Gandhar Oil Refinery (India) Ltd Management Discussions

Economic environment Global economic overview¹

The global economy showed resilience in CY 2024, recording a growth rate of 3.3%, despite experiencing several challenges. This momentum was aided by moderating inflation and adoption of more accommodative monetary policies by many countries. However, the pace of recovery varied significantly across regions. The US experienced robust economic growth, while the major European economies, particularly Germany, struggled with structural issues and increased competition from China. Conversely, many developing economies benefitted from policy reforms and improved insulation against global shocks, leading to accelerated growth rates.

Asia accounted for approximately 60% of global growth in CY 2024 driven by growing exports and integration into value chains.² However, growth in the Middle-East and North African (MENA) region moderated owing to ongoing regional conflicts, sanctions, declining oil prices, capacity constraints and fiscal tightening. Nonetheless, the global energy demand rose, driven by continued shift toward cleaner energy sources, even as economic uncertainties persisted.

Outlook

Global growth is anticipated to ease, reaching 2.8% in CY 2025 and 3% in CY 2026. Advanced economies are projected to achieve their inflation targets sooner than Emerging Markets and Developing Economies (EMDEs), with global inflation projected to average at 4.3% in CY 2025.

As major economies work to overcome economic headwinds, increasing energy demand is likely to drive industrial activity. Increased oil supply from the US, Russia and the Organisation of the Petroleum Exporting Countries plus (OPEC+) members is expected to exert pressure on energy prices. However, persistent geopolitical vulnerabilities particularly in the Middle East and ongoing global trade tensions have led to more cautious forecasts in global trade volumes in the near term.

Emerging Asia could witness declining output due to subdued exports to the US, but efforts to establish new trade partnerships and bilateral agreements are expected to help mitigate risks and bolster economic stability.

Indias economic overview³

Despite the global headwinds, the Indian economy showed resilience registering a growth rate of 6.5% during FY 2024-25. This performance was supported by consistent rural demand, favourable monsoons and a robust services sector, all of which contributed to a downward trend in inflation. The headline CPI inflation averaged at 4.7%, remaining within the RBIs target range.

Even amid external uncertainties and supply chain constraints, Indias export sector performed well, particularly in advanced manufacturing segments such as electronics, semiconductors and pharmaceuticals. Indian investment picked up pace driven by rising manufacturing export growth, improved production in steel and cement and greater import of capital goods. Infrastructure development remained a key government focus, with the rollout of initiatives like the Production Linked Investment (PLI) 2.0 to support domestic manufacturing. Additionally, the RBIs shift to an accommodative policy stance played a vital role in sustaining growth momentum.

Outlook

Moving forward, Indias economic prospects appear positive. The nation is projected to be among one of the fastest-growing major economies, driven by increasing foreign investment, a sustained reduction in inflation, improving industrial performance and robust consumer consumption. Government policies aimed at promoting higher Foreign Direct Investment (FDI) and greater public capital spending are expected to further fortify domestic industries. Efforts to tackle food price shocks and spur economic activity in the smaller cities are likely to lift domestic demand, supported by improved consumer sentiment and business confidence.

However, global economic headwinds, volatile trade policies and persistent supply chain disruptions could squeeze manufacturers profit margins. Additionally, a slowdown in global economy could negatively affect investor confidence in the near term.

On the positive side, Indias relative macroeconomic stability positions it as an attractive destination for foreign institutional investors seeking alternatives to the US market.

Indias energy requirements are likely to expand at a fast pace as the nation strives to become a developed economy by 2047. Meanwhile, the countrys emergence as a global manufacturing hub for the world is expected to drive demand for warehousing and attract multinational corporations to set up production bases.

Industry overview

Global oil sector⁴

Global oil demand growth slowed abruptly in 2024, increasing by only 0.8% compared to a 1.9% gain in the prior year. While average oil prices declined slightly, the modest decrease was insufficient to stimulate stronger consumption.

In developed economies, oil consumption fell by 0.1% in 2024, following a 0.7% drop in 2023. This decline was driven by reduced demand for road-transport fuels, owing to stricter vehicle efficiency standards, an increasing proportion of electric vehicles and sustained remote work practices. Additionally, weak industrial activity in the European Union further suppressed demand.

Conversely, developing and emerging economies in Asia experienced resilient growth driving increased fuel consumption. However, a strong US dollar placed financial strain on importing nations, resulting in disruptions in fuel availability and utilisation in some markets.

Market stability was again put to test in early April when crude oil prices plunged to four-year low amid renewed tariff announcements from the US and other countries. The sudden move in trade tensions, combined with expectations of increased supply from select OPEC+ members, fuelled the sharp price decline.

Despite these short-term shifts, fossil fuels comprising oil, natural gas and coal-are expected to remain dominant in the global energy mix till 2050, providing 40% to 60% of total energy demand.⁵

Indian oil sector⁶

India emerged as the worlds largest contributor to oil demand growth in 2024, registering a 3.4% increase in consumption, compared to 2.6% in South-east Asia. The surge was fuelled by Indias strong economic momentum, with total oil demand rising 11.6% above 2019 levels and gasoline consumption soaring by 41.7% over the same period.

However, recent challenges including the energy market volatility and sanctions on Russian oil imports, have highlighted Indias vulnerability due to dependence on imported oil. During the year, domestic crude oil production moderated to around 28.7 million metric tonnes.

Moving forward, India is likely to be a key driver of global oil demand growth through 2030. Ongoing urbanisation, increasing middle- class incomes, rising mobility and expanded access to clean cooking fuels are projected to add around 1.2 million barrels per day to global demand, more than one-third of the anticipated 3.2 mb/day increase, taking Indias total to approximately 6.6 mb/day.

Recent tariff measures in the US have led to a decline in global oil prices, offering Indian oil-importing companies an opportunity to improve profit margins. Nevertheless, Indias long-term strategic goals focus on reducing imports dependency, enhancing energy security and building refining capability, all of which will support the nations pivotal position in global oil commerce and supply during 2030.

Global industrial oil sector⁷

Driven by industrialisation and rising automation in manufacturing, the global industrial oils industry is valued at $116.95 billion in 2025. The market is projected to reach $188.52 billion by 2034, experiencing a Compound Annual Growth Rate (CAGR) of 5.45%.

Industrial oils are crucial for ensuring the smooth operation of equipment and machinery, offering benefits such as corrosion protection, friction reduction and thermal stability. Key sectors utilising these oils include food and beverages processing, pharmaceuticals, cosmetics and tobacco. Major economies such as India, China, Germany and the US greatly depend on food- grade lubricants to ensure high safety and efficiency standards in manufacturing lines.

In the automotive industry, rising automobile production in emerging economies remains the key driver for demand of engine and hydraulic oils. Major suppliers are expanding globally to meet this demand. Meanwhile, the gradual transition to electric vehicles poses a long-term threat to traditional lubricant sales, as EVs require less or specialised fluids. As industries are expected to rebound from headwinds including interrupted supply chains and raised raw- material prices, growth in production and global auto demand is likely to support a recovery and greater utilisation of industrial oils in the years to come.

Global automotive oil market⁸

The automotive oil sector is undergoing significant transformations due to technological advances and stricter regulations. Manufacturers are shifting toward low-viscosity, high-performance synthetic oils that help meet emissions standards and improve fuel efficiency.

While Electric Vehicle (EV) lubricants are seeing strong demand with increasing EV adoption, Internal Combustion Engine (ICE) models still dominate overall sales. In response, leading oil producers are introducing products tailored to hybrid-specific lubricants for mixed powertrains.

Looking ahead, the market is projected to grow at a 2.6% CAGR in 2025, reaching about $56.85 billion. Demand for synthetic and biobased oils is expected to remain balanced, with nano-lubrication technologies likely to enhance performance further. Continued automotive production in China and India will support volume growth, with next-generation lubricants emphasising on sustainability, efficiency and durability.

Global white oil market⁹

White oils are highly refined mineral oils known for their chemical inertness, purity, stability and lack of colour, odour or toxicity. Increasing consumer demand for cosmetics and rising living standards are propelling demand for white oil.

The international white oil market was worth $2.15 billion in 2024 and is expected to grow from $2.25 billion in 2025 to approximately $3.45 billion by 2034 at a CAGR of 4.84%. The growth is being driven by the pharmaceutical, cosmetics and personal care sectors, where white oils purity and compatibility with other ingredients make it a preferred component in products such as lotions, creams and ointments.

In the pharmaceutical industry, white oil serves as a process aid and carrier in topical drug formulations, ensuring consistency and ease of production. The plastics and polymer industries, on the other hand, employ white oil as a plasticiser and a lubricant during manufacturing to provide flexibility to materials and improve manufacturing efficiency.

Growing regulatory standards on product safety and quality across all end-user industries have generated demand for ultra-refined white oil grades. Simultaneously, advancements in purification technologies are enabling manufacturers to develop specialised formulations for applications, paving the way for market growth.

Indias white oil market

The Indian white oil market has witnessed substantial investments in research and development in recent years directed towards improving product quality and meeting stringent international standards. The market is projected to grow at a steady rate of about 2% between 2025 and 2030.¹⁰

The Indian pharmaceutical sector stands as a major consumer of white oil, utilising it in a wide range of applications including pomades, balms, creams, laxative jellies, capsule lubricants, ointment bases, pelletising aids and vaccines. The Government of India projects that the nations pharmaceutical market will reach $100 billion by 2025, supporting additional demand for white oil for pharma production.¹¹

The food and beverage industry also presents a growth opportunity, supported by increased investments in manufacturing units. Rising standards of living and evolving lifestyle preferences are driving demand across various segments, including skincare, hair care, fragrance, colour cosmetics and oral care. Companies are responding by expanding their reach across both urban and rural markets through innovative product development and marketing strategies.

Global petroleum jelly market

Petroleum jellys multifaceted properties including moisturising, lubricating, protective and healing functions have made it suitable for pharmaceutical, personal care, cosmetic and industrial uses. Its high purity and chemical stability render it beneficial for medical-grade formulations, skin-care products, coatings and anti-rust protection treatments. Market growth is being driven by increasing demand across these sectors, although expansion faces challenges due to regulatory restrictions, environmental concerns over petroleum- based products and the growing availability of natural alternatives.

Global consumption of petroleum jelly has remained stable, with pharmaceuticals and personal care leading the usage. The industry is projected to climb from $565.8 million in 2025 to reach $829.5 million by 2035, reflecting a CAGR of 3.9%.¹²

Asia-Pacific market overview

The Asia Pacific region is among the fastest growing regions, driven by increasing industrialisation, rising disposable incomes and a more informed consumer base. Demand spans across cosmetic, pharmaceutical and industrial markets. The influence of western beauty trends, combined with a diverse evolving consumer demographic is driving rapid adoption. The convergence of changing preferences and heterogeneous consumer bases continue to fuel the market growth.

Growing awareness about environmental concerns are making companies shift to alternate packaging solutions. Customers prefer biodegradable and recyclable packaging, which encourages brands to launch sustainable options. By integrating packaging innovation with sustainability goals, companies strengthen brand reputation, meet customer expectations of responsible products and drive transformative changes within the beauty and personal care industry.

Growth drivers

Rising discretionary incomes

Indias Gross National Disposable Income (GNDI) increased by 9.8% YoY in FY25, reaching I 335.83 lakh crore at current prices. This increase demonstrates enhanced household purchasing power, which is expected to continue with ongoing tax reforms and economic recovery.¹³ As a result, demand for white oil-dependent products in personal care and pharmaceutical sectors is set to rise.

Population growth and urbanisation

With a population of approximately 1.43 billion in 2025 and an annual growth rate of 0.8%, India presents a large and expanding consumer base.¹⁴ Demand is rising across key white oil leveraging sectors such as cosmetics, pharmaceuticals and processed foods. By 2036, about 600 million Indians- around two-fifths of the population, are projected to reside in urban areas, where consumers tend to favour premium personal care products.¹⁵ Meanwhile, rural markets are seeing growing demand for basic healthcare and hygiene products.

Pharmaceuticals and cosmetics

The pharmaceutical sector, projected to reach $130 billion by 2030, relies on white oils for ointments, vaccines and capsule lubricants.¹⁶ Indias cosmetics industry, valued at $8 billion in 2024, is expanding at an accelerated rate, with white oil integral to moisturisers, makeup removers and hair oils.¹⁷

Applications in food and industry

The demand for white oil for use in food preparation is increasing as safety standards get tighter in food packaging and food oil processing. Industrially, white oil can be used as a plasticiser in polymers, a lubricant in adhesive products and a coolant in renewable energy processes, with expanding uses in renewable lubricants and solar panel fabrication.

Technological and sustainability trends

Manufacturers are deploying AI-driven quality control systems and IoT-enabled logistics to increase efficiency in production and address changing regulatory needs. Brands are also implementing recyclable and biodegradable packaging to harmonise with consumer demand for sustainability, especially in urban areas.

Automotive sector demand

Global car sales grew 2.5% in 2024 while the Indian domestic automotive sales grew 7.3% indicating healthy demand for mobility. Although electric vehicle uptake slows down conventional lubricant demand, hybrid-specific products and dedicated EV thermal fluids offer new opportunities.

Company overview

Gandhar is a leading manufacturer of white oils by revenue, engaged in producing Personal care, Healthcare and Performance Oil (PHPO), Process Insulating Oil (PIO) and Lubricants (automotive oils and industrial oils). These products also adhere to national and international quality standards, with certifications and approvals from the Indian FDA, ISO, Kosher, BIS and Halal authorities.

Founded in 1992, Gandhar has grown into a leading entity in the specialty oils sector. The Company is guided by a qualified and experienced management team with expertise across administration, marketing and human resource management.

With a global customer base exceeding 3500 , Gandhar exports to over 100 countries across Europe, the Americas, Africa and the Asia-Pacific (APAC) region. Exports form a major part of its business. Gandhar ranks among the top two players in Indias white oil market, holding an estimated 26.5% share in the category.

Segmental Overview

Financial performance

The standalone total income of the Company during the year stood at 1 31751.13 million compared to the total income of 1 28,589.21 million during the previous year.

The consolidated total income during the year stood at 1 39099.23 million compared to the total income of 1 41,231.04 million during the previous year. The consolidated revenue thus changed by 1 2,131.81 million compared to previous year.

As per the standalone financials, the Company earned a net profit before tax of 1 1054.49 million in the year under review as against a net profit before tax of 1 1,636.21 million in the previous year.

Petroleum products and specialty oil

The turnover of the oil segment changed from 128,389.10 million in the previous year to 1 31,751.13 million in current year thereby resulting change of 11.18%. The turnover of other segment changed from 128.27 million in the previous year to 1 40.05 million in current year.

Financial snapshot

In Millions	FY21	FY22	FY23	FY24	FY25
Revenue (in millions)	19,913	29,897	29,462	28,589	31,751
EBITDA (in millions)	1,103	2,285	2,538	2,000	1,455
PAT (in millions)	513	1,966	1,695	1,187	753
D/E	0.18	0.08	0.02	0.02	0.00

Key ratios

Particulars	Consolidated		Standalone
	2024-25	2023-24	2024-25	2023-24
EBITDA/Turnover (%) (before exceptional items)	4.49	6.78	4.60	7.04
Return on Net Worth (%)	6.65	16.52	6.59	13.07
Book Value per Share (I)	13168.53	12,502.32	11989.32	11,365.22
Earnings per Share (I)	8.18	16.27	7.69	13.75
Debtors Turnover (days)	63	55	63	68
Inventory Turnover (days)	43	40	40	36
Current Ratio	2.91	2.52	3.77	3.11
Interest Coverage Ratio	3.09	4.44	3.74	4.84
Debt-to-Equity Ratio	0.14	0.17	-	0.02
Operating Profit Margin (%)	4.16	6.53	4.38	7.10
Net Profit Margin (%)	2.14	4.02	2.38	4.18

SWOT analysis Strengths Market leadership

Gandhar Oil Refinery is one of the leading manufacturers of white oils in India and among top five players globally, contributing to a repeated significant portion of the revenue.

Strategic location

The Company operates from three strategically located manufacturing facilities in Taloja (Maharashtra), Silvassa (Dadra and Nagar Haveli) and Sharjah (UAE) which facilitates its access to raw materials and overseas expansion.

Diversified product portfolio

The Companys expansion of product portfolio, which encompasses white oil, waxes, automotive oil, lubricants, industrial oils, greases, rubber processing oils and other petroleum-based products, allows it to respond effectively to emerging industry trends in consumer and healthcare end-industries.

Robust R&D capabilities

The Company operates advanced laboratory equipment for specialised product and quality testing. Facilities include jet-mixing and quick-unloading technologies, along with infrastructure for R&D facilities at Taloja and Silvassa. Supervisory Control and Data Acquisition (SCADA) capabilities further strengthen its technological foundation.

Strong customer relationships

The Company enjoys long-term relationships with leading global and Indian clients, with growth driven by increased business from existing customers and successful onboarding of new customers.

Weaknesses

Dependency on raw material price

The Company relies heavily on the supply of base oil which can cause price fluctuation in raw material to impact its profitability.

Regulatory restrictions

Compliance with environmental regulations requires considerable timeandresource, hindering operationalflexibility and adding tocosts.

Limited global presence

Despite having a robust presence in India, the Middle-East, parts of Asia, Africa and the far East, the Companys footprint remains limited in the eastern hemisphere, constraining global scalability.

Opportunities Declining oil prices

Oil prices have been on the decline in the later part of the financial year due to production expansion by the OPEC+ and the US, along with global trade uncertainties. Lower oil prices provide opportunity for the Company to negotiate profitable long-term contracts with its suppliers.

Emerging markets

Rapid industrialisation in emerging markets provide opportunities for the Company to explore expansion, thereby adding to its demand.

Digital transformation

The Company can enhance its operational capabilities by adopting digital technologies and automation in its processes, providing additional cost efficiencies.

Eco-friendly product development

With growing demand for sustainable solutions, the Company can focus on developing greener alternatives to traditional petroleum products, aligning with global environmental trends.

Threats

Economic downturn

Global recessionary pressures can impact the demand for the Companys products, adversely affecting revenues.

Regulatory compliance costs

Stricter environmental and safety regulations may increase operational costs and expose the Company to compliance risks or legal issues.

EV disruption

Accelerated advancement in alternate energy sources and the shift toward electric cars may diminish the demand for conventional petroleum products, which constitutes a long-term threat to the core business of the Company.

Competitive pressures

Intense competition from local and international players may result in price wars and narrowed profit margins.

Geopolitical risks

Global conflicts can cause dampening of investor sentiments and disrupt supply chains leading to additional overheads or operational delays for the Company.

Materiality in human resources

Human resource materiality entails identifying and addressing key HR issues that are vital to an organisations performance and stakeholders expectations. At Gandhar Oil Refinery, HR initiatives are closely aligned with the Companys broader business

objectives, focusing on areas such as talent management, employee engagement, diversity and regulatory compliance. This alignment not only enhances operational performance but also supports risk mitigation and integrates social responsibility within the Companys sustainable framework.

The Company adopts a structured approach that includes stakeholder engagement, assessment and prioritisation of important HR issues and their incorporation into strategic planning. Through ongoing monitoring and open reporting of these material HR matters, the Company remains sensitive to evolving challenges and requirements, thus enabling long-term success.

As of the reporting year, the Companys talent strength exceeded 350 employees.

Risk management

Risk	Risk Impact	Mitigation Strategy
Macroeconomic risk	Geopolitical turbulences, economic downturns and geoeconomic fragmentation can impact the Companys ability to further expand its business.	Gandhar Oil aims to leverage its existing customer base to expand into the manufacturing of ingredients for its key customers across new geographies.
& Oil price volatility risk	The volatility of global base oil prices can significantly affect Gandhar Oil Refinerys revenue and profitability.	The Companys supply agreements with key suppliers are linked to monthly ICIS base-oil benchmarks. To manage input-cost fluctuations, the Company enacts price-pass-through clauses in certain customer contracts. The Company also forecasts procurement and inventory needs by assessing expected sourcing levels alongside projected demand.
dS) Currency risk	The Company earns a significant portion of its income from its international business. Fluctuations in foreign exchange can therefore impact the profitability of the Company.	The Company adopts a hedging policy to mitigate this risk. A part of foreign exchange is also managed by entering into forward- contracts.
Environmental risk	The Companys synthetic business is prone to environmental risks due to growing shift in customer preferences towards bio-based alternatives.	To mitigate this, the Company adheres to regulations issued by central, state and municipal authorities.
s. Regulatory risk	The oil and gas sector is particularly vulnerable to regulations, taxes or policy changes which could increase operational costs or limit business operations for the Company.	The Company manages this risk through a flexible compliance programme that helps anticipate and adapt to regulatory changes. Additionally, the Company invests in cleaner and more sustainable technologies to lessen the impact of evolving environmental regulations.

Internal control systems and their adequacy

The risk management and internal control framework is developed and put in place in accordance with the principles and standards contained in the organisations corporate governance code. It is an integral part of the Companys overall framework, with significant findings being reported by the internal auditor to the Audit Committees. The Board of Directors advises and has strategic supervision of the Executive Directors and management and of the monitoring and support committees. The control and risk committee and the department head in charge of audit have to work under the supervision of the Statutory Auditors commissioned by the Board.

Cautionary Statement

The statements made in this section describes the Companys objectives, projections, expectation and estimations which may be ‘forward-looking statements within the meaning of applicable securities laws and regulations. Forward-looking statements are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realised by the Company. Actual result could differ materially from those expressed in the statement or implied due to the influence of external factors which are beyond the control of the Company. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements on the basis of any subsequent developments.