Dolphin Offshore Enterprises India Ltd Management Discussions

<dhhead-MANAGEMENT DISCUSSION AND ANALYSIS</dhhead-

Industry Overview

Global offshore oil and gas activity continues to strengthen, supported by sustained investments in energy security, increasing deepwater developments, and the need to offset production declines from mature fields. National oil companies and international energy companies continue to sanction offshore projects across Latin America, the Middle East, West Africa, Southeast Asia and the Gulf of Mexico. These trends are supporting demand for offshore support vessels, accommodation barges, diving support vessels and subsea service providers.

Key demand drivers include: (i) increased offshore exploration and production expenditure, (ii) redevelopment of mature offshore fields, (iii) expansion of deepwater developments, (iv) limited addition of new offshore vessels over recent years, resulting in tighter fleet availability, (v) increasing offshore maintenance, Brownfield modification and well intervention activities requiring specialized marine assets and (vi) political unrest and war in the Middle East resulting in closure of the Straits of Hormuz and disruptions in productions from oil and gas fields and refineries..

Dynamic Positioning Class 2 (DP2) accommodation barges play a critical role in offshore construction, maintenance, hook-up and commissioning, well intervention and offshore renewable projects. The global supply of such specialized assets remains limited compared with increasing demand, supporting healthy utilization levels and improving charter opportunities for technically capable operators.

Unlike traditional mooring barges, a DP2 barge relies on an automated system of thrusters, sensors, and computers to maintain its exact position and heading without anchors even if a critical component (like a generator or a thruster) completely fails. In 2026, DP2 configurations command the largest share of all marine dynamic positioning installations, serving as essential, high-stability workhorses for complex marine environments.

Key Industry Drivers in 2026

Seabed Congestion & Deepwater Limits: Traditional anchoring is becoming impossible or illegal in heavily developed sectors. Laying multiple massive anchors creates a high risk of snagging existing subsea cables, pipelines, or templates. Furthermore, as energy projects push into deeper waters, the time and cost required for anchor-handling tugs to secure a traditional barge becomes highly inefficient. A DP2 barge sets up position in minutes regardless of water depth or seabed obstructions.

The Offshore Wind and "Green" Pipeline: Offshore wind installations are accelerating globally, with current projects expanding toward 100+ GW of total capacity. Modern turbine components are becoming so massive that standard installation vessels are facing backlogs. Heavy-lift DP2 barges are increasingly stepping in to act as static transport and construction staging grounds, maintaining safe 1-meter station-keeping accuracy directly next to monopiles.

Stringent Safety Regulations: Nearly 45% of offshore fleet upgrades and procurement decisions are tied directly to safety compliance. Marine insurance pools and national regulatory bodies (such as the Bureau of Safety and Environmental Enforcement in the US or the North Sea authorities) heavily mandate DP2 or higher classifications for any vessel operating within the "500-meter safety zone" of a live oil and gas platform.

Supply Dynamics: The Cost and Complexity Barrier: The DP2 barge market experiences significant high-barrier-to-entry characteristics. Regional Market Hotspots

• Asia-Pacific (APAC): Dominates the fabrication and utilization landscape, holding over 37% of the global market share. Driven by massive shallow-to-deepwater infrastructure transitions in the South China Sea, Southeast Asia, and localized offshore wind arrays in Taiwan and Japan.

• Middle East & West Africa: High demand for DP2 accommodation and well-intervention barges. Shallow water depths coupled with highly dense networks of legacy oil platforms make anchored barges too risky, cementing a strong term-charter market for DP2 flotels. Further, due to ongoing War and instability in the Middle East, where ready supply of oil and gas is being disrupted, there is rebewed activity in West Africa to increase production of oil and gas.

• North America / Gulf of Mexico: Driven heavily by deepwater subsea construction and tie-backs. High-spec DP2 barges operating here command premium daily rates due to strict regulatory oversight and limited regional fleet availability.

Current Market Realities

The offshore support vessel market remains in an upcycle driven by higher offshore capital expenditure, improving utilization levels and constrained vessel supply. Demand for Anchor Handling Tug Supply (AHTS), Platform Supply Vessels (PSVs), Diving Support Vessels (DSVs) and Multi-Purpose Support Vessels (MPSVs) continues to improve across major offshore basins.

These highly specialized vessels serve as the operational backbone for offshore installation, logistics, and maintenance. Driven by deepwater exploration spend alongside the expansion of offshore wind and renewable energy projects, vessel utilization rates and day- rates are rising globally. With regional public and private energy majors accelerating offshore drilling campaigns, the macro-environment presents an expanding, high-yield opportunity landscape for players operating in the maritime chartering and offshore logistics domain.

Global Offshore Expansion & Support Vessel (OSV) Market: Globally, offshore oil and gas activities are witnessing a major capital expenditure upswing. While traditional deepwater zones like the Gulf of Mexico and the North Sea maintain a dominant footprint, developing and newly industrializing nations are aggressively broadening the global resource map.

1. Market Size & Growth Trajectory

Utilization Levels: Global average utilization hovers tightly above 75-82% for premium, high-specification fleets, creating immediate spot-market competitive tension between major charterers

2. Supply-Side Crunch: The 4% Orderbook Constraint The most unique element of this current cycle is the structural lack of new supply. During previous market peaks, ship owners aggressively commissioned new builds, causing an oversupply that crashed the market. This time, the playbook has flipped:

An Aging Global Fleet: The median age of the global OSV fleet has crept past 15-18 years. Instead of building new vessels, owners are paying multi-million dollar dry-docking and life-extension fees to keep aging assets working.

The Newbuild Barrier: Shipyards have increased newbuild pricing indexes by over 20%, driven by high steel costs and limited yard capacity. With a 3-to-4-year delivery lag, ordering a high-spec, Dynamic Positioning 2 (DP2) class vessel today requires capital expenditure that current day rates struggle to justify upfront.

3. Key Demand Drivers & Regional Hotspots: Deepwater Oil & Gas Resurgence High-volume deepwater projects are commanding the bulk of heavily specd AHTS and Subsea Construction vessels.

Latin America: Brazil (Pre-Salt fields) and Guyana remain global demand vacuums, with state-backed tenders locking up high-end tonnage on long-term contracts (e.g., Petrobras signing multi-year, $150M+ support contracts).

Gulf of Mexico & West Africa: Multi-billion-dollar tie-back allocations by majors like Chevron and ExxonMobil are keeping regional capacity severely constrained.

The Offshore Wind Pivot The rapid scaling of global offshore wind capacity—advancing toward 100+ GW globally—has triggered intense competition for maritime assets. Traditional OSVs are being heavily modified or customized as Service Operation Vessels (SOVs) and commissioning craft. In the US, strict Jones Act compliance mandates are creating acute local scarcity for East Coast wind arrays, driving regional day rates north of $50,000.

Dolphin Offshore Enterprises (India) Limited (DOEIL) is well positioned to benefit from these market trends through its specialized offshore service capabilities, DP2 accommodation barge operations, marine logistics expertise and expanding international presence. The Companys strategy focuses on disciplined asset deployment, operational excellence and long-term customer relationships rather than cyclical spot-market exposure.

Strategic Vectors of Growth

1. Asset Maximization & Premium Monetization: Amid global shortages of specialized offshore assets, DOEIL has unlocked exponential value from its fleet. A key highlight of the year is the optimization of our "Prabha" DP2 Accommodation Barge. Leveraging its advanced Dynamic Positioning (DP2) capabilities, the asset has commanded premium charter rates from global exploration majors, driving robust top-line growth and asset utilization.

2. Borderless Execution via International Subsidiaries: To seamlessly capture multi-year highs in deepwater exploration spending, we have operationalized our global expansion strategy through specialized international arms, including Beluga International DMCC. This structure allows DOEIL to fluidly deploy assets and execute high-tech subsea services across cross-border markets, building on our rich historical footprint across India, Thailand, Mexico, Malaysia, Indonesia, and Africa.

3. Client Ecosystem: Our technical precision continues to make us the partner of choice for mission-critical energy projects.

Verticals and Segments in which the Company has start operations in immediate future:

1. Prabha- DP2 Accommodation Barge

Prabha is a Dynamically Positioned Vessel (DP2) accommodation Work Barge with a capacity of 275 People, Deck Space of 1200 sq. meter and 330-ton crane and the same is owned by Beluga International DMCC, UAE which is 100% subsidiary of DOEIL. A Dynamic Positioning system is able to control the position and heading of a vessel by using thrusters that are constantly active and automatically balance the environmental forces (wind, waves, current etc.). Environmental forces tend to move the vessel off the desired position while the automatically controlled thrust balances those forces and keeps the vessel in position

Right now, there are only few barges like this which are available globally and hence it comes with a great use case.

2. Anchor Handling Tug Supply (AHTS)

Anchor Handling Tug Supply (AHTS) vessels have several critical uses, particularly in the offshore oil and gas industry.

The primary uses of the AHTS vessels are Anchor Handling, Towing Operations, Supply and Transportation, Emergency Response, Subsea Operations, Heavy-Lift Operations, Dynamic Positioning and Support for Offshore Construction Projects etc.

In summary, AHTS vessels are versatile workhorses in the offshore oil and gas industry, performing a wide range of critical tasks that ensure the successful and safe operation of offshore projects. Their adaptability and power make them indispensable for both

Verticals and Segments in which the Company will start operations in immediate future: 3. Platform Supply Vessels (PSV) and other Marine Operations

j Platform Supply Vessels (PSVs) are currently in high demand due to increased activity on offshore oil and gas platforms.

The contract tenures for Platform Supply Vessels (PSVs) and Anchor Handling Tug Supply (AHTS) vessels generally range from 1 to 5 years, providing Dolphin Offshore Enterprises with a stable and predictable revenue stream. These medium- to long-term contracts offer financial visibility and reduce exposure to short-term market volatility, making them a reliable asset class in the offshore oil and gas services sector.

4. Diving Support Vessel (DSV)

p A Diving Support Vessel (DSV) is a specialized type of ship designed specifically to support underwater diving operations, primarily in offshore oil and gas fields, subsea construction, and maintenance activities. These vessels are equipped with a range of sophisticated systems and equipment, including redundancies, to ensure the safety, efficiency, and success of complex underwater tasks.

One of the core features of a DSV is its Dynamic Positioning (DP) System, which allows the vessel to maintain a precise position over the work site without the need for anchoring. This is critical for diver safety and operational accuracy, especially in deep or hazardous waters. The vessel is also fitted with advanced diving equipment, including saturation diving systems, decompression chambers, and emergency medical facilities, allowing divers to work at great depths for extended periods while minimizing health risks.

The work deck is specially designed to accommodate a variety of tools and heavy equipment necessary for subsea operations, while accommodation quarters provide comfortable living space for the crew and diving teams during extended missions at sea. To ensure operational coordination and diver safety, robust communication systems are installed to maintain constant contact between divers underwater, the vessel.

In response to this market opportunity, Dolphin Offshore Enterprises (India) Limited is planning for acquiring new vessels depending on the proximity of contract.

This strategic expansion will be financed through a combination of debt and equity, aligning with the companys growth ambitions and current market dynamics.

Strength and Opportunities:

- Prabha- DP2 Accommodation Barge (Previously known as Vikrant Dolphin)

- Offering Marines Operations and Management Services

- Logistics support to Marine Operations

- Diving and Underwater Services

- Repairs and maintenance of offshore platforms and structures

- Platform Supply Vessels (PSV) and other Marine Operations

Marine Operations - Geographical Opportunity

Outlook:

The medium-term outlook for the offshore services sector remains favourable, supported by sustained offshore investment, increasing demand for specialised marine assets and limited fleet additions. The Company expects these industry fundamentals to provide opportunities for long-term growth while maintaining prudent risk management and capital allocation.

The deployment of the Prabha-DP2 Accommodation Barge marks a critical operational pivot for Dolphin Offshore. Moving into the 26-27 fiscal year, this asset acts as a baseline financial engine, transforming macro sector tailwinds into highly predictable cash flows.

Group Structure:

- Deep Industries Limited, Ultimate Parent Company 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. 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.

- Deep Onshore Services Private Limited (DOSPL), Holding Company and a Wholly Owned Subsidiary (WOS) of Deep Industries Limited. DOSPL acquired Dolphin Offshore Enterprises (India) Limited. It is a strategic acquisition expanding business footprint into offshore services segment.

- Dolphin Offshore Enterprises (Mauritius) Private Limited, based in Ebene, Mauritius is a wholly based subsidiary of the Company, engaged in investment holding, Leasing of Barge and shipping activities.

- Beluga International DMCC, based in Dubai (UAE) is a wholly based subsidiary of the Company, incorporated in the month of December 2023. The Company is incorporated for the purpose of carrying out the activities relating to ship charter including renting and leasing of water-transport boats, Barges & Tugs and for passenger transport or cargo, whether owned by the company or being re-chartered.

- Beluga International (IFSC) Private Limited, based in GIFT City, Gandhinagar, Gujarat. is a wholly based subsidiary of the Company, incorporated in the month of March 2026. The Company is incorporated for the purpose of operating ship leasing. The Company is still in the process of opening the subsidiary Companys bank account accordingly the paid-up capital has not yet been infused.

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 offshore vessel business, which involves the operation of ships that support offshore oil and gas exploration, construction, and production, is critical but comes with several risks and concerns. These risks span various areas, including financial, operational, environmental, regulatory, and reputational aspects.

Here are the key risks and concerns:

1. Market and Economic Risks

- Volatility in Oil Prices: Offshore vessels heavily rely on the oil and gas industry. Fluctuations in oil prices can lead to reduced demand for vessels, affecting profitability.

- Economic Downturns: Global economic slowdowns can lead to reduced investment in offshore projects, leading to lower utilization rates for offshore vessels.

2. Operational Risks

- Accidents and Collisions: Offshore operations are complex and hazardous. Collisions, groundings, or accidents can result in significant financial losses and environmental damage.

- Technical Failures: The failure of critical vessel systems or equipment can lead to costly downtimes and potentially dangerous situations.

- Weather and Sea Conditions: Adverse weather and harsh sea conditions can disrupt operations, damage vessels, and pose safety risks to crew members.

3. Safety and Security Risks

- Piracy and Armed Attacks: Vessels operating in certain regions may face the threat of piracy or armed attacks, leading to potential loss of assets and crew.

- Cybersecurity: Increasing digitalization of vessel operations raises the risk of cyber-attacks, which could disruptoperations or lead to data breaches.

- Political unrest which can cause damage to vessels similar to what is happening in the Straits of Hormoz.

4. Financial Risks

- High Capital Costs: Offshore vessels are expensive to build and maintain, requiring significant capital investment Financing these assets can be challenging, especially during downturns.

- Liquidity Risks: Operators may face liquidity issues if they are unable to secure contracts or if payments from clients are delayed.

- Insurance Costs: The high risks associated with offshore operations and working in unsafe areas can lead to substantial insurance premiums.

5. Technological Risks

- Rapid Technological Change: The need to keep up with rapid advancements in technology requires continuous investment in new equipment and training, which can be costly.

- Obsolescence: Older vessels may become obsolete due to new regulations or advances in technology and safety norms, requiring costly upgrades or replacements.

6. Human Resource Risks

• Shortage of Skilled Maritime Crew and Divers: Specialized subsea engineering, diving services, and vessel operations require

highly certified personnel. Wage inflation or a domestic shortage of qualified marine crew and commercial divers could drive up operating costs or stall execution timelines.

In summary, the offshore vessel business is exposed to a wide range of risks that require careful management. Companies must have robust risk mitigation strategies, including safety protocols, financial planning, regulatory compliance, and environmental stewardship, to navigate these challenges successfully.

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

Nature of Services	FY 2025-26	FY 2024-25	Change	Change%
Sale of Spares and Technical Consulting services to the offshore oil and gas industry	1,173.25	1,488.48	(315.23)	(21.18%)
Total Business Income	1,173.25	1,488.48	(315.23)	(21.18%)

 

Particulars	For 2025-26	For 2024-25
Revenue From Operation & Other Income	3,979.00	2,077.97
Earnings Before Interest, Taxes Depreciation & Amortization (EBITDA)after exceptional items	3,387.53	570.76
Earnings before Depreciation, Taxes and Amortization (EBTDA) after exceptional items	2,617.97	453.95
Profit before tax (PBT)	2,617.65	433.18
Profit after tax (PAT)	3,753.54	324.16

The Companys Operating Profit have increase from loss of Rs. 18.72 Lakhs to Profit of Rs. 581.79 lacs .

Operating Profit Ratio improved significantly from (-1.26%) in FY 2024-25 to 49.59% in FY 2025-26. The improvement was primarily due to a substantial reduction in cost of material consumed and operating expenses, which more than offset the decline in revenue from operations, resulting in a significant increase in operating profitability.

Material developments in Human Resources / Industrial Relations

The Company values its Human Resources most and continued in its endeavors to ensure work-life balance of its employees. The Company believes that employees are the key to achievement of Companys objectives and strategies. 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. We provide our employees outstanding career development opportunities and reward to the staff for their good performance and loyalty to the organization. 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. Other than Key Managerial Personnel, there were no any other employees in the Company as on 31st March, 2026.

Health, Safety & Environment

Being a service provider to high-risk industry, safety of employees is utmost priority of our Company. While carrying out operations, 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. Financial Ratios No.	Key Financial Ratios			Changes Explanation
	2025-26	2024-25
1. Debtors Turnover Ratio (In times)	0.10	0.13	(20.69%)	-
2. Inventory Turnover (in Times)		-	-
3. Interest Coverage Ratio (%)	2.86	3.95	(27.66%)	The reduction in Debt Service Converage Ratio is primarily due to increase in Debt as compared to increase in Earnings available for debt servicing.
4. Current Ratio (in times)	7.51	20.90	(64.70%)	The decrease in current ratio is primarily due to increase in current liabilities during FY 2025-26
5. Debt Equity Ratio (In times)	0.97	0.31	212.90%	The increase in Debt Equity ratio is primarily due to increase in borrowings from parent company.
6. Operating Profit Margin (%)	49.59%	(1.26%)	50.85%	Operating Profit Ratio improved significantly from (-1.26%) in FY 2024-25 to 49.59% in FY 2025-26. The improvement was primarily due to a substantial reduction in cost of material consumed and operating expenses, which more than offset the decline in revenue from operations, resulting in a significant increase in operating profitability
7. Net Profit Margin (%)	94.33%	15.60%	504.68%	The increase in Net Profit Ratio (%) is mainly attributable to substantial increase in profitability during the year led by higher other income.
8. Return on Capital Employed (%)	9.03%	2.75%	228.33%	Return on Capital Employed increased becuase of improved operating earnings and efficient utilization of capital employed.

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 revise any forward-looking statements on the basis of subsequent developments, information or events.