Aakash Exploration Services Ltd Management Discussions

i) Industry Structure and Development

The global oil and gas industry continues to play a critical role in meeting the worlds energy requirements. Despite the rising focus on renewable energy, oil and natural gas remain the dominant sources of energy, particularly in developing economies like India.

India is the third-largest consumer of crude oil and petroleum products globally, with significant import dependency. However, the Government of India is actively promoting domestic exploration and production (E&P) through policies such as the Hydrocarbon Exploration and Licensing Policy (HELP), Open Acreage Licensing Policy (OALP), and the Discovered Small Fields (DSF) Policy, which aim to reduce import dependence and increase domestic production.

Technological advancements, digital oilfields, and improved seismic imaging are also supporting efficient exploration and enhanced recovery rates in the oil and gas sector.

Aakash Exploration Services Limited is Indias leading Solution provider to the Energy sector. We carry the vision to become major contributors to Indias Gas based economy with a focus on people, environment, innovation and technology. Our mission is to maximize stakeholders value by providing efficient services to ensure sustainable growth while catering to the needs of customers, partners, employees and society at large. The Management team comprising one of the Director is looking after day-to-day management of the company.

ii) Opportunities and Threats

Opportunities

Government Policy Support: Initiatives such as HELP and OALP encourage private sector participation in upstream oil and gas exploration.

Growing Energy Demand: With rising industrialization and urbanization, domestic demand for hydrocarbons continues to grow.

Technological Advancements: Enhanced Oil Recovery (EOR) techniques, horizontal drilling, and digital monitoring improve operational efficiency.

Strategic Partnerships: Collaborations with global oilfield service providers can help access expertise and advanced technology.

Threats

Volatility in Crude Prices: Fluctuating global crude oil prices directly impact profitability and capital expenditure planning.

Regulatory Risks: Stringent environmental and safety regulations may increase compliance costs.

Geopolitical Uncertainties: Political instability in oil-exporting countries and global trade tensions can disrupt supply chains.

Energy Transition Risks: Increasing investments in renewables and electric mobility may gradually impact long-term oil demand. iii) Outlook

With favorable government policies and ongoing emphasis on increasing domestic oil and gas production, the Company is well-positioned to capitalize on upcoming opportunities in the exploration and production (E&P) sector.

Key focus areas for the future include:

Expansion of service fleet and equipment modernization

Leveraging technology for cost optimization and safety enhancement

Strengthening long-term contracts with key clients like ONGC, Oil India, and Cairn Vedanta

Exploring adjacent service verticals such as offshore support and pipeline maintenance

Given the sustained demand for oilfield services and a strong order book, the Company remains optimistic about steady growth in the coming years.

iv) Risk & Concerns

Operational Risks: Dependence on large contracts from PSU oil companies exposes the Company to bidding competition and margin pressures.

Price Volatility: Variations in crude oil prices may affect exploration budgets of client companies.

Environmental and Safety Risks: Oilfield operations carry inherent environmental and occupational hazards requiring strict compliance with safety standards.

Currency Fluctuations: Exchange rate volatility may impact costs, particularly for imported equipment and spare parts.

v) Internal Control system and their adequacy

The Company has a robust system of internal controls commensurate with the nature of its business and size of operations. Regular internal audits, risk assessments, and compliance reviews ensure that all transactions are properly authorized, recorded, and reported.

Audit observations and recommendations are periodically reviewed by the Audit Committee, and corrective measures are implemented promptly.

vi) Financial performance with respect to operational performance

The Company reported a Total Income of 9,978.29 lakhs in FY 2024-25 compared to 9,282.37 lakhs in FY 2023-24, representing growth of 6.45%.

However, Profit After Tax declined to 184.08 lakhs in FY 2024-25 from 620.36 lakhs in FY 2023-24, primarily due to increased operating expenses and competitive pricing pressures in the oilfield services segment.

vii) Human Resources/ Industrial Relations

The Company believes that the quality of the employees is the key to its success and is committed to equip them with skills. The Company provides to the employees a fair and equitable work environment and support from their peers with a view to develop their capabilities leaving them with the freedom to act and to take responsibilities for the task assigned. The Company has strongly embedded core values and all employees are trained and encouraged to use these values in their daily operations and the bases for making decisions. The Companys management has always carried out systematic appraisal of performance and imparted training at periodic intervals. The Company has always recognized talent and has judiciously followed the principle of rewarding performance. This has helped to ensure all employees are aligned and focused on key objectives and key performance indicators critical for the Companys performance. In order to meet steady flow of talent, Company has appointed experienced professionals in Technical as well as Commercial Departments. Apart from that, as a strategic policy, every year, Company hires new pool of talent from reputed technical / petroleum institutes through campus selection process.

viii) Key Financial Ratios:

Sr. No.	Particulars	FY 2024-25	FY 2024-25	Explanation
1.	Debtors Turnover Ratio	4.25	4.62	No significant change
2.	Inventory Turnover Ratio	NA	NA	NA
3.	Interest Coverage Ratio	2.30	3.71	Decrease due to higher finance cost and lower EBIT in FY 2025 compared to the previous year
4.	Current Ratio	0.91	1.21	Decrease due to higher current liabilities, while current assets have reduced
5.	Debt Equity Ratio	0.29	2.54	Substantial improvement due to repayment or reduction of borrowings and increase in equity
6.	Operating Profit Margin (%)	4.61	0.11	Improved operational efficiency, leading to significantly higher operating margins
7.	Net Profit Margin (%)	1.87	0.07	Better profitability and cost control, resulting in a significant increase in net margin
8.	Return on Net Worth (%)	3.05	0.61	Higher net profit has improved returns on shareholder funds

ix) Cautionary Statement

Statement in this management Discussion and Analysis describing the companys objectives, projections, estimated and expectations are "forward looking statements" Actual results might differ, materially from those anticipated because of changing ground realities.

For Aakash Exploration Services Limited Date: 26/08/2025

Place: Ahmedabad

Vipul N. Haria	Hemang N. Haria
Chairman Managing	Whole Time
Director	Director
DIN: 01690638	DIN: 01690627