Deep Industries Ltd Management Discussions

India Oil and Gas Industry

The oil and gas sector is transitioning from a period of "crisis
management" to a "structural rebalancing." While 2026 was
dominated by the shock of the Strait of Hormuz closure, FY27 is
expected to see a demand rebound as supply flows normalize.

Energy security remains the cornerstone of Indias economic
growth, national security, and social stability within a highly
volatile global geopolitical landscape. As the worlds third-largest
energy consumer, Indias structural reliance on imported crude oil
(exceeding 85%) and natural gas leaves the domestic economy
exposed to price fluctuations and supply disruptions in the Middle
East. Sustaining economic momentum requires an aggressive,
domestic upstream expansion.

The 2040 Horizon: Driven by robust economic fundamentals,
Indias Gross Domestic Product (GDP) is projected to expand to
US$ 8.6 trillion by 2040.

Demand Surge: According to the International Energy Agency
(IEA), Indias primary energy demand is on track to nearly double,
reaching 1,123 million tonnes of oil equivalent (Mtoe) to power
this economic expansion.

Transformative Policy & Regulatory Paradigm Shift

The financial year ended March 31, 2026, marked the full
operationalization of historic regulatory reforms designed to
accelerate domestic exploration, de-risk capital deployment, and
improve the "Ease of Doing Business".

The Oilfields Amendment Act: This landmark legislation legally
decoupled petroleum assets from generic mining frameworks. It
streamlined operational risks by introducing a single, consolidated
Petroleum Lease system and legally expanded definitions to
protect unconventional plays (shale, tight oil, and Coal Bed
Methane) under a unified framework.

A massive push is expected in FY27 toward Natural Gas as a bridge
fuel. India and China are aggressively expanding LNG regasification
infrastructure to reduce reliance on volatile crude markets.

India has rationalized royalty rates for oil and gas companies under
the Oilfields (Regulation and Development) Act to boost growth in
the upstream sector. Just this month (May 2026), the government
slashed royalty rates to attract global majors and incentivize
domestic players like ONGC to tackle "difficult" fields. Royalty is
now calculated on "wellhead price" with a fixed deduction (15-
20%), removing the long-standing disputes over "post-production
cost" deductions.

OALP Rounds X & XI Convergence: The Directorate General of
Hydrocarbons (DGH) synchronized the 10^th and 11^th licensing
rounds into a unified bidding timeline. Covering vast acreages-
including previously restricted "No-Go" zones-these rounds
leverage AI-driven seismic data architecture to accelerate
discoveries. This supports the national target to expand Indias
active exploration area to 1 million square kilometers by 2030.

Unlocking Value for Independent Operators

To increase domestic production by FY27, the Indian government
has pivoted from a "revenue-sharing" mindset to an "exploration-
first" strategy. The goal is to reverse the decade-long decline in
crude production and hit the ambitious target of reducing oil
import dependency.

The government has launched "Special CBM Bid Rounds" in 2025
and 2026. These unconventional sources are expected to start
feeding into the national gas grid by early 2027, particularly in the
eastern states.

One of the most aggressive moves in the 2026 strategy is the
shrinking of "No-Go" areas. Huge swaths of the Indian Exclusive
Economic Zone (EEZ) that were previously restricted due to
defense or environmental concerns (nearly 1 million sq. km) have
been opened for seismic surveys and drilling.

One Nation, One Grid. The strategy isnt just about digging; its
about moving the product efficiently. Unified Pipeline Tariff (UPT)
implemented to ensure that a factory in a remote area pays the
same gas transport rate as one near a terminal. This incentivizes
E&P companies by ensuring there is a steady, national market for
their gas. Indias gas pipeline network is crossing 25,000 km in
2026, aiming to connect almost every state to the national gas grid
by the end of FY27.

With the vision of our Honorable Prime Minister Shri Narendra
Modiji for Aatmanirbhar Bharat, Country is actively perusing
investments for its exploration and production (E&P) sector
as a part of broader USD 500 billion opportunity in its Energy
Infrastructure by 2030. We are strategically positioned to capitalize
on this opportunity, reinforcing our commitment to national
energy security and long-term value creation.

Industry structure and developments:

The Oil and Gas Industry is split into three major categories;

Upstream segment

? Locating new fields for exploration: 78% of the countrys
sedimentary area is yet to be explored.

Driven by the Hydrocarbon Exploration and Licensing Policy
(HELP), the Directorate General of Hydrocarbons (DGH) has
aggressively pursued the national target of expanding Indias
active exploration area to 1 million square kilometers by
2030.

The convergence of the 10^th and 11^th Open Acreage Licensing
Policy (OALP) bidding rounds opened vast prospects.

? Opportunities for secondary/tertiary oil-producing
techniques.

? Higher demand for skilled labour and oilfield services and
equipment.

Midstream segment

? Expansion in the transmission network of gas pipelines.

? LNG imports have increased significantly, which provides an
opportunity to boost production capacity.

? In light of mounting LNG production, huge opportunity lies
for LNG terminal operation, engineering, procurement, and
construction services.

Supply Chain Diversification: In line with global energy security
directives, Indian midstream operators have finalized landmark
long-term agreements to import 2.2 million tonnes of LPG from
the United States, diversifying supply chains away from historical
bottlenecks.

Downstream segment

? India is already a refining hub with 23 refineries, and
expansion is planned for tapping foreign investment in
export-oriented infrastructure, including product pipelines
and export terminals.

Development of City Gas Distribution (CGD) networks similar
to Delhi and Mumbais CGDs.

Indian companies are expected to spend 100 billion (US$
1.35 billion) over three years on 1,000 liquefied natural gas
(LNG) stations along main roads and industrial corridors and
in mining areas to cut diesel consumption.

India currently plans to expand its natural gas pipeline
network by about 10,805 km, increasing from 24,945 km
operational to nearly 35,750 km-a 43% expansion to
complete the national gas grid and ensure uniform gas
availability across regions and10,459 km is currently in active
construction under various stages of execution.

Deep Industries Limited is a one stop solution provider in
the business of various Oil and Gas support services for more
than 30 years now. It had started with Natural Gas Compression
services in 90s and have added various services like natural
gas dehydration, Drilling and workover rigs, Integrated project
management and Charter Hiring of Gas processing services. Its
current Service portfolio covers more than 70 percent of post
exploration value chain services. Services like Integrated Project

Management and Charter hiring of Entire Gas processing
facility forms part of its value-added offerings. This is a unique
proposition offered by the Company converting EPC business
into charter hire services. After entering into Production
Enhancement Contract with ONGC, company has successfully
commenced production operations. This initiative marks a
significant milestone in companys efforts to contribute to
Indias energy security through the efficient development of
existing oil and gas fields.

With its diversified oil & gas services portfolio, Deep Industries
Limited now covers more than 70% of Post Exploration Value chain
Services in the entire value chain of Oil & Gas Services Industry.

Deep Industries Limited with pool of service offerings, is catering
all three segments with presence in Drilling, Gas gathering, Gas
Processing, Gas transmission and distribution.

After a record FY24 and FY25, FY26 has also been a pivotal year
with the company on track to achieve its highest-ever revenue,
EBITDA and cash profit, supported by favourable government
initiatives in energy sector. As we look ahead, our focus remains

on enhancing operational efficiency, leveraging technology and
pursuing opportunities that align with Indias evolving energy
needs. Deep continue to explore opportunities in production
enhancement contracts, charter hiring of entire gas processing
facilities, integrated project management services and offshore
support services, all the 4 segments are expected to drive our
growth over the next few years. Also considering huge demand
of Onshore Drilling Rigs, under Integrated Project Management
the Company is exploring opportunities of entering into higher
capacity Drilling Rigs, which can add further to the growth of
business. Deep believe the ongoing policy support, coupled
with favourable market dynamics, provides a strong foundation
for sustained growth in the sector. By maintaining a disciplined
focus on cost optimization and operational efficiency, we remain
committed to delivering consistent value to our stakeholders.

Your Company has also entered into an MOU for venturing into
Green Hydrogen Business to explore the new business areas to
add in our service portfolio. This MOU aims to bid for and execute
various Green Hydrogen project tenders and contracts.

Companys Services:

> Natural Gas

Charter Hire of Gas Processing facility

The Company is providing Design, Supply, Installation,
Commissioning and regular Operation and Maintenance
of Production system to receive, process and deliver
Hydrocarbons at custody transfer point which are produced
from the wells.

The development of Facility signifies the continuous efforts
of the Company to offer various value added services to the
clients as a key player in Oil and Gas Service Industry.

The idea and the project is one of its kind. Project Jaya
is distinguished from all other projects executed by the
Company, as under this project the Entire Gas Processing
and produced fluid processing network from wellhead to
the transportation point was delivered by the Company on
Charter Hire basis.

This will create entire new opportunities in the Industry.

Natural Gas Compression Services:

Deep Industries Limited is the largest Natural Gas
Compression service provider in India on chartered hire basis.
The Company has executed various natural gas compression
projects with various Public and Private sector Companies
in India during last Three Decades. The Company executes
compression contracts on turnkey basis, which includes
supply of Equipment, Installation, Commissioning and
Operation & Maintenance of gas engine driven compressor
packages.

The Company is able to provide the right solution to
accommodate clients time-frame and budget. The

Company has built its equipment fleet to offer a wide range
of compression requirements. Deep International DMCC,
subsidiary of the Company has acquired number of Gas
Compression packages in USA to cater business opportunities
in Middle East countries. The Company has started executing
various projects in International Market.

Natural Gas Dehydration

Gas Dehydration is a process which ensures to remove water
moisture and heavy hydrocarbons out of natural gas before
putting the same in pipeline so to ensure safety of National
Grid.

Deep Industries Limited is the pioneer in providing Gas
Dehydration Systems on Build, Own and Operate basis in
India on charter hire basis. The Company is also one of the
largest Gas Dehydration Service providers in the country.

The Company has efficiently commissioned Gas
Dehydration Units of capacities upto 10 LSCMD in a
record time and designs packages to meet a wide range of
applications with minimal changes required. The Company
also maintains an intensive stock of spares to prevent
any shutdowns as Deep understand the criticality of the
process and its impact on clients.

> Integrated Project Management Services
Integrated Project Management

Deep Industries Limited has adopted the Integrated Project
Management (IPM) as a turnkey solution to drill and complete
a well or a number of wells under single contract. We have
capabilities to provide pool of niche services involving
highly technical jobs and services under one roof improves
coordination, Time & Cost Management. Deep is the first
Indian company to offer integrated solutions. The Company
has adopted various services of Oil & Gas exploration
since 2016 considering the opportunity in the space and
unconventional energy being the future.

Deep is the only incorporated company who has the
unique combination of providing services to Upstream
and midstream. Deeps experience, expertise and quality
equipment helps to deliver results to the challenging projects
and meet stringent client demands.

The Companys IPM services include:

- Surface Hole Drilling

- Air Drilling

- Cementing

- Geophysical Logging, wire line service

- Hydro Fracturing & Coiled tubing

- Well Completion Services-Workover operations to
Production

Drilling and Workover Services

DEEP commands a healthy market position in the area of providing the Drilling and Workover Rig services on charter hire basis in
India. Since last 16 years, DEEP has served long term contracts for Drilling rig and Workover services to variety of clients including
PSUs and Private E&P companies, and having the excellent track records in India. DEEP is having vision to expand the Rig business in
overseas Market as well. DEEP is also approved Drilling Contractor in Kuwait Oil Company for providing the Rigs.

DEEP owns total 20 Nos. of onshore rigs where in it owns 14 workover rigs with capacity ranging from 30T to 150T and 6 Drilling
Rigs with capacity of 1000Hp. The Company has remarkably carried out and successfully completed various contracts for different
operators and in diverse areas spreading from the Deserts of India, Ecosensitive Areas, and difficult Terrain of Mountain Range Areas.

DEEP is Capable to provide all Oilfield equipment pertaining to Drilling, Workover, Completion & Production on Charter, Rental & Dry
Lease Hire basis. Our professional staff and fully operable fleet of drilling rigs and Workover rigs and technologies delivers for any
operational need and helpful to quickly and safely deploy them at well site.

> Production Enhancement Contract

Deep Industries Limited has secured a > 1,402 crore contract from ONGC for 15 years. The said contract offers comprehensive services
to boost production from one of the Matured Fields of ONGC.

Under the Production Enhancement Contract Deep is expected to enhance the Hydrocarbon production and extend the overall life
span of ONGCs mature oil/gas fields by deploying advance techniques, safe operating practices and specialised field equipment.

Deep stands out as uniquely qualified for such contract because it offers a rare combination of in-house technical capabilities,
backed by its 3 decades of experience and end-to-end operational reach.

> Offshore Services

Deep Industries has been engaged in the Onshore Services segment for more than 3 decades and with an intention to expand its
service portfolio in the offshore segment Deep acquired Dolphin Offshore Enterprises (India) Limited through NCLT in 2022 step
down subsidiary Company. Under Offshore Oil and Gas services, the operations are performed in deep sea.

The Offshore Services business has following target market / industries

o Offshore oil & gas industry-Energy producers with shallow water and deep water platforms.
o Offshore renewable energy industry - Offshore wind platforms.
o Offshore rare earth element and deep-sea mining.

o Communication Industry-Trans-country and Trans-continental networks with undersea data cables.
o Transmission & Transportation-under sea gas transportation pipelines and undersea power cables.
o Additionally offshore services can be provided to domestic and international offshore Oil & Gas producers

- Offering a wide range of services in various sectors,
catering to a diverse client base, and ensuring stability
through different market fluctuations and demands.

- Leveraging the flexibility of fully mobile units, the
company can expediently transport its resources to any
corner of the country within a matter of months.

- The companys subsidiary is actively pursuing
sustainable offshore opportunities, with promising
prospects that are expected to unlock significant value
in the foreseeable future.

- The companys liquidity and robust resource base
position it favorably to meet expansion requirements
seamlessly. The company has mirrored its financial
moats from its core principles, maintaining a judicious
balance between liquidity and debt on its books,
consequently fostering a strong balance sheet.

- As the market demand for gas compression services
continues to rise, the company is poised for an
expansion, capitalizing on the increasing trend of
outsourcing this specialized service.

- Deep Industries has supreme Expertise in providing
Value added services for our clients which in turn
improves their revenue generating ability as well as
profitability at large and provides a diversified service
mix for their product portfolio

Outlook

The Indian Oil & Gas sector is experiencing a structural rebalancing,
with the Government accelerating its resolve to reduce import
dependencies amid global supply-side disruptions. Aligned with
the Honorable Prime Ministers vision of Aatmanirbhar Bharat, the
nation is targeting a monumental USD 500 billion opportunity in
Energy Infrastructure by 2030, with a heavy emphasis on domestic
Exploration and Production (E&P).

Strategic Positioning & Growth Momentum

Deep Industries Limited is uniquely positioned to capitalize on
this massive investment cycle. As Indias only integrated onshore
and offshore Oil & Gas service provider with over 30 years of
operational legacy, we are a vital partner in reinforcing national
energy security.

The shift from captive to outsourcing of various oil and gas support
services by PSUs also results in to an opportunity for Deep.

Our business outlook remains highly promising, underpinned by:

A constantly growing revolving order book ensuring robust
revenue visibility.

A healthy, expanding bidding pipeline driven by heightened
domestic E&P activity.

With strong macro tailwinds and unmatched execution capabilities,
Deep Industries is well-placed to deliver sustained, long-term
value for all stakeholders.

Considering huge demand of Onshore Drilling Rigs, under
Integrated Project Management your Company is exploring
opportunities of entering into higher capacity Drilling Rigs, which
can add further to the growth of business.

The Company has been building up and growing steadily since,
primarily through:

- Conveniently & strategically located to Service Oil & Gas
markets in India and globally

- Owns Fuel Efficient, latest Equipments to cater the need of Oil
& Gas Industry

- Recruiting highly skilled technical staff

- Providing services at high quality of standards with peak
performance

The Company has grown from being a "One Stop Solution"
provider for every need in Oil and Gas field operations to Indias
only integrated Onshore and offshore Oil & Gas Service Provider.

Risks and Concerns

Risks and uncertainties are an inherent part of every business, and
yet it is important to identify the risks and take proactive steps
to measure, minimize and mitigate them. The Company sees
concerns in relation to the Scarcity of skilled personnel in market,
Procurement Risk as not being able to procure rightly configured
equipments in a timely manner and dependency on few clients.

The Company understands these risks can adversely impact
fruition of both short-term operational and long-term strategic
goals. Hence Risk management process is closely aligned with
Companys business planning process and control function
whereby the Company identifies and evaluates risks as early as
possible, applies strategies and tools to mitigate those risks and
attempts to limit its overall impact on the business by adopting
suitable measures and continuously revaluating those measures
with a prime focus to mitigate those risks that pose a threat to its
sustainable growth.

Green Initiative

Your Companys all gas processing equipments are running on gas
based engines which uses natural gas as fuel. Natural gas is a green
form of gas which enables in less carbon emission.

Your Company has also signed an MOU for venturing into Green
Hydrogen Business to explore the new business areas to add in our
service portfolio.

Internal control systems and their adequacy

The Company has put in a place an adequate and effective Internal
Control Mechanism to ensure efficient conduct of its operations,
security of assets, prevention and detection of frauds/errors,
preserving accuracy and completeness of the accounting and
business records and timely preparation of financial statements
and related information. These internal control systems are
then further supplemented by Internal Audit carried out by the
Internal Auditor of the Company and periodical review by the
management. The Company has put in place Proper and adequate
controls, which are reviewed at regular intervals to ensure that
the business decisions and transactions are properly authorized,
correctly and timely reported and the assets are safeguarded from
loss, damage and misuse.

In addition to above, the Company has formulated a Vigil
Mechanism and Whistle Blower Policy for its Directors and
employees of the Company for reporting genuine concern about
unethical practices and suspected mal-practices.

Discussion on financial performance
Revenue from Operations

(Rs in Lakhs)

Nature of Services	FY 2025-26	FY 2024-25	Change	Change %
Natural Gas Compression Services/Processing services and Workover and Drilling Rig & Services	70,296.17	47,747.86	22,548.31	47.22
Total Business Income	70,296.17	47,747.86	22,548.31	47.22
(Rs in Lakhs)
Particulars			FY 2025-26	FY 2024-25
Revenue From Operation			70,296.17	47,747.86
Earnings Before Interest, Taxes Depreciation & Amortization (EBITDA)			31,650.90	22,857.33
Earnings before Depreciation, Taxes and Amortization (EBTDA)			29,942.60	21,409.37
Profit before tax (PBT)			25,658.12	17,426.53
Profit after tax (PAT)			9,748.19	(11,543.32)

Further, the Companys Other Income increased from Rs3,829 Lakhs to Rs5,288.66 Lakhs whereby Other Expenses increased from Rs 2,811.29
Lakhs to Rs 3,021.89 Lakhs.

Employees Remuneration & Benefits has increased from Rs5,492.77 Lakhs to Rs6,919.90 lakhs with increase in manpower for new projects
and this also includes Directors Remuneration.

Interest & Financial Cost has increased from Rs1,486.37 Lakhs to Rs1,708.30 Lakhs as compared to previous year. The Companys Operating
Expenses have rose from Rs20,377.06 Lakhs to Rs33,992.14 Lakhs which commensurate with the increase in Revenue from Operations.

Material developments in Human Resources / Industrial Relations

The Company believes that the quality of the employees is the key to its success and is committed to equip them with skills. The Company
provides to the employees a fair and equitable work environment and support from their peers with a view to develop their capabilities
leaving them with the freedom to act and to take responsibilities for the task assigned. The Company has strongly embedded core values
and all employees are trained and encouraged to use these values in their daily operations and the bases for making decisions. The
Companys management has always carried out systematic appraisal of performance and imparted training at periodic intervals. The
Company has always recognized talent and has judiciously followed the principle of rewarding performance. This has helped to ensure
all employees are aligned and focused on key objectives and key performance indicators critical for the Companys performance. In order
to meet steady flow of talent, Company has appointed experienced professionals in Technical as well as Commercial Departments. Apart
from that, as a strategic policy, every year, Company hires new pool of talent from reputed technical / petroleum institutes through campus
selection process.

In adding up, the Company is committed to nurturing, enhancing and retaining top talent through superior Learning and Organizational
Management. The Industrial relation of the Company with various suppliers, customers, financial lenders and employees is cordial. Total
employees on the payroll of the Company as on March 31,2026 are 838.

Health, Safety & Environment

Being a service provider to high risk industry, safety of employees is utmost priority of Company. While providing services, Company
ensures compliance to all Rules and Regulations regarding Health, Safety and Environment protection. Imparting essential health and
safety training such as MVT, Firefighting etc is being followed on regular basis.

Details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial
ratios and any change in Return on Net Worth, along with detailed explanations thereof.

Sr. No Financial Ratios	Key Financial Ratios		Changes	Explanation
	2025-26	2024-25
1. Debtors Turnover Ratio	2.38	1.91	24.66%	-
2. Inventory Turnover	5.72	4.61	24.09%	-
3. Interest Coverage Ratio	16.02	12.72	25.90%	Interest Coverage ratio has increased primarily due to increased earnings available for servicing the debt
4. Current Ratio	1.76	2.57	(31.71)%	Current Ratio has decreased primarily due to reduction in current assets as compared to previous year.
5. Debt Equity Ratio	0.12	0.13	(6.83)%	-
6. Operating Profit Margin	31.41%	31.59%	(0.58)%	-
7. Net Profit Margin (%)	40.45%	26.06%	55.25%	Net Profits ratio has improved due to revenues coming from more profitable projects and one time impact to tax items
8. Return on Net worth	7.90%	(9.95)%	179.37%	Improvement in RoNW is primarily due to better utilization of assets and increased profitability on projects

*Net worth is Adjusted for Goodwill and Capital Work In Progress

Disclosure of Accounting Treatment

Standard Accounting procedure has been followed.

Cautionary Statement

Statements made in this Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations
and predictions may be forward looking statements within the meaning of applicable laws and regulations. The Companys actual results,
achievements may differ materially from those projected in any such forward looking Statements. The Company assumes no responsibility
to publicly amend or revive any forward looking statements on the basis of subsequent developments, information or events.