Garware Offshore Services Ltd Management Discussions

As the members are aware, the Company owns and operates Offshore Support Vessel (OSV) which are chartered to Oil Exploration and Production (E&P) Companies as well as offshore E&P as well as offshore E&P Companies. The Company presently owns and operates 3 OSVs -1 Platform Suppy Vessel and 2 - Anchor Handling Tug Cum supply Vessel (AHTSV).

THE INDUSTRY:

The OSV industry /market navigated a transition in 2025-2026. The market is seeing tight supply and steady growth. Market size is valued around $30 billion in 2026 growing at a Compound Annual Growth Rate (CAGR) of about 6.5% to 7.7%. High demand comes from offshore oil projects and fleet aging. Few new ships are being built, which raises ship charter rates.

Indias OSV market reached USD 1.55 Billion in 2025 and is projected to reach USD 2.06 Billion by 2034, growing at a CAGR of 3.07%. Rising offshore oil and gas exploration activity in the KG Basin, Bay of Bengal and Arabian Sea, combined with Indias expanding offshore wind energy program, are creating sustained demand for Anchor Handling Tug Cum Supply Vessel, (AHTSV), Platform Supply Vessel (PSV) and specialized renewable energy support vessels.

TO SUMMARISE:

• Trends in offshore markets remain mixed.

• The global OSV market is valued at approximately $21.2 billion and is projected to reach over $38 billion by 2034.

• The Industry is projected to grow in a sustained / stable manner.

• AHTSV dominated the market in 2025 and are expected to continue to dominate the market in next few years.

• Overall, OSV markets have softened slightly year on year, but remained well above long term averages.

• The Vessel supply side remains very favourable with little growth from the orderbook, so there is market upside as and when any demand

i m prove me nt a ppea rs.

• Global OSV utilization stands at 71% down 3pp year on year.

• Demand has slipped 4% year on year, whilst OSV supply has held broadly flat.

• However, with the pool of long-term lay-ups still significant, market is expected to tighten considerably.

• Constrained supply and increased activity in 2026 will create a bullish outbok for OSV demand.

• OSV newbuild activity for all types of vessels saw 213 orders placed in 2025.

OSV MARKET SIZE & SHARE.

Market size in year 2025 : USD 23.96 billbn.

Market size in year 2026 : estimated at roughly USD $30.4 billbn.

Market size in year 2032 : USD 37.23 billion.

CAGR % (2026-32) : 6.5%.

• The Asia-Pacific regbn dominates the market, followed by strong growth in North America and Latin America.

(Source: Clarkson Report)

IMPACT OF THE RECENT WAR ON OFFSHORE INDUSTRY.

• Recent conflicts, particularly the US-lran war and Middle East supply shocks, have caused massive upheavals in the global offshore industry. The industry is experiencing a surge in deepwater investments, soaring shipping and insurance costs, and accelerated shifts toward renewable energy.

Here is how the war has specifically impacted the sector:

• Surge in Offshore Investment: The temporary closure of critbal chokepoints like the Strait of Hormuz caused historic supply deficits. With Middle East production offline, energy giants especially National Oil Companies (NOCs) have pivoted their budgets to deepwater and offshore oil opportunities in the America, Africa, and Asia to guarantee long-term in energy security.

• Soaring Insurance and Operational Costs: Heightened regional tensions and airspace closures drastically drove up war-risk insurance premiums and shipping costs particularly in the region. These heavy financial burdens have restricted non-essential maritime expbration and strained the balance sheets of global energy companies.

• Accelerated Shift to Renewables: The severe oil and liquefied natural gas (LNG) shocks forced major consuming nations to reconsider their energy dependences. Analysts note that this disruption is permanently accelerating the transition, pushing offshore wind and marine energy to the forefront of natbnal security strategies.

• Depletion of Strategic Reserves: The global economy survived the historic supply deficits by draining emergency petroleum stocks at an unprecedented pace. According toanalysis by the Intematbnal Monetary Fund, replacing these reserves will cost billions, bcking in higher capital costs for the energy sector going forward.

In its latest Oil Market Report, released in mid-May, the International Energy Agency highlighted that “mounting supply losses from the Strait of Hormuz are depleting global oil inventories at a record pace” as the ongoing conflict between the USA/lsrael and Iran continues to wreak havoc on energy markets.

With tanker traffic still restricted, cumulative supply losses from Middle East oil & gas producers already exceed 1 billion barrels comfortably. On the supply side, Saudi Arabia and the UAE have successfully redirected some exports to terminals away from the Strait of Hormuz, while stocks from both commercial and government strategic storage sites in consuming countries have been flowing into the market to offset some of the supply losses.

While that has eased some of the pressure on the supply side, observed global inventories (including oil on water) were drawn down by nearly 250 million barrels over the course of March and April, with that figure likely to be considerably higher once the May figures are added into the mix.

AND EFFECT IN PARTICULAR TO INDIA.

The US-lran war and Strait of Hormuz crisis caused major disruptions and price hikes for Indias oil and gas imports. In response, India launched a massive push to expand domestic offshore exploration, particularly in the Andaman Basin, to reduce its long-term reliance on the Middle East

The recent geopolitical conflicts impacted the Indian offshore and energy industry in several key ways including:

• Massive Offshore Expansion: To prevent future supply “chokepoints”, the government is bidding out $10 billion to explore 250,000 square kilometers of unexplored areas. State-owned firms like Oil India are increasing deepwater and ultra-deepwater exploration in the Andaman Sea.

• Global Partnerships: India is relying on major deepwater exploration experts like TotalEnergies, ExxonMobil, and Shell to scale up these offshore projects rapidly.

• New Strategic Reserves: India is building up massive storage reserves of erode and LNG to act as a buffer against future maritime conflicts

KEY TRENDS AND DRIVERS OF OSV INDUSTRY.

The OSV industry in 2025-2026 was driven by fleet aging, deepwater oil projects, and offshore wind. High charter rates continue and supply remains tight as few new ships are built.

Deepwater Oil and Gas: Most shallow water reserves are depleted. Oil companies are moving into deeper waters and harsh environments. These deepwater projects require highly advanced and expensive vessels to operate.

Energy Security: Countries like India and China are expanding local oil exploration to ensure they have enough power for their growing economies.

Offshore Wind Farms: Building and maintaining wind turbines in the ocean requires specialized ships. This demand has grown a lot, especially in Europe and Asia-Pacific

OPPORTUNITIES AND THREATS.

Key Opportunities:

Offshore Wind Boom: Global efforts to install clean energy create strong new demand for specialized wind turbine installation and maintenance vessels.

Green Upgrades: Ship owners by replacing old, gas-guzzling engines with battery-hybrid power can lower fuel costs and win more contracts.

Deepwater Exploration: Oil and gas companies are drilling deeper into the ocean. This requires heavy-duty AHTS vessels to move and secure large floating rigs.

New Builds : Orders for Newbuilds are limited and therefore supply of Assets is restricted.

Major Threats

Global crude oil prices drop, teads to energy companies cutting their spending on Exploration and Production (E & P). This instantly lowers the demand and daily charter rates for OSVs.

High Building Costs: Constructing a new, modern OSV requires massive capital expenditure (huge amounts of money). If oil prices “crash”, owners may not earn this money back.

Strict Emission Laws: Governments are passing tough new rules to lower carbon footprints. Older vessels that cannot meet these roles will face expensive repairs or forced retirement.

Labor Shortages: The maritime industry faces a large shortage of trained officers and crew. This drives up wage costs and can delay vessel operations.

The offshore industry is at a transformative stage, balancing traditional energy needs with a strong push toward sustainability. Wth rapid advancements in engineering, digital tools, and renewable technologies, the sector is set for long-term growth

Market Challenges & Forecast

• Macro Pressures: Despite market tightness, global oil price volatility and high exploration costs present headwinds to rapid expansion.

• Utilization: Marketed utiization rates remain strong and are expected to strengthen further in 2026 as fleet availability tightens.

OUTLOOK :

The offshore industry is evolving rapidly in 2026, driven by rising global energy demand, technological advancements, and the transition toward renewable energy as an “add on” to Oil and Gas exploration. While offshore oil and gas continue to play a vital role, the industry is also witnessing strong growth in offshore wind, floating solar, and subsea infrastructure.

OPERATIONAL PERFORMANCE:

The average age of the Companys vessel stood at 18.5 years.

1) During the year Company acquired one vessel viz. M.V. Mahanadi, which secured a 8 month contract w.e.f. September, 2025.

2) The vessel M V. Kamet remained idle for most of the year. However, the Vessel secured and concluded a 75 day contract w.e.f. May, 2026 and was also awarded a 4 + 1 year contract w.e.f. August 2026 to work along the East Coast of India.

3) M.V. Mahananda continued to work on the East Coast of India and will do so till December 2027, atleast

FINANCIAL RATIOS:

Pursuant to the Provisions of Schedule V- Part B, Clause I, Sub-Clause (i) & Q), the details of the significant changes in the financial ratios (i.e. change of 25% or more as compared to the immediately previous financial year) are as follows :

1) Debtors turnover Ratio : N.A.

2) The change in Inventory Turnover Ratio : N.A.

3) Interest Coverage Ratio : has reduced by 32.50% from 3.90 to 2.63 due to increase in the interest cost as a result of additional loan availed for acquisition of vessel M. V. Mahanadi.

4) Current Ratio has decreased by 41.00% from 1.81 to 1.06 due to decrease in current assets as a result of utilization of Bank balances for the acquisition of M. V. Mahanadi.

5) Debt Equity Ratio has increased by 318% from 0.01 to 0.39 due to increase in long term debt on account of acquisition of M. V. Mahanadi.

6) Operating Profit Margin: N.A.

7) Net Profit Margin Ratio has decreased by 38% from (-)24% to (~)33% in view of increase in net loss in view of the fact M.V Kamet remained idle for almost entire year. While operating costs for the vessel continued to be incurred.

8) Return on Net worth is 8.31 %, decreased by 33.69% from (-)6.22 to (-)8.31 in view of M.V. Kamet remaining idle for almost the entire year.

RISK & CONCERNS:

Fluctuating oil prices remain the biggest risks to the industry. Additionally, an “ageing fleet would automatically translate into a replacement programme progressively, which could mean a large capital outlay, in the future.

INTERNAL CONTROL SYSTEMS AND ADEQUACY

Your Company continues to emphasize the importance of the set-up of suitable systems which would drive its performance. A regular audit of systems and processes is carried out and findings help your Company improve continuously.

Cost management is an important issue for the Company, and the Technical, Procurement and Health & Safety teams are continuously exploring ways and means to be able to manage assets at optimal costs - but not at the expense of safety.

HUMAN RESOURCES AND PEOPLE

The relationship with Employees remains cordial. There have been some changes in Employees with the induction of “younger blood" into the Organisation.

Registered Office:

A-304 Naman Midtown, Senapati Bapat Marg,

Prabhadevi (West), Mumbai -400 013.

CIN : L61100MH1976PLC019229.

Date : IQ”1 August, 2026.

Place: Mumbai.