Veritas (India) Ltd Management Discussions

ECONOMIC OVERVIEW Global Economy

The global economy is experiencing subdued growth amid ongoing trade tensions, policy uncertainty, and tight financial conditions. Global GDP growth is projected to slow significantly, driven by weakening investment sentiments, fragile consumer confidence, and disrupted trade flows. Commodity prices, particularly energy and metals, are softening due to reduced industrial demand, while inflation, though easing, remains above prepandemic norms.

Financial markets continue to face volatility, with emerging markets witnessing capital outflows and declining foreign direct investment. Although growth in emerging and developing economies remains moderate, structural challenges such as high debt levels and constrained fiscal space persist. Key risks to the outlook include trade disruptions, geopolitical instability, climate shocks, and deteriorating investor sentiment.

Indian Economy

India remained the world?s fastest-growing major economy in FY 2024-25, achieving real GDP growth of 6.5% and becoming the fourth-largest global economy. Growth was fuelled by strong domestic consumption, a dominant services sector, high public capital expenditure, and ongoing structural reforms under the Aatmanirbhar Bharat vision. Inflation eased to 4.6%, supported by a balanced monetary policy stance by the Reserve Bank of India.

Exports rose to US$ 825 billion, while cumulative FDI inflows crossed US$ 1.05 trillion, reflecting continued investor confidence. The economy also benefited from improved manufacturing performance and increased infrastructure spending, strengthening India?s position as a resilient and competitive growth engine in the global landscape.

INDUSTRY OVERVIEW

Global Petroleum and Petroleum Products Industry

The global petroleum and petroleum products industry continues to be a vital component of the world economy, meeting the energy requirements of key sectors such as transportation, manufacturing, and power generation. While the global shift toward renewable energy and decarbonization is accelerating, petroleum remains a dominant source of energy and a critical feedstock for various industrial applications. Despite increasing sustainability pressures, demand for crude oil and refined products remains robust, particularly in developing economies.

The industry, however, operates in a highly dynamic environment shaped by geopolitical tensions, supply chain reconfigurations, price volatility, and evolving regulatory norms. As global trade patterns shift and environmental regulations tighten, companies are adopting advanced digital tools, enhancing operational efficiency, and embracing ESG-aligned strategies. Those with strong sourcing capabilities, flexible logistics, and sustainable practices are better positioned to navigate market complexities and capitalize on long-term growth opportunities.

Indian Petroleum and Petroleum Products Industry

India, as the third-largest consumer of oil and a rapidly growing energy market, continues to demonstrate robust demand for petroleum and petroleum products creating a strong landscape for trading entities. In FY 2024-25, the crude imports totals to 242 MMT with the domestic consumption of petroleum products stood at approximately 239.2 MMT, underscoring steady economic activity, enhanced industrial output, and increased mobility. Over the past decade, petroleum product consumption has grown at a CAGR of 4.0%, supported by India?s expanding infrastructure, urbanisation, and rising energy needs. This consistent demand trend positions India as a strategic market for petroleum trade and logistics.

The Indian petroleum sector has evolved into a dynamic and liberalized market, offering significant opportunities for trading entities. With rising energy demand and limited domestic crude output, India remains heavily reliant on imports, making it one of the world?s largest importers and consumers of petroleum products. The sector benefits from improved infrastructure, policy support, and a growing network of global suppliers and buyers, enabling trading companies to leverage arbitrage opportunities and scale operations in both domestic and international markets.

KEY INDUSTRY CHALLENGES AND RISK LANDSCAPE

The petroleum and petroleum products industry presents substantial growth potential, but it also encounters various structural and operational challenges that need to be addressed to maintain competitiveness and ensure long-term profitability.

Volatility in Crude Oil Prices: Crude oil price fluctuations in the global market remain a primary risk. Influenced by geopolitical tensions, OPEC+ decisions, and macroeconomic factors, such volatility impacts procurement costs, inventory valuations, and trading margins.

Regulatory and Policy Uncertainty: The petroleum sector is subject to a complex regulatory framework, including import duties, product pricing, environmental standards, and strategic reserve mandates. Sudden policy shifts or regulatory changes can affect trade dynamics and operational planning.

Environmental and Sustainability Pressures: With increasing focus on carbon emissions and climate change, the petroleum industry is under pressure to reduce its environmental footprint. Evolving ESG norms require enhanced transparency, cleaner fuel adoption, and greener supply chain practices and all of which entail additional compliance costs and reporting obligations.

Market Competition and Margin Pressure: With deregulation and rising private participation, competition among trading entities has intensified. Margin compression is a persistent challenge, requiring firms to optimize sourcing, logistics, and customer servicing strategies.

Geopolitical and Trade Policy Risks: The imposition of tariffs by key global economies, such as the recent U.S. action on select Indian exports, underscores the growing unpredictability in international trade policies. While not directly targeting petroleum products, such measures can contribute to broader trade tensions, impact currency movements, and create logistical uncertainties. These external factors pose indirect risks to petroleum trading businesses, requiring heightened vigilance, diversified sourcing strategies, and agile risk mitigation frameworks.

With a focus on sustainability, compliance, and supply chain resilience, your company continues to evolve its risk management practices and remains well-positioned to navigate market volatility and regulatory changes.

OPPORTUNITIES IN THE INDIAN PETROLEUM AND PETROLEUM PRODUCTS INDUSTRY

Growing Global Energy Demand: Growing industrialization, urbanization, and mobility trends are driving sustained demand for petroleum and refined products. As economies expand and transportation networks grow, the requirement for fuels, lubricants, and related products continues to present long-term trading and distribution opportunities.

Shifting Global Supply Chains: Evolving geopolitical dynamics, changing trade policies, and the need for diversified energy sourcing are reshaping global supply chains. This environment opens new avenues for trading entities to bridge supply-demand gaps across regions and capitalize on emerging trade routes and arbitrage opportunities.

Infrastructure and Logistics Development: Ongoing investments in refining capacity, storage terminals, port infrastructure, and transportation networks are improving global connectivity and supply chain efficiency. These enhancements support more flexible and scalable trading operations for petroleum and its derivatives.

Expansion of Global Trade Opportunities: With refining hubs expanding their export footprints and new markets opening up through trade agreements and infrastructure connectivity, petroleum trading companies have increasing access to new regions and customer segments worldwide.

Future Relevance of Petroleum Products: Despite the ongoing global energy transition, petroleum and its derivatives are expected to remain integral to India?s energy mix for the foreseeable future. Growing industrial activity, expanding transportation needs, and demand for petrochemical feedstocks continue to support long-term relevance. This sustained dependence creates opportunities for trading businesses to strengthen supply networks, explore value-added product segments, and support downstream industries in ensuring consistent availability of essential fuels and intermediates.

OUTLOOK

The petroleum and petroleum products trading industry continues to operate within a volatile and evolving environment. While the long-term fundamentals remain relevant, recent shifts in global trade dynamics, supply chain uncertainties, and regulatory developments have introduced new complexities. In addition, broader macroeconomic headwinds and geopolitical tensions may continue to affect demand patterns, pricing, and trading margins across key markets.

At the organizational level, the company is currently navigating certain complex business environments and transitional developments, which are expected to influence business operations and execution capabilities in the near term. These factors, combined with growing competition and cost pressures, may result in a moderation of sales performance and trading volumes in the coming quarters. Additionally, rising geopolitical uncertainties and disruptions in global trade flows are contributing to a more unpredictable operating landscape, which could influence demand patterns and affect the overall business momentum going forward.

On May 31, 2025, a fire at a neighbouring terminal in Hamriyah Free Zone, Sharjah, spread to our facility, causing significant damage. While tanks and refinery units were largely unaffected, critical control systems and the main office building were severely damaged, halting operations. An initial inspection by insurers is complete, and the claim process is in progress. Following an internal assessment, we received a No Objection Certificate from the HFZ Authority to begin temporary manual operations. A full damage assessment is ongoing, and we are working closely with stakeholders to safely restore full operational capacity.

While the company remains committed to strengthening its risk management processes, improving operational efficiency, and enhancing market responsiveness through digital tools, it acknowledges that growth may remain subdued in the short term. Management is focused on optimising existing resources, adapting to evolving market dynamics, and navigating this period with resilience and prudence to ensure long-term sustainability.

RISK MANAGEMENT

Like any other business, the company is prone to various risks and concerns including but not limited to fluctuating foreign exchange, increase in operational costs, etc. The Company evaluates and monitors all risks associated with various areas of operations such as procurement, sales, marketing, inventory management, debtor?s management, operational management, insurance, supply chain management, legal, Cyber security risk, geopolitical risk and other issues having a material impact on the financial health of the company on a regular basis with a view to mitigate the adverse impact of the risk factors. In view of the ongoing volatility and complexities involved in the present market scenario, the company has decided to restrict trade by curtailing the product portfolio to mitigate the contrary risk involved.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company maintains a robust internal control framework to ensure operational efficiency, accurate financial reporting, and compliance with applicable regulations. As the new management has gained operational control since November 9, 2024, enhanced efforts have been deployed to improve the control systems. These systems are supported by a reliable IT infrastructure, regular employee training, and continuous process improvements. Periodic internal audits are conducted by an independent firm of Chartered Accountants, with findings reviewed by the Audit Committee of the Board. Ongoing efforts in digitalization and automation further strengthen the internal control environment, aligning it with industry best practices and evolving business needs.

REVIEW OF FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

A summary of major performance indicators is given below, while the detailed and physical performance may be viewed from the Balance Sheet and Profit & Loss account and the annexure thereto.

(Amount in Rs.)

Year	2024-2025	2023-2024	Percent Increase /(Decrease)	Remarks
Revenue from Operations (Sales)	3,23,14,09,061	2,45,32,47,608	32%	Improved channel distribution resulting in good growth.
PBT	4,68,80,176	4,80,75,917	(2%)	-
PAT	4,33,87,349	3,77,27,446	15%	-
Change in Inventories (Inventory Turnover Ratio)	7.54	5.53	36%	-
Current Ratio	0.74	1.55	(52%)	-
Debt Equity Ratio	0.07	NIL	-	-
Debtors Turnover Ratio	7.42	5.42	37%	Due to increased focus on speedy recovery and increase in sales.
Interest Coverage Ratio*	NIL	NIL	NIL	-
Operating Margin (%)	1.83	4.4	(58%)	Due to increase in purchase cost.
Net profit margin (%)	1.38	1.54	(10%)	-
Return on Net worth	2.30	1.96	17%	-

* Finance Charges as per P&L Account consist of Bank Charges, Commission and Others & Interest expense on Lease Liability as per IND-AS. There is no actual Interest expense.

HUMAN RESOURCE MANAGEMENT

Acknowledging the pivotal role of its workforce in driving our growth & significant emphasis is placed on fostering the personal and professional development of employees. Diverse training and development initiatives are regularly conducted to upskill staff and broaden their knowledge base. Throughout the year, the Company has maintained harmonious relations with its employees, expressing gratitude for their invaluable contributions to operational growth and commending them for their proactive initiatives. Considering the new management control, more emphasis has been placed on digitalization. In the present changing environment & in view of the fire incident, the company has decided to restructure and right-sizing the organization setup.

CAUTIONARY STATEMENT

Statements in the Management Discussion and Analysis describing the objectives, projections, estimates and expectations of the Company, its direct and indirect subsidiaries and its associates, may be ‘forward-looking statements within the meaning of applicable laws and regulations. Actual results might differ substantially or materially from those expressed or implied. Important factors that could make a difference to the Company?s operations include, among others, economic conditions affecting demand/supply, price conditions in the domestic and overseas markets in which the Company operate, changes in Government regulations, tax laws, other statutes, and incidental factors.

For and on Behalf of the Board of Directors

Place: Mumbai	Veritas (India) Limited
Date: August 13, 2025	Paresh Merchant
	Managing Director
	DIN: 00660027