United Drilling Tools Ltd Management Discussions

Global economic growth

The global economy started 2024 with the condence that ination was largely beaten and that major economies would likely avoid recession. But as the year drew to a close, a nagging worry crept in: ination proved to be much stickier than wed hoped. While the US economy powered ahead, many other developed nations struggled to keep pace. On top of that, many countries saw their currencies lose value, a situation that could become especially tricky for developing economies.

Stepping in 2025, the global economic activity is expected to maintain modest momentum in 2025 owing to the likely shift in policy following numerous elections around the world. New policies could lead to new trajectories for ination, borrowing costs, and currency values, as well as trade ows, capital ows, and costs of production. According to the IMF, the global economy is expected to grow at 3.3% both in 2025 and 2026, primarily on account of an upward revision in the United States osetting downward revisions in other major economies. Global headline ination is expected to decline to 4.2% in 2025 and to 3.5% in 2026, converging back to target earlier in advanced economies than in emerging market and developing economies.

Global ination is expected to ease gradually, dropping from 4.5% in 2024 to 3.5% in 2025, though it will still remain slightly above the 3.1% level seen in 2019. Advanced economies are likely to rein in ination more quickly than emerging markets, but the path to price stability may not be smooth. Persistent wage and services ination in some regions could lead to uneven monetary policy responses. Additionally, factors such as rising protectionism, geopolitical tensions, supply chain adjustments, and demographic shifts could keep inationary pressures elevated, adding uncertainty to the global outlook.

Growth projections for advanced economies are taking dierent paths. In the United States, strong consumer demand continues to drive momentum, supported by rising wealth, a relatively exible monetary policy, and favorable nancial conditions. The economy is expected to grow by 2.7% in 2025 ?€“ 0.5 percentage points higher than the previous forecast in October. This upward revision reects the carryover eect from 2024, along with a resilient job market and increasing investments. However, by 2026, growth is anticipated to gradually ease, aligning with its long-term potential.

Growth in the euro area is expected to improve, but at a slower pace than previously anticipated. Ongoing geopolitical tensions continue to dampen condence, and weaker-than-expected momentum in late 2024 ?€“ particularly in manufacturing ?€“ has led to a downward revision of the 2025 growth forecast to 1.0%, 0.2 percentage points lower than earlier estimates. However, by 2026, growth is projected to reach 1.4%, driven by stronger domestic demand as nancial conditions ease, condence strengthens, and uncertainty gradually subsides.

In emerging markets and developing economies, economic growth in 2025 and 2026 is expected to stay on par with 2024.

Chinas 2025 growth forecast has been slightly revised upward by 0.1 percentage point to 4.6%, mainly due to momentum from 2024 and the scal stimulus announced in November, which is helping counterbalance the negative impact of trade policy uncertainties and challenges in the property sector. In 2026, growth is expected to remain steady at 4.5%, as trade concerns ease and an increase in the retirement age helps slow down labor supply decline.

Meanwhile, Indias economy is projected to maintain a robust growth rate of 6.5% in both 2025 and 2026, consistent with earlier forecasts and aligned with the countrys long-term potential.

Economic growth in the Middle East and Central Asia is expected to improve, though not as much as previously anticipated. A key factor behind this adjustment is the 1.3 percentage point downgrade in Saudi Arabias 2025 growth forecast, largely due to the extension of OPEC+ production cuts.

In Latin America and the Caribbean, overall growth is set to edge up to 2.5% in 2025, even as some of the regions largest economies experience a slowdown. Meanwhile, sub-Saharan Africa is projected to see stronger growth next year, while emerging and developing Europe is likely to face a slowdown.

Outlook

According to the IMF, factoring in recent market trends and the impact of rising trade policy uncertainty, the uncertainty surrounding the global economy is expected to persist throughout 2025. However, the probable impact of any potential policy changes that are still under discussion.

In 2025, energy commodity prices are expected to decline by 2.6%, largely due to weaker oil demand from China and increased supply from non-OPEC+ countries (which includes Russia), though rising gas prices ?€“ caused by colder weather, supply disruptions, and ongoing conicts in the Middle East ?€“ partly oset the decline. Meanwhile, non-fuel commodity prices are projected to rise by 2.5%, mainly driven by higher food and beverage costs due to adverse weather aecting major producers.

On the monetary front, major central banks are expected to continue lowering interest rates, though at dierent speeds, depending on their respective economic growth and ination outlooks. Fiscal policies in advanced economies, including the U.S., are expected to tighten in 2025?€“26, with a lesser degree of tightening in emerging and developing markets.

Indian economy overview

Even in FY25, the Indian economy continued to emerge as of the fastest growing economies in the world, but at a sluggish pace compared to the previous years. Slower growth in the rst half of the scal (6%) led the RBI to bring down the annual projection to 6.6% (down from an earlier projection of 7%). However, according to the rst advance estimates, Indias real GDP is expected to grow at 6.4% in FY25.

Some of the key factors which helped drive the growth of the Indian economy include, rural consumption has remained robust, supported by strong agricultural performance, while the services sector continues to be a key driver of growth. Manufacturing exports, particularly in high-value-added components (such as electronics, semiconductors, and pharmaceuticals), have displayed strength, underscoring Indias growing role in global value chains.

Indias current account decit (CAD) widened to $11.5 billion in the third quarter (Q3) of FY25 from $10.4 billion in the year-ago quarter due to increase in merchandise trade decit. However, CAD was unchanged at 1.1% in terms of percentage of GDP. However, on the positive side, CAD moderated from $16.7 billion (1.8% of GDP) in Q2 FY25 to $11.5 billion (1.1% of GDP). For Q4 FY25, it is expected that the current account to witness a surplus of $4-6 billion aided by a seasonal uptick in merchandise exports and the resulting moderation in the merchandise trade decit, as well as healthy services surpluses. For the entire scal year (FY25), the CAD is expected to hover around 0.8% of GDP.

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Indias foreign exchange reserves have continued their upward trajectory, reaching $676.3 billion as of April 4, 2025, according to the Reserve Bank of India (RBI). This marks the highest level in ve months and reects gains for the fth straight week. With this achievement, India has rmly positioned itself as the worlds fourth-largest holder of forex reserves, following China, Japan, and Switzerland. The journey of Indias forex reserves has been remarkable ?€” rising from just $29.3 billion in March 1997 to an impressive $644.39 billion by December 2024. More than just a number, these reserves are a testament to Indias economic resilience and prudent nancial management. In times of global uncertainty, they act as a vital buer, strengthening market condence and supporting economic stability. They also play a critical role in bolstering the national currency, facilitating debt repayments, and promoting vibrant trade activities.

Indias economic growth momentum remains strong, with the real Gross Value Added (GVA) projected to expand by 6.4% in FY25. The agriculture sector is set for a healthy rebound, expected to grow at 3.8%, reecting resilience in farm output. The industrial sector is poised for 6.2% growth, supported by a surge in construction activities and steady expansion in electricity, gas, water supply, and other utilities. Meanwhile, the services sector continues to be a key driver of economic activity, projected to grow at 7.2%, fueled by strong performance in nancial and real estate services, professional sectors, public administration, and defense. This balanced expansion across sectors underscores the economys robustness and adaptability in the face of evolving challenges.

Despite the overall positive outlook, certain challenges persisted, particularly in the manufacturing sector. Export growth in this segment faced a notable slowdown, largely due to subdued demand from key international markets. Additionally, the aggressive trade and industrial policies adopted by major trading nations further intensied the pressure,

As a cornerstone of Indias industrial ecosystem, the MSME sector drives manufacturing, exports, and employment, shaping the nations economic fabric. With 5.93 crore registered MSMEs employing over 25 crore people, these enterprises form the backbone of economic activity.

creating a more competitive and restrictive global landscape for manufacturingexports.

In its January 2025 update of the World Economic Outlook, the International Monetary Fund (IMF) revised Indias real GDP growth projection for FY25 to 6.5%, marking a 0.5 percentage point downgrade from its October 2024 forecast. This adjustment largely stems from an unexpected 12.3% contraction in the Government of Indias capital expenditure during the rst eight months of FY25 ?€“ a stark contrast to the budgeted 17.1% growth over FY24s actuals, as reported by the Controller General of Accounts (CGA). The slowdown in public investment has, in turn, dampened gross xed capital formation (GFCF) ?€“ a key indicator of investment activity ?€“ bringing its estimated growth down to 6.4% in FY25, compared to 9.0% in FY24. On the external front, however, there is a silver lining. The estimated 1.7 percentage point positive contribution of net exports to real GDP growth reects the benets of lower crude oil prices, even as global economic uncertainties continue to pose challenges for theeconomy.

Indias net direct tax collections for FY25 witnessed a robust 13.57% growth, rising to 22.26 lakh crore. This gure not only exceeded the initial budget estimates but fell just short of the revised target, largely due to lower-than-expected non-corporate tax receipts. Reecting the strength of this performance, tax buoyancy ?€” which measures the growth in direct taxes relative to GDP growth ?€” improved to 1.57, up from 1.54 in FY24. For context, the net direct tax collection in FY24 stood at 19.60 lakh crore, underlining the strong momentum carried into the new scal year.

Indian MSME sector

The Micro, Small, and Medium Enterprises (MSME) sector is a critical enabler of Indias socio-economic progress. Beyond driving economic growth, it plays a crucial role in shaping the nations entrepreneurial landscape, particularly in semi-urban and rural regions. Its contributions extend far beyond numbers, fueling innovation, creating jobs, and strengthening local economies. As a key engine of Indias GDP and exports, the MSME sector continues to be a catalyst for inclusive and sustainable development.

As a cornerstone of Indias industrial ecosystem, the MSME sector drives manufacturing, exports, and employment, shaping the nations economic fabric. With 5.93 crore registered MSMEs employing over 25 crore people, these enterprises form the backbone of economic activity. In 2023-24, MSME-related products contributed 45.73% of Indias total exports, underscoring their pivotal role in establishing the country as a global manufacturing powerhouse. Recognizing this, the latest budgetary provisions focus on fostering innovation, enhancing competitiveness, and improving resource accessibility. By empowering MSMEs with the necessary tools and support, the government aims to expand their reach and amplify their impact on Indias economic growth.

Exports from MSMEs have seen substantial growth, rising from 3.95 lakh crore in 2020-21 to 12.39 lakh crore in 2024-25. The number of exporting MSMEs has also surged, increasing from 52,849 in 2020-21 to 1,73,350 in 2024-25. Their contribution to Indias total exports has steadily grown, reaching 43.59% in 2022-23, 45.73% in 2023-24, and 45.79% in 2024-25 (up to May 2024). These trends underscore the sectors increasing integration into global trade and its potential to drive Indias position as a manufacturing and export hub.

Key Budget takeaways for the Indian MSME Sector

Revised classication criteria: To empower MSMEs with greater growth opportunities, the investment and turnover thresholds for classication have been signicantly raised, by 2.5 times and 2 times, respectively. This strategic move aims to enhance operational eciency, drive technological adoption, and create more employment opportunities, fostering a stronger and more competitive business ecosystem.

Enhanced credit availability: The credit guarantee cover for micro and small enterprises has been increased from 5 crore to 10 crore, enabling additional credit of 1.5 lakh crore over ve years. Startups will see their guarantee cover double from 10 crore to 20 crore, with a reduced fee of 1% for loans in 27 priority sectors. Exporter MSMEs will benet from term loans up to 20 crore with enhanced guarantee cover.

Credit cards facility for micro enterprises: A new customised Credit Card scheme will provide 5 lakh in credit to micro enterprises registered on the Udyam portal, with 10 lakh cards set to be issued in the rst year.

Support for startups and rst-time entrepreneurs: A dedicated 10,000 crore Fund of Funds is likely to be launched to strengthen support for startups, fostering innovation and entrepreneurship across the country. Additionally, a new initiative will empower 5 lakh rst-time women, Scheduled Caste, and Scheduled Tribe entrepreneurs by oering term loans of up to 2 crore over a ve-year period. This initiative aims to create greater nancial inclusion, encourage self-reliance, and unlock new opportunities for underrepresented entrepreneurs.

Focus on labour-intensive sectors: A Focus Product Scheme for the footwear and leather sector aims to boost innovation, manufacturing, and non-leather production, creating 22 lakh jobs and driving a 4 lakh crore turnover. A new toy sector scheme will enhance cluster development and skill-building, positioning India as a global manufacturing hub. Meanwhile, a National Institute of Food Technology in Bihar will accelerate food processing growth, unlocking opportunities in the easternregion.

Manufacturing and clean tech initiatives: A National Manufacturing Mission will provide policy support and roadmaps f or small, medium, and large industries under the Make in India initiative. Special emphasis will be given to clean tech manufacturing, fostering domestic production of solar PV cells, EV batteries, wind turbines, and high-voltage transmissionequipment.

Export scenario

Despite the prevailing geopolitical tensions, the Indian goods and services exports is expected to cross $800 billion by the end of the current scal, signalling a robust economy and continued growth across sectors. This would be higher than the earlier record of $776.68 billion in the overall exports in FY24.

As demand for Indian products in the global market surges across categories, the countrys total exports reached about $778 billion in FY 2023-24, compared to $466 billion in FY 2013-14 - a whopping 67% growth. In 2023-24, merchandise exports stood at USD 437.10 billion, while services exports contributed USD 341.11 billion, demonstrating a well-balanced expansion. Key sectors like electronics, pharmaceuticals, engineering goods, iron ore, and textiles played a vital role in this surge. Strengthened by strategic policy measures, enhanced competitiveness, and broader market access, Indias export ecosystem is now more resilient and deeply integrated into the global economy.

The momentum has continued into FY 2024-25, with cumulative exports during April-December 2024 estimated at USD 602.64 billion, a 6.03% increase from USD 568.36 billion in the same period of 2023. Strengthened by strategic policy measures, enhanced competitiveness, and broader market access, Indias export ecosystem is now more resilient and deeply integrated into the global economy.

Indias share in world merchandise exports also improved from 1.66% to 1.81%, with the country advancing in rankings from 20th to 17th position. The feat was achieved as the government implemented several initiatives to sustain and accelerate export growth.

Outlook

India is poised to sustain a robust 6.5% GDP growth in FY 2026, driven by favorable monsoons and stable commodity prices. This momentum is supported by a resilient manufacturing sector, moderated ination, tax incentives, and strong urban consumption. Additionally, continued infrastructure expansion and economic reforms are reinforcing Indias ability to navigate global uncertainties.

Looking ahead, India is expected to maintain its potential real GDP growth of 6.5% YoY from FY26 to FY28, positioning itself as the worlds third-largest consumer market by 2026 and the third-largest economy by 2027, trailing only the United States and China. The countrys nominal GDP is projected to rise from USD 4 trillion in FY25E to over USD 6 trillion by FY30E.

This growth trajectory is likely to be fuelled by a manufacturing and export push, increasing services exports, and accelerated digitalization, all contributing to higher productivity and eciency gains. However, challenges persist, including the need to create productive employment for the expanding workforce, a less favorable global trade environment, and the impact of automation on jobs.

Overview of the global oil & gas industry

The global oil and gas sector in 2024?€“25 navigated a phase of profound realignment, shaped by a complex interplay of geopolitical tensions, shifting policy landscapes, subdued economic momentum, and the accelerating push toward energy transition. Crude prices experienced heightened volatility, inuenced by OPEC+ production recalibrations, escalating trade frictions among major economies, and evolving investment strategies across the oil value chain. On the demand side, signicant shifts became more evident, Chinas consumption began to level o, while India emerged as the primary engine of growth. Meanwhile, petrochemicals surpassed traditional fuels as the main contributor to incremental demand.

In the midst of these dynamic forces, the industry continues to transform. Rening capacity is undergoing strategic rebalancing, LNG is gaining greater inuence, and the urgency to decarbonise is intensifying. Companies that can swiftly adapt, by reshaping portfolios, enhancing asset eciency, and embedding low-carbon solutions, are better equipped to lead in this evolving energy landscape.

Brent crude prices reected this turbulence, averaging $78.91 per barrel in FY25, down from $83.15 the previous year. The sharpest drop occurred between April and early May 2025, when prices fell to four-year lows due to OPEC+ output normalization and renewed US-China trade tensions. By May 2025, Brent had declined to $64.22 per barrel, a signicant fall from $67.79 in April and $82.05 a year earlier.

OPEC+, led by Saudi Arabia, began phasing out its voluntary output cuts of over 2 million barrels per day from May 2025, just as global demand remained weak and economic forecasts muted, raising concerns of oversupply. Brent crude prices briey surged nearly 20% to the mid-$70s amid fears of supply disruption during the Israel-Iran conict but eased after a ceasere. Meanwhile, natural gas prices stayed elevated, with Henry Hub futures exceeding $4.30/MMBtu, driven by strong power demand and limited LNG supply. The energy price environment remains fragile, shaped by ongoing geopolitical tensions and uncertain macroeconomic trends.

Global upstream oil investment is projected to decrease by 6% to $420 billion in 2025, reecting a cautious outlook in response to market dynamics. The most signicant cutbacks are seen in the U.S. tight oil basins, where rising costs, price volatility, and dwindling reserves in prime zones have put pressure on project viability. In contrast, conventional oil developments across the Middle East, Latin America, and Africa remain resilient, supported by lower break-even costs, strong government backing, and favourable long-term contracts.

The global oil market is shifting from traditional fuels to petrochemical feedstocks like naphtha, LPG, and ethane, with the IEA projecting that polymer and synthetic ber production alone will consume 18.4 million barrels per day by 2030, nearly one-sixth of global oil use. This trend is driving major investments in NGL infrastructure, led by the US, China, and the Middle East.

Meanwhile, demand for rened fuels such as gasoline and diesel is plateauing, expected to peak by 2027, as eciency gains, changing mobility patterns, and rising EV adoption reduce consumption, particularly in developed markets like the US andJapan.

Outlook

Global oil demand is expected to peak at around 105.5 million barrels per day by 2030, with growth slowing signicantly after 2026. This plateau is driven by weak economic growth, rising electrication, and policy shifts toward cleaner energy sources.

Electric vehicles are a major disruptor, with global EV sales surpassing 17 million in 2024 and expected to top 20 million in 2025, displacing an estimated 5.4 million barrels of daily oil demand by 2030. Remote work trends are also cutting fuel use, with the US alone reducing demand by 800,000 barrels per day. Meanwhile, Saudi Arabias transition to LNG and renewables is set to displace nearly 1 million barrels per day.

Regionally, demand is also diverging. OECD nations will see a combined decline of 1.7 million barrels per day, and Chinas growth will nearly stagnate. In contrast, India is set to drive demand with an additional 1 million barrels per day, supported by rising mobility and infrastructure, while Southeast Asia will also contribute to growth. The industry faces a pivotal decade, requiring adaptability amid evolving consumption patterns and energy transitions.

Overview of the Indian oil and gas industry

India is the worlds third-largest energy consumer globally; the oil & gas industry is among the eight core industries in India and plays a major role in inuencing the decision-making for all the other important sections of the economy.

Indias petroleum sector witnessed strong momentum in FY 2024-25, fuelled by rising demand across the transport, aviation, and residential segments. Total petroleum product consumption soared to a record 239.5 million metric tonnes (MMT), marking a 2.2% year-on-year increase. This surge was largely driven by higher usage of Motor Spirit (MS), Aviation Turbine Fuel (ATF), Liqueed Petroleum Gas (LPG), and High-Speed Diesel (HSD), which grew by 7.5%, 8.9%, 5.6%, and 2.0% respectively. Over the past decade, consumption patterns have demonstrated steady structural growth?€”with MS growing at a CAGR of 7.7%, LPG at 5.7%, ATF at 4.6%, and HSD at 2.8%. Factors such as greater personal mobility, expanding air travel, and deeper LPG penetration have played pivotal roles. Interestingly, the HSD-to-petrol consumption ratio fell from 3.6 in 2014?€“15 to 2.3 in 2024-25, signaling a gradual consumer shift toward gasoline over diesel.

Aviation fuel sales neared 10 MMT in FY25, with international aviation contributing 26%. Retail outlets grew to 96,724, including 27,748 rural stations, and are set to cross 100,000 soon. Cleaner fuel access expanded with 29,258 alternative fuel outlets and 27,602 EV charging stations. Direct diesel sales made up 12% of total volumes. Ethanol blending rose sharply, averaging 18.4% from Nov 24 to Mar 25, peaking at 19.7% in Feb 25, keeping the 20% target well within reach before the 2025?€“26 deadline.

Indias dependence on imported crude oil and natural gas deepened in FY2024-25, reecting strong demand amid relatively stable domestic output. Crude oil import dependency reached an all-time high of 88.2%, slightly up from 87.8% the previous year, while natural gas dependency rose to 50.8% from 47.1%. Domestic crude oil production saw a marginal dip, declining to 28.7 MMT from 29.4 MMT in FY2023-24. Crude oil imports increased to 242.4 MMT, pushing the total import bill up by 3% to $137 billion. Liqueed Natural Gas (LNG) imports also surged by 15.4%, reaching 36.4 billion m³ valued at $15.2 billion, compared to $13.4 billion a year earlier, underscoring the growing pressure on Indias energy security and trade balance.

Despite ongoing policy eorts to reduce import dependence, India continues to rely heavily on overseas supplies to meet its energy needs. In FY 2024?€“25, self-suciency in petroleum products stood at just 11.8%, with domestic crude oil production of 28.2 MMT falling far short of the total consumption of 239.2 MMT. Natural gas production remained relatively stagnant at 35.6 billion cubic metres. To mitigate the risks of global price uctuations, state-run companies entered long-term LNG agreements for 11 MMT annually?€”strategically benchmarked to the Henry Hub index, marking a shift from traditional oil-linkedpricing.

Indias exploration and production (E&P) ecosystem has evolved signicantly, moving from legacy nomination and pre-NELP regimes to more liberalised frameworks like HELP and DSF. The Open Acreage Licensing Policy (OALP) continues to gain traction, with its tenth round recently launched. Production remained geographically diverse?€”Western Oshore elds contributed 43% of crude oil output, followed by Gujarat Onshore (17%), Assam Onshore (16%), and Rajasthan Onshore (12%). A major policy milestone during the year was the passage of the Oileld (Regulatory and Development) Amendment Act, 2025, which consolidated multiple licenses into a single petroleum lease. This reform is expected to streamline regulatory processes, enhance energy accessibility and aordability, and bolster Indias long-term energy security in line with the national vision of ViksitBharat 2047.

Indias rening landscape remains robust, with a total installed capacity of 258.1 MMTPA as of April 2025?€”ranking it second in Asia and fourth globally. The country operates 22 reneries, with the private sector accounting for 34.3% of capacity. Crude throughput reached 267.7 MMT during the year, with an impressive average capacity utilization of 102.9%. Total petroleum product output stood at 284.1 MMT, comprising 35.4% light distillates (LPG, petrol, naphtha), 50.6% middle distillates (diesel, ATF, kerosene), and 14% heavy ends (petcoke, furnace oil, bitumen). High-Speed Diesel (HSD) dominated the product mix at 41.5%, followed by Motor Spirit (MS) at 17%, naphtha at 6.5%, and ATF at 6.2%.

Outlook

India remains at the forefront of global oil demand growth, poised to register the highest absolute increase in consumption through 2030. According to the IEA, Indias oil demand is expected to rise by an additional 1 million barrels per day, driven primarily by gasoline and jet fuel. This surge is fuelled by rapid urbanization, rising private vehicle ownership, a growing middle class, and increasing air travel. Deeper LPG penetration and an expanding petrochemical base are further reinforcing the demand outlook. Simultaneously, Indias energy transition is gathering momentum. Ethanol blending has reached 18.4% in the current supply year, with a 20% target by October 2025. Strong policy thrust on biofuels, compressed biogas, and electric mobility is opening up new avenues for growth. Additionally, the National Green Hydrogen Mission, aiming for a 5 MMT capacity by 2030, signals Indias commitment to cleaner fuels and long-term energy security. Together, these dynamics oer sustained opportunities across the rening, marketing, and petrochemical value chains.

Company overview

Founded in 1985, United Drilling Tools Limited (UDTL) has grown to become a trusted leader in Indias oil and gas exploration landscape. With a stronghold in the domestic market, UDTL oers a complete suite of high-performance drilling, production, and exploration solutions, proudly holding the largest market share in the country. This leadership is built on a foundation of advanced manufacturing capabilities, rigorous quality systems, and a dedicated team of experts who bring precision and innovation to every project.

The companys product portfolio spans four critical categories: wireline and well service equipment, gas lift equipment, downhole tools, and large OD casing connectors, all designed to meet stringent global standards, including ISO 9001 and API certications.

Expanding beyond Indian shores, UDTL has steadily built its global footprint through long-standing partnerships with both public and private sector giants, including ONGC, Oil India, Focus Energy, Welspun, Halliburton, Schlumberger, Shelf Drilling, American Completion Tools Inc., Argentera, Petrobras, Cactus, Baker Hughes, Cairn Oil & Gas (Vedanta) while also collaborating with leading international brands to enhance its reach and impact. UDTLs growth story is powered by a balanced revenue mix across government contracts, private enterprises, and global exports. Guided by a deep commitment to innovation, excellence, and engineering expertise, UDTL continues to pioneer solutions that drive the future of oil and gas exploration, both in India and around the world.

Our Core Strengths

Relentless R&D focus and development. We continuously push the boundaries of innovation to deliver precisely engineered, high-performance products tailored for the upstream oil and gas industry. Each innovation reects our passion for quality, craftsmanship, and forward-thinking solutions.

Industry leadership

We are proud to stand as a leading force in Indias oil and gas drilling tools and manufacturing sector. Our unwavering focus on excellence drives us not only to uphold this leadership but also to extend our reach across global markets with condence andambition.

Diverse and integrated product portfolio

Our carefully curated product range is designed to perform seamlessly across various operational environments within the oil and gas sector. These specialised oerings ensure compatibility, eciency, and reliability, enabling our customers to operate with greater assurance.

Strategic global partnerships

Our pursuit of excellence is amplied through collaborations with internationally respected industry players. These partnerships not only strengthen our capabilities but also accelerate our entry into new markets, reinforcing our presence on the global energystage.

Collaborative synergies

We believe in the transformative power of collaboration. By leveraging strong internal and external synergies, we have built a foundation that enhances our global competitiveness while reinforcing our leadership in the domestic market.

SWOT Analysis S- Strengths a) The company having strong intellectual property base, proven technology, and superior product quality, the company holds signicant potential to expand in the global market. Increasing demand for reliable, aordable, and innovative equipment worldwide presents the company with an attractive opportunity to establish itself as a leading international player. By leveraging its domestic strengths, building strategic global partnerships, and focusing on brand positioning, the company can successfully capture emerging opportunities across geographies.

b) Analysis indicates that the company is likely to experience stronger growth compared to the overall industry in the coming years. This anticipated performance overtakes industry averages, reecting a favourable outlook for the companys future.

c) In India, labour and overhead costs are much lower compared to the USA and European countries, where most of this equipment are currently made. This substantial cost dierence gives Indian companies a strong advantage and produce equipment more aordably, allowing them to oer more competitive prices. This cost-benet ratio helps Indian manufacturers stand out in the global market.

d) Compared with others in the industry, the companys products feature a high level of patented content. This unique aspect signicantly enhances the companys competitive position. The specialized nature of these products sets the company apart from competitors. As a result, the company can leverage its proprietary technology to gain a strong market advantage. This distinctive edge helps secure a leading position in the industry.

e) Currently, the companys products are recognized for their excellent quality. They stand out signicantly in the market due to their high level of diversity. This unique quality helps the company distinguish itself from competitors. As a result, the products are supposed as top-tier in their category. This strong market presence underscores the companys reputation for excellence.

f) The market is currently in a healthy state, experiencing rapid growth that presents signicant opportunities for businesses. With demand increasing swiftly, companies are benetingfromafavourableenvironmentwithminimalprice competition. This lack of intense pricing pressures allows rms to focus on enhancing their products and services rather than solely competing on cost. As a result, businesses can invest in innovation and quality improvements without the constant threat of price wars. Overall, the strong and expanding market conditions support sustainable success and protability for companies operating within it.

g) For new competitors, entering this market is both challenging and costly. This high barrier to entry helps protect the companys competitive position. Consequently, it enhances the companys overall value. competitive position and increases its value.

h) Customers prefer the companys products because they serve as eective substitutes for imports. These products are known for their high quality and reliability. Additionally, they are oered at reasonable prices. This combination of attributes makes the company a popular choice among buyers. Overall, the value provided helps build strong customer loyalty.

i) Since the technology is well-tested and approved both domestically and internationally, there is minimal risk of product failure. This established reliability builds customer condence in the products.

j) The company has built long-standing relationships with its clients. This ongoing trust and loyalty strengthen its market position.

k) As a registered MSME, the company receives price preferences from Indian public sector companies as per government policies in tenders and when purchasing equipment, giving it an advantage over larger and international competitors.

l) A diversied product portfolio helps to cater to the demand of customer at one place.

W- Weakness a) As a smaller rm in the market, the company faces a slight disadvantage in its competitive position. This smaller scale can limit its market inuence and overall impact.

b) Being the company under the SME segment, so lacks the funds and time needed for substantial growth.

c) The companys sales are primarily concentrated on government public sector undertakings (PSUs), with a relatively small customer base. Additionally, its presence in the international market is limited.

d) The company operates on a moderate scale and relies heavily on a tender-based business model. The companys business dynamics are closely tied to securing and winning tenders.

e) Need for continuous upgrades to match advanced drilling solutions oered by multinational players

f) Dependence on certain imported raw materials and components may lead to delays or higher costs.

O- Opportunities a) Increasing investments in Indias oil & gas exploration and government support for energy security.

b) Rising demand for drilling tools in the Middle East, Africa, and Latin America provides strong export potential.

c) As demand for oil and natural gas continues to rise, there will be an ongoing need for drilling more wells. The company is actively exploring ways to capitalize on these growing opportunities. This proactive approach aims to position the company to benet from the increasing market demand.

d) The Indian governments initiatives, like "Made in India" and "Atmanirbhar Bharat," are designed to boost local production and increase the competitiveness of Indian industries. In response, the company is working to develop value-added products domestically.

e) Rising international oil prices have led to increased demand for equipment. This ow is driven by the need for more drilling and extraction capabilities.

f) There is minimal business risk for these products due to consistently growing demand and limited competition from just 3-4 major global players. This stable market environment supports steady opportunities for the company.

g) As customers become more cost-conscious and the global perception of Indian products improves, acceptance of Indian products in this eld is rising.

h) In addition to the international market, there is a substantial domestic market that is expected to remain healthy, increasing trends for fty years, there will be an ongoing demand for oil.

T- Threats a) Instability in oil-rich regions can disrupt market access and supply chains.

b) Volatile oil prices can impact investment and demand for drilling equipment.

c) New environmental regulations or policy shifts can aect industry operations and costs.

d) Growing adoption of renewable energy sources may reduce demand for traditional oil equipment.

e) Recessions or economic slowdowns can decrease investments in oil exploration and drilling.

f) Rising competition from both domestic and international manufacturers can impact market share and pricing.

g) Interruptions in the supply chain can lead to delays and increased costs for manufacturing and delivery.

Our operational excellence

At UDTL, we take immense pride in our seamlessly integrated operations, where pioneering research, thoughtful design, and precision manufacturing come together to deliver specialized, high-performance drilling tools and equipment. This end-to-end approach gives us unmatched agility, enabling us to develop in-demand products while oering exceptional value to our customers. Our manufacturing units consistently operate at optimal eciency, eortlessly meeting the rising demand with quality and consistency.

What truly underpins our decades of success is a steadfast commitment to operational excellence. We continuously rene our processes through innovation, with a strong emphasis on research and development. Our ability to bring new products to market swiftly, within our existing infrastructure, speaks volumes about the strength and adaptability of our systems. By harnessing real-time data and advanced analytics, we make smarter, faster decisions that help us stay ahead in a dynamic industry landscape

Financial review

Established over three and a half decades ago, UDTL has developed a diverse product portfolio, with solid process expertise to provide solutions from renowned Indian to global majors. In the last couple of years, the Company emphasized on being more agile, while being committed to its long-term sustainable growth strategies.

In FY25, revenue from operations, including other income, stood at 175.09 crore, EBITDA stood at 26.27 crore and PAT stood at 14.92 crore after growing by 26.80%, 27.35% and 62.67% respectively, compared to the previous year.

Revenue contribution from the domestic market stood at 82.80% while 17.20% came in from exports. Steady demand in key export geographies resulted in higher export revenues. Domestic revenue for FY25 stood at 144.97 crore, compared to 134.85 crore in FY24, and export revenue for FY25 stood at 30.11 crore compared to 1.63 crore in FY24.

P&L analysis

Particulars	FY25 ( E in crore)	FY24 ( E in crore)	Growth (change in %)
Revenue from operations	172.16	136.64	25.99%
Employee Benets Expense	13.45	11.49	17.06%
Interest cost	2.73	2.98	(8.72)%
EBITDA	26.26	20.62	27.35%
PBT	19.64	13.50	45.41%
PAT	14.92	9.17	62.60%
EPS (in )	7.33	4.53	61.81%

Key Financial Ratios

Ratios	FY25	FY24	% Change	Reason for change
Trade Receivables Turnover	2.33	2.88	-19.22	Increase average receivable
Inventory Turnover Ratio	0.68	0.53	27.80	Reduced due to decrease in inventory
Debt Service Coverage Ratio	6.41	5.36	19.59	Increase in prot after tax and reduce of interest
Current Ratio	3.77	2.78	35.62	Due to Decrease in trade payables and
				utilisation of credit facilities
Debt-Equity Ratio	0.12	0.13	-7.69	Repayment of Debt
Operating Prot Margin (%)	12.76	11.93	7.04
Net Prot Ratio	8.65	6.71	28.92	Due to Increase in Net Prot after Tax
Return on Equity Ratio	5.79	4	44.75	Due to Increase in Net Prot after Tax

Analysis of Balance Sheet

Particulars	FY25 ( E in crore)	FY25 ( E in crore)	Growth (change in %)
Total equity	263.11	251.88	4.45%
Long-term borrowings	1.12	1.23	-8.20%
Short-term borrowings	30.36	31.51	-3.62%
Total non-current assets	87.40	89.35	-2.19%
Trade receivables	87.07	60.86	43.07%
Cash and cash equivalents	1.56	2.38	-82.35%
Land	3.82	3.82	0%

As of 31st March 2025, the Companys Equity Capital stood at 263.10 crore compared to 251.88 crore as of 31st March, 2024. Total long-term borrowings of UDTL as of 31st March, 2025 stood at 1.12 crore vis-? -vis 1.22 crore as on 31st March, 2024 and reduced interest cost 9.52% during the year from 2.99 crore in FY24 to 2.73 crore in FY25.

Cash and cash equivalents as of 31st March, 2025, stood at 1.56 crore vis-? -vis 2.38 crore as on 31st March, 2024.

Risk management

Risk management at our Company is a structured and proactive approach aimed at identifying potential threats, assessing their impact on operations, and implementing eective mitigation measures. While many risks can be anticipated and addressed through a robust internal control framework, certain uncertainties remain unpredictable. These are navigated using the deep industry experience and strategic foresight of our leadership. We have established a comprehensive risk management system tailored to the nature of our business, with clearly dened roles at the senior management level to ensure timely detection and response. Operating in a dynamic environment, we continuously evaluate risks and take appropriate actions to safeguard the Companys stability and long-term sustainability.

Economic risk

The Companys performance could be adversely aected in the event of an economic slowdown.

How is UDTL safeguarded?

India remains one of the worlds fastest-growing economies, recording a solid 6.5% growth in FY25. Government projections indicate this strong momentum is set to continue. The growing focus on the part of the government for self-reliance on the domestic oil demand, is expected to prove the required push for the Indian oil & gas industry.

Market and demand risk

Volatility in crude oil prices and capital spending in the oil & gas sector can impact order inow and demand for drilling tools and equipment.

How is UDTL safeguarded?

UDTL has strategically diversied its customer base across domestic and international markets and is expanding its footprint in non-oil sectors. Continued focus on high-quality, value-added products and after-sales support also helps sustain customer loyalty during downcycles.

Raw material and supply chain risk

Dependence on key raw materials like high-grade alloys and imported components may lead to supply disruptions or cost uctuations.

How is UDTL safeguarded?

The Company invests signicantly in R&D to innovate and upgrade product designs regularly. By integrating digital tools and analytics in manufacturing, UDTL ensures adaptability and future-readiness.

Technology risk

Evolving industry standards and technological advancements may render existing product lines outdated.

How is UDTL safeguarded?

The Company invests signicantly in R&D to innovate and upgrade product designs regularly. By integrating digital tools and analytics in manufacturing, UDTL ensures adaptability and future-readiness.

Foreign exchange risk

A signicant portion of the Companys revenue comes from exports, exposing it to currency uctuations.

How is UDTL safeguarded?

At UDTL, we actively monitor currency movements and uses appropriate hedging mechanisms to manage foreign exchange exposure.

Operational risk

Equipment failure, manufacturing delays, or logistics disruptions may hinder timely delivery.

How is UDTL safeguarded?

The Company operates with stringent quality control systems, preventive maintenance schedules, and lean manufacturing practices to ensure high uptime and operational reliability.

With a comprehensive risk management framework in place, UDTL remains well-prepared to navigate emerging challenges and leverage new opportunities. The Companys agility, robust systems, and forward-looking strategy continue to ensure stability and sustained performance across business cycles.

Internal control systems and their adequacy

At United Drilling Tools Limited, robust internal control systems are in place to ensure nancial integrity and regulatory compliance, aligned with the Companys evolving scale and operational complexity. These controls encompass a wide range of policies, procedures, and statutory requirements, forming a strong foundation for sustainable growth.

The framework is designed to continuously evaluate and manage risks across all aspects of the business?€”including scientic and R&D-related risks, partner and stakeholder interests, as well as commercial and nancial exposures. Comprehensive management reporting systems further support the oversight of strategy, performance, operations, risk, funding, and governance.

Internal auditors conduct detailed, year-round audits across all locations and departments, with their ndings reported to a dedicated Committee for timely review and action.

Human resource and Industrial relations

In todays fast-evolving and competitive business environment, UDTL rmly believes that its people are its greatest asset. Acknowledging that employees form the backbone of the organisations success, UDTL has adopted a holistic approach to workforce development. By integrating industry best practices and standard operating procedures across departments, the company ensures operational consistency, enhances team eciency, and drives collective performance.

But UDTLs commitment goes beyond process. With a strong focus on future-readiness, the company continuously invests in skill development through structured learning and training programs. These initiatives are designed not just to upskill employees but to cultivate a mindset of curiosity, adaptability, and continuous growth. This people-rst philosophy has resulted in one of the highest employee retention rates in the industry, as UDTL nurtures talent from within and empowers individuals to become future leaders. As of March 31, 2025, the company had 352 employees on its payroll including worker.

Cautionary Statement

The statements made in this report describing the Companys objectives, estimations, expectations, projections, outlooks, constitute forward-looking statements within the meaning of applicable securities laws and regulations. Actual results may dier from such expectations, projections, among others, whether express or implied. The statements are based on certain assumptions and future events over which the Company has no direct control. The Company assumes no responsibility to publicly amend, modify and revise any of the statements on the basis of any subsequent developments, information or events.