for Innovative Training & Skill Development Practices" from Indian Society for Training & Development (ISTD) on April 10, 2024 at New Delhi.

• First prize in the "Swacchta Pakhwada Award - 2023" organized by DDP, MoD during December, 2023, which was announced on June 18, 2024.

• Gold award at the "ET Government PSU Leadership & Excellence Awards 2024" in the category of 'Skill Development & Capacity Building' during the 5^th National PSU Summit held at New Delhi on June 21, 2024 for its outstanding initiatives towards Critical Skill Transfer (CST).

• "Rajbhasha Kirti Puraskar" First prize for the year 2023-24 among the Public Sector Undertakings category of Region 'C' for excellence in implementation of Official Language during the Hindi Day and 4^th All India Official Language Conference organized at New Delhi on September 14, 2024.

• Dun & Bradstreet award for being "India's Top Value Creator 2024 - Defence" during the Dun & Bradstreet- G7 CR Technologies 'India's Top 500 Value Creators' summit held on November 29, 2024 in Mumbai.

• Platinum award for "Operational Performance Excellence" as well as Bronze award for "Corporate Social Responsibility and Sustainability" at 14^th PSE Excellence award event held on December 12, 2024 in New Delhi.

• "IEI Industry Excellence Award 2024" (Platinum Award) under Engineering Manufacturing and Processing Category for demonstrating Outstanding Performance with High Order of Business Excellence. The award was presented by The Institution of Engineers (India) (IEI) in an event held at Kolkata on December 19, 2024.

• "Aerospace and Defence Awards 2025" under the category "Outstanding Contribution in Aerospace Industry" instituted by "SAP Media Worldwide Ltd" during the 10^th Aerospace & Defence Awards ceremony held on February 09, 2025 at Bengaluru.

• "Sunrise Sector Pioneer Award" at Global Investors Meet 2025 for leading Aerospace and Defence Innovation on February 13, 2025.

• Conferred with the certificate of appreciation for the successful indigenisation of VPX-135 Single Board Computer for Light Combat Aircraft in association with M/s Mistral Solution Pvt. Ltd, Bangalore during the indigenisation event "Samarthya" held during Aero India 2025, Bangalore in the presence of Hon'ble Raksha Mantri.

The Company has a well establishment and dedicated Vigilance Department headed by Chief Vigilance Officer (CVO). To uphold high ethical standards, transparency, accountability and responsibility in the workplace, the Company has implemented various initiatives. Towards this, vigilance officers are posted at various Divisions and Offices of the Company. Preventive vigilance has been the thrust area of the Vigilance Department during the current year.

Some of the key activities that have been carried out by Vigilance Department during the year are as under:

i. Preventive Vigilance: 191 complaints were handled, 341 regular scrutiny/surprise checks and 06 CTE type intensive examinations were carried out across the Company. Four system studies were also carried out on various topics and system improvement suggestions were made.

A total of 190 awareness sessions were conducted on various topics. Key note address by eminent speakers were organized to spread vigilance awareness among employees on various topics.

ii. Vigilance Publications: Two in-house vigilance e-magazines were published, as under:

• "Marg Darshan Vol.XXI" Issue No.1, an annual magazine was released during Vigilance Awareness Week (VAW) 2024 on the theme "Gender Dimension in Fighting Corruption".

• "Vishleshan IV-A compendium of Vigilance

Interventions" - a preventive vigilance initiative wherein an attempt is made to bring out the deviations noticed by vigilance department in certain areas and system improvement suggestions implemented to improve the area.

iii. System Improvement measures: Based on the recommendations of vigilance, several system improvements have been implemented by the management in the areas of HR, IMM, stores, works and finance etc. Some of major system improvement undertaken such as Sensitization of guidelines - provisions applicable to MSME; Online Employee grievance redressal system, Police Verification of Contractual Employees, Calculation of Liquidated Damages (LD) on account of delay in completion of works, Monitoring of Estate Management, Procurement on proprietary basis, R&D project and content management portal, Vigilance Guidelines for Recruitment Activities, Directive on use of Remote Access Software and Rate contract terms & conditions for procurement, supply of In-house pharmacy.

iv. Vigilance Awareness Week: Vigilance Awareness Week was conducted throughout the organization from October 28, 2024 to November 03, 2024 on the theme "Culture of Integrity for Nation's Prosperity". In order to spread wider awareness and to promote transparency, accountability & integrity amongst employees, other stakeholders and school children, various activities and events were conducted.

Further, three months' campaign was also carried out from August 16, 2024 to November 15, 2024 in the areas of:

• Capacity Building programs,

• Identification and Implementation of Systemic Improvement measures,

• Updation of Circulars /Guidelines /Manuals

• Disposal of Complaints

• Dynamic Digital Presence

26^th annual conference of vigilance officers of the Company was conducted during October, 2024, as a part of capacity building measures, which provides a platform for vigilance professionals for knowledge sharing, adoption of transparent policies etc. Also training programs are conducted for officers and staff in premier training institutions of the Country.

vi. Digital Initiatives: The R&D project & content management portal and Online Employee grievance redressal system in the Company was launched in December, 2024, as part of digital initiatives.

• During the year, DGCA has granted fresh approval to various divisions of the Company for the following:

a) CAR 21 - POA "Production Organisation Approval" granted to Engine Division, Bangalore.

b) CAR 145 - MOA "Maintenance Organisation Approval" granted to Helicopter-MRO Division, Bangalore and Avionics Division, Korwa.

• During the year, various divisions of the Company have been awarded fresh approvals by the authority of the National Aerospace and Defence Contractors Accreditation Program (NADCAP) Management Council for special processes, which are as under:

a) Hardening process & Tempering process at Accessories Division, Lucknow.

b) Sulphuric Acid Anodising at Avionics Division, Hyderabad.

c) Sulphuric Acid Anodizing & Magnesium Chromating at TAD-Kanpur.

d) Chemical processes at Aircraft Division, Bangalore.

• As per Govt. of India initiative of 100 days 100 projects for Quality 4.0 in 2024, 10 Quality 4.0 projects were successfully completed on-time by the Company.

• Institute of Printed Circuit (IPC) training has been conducted by Institute of Printed Circuit India for HAL employees working in Electrical & Electronics field and certified 161 employees of the Company during the year.

• 263 Operators have been approved by DGAQA across HAL divisions for self-verification of inspection stages to empower the Operators for intermediate inspection stages and less complex inspection stages as per Guidelines on Operator Self-Verification Program (CQAG 9015).

• Conducted 18 training programs/workshops at customer bases/field units and 70 training programs/workshops at HAL premises for Customers on critical aircraft systems.

• During the year, Internal Corporate Quality Audit has been successfully Completed for 18 Manufacturing & Overhaul Divisions, 10 R&D Centres, 4 PBL Bases of ICG and 5 IAF Bases.

• HAL & DGAQA have jointly released a guideline for Approval of Supplier/ Sub-contractor & its Quality Management System (CQAG-9017: ASQMS) enabling Suppliers/ Sub-contractors to clear and supply Products produced by them under "Certificate of Confirmity (COC)". During Aero India 2025, M/s Godrej & Boyce Mfg. Co. Ltd, Mumbai has been approved under ASQMS by HAL Accessories Division, Lucknow.

• Trained HAL officers by accreditation body to conduct audits for AS9100 compliance across the divisions to ensure the product meets the highest standards of Safety and Quality. The total number of auditors available across the HAL Divisions are:

a) Lead Auditors - 10 Officers

b) Internal Auditors - 691 Officers

• LCA-Tejas Division, Bangalore has developed AI Based solution for Snag Disposition Information Management System.

• A fully automated system has been developed and integrated with SCADA (Supervisory Control and Data Acquisition) system with Heat Treatment furnaces to control & monitor the furnaces parameters online without human intervention and to eliminate the errors at TAD Kanpur, Engine Division, Koraput and Engine Division, Bangalore.

• Foundry & Forge Division, Bangalore has established Rapid Quench Heat Treatment (RQHT) facility and the facility is integrated with Industry 4.0 features utilizing SCADA system for comprehensive record management, documentation and process control. Key features of this facilities are 3 Axis Robotic Manipulator, automated loading and unloading which will result in 133% increase in working volume and improvement in productivity by 4-6 folds.

HAL being a CPSE, Statutory Auditors of the Company were appointed by the Comptroller & Auditor General of India (C&AG). M/s Gupta Nayar & Co, Chartered Accountants, Bengaluru was appointed as Statutory Auditors for auditing the Accounts of the Company for the year and 17 firms of Chartered Accountants were appointed as Branch Auditors. The Auditors' Report does not contain any qualification, reservation or adverse remarks.

The Auditors' Report on financial statements for the year 2024-25 and comments of the Comptroller & Auditor General of India (C&AG) under Section 143(6) of the Companies Act are attached to this Report, which is self-explanatory.

The Company has appointed M/s Murthy & Co. LLP, Cost Accountants, Bengaluru as Cost Auditors for conducting the Cost Audit of the Company for the year 2024-25. The Company maintains cost records as specified by the Central Government under Section 148(1) of the Companies Act, which are audited by Cost Auditors.

The Company has appointed 13 firms of Chartered Accountants and 1 Cost Accountant firm for carrying out internal audit of the Company for the year 2024-25.

In pursuant to the provisions of Section 204 of the Companies Act, 2013, the Board of Directors has appointed, M/s. DPSP & Associates, Practicing Company Secretaries, Bengaluru as Secretarial Auditors of the Company for the year 2024-25.

The Secretarial Audit Report is annexed to this Report as Annexure - IV. The management's reply on the qualification of the Secretarial Auditor, form part of Secretarial Audit Report, which is self-explanatory.

As per Regulation 24A of the SEBI (LODR) Regulations, the Company has filed the Annual Secretarial Compliance Report for the year 2024-25, signed by the Secretarial Auditor with the BSE Limited and National Stock Exchange of India Limited within the stipulated time.

In terms of Regulations 34 read with Schedule V of SEBI (LODR) Regulations and DPE Guidelines, a report on Corporate Governance for the year 2024-25 along with Compliance Certificate on Corporate Governance issued by the Secretarial Auditor of the Company, is attached to this Report.

As per Regulations 34(2)(e) of the SEBI (LODR) Regulations, the Management Discussion and Analysis Report (MDAR) forms part of the Annual Report.

The Company has a Whistle Blower Policy approved by the Board. The details of the Whistle Blower Policy are explained in the Corporate Governance Report and the same is hosted on the Company's website at www.hal-india.co.in/investors

Employees are encouraged to raise any of their concerns by way of whistle blowing and none of the employees have been denied access to the Chairman of the Audit Committee.

Pursuant to the provisions of Section 134(3)(c) of the Companies Act, your Directors state that:

(a) In the preparation of the annual accounts for the year ended March 31, 2025, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(b) the directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as on March 31, 2025 and of the profit and loss of the Company for the year ended on that date;

(c) the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) the directors have prepared the annual accounts on a "going concern" basis;

(e) the directors have laid down internal financial controls which are being followed by the Company and that such internal controls are adequate and are operating effectively;

(f) the directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Your Directors are extremely thankful and acknowledge the excellent support extended by the Government of India, in particular the Ministry of Defence, Department of Defence Production, Defence Acquisition and Defence Finance as well as other Ministries of the Government of India in all the endeavours of the Company.

Your Directors also place on record their sincere appreciation towards the Company's valued customers, in particular the Indian Defence Services, for the support and confidence reposed by them in the Management of the Company, and look forward to the continuance of this mutually supportive relationship in the future.

The Company wishes to place on record its appreciation for the co-operation extended and services provided by the Comptroller & Auditor General of India (C&AG), the Principal Director of Commercial Audit & Ex-officio Member, Audit Board, Statutory/ Internal Auditors, Cost Auditors, Secretarial Auditor, Bankers, Collaborators, JV Partners and Suppliers.

Your Directors are also thankful to the shareholders for the trust and confidence reposed in the Company and look forward to their continued support to propel the Company to greater heights.

Your Directors also wish to place on record their deep sense of appreciation for the committed services by the Company's Executives and Workmen for progress and prosperity of the Company.