Veritas India Ltd Management Discussions

ECONOMIC & INDUSTRY OVERVIEW

Global Economy

The global economy continued to navigate a complex operating environment during FY 2025-26, shaped by geopolitical tensions, evolving trade policies, supply chain realignments, and commodity price volatility. Global growth remained uneven across regions as inflationary pressures, elevated logistics costs, and uncertainty in international trade continued to influence economic activity.

The energy sector witnessed heightened volatility during the year, particularly following escalating geopolitical developments in the Middle East and concerns surrounding the Strait of Hormuz, a critical global energy transit corridor. These developments impacted crude oil prices, petroleum product markets, freight costs, insurance premiums, and global supply chains, prompting market participants to adopt more resilient and risk-conscious operating strategies. Simultaneously, changing regional trade dynamics and evolving energy policies are expected to reshape global petroleum trade flows and logistics infrastructure over the medium to long term.

Despite these challenges, gradual moderation in inflation across several advanced economies supported measured monetary policy easing, while emerging economies continued to focus on infrastructure development, manufacturing expansion, and strengthening long-term energy security.

Indian Economy

India continued to remain one of the fastest-growing major economies globally during FY 2025-26, supported by resilient domestic demand, sustained public infrastructure spending, manufacturing growth, and policy-led reforms. The Governments continued focus on infrastructure development, logistics enhancement, manufacturing competitiveness, and energy security under initiatives such as "Make in India" and "Atmanirbhar Bharat" continued to support economic activity across key sectors.

Indias growing industrial base, expanding transportation requirements, rising energy demand, and ongoing urbanisation continue to support long-term growth prospects for the petroleum and petroleum products sector.

Indian Petroleum and Petroleum Products Industry

India continues to remain one of the worlds largest consumers of petroleum products, supported by industrialisation, infrastructure development, urbanisation, and increasing mobility requirements.

During FY 2025-26, the Indian petroleum sector also witnessed the impact of rising crude oil and petroleum product prices driven by geopolitical tensions, supply chain disruptions, and volatility in global energy markets. Escalating uncertainties in the Middle East and concerns relating to international maritime trade routes contributed to fluctuations in global crude prices and freight costs, impacting overall market dynamics.

Despite these challenges, the Indian petroleum sector continues to offer significant opportunities for trading entities due to rising domestic energy demand, dependence on imports, expanding logistics infrastructure, and increasing integration with global supply chains.

The sector also benefits from ongoing investments in refining capacity, storage infrastructure, ports, and transportation networks, which continue to improve operational efficiency and supply chain connectivity.

KEY INDUSTRY CHALLENGES AND RISK LANDSCAPE INDUSTRY OVERVIEW

The petroleum and petroleum products industry continues to operate in an increasingly dynamic environment shaped by geopolitical developments, commodity price volatility, evolving regional trade routes, and changing regulatory requirements. These factors have heightened the importance of prudent risk management, supply chain resilience, and disciplined capital allocation across the industry.

Geopolitical and Regional Supply Chain Risks

Geopolitical developments in the Middle East, particularly around the Strait of Hormuz, continue to influence global energy markets, freight availability, insurance costs, and supply chain reliability. In addition, evolving sanctions policies affecting major oil-producing nations, including Russia and Venezuela, continue to reshape global crude oil trade flows, pricing dynamics, and sourcing patterns. These developments, coupled with changing regional logistics infrastructure, are encouraging market participants to diversify supply chains, optimise capital deployment, and strengthen business continuity and risk management frameworks.

Volatility in Global Energy Prices

Crude oil and petroleum product prices remain susceptible to geopolitical events, production decisions by major oil-producing nations, and changes in global demand-supply dynamics. Such volatility can significantly impact procurement strategies, inventory valuations, and trading margins, requiring disciplined inventory and price risk management.

Supply Chain and Logistics Challenges

Changing trade flows, shipping disruptions, freight rate volatility, port congestion, and evolving logistics infrastructure continue to influence sourcing decisions and operational efficiency. Companies operating in the sector are increasingly focusing on flexible and asset-e_cient trading models to enhance resilience against supply chain disruptions.

Regulatory and Compliance Requirements

The industry continues to witness evolving regulatory requirements relating to environmental standards, international trade, new and evolving sanctions risks, import regulations, and operational compliance. In addition, changing global energy policies and evolving crude supply dynamics may reshape regional petroleum trade patterns and require continuous adaptation by market participants.

Competitive Market Environment

The petroleum trading industry remains highly competitive, characterised by thin operating margins, pricing pressures, and increasing customer expectations. Maintaining operational efficiency, prudent risk management, efficient working capital deployment, and diversified sourcing capabilities remain critical for sustaining long-term competitiveness.

OUTLOOK

The petroleum and petroleum products industry is expected to continue operating in a dynamic environment influenced by geopolitical developments, commodity price volatility, evolving trade routes, and changing regional energy dynamics. Recent developments in the Middle East have further reinforced the importance of prudent risk management, supply chain resilience, and strategic capital allocation across the petroleum value chain.

Recognising these changing market conditions, the Company proactively adopted a cautious and disciplined approach during the year by reducing inventory exposure, adopting an order-backed trading model in the UAE. These initiatives were aimed at minimising inventory price risk, preserving capital, maintaining business continuity, and enhancing operational flexibility in an environment characterised by thin trading margins and heightened market volatility.

The evolving regional dynamics also necessitated a systematic review of the Companys capital deployment strategy. The UAEs approach towards developing ports outside the strait on the east coast affects the business proposition and outlook of the existing assets located within the strait and their ability to operate profitably over the longer run. Accordingly, Veritas (India) Limited sought and received approval from shareholders for the proposed sale and transfer of certain assets and liabilities of its subsidiary, Verasco FZE, UAE. The proposed transaction is intended to de-risk the Companys capital investments from geographic realignment in the UAE, mitigate geopolitical, operational and insurance-related risks associated with assets located within the Strait of Hormuz, and ensure long-term business continuity. Going forward, the Company will continue to adopt a prudent and risk-calibrated approach, strengthen its trading platform, optimise supply chain efficiencies, and remain agile in responding to evolving regional and global market conditions while maintaining long-term business resilience.

SEGMENT-WISE PERFORMANCE

The Company is a single-segment Company as mentioned in Note 40 of the Accounts.

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, debtors 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. 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.

Year	2025-26	2024-25	Percent Increase /(Decrease)	Remarks
Revenue from Operations (Sales)	2,367.29	32,314.09	(92.67%)	Significant decrease in revenue from operations during the year.
PBT	(81.35)	468.80	-	Company reported a loss before tax during the current year as against profit in the previous year; percentage variation is not comparable.
PAT	(74.71)	433.88	-	Company reported a loss after tax during the current year as against profit in the previous year; percentage variation is not comparable.
Change in Inventories (Inventory Turnover Ratio)	0.57	7.87	(92.69%)	Due to decrease in turnover in current year
Current Ratio	0.65	0.74	(12.29)	-
Debt Equity Ratio	0.15	0.07	120.07	Due to increase in borrowings in current year
Debtors Turnover Ratio	0.56	7.42	(92.44)	Due to decrease in turnover in current year
Interest Coverage Ratio	NIL	NIL	-	-
Operating Margin (%)	-	4.15	-	-
Net profit margin (%)	(3.16)	1.34	(335.04)	Due to decrease in Turnover in current year
Return on Net worth	(0.38)	2.23	(117.07)	Due to loss incurred in current year

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-size the organizational 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 Companys 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
Veritas (India) Limited	Paresh V. Merchant
	Managing Director
	DIN: 00660027
Place: Mumbai
Date: May 28, 2026