Expo Gas Containers Ltd Management Discussions

THE INDIAN ECONOMY:

India is expected to continue outperforming major economies, remaining the fastest-growing large economy in FY 2025-26. Growth is likely to be underpinned by strong domestic demand, public investment, and monetary support, while exports, trade tensions, and external volatility pose downside risks.

Key structural areas such as deepening labor reform, improving logistics and tax ef ciency, and investment in digital infrastructure and AI-adoptive industries will determine whether India can sustain its rise toward becoming a US $5-6 trillion economy.

A synthesis of growth forecasts from agencies including ICRA, India Ratings, and the Asian Development Bank indicates that Indias GDP growth for FY 2025 26 is likely to fall within the range of 6.2% to 6.5%Drivers of Growth

? Domestic demand remains robust, with consumption especially in rural India acting as a key stabilizer amid weaker global trade

? Capital expenditure by the government is projected to rise by ~10%, aimed at building infrastructure and boosting employment

? Monetary policy has turned accommodative: the RBI cut its repo rate twice, shifting stance and supporting private credit and investment

? In ation expected to moderate, staying within 4 4.3%, aided by favorable monsoons and easing energy prices

Risks & Headwinds

? Global trade tensions, particularly U.S. tariffs on Indian exports, threaten external demand and private investment ows

? Policy uncertainty, both global and domestic, remains a dampener on business sentiment and credit growth

? Climatic variability, especially monsoon shortfalls, could impact agriculture, food in ation, and rural incomes

? Structural constraints: experts like former RBI Governor Rajan highlight the limitations of Indias manufacturing sector and urge deeper service-led reforms

INDUSTRY STRUCTURE AND DEVELOPMENT :

Indias economy is expected to continue expanding amid strong manufacturing and service sector activities, supported by a continuation of current government support in key sectors. Accordingly, oil demand is projected to grow by 246,000 bpd, y-o-y, to average 6.0 million bpd, supported by robust economic growth amid healthy transportation and manufacturing activities.

India is more than 85 per cent dependent on imports to meet its needs of crude oil, which is turned into fuels like petrol and diesel in re neries.

OPEC report said Indias crude imports set a record high of 5.4 million bpd in March, following month-on-month increase of over 5 per cent.

Product imports rose by 2 percent, m-o-m, amid higher in ows of LPG. Product exports slipped by almost 3 per cent m-o-m, but remained at strong levels, as declines in naphtha and gasoline were offset by increased out ows of diesel and fuel oil.

In terms of crude imports by source, Kpler data shows Russia had a 36 per cent share of Indias total crude imports in march, up from 31 per cent in the previous month. Iraq was second with 17 percent, followed by Saudi Arabia with 11 per cent.

MARKET SIZE:

Indias petroleum product consumption in 2023-24 was 234.3 MMT, re ecting an almost 50% growth from 158.4 MMT in 2013-14.

Crude Oil, Natural Gas, and Petroleum Re nery Products are among eight core industries in India. In the scal year 2023-24, India produced 29.4 Mn metric tons (MMT) of crude oil and 36.4 Bn cubic meters (BCM) of natural gas, while importing 234.3 MMT of crude oil, 48.7 MMT of petroleum products, and 31.7 BCM of liqui ed natural gas (LNG) to meet rising energy demand. During the same period, India consumed 234.3 MMT of petroleum products and exported 62.6 MMT of petroleum products worth $47.7 Bn. Notably, 67 million people visit refueling stations every day in India.

To bolster Indias exploration and production segment and streamline operations, several initiatives have been implemented. These include policies such as the Hydrocarbon Exploration and Licensing Policy (HELP), a 99% reduction in No-Go areas in Indian offshore zones, and the introduction of the Urja Pragati Platform for faster clearances and easier compliance through self-certi cation, reducing the number of approvals. Additionally, the establishment of the National Data Repository (NDR) enhances transparency and accessibility of vital energy sector data and information. Indias energy landscape is rapidly evolving, with the country boasting 651.8 Mn metric tons of recoverable crude oil reserves and 1,138.6 Bn cubic meters of recoverable natural gas reserves within its sedimentary basins. Indias E&P sector offers investment opportunities worth $100 Bn by 2030.

India offers opportunities worth $67 Bn investment as the share of Natural Gas increases from 6.7% to 15% in the energy mix by 2030. In this regard, a signi cant development is the expansion of Indias City Gas Distribution (CGD) network, aiming for complete national coverage (excluding Islands).

An overview of some of the major infrastructure in the Indian Oil & Gas segment is:

1. 23 re neries with a cumulative installed capacity of 256.8 MMTPA (4th largest re ner globally). 2. 8 LNG terminals with a combined regasi cation capacity of 52.7 MMTPA (4th largest LNG importer globally).

3. 93,839 petroleum retail outlets spread across the length and breadth of India. 4. 10,445 km of crude oil pipelines and 24,130 km of petroleum product pipelines. 5. 329 Mn+ domestic LPG consumers across the country. (3rd largest LPG consumer)

In parallel, India has made signi cant strides in biofuels, achieving a 10% ethanol blending in gasoline target in June 2022, ahead of its schedule. This success has encouraged the country to advance the 20% ethanol blending target to 2025-26 from 2030. The government has also introduced blending mandates for other biofuels in compressed natural gas (5% blending obligation in CNG (transport) & PNG (Domestic) by 2029), biodiesel - (indicative target of 5% blending by 2030), and sustainable aviation fuel - (indicative blending of 2% for international ights by 2028), supporting their growth and investments.

INCREASING DOMESTIC DEMAND:

India is expected to contribute 25% of global energy demand growth between 2020-2040, driven by its expanding economy and demographic advantage. As the worlds third- largest oil consumer, India is set to lead global oil demand growth between 2023-2030.

Augmenting re ning capacity

India plans to enhance its re ning capacity from the current 256.8 MMTPA to 310 MMTPA by 2030, aiming to meet both increasing domestic and export markets.

THREATS:

The oil and gas industry in India faces a complex web of threats, including physical dangers, cybersecurity risks, volatile costs, geopolitical instability, and the increasing pressure of climate change and the energy transition. These threats can disrupt operations, cause nancial losses, and impact the industrys long-term sustainability.

Impact of U.S. and EU Sanctions on Indian Oil & Gas Business

Russia Sanctions (post-Ukraine War): Though India continues to buy discounted Russian oil, EU & U.S. sanctions might create several hurdles including logistical hurldles, including shipping, insurance, payment settlement etc. thereby complicating the trade.

When sanctions disrupt global oil supply chains, crude prices rise due to reduced availability. This puts pressure on Indias import bill and contributes to scal de cits and in ation.

Indias energy diplomacy gets complicated. It has to balance geopolitical relationships maintaining ties with the U.S. and EU while securing affordable energy from sanctioned nations.

Internal Control System :

The Company maintains adequate internal control systems, which provide among other things, reasonable assurance of recording the transactions of its operations in all material respects and of providing protection against signi cant misuse or loss of company assets. Moreover, the Management team regularly meets to monitor expectations and budgeted results and scrutinizes reasons for deviations in order to take necessary corrective steps. The Audit Committee, which meets at regular interval, also reviews the internal control systems with the Management and the Internal Auditors. There are clear demarcation of roles and responsibilities at various levels of operations. The Companys internal control system is further strengthened by continuous periodical internal audit system and Review at the Board level. The speci c appointment of internal auditor would further strengthen the existing system. The internal audit is conducted at regular intervals at various locations of the Company and covers all the key areas. All audit observations and follow up actions are discussed with the Management as also the Statutory Auditors and the Audit Committee reviews them regularly.

SAFETY, HEALTH AND ENVIRONMENT :

Safety, Health and Environment is a core value for your Company. Simply stated your Companys goals are: no accidents, no harm to people and no damage to environment. The Companys success owes to the health, safety & security of everyone who works for them. The health and medical services are accessible to all employees through well equipped occupational health centers at all manufacturing facilities. Safety and security of personnel, assets and environmental protection are also on top of the agenda of the Company at its manufacturing facilities.

Clean environment and sustainable development integrated with the business objective is the focus of operations of the Company. The projects and activities are planned and designed with environment protection as an integral part to ensure a safe and clean environment for sustainable development.

CAUTIONARY STATEMENT:

The statements in this Managements Discussions & Analysis describing the Companys objectives, projections, estimates, expectations and predictions which may be “forward looking statements” within the meaning of the applicable securities laws and regulations. The annual results can differ materially from those expressed or implied, depending on the economic conditions, Government Policies and other incidental factors and developments.