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Harsha Engineers International Limited Earnings Presentation – Quarter and year ended Mar’25
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2 Privileged & Confidential, © 2022, All Rights Reserved. Disclaimer/ Safe Harbor Cautionary statement regarding forward-looking statements ● This presentation may contain certain forward-looking statements relating to Harsha Engineers International Limited (“HEIL”, or “Company””) and its future business, development and economic performance. These statements include descriptions regarding the intent, belief or current expectations of the Company, its subsidiaries and associates and their respective directors and officers with respect to the results of operations and financial condition of the Company, subsidiary or associate, as the case may be. Such forward-looking statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and assumptions that are difficult to predict. These risks and uncertainties include, but are not limited to (1) competitive pressures; (2) legislative and regulatory developments; (3) global, macroeconomic and political trends; (4) fluctuations in currency exchange rates and general financial market conditions; (5) delay or inability in obtaining approvals from authorities; (6) technical developments; (7) litigation; (8) adverse publicity and news coverage, which could cause actual development and results to differ materially from the statements made in this presentation. Company assumes no obligation to update or alter forward-looking statements whether as a result of new information, future events or otherwise. Any forward-looking statements and projections made by third parties included in this presentation are not adopted by the Company and the Company is not responsible for such third party statements and projections. ● This presentation has been prepared by the Company based on information and data which the Company considers reliable, but the Company makes no representation or warranty, express or implied, whatsoever, and no reliance shall be placed on, the truth, accuracy, completeness, fairness and reasonableness of the contents of this presentation. This presentation may not be all inclusive and may not contain all of the information that you may consider material. Any liability in respect of the contents of, or any omission from, this presentation is expressly excluded. ● This presentation does not constitute a prospectus, offering circular or offering memorandum or an offer, or a solicitation of any offer, to purchase or sell, any shares and should not be considered as a recommendation that any investor should subscribe for or purchase any of company’s securities in any jurisdiction. Neither this presentation nor any other documentation or information (or any part thereof) delivered or supplied under or in relation to the shares shall be deemed to constitute an offer of or an invitation by or on behalf of company. No part of it should form the basis of or be relied upon in connection with any investment decision or any contract or commitment to purchase or subscribe for any of company’s securities. ● HEIL assumes no responsibility to publicly amend, modify or revise any forward looking statements, on the basis of any subsequent development, information or events, or otherwise. Unless otherwise stated in this document, the information contained herein is based on management information and estimates. The information contained herein is subject to change without notice and past performance is not indicative of future results. HEIL may alter, modify or otherwise change in any manner the content of this presentation, without obligation to notify any person of such revision or changes. ● No person is authorized to give any information or to make any representation not contained in and not consistent with this presentation and, if given or made, such information or representation must not be relied upon as having been authorized by or on behalf of HEIL. ● This presentation and its contents are confidential and should not be distributed, published or reproduced, in whole or in part, or disclosed by recipients directly or indirectly to any other person.
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3 Privileged & Confidential, © 2022, All Rights Reserved. Index Business Update Company Overview Summary on use of IPO Proceeds Quarter and Year End Highlights
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QUARTER AND YEAR END HIGHLIGHTS
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5 Privileged & Confidential, © 2022, All Rights Reserved. Financial Highlights - QoQ PAT - Engineering CONSOLIDATEDRevenue - Engineering CONSOLIDATED EBITDA - Engineering CONSOLIDATED 6,063 4,821 3,834 6,603 18.9% 16.0% 11.6% 20.0% - 1,000 2,000 3,000 4,000 5,000 6,000 7,000 Q4FY24 Q3FY25 Q4FY25 Q4FY25-Adj.* EBITDA EBITDA % 32,063 30,199 33,032 0 5000 10000 15000 20000 25000 30000 35000 Q4FY24 Q3FY25 Q4FY25 Revenue outside India (%) 54.3%55.4%60.2% 3,570 2,576 1,215 3,983 11.1% 8.5% 3.7% 12.1% Q4FY24 Q3FY25 Q4FY25 Q4FY25-Adj.* PAT PAT % EBITDA - Engineering INDIA PAT - Engineering INDIA 3,745 2,982 (5,201) 4,300 15.7% 12.8% -20.8% 17.2% Q4FY24 Q3FY25 Q4FY25 Q4FY25-Adj.* PAT PAT % EBITDA = Profit/ (Loss) Before Taxation+ Depreciation and Amortisation + Finance Cost *Adjusted for Exceptional Items - Rs, 2,768 lakhs (Consolidated) and Rs.9,501 lakhs (Standalone) for Impairment loss of subsidiary investment Revenue - Engineering INDIA 23,919 23,309 25,043 0 5000 10000 15000 20000 25000 30000 Q4FY24 Q3FY25 Q4FY25 Revenue outside India (%) 40.1%52.5% 42.6% 5,832 4,867 (2,938) 6,564 24.4% 20.9% -11.7% 26.2% (4,000) (2,000) - 2,000 4,000 6,000 8,000 Q4FY24 Q3FY25 Q4FY25 Q4FY25-Adj.* EBITDA EBITDA % ₹ in Lakhs
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6 Privileged & Confidential, © 2022, All Rights Reserved. Financial Highlights - YoY PAT - Engineering CONSOLIDATEDRevenue - Engineering CONSOLIDATED EBITDA - Engineering CONSOLIDATED 19,840 19,914 22,683 16.2% 15.7% 17.9% 1.0% 3.0% 5.0% 7.0% 9.0% 11.0% 13.0% 15.0% 17.0% 1,000 6,000 11,000 16,000 21,000 FY 23-24 FY 24-25 FY 24-25-Adj* EBITDA EBITDA % 1,22,684 1,26,885 0 20000 40000 60000 80000 100000 120000 140000 FY 23-24 FY 24-25 Revenue outside India (%) 56.8%62.1% 11,009 9,975 12,743 9.0% 7.9% 10.0% 1,000 3,000 5,000 7,000 9,000 11,000 13,000 FY 23-24 FY 24-25 FY 24-25-Adj.* PAT PAT % EBITDA - Engineering INDIA PAT - Engineering INDIA 12,591 4,660 14,161 13.7% 4.9% 14.8% -500 500 1500 2500 3500 4500 5500 6500 7500 8500 9500 10500 11500 12500 13500 14500 FY 23-24 FY 24-25 FY 24-25-Adj.* PAT PAT % Revenue - Engineering INDIA 91,691 95,819 0 20000 40000 60000 80000 100000 120000 FY 23-24 FY 24-25 Revenue outside India (%) 43.2%49.3% 19,919 12,897 22,399 21.7% 13.5% 23.4% (2,500) 2,500 7,500 12,500 17,500 22,500 FY 23-24 FY 24-25 FY 24-25-Adj.* EBITDA EBITDA % Amount ₹ in Lakhs EBITDA = Profit/ (Loss) Before Taxation+ Depreciation and Amortisation + Finance Cost *Adjusted for Exceptional Items - Rs, 2,768 lakhs (Consolidated) and Rs.9,501 lakhs (Standalone) for Impairment loss of subsidiary investment
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7 Privileged & Confidential, © 2022, All Rights Reserved. Business Update ▪ While the revenue from operations on QOQ as well as YOY basis are flat, the company has achieved a consolidated revenue growth of 10% in Q4 over Q3 reflecting the past trend of Q4 being one of the strongest quarters. ▪ On a consolidated basis the company has posted a strong adjusted EBITDA growth of 6.4% on a QOQ basis and 16.2% on YOY basis; an adjusted PAT growth of 9.6% on QOQ basis and 19% on YOY basis. ▪ While Harsha India Engineering business posted a modest top line growth of 4.5% on YOY basis, it has posted a strong adjusted EBITDA growth of 12.4% on YOY basis and an adjusted PAT growth of 12.5% on YOY basis. ▪ The Bronze Bushing segment clocked sales of Rs.102 crores in FY 2025 as against around Rs.40 crores achieved in FY 2024, exceeding our targets. ▪ Sales of Stampings stood at around Rs.54 crores in FY 2025 as against Rs.50 crores in FY 2024. ▪ The sales to Japan based customers stood at around Rs.65 crores whereas sales of large sized bearing cages stood at around Rs.43 crores – the sales in these two segments remained more or less flat in FY 2025, but are expected to gain traction in FY 2026.
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8 Privileged & Confidential, © 2022, All Rights Reserved. Business Update ▪ The Solar business sales in Q4 shows a de-growth of around 28% on a QOQ basis and a de-growth of around 16% on YOY basis- which is largely attributable to the completion pattern of various projects undertaken in this division. However, in spite of the provision of ECL and substantial bad debt written off, this division has still posted a significant growth in EBITDA and PAT margins on YOY basis. Going forward this division continues to have the benefit of strong Tailwinds. ▪ Harsha Romania continues to face strong headwinds which has reflected a YOY de-growth of around 8% in the top line. This division has continued to post losses at EBITDA level. However, Harsha China has reported satisfactory performance in Q4 and FY 2025 resulting into a positive EBITDA and PAT contribution of Rs.12.03 crores and Rs.2.92 crores respectively in FY 2025 partly offsetting the losses faced in Romania. ▪ The New product Development activity continues to be strong- with around 450 nos. new SKUs developed in FY 2025. ▪ The First phase of the new Bhayla Greenfield Facility of Harsh Advantek is expected to be commissioned in next few weeks. ▪ Total capex incurred in FY 2025 IS Rs 209 crores and targeted Capex in FY 2026 is Rs.165 crores.
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9 Privileged & Confidential, © 2022, All Rights Reserved. Consolidated P & L Statement EBITDA = Profit/ (Loss) Before Taxation+ Depreciation and Amortisation + Finance Cost (₹ in Lakhs) Particulars Q4 FY25 Q3 FY25 Q4 FY24 FY24-25 FY23-24 REVENUE : Revenue from Operations 37,297 33,894 38,040 140,765 139,230 Other Income 1,103 672 775 3,773 2,949 TOTAL REVENUE 38,400 34,566 38,815 144,538 142,179 EXPENSES : Cost of Material Consumed 18,869 18,249 21,863 72,883 77,905 Change in Inventories of Finished Goods & Work-in- progress 1,311 (16) (597) 985 (181) COGS 20,180 18,233 21,266 73,868 77,724 Employee Benefits Expenses 4,559 4,413 4,287 18,155 16,905 Other Expenses 7,043 6,970 6,802 29,188 27,215 Bad Debts Write Off / Net Sundry Balance write off 1,999 1 231 2,060 251 Exceptional Items 2,768 - - 2,768 - EBITDA 1,851 4,949 6,229 18,499 20,084 Margin % 5.0% 14.6% 16.4% 13.1% 14.4% Finance Costs 146 213 283 877 1,077 Depreciation and Amortization Expense 986 1,008 998 4,054 3,932 PROFIT BEFORE TAXATION 719 3,728 4,948 13,568 15,075 Tax Expenses 958 1,059 1,270 4,637 3,932 PROFIT AFTER TAXATION (239) 2,669 3,678 8,931 11,143 PAT Margin% -0.6% 7.9% 9.7% 6.3% 8.0% Other comprehensive income (119) 229 148 (229) 400 Basic Earnings per Share - In ₹ (0.26) 2.93 4.04 9.81 12.24 Diluted Earnings per Share-In ₹ (0.26) 2.93 4.04 9.81 12.24
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10 Privileged & Confidential, © 2022, All Rights Reserved. Certain Key Parameters and Break Up ^ Adjusted for Exceptional Items - Rs, 2,768 lakhs (Consolidated) and Rs.9,501 lakhs (Standalone) for Impairment loss of subsidiary investment ^^Adjusted for Bad Debts Write off impact of Solar – EPC and O&M for Q4 FY25 and FY24-25 EBITDA = Profit/ (Loss) Before Taxation+ Depreciation and Amortisation + Finance Cost Particulars Q4 FY25 Q3 FY25 Q4 FY24 FY 24-25 FY 23-24 Revenue from Operations - Engineering & Others - Consolidated 33,032 30,199 32,063 1,26,885 1,22,684 - Engineering & Others - India 25,043 23,309 23,919 95,819 91,691 - Solar - EPC and O & M 4,265 3,695 5,977 13,880 16,546 Adj. EBITDA - Engineering & Others - Consolidated^ 6,603 4,821 6,063 22,683 19,840 - Engineering & Others - India^ 6,564 4,867 5,832 22,399 19,919 - Solar - EPC and O & M^^ 27 128 166 655 244 Adj. PAT - Engineering & Others - Consolidated^ 3,983 2,576 3,570 12,743 11,009 - Engineering & Others - India^ 4,300 2,982 3,745 14,161 12,591 - Solar - EPC and O & M^^ 50 93 108 505 134 Other Income 1103 672 775 3773 2949 - Interest Income 404 327 305 1,315 1,484 - Share of Profit/Loss from Cleanmax Harsha Solar LLP (13) 27 (21) 29 29 - Share of Profit/Loss from Sunstream Green Energy One Pvt. Ltd. - - 1 - - - Gain / (Loss) on Exchange Rate Fluctuation 255 (35) 128 925 234 - Miscellaneous Income 14 18 12 43 79 - Gain / (Loss) on Sales of Investment in Subsidary Co. /Associates - - (1) - (1) - Gain / (Loss) on Sale of Investment (Mutual Fund) 65 25 18 197 292 - Gain / (Loss) on Fair value of Investments (measured at FVTPL) 378 310 333 1,264 832 - Total Other Income 1,103 672 775 3,773 2,949 (₹ in Lakhs)
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11 Privileged & Confidential, © 2022, All Rights Reserved. Working Capital – Consolidated – Key Parameters Revenue from operations is used as denominator for No. of days calculation. (₹ in Lakhs) FY 24-25 Q3 FY25 Q2 FY25 Q1 FY25 FY 23-24 1 Inventories a. Raw Material - Amount 5,865 6,259 7,583 7,785 7,154 No. of Days 15 17 20 21 19 b. Semi Finished- Amount 2,381 2,960 2,273 2,707 2,061 No. of Days 6 8 6 7 5 c. Finished - Amount 11,348 11,684 12,599 12,831 12,793 No. of Days 29 31 33 34 34 d. Stores & Spares and Tooling - Amount 13,792 14,163 14,095 13,623 13,358 No. of Days 36 37 37 36 35 2 Receivables - Amount 30,198 30,473 31,028 31,509 31,893 No. of Days 78 81 81 84 84 3 Trade Creditors- Amount 14,670 11,129 9,861 10,751 13,293 No. of Days 38 29 26 29 35 Sr. Particulars
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12 Privileged & Confidential, © 2022, All Rights Reserved. Utilisation of IPO Proceeds as on 31st March’ 2025 ₹ in Lakhs Particulars Amount Total IPO Proceeds 45,500 Less: IPO Expenses (2,560) Net Proceeds as per Prospectus 42,940 Less: IPO Expenses (excess contingencies hold) - Net Proceeds available 42,940 ₹ in Lakhs 1 Pre-payment or scheduled repayment of a portion of the existing borrowing availed by the Company 27,000 27,000 - 2 Funding capital expenditure requirements towards purchase of machinery 7,795 6,822 973 3 Infrastructure repairs and renovation of our existing production facilities including office premises in India 712 712 - 4 General corporate purposes 7,433 7,433 - Total 42,940 41,967 973 Unutilised AmountSr. No Particulars Amount as proposed in the Offer Document Amount Utilised
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Company Overview
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14 Privileged & Confidential, © 2022, All Rights Reserved. Harsha At A Glance Largest manufacturer of precision bearing cages in India* 5 strategically located manufacturing facilities with various warehouses at different locations worldwide – supplying products to over 25 countries across 5 continents Diversifying into complex and specialized precision stamped components Capability to manufacture bearing cages with diameters between 20mm to 2,000mm with >7,500 products manufactured since incorporation 6.5% of the market share in the global organized bearing brass, steel and polyamide cages market^ Supplies products to each of the top 6 global bearing manufacturers^^ Note : *Largest manufacturer in terms of revenue in organized sector; ^in CY2021 ^^As of 31st March 2022 50-60% of domestic market share China RomaniaIndia Schaffler AG NTN NSK TIMKENSKFJTEKT
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15 Privileged & Confidential, © 2022, All Rights Reserved. Bearing cages | ~US$5.2bn market expected to grow at ~6.4% Bearing cages form an important component within Bearings Separate rolling elements, reduce friction & heat generated in bearing Keep the rolling elements evenly spaced optimizing load distribution on the bearing Cages offer high rigidity, strength High heat resistant operating conditions Small portion of total cost of bearing - The global bearing cages is estimated at about 5% of the global bearings market Bearing Cages are critical components requiring highest lead time, technical & tooling expertise Bearing cages have increasing usage across key fast-growing end user industries Breakup of Bearing Market based on Application (USD bn) 93.4 104.6 171.7 2020A 2021A 2029F Global Bearings Market (USD bn) Domestic Bearings Market (USD bn) 4.4 5.5 10.3 2020A 2021A 2029F 8.3% CAGR 6.4% CAGR Segment / Market Size 2022 F 2029 F % share 2021 CAGR % Automotive 24.8 37.0 22.5% 5.8% Aviation & Aero 21.9 34.0 19.7% 6.5% Railways 19.5 30.9 17.6% 6.7% Construction 15.2 24.2 13.6% 6.8% Mining 12.3 19.3 11.1% 6.6% Electronics 10.0 15.5 9.0% 6.5% Agriculture 6.2 9.5 5.6% 6.3% High growth bearing cages market 4,670.1 2020 8,583.5 2029 6.4% CAGR Global Bearing Cages Market (USD mn) India market is expected to grow at a CAGR of 8.3% during 2021 to 2029. Given the complexity of bearing cages production , customers prefer continuing with reliable vendors for a long period for consistency of quality Global bearing companies have steadily increased outsourcing manufacture of bearing cages Supplies to each of the top 6 global bearing manufactures
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16 Privileged & Confidential, © 2022, All Rights Reserved. ✓ Railways ✓ Industrial machines ✓ Pumps ✓ Compressors ✓ OEMs ✓ Engine applications ✓ Crushers ✓ Steel mills ✓ Thermal turbines ✓ Windmills ✓ Agricultural machines ✓ Automotive parts ✓ Chemical machinery ✓ Utilities ✓ White appliances ✓ Chemical machinery ✓ General industries ✓ Blowout preventers ✓ Extruders ✓ Gearboxes ✓ Offshore drilling ✓ Oil rigs ✓ Traction motors for railways Different designs of bearing cages with diverse applications Comprehensive solution provider offering diversified suite of precision engineering products Bearing Cages Cylindrical Roller Angular Contact Ball Spherical RollerDeep Grove Thrust Roller Taper Roller Cylindrical RollerAngular Contact Ball Spherical RollerDeep Grove Thrust RollerTaper Roller Sand Casting Bronze Bushing ✓ Railway Seal ✓ AC Compressor Head ✓ Bronze Bushing for Wind Gear Box ✓ Chassis Parts ✓ Engine Drive ✓ Clutch Components ✓ Gear Shifter Assembly Parts Precision Stamping Components
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17 Privileged & Confidential, © 2022, All Rights Reserved. Tool Manufacturing • Comprehensive tooling, testing and measurement infrastructure • Dedicated tool production facilities at Changodar have strengthened HEILs ability to meet customer demands Process Design & automation • Decades of experience – technologically driven manufacturing process enables HEIL to provide solutions in a cost-effective manner • In-house automation has helped to optimize O&M expenses, reduce production cycle time and minimize capex • Indigenously designed vision camera system detects defects that are not possible to detect with naked eye Product Development • Expertise in product development - product development cell and innovation centre Tooling Design • Expertise to design and develop advance tooling inhouse which enables HEIL to manufacture precision products • Engaged with customers to in product development process from design stage Expertise in tooling, design development and automation Full-service capabilities under one roof Product Design Support Tooling Design Tooling Manufacturing Development, Testing & Measurement
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18 Privileged & Confidential, © 2022, All Rights Reserved. Key Strategies going forward Enhance market leadership in bearing cages and customer base expansion Increased focus on developing products suited to capture market opportunity in the growing EV segment Retain and strengthen technological leadership through continued focus on development and automation Focus on growth by partnerships with customers and opportunistic inorganic acquisitions Growing bronze bushings and specialised component segment Focus on increasing operational efficiencies to improve returns %
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T H A N K YO U