Honeywell Automation India : Annual Report 2021-22

HONEYWELL AUTOMATION INDIA LIMITED

ANNUAL REPORT 2021 - 22

DR. GANESH NATARAJAN

Independent Director

(Non-Executive) and Chairman of

the Board of Directors, Honeywell

Automation India Limited

FROM THE

CHAIRMAN'S DESK

Dear Shareholders,

I am delighted to connect with you! I would like to thank you for your continued ownership of Honeywell Automation India Limited ("HAIL") and I sincerely hope that you and your family members are safe and healthy.

The last year has proven our strength and resolve as we emerge from the pandemic. India's economy bounced back and the GDP grew 8.7% in FY2021-22, even as we continue to navigate the challenges of the pandemic. A large share of the population is now fully vaccinated which will help in containing the impact from any further spikes in COVID-19. Even though FY 2021-22 might not have been the best of the years because of unprecedented external macroeconomic factors, their impact is expected to be seen in the future as well. The fundamentals of the Indian economy, however, remain strong. India's democratic political system is more stable and institutionalized than those of other developing economies. This favours policy continuity and institutional stability. Latest GDP estimations shows a growth of 7.2% Y-o-Y which will help boost the Indian economy further.

Last year was a year of recovery for your Company. While Honeywell continues to face challenges such as supply chain disruption and inflation among others, the Company's principles and core behaviors have provided tenets to help guide a roadmap to the future. Under the leadership of a capable management team, your Company was quick to pivot and find opportunities to not only tide over a tough year, but also solve for some of the challenges thrown up by post pandemic external factors. The pandemic accelerated the pace of digital transformation and pushed us faster and further into the digital era. Your Company empowered customers with required digital offerings as and established itself as their preferred automation vendor. Your Company will continue to focus on its core strategies and aggressively pursue new growth levers of digitization, sustainability, and tailwinds across various industry segments like metals, healthcare, and cybersecurity in the country.

All around the world, there is increased focus on sustainability - from alternative fuels to reduced emissions, and commitments by companies and countries to go carbon neutral. Globally, 60% of Honeywell's new product R&D is focussed on solutions that enhance environmental and social outcomes for customers. Your Company remains committed to innovate to create flexible, future-forward, and sustainable solutions that address the challenges of an ever-changing world.

Non Nascor Mihi Solum - Live not for self alone. In partnership with leading non-profit institutions, your Company developed powerful corporate social responsibility (CSR) programs to address the needs of the communities Honeywell serves. Your Company contributed to strengthening of rural healthcare systems and holistic rural development programs and supported non-COVID recovery efforts. We will continue to find ways to help those who are less privileged but certainly not less deserving.

It would be incorrect to say that the economy has turned into the growth phase. There are still some external factors, which may impact your Company's overall growth in near short term. However, with the resilience and dedication of the leadership team, your Company will overcome these turbulent times in the long run. On your behalf, I would like to acknowledge the tremendous efforts of your Company's employees across levels and thank them for their hard work, dedication and continued commitment. I would also like to thank our customers, suppliers, bankers, and financial institutions.

Last but not the least, on behalf of the Board of Directors of Honeywell Automation India Limited, I want to thank you for your continued trust, confidence, and support.

Dr. Ganesh Natarajan

Chairman & Independent Director

ASHISH

GAIKWAD

Managing Director, Honeywell

Automation India Limited and

VP-GM, Honeywell Process

Solutions India

FROM THE

MANAGING DIRECTOR'S DESK

Dear Shareholders,

Your Company has completed 38 years in India. During these years, your Company has evolved into a trusted brand. From a fledgling entity serving customers in the process industry and commercial buildings with a limited automation portfolio, we have now transformed into a industry leader with a large and diverse portfolio, serving the government and private sectors in India and overseas.

This has been an exciting journey and I have been fortunate to serve the Company for over 30 of these 38 years.

You will agree that FY2021-22 was a tough year for the Company. The post pandemic effect, slowdown in the global economy, and unprecedented external macroeconomic factors impacted us. Overall revenue from operations in FY2021-22 stood at INR 2,948 crore, registering a year-on-year decline of 3.1%. Your Company's profit (after tax) was INR 339 crore. Cost of goods sold was 52.4% of sales against 50.3% in the previous year. Your Company delivered a return of 11.5% on sales as against 15.1% in the previous year.

On a positive note, demand was not an issue for us in FY2021-22, External order booking in the year increased by 31% as compared to the previous year. Supply chain disruptions, inflation, and the continued presence of COVID-19 in the first half of the year proved to be the key challenges. Your Company is already working to address these challenges, and will look at - among other steps - focusing on proactively identifying local manufacturers to avoid supply chain disruptions. This is also in line with the Government of India's Atmanirbhar Bharat Mission.

Responding to needs arising post pandemic, your Company rolled out several offerings for our industrial and commercial buildings customers to enable them to continue their operations remotely. Your Company offered effective remote engineering solutions, remote factory acceptance test set- ups, remote site-commissioning solutions, and remote maintenance solutions. All this was done using our approach to digital transformation with our leading industrial software applications. This also accelerated our customers on their digital transformation/Industry 4.0 journey. Additionally, we offered our Industrial Cybersecurity solutions to protect our customers' digital infrastructure and data.

Your Company developed Honeywell Healthy Buildings solutions portfolio, which makes commercial real estate, workplaces and campuses safer and healthier for occupants and users as they begin weaning away from a 'work from home' practice that was prevalent through much of last year.

Your Company bagged the prestigious Bengaluru Safe City project under the Government's Nirbhaya Fund, which seeks to make the city safer for women. Continued Government spending on the country's core infrastructures such as airports, metros, railways, ports, Smart Cities and large-scale data centers among others are opportunities for value-added services that we excel in. Your Company is well positioned to align with this growing demand in the country.

Over the last few years, your Company has focused to grow the business in the pharma and life sciences industry. The pandemic showed that our foresight was not misplaced. Your Company has a strategic approach to grow in this industry by building a differentiated portfolio relevant to the needs of the Indian customer. Our portfolio of products, software, and solutions align well across the value chain of the pharma and life sciences sector - from R&D for vaccine and drugs discovery to manufacturing, packaging, distribution, and tracking. Our integrated hardware and software solutions enable pharmaceutical manufacturers to meet their key goals - operational excellence, productivity, safety, regulatory compliance, and data driven decision making. The steady growth of this sector coupled with rapid adoption of automation and digitalization solutions by pharmaceutical companies provides an attractive opportunity for your Company to become a trusted automation and digitalization partner for the sector in our country.

In tune with time, your Company is driving the digital transformation -both internally and externally with our customers to help them gain efficiency. We made significant progress on both the fronts in FY2021-22. This also aligns with the Government's Digital India mission.

Sustainability has taken centerstage in a post pandemic world. India is facing a higher demand for sustainable solutions that address energy optimization, natural gas transmission and distribution, renewable energy, and water conservation. Working with global Honeywell experts and powered by Honeywell's leading technologies, your Company is well placed to address these new growth areas. Looking ahead, Sustainable Technology Solutions will be a global business before the turn of the decade and will enable a transition path from the current carbon-intensive industry to the future of new energy. Our play in sustainability and energy transformation will be a key area of growth for Honeywell. We will take steps to bring these highly impactful technologies to market faster, where our customers and the environment will greatly benefit from them.

Enterprises are increasingly turning to sustainability as a force multiplier for competitive advantage. Your Company's building management systems help enable smarter buildings, simplify facility operations, increase occupant comfort, and maintain operational and energy efficiency. Your Company is a key enabler for enterprises in their progression throughout the sustainability journey - offering solutions to manage energy demand and drive business continuity, while achieving compliance and working towards meeting sustainability goals. Backed by more than 50 years' experience in building controls and technologies, Honeywell's Healthy Buildings solutions are part of a comprehensive effort to innovate solutions that help critical sectors of the economy recover, without the need to replace existing infrastructure.

Finally, on your behalf, I would like to express my sincere gratitude towards the Company employees and appreciate their resiliency. They have gone above and beyond their responsibilities to ensure uninterrupted operations, delivering on customer commitments and business priorities. While doing so, they also supported colleagues and their families during this difficult time. With your continued support, and our collective efforts I am confident that we shall emerge stronger and be known as one of the best socially-responsible software industrial companies.

I look forward to your continued support and trust in the Management Team.

Ashish M. Gaikwad

Managing Director

OUR

BOARD OF DIRECTORS

DR. GANESH

NATARAJAN

Independent Director and

Chairman of the

Board of Directors

ATUL PAI

Non-Executive Director

and VP, Enterprise Controller

Operations, Honeywell Global

Finance Center

ASHISH GAIKWAD	ASHISH MODI
Managing Director and VP-GM,	Non-Executive Director
Honeywell Process Solutions	and VP-GM, Honeywell
India	Building Technologies
	India and Rest of Asia

NEERA SAGGI	RAJESH REGE
Independent Director	Non-Executive Director
	and President,
	Honeywell India

OUR

OUR KEY MANAGERIAL PERSONNEL (KMP)

Ashish Gaikwad	Farah Irani	Pulkit Goyal
Managing Director	Company Secretary	Chief Financial Officer

OUR

MANAGEMENT TEAM

Anand Pandey	Anurag Anand	Dipankar Routray	Madhavi Bhalerao
Advanced Sensing	Building Management	Global Engineering	Internal Auditor
Technologies	Systems	Services

Mahesh Joshi	Ritwij Kulkarni	Saurabh Gupta	Shreeharsha
Human Resources	Building Solutions	Global Manufacturing	Karve

Procurement