Savita Oil Technologies Ltd Management Discussions

A. GL OBAL ECONOMIC SCENARIO

The global economy demonstrated steady but moderate growth during FY 2024-2025 amid a challenging backdrop. After rising by 3.2% in FY 2023-2024, global GDP growth is estimated to have eased modestly to around 3.1% in FY 2024-2025, as per latest international estimates. Growth in advanced economies improved slightly to 1.7%, while emerging markets and developing economies saw expansion of approximately 4.1%-4.2%.

Growth Trends:

Despite recurring external shocks, the global economy showed resilience, supported by robust domestic demand in select regions and ongoing recovery efforts. However, growth remained uneven advanced economies stabilised at low positive rates, whereas momentum in large emerging markets diverged due to region-specific factors.

Supply Chain Instabilities:

Heightened geopolitical tensions especially in the

Middle East and Eastern Europe – led to ongoing disruptions along strategic shipping routes, notably the Red Sea. Container freight rates on critical Asia-Europe lanes more than doubled at times compared to late 2023, translating into increased delivery times and input costs globally.

These disruptions compounded operational challenges for manufacturers, exporters, and supply-dependent industries.

Energy Price Volatility:

Crude oil markets remained turbulent over the year, with geopolitical risks and supply interruptions driving frequent price swings. Elevated energy prices persistently influenced costs across value chains, especially for energy-importing economies such as India. The direct and indirect impact of oil price volatility was felt in higher transportation expenses, increased raw material costs, and amplified uncertainty in planning for energy-intensive sectors.

Macroeconomic Headwinds:

While global inflation continued to moderate, reaching an estimated 5.9% by end-FY 2024-2025, it stayed above pre-pandemic levels in several economies due to persistent shipping and energy shocks.

B. DOME STIC ECONOMIC SCENARIO

India continued to stand out as one of the worlds fastest-growing major economies in the

FY 2024-2025, demonstrating robust fundamentals and remarkable resilience amid a complex global backdrop.

GDP Growth and Demand:

Real GDP expanded by an estimated 6.4% in FY 2024-2025, closely tracking its decadal average and making India a global growth leader.

This momentum was fuelled by strong domestic consumption, a revival in rural demand, and sustained investment in infrastructure and manufacturing. Public and private capital expenditure remained healthy, with high-frequency indicators such as GST collections and auto sales – pointing to underlying economic strength.

Inflation and Price Stability:

Inflationary pressures eased considerably. Headline retail inflation fell to an average of 4.6% in FY 2024-2025, the lowest in six years, with March 2025 inflation at 3.34% year-on-year. This achievement reflects effective policy interventions: active buffer stock management and targeted subsidies in food and fuel helped moderate price rises and protect vulnerable consumers.

Industrial and Manufacturing Activity:

Indias industrial output grew by 4.0% for FY 2024-2025, a modest increase compared to previous years but with notable resilience in the face of global headwinds. Manufacturing sector indicators, including the Purchasing Managers Index (PMI), remained in expansion territory signalling strong order books, rising exports, and robust hiring. However, year-on-year industrial growth rates slowed in the latter half of the year, reflecting global trade disruptions.

External Sector and Exports:

Services exports posted double-digit growth at 12.8% year-on-year between April and November, far outperforming merchandise exports, which grew 6% in the same period. Despite volatility in the global environment, gross FDI inflows increased nearly 18% year-on-year to reach USD 55.6 billion (first eight months of FY 2024-2025). The rupee remained relatively stable, supported by strong remittances and foreign investment.

Macroeconomic Stability:

Fiscal policy retained an expansionary orientation to support economic activity, especially in infrastructure and digitalisation. Banking sector health improved further, with lower NPAs and sustained credit growth.

Key Risks:

Indias outlook is not without challenges – uncertainties around monsoon rainfall, continued volatility in global energy and shipping costs, and evolving trade headwinds require ongoing vigilance and agile policy responses.

I. Petroleum Products Transformer Fluids

Transformer fluids play a critical role in ensuring the safe and efficient functioning of transformers, which are essential components in supporting the countrys power grid and boosting electricity distribution across both urban and rural regions. These durable fluids act as reliable insulators, aiding in the dissipation of heat and helping keep transformers operating within safe temperature limits.

Global demand for transformers is set to experience unprecedented growth in the coming years, driven by several converging trends worldwide. The rapid expansion of artificial intelligence (AI), electric vehicles (EVs), and renewable energy systems all require significant upgrades and scaling of electrical infrastructure, especially transformers. Transformers are essential for efficiently transmitting and distributing increasing volumes of electricity across smart grids, new manufacturing facilities, and vast charging networks for EVs. As cities urbanise, industries intensify, and older power grids are replaced or upgraded, the need for modern, high-efficiency transformers is rising sharply.

The simultaneous growth of electric cars and

AI, both of which need electricity and voltage transformers, is creating tremendous demand for electrical equipment and for electrical power generation. It is predicted that after chips, transformers will be the next major bottleneck for technological advancement, underlining the urgent need for investment and innovation in transformer manufacturing and grid infrastructure.

Opportunities, Threats & Risks and Future Roadmap

As cited above and in previous Annual Reports, the case for growth in Transformers and thus Transformer

Fluids remains very robust. Most of your Companys customers are undertaking capex and your Company is extremely positive on this sector. Your Company achieved double digit growth in this segment, and is positive to achieve similar results in the coming year keeping in mind the capex projects lined up by your Companys customers.

In the domestic market, distribution transformer companies are also growing, however there is more competition here and your Company remains selective in identifying business and working with credible companies with a track record and past performance. In the case of Power Transformers, your

Company is focussed on executing large orders and is working on some prestigious projects being executed across the country.

Ester Fluids for Transformers

Your Company is one of the only companies globally manufacturing the entire portfolio range of

Transformer Fluids which are mineral, natural and synthetic. Your Company is seeing now immense traction in both these fluids as new infrastructure which is being built today such as Data Centres, Renewable Power, Defence, Airports, Railways and Mining all require higher and advanced levels of safety and sustainability which cannot be sufficed by Mineral Based Fluids. Your Company is focussing sharply on being the leading manufacturer of Natural and Synthetic Fluids and working with Utilities and the concerned agencies to get its product approved by showcasing the benefits. Your Company is currently leading the efforts in India to move to these higher performance fluids.

White Mineral Oils

Global demand for white mineral oils (highly refined, colourless, odourless oils used across various industries) remains robust and is growing steadily.

The global white mineral oil market is estimated to reach about USD 2.57 3.48 billion in 2025, projecting a compounded annual growth rate (CAGR) of 3.5% 6% in the coming decade, depending on the source and market segment. This growth is primarily driven by expanding applications in personal care, pharmaceuticals, food processing, plastics, and industrial lubricants. Demand is especially strong in the Asia-Pacific region including India due to rapid population growth, urbanisation, and escalating use in cosmetics, food, and healthcare products. The main market drivers globally are rising personal care and beauty product consumption, a growing pharmaceuticals industry, and the need for safe, stable, and non-toxic oils across regulated end-uses.

Opportunities, Threats & Risks and Future Roadmap

India remains an important market for white mineral oils, supported by steady demand from key industries such as pharmaceuticals, personal care, and food processing. While the FMCG sector continues to be a significant driver of white oil consumption, its growth has been moderate rather than rapid, reflecting evolving consumer preferences and cautious macroeconomic conditions.

The Indian FMCG market is currently experiencing measured growth, estimated at around 5 7% annually, influenced by factors such as shifting rural-urban dynamics, inflationary pressures on consumer spending, and competitive market landscapes.

This tempered growth pace has impacted demand for white mineral oils used in formulations for personal care products, cosmetics, and packaged foods, which remain critical but are expanding cautiously.

Additionally, regulatory compliance and heightened consumer awareness around product safety and quality have increased demand for higher-grade and more specialised white oils, even as overall volume growth remains moderate. The food processing and pharmaceutical sectors continue to provide steady demand, though cost sensitivities and supply chain challenges may constrain rapid expansion in the short term.

Automotive and Industrial Lubricants

The Indian lubricants market demonstrated steady growth in FY 2024-2025, with overall volume increase estimated at around 2.3% for automotive lubricants and approximately 4.5% for industrial lubricants.

The automotive lubricant segment benefited from growth in passenger vehicles, two-wheelers, and commercial vehicles, while the industrial lubricant segment grew on the back of robust manufacturing, infrastructure development, and construction activities.

The farm and off-highway vehicle segment remained strong, supported by tractor sales growth of over 9% and a rise of roughly 12% in construction equipment sales, boosting industrial lubricant demand.

Opportunities, Threats & Risks and Future Roadmap

Automotive lubricants are expected to have a modest growth rate of 2.0% 2.5% by volume in FY

2025-2026, driven by vehicle purchase expansion, especially in semi-urban and rural markets.

Industrial lubricants are forecast to grow at around 4.2% 4.5%, supported by ongoing capital expenditures in infrastructure projects, increased use of off-highway machinery, and improved industrial output.

Premiumisation towards synthetic and semi-synthetic lubricants for advanced engines and emission compliance will remain a key trend, alongside steady replacement and maintenance demand.

New Mobility: CNG and Electric Vehicles (EV) CNG Vehicles: FY 2024-2025 saw CNG passenger and commercial vehicle sales grow by approximately 30% year-on-year, benefiting from expanded CNG fueling infrastructure and consumer interest in cost-effective mobility solutions. Although CNG-specific lubricants currently form a small market share, they are a fast-growing niche.

Electric Vehicles: In FY 2024-2025, electric two-wheelers and three-wheelers continued to gain traction, with electric two-wheeler sales reaching over 1.6 million units, marking a significant year-on-year increase of approximately 55%. EV penetration in commercial three-wheelers also improved, accounting for roughly half of new registrations in this segment, while electric buses have begun to see greater adoption in some urban fleets. However, despite this encouraging growth, EVs still constitute a relatively small share of Indias overall vehicle population. Consequently, the impact on traditional lubricant demand remains limited at this stage. Lubricant manufacturers are cautiously developing products tailored for e-mobility applications – such as thermal management fluids and specialised gear oils to prepare for the gradual shift in demand patterns linked to electrification.

Farm Vehicles and Off-Highway Segment

Tractor and farm equipment sales remained robust in FY 2024-2025 due to government incentives, favourable monsoon conditions, and recovering rural demand. The construction and off-highway segment continued expanding, bolstered by accelerated infrastructure spending and increased activity in mining, highways, and real estate development. These segments drive significant demand for industrial lubricants like hydraulic fluids, gear oils, and greases.

Regulatory Developments: CAFE 3 & Emission Norms

The adoption of CAFE 3 (Corporate Average Economy) regulations, alongside ongoing enforcement of Bharat Stage VI (BS VI Phase 2) and OBD-II emission standards, is steadily pushing demand for advanced, fuel-efficient, and OEM-endorsed lubricants across vehicle categories.

This regulatory environment encourages the of low-viscosity synthetic and semi-synthetic oils optimised to reduce emissions and support aftertreatment technologies.

Opportunities, Threats & Risks and Future Roadmap

Your Company had a very good reception to the launch of SAVSOL Ester5 and the brand continues to grow. Your Companys overall lubricating oil segment reported strong double digit growth and your

Companys efforts remain to educate the customers in retail as well as OEMs about the benefits of

Ester-based lubricants from a technological standpoint. Your Company will continue to invest in building the brand to achieve its market share ambitions and build the most technologically superior brand for the Indian Market.

New-Age Fluids

Your Company is investing in research and development initiatives to build on its synthetic ester platform to pioneer products for several new applications. There remains focus on building immersion cooling fluids for Electric Vehicles, Battery Energy Storage Systems, Data Centres for Artificial Intelligence Infrastructure and Automotive, Industrial and Residential Compressors. These application areas cannot survive with mineral oil or alternative fluids and your Companys Ester Products are going to play a pivotal role in the build of this Infrastructure.

II. Wind Power

In the year 2024 where the world marked 1 terawatt of wind power capacity and added a record 117 GW globally, India quietly reaffirmed its position as one of the five key engines of wind energy growth, offering not just scale, but a critical test case for how emerging economies can industrialise without fossil fuels. With the national GDP estimated at USD

4.19 Trillion as of 31.03.2025, India continues to rise as a global economic force, intensifying the need for reliable, clean, and scalable energy solutions. The governments Panchamrit commitments, which include installing 500 GW of non-fossil fuel capacity and sourcing 50% of total power from renewables Fuel by 2030, have placed wind power at the core of

Indias energy transition. Indias total installed renewable energy capacity reached 220.09 GW in FY 2024-2025 marking a 20% increase in capacity, with wind power being the second-largest contributor after solar. Indias wind manufacturing ecosystem continues to grow, supported by robust supply use chains and growing manufacturing infrastructure.

While coal remains dominant at 46% (down from 49% in FY 2023-2024) of the total capacity, the share of renewables in the total power mix is increasing steadily year-on-year.

In FY 2024-2025, India saw the addition of 4.15 GW of new wind power capacity, bringing total installations to 50.04 GW as of 31st March, 2025. This marks the highest annual wind addition, in nearly a decade and signals a rebound after years of slow growth. The year saw a sharp revival in utility-scale wind project development, driven by demand from commercial and industrial (C&I) segment for open access projects. This is also powered by wind-solar hybrid projects where wind plays a major role for Round-the-Clock power due to its capability to generate electricity during peak load.

Opportunities, Threats & Risks and Future Roadmap

Indias wind energy sector gained significant traction in FY 2024-2025, marking a shift from stagnation to strategic repositioning. With a national target of

500 GW of non-fossil fuel-based capacity by 2030, wind is once again being recognised as a cornerstone of Indias clean energy future with a target of 100

GW by 2030, i.e. 20% of the total non-fossil target.

FY 2024-2025 marked a milestone for the wind sector with the total installed wind capacity crossing 50% of Indias 2030 target at 50.04 GW. However, this is a modest achievement when compared to the nations estimated potential of 1,163.86 GW at a 150-metre hub height as per National Institute of Wind Energy (NIWE). There is huge potential for repowering the windy sites captured by aged sub-megawatt turbines.

Replacing legacy turbines with higher-efficiency machines offers a cost-effective strategy to scale generation without additional land acquisition. Beyond onshore expansion, offshore wind marks the next major frontier for India. Additionally, initiatives like the successful implementation of the Electricity

(Late Payment Surcharge and Related Matters) Rules 2022 notified by the Ministry of Power and subsequent regularisation of payment by DISCOMs are boosting investor confidence. On the manufacturing front, Indias status as the second-largest onshore wind turbine assembly hub in Asia-Pacific continued to solidify, with global OEMs exploring India as a manufacturing base for major components including gearbox, generator, blades, etc.

However, as core challenges persist, the window of opportunity is narrow. Transmission delays, policy inconsistencies across states, and procedural bottlenecks for granting Green Energy Open Access approvals by the states continue to hinder project execution. The Renewable Energy Certificate (REC) mechanism continues to falter. The removal of floor prices and weak RPO enforcement have led to low certificate demand, eroding its utility as a revenue source. Meanwhile, grid curtailment especially in a wind-saturated state like Tamil Nadu though improved over the years, still remains unresolved especially during the high wind season. Additionally, state-level issues regarding right-of-way, delayed payments, and land allocation issues are plaguing the sectoral growth.

The resurgence of Indias wind sector in

FY 2024-2025 signals a pivotal shift in the clean energy landscape. The new trend of wind-solar hybrid power projects wherein wind plays a key role, if sustained and scaled, could mark a transition towards a more flexible, decentralised, and demand-responsive renewable energy market. With the Ministry of Power and MNRE actively pushing for wind-specific targets within national renewable capacity goals, and the revised national repowering and life extension policy unlocking over 25 GW potential from ageing assets, the groundwork is being laid for accelerated growth. Simultaneously, Indias offshore ambitions remain on the radar, with early-stage infrastructure investments and international collaborations hinting at medium-term deployment possibilities. As per the latest study conducted by Survey of India, the coastline has been recalculated as 11,098.8 km. NIWE has estimated an offshore wind potential of 70 GW in India split between two states, Gujarat (36 GW) and Tamil Nadu

(35 GW). With this, India will overcome onshore land and resource constraints while providing stable, high-capacity output. Through targeted policy on long-term offtake guarantees, port infrastructure, and domestic manufacturing alignment, India is poised to emerge as a regional deployment hub and global supplier, aligning with the Prime Ministers vision that India must lead the supply chain revolution by embracing the mantra of ‘Make for the World alongside ‘Make in India. Market appetite, while visibly improving, is still sensitive to tariff viability, evacuation assurance, and regulatory consistency across states. The sectors continued growth depends on swift resolution of these barriers. With grid integration, repowering, wind-solar hybrid projects and advancing manufacturing capabilities, wind energy is set to play a central role in achieving Indias net-zero goal by 2070. India is at a point where wind energy, once stagnating, is regaining relevance not just as a clean energy solution, but as a strategic pillar for energy security. By turning this renewed momentum into decisive action, Indias wind sector can rise from resurgence to dominance, driving both energy security and our vision of a developed nation.

C. SEGMENT-WISE PERFORMANCE

I. Petroleum Products:

During the year under review, on standalone basis, your Company achieved sales volume of 4,40,136 KLs/ MTs as against 4,18,404 KLs/MTs achieved during FY

2023-2024. Your Companys sales turnover increased during the year 2024-2025 at 3,78,675/- Lakh against 3,70,814/- Lakh in the year 2023-2024. Your Company achieved a net profit of 12,377/- Lakh during the year 2024-2025 as against 20,429/-Lakh during the previous year.

II. Wind Power:

The total installed capacity in Wind Power Division of your Company stands at 53.1 MW. During the FY 2024-2025, your Companys Wind Power Plants situated in the states of Maharashtra, Karnataka and Tamil Nadu generated 80.40 MU against 86.73 MU generated in the previous year.

D. KEY FINANCIAL RATIOS

Particulars	Change*	Remarks
Inventory Turnover Ratio	4.77	Improved as inventory level reduced significantly during current FY
Debt Equity Ratio	NIL	No significant change
Debtors Turnover Ratio	0.68	No significant change
Current Ratio	17.63	Improved as trade payable reduced significantly during current FY
Interest Coverage Ratio	-6.86	Reduction in Companys profitability due to following reasons:
Operating Profit Margin	-38.53	1. The prices of major input, base oil, remained volatile affecting the margins of the products
Net Profit Margin	-40.25
Return on Net Worth change	-43.57	2. Red Sea crises continued to impact export freight cost during current FY
		3. Company continued to invest in product innovation, brand development and expansion of SAVSOL Ester5 brand.

* On standalone basis

E. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

In ternal control systems are critical designed to ensure the integrity, authorisation and accurate recording of financial and accounting information, facilitate accurate financial reporting, promote accountability, improve operational efficiency, prevent fraudulent activities and ensure compliance with applicable laws and regulations. Internal control systems function as a crucial deterrent towards fraud and financial irregularities.

Internal control systems must comprise of policies and procedures which are designed to ensure sound management of any companys operations, safekeeping of its assets, optimal utilisation of resources, reliability of its financial information and compliance. The detection and prevention of fraud are crucial for keeping investor self-assurance and enhancing corporate governance practices. In a constantly evolving regulatory environment, keeping up with compliance and governance is critical to avoid legal repercussions and establish a strong ethical and sustainable image for any organisation. Internal control systems assist companies in meeting regulatory requirements by ensuring that policies and processes align with relevant laws and standards. Moreover, a robust internal control system mitigates legal and financial risks, protecting the organisation from potential lawsuits and reputational damage.

An effective internal control system fosters clear accountability and responsibility, ensuring that employees understand their roles and obligations.

This leads to a culture of continuous improvement within the organisation, where feedback and lessons learned are used to increase efficiency and effectiveness.

Your Company has a robust internal control system in place, aligned with the size, scale and complexities of its operations. The Audit Committee of your

Company conducts reviews of the Internal Audit function regularly. Internal Auditors have been appointed by your Company to conduct periodic audits, assessing the adequacy and effectiveness of internal control systems in specific areas identified by the Committee, and recommending improvements as necessary. The Audit Committee reviews internal audit reports during its meetings and any significant audit observations are brought to the attention of the Audit Committee for review and discussion. Subsequently, the Audit Committee devises action plans and provides recommendations, which are then communicated to department heads of your Company for necessary corrective actions and compliance. The Audit Committee reviews the progress on these action plans during its subsequent meetings.

F. MA TERIAL DEVELOPMENTS IN

RESOURCES/INDUSTRIAL RELATIONS

During the year under review, your Company maintained cordial industrial relations across all its locations, fostering a stable and collaborative work environment. Your Company values the pivotal role of human resources in its growth trajectory and acknowledges their significant contribution to sustained business growth and long-term success.

It remains dedicated to cultivating a conducive work environment where employees can thrive, contribute effectively and advance professionally.

The management prioritises open training programs aimed at enhancing employee skills and productivity. Continuous improvement in performance, efficiency and productivity are facilitated through timely evaluations and feedback within the Companys employee performance management system, ensuring alignment of employees efforts with organisational objectives, targets, and goals.

Your Company remains committed to fostering a work environment that supports innovation, collaboration and resilience. Continued focus on people development is expected to play a crucial role in supporting your Companys strategic goals.

	For and on behalf of the Board
	Gautam N. Mehra
Mumbai	Chairman & Managing Director
7th August, 2025	(DIN: 00296615)