october 2015 - deep industriescairn india ltd 2013 2014 award of 25% stake in north karanpura cbm...

October 2015

CORPORATE PRESENTATION

DEEP INDUSTRIES LIMITED

DisclaimerSafe Harbor Statement

This presentation is strictly confidential and may not be copied, published, distributed or transmitted. The information in this presentation is being provided by Deep Industries Limited (also referred to as ‘DIL’ or ‘Company’) forinformation purposes only. By attending the meeting where this presentation is being made or by reading the presentation materials, you agree to be bound by following limitations:

The information in this presentation has been prepared for use in presentations by DIL for information purposes only and does not constitute, or should be regarded as, or form part of any offer, invitation, inducement oradvertisement to sell or issue, or any solicitation or initiation of any offer to purchase or subscribe for, any securities of the Company in any jurisdiction, including the United States and India, nor shall it, or the fact of its distributionform the basis of, or be relied on in connection with, any investment decision or any contract or commitment to purchase or subscribe for any securities of the Company in any jurisdiction, including the United States and India. Thispresentation does not constitute a recommendation by the Company or any other party to sell or buy any securities of the Company.

This presentation and its contents are not and should not be construed as a prospectus or an offer document, including as defined under the Companies Act, 2013, including the rules formulated thereunder (to the extent notifiedand in force) or an offer document under the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 as amended.

This presentation and its contents are strictly confidential to the recipient and should not be further distributed, re-transmitted, published or reproduced, in whole or in part, or disclosed by recipients directly or indirectly to anyother person or press, for any purposes. In particular, this presentation is not for publication or distribution or release in any country where such distribution may lead to a breach of any law or regulatory requirement. No person isauthorized to give any information or to make any representation not contained in or inconsistent with this presentation or and if given or made, such information or representation must not be relied upon as having beenauthorized by us. Receipt of this presentation constitutes an express agreement to be bound by such confidentiality and the other terms set out herein. Any failure to comply with this restriction may constitute a violation ofapplicable securities laws.

No representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained in this presentation. Neither DILnor any of its affiliates, advisors or representatives shall have any responsibility or liability whatsoever (for negligence or otherwise) for any loss howsoever arising from any use of this presentation or its contents or otherwisearising in connection with this presentation. The information set out herein may be subject to updating, completion, revision, verification and amendment and such information may change materially in a short span of time. Thispresentation is based on the economic, regulatory, market and other conditions as in effect on the date hereof. It should be understood that subsequent developments may affect the information contained in this presentation,which neither DIL nor its affiliates, advisors or representatives are under an obligation to update, revise or affirm.

This presentation contains forward-looking statements based on the currently held beliefs and assumptions of the management of DIL, which are expressed in good faith and, in their opinion, reasonable. Forward-lookingstatements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, financial condition, performance, or achievements of DIL or industry results, to differ materially from the results,financial condition, performance or achievements expressed or implied by such forward-looking statements. Unless otherwise indicated, the information contained herein is preliminary and indicative and is based on managementinformation, current plans and estimates. Industry and market-related information is obtained or derived from industry publications and other sources and has not been independently verified by us. Given these risks, uncertaintiesand other factors, recipients of this document are cautioned not to place undue reliance on these forward-looking statements. DIL disclaims any obligation to update these forward-looking statements to reflect future events ordevelopments.

THIS PRESENTATION IS NOT AN OFFER FOR SALE OF SECURITIES IN INDIA, THE UNITED STATES OR ELSEWHERE

Corporate Presentation2

General Introduction Company Overview Key Highlights Business Opportunity Annexures

Abbreviations


General Introduction Company Overview Key Highlights Business Opportunity Annexures

Abbreviation Description

BS OHSAS BSI’s Occupational Health and Safety Assessment Series

CAGR Compounded Annual Growth Rate

CBM Coal Bed Methane

CPCL Chennai Petroleum Corporation Limited

DIL Deep Industries Limited

EBIT Earnings Before Interest & Tax

EBITDA Earnings Before Interest, Tax, Depreciation & Amortization

EBT Earnings Before Tax

GACL Gujarat Alkalies and Chemicals Limited

GDU Gas Dehydration Unit

GSPL Gujarat State Petronet Limited

Abbreviation Description

HP Horse Power

MMBOE Million Barrels Of Oil Equivalent

MMSCMD Million Metric Standard Cubic Meter Per Day

NELP New Exploration Licensing Policy

O&G Oil & Gas

ONGC Oil and Natural Gas Corporation Limited

PAT Profit After Tax

RGPPL Ratnagiri Gas and Power Private Limited

sq km Square Kilometres

TCF Trillions of Cubic Feet

Contents


General Introduction

1 Company Overview

4

Business Opportunity3

Key Highlights

Annexure

2

Company Overview Key Highlights Business Opportunity Annexures

Business SegmentsOne of the leading solution provider to the Oil & Gas producers in India


Company OverviewGeneral Introduction Key Highlights Business Opportunity Annexures

Diversified Oil & Gas company serving the industry in India since 1991

Business interests includes:

Oil Field Services

– Natural Gas Compression – One of the leading companies in the outsourced gas compression business

– Natural Gas Dehydration – One of the first companies to supply dehydrators on contract basis

– Drilling and Work over Rigs – Long standing relationship and preferred vendor status with few clients

Exploration & Production

– Oil & Gas Exploration & Production – 4 NELP Blocks

– CBM Exploration & Production – 3 CBM Blocks in India and 1 CBM block in Indonesia

– Marginal Fields – 3 Fields awarded by ONGC in Rajasthan

Presence through its subsidiary in USA and Singapore and a branch office in Indonesia

One of the first companies in India to provide high pressure Natural Gas Compression Services and Gas

Dehydration Services on charter hire basis

Rated as “CARE A-” and “ CARE A2+” (28-Sept-15) and “CRISIL A-” and “CRISIL A2+” (12-Nov-14) for Long term

and Short term Bank facilities respectively.

Received several accolades including Forbes Asia - Best Under Billion Dollar Company – 2010 List

One of the leading companies in Outsourced

Compression and Dehydration

More than 2 decades of experience in oil and gas

Service providers to a large number of oil and gas

producers in India

Deployment of Skilled team and efficient customisation

Long term association with US based vendors

Journey of the CompanyMajor milestones and achievements



1991

Commenced activitiesof providing liquidtransportation services

Contract awarded forAir Compression byONGC

Strategic shift fromproviding CrudeOil/Liquid transportservices to providingAir/Gas compressionservices

1994

1997

Contract awarded for

Natural Gas

Compression by ONGC

Gas compressionEquipment Lease andService Agreement withHanover, Asia Inc. USA

2001

2004

Sales Representation

Agreement with Valerus

Compression Services

Ltd., USA

Purchased one 100Ton Cardwell KB 500S Axle Mobile Rig

Registered withInternationalAssociation ofDrilling Contractors(“IADC”)

ISO 9001-2000certification

2005

2006

Awarded 2 CBM

blocks under CBM III

Initial Public Offer

(“IPO”)

Awarded 3 marginal gasfields by ONGC

2007

Journey of the CompanyMajor milestones and achievements



2008

Contract awarded for Natural

Gas Compression at Balol by

ONGC

Awarded 1 Onshore O&G block

under NELP VII

Natural Gas Compression

Contract at Kemalapuram by

CPCL

Natural Gas Compression Contract atBorohola by ONGC

Natural Gas Compression Contract atGamnewala by ONGC

ISO 14001:2004 & BS OHSAS18001:2007 Certification

2010

2011

Awarded one of the largest Gas Compression

Contracts at Rajamundary by ONGC

Natural Gas Compression Contract at Kariakal by

HOEC

Awarded 1 CBM Block in Indonesia

Natural Gas Compression Contract at Kalol by ONGC

Winner of 3 O&G Blocks under NELP IX

Award of largest* onshoreworkover rig contract fromCairn India ltd

2013

2014

Award of 25% stake in

North Karanpura CBM Block

Awarded contracts

worth INR 2,780 Mn in

Gas Dehydration Business

Awarded contract worth

INR 850 Mn for 1,000 HP

Drilling Rig Services

2015

* For the Company

Key HighlightsComprehensive service provider to oil and gas companies


Comprehensive service offering to oil and gas producers

Growing Business

Consistent yearly growth in revenues

Long term relationships with clients & Large Order Book

First mover advantage in outsourced gas dehydration opportunity

Qualified Management & Experienced Team

Key HighlightsGeneral Introduction Company Overview Business Opportunity Annexures

Comprehensive Service OfferingTechnically equipped to provide comprehensive offering to oil and gas producers


1


Oil & Gas Services

Natural Gas Compression Work Over & Drilling Rigs Natural Gas Dehydration

Owns 53 Gas

Compressors with total

capacity of more than

50,000 HP

One of the largest

companies providing

Gas Compression

Services in India

Compressing about 3.5

MMSCMD

Own and operate 9

work over rigs

Have tie ups for up to

2,000 HP

Currently has 1 drilling

rig

Have tie-ups with

international

companies for

expansion purposes

One of the first

companies to bag

contract for

Dehydration on

contract basis in India

Contract for

Dehydrating about 1.2

MMSCMD

Contracts for 5.7

MMSCMD expected to

come up for

bidding/already bid for

Conventional Unconventional

Deep Industries is

operator in 7 oil & gas

blocks in India

covering total area of

10,102 sq km having

resource potential of

8,920 MMBOE

3 onshore marginal

gas fields in Rajasthan

1 oil & gas block each

in Chhattisgarh and

Gujarat and 2 oil &

gas Blocks in MP

Deep Industries is

operator in 4 CBM

blocks in India and

Indonesia covering a

total area of 2,060

sq. km having

resource potential of

5.5 TCF

3 CBM blocks (North

Karanpura, Singrauli &

Godavri) in India

1 CBM Block in

Indonesia

Exploration and Production

Growing Business Track record of delivering projects and maintaining commitments


2


Gas Compression Business – Growth in Asset Base to keep up with increased business

Deployment of Gas Compressors and the Rigs have increased as have the number of contracts and clients per year

ParticularsFY13A FY14A FY15A

Gas Compressor Business

Number of Gas Compressor Packages 43 48 53

No of Clients 18 19 27

Rigs Business

Number of Onshore Rigs 7 7 10

No of Clients 4 4 5

43

48

53

7

7

10

FY2013 FY2014 FY2015

No of Gas Compressors No of Rigs

Deployment of Gas Compressors & RigsOwned by the Company

Consistent Yearly growth in revenuesStrong growth in topline and bottom line with robust margins


3

Revenue Growth EBITDA Growth

PAT growth


614 669

920 1,026

FY 2012 FY 2013 FY 2014 FY 2015

296

378

534 563

48.3

56.4 58.0 54.9

FY 2012 FY 2013 FY 2014 FY 2015

EBITDA EBITDA Margins

All figures in INR million All figures in INR million

120 121

200 213

19.6 18.1

21.8 20.7

FY 2012 FY 2013 FY 2014 FY 2015

PAT PAT Margin

Overall revenue has grown with a CAGR of 18.7% overFY2012-FY2015

Robust 23.9% CAGR in EBITDA aided by margin expansionover the same period

PAT margins too have been consistently high, underscoringthe operations of the Company

Established Relationships with ClientsOur experience and performance help us meet PQE requirements


4

Long term relationships with various public sector and private sector clients in India

Long term relationships help in a better understanding of our clients’ requirements and better evaluation of the scope of work and risks involved in a project we bids for, as well as address changing demands in target markets


Large Order BookLong term nature of contracts provides clear visibility of revenues. GDU revenue expected in FY16



4

Workover Rigs, 1,878

Gas Compressors, 1,504

Gas Dehydration Units, 2,769

Division wise Order Book

Current order book (Value of outstanding Contracts in ₹ million)

Client Balance Contract Value (₹mn)

ONGC 4,417

Cairn 774

Oil India 321

RGPPL 299

CPCL 113

Petronet 90

GSPL 46

Assam Gas 42

Essar 40

GACL 10

Grand Total 6,151

New Gas Dehydration Orders secured in September 2015 with outstanding value of ₹ 2,769 million to be completed over a three year period

Current orders for work over rigs and gas compressors with outstanding value of ₹ 3,382 million from 28 contracts to be completed over the next three-four years

Total Order book of ₹ 6,151 million provides strong revenue visibility

First mover advantage in Gas Dehydration Gas dehydration to provide an additional revenue stream from FY16



Deep Industries to benefit from its market positioning

The blast at the GAIL site increased the scrutiny on the processes followed by producers and

resulted in regulations being made more stringent

This necessitated ONGC to get a dehydration unit installed at the site before resuming

production, as needed by the stricter implementation of regulations.

DIL is the one of the few companies in the country who qualifies to provide the Gas

Dehydration on contract basis based on its experience of quantum of Gas Compressed in

past.

ONGC Rajamundry contract for installation of a Gas Dehydration Unit for 1.2 MMSCMD has

already been awarded to the Company.

DIL has put in bids for 2 more contracts for GDU installation for 3.4 MMSCMD and expects to

bid for a few more contracts aggregating to ~ 5 MMSCMD

Active technical backup from M/s Valerus Compression Services, USA and are the only

authorized representatives of Valerus in India, one of the key suppliers of GDUs

Also has tie-ups with reputed and experienced Gas Dehydration packagers in USA for the

supply of Gas Dehydration Packages

Gas Dehydration Unit

5

Qualified Management & Experienced TeamQualified and motivated employee base and experienced management team


Paras Savla,Chairman & Managing DirectorFirst generation entrepreneur with over20 years experience in oil and gasindustry. Com. Graduate from GujaratUniversity. Nominated as a finalist for theCNBC 14th ABLA, to be held in Oct 15.

Dharen Salva,Executive DirectorMBA from Swinburne University ofTechnology, Australia, is instrumental inthe Work Over Rig and Drilling RigActivities of the Company. He is alsoresponsible for the HR department.

Dr. K.L PatelSr. Advisor, ExplorationPost Graduate in Geology & PhD inPetroleum Economics. He has over morethan 36 years of experience with ONGC inExploration, Development, Operation &Economics.

N.S. Ghai,Senior Vice PresidentHolder of certificate in drilling fromInternational Well Control Forum and hasover 46 years of experience in drilling forconventional Oil & Gas and CBM wells inONGC, Reliance Industriesand Essar

Prem Sawhney,ED and CEO for E&P27 years of extensive experience inexploration and development ofconventional & unconventional hydrocarbon resources. Past assignments includeONGC, Essarand Reliance Industries.

A.K. Singhania,Senior Vice PresidentB.E(Chem), MBA with more than 37years of experience in the Oil and Gassector. Served as GM of ONGC withspecialisation in several areas of Oil andGas operations.

Vipul SinghalGeneral ManagerHas experience of 12+ years inplanning, drilling and completions. Hehas worked as Drilling Engineer inReliance Industries Limited andsupervised operations.

Rohan ShahChief Financial OfficerHolds CA degree from The Institute ofChartered Accounts of India and holds aB.Com degree from Gujarat University.He has about 9 years of postqualification experience.


As of September 30, 2015, the Company had more than 550 full time employees

Rupesh Savla,Managing DirectorCommerce Graduate from GujaratUniversity and an MBA from BentleyCollege, USA, has over 20 years ofexperience in execution of projects inthe oil and gas sector.

6

Business OpportunityFurther expansion in oil and gas services sector in India


Increase market share in in Gas Compression Business

Expand Rigs business by capitalizing new opportunities created by increased demand on exit of one of the existing players

Leverage our experience and track record in the gas compression to get new contracts for gas dehydration

Focus on expansion while maintaining margins

Expansion of assets base to cater to new opportunities in all three segments of Oil and Gas Services

Business OpportunityGeneral Introduction Company Overview Key Highlights Annexures

Business OpportunityLeveraging technical expertise to target opportunities in the GDU space


Business OpportunityGeneral Introduction Company Overview Key Highlights Annexures

In June 2014 a massive fire broke out following a blast in GAIL 18" size underground gas

Pipeline in East Godavari district of Andhra Pradesh, India

The blast at the ONGC site increased the scrutiny on the processes followed by

producers and resulted in regulations being made more stringent.

PNGRB has made it mandatory to have the Gas Dehydrated before they can be mounted

to the gas pipelines. We expect gas dehydration to be outsourced, driven by:

– Specialised service providers who can provide shorter lead times

– Reduced capex requirement for upstream companies

– Risk mitigation and better performance

The Gas Dehydration Business throws open an immense opportunity as most Public

Sector Undertaking would be happy to contract this business due to the time taken from

decision making to implementation, if they themselves have to install.

Changing market dyncamics to provide an opportunity to players

We believe, based on industry discussions, that the immediate potential for gas dehydration would be close to 10 MMSCMD

Need for Dehydration

Wet gas can form hydrates in pipelines,which if accumulated can create plugs inthe pipeline.

Because of the potentially high hydratecontents in the gas the blockage can arisewithin minutes without any prior warning.

This can lead to corrosion and leakages, orworse still, an explosion

FY 2016

Thank you for your Interest

Annexures Follow

DEEP INDUSTRIES LIMITED12A & 14, Abhishree Corporate Park, Ambli Bopal Road, Ambli, Ahmedabad - 380058

Annexure 1Financial Snapshot | Income Statement & Balance Sheet


Balance Sheet (Consolidated)Income Statement (Consolidated)

AnnexureGeneral Introduction Company Overview Key Highlights Business Opportunity

All figures in ₹ million

Income Statement FY 2013 FY 2014 FY 2015

Total Revenue from Oil & Gas Services 651 908 1,013

Other Income 18 12 13

Total Revenue 669 920 1,026

Operating Expenses 164 224 245

Employee Benefit Expenses 68 93 133

Other Expenses 55 65 82

Preliminary Expenses Written Off 4 4 4

Total Operating Expenses 291 386 463

EBITDA 378 534 563

EBITDA Margin 56.5% 58.0% 54.9%

Depreciation & Amortization Expenses 101 120 121

EBIT 277 413 442

Finance Costs 64 85 108

EBT 213 328 334

Total Tax Expense 91 127 121

Profit for the Year 121 200 213

Balance Sheet FY 2013 FY 2014 FY 2015

Share Capital 263 263 292

Reserves & Surplus 1,457 1,583 1,904

Money Received Against Share Warrants - 90 -

Total Shareholders Funds 1,720 1,936 2,196

Term Loans 799 1,055 1,018

Deferred Tax Liabilities 174 235 290

Other Long Term Liabilities 1 15 15

Working Capital Borrowings 76 62 123

Trade Payables 56 60 75

Other Current Liabilities 5 3 3

Short Term Provisions 172 219 119

Total Shareholders Equity & Liabilities 3,003 3,586 3,840

TOTAL ASSETS

Tangible Assets 1,970 2,375 2,707

Intangible Assets 3 3 1

Capital Work In Progress 498 515 500

Total Fixed Assets 2,472 2,893 3,209

Non Current Investments 3 3 3

Long Term Loans & Advances 26 7 5

Other Non Current Assets 25 26 34

Current Investments 37 42 10

Inventories 48 41 59

Trade Receivables 136 167 260

Cash & Equivalents 66 111 109

Short Term Loans & Advances 164 267 131

Other Current Assets 27 30 20

Total Assets 3,003 3,586 3,840

Annexure 2Corporate Structure


AnnexureGeneral Introduction Company Overview Key Highlights Business Opportunity

Deep Industries

Deep Natural Resources Limited

Subsidiary

(70%)

Prabha Energy Private Limited

Subsidiary

(71.4%)

Deep Energy LLC

Subsidiary

Deep Global Pte Ltd

Subsidiary

october 2015 - deep industriescairn india ltd 2013 2014 award of 25% stake in north karanpura cbm...

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