Inter State Oil Carrier Ltd Management Discussions

OVERVIEW AND DEVELOPMENTS

The logistics sector in India continues to be a fundamental enabler of economic growth and competitiveness. As the country progresses toward becoming a US$ 6 trillion economy by 2030, the logistics ecosystem is rapidly evolving to meet increasing demands for speed, efficiency, and integration.

By 2025-2026, Indias logistics and transport sector is expected to show strong momentum, supported by consistent growth in manufacturing, e-commerce, and exports. The sector is on track to expand at a compound annual growth rate (CAGR) of 4.5% from 2022 through 2050, reaching 15.6 trillion tonne- kilometres.

A key national objective remains the reduction of logistics costs from the current 13-14% of GDP to 8-10%, with targeted outcomes under the National Logistics Policy (NLP) and PM Gati Shakti Master Plan. Achieving this would enhance Indias global trade competitiveness, with estimates suggesting that a 10% reduction in indirect logistics costs could lead to a 5-8% increase in exports.

The year 2025-2026 Focus on Integration, Innovation, and Sustainability:

a. Policy Implementation and Infrastructure Integration

• The impact of PM Gati Shakti is expected to become more visible by 2025-2026, with better coordination between rail, road, air, and port infrastructure.

• Continued rollout of Multimodal Logistics Parks (MMLPs) is likely to streamline cargo movement, reduce handling costs, and minimize transit delays.

b. Digital Logistics and ULIP Adoption

• The Unified Logistics Interface Platform (ULIP) is gaining traction among logistics service providers, offering real-time visibility, seamless data exchange, and greater efficiency.

• End-to-end digital supply chain visibility and paperless logistics operations are becoming the norm, improving compliance and reducing lead times.

c. E-commerce and Last-Mile Innovation

• Driven by growing e-commerce penetration into Tier 2 and Tier 3 cities, there is a surge in demand for last-mile delivery solutions, micro-fulfilment centers, and hyperlocal logistics platforms.

• Startups are playing a crucial role in reshaping last-mile and mid-mile logistics using AI, drone delivery pilots, and EV-based fleets.

d. Green Logistics and ESG Compliance

• Environmental sustainability is becoming a key driver in logistics planning.

• Companies are investing in electric vehicles (Evs), CNG/LNG-based fleets, and green warehouses to meet carbon reduction goals and improve energy efficiency.

As India moves closer to becoming a major global manufacturing and export hub, the logistics sector in 2025-2026 is poised to be a cornerstone of this transformation. With proactive policy support, digital innovation, and sustainability-focused practices, the sector is set to become more resilient, cost-effective, and globally competitive.

For entrepreneurs, investors, and innovators, 2025-2026 offers a dynamic landscape rich with opportunities to redefine how India moves goods — faster, greener, and smarter.

GLOBAL ECONOMY

Global growth is projected to remain steady at around 3.0%-3.2% in 2025-2026, driven by the continued resilience of the United States and recovery in several major emerging and developing economies. Despite ongoing challenges such as tight financial conditions, high debt levels, and lingering postpandemic imbalances, strong consumer spending, government support in key sectors, and rising investment are supporting economic activity across regions.

While global economies continue to adjust to a high-interest rate environment, improvements in real disposable income and moderate gains in employment are aiding recovery. Private sector confidence has also seen gradual improvement, particularly in technology, infrastructure, and energy-related investments. However, the withdrawal of pandemic-era fiscal support and elevated central bank rates to control inflation continue to weigh on growth momentum in some regions.

Global headline inflation is expected to fall further to 4.4% in 2025, following a decline to 5.8% in 2024. Although inflation is easing, it remains above pre-pandemic averages, with persistence in core inflation posing a key downside risk to the global growth outlook. Continued tightness in labour markets, elevated wage pressures, and increased costs related to energy transition and localized supply chains are expected to keep inflation from falling rapidly.

Additionally, the renewed rise in oil prices and volatility in global commodity markets have once again put pressure on input costs. Structural factors such as deglobalization, reshoring of production, and the high cost of financing green energy projects could further intensify cost pressures going forward.

Looking ahead to 2025-2026, while global economic growth remains positive, it is likely to be uneven across regions. Effective policy coordination, continued investment in sustainable sectors, and digital transformation will play a critical role in shaping medium-term global economic stability.

INDIAN ECONOMY

Indias economy remains on a strong growth path in 2025-2026, following the impressive 6.5% GDP growth recorded in FY 2024-25. The country continues to be the fastest-growing major economy, supported by robust domestic demand, policy stability, and a strong reform agenda.

Favourable macroeconomic conditions, rising private sector investment, and a focus on structural reforms are sustaining momentum. Continued government emphasis on infrastructure development—both physical and digital—along with improved regulatory frameworks, is enhancing productivity and supporting ease of doing business.

India is projected to grow from a $5 trillion to a $7 trillion economy by 2031, with an average growth rate of 6.7%, pushing per capita income into the upper-middle-income bracket and solidifying Indias position as the worlds third-largest economy.

However, the outlook for 2025-2026 also faces challenges, including geopolitical uncertainties, an uneven global recovery, climate-related disruptions, and technological shifts. Navigating these risks while staying focused on domestic reforms, investment in clean energy, and boosting innovation will be key to sustaining long-term growth.

INDIAN LOGISTICS SECTOR: OUTLOOK AND OPPORTUNITIES

In 2024, Indias logistics market is valued at approximately $471 billion, reflecting steady growth driven by rising domestic consumption, expanding manufacturing activities, and the continuous boom in e- commerce. The sector maintains a healthy compound annual growth rate (CAGR) of 8.3%, underscoring its increasing contribution to the countrys economic development.

The logistics industry continues to experience strong demand, driven primarily by rapid urbanization, the rise of e-commerce, and increased manufacturing activity under initiatives such as Make in India. However, the sector faces notable challenges, including infrastructure insufficiency, outdated equipment and technology, and suboptimal facility design. These issues constrain the industrys ability to efficiently support expected growth rates of 7-8% over the next decade.

In FY 2025-26, the freight forwarding segment is expected to maintain its position as the fastest-growing function within the broader logistics market. Recognizing these dynamics, the Government of India has identified four key pillars to strengthen the logistics ecosystem:

• Integrating logistics services to enable seamless end-to-end movement of goods;

• Enhancing transport infrastructure for improved connectivity across road, rail, air, and maritime modes;

• Addressing logistics needs of core sectors such as agriculture, manufacturing, and retail;

• Enhancing international competitiveness through policy reforms and global partnerships.

Digital transformation remains central to the sectors evolution, with widespread adoption of IoT, blockchain, artificial intelligence, and data analytics helping to optimize operations, improve shipment tracking, and reduce costs. Investments in modern infrastructure — including state-of-the-art warehousing, cold storage, and multimodal logistics parks — continue to rise, addressing bottlenecks and capacity gaps.

The ongoing e-commerce boom has further heightened demand for innovative last-mile delivery solutions, emphasizing speed, flexibility, and transparency. Meanwhile, sustainability initiatives, such as the integration of electric vehicles and energy-efficient practices, are gaining momentum, aligning with global environmental goals and emerging regulatory standards.

Through the National Logistics Policy (NLP), the government aims to reduce logistics costs from the current 14.4% of GDP to 9-10%, thereby enhancing Indias export competitiveness and improving supply chain resilience. Despite persistent challenges including inflationary pressures and supply chain disruptions, the sector presents significant opportunities for growth, innovation, and employment.

In summary, FY 2025-26 offers a promising landscape for Indias logistics industry. Our company is strategically positioned to leverage ongoing infrastructure developments, technological advancements, and policy reforms to expand our service offerings, improve operational efficiencies, and contribute meaningfully to Indias economic progress.

INTER STATE OIL CARRIER LIMITED (ISOCL)

Inter State Oil Carrier Limited is a prominent player in the bulk liquid and gas transportation sector, operating across various strategic zones including East-North-East, West-North-West, West-East-West, East-South-East, and South-West-South. The company maintains a robust fleet and has established camp offices in key locations such as Haldia, Chennai, Hazira, Mumbai, Kandla, Vadodara, Namrup, and Paradeep, ensuring comprehensive coverage of Indias critical logistics corridors.

Your Directors will leave no stone unturned to ensure that the effect of contraction in demand for movement of tankers on hired basis is minimum. Your Company has full faith in the efficiency and efficacy of staff at all levels. Moreover, your Company still enjoys the confidence of many Companies across India.

FINANCIAL PERFORMANCE OVERVIEW

The financial statement for the year ended 31^st March, 2025 of the Company have been prepared in accordance with the Indian Accounting Standards (referred to as Ind AS) prescribed under section 133 of

the Companies Act, 2013, read with the Companies (Indian Accounting Standards Rules, 2015, as amended from time to time. Significant accounting policies used in the preparation of the financial statements are disclosed in the notes to the financial statements.

The following table gives an overview of the financial results of the company.

a) Analysis of revenue growth, profitability, margin performance and Earnings Per Share (EPS).

• Revenue Growth: Total income increased from ^8,524.71 Lakhs in Financial Year 2023-2024 to ^8,856.24 Lakhs in Financial Year 2024-2025, marking a growth of 3.89%.

• Profitability: EBITDA grew by 2.36%, from ^745.41 Lakhs to ^763.02 Lakhs.PAT rose significantly by 32.63%, driven mainly by lower tax expenses.PBT decreased by 5.85%, due to higher depreciation and finance costs.

• Margins: EBITDA Margin slightly declined from 8.75% to 8.62%, indicating nearly stable operational efficiency. PAT Margin improved from 1.01% to 1.29%, reflecting improved net profit due to lower tax burden.

• Earnings Per Share (EPS): EPS increased from ^1.73 in FY23 to ^2.29 inFinancial Year 2024-2025, an impressive growth of 32.37%.

b) Segment-Wise Performance:

The Company does not have more than one reportable segment in line with the Indian Accounting Standards ("Ind AS") during the year and hence, segment reporting is not applicable.

FUTURE OUTLOOK OF YOUR COMPANY

ISOCL has demonstrated a consistent commitment to expanding its fleet to meet growing demand. As of 2024, the company operates a fleet of nearly 300 vehicles, comprising owned and dedicated-attached stainless steel tankers, single and multi-compartment tankers, and state-of-the-art integrated tanker trailers equipped with high-end facilities. This expansion reflects ISOCLs proactive approach to enhancing its capacity and service offerings.

With a strong operational foundation and alignment with industry trends, ISOCL is well-positioned to leverage the growth opportunities in Indias logistics sector. The companys strategic initiatives, coupled with favourable market dynamics and government support, are expected to drive sustained growth and enhance its competitive edge in the bulk liquid and gas transportation segment.

INTERNAL CONTROL SYSTEM

The Company maintains a robust internal control system and procedures that are appropriately designed to align with the size and nature of its operations. These controls ensure that financial and operational records are reliable and accurate, supporting the preparation of financial statements and other management reports while safeguarding the accountability of assets.

An Internal Auditor conducts regular internal audits throughout the year, with audit activities carried out on a quarterly basis. The Internal Audit Reports are submitted to the Audit Committee for their review and to identify opportunities for enhancing the system across the organization.

The Company utilizes a comprehensive ERP system that facilitates accurate data recording for accounting, consolidation, and management information purposes, ensuring efficiency and integrity in data management.

The Audit Committee, composed entirely of Independent Directors, meets quarterly to provide oversight. Their role is to ensure independent, professional, and high-quality audits, reinforcing the governance framework and contributing to continuous improvement in the Companys internal control environment.

OPPORTUNITIES AND THREATS Opportunities

Innovative logistics services are increasingly vital in meeting customer demands for a wider selection of high-quality products delivered punctually and cost-effectively. Service providers in the logistics sector have significant opportunities to capitalize on this growing demand by adopting advanced models such as Direct to Customers (D2C), Direct to Retailers (D2R), and Direct to Kirana (D2K). These models require the development of new approaches to production, storage, and distribution.

To remain competitive, logistics players must enhance capabilities in distribution, fulfilment, last-mile delivery, and leverage technology for inventory management, optimization, customer data analytics, and route planning. Meeting these evolving customer expectations is essential for sustained growth.

The Indian Governments focus on infrastructure development-such as improving road networks, constructing dedicated freight corridors, implementing technology-driven warehousing, and establishing multimodal logistics parks-further strengthens the growth potential in the sector.

Threats

The transportation and logistics industry faces a range of challenges in a rapidly changing environment. Environmental concerns, including emissions and carbon footprint reduction, require urgent adoption of sustainable practices. Increasing regulatory pressures and stricter emissions standards compel companies to adjust their operations accordingly.

Additionally, the integration of advanced technologies such as autonomous vehicles presents infrastructural and safety challenges. Balancing economic viability with sustainability goals continues to be a complex task, necessitating innovative strategies and collaborative efforts.

Further risks include climate change impacts, supply chain disruptions, and aging infrastructure. Deteriorating infrastructure leads to bottlenecks, causing delays, missed delivery windows, and increased transit times. Moreover, frequent repairs and maintenance of outdated infrastructure escalate operational costs.

Despite these challenges, digitalization, automation, sustainable transportation initiatives, and collaborative approaches offer significant avenues for the industry to innovate, transform, and thrive in the future.

RISK AND CONCERN

Risk is inherent in all business activities, varying in degree and form. Your Company continuously evaluates and manages risks as an ongoing process. The primary risks faced include intense market competition and rapid technological changes, both of which significantly impact the business environment.

CHALLENGES

The logistics sector is rapidly evolving, bringing new challenges that require focused solutions. Persistent issues include lack of standardization in processes, technology adoption, and regulations. Managing high traffic density and rising input costs adds further complexity. Additionally, the absence of optimized cost-reduction processes and a shortage of professionally skilled workforce hinder growth. Technology-driven startups also face slow progress due to limited availability of experienced manpower needed to support automation and digitalization across logistics.

HUMAN RESOURCES AND INDUSTRIAL RELATIONS

Your Company places great importance on its human resources and maintains cordial relations at all levels. We are committed to investing in people and processes to enhance human capital and improve service delivery to stakeholders.

Attracting, developing, and retaining the right talent remains a key strategic focus. Recognizing human capital as vital to success, the Company values employee performance and looks forward to continued excellence. Empowerment across the organization fosters effectiveness, supported by a strong talent pool across operational areas. The human resource environment has remained smooth throughout the year, reflecting our belief that the workforce is an invaluable asset.

Safety is a core company value, and all necessary measures are taken to ensure a safe working environment.

KEY FINANCIAL RATIOS, ALONG WITH DETAILED EXPLANATIONS THEREFOR

As stipulated in the Regulation 34(3) of SEBI (LODR) Regulations, 2015, the Company reports key financial ratios as follows:

a) Details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios or sector specific ratios, along with detailed explanations thereof:

B) Details of any change in Return on Net Worth as compared to the immediately previous financial year along with a detailed explanation thereof:

CAUTIONARY STATEMENT

Statements in the Management Discussion and Analysis Report describing projections, estimates, expectations, future outlook etc. In connection with the business may be forward looking statements within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed or implied. However, the actual results could materially differ from those expressed or implied in the statements made by the Management. Various factors which are outside the purview of the Management Control can cause these deviations. These factors include economic developments in the country, changes in governmental policies and fiscal laws, sudden and unexpected rise in input costs, change in the demand supply pattern in the industry, etc.