I shared my observation..If any one can find out, whom they have given thins 23cr loan, would be helpful in assessing the mgt quality..
Provision creation also factors what steps are you taking. If deep has confidence that they can recover ,thatās why they are not creating provision.
Regardless of the fact that debtors are due since March 22
This is like asking a thief whether he committed robbery.
Of course they are gonna say that they can recover. It is the duty of the auditor to determine whether these balances are recoverable or not. The auditors which did not carry out the aforementioned duty.
What he is saying is
According to Management, Loan given to Prabha earns them 12% p.a.
That means Loan amount * 12% should be Deepās income and the same amount should be Prabhaās expense
But Prabhaās expense is only ā¹15 lakhs. 15 lakhs interest (without amortization) on a 12% interest rate amounts to roughly ā¹1.25 crores amount of loan.
Which does not match with the loan given to Prabha as per Deepās financials
That means that they might be lying on the interest rate
So ultimately you are saying that, they have recognised debtors on March 25 and now you want results in just 6 months,whatās the update on debtors.
These are old debtors it will take time and this also involve court cases etc
Everything seems easy while arguing from a home
I could say the same for you boss. You are no different than me. We are both sitting at our homes
There is no point writing such cheap sentences when my replies have been respectful. I have never gone personal, at least when it comes to you.
I donāt want results in 6 months. What I want, is for the auditors to do their job, confirm the balances, acknowledge itās recoverability, if any, and make provision if itās not recoverable. Simple.
I donāt know what you found cheap here but apologies if you find it disrespectful
I just said, some things will take time and we have to wait for the correct time for our certain questions
Thia is a good question that remains unanswered. Credits @Krishna_Kumar
Yes I agree too
Which I think should be further looked upon
Looks like Management Lie number 2
I am keeping a diary boss.
The game, Mrs. Hudson, is ON
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This discussion is looping and marching towards never ending story. I request not to take this too personally. Everyone has their own understanding. Even I am not good at these accounting items but I feel itās too much. Can we stop this @kautuk @Pankaj_Motwani.
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Itās a healthy debate, no? I really donāt mind. I am not taking this personally, I hope others arenāt too.
Actually I have started to enjoy this to be very honest. Itās a good way to look at businesses and acquisitions from a different lens. I have learnt a lot from Mr. Motwani and I am really grateful. (I am serious)
All chill from my side
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Haha same here to be honest 
I wish we can have such debates on another companies too
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@kautuk @Pankaj_Motwani @Krishna_Kumar please continue this debate, Iām learning a lot of accounting here thanks to you folks. Have a considerable position since 2021 and deciding if it makes sense to sell.
I can patiently hold (since even with great performance stock isnāt moving in proportion), but CG issues are huge no-no for me.
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I talked with Prabha IR
They said they have capitalized the interest portion in CWIP, till the project gets commissioned
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All right, makes sense now why Finance costs of Prabha is only 15 lakh
Also here is the summary of the loan given to Prabha, according to the latest AR
All this doesnāt make sense to me. I am failing to understand that in Consolidated statements, the interest expense booked by Prabha is shown as Advance given in Deepās books (751.88). The loan repaid by Prabha (1098.82) is treated as Interest Income in Deep Consol whereas Deep standalone booked only 751.88 as interest income.
Also out of 751.88 interest income booked, 676.69 is interest receivable in the books of Deep. That means that the actual cash inflow from interest is less, though the management, rightfully booked, interest income on accrual basis. This can also be verified from the fact that the interest outflow in the Cash Flow Statement is less, which means no actual cash has been transferred from Prabha to Deep.
Its pretty standard since interest is always booked on accrual basis. Though this might potentially indicate cash crunch faced by Prabha if it persists for a longer time
Thereās one point that prima facie is in favour of the management. By amalgamating Deep Energy, Savla Oil & Gas and Prabha, they have increased disclosures as Prabha and Savla Oil & Gas were earlier private limited companies
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Q2FY26:
ā¢ Companyās order book stood at ā¹ 3,050 Cr as on date. (Same as PQ)
CONCALL NOTES:
ā¢ ONGC PEC CONTRACT: We are expecting on full year basis revenue from this particular contract to the tune of Rs. 140 to Rs. 150 crores from next financial year onwards. And the margins we are expecting out of this contract in range of around 50% kind of EBITDA.
We can expect 40-45cr revenue from this contract in H2. In this financial year FY26, we are expecting total revenue of around 60 crores from this production enhancement contract.
We have crossed the baseline. And this production is increasing above baseline, which is progressing as per our expectation. And we believe from next financial year on full year basis; we would be earning as per our expectation.
So, price realization, currently it is in line with what ONGC used to sell. And with higher quantity coming up, we may take a call to sell at spot as well with higher price. But these decisions are dynamic and depending on the volume and availability of clients. So, but we are quite bullish on that part as well.
ā¢ Even if crude oil price is higher or lower, the activity of production is continuously going on with India being energy deficient country. And so, we have seen in last 20-25 years, this crude oil price movement generally not affecting us much.
ā¢ We believe this kind of other income (20cr) would continue in next half as well. So, interest and mutual fund income would definitely be continued in coming quarters as well. Of course, I cannot comment on revaluation gain on foreign currency
ā¢ So, we have a bidding pipeline close to 700 odd crores but it has a high potential to grow in the next quarters.
ā¢ We are expecting growth of 35% to 38% year-on-year basis in next financial year. Margins we believe should improve a bit going forward and we are expecting our EBITDA margins to grow upwards beyond 45% in coming quarters
ā¢ Expect to close QIP by end of this FY.
ā¢ W****e are expecting H2 would have a growth over H1.
ā¢ More PEC contracts: So, there will be various bidding rounds coming up. And if that happens, definitely, we will be bidding for it. And hopefully, we should win some of those projects.
So, their (ONGC) internal back-office work is going on. So, we cannot comment on the exact timeline when they will come up with such more tenders. But it is very much expected in coming quarters.
ā¢ Asset acquisition in Dolphin: We have identified and shortlisted few assets and we are working on it. Once we will be able to tie up those assets for contracts, we will go for acquisition. So, we are on quite advanced stage of that part.
ā¢ We believe for next 2 years, this kind of 35% growth is clearly visible. Depending on further addition to this order book, we can continue the momentum beyond 2 years as well.
ā¢ ONGC Sick Well program: ONGC Sick Well program is a little different than production enhancement. So, sick well is basically that they are not producing anything out of it. So, the challenges within sick well are different to the ones of the enhancement. So, there are few tenders that for sick well, they have already been published. We are evaluating that probabilities, and how potential are those. So, I think it will take some amount of time to evaluate and then perhaps we will take some decision on that.
ā¢ On potential of increasing competition: So, as the sector definitely gets more and more of business, potential business competition definitely is bound to come. So, that fact cannot be ignored. But having said that, we have been into this industry for more than three decades. And I believe that the edge that we have over the technical things and providing solutions to the client is something that matters the most. So, even after having a competition, I think we have already sustained for last three decades with a decent amount of growth. And Iām very sure that as we go forward, weāll continue with that trajectory.
ā¢ This year, we are expecting to close Dolphin Offshore at around 100 crores of top line in FY26.
ā¢ My question was that I think we have around 100 crores of loans now as of now given. And we are raising QIP of 300 crores. Maybe some rationale for that. We are already giving loans and then we are raising equity. So, just maybe some rationale is there which I am missing to understand.
So, there one loan is given to company called Prabha Energy and it is a 12% interest bearing loan. And that particular loan was originally given before de-merger. So, I think that is still continue there.
ā¢ Given the company is already generating strong cash flows and has a very low debt level, what is the rationale behind raising 300 crores through a QIP? Is it primarily to accelerate the 400 crores CAPEX or to strengthen the balance sheet for future opportunities?
So, I would say both because we believe that our balance sheet should have the lowest possible leverage. As in our industry, we have always seen that people have gone wrong because of high leverage. And so, we believe that we should have leverage which should be very much in control. And of course, the momentum and the growth we are foreseeing in coming years, it would definitely help us capturing that growth with such strong balance.
Also, there are some possibilities we are looking around for acquisitions. So, when the acquisitions have to happen, we should be ready with our resources. So, there are multiple things related to the growth and acquisitions put together and therefore, we are trying to raise this fund.
ā¢ So, total CAPEX we are expecting is of 600 crores of which 100 crores has already been done. And balance would be going further, including the CAPEX for production enhancement contract.
THINGS TO TRACK:
ā¢ PEC Contract āWill they face technical difficulties as this is a new segment? Will the revenue generation be as guided? Can the segment surprise on the upside?
ā¢ New Offshore/Marine segments: Apart from the barge, what other segments/assets will the company get and how will its revenue and margins pan out?
ā¢ QIP and Potential Acquisition and Capex
ā¢ Gas Compression and Gas dehydration segments: How much will these be affected by increased competition going forward? Would new segments be able replace their revenue contribution in the long run?
ā¢ Core orderbook slowdown?: As focus of the management turns to PECās and Offshore segment, will the core segment slowdown a bit? Increased competition in those segments may have led the management to pivot to these new growth segments.
ā¢ Kandla energy operations progress: When will operations start? Impact on Ebitda margins and cost savings.
ā¢ Loan to Prabha energy: Since Prabha has started operations on gas field, will the loans by Deep get reduced?
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Brilliant performance in H1 and stage looks set for even greater performance in H2 and even beyond. Share price reaction has been very poor recently. Sometimes market is like that or there maybe something going on behind. But we can only focus on the facts.
Yes, the issue of Prabha loan needs to be monitored and checked at annual report of next year.
Still, all being said, Deep looks ready to go into next orbit of scale over next two years.
DISCLOSURE: INVESTED
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