Expo Engineering and Projects Ltd Management Discussions

ANNEXURE-I

THE INDIAN ECONOMY:

The Indian economy has remained resilient, registering an estimated GDP growth of roughly 7.5% to 7.7% last year, driven by strong domestic demand, robust private consumption, and government capital expenditure.

Future Outlook: 2026 and Beyond

• Surging Demand: India is projected to be the fastest-growing major oil consumer globally. Oil demand is forecasted to double to 11 million barrels per day by 2045, with diesel and gasoline continuing to cover the bulk of consumption.

• Natural Gas Expansion: Natural gas is targeted to increase its share in Indias primary energy mix from the current 6% to 15% by 2030. This is driven by the rapid authorization of 228 city-gas distribution areas.

• Diversification & Transition: India is aggressively hedging its high-carbon import bill by scaling up SPR (Strategic Petroleum Reserves), heavily expanding ethanol blending targets, and developing massive Green Hydrogen capacity through major Oil Marketing Companies (OMCs).

• Upstream Targets: To counter massive import bills, the government is looking to expand total exploration acreage to 1 million square kilometers by 2030

GROWING DEMAND:

Oil demand in India is projected to register a 2x growth to reach 11 million barrels per day by 2045.

India signed historic deals to import 2.2 million tonnes of LPG from the US in 2026, a strategic step in energy diversification.

India consumes 25-30 (Check this figure - It should be about 52 million MT. There is a difference between Petroleum and Niti Aayog, Im highlighting Niti Aayog figures which coves petrochemicals more broadly. Petroleu ministry covers core petrochemical products) million metric tonnes (MMT) of petrochemicals annually, with demand projected to surge over the coming decades amid rapid urbanisation and increasing incomes.

Diesel demand in India is expected to double to 163 MT ( 75-85 million MT as per Niti Aayog ) by 2029- 30, with diesel and gasoline covering 58% of Indias oil demand by 2045.

Crude oil imports increased by 3.82% to 243.22 MMT in FY25 compared to rise by 234.26 MMT from previous year.

Rapid Expansion

India aims to commercialize 50% of its SPR (strategic petroleum reserves) to raise funds and build additional storage tanks to offset high oil prices.

*Oil Marketing Companies (OMCs) are planning to achieve 900 KTPA of green hydrogen capacity by 2030, with plants already operational at BPCL Bina, HPCL Vizag, and GAIL Vijaipur.

The industry is expected to attract Rs. 218,475 crore (US$ 25 billion) investment in exploration and production. Refining capacity in the country is expected to increase to 667 MTPA by 2040.

India plans a capex push of Rs. 3,28,227 crore (US$ 37 billion) to transform itself into a petrochemicals powerhouse by 2030, aiming to supply as much as one-third of global capacity additions.

POLICY SUPPORT:

The Union Budget FY26 has allocated Rs. 5,597 crore (US$ 640.46 million) to the petroleum and natural gas (PNG) ministry for phase II of the Indian Strategic Petroleum Reserves Ltd (ISPRL) project, aimed at turning two vast underground caverns into petroleum storage facilities.

*Under the Sustainable Alternative Towards Affordable Transportation (SATAT) initiative, as of 1 November 2025, more than 130 compressed biogas (CBG) plants have been commissioned, with several others under construction. Mandatory blending obligations for CBG in the CNG and PNG sectors commenced from FY 2025-26.

Industry Structure and Development

The engineering, fabrication, and project execution sector plays a critical role in supporting Indias industrial growth. Investments in oil & gas, petrochemicals, refineries, power generation, renewable energy, water treatment, and infrastructure projects continue to create significant opportunities for engineering companies.

The Governments continued focus on industrial development, energy security, and infrastructure modernization is expected to drive demand for process equipment, fabricated structures, piping systems, and project execution services.

Growth in refinery expansions, petrochemical investments, renewable energy projects, and industrial manufacturing facilities is expected to provide sustained opportunities for companies operating in the engineering and project sector.

THREATS

The primary threats to Indias oil and gas industry in the light of the global scenario are extreme import dependency, structural chokepoint vulnerabilities, and imported inflation. Because India imports nearly 85% of its crude oil and large portions of its LPG and LNG, global geopolitical conflicts directly trigger supply chain disruptions, soaring insurance/freight costs, and domestic price spikes.

The potential threats to the industry and the broader Indian economy in light of current global tensions manifest in several critical ways:

1. Supply Chain Vulnerability and Chokepoints

• Strait of Hormuz Dependence: A significant share of Indias crude oil, and the vast majority of its Liquefied Petroleum Gas (LPG) and Liquefied Natural Gas (LNG), transit through the Strait of Hormuz. Geopolitical escalations in West Asia directly threaten these shipping lanes, leading to halted tankers, surging war-risk insurance premiums, and demurrage charges.

• Import Force Majeure: The volatility of the Middle East region regularly disrupts supply contracts. Even with rapid diversification into Russian crude and US/African LNG, sudden choke-offs force India to tap into its limited Strategic Petroleum Reserves (SPR).

India-specific structural challenges

Beyond global pressures, Indian manufacturers also face domestic constraints:

• High logistics and infrastructure costs compared with leading manufacturing nations.

• Relatively expensive industrial land and utilities in some regions.

• Higher input costs due to duties and inverted tariff structures for certain materials.

• Costly international certifications (ASME, CE, API, PED, etc.).

• Limited investment in indigenous R&D compared with global competitors.

Emerging opportunities that can offset these threats

Despite these risks, several trends work in favor of Indian process plant machinery manufacturers:

• Strong domestic investment in refineries, petrochemicals, green hydrogen, renewable energy, pharmaceuticals, food processing, and infrastructure.

• "China+1" sourcing strategies adopted by multinational companies seeking supply-chain diversification.

• Government initiatives such as Make in India and capital goods policies encouraging domestic manufacturing.

• Increasing localization by global OEMs, creating opportunities for Indian suppliers.

• Growing export potential to the Middle East, Africa, Southeast Asia, and Latin America.

Strategic priorities for Indian manufacturers

To remain globally competitive, manufacturers should focus on:

1. Increasing investment in R&D and product innovation.

2. Adopting Industry 4.0 technologies, including digital twins, predictive maintenance, and smart manufacturing.

3. Improving quality to international standards (ASME, API, ISO, PED, etc.).

4. Expanding lifecycle services, aftermarket support, and long-term maintenance contracts.

5. Diversifying export markets to reduce dependence on any single geography.

6. Building resilient supply chains through greater localization of critical components.

7. Investing in workforce development for automation, digital engineering, and advanced manufacturing.

HUMAN RESOURCES AND INDUSTRIAL RELATIONS

The Company continues to maintain cordial and harmonious industrial relations across all its operations. Constructive engagement with employees and a focus on employee well-being have contributed to a stable and productive work environment during the year under review. As on date, the total employee strength of the Company stands at 43.

CAUTIONARY STATEMENT

The Management Discussions and Analysis Statement made above are on the basis of available data as well as certain assumptions as to the economic conditions, various factors affecting prices, trend and consumer demand and preference, governing and applicable laws and other economic and political factors. The management cannot guarantee the accuracy of the assumptions and projected performance of the Company in future. It is therefore, cautioned that the actual results may differ from those expressed and implied therein.