Global Vectra Helicorp Ltd Management Discussions.

Overview

Global Vectra Helicorp Limited (GVHL) is the largest private sector helicopter operator in India. GVHL is listed on the National Stock Exchange of India Limited and the Bombay Stock Exchange Limited and is an ISO 9001-2015, ISO 14001-2015, and OHSAS 18001-2007 certified Company. These certifications overarch all GVHL activities, including flight operations, engineering, safety, quality control and commercial systems. GVHL is also proud to be a long-term Corporate Member of the Rotary Wing Society of India (RWSI).

Its prime objective is to continue to deliver world class standards of safety and service to Indias helicopter industry and to be the leader in Offshore Oil & Gas operations. We are extremely positive with regard to the continued growth in the helicopter industry in India and abroad. To capitalize on this, GVHL will continue to expand its fleet and adapt its services to meet the dynamic needs of these markets.

Flying hours and safety

Being the largest private sector helicopter operator in India, GVHL has always ensured that safety is paramount in its operations and has recorded over 2,60,000 accident free hours to date and has also been commended for our safety initiatives, including being awarded "Operator of the Year "in 2016 and 2017 by the India Business Aircraft Operators Association.

Operations, Maintenance & Personnel

The major maintenance base for offshore fleet is Mumbai where all maintenance work is carried out including 5000 hours / 05 years check on its Bell 412 and 1200 hours / 04 years check on AW 139 fleet of aircraft in a 6600 sqm state-of-the-art hangar. This facility meets international quality standards and maintains all relevant certifications from the Directorate General Civil Aviation (DGCA) as a CAR 145 & CAR-M sub part G approved organization.

GVHL has a total staff of over 400 personnel, including pilots, engineers and support staff.

Audits

GVHL is actively involved in regular and stringent audit activities from some of the most prominent oil companies in the world, including British Petroleum, Total, British Gas, ONGC, Reliance, Dolphin Geo, CGG and Cairn, through their renowned auditing agencies like Hart Aviation, GSR, Airclaim Services, Schlumberger Asia Services Limited and Aviation Management Services. It is also fully compliant with all Indian Directorate General Civil Aviation (DGCA) auditing schedules (Operations, Maintenance, Safety and Quality) and also follows a rigorous Internal Audit program. Further, GVHL undergoes thorough, independent financial auditing on a quarterly and annual basis.

Services

With a modern and technologically advanced fleet of helicopters, Global Vectra Helicorp Limited has a wide range of capability to provide essential onshore and offshore services to strategic sectors:

• Oil and Gas

• Geophysical Survey

• Corporate and VVIP flights

• Aerial Photography

• Religious Tourism

• Emergency services

• Underslung operations

• Power Grid Construction and Maintenance

Its unblemished safety track record also makes it preferred supplier for the top rung of the country for corporate, religious and leisure travel. It has world class maintenance facilities having highly skilled engineers and experienced pilots to ensure safe, secure and uninterrupted services to the nation. It is the only service provider that is capable of providing a replacement helicopter at short notice thus, ensuring unhindered operations for its clients.

Clients

Our offshore team is dedicated to providing Air logistics services to the Oil & Gas industry majors like Oil and Natural Gas Corporation (ONGC), Cairn India, Reliance Industries Limited (RIL), Transocean (TSF), Shelf Drilling, British Petroleum, Schlumberger Asia Services Limited, Baker Hughes and many more, under long term contracts with an outstanding market share in the offshore helicopter market in India.

Seawater Geo Pvt. Ltd., Polarcus, Fugro, CGG VERITAS, Results Marine & Western Geco have been our major Seismic partners for whom we have flown on the East and West Coast of India in the recent past and are hopeful for the same in the near future as well.

GVHL provides services to its clients under long-term contracts. These contracts range from one to five years with renewal options. Companies involved in offshore E&P activities have to use helicopter services extensively for Crew Change, Production, Cargo and Medevac.

Bases

GVHL has its main maintenance base at Juhu Airport, Mumbai with sub-bases in various parts of India including: Juhu, S. Yanam, Imphal, Rajahmundry, Suvali, Hyderabad, Sitapur, Patna, Uttarakhand, Gadimoga, Vijayawada, Porbandar, Dimapur, Katra, Madurai, Itanagar, Manipur, Jagdalpur, Greater Noida and Behala. internal financial control Systems and their adequacy GVHL is totally committed to maintaining the highest possible standards in its operations, maintenance and safety. GVHL introduced in India a full and formal Safety Management System (SMS) as per international recommendations and requirements of the Global Oil/Gas Industry and International Civil Aviation Organisation.

As part of our continuing effort to further enhance our management systems we implemented an ERP (Enterprise Resource Planning) System from IFS AB, a Swedish company and one of the worlds leading providers of business software. Through this system we have integrated the management data of Flight Operations, Maintenance, Repair and Overhaul (MRO) processes, Quality Control, Logistics, Inventory Management, Human Resources/ Payroll and Finance.

Mission Statement

Global Vectra Helicorp Limited shall provide safe, efficient and reliable helicopter services and we shall remain recognised as the operator of choice in our region. We shall also grow our brand internationally, by further enhancing our safety, quality and compliance functions, in line with internationally recognised standards and best practice principles for our industry.

• We are the first choice for helicopter services in India.

• Our commitment to maintaining our safety focus underpins all that we do.

• We deliver safe operations.

• We are cost effective and reliable, commensurate with high quality of service provided.

• We shall exceed our customer expectations.

• We shall achieve our objectives - because we know where we are today and where we are going tomorrow.

Our Mission is driven by our Management Team - but delivery comes from every member of our Company.

Oil and Gas Industry in India Introduction

The oil and gas sector is among the eight core industries in India and plays a major role in influencing decision making for all the other important sections of the economy.

Indias economic growth is closely related to energy demand; therefore, the need for oil and gas is projected to grow more, thereby making the sector quite conducive for investment.

The Government of India has adopted several policies to fulfil the increasing demand. The government has allowed 100 per cent Foreign Direct Investment (FDI) in many segments of the sector, including natural gas, petroleum products, and refineries, among others. Today, it attracts both domestic and foreign investment, as attested by the presence of Reliance Industries Ltd (RIL) and Cairn India.

Indias energy demand is expected to double to 1,516 Mtoe by 2035 from 753.7 Mtoe in 2017. Moreover, the countrys share in global primary energy consumption is projected to increase by 2-folds by 2035.

Petroleum product consumption registered a growth of 0.3% in April 2019.

Market Size

India is expected to be one of the largest contributors to non-OECD petroleum consumption growth globally. Oil imports rose sharply to US$ 87.37 billion in 2017-18 from US$ 70.72 billion in 201617. India retained its spot as the third largest consumer of oil in the world in 2017 with consumption of 4.69 mbpd of oil in 2017, compared to 4.56 mbpd in 2016.

India was the fourth-largest Liquefied Natural Gas (LNG) importer in 2017 after Japan, South Korea and China. LNG imports increased to 26.11 bcm in 2017-18 from 24.48 bcm in 2016-17.

Gas pipeline infrastructure in the country stood at 16,226 km at the beginning of February 2019.

Investments

According to data released by the Department for Promotion of Industry and Internal Trade Policy (DPIIT), the petroleum and natural gas sector attracted FDI worth US$ 7.018 billion between April 2000 and March 2019.

Following are some of the major investments and developments in the oil and gas sector:

In September 2018, the Government of Gujarat selected Energy Infrastructure Limited (EIL), a subsidiary of the Netherlands-based Energy Infrastructure Butano (Asia) BV, to set up a Liquefied Petroleum Gas (LPG) terminal at Okha with an investment of Rs 700 crore (US$ 104.42 million).

Foreign investors will have opportunities to invest in projects worth US$ 300 billion in India, as the country looks to cut reliance on oil imports by 10 per cent by 2022, according to Mr Dharmendra Pradhan, Minister of Petroleum and Natural Gas, Government of India.

Oil and Natural Gas Corporation (ONGC) is going to invest Rs 17,615 crore (US$ 2.73 billion) on drilling oil and gas wells in 201819.

As of March 2019, Brookfield is going to acquire Reliance Gas Transportation Infrastructure, now known as East West Pipeline (EWPL) for Rs 13,000 crore (US$ 1.80 billion).

Government Initiatives

Some of the major initiatives taken by the Government of India to promote oil and gas sector are:

> Investment of Rs 70,000 crore (US$ 9.97 billion) to expand the gas pipeline network across the country is planned by the Government of India

> Government of India approved fiscal incentives to attract investments and technology to improve recovery from oil fields which is expected to lead to hydrocarbon production worth Rs 50 lakh crore (US$ 745.82 billion) in the next twenty years.

> State-run oil firms are planning investments worth Rs 723 crore (US$ 111.30 million) in Uttar Pradesh to improve the liquefied petroleum gas (LPG) infrastructure in a bid to promote clean energy and generate employment

> A gas exchange is planned in order to bring market-driven pricing in the energy market of India

> The Oil Ministry plans to set up bio-CNG (compressed natural gas) plants and allied infrastructure at a cost of Rs 7,000 crore (US$ 1.10 billion) to promote the use of clean fuel.

Achievements

Following are the achievements of the government during 2018:

> Construction of around 13,500 km long gas pipeline is under way, at the end of 2018.

> Under City Gas Distribution (CGD) network, 86 Geographical Areas constituting 174 districts in 22 States/ Union Territories are covered

> More than 58.3 million connections have been released under Pradhan Mantri Ujjwala Yojana (PMUY) as of December 5, 2018

Road Ahead

Energy demand of India is anticipated to grow faster than energy demand of all major economies, on the back of continuous robust economic growth. Consequently, Indias energy demand as a percentage of global energy demand is expected to rise to 11 per cent in 2040 from 5.58 per cent in 2017.

Crude oil consumption is expected to grow at a CAGR of 3.60 per cent to 500 million tonnes by 2040 from 221.76 million tonnes in 2017.

Natural Gas consumption is forecasted to increase at a CAGR of 4.31 per cent to 143.08 million tonnes by 2040 from 54.20 million tonnes in 2017.

ADVANTAGE TO INDIA

Growing demand

• India is the worlds third largest energy consumer globally.

• Demand for primary energy in India is to expected increase threefold by 2035 to 1,516 million tonnes of oil

• Diesel demand in India is expected to double to 163 million tonnes (MT) by 2029-30.

Rapid expansion

• The oil and gas industry is growing robustly and players are undertaking investments to cater to the burgeoning demand.

• The industry is expected to attract US$ 25 billion investments in exploration and production by 2022.

• Refining capacity in the country is expected to increase to 667 MTPA by 2040.

Supportive FDI Guidelines

• The government allows 100 per cent Foreign Direct Investment (FDI) in upstream and private sector refining projects

• The FDI limit for public sector refining projects has been raised to 49 per cent without any disinvestment or dilution of domestic equity in the existing PSUs

Policy Support

• Government has enacted various policies such as the OALP and CBM policy to encourage investments

• In September 2018, Government of India approved fiscal incentives to attract investments and technology to improve recovery from oil fields which is expected to lead to hydrocarbon production worth Rs 50 lakh crore (US$ 745.82 billion) in the next twenty years.

Oil consumption in India (2010-17)

• Oil consumption has expanded at a CAGR of 4.78 per cent during 2007-17 to reach 4.69 mbpd by 2017.

• Due to the expected strong growth in demand, Indias dependency on oil imports is likely to increase further.

• Rapid economic growth is leading to greater outputs, which in turn is increasing the demand of oil for production and transportation.

• Indias crude oil demand is expected to increase over 150 per cent to 10.1 million tonnes per day by 2040.

• In FY19, total crude oil imports were valued at US$ 111.96 billion as compared to US$ 87.70 billion in FY18. In FY19, crude oil imports increased to 4.53 mbpd from 4.41 mbpd in FY18.

Imports and domestic oil production in India

• Indias crude oil production reached 0.64 mbpd in 2017-18.

• In March 2017, the Indian Strategic Petroleum Reserve Ltd (ISPRL) and Abu Dhabi National Oil Company (ADNOC) of UAE signed an agreement, to fill up 0.81 MMT or 5,860,000 million barrels of crude oil at ISPRL storage facility at Mangalore, Karnataka. In May 2018, India received the first shipment of 2 million barrels of crude oil from ADNOC. Provisional for FY19*

Domestic gas production and imports (bcm)

• Indias LNG imports increased at a CAGR of 8.14 per cent during FY08-FY18.

• Domestic gas production in India during 2017-18 increased to 31.83 bcm from 30.92 bcm in 2016-17.

• Auto LPG consumption advanced 0.1 per cent or about 20 MT in April 2018. Domestic production accounts for more than three-quarter of the countrys total gas consumption

EXPLORATION AND DEVELOPMENT ACTIVITIES

• During FY18(P), 1,228,000 metres of wells were explored and developed and 545 wells were drilled in the country.

• State-owned oil companies undertake most of the upstream drilling and exploration work.

• In September 2018, investments worth Rs 5,900 crore (US$840.70million) were committed in 55 oil and gas exploration areas awarded under Open Acreage Licensing Policy -1. The Government of India will soon undertake auction of 14 more blocks in these condround.

• The government is planning to invest US $2.86 billion in the upstream oil and gas production to double the natural gas production to 60bcm and drill more than 120 exploration wells by 2022.

Internal Control Systems And Adequacy:-

The Company has an appropriate system of internal controls to ensure that all activities are monitored and controlled against any unauthorized use or disposition of the assets and those transactions are authorized, recorded and reported correctly.

The Company ensures adherence to all internal control policies and procedures as well as compliance with all regulatory guidelines. The Audit Committee of the Board of Directors appraised the adequacy of internal controls.

Human Resources:-

The Company takes pride in the commitment, competence and dedication shown by its employees in all areas of business. Various HR initiatives are taken to align the HR Policies to the requirement of the business.

As on March 31,2019 the Company has a total workforce of over 400 employees.

Cautionary Statement:-

Statements in this Report on Management Discussion and Analysis, describing the Companys objectives, projections, estimates, figures and expectation may constitute "forward looking statements" within the meaning of applicable laws and regulations. Actual results might differ materially from those expressed or implied.

The company assumes no responsibility in respect of forward looking statements herein, which may undergo changes in future on the basis of subsequent developments, information or events.