💰 Financial Performance

Revenue Growth by Segment

Total revenue from operations reached INR 181.61 Cr in H1 FY26, representing a growth of 30.60% YoY compared to INR 139.05 Cr in H1 FY25. The Dubai subsidiary is projected to contribute 7-8% of total turnover by the end of FY26.

Geographic Revenue Split

Primary operations are based in India (Maharashtra), with international expansion via the Dubai-based 100% subsidiary, Arzol Petroleum. The Dubai entity is expected to scale from a trading hub to a significant contributor, targeting 7-8% of total revenue.

Profitability Margins

PAT for H1 FY26 was INR 5.95 Cr, up 28.39% YoY from INR 4.64 Cr. PAT margin remained relatively stable at 3.28% in H1 FY26 compared to 3.33% in H1 FY25. Management expects margin improvement through a shift toward value-added specialty products.

EBITDA Margin

EBITDA stood at INR 10.12 Cr in H1 FY26, a 17.09% increase YoY from INR 8.64 Cr. However, the EBITDA margin compressed to 5.57% in H1 FY26 from 6.21% in H1 FY25, a decline of 10.35% YoY due to higher total expenditure which rose 31.75% YoY.

Capital Expenditure

Fixed assets were reported at INR 11.60 Cr as of September 30, 2025. The company is investing in diversifying its product range into specialty lubricants, though specific future INR Cr outlay for expansion was not disclosed.

Credit Rating & Borrowing

The company carries a credit rating of CARE BB-; Stable; ISSUER NOT COOPERATING as of April 2024. Despite this, overall gearing improved significantly to 0.48x in FY25 from 0.72x in FY24, and interest coverage ratio strengthened to 6.27x in H1 FY26 from 4.9x YoY.

⚙️ Operational Drivers

Raw Materials

The company utilizes base oils, chemical additives, and packaging materials for its lubricants and greases. Specific percentage breakdowns for each raw material were not disclosed.

Import Sources

Raw materials are sourced domestically and internationally, with the Dubai subsidiary (Arzol Petroleum) facilitating global trade and imports to support the Ambernath manufacturing facility.

Capacity Expansion

Manufacturing is centralized at the Ambernath facility in Thane, Maharashtra. While specific MTPA capacity was not disclosed, the company is expanding its operational scope through two subsidiaries: Arzol Petroleum (Dubai) and Lavisa Technologies (91% holding) for specialty lubricants.

Raw Material Costs

Total expenditure, heavily driven by raw material consumption in lubricant blending, rose to INR 172.58 Cr in H1 FY26, a 31.75% increase YoY, slightly outpacing revenue growth of 30.60%.

Manufacturing Efficiency

The company is transitioning toward higher-margin 'value-added' products such as specialty metalworking fluids and auto care products to optimize manufacturing output value.

Logistics & Distribution

The company operates an administrative office and manufacturing facility in Ambernath, Maharashtra, serving sectors including automotive, engineering, chemicals, and pharmaceuticals.

📈 Strategic Growth

Expected Growth Rate

30.60%

Growth Strategy

Growth will be driven by the Dubai subsidiary's expansion into global import/export markets, aiming for 7-8% of turnover. Additionally, the company is pivoting toward high-margin specialty lubricants through Lavisa Technologies and diversifying into auto care and mechanical maintenance products.

Products & Services

Industrial lubricants, automotive lubricants, greases, specialty metalworking fluids, auto care products, and mechanical maintenance products.

Brand Portfolio

Arzol (associated with Arzol Petroleum subsidiary).

New Products/Services

New launches include Specialty metalworking fluids, Auto care range, and Mechanical Maintenance products, intended to yield higher margins than standard lubricants.

Market Expansion

Expansion is focused on the UAE/Dubai market for global trading and the specialty lubricants segment in India.

Strategic Alliances

The company operates through subsidiaries Arzol Petroleum (100%) and Lavisa Technologies Private Limited (91%).

🌍 External Factors

Industry Trends

The industry is shifting toward specialty and synthetic lubricants. Arabian Petroleum is positioning itself by incorporating Lavisa Technologies to delve into these high-performance specialty ranges.

Competitive Landscape

Competes with both large PSU oil companies and private lubricant manufacturers in the industrial and automotive segments.

Competitive Moat

The company's moat is built on its ISO-certified manufacturing processes (9001:2008, 14001:2015, 45001:2018) and a decade-long track record since 2011, providing established relationships in diverse industrial sectors.

Macro Economic Sensitivity

The business is sensitive to industrial production cycles in the automotive and engineering sectors, which drive demand for lubricants.

Consumer Behavior

Increasing demand for high-performance and specialty lubricants in the automotive and pharmaceutical sectors is driving the company's product diversification.

Geopolitical Risks

Operations in Dubai expose the company to Middle Eastern geopolitical stability and international trade regulations.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to environmental pollution norms for chemical manufacturing and safety standards for handling petroleum-based products.

Environmental Compliance

The company maintains ISO 14001:2015 (Environmental Management) and ISO 45001:2018 (Occupational Health and Safety) certifications.

Taxation Policy Impact

Tax expense for H1 FY26 was INR 1.98 Cr, representing an effective tax rate of approximately 25% on Profit Before Tax of INR 7.93 Cr.

Legal Contingencies

Auditors noted related party transactions with Eastern India Co. and Arabian Technologies LLP. No specific pending court case values in INR were disclosed.

⚠️ Risk Analysis

Key Uncertainties

The 'Issuer Not Cooperating' status with CARE Ratings presents a significant risk to credit access and reputation. Margin volatility (10.35% YoY decline in EBITDA margin) remains a key concern.

Geographic Concentration Risk

Manufacturing is highly concentrated in a single facility in Ambernath, Maharashtra, making it vulnerable to regional operational disruptions.

Third Party Dependencies

Dependency on base oil suppliers and global logistics providers for the Dubai trading operations.

Technology Obsolescence Risk

The shift toward electric vehicles (EVs) may reduce long-term demand for traditional automotive engine oils, necessitating the company's current pivot to specialty industrial fluids.

Credit & Counterparty Risk

Trade receivables of INR 59.25 Cr indicate significant credit exposure, though the reduction in debtor days to 48 suggests improving collection efficiency.