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 45001-2018 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) and a member of Heli offshore, the global safety focused association for the offshore helicopter industries.

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 2,73,000 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.

Dolphin Geo, Shearwater, 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 (Mumbai), S. Yanam, Rajahmundry, Suvali, Gadimoga, Imphal, Porbandar, Hyderabad, Patna, Itanagar, Katra, Behala, Neel Grath, and Vizag.

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.

India had 4.5 thousand million barrels of proven oil reserves at the end of 2018 and produced 39.5 million tonnes in 2018. As of Apr 01,2019, India had a network of 10,419 km of crude pipeline having a capacity of 145.6 mmtpa.

MARKETSIZE

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 2016-17. 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. Crude Oil import rose sharply to US$ 101.4 billion in 2019-20 from US$ 70.72 billion in 2016-17.

As of May 01, 2021, the sectors total installed provisional refinery capacity stood at 249.9 MMT; and IOC emerged as the largest domestic refiner, with a capacity of 69.7 MMT.

As of December 01, 2020, Indias oil refining capacity stood at 259.3 million metric tonnes (MMT), making it the second-largest refiner in Asia. Private companies own about 35.29% of the total refining capacity in FY20.

In FY20, crude oil production in India stood at 32.2 MMT. In April 2021, the crude oil production stood at 2.5 MMT, while for FY21 it was 30.5 MMT. In FY20, crude oil import increased to 4.54 mbpd from 4.53 mbpd in FY19. Natural Gas consumption is forecast to reach 143.08 million tonnes (MT) by 2040. Indias LNG import stood at 33.68 bcm during FY20.

Indias consumption of petroleum products grew 4.5% to 213.69 MMT during FY20 from 213.22 MMT in FY19. The total value of petroleum products exported from the country increased to US$ 35.8 billion in FY20 from US$ 34.9 billion in FY19. Export of petroleum products from India increased from 60.54 MMT in FY16 to 65.7 MMT in FY20.

Exports of petroleum products from India reached 55.9 MMT in FY21 from 60.5 MMT in FY16.

As of December 31,2020, Gas Authority of India Ltd. (GAIL) had the largest share (69.39% or 11,884 kms) of the countrys natural gas pipeline network (17,126 kms).

INVESTMENTS

According to the data released by Department for Promotion of Industry and Internal Trade Policy (DPIIT), the petroleum and natural gas sector attracted FDI worth US$ 7.91 billion between April 2000 and December 2020.

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

• According to government data, Indias natural gas zproduction increased by 22.7% YoY in April 2021, as Reliance Industries Ltd. and its partner, BP plc, increased production in the KG-D6 block on the east coast.

• In February 2021, Petronet LNG announced its plans to increase in its Dahej terminals capacity by 29% to 22.5 million tonnes per annum (mtpa) to meet the rising demand.

• In February 2021, ONGC announced that by May 2021, it would increase natural gas output from a KG basin block to 2.5-3 million standard cubic meters per day.

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

GOVERNMENT INITIATIVES

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

• In February 2021, Prime Minister Mr. Narendra Modi announced that the Government of India plans to invest ~Rs. 7.5 trillion (US$ 102.49 billion) on oil and gas infrastructure in the next five years.

• In Union Budget 2021, the government allocated funds worth Rs. 12,480 crores (US$ 1.71 billion) for direct benefit transfer of LPG (liquefied petroleum gas)

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

ROADAHEAD

Energy demand of India is anticipated to grow faster than energy demand of all major economies on the back of continuous robust economic growth. 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 two-fold by 2035.

Crude oil consumption is expected to grow at a CAGR of 3.60% to 500 million tonnes by 2040 from 221.56 million tonnes in 2017. Indias oil demand is projected to rise at the fastest pace in the world to reach 10 million barrels per day by 2030, from 5.05 million barrel per day in 2020.

Natural Gas consumption is forecast to increase at a CAGR of 4.18% to 143.08 million tonnes by 2040 from 58.10 million tonnes in 2018.

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

India is set to expand Indias natural gas grid to 34,500 kms by adding another 17,000 km gas pipeline. The regasification capacity of the existing 42 MMT per annum will be expanded to 61 MMT per year by the year 2022.

ADVANTAGE TO INDIA GROWING DEMAND

• India is the worlds third largest energy consumer globally.

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

• Consumption of natural gas in India will increase by more than three-folds in next10years.

RAPID EXPANSION

• In February 2021, Prime Minister Mr. Narendra Modi announced that the Government of India plans to invest ~Rs. 7.5 trillion (US$ 102.49 billion) on oil and gas infrastructure in the next five years.

• The industry is expected to attract US$ 25 billion investment 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

• In Union Budget 2021, the government allocated funds worth Rs. 12,480 crores (US$ 1.71 billion) for direct benefit transfer of LPG (liquefied petroleum gas) and Rs. 1,078 crores (US$ 147.31 million) to feedstock subsidy to BCPL/Assam Gas Cracker Complex.

• In Union Budget 2021, the Finance Minister announced to provide 1 crore more LPG connections under Pradhan Mantri Ujjwala Yojana (PMUY) scheme.

OIL SUPPLY AND DEMAND IN INDIA

• Diesel was the most consumed oil product in India and accounted for 39% of petroleum product consumption in 2019. It is used primarily for commercial transportation and further, in the industrial and agricultural sectors.

• Oil demand is expected to rise by 5.8 mbpd in 2040 from 5.27 mbpd in 2019.

• Oil demand increased 3.11% to 5.27 mbpd in 2019 from 5.11 mbpd the previous year.

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

• In FY21, crude oil imports decreased to 3.96 MBPD from 4.54 mbpd in Fy19.

DOMESTIC GAS PRODUCTION AND IMPORTS (BCM)

• Demand is not likely to simmer down anytime soon, given strong economic growth and rising urbanization.

• Gas consumption is projected to reach 143.08 bcm by 2040. The Government is planning to invest US$ 2.86 billion in the upstream oil and gas production to double the natural gas production to 60 bcm and drill more than 120 exploration wells by 2022.

• Indias natural gas imports increased at a CAGR of 6.92% between FY16 and FY21.

• LPG penetration rate of households reached ~97% in early 2020 compared with 56% in 2016.

COVID-19 SECOND WAVE IMPACT ON THE OIL & GAS INDUSTRY - A PERSPECTIVE & ITS RECOVERY

With the second wave of the Covid-19 pandemic hitting India with increasing lockdowns across multiple states, the countrys oil demand in 2021 fall below the level of demand seen in 2019. The oil and gas sector is now the worst performer in the world economy, with sectoral activity still below pre-pandemic levels in the first quarter of 2021.

In Q1 2021, activity levels in the sector were 5.1% lower than they were at the end of 2019, before the pandemic decimated economies across the world. This means that, of the 18 sectors included in the analysis, the oil and gas sector rank 18th in terms of its latest value for Covid-19 activity recovery. After a dip in Spring 2020, the average sector has been performing above pre-pandemic levels since early August 2020. However, this varies significantly by sector.

Indias crude oil refinery output fell by 11.22 per cent in financial year 2020-2021 as the first wave of Covid-19 and subsequent demand destruction due to lockdowns pulled down domestic consumption. According to data shared by the Ministry of Petroleum and Natural Gas, cumulative production of petroleum products by refineries during April-March 2020-21 stood at 229.22 million tonnes (mt). This stood at 258.18 mt in the April- March 2019-20 period.

Domestic crude oil and natural gas production also took a hit. But this is largely in line with the broader trend of declining hydrocarbon output every year. The lower crude oil and natural gas output is mostly attributed to ageing fields that continually produce less output. For most months of the year, upstream oil companies also cited lack of demand from their consumers for curtailing production.

Cumulative crude oil production during April-March, 2020-21 stood at 30.49 mt, this is 5.22 per cent lower 32.17 mt than production during corresponding period of last year. Cumulative natural gas production during this period stood at 28.67 billion standard cubic meters (bcm), 8.06 per cent down from 31.18 bcm production reported in 2019-20.

As India girds to rehabilitate its economy from Covids latest onslaught, pushing ahead with some key and long-awaited reforms in the upstream oil and gas sector could accelerate growth and also secure supply for the countrys growing energy needs.

Indias oil and natural gas production has been in a worryingly stubborn decline over the past decade. Crude output in the fiscal year ended March 31 fell by 5 per cent annually to around 610,000 barrels per day (b/d), while gas production slipped 8 per cent to roughly 78.5 million standard cubic meters/day. Covid- related constraints were partially responsible, but the pandemic has also delivered a reminder to build up the upstream sectors resilience against future shocks.

Theres nothing like Indian oil and gas players themselves exemplifying progress on "ease of doing business" to attract overseas partners with the funds and technical knowhow that could spur production growth. Meanwhile, gas production in India does not carry oils tax burden, but is also disadvantaged vis-a-vis growing LNG imports, which also come at a higher cost. There is some low-hanging fruit in the shape of reforms that could propel the country towards its ambitious target of becoming a gas-based economy, and some bigger improvements that will pay off in the longer term.

India has a short window of opportunity to give the domestic upstream sector a shot in the arm, especially with regard to shoring up oil and gas output from producing fields. Aside from making the most of the national resource wealth, it would help moderate the upward incline of imports over the coming years.

COVID-19 IMPACT ANALYSIS ON THE HELICOPTER INDUSTRY:

The downturn in the oil and gas industry had led to severe cuts in expenditure over exploration, production and maintenance activities across the globe, thereby adversely affecting the offshore helicopters market. In addition, the global helicopter fleet utilization hit a low of 54% in 2021 due to falling demand and increased supply from orders placed pre-downturn. As a result, oil companies required fewer journeys offshore which led to many airframes to be put into storage. However, with the recovery of oil prices to sustainable levels coupled with increased spending for offshore project development and maintenance activities, especially in the deep-water exploration and production (E and P) operations, the offshore helicopter services are expected to grow substantially.

The global oil glut has led the offshore helicopters industry to look for diversification of its business base to sustain in the market. As a result, the market players have started upgrading their global fleet to capture emerging markets, such as the offshore wind market, search, and rescue (SAR) operations and emergency medical services (EMS) markets, for new sources of revenue.

Covid-19 put another big strain on oil and gas aviation, which was already experiencing a decrease in utilization, oversupply and intense competition. Companies had to ration fleets and were forced to accept contracts with lower margins, which drove some out of the market.

However, with the rising demand for cost optimization among the end-users, the need for large helicopters with an ability to transport further and with increased passenger capacity is also set to increase. Safety is detrimental for taking any decision across offshore operations. in the long term, the industry is projected to grow at a marginal pace with the influx of a more advanced helicopter fleet, increase in the production acreage of the end users and the rise in the drilling of offshore oil and gas fields.

With the operations and maintenance in the offshore segment of the oil and gas industry increasing in complexity, especially on ultra-deep-water and deep-water drilling operations, there exists a need for frequently transporting large helicopters at regular intervals. Moreover, the government regulations have become stringent on the number of people transported at a time and the type of helicopters that can fly in particular airspace. Thus, the demand for the medium and heavy type of helicopters is expected to grow significantly.

With the oil prices stabilizing over USD 50 per barrel mark, similar trends are also expected to rise in other areas; especially in Western Europe, throughout Asia-Pacific, and most of Africa. Hence, the above developments in the offshore oil and gas industry are expected to have a positive impact on the offshore helicopter services market.

GVHL is taking continuous efforts to help the business sustain and grow during the COVID-19 pandemic.

NEED FOR HELICOPTERS FROM THE HEALTHCARE INDUSTRY TO DRIVE GROWTH

The Indian Helicopter Emergency Medical Services (HEMS) sector is in its infancy with only a handful of helicopters configured for this role. The global HEMS sector is a key market for helicopter manufacturers, along with Search and Rescue (SAR), and will remain a driver for future growth as markets like China and India begin to acquire more such helicopters. An estimated 30 per cent of the helicopters currently flying worldwide are outfitted for medical and other similar roles. Global helicopter manufacturers such as Airbus Helicopters, Bell Helicopter, AgustaWestland, Sikorsky and Russian Helicopters are keenly awaiting growth in this sector in India, with an estimated market for 50 helicopters by the end of this decade. Post 2020, the demand for air-medical helicopters is expected to grow substantially.

A helicopter configured in the air-medical evacuation role with trained crew can quickly stabilise a critically ill or injured patient (on the ground or inside the helicopter), and then have them transferred to a hospital. India lags behind in offering this important emergency medical service compared to other developed countries, where the usage of helicopters for such roles is well established. The increasing urbanisation of major Indian cities marked by rapid and unplanned growth, along with high traffic density, makes the need for HEMS even more urgent. A helicopter can travel at approximately two miles per minute and surmount challenges such as natural obstacles, traffic snarls, and slow movement of traffic on narrow roads, which cannot be overcome by ground ambulances. It is important to note that HEMS is not a substitute for ground ambulances, it only offers an enhanced capability and must for be used for emergencies only, and not when a ground ambulance can perform the same task. For many in India, the sight of the armed forces being deployed to provide air evacuation during natural disasters and other emergencies, is a familiar one. The helicopters are often mobilised from nearby units and have to be flown down and are configured only for transport and not equipped with the specialised medical equipment available on a HEMS configured platform. These operations also consume precious flight hours on expensive military assets. The solution is to have air-medical helicopters available for such roles.

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 31,2021 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 forwardlooking statements herein, which may undergo changes in future on the basis of subsequent developments, information or events.