DEEP INDUSTRIES LIMITED General Introduction Company Overview Key - - PowerPoint PPT Presentation

October 2015

CORPORATE PRESENTATION

DEEP INDUSTRIES LIMITED

Disclaimer

Safe 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’) for information 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 or advertisement 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 distribution form 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. This presentation 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 notified and 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 any

• ther 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 In particular, this presentation is not for publication or distribution or release in any country where such distribution may lead to a breach of any law or regulatory requirement.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 is

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General Introduction Company Overview Key Highlights Business Opportunity Annexures

Abbreviations

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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

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General Introduction

1 Company Overview 4 Business Opportunity 3 Key Highlights Annexure 2

Company Overview Key Highlights Business Opportunity Annexures

Business Segments

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

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Company Overview General 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 Company

Major milestones and achievements

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Company Overview General Introduction Key Highlights Business Opportunity Annexures 1991 Commenced activities

• f

providing liquid transportation services Contract awarded for Air Compression by ONGC Strategic shift from providing Crude Oil/Liquid transport services to providing Air/Gas compression services 1994 1997 Contract awarded for Natural Gas Compression by ONGC Gas compression Equipment Lease and Service Agreement with Hanover, Asia Inc. USA 2001 2004 Sales Representation Agreement with Valerus Compression Services Ltd., USA Purchased one 100 Ton Cardwell KB 500 S Axle Mobile Rig Registered with International Association

• f

Drilling Contractors (“IADC”) ISO 9001-2000 certification 2005 2006 Awarded 2 CBM blocks under CBM III Initial Public Offer (“IPO”) Awarded 3 marginal gas fields by ONGC 2007

Journey of the Company

Major milestones and achievements

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Company Overview General Introduction Key Highlights Business Opportunity Annexures 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 at Borohola by ONGC Natural Gas Compression Contract at Gamnewala by ONGC ISO 14001:2004 & BS OHSAS 18001:2007 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* onshore workover rig contract from Cairn India ltd 2013 2014 Award

• f

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 Highlights

Comprehensive service provider to oil and gas companies

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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 Highlights General Introduction Company Overview Business Opportunity Annexures

Comprehensive Service Offering

Technically equipped to provide comprehensive offering to oil and gas producers

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Key Highlights General Introduction Company Overview Business Opportunity Annexures

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
• perator 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
• perator 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

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Key Highlights General Introduction Company Overview Business Opportunity Annexures 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 Particulars FY13A 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 & Rigs Owned by the Company

Consistent Yearly growth in revenues

Strong growth in topline and bottom line with robust margins

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Overall revenue has grown with a CAGR of 18.7% over FY12-15 … … with an equally robust 23.9% CAGR in EBITDA aided by margin expansion Importantly, PAT margins have been consistently high … Key Highlights General Introduction Company Overview Business Opportunity Annexures … aiding the return ratios 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 * Capital employed includes ₹450.5 mn deployed for the E&P business that is current not generating revenue/returns | Capital Employed = Total Assets less current liabilities 8.7% 10.3% 12.7% 12.5% 7.9% 7.1% 10.4% 9.7% FY 2012 FY 2013 FY 2014 FY 2015 Return on Capital Employed * Return on Equity

Established Relationships with Clients

Our experience and performance help us meet PQE requirements

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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

Key Highlights General Introduction Company Overview Business Opportunity Annexures

Large Order Book

Long term nature of contracts provides clear visibility of revenues. GDU revenue expected in FY16

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Key Highlights General Introduction Company Overview Business Opportunity Annexures

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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

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Key Highlights General Introduction Company Overview Business Opportunity Annexures 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

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Qualified Management & Experienced Team

Qualified and motivated employee base and experienced management team

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Paras Savla,

Chairman & Managing Director First generation entrepreneur with over 20 years experience in oil and gas

• industry. Com. Graduate from Gujarat
• University. Nominated as a finalist for the

CNBC 14th ABLA, to be held in Oct 15.

Dharen Salva,

Executive Director

MBA from Swinburne University of Technology, Australia, is instrumental in the Work Over Rig and Drilling Rig Activities of the Company. He is also responsible for the HR department.

• Dr. K.L Patel
• Sr. Advisor, Exploration

Post Graduate in Geology & PhD in Petroleum Economics. He has over more than 36 years of experience with ONGC in Exploration, Development, Operation & Economics.

N.S. Ghai,

Senior Vice President

Holder

• f

certificate in drilling from International Well Control Forum and has

• ver 46 years of experience in drilling for

conventional Oil & Gas and CBM wells in ONGC,RelianceIndustriesandEssar

Prem Sawhney,

ED and CEO for E&P

27 years

• f

extensive experience in exploration and development

• f

conventional & unconventional hydro carbon resources. Past assignments include ONGC,EssarandRelianceIndustries.

A.K. Singhania,

Senior Vice President

B.E(Chem), MBA with more than 37 years of experience in the Oil and Gas

• sector. Served as GM of ONGC with

specialisation in several areas of Oil and Gas operations.

Vipul Singhal

General Manager

Has experience

• f

12+ years in planning, drilling and completions. He has worked as Drilling Engineer in Reliance Industries Limited and supervised operations.

Rohan Shah

Chief Financial Officer

Holds CA degree from The Institute of Chartered Accounts of India and holds a B.Com degree from Gujarat University. He has about 9 years

• f

post qualification experience.

Key Highlights General Introduction Company Overview Business Opportunity Annexures

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

Rupesh Savla,

Managing Director Commerce Graduate from Gujarat University and an MBA from Bentley College, USA, has over 20 years of experience in execution of projects in the oil and gas sector.

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Business Opportunity

Further expansion in oil and gas services sector in India

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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 Opportunity General Introduction Company Overview Key Highlights Annexures

Business Opportunity

Leveraging technical expertise to target opportunities in the GDU space

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Business Opportunity General 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 in the pipeline.

• Because of the potentially high hydrate

contents in the gas the blockage can arise within minutes without any prior warning.

• This can lead to corrosion and leakages, or

worse still, an explosion

FY 2016

Thank you for your Interest

Annexures Follow

DEEP INDUSTRIES LIMITED

12A & 14, Abhishree Corporate Park, Ambli Bopal Road, Ambli, Ahmedabad - 380058

Annexure 1

Financial Snapshot | Income Statement & Balance Sheet

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Balance Sheet (Consolidated) Income Statement (Consolidated) Annexure General 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 2

Corporate Structure

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Annexure General 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