United Drilling Tools Ltd

The Chairman's Overview

Dear Shareholder's

It gives me pleasure to present the performance of United Drilling Tools Limited for 2023-24. The Company ended the year with revenue of Rs.136.64 crores and PAT of Rs.9.17 crores.

I am pleased to report a robust performance, we reported a better performance compared to the last year across a number of parameters thanks to our lean capital structure and better sweating of assets. Along with financial growth, we have successfully secured promising export orders, expanded our presence into multiple new countries and secured substantial orders from key markets such as the USA, Mexico and Vietnam

We've made substantial strides in protecting our intellectual property. This year, we were granted 22 patents worldwide and registered 29 trademarks in India, Egypt, and the United Kingdom. These achievements underscore our commitment to innovation and brand protection on a global scale.

The past year has been a journey of both triumphs and challenges. While we are proud to report a 15% growth in revenue, climbing from Rs.119.34 crore to Rs.136.64 crores, however, our profitability story isn't as rosy. Our bottom line witnessed a decline of 10% in FY24and stood at Rs.9.17 crores, falling short of our own expectations.

The decline in profitability can be traced backto a significant buildup of inventory caused by a global slowdown in drilling activities, especially in the aftermath of the COVID pandemic. Reduced oil drilling activities worldwide during this period directly impacted our revenue and profitability, a challenge shared by many businesses in our industry. While we saw positive signs of recovery in the FY2024, leading to increased sales, the lingering effects of the inventory glut continued to weigh on our bottom line.

Our geographic expansion into new geographies and ability to secure fresh orders from key markets like USA, Mexico and Vietnam : fuelled our revenue growth. This expansion also contributed to a healthy increase in EBITDA. Our PBT stood at Rs.13.50 crores as compare to Rs.14.65 crores in FY 23 while EBITDA Rs.20.62 crores, after registering a 11.82% y-o-y growth as compare to FY 23. We are particularly pleased to have significantly grown our order book, a testament to our growth. Despite these achievements, we recognize that our profitability could have been stronger. This is an area where we are determined to excel in the coming year.

As drilling operations have surged both domestically and internationally, so too has our sales revenue. This positive trend is a direct result of several factors, including supportive government policies and growing demand for oil and gas. India's increased focus on domestic production and investment in the energy sector has created a fertile environment for our business. We've seized these opportunities to expand our market reach and deliver exceptional value to our customers. Looking ahead, we're committed to sustaining this growth and continuing to contribute to the energy landscape.

At UDTL, we believe that in our business, sustainability is derived not just from increased capacity but a stronger product mix. The result is that in the last few years we increased the share of customised products in our portfolio, invested in stricter process consistency, resisted the temptation to play the resource markets and invested deeper in client relationships.

By dedicating ourselves to innovation through research and development, and by crafting strategic marketing plans, UDTL seeks to seize opportunities, outshine competitors, and foster lasting growth in various global markets. Our commitment to these endeavours ensures a future of sustained success.

We invested around Rs.3.84 crores during the year for various capex initiatives.

Further, we undertook some major technological advancements in the manufacturing of some of our key product lines such as wireline winches and multi-start connectors.

The results of this strategic disciplines are evident.

United Drilling Tools Limited has reinforced its position as one of the most competitive oil drilling tools and equipment manufacturer in the world. We're thrilled to announce that we've experienced a significant comeback in the past fiscal year, with our orderbook surging by nearly 67% to an impressive B250 crores. This growth demonstrates our resilience and our unwavering commitment to excellence in the industry.

We launched several new products during the year, such as UDT Chaser Subs and Drive Subs, UDT Circulating Head, UDT Crossovers and Pup Joints, UDT Anti-Rotation Device (Shear Tool), UDT Telescopic Mastline Unit, and UDT BOP Control System for Truck-Mounted Slickline Winches. These cutting-edge solutions are designed to enhance efficiency, safety, and performance in the oil and gas industry.

We achieved a better capacity utilisation during the year. As an extension, the Company achieved high operational productivity, reporting one of the lowest people costs per tonne of output sold.

In today's evolving industry space, complacency is a luxury we can't afford. Companies that need to enhance their competitiveness need to keep growing all the time, either by enhancing their manufacturing capacity, or investing in cutting- edge technologies that enhance product quality or by integrating backwards or by manufacturing a superior product mix.

In line with this strategy, we initiated the construction of our new plant at Mundra. In FY24, we have completed approx. 2530% of the construction work for our new plant and expect to commence commercial production in FY25.

As a part of our innovation focus, we have set up a dedicated R&D unit to develop new and innovative products. To further boost our R&D capabilities, we hired new engineers and scholars in FY24.

UDTL is a committed player in the oil and gas industry, actively participating in key conferences like India Energy Week in Goa, which was inaugurated by the Prime Minister. These events provide a platform for us to showcase our expertise, build relationships with industry leaders, and explore potential collaborations. By being at the forefront of industry discussions, we're positioning UDTL for continued growth and success in this dynamic sector.

The past year has been a period of strong growth and accomplishment for United Drilling Tools Limited. We've successfully ventured into new markets, expanded our portfolio, and exceeded expectations in our operations. As we look ahead, we're excited to build on this momentum and seize the incredible opportunities that India's thriving economy offers.

As we navigate the dynamic business environment, we remain steadfast in our mission to deliver value to our stakeholders and contribute meaningfully to India's growth story. We are focused on enhancing our presence, investing in technology, and forging strategic partnerships to drive innovation and meet the evolving demands of our customers.

On behalf of every member of the UDTL family, we thank our stakeholders for the trust they have reposed on us. We are truly grateful for their sustained cooperation throughout our journey and would continue to direct our efforts to be well- positioned to capitalize on the opportunities that lie ahead.

I am confident that with your continued support and our collective efforts, United Drilling Tools Limited will continue to thrive and create sustainable value for all stakeholders.

Our journey has just begun, and with your continued support, we will achieve even greater heights. Together, we will achieve a better and sustainable future.

Thanks & Regards

Sd/-

Chairman-cum-Managing Director