In a strategic move to enhance operational efficiency and consolidate business functions, Deep Industries Limited (DIL), a key player in oil and gas services, has approved a Scheme of Amalgamation with Kandla Energy & Chemicals Limited (KECL), its wholly owned subsidiary. The decision was formalised at the company’s Board Meeting held on June 30, 2025, following the recommendations of the Audit Committee and the Committee of Independent Directors.

The amalgamation proposal has been initiated in accordance with the provisions under Sections 230 to 232 of the Companies Act, 2013, and is subject to the necessary approvals from the National Company Law Tribunal (NCLT), statutory regulators, and the shareholders and creditors of the entities involved.

Company Profiles & Financial Overview:

Kandla Energy & Chemicals Limited (KECL) – The transferor company reported total assets of ₹21,505.14 lakh and income of ₹38.50 lakh for the financial year ending March 31, 2025. KECL operates primarily in the manufacturing of chemicals, hydrocarbon fluids, petroleum products, and clean energy equipment, besides offering drilling support services.

Deep Industries Limited (DIL) – The transferee company, which will absorb KECL, reported total assets of ₹1,82,002.22 lakh and income of ₹51,538.36 lakh for the same fiscal period. DIL is involved in a range of post-exploration oil and gas services, including natural gas compression, dehydration, and processing, as well as drilling and project management.

Transaction Type & Related Party Context:

While KECL qualifies as a related party under the Companies Act, 2013, and SEBI (LODR) Regulations, the transaction is exempt from related party transaction approval norms. This is due to clarifications issued in MCA’s Circular No. 30/2014 and Regulation 23(5)(b) of SEBI LODR, which exclude wholly-owned subsidiary mergers from these compliance mandates.

Importantly, no valuation or share exchange ratio is required, and no shares or consideration will be issued under the Scheme, thereby keeping the shareholding pattern unchanged post-merger.

Strategic Rationale Behind the Amalgamation:

The proposed Scheme of Amalgamation is driven by long-term strategic objectives focusing on backward integration, cost-efficiency, and simplified governance. Some of the core rationales include:

1. Backward Integration & Supply Security:
   KECL manufactures chemicals and hydrocarbon fluids that are critical to DIL’s service delivery. The merger ensures in-house sourcing, resulting in better margins and operational resilience.

2. Simplification of Corporate Structure:
   Eliminating the holding-subsidiary relationship between KECL and DIL will reduce compliance complexity and administrative overhead, allowing DIL to operate as a unified standalone entity.

3. Resource and Talent Optimization:
   The merged entity will pool financial and human resources to enhance service delivery, optimise working capital, and strengthen market presence.

4. Operational & Financial Synergies:

   • Consolidation of complementary operations

   • Streamlined control and management systems

   • Improved bargaining power and scalability

   • Pan-India footprint expansion and deeper market penetration

   • Greater capability to pursue inorganic growth opportunities

5. Stakeholder Value Creation:
   The Scheme is expected to increase long-term value for shareholders, improve financial metrics, and eliminate duplicated efforts and expenditures.

Regulatory and Governance Milestones:

• The merger is subject to approval by the NCLT and other statutory bodies, as well as creditors and shareholders as mandated by law.

• The Board Meeting which approved this proposal was held between 12:00 PM and 3:15 PM on June 30, 2025.

• Disclosures have been made in compliance with Regulation 30 of SEBI Listing Regulations, read with Master Circular SEBI/HO/CFD/PoD2/CIR/P/0155 dated November 11, 2024.

No Change in Shareholding Pattern or Consideration:

Since the transaction is between a holding company and its wholly owned subsidiary, no new shares will be issued and no cash consideration will be paid. Hence, there will be no impact on DIL’s shareholding pattern post-merger.

Conclusion:

This proposed amalgamation represents a significant step in Deep Industries’ long-term growth and sustainability strategy. By integrating its wholly owned subsidiary KECL, DIL is aiming to build a streamlined, cost-efficient, and vertically integrated entity that is better positioned to capture market share, improve customer satisfaction, and sustain its leadership in the post-exploration oil and gas value chain.

Once all required regulatory approvals are in place, this merger is expected to offer robust operational, financial, and strategic benefits—without dilution of shareholder value or structural disruption. It exemplifies Deep Industries’ proactive approach toward corporate simplification and strategic consolidation in the ever-evolving Indian energy and infrastructure landscape.

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