Deep Industries Ltd (DEEPINDS) Q4 FY23 Earnings Concall Transcript

Deep Industries Ltd (NSE:DEEPINDS) Q4 FY23 Earnings Concall dated May. 29, 2023.

Corporate Participants:

Paras Shantilal Savla — Chairman and Managing Director

Rohan Shah — Whole Time Director, Finance and Group Chief Financial Officer

Analysts:

Sana Kapoor — Go India Advisors — Analyst

Surya Narayan — Sunidhi Securities — Analyst

Manan Shah — Moneybee Investment Advisors — Analyst

Karan Dubey — Anubhuti Advisors LLP — Analyst

Yogesh — Arihant Capital Markets Limited — Analyst

Mayur Liman — Profitmart Securities — Analyst

Parin Gala — SageOne — Analyst

Kashvi Dedhia — Centra Advisors — Analyst

Sanjay Shah — KSA Securities Private Limited — Analyst

Mayank Mamania — Mavira Investments — Analyst

Sudhir Bheda — Right Time Private Limited — Analyst

Dhruv — Jairam Stock Brokers — Analyst

Gaurav Sachdeva — Further Investments — Analyst

Saket Kapoor — Kapoor Company — Analyst

Raja Panda — Individual Investor — Analyst

Presentation:

Operator

Good morning, ladies and gentlemen. Welcome to the Q4 FY ’23 Earnings Conference Call for Deep Industries Limited hosted by Go India Advisors. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Sana Kapoor from Go India Advisors. Thank you and over to you, ma’am.

Sana Kapoor — Go India Advisors — Analyst

Thank you, Lisa. Good morning, everybody. Welcome to the Deep industries earnings call to discuss the Q4 and FY ’23 results. We have on the call Mr. Paras Savla, Chairman and Managing Director; and Mr. Rohan Shah, Director of Finance and Group CFO.

We must remind you that the discussion on today’s call may include certain forward-looking statements and must be therefore viewed in conjunction with the risks that the company faces.

May I now request Mr. Paras Savla to take us through the company’s business outlook and financial highlights. Subsequent to which, we will open the floor for Q&A. Thank you and over to you, sir.

Paras Shantilal Savla — Chairman and Managing Director

Good morning, everyone. Thank you for joining Deep Industries quarter for and FY ’23 earnings conference call. I hope that you have got a chance to go through our earnings presentation that has been uploaded on the website and stock exchanges. FY ’23 has been a great year for us, financial as well as operational aspects. Deep has achieved higher revenues, profits and order book in line with our stated guidance. Before Mr. Rohan discusses the financial performance, let me throw some light on the strategic updates of the company.

I’m pleased to announce [Technical Issues] has exceeded INR1,000 crores order book reaching INR1,078 crores at the close of FY ’23. These represents a Y-o-Y increase of 71% and a Q-o-Q increase of 10%. Deep recently secured an order worth INR106 crores from ONGC for the hire of mobile drilling rigs over a period of three years. As you are aware, Deep is a leader in natural gas compression market commanding a market share of approximately 75%. In addition to this, we have a strategic presence in natural gas, dehydration workover and drilling rigs, integrated project management and manufacturing of CNG booster compressors.

The Indian government’s goal to raise the proportion of natural gas in the country’s primary energy mix [Technical Issues] to 15% by 2030 coupled with supportive policy changes such as reform in domestic gas pricing guidelines bodes well for our company. These developments will stimulate the demand and supply of natural gas creating a need of natural gas processing in which our company plays a significant role. Hence, Deep Industries is poised to benefit from the gas pricing policy changes and the potential surge in natural gas consumption. Furthermore, we are optimistic about the strong bidding pipeline and anticipate substantial convergence in the near future.

During FY ’23, we completed the acquisition of Dolphin Offshore through IDC route and have initiated the implementation of revival strategy. This acquisition will grant Deep with a quick market access to offshore services which otherwise would have taken two to three years to achieve the required classification. This will also lead to the diversification of the business verticals of Deep and synergy benefits from existing client relationships. With the overall revival plan in place, the integration process has commenced with the appointment of key managerial personnel and the Board taking control of assets and establishment of offices.

Refurbishment of the major assets have begin and the operational activities are projected to commence in about the next six months approximately. We expect Dolphin Offshore to start contributing to the operational revenues by second half of FY ’24. Deep focuses on superior wealth creation for its shareholders and thus, I am happy to share that Board has recommended a final dividend of INR1.85 per equity. Face value of the share is INR5. Deep has also executed a stock split of one to two ratio during the financial year.

With this, I would like to hand over the call to Mr. Rohan Shah, our CFO and Director Finance, to take us through quarter four and FY ’23 financial performance. Thank you.

Rohan Shah — Whole Time Director, Finance and Group Chief Financial Officer

Thank you, Paras, sir. Good morning, everyone. I will now present a brief overview of our quarterly and annual financial performance. After which, we will open the floor for question and answer. For fair comparisons, we will be comparing numbers on year-on-year basis. Starting with the consolidated financial performance. On annual basis, I’m happy to share that Deep has achieved record high annual financial performance. Deep has achieved highest ever revenue of INR341 crores, which is up by 6% compared to last year.

Additionally, Deep has accomplished record breaking profits this year with EBITDA soaring by 19% to INR142 crores and PAT reaching an impressive INR125 crores. PAT adjusted for exceptional items is INR81 crores, which has increased by 11%. This year in quarter four, we had an exceptional item of INR44 crores consisting of net gains from writing back of operational liabilities and writing off of receivables of Dolphin Offshore post its acquisition. EBITDA and adjusted PAT margins are strong at 40% and 23% for the year.

I’m happy to share that Deep has maintained its status of being zero net debt company with healthy balance sheet and very strong liquidity position. Presently, Deep has total gross liquidity of INR90 crores that places Deep in comfortable position to capture next phase of growth. On quarterly basis, revenue has increased by 23% to INR103 crores, whereas EBITDA and adjusted PAT has increased to INR47 crores and INR28 crores, up by 54% and 61%, respectively. EBITDA and adjusted PAT margins for the quarter have improved from Q4 FY ’22 and are strong at 43% and 25%, respectively.

Coming to standalone performance. On annual basis, revenue has increased by 11% to INR301 crores. EBITDA and PAT also showed an increasing trend and were up by 18 and 13%, respectively. On quarterly basis, Deep showed a rising trend in terms of revenue, EBITDA and PAT, which were up by 15%, 32% and 32%, respectively. Overall, FY ’23 has been a strong year and we expect to deliver great performance for the years to come.

We can now open the floor for question-and-answers. Thank you.

Questions and Answers:

Operator

[Operator Instructions] The first question is from the line of Surya Narayan from Sunidhi Securities. Please go ahead.

Surya Narayan — Sunidhi Securities — Analyst

Am I audible?

Operator

Yes, sir. Please proceed.

Surya Narayan — Sunidhi Securities — Analyst

Yeah. So if you can — Paras bhai, thank you for giving me opportunity. Just if you can throw some light on the segment-wise revenue breakup for last year? And how do you expect these segments to grow in FY ’24? And — because in way on the revenue side, the revenue visibility is there. So what kind of chase here in the revenue we can expect and plus what is the need to go for the stock split for small? We are actually not getting liquidity issues. So what are the reason for going soft, please? Yeah, I will come in queue.

Paras Shantilal Savla — Chairman and Managing Director

Sure. So with regards to revenue split, I’ll answer that. So out of total INR301 crores on standalone basis, our revenue from gas compression division is almost 43%. From rigs division, it is around 40%. From gas dehydration unit, it is around 5% and balance is from integrated project management and other small services. With regards to growth coming up in next financial year, since we have good amount of order book in place and almost sure kind of revenue for next two, two and half year, we expect to grow around 20% on conservative basis on CAGR. So that is what we expect for years to come. And with regards to stock split, it was basically just to increase the liquidity in market and to allow a small investors to participate in our stock. That was the only reason. I think there was no other reason for stock split, yeah.

Surya Narayan — Sunidhi Securities — Analyst

Okay. And regarding integrated project management, we were actually hoping for a bigger pie. So what is happening in that segment, sir?

Paras Shantilal Savla — Chairman and Managing Director

So in integrated project management, we have successfully completed our first project and we are doing some small integrated projects with Oil India and SELAN as well. With ONGC, we have bidded for another integrated project and we are expecting to have some good outcome in that as well.

Surya Narayan — Sunidhi Securities — Analyst

Okay. And with oil and gas prices remaining benign going forward beyond this INR1,000 crores of orders, so are we expecting the budget from the up stream players to increase or how — because generally we tend to be very cautious on that front if oil prices remains benign or is soft. So what is your call?

Paras Shantilal Savla — Chairman and Managing Director

See in domestic market, we have been there since last 30 years now and we have seen that foreign players are not that aggressive in coming into India because of various reasons. And crude oil price being benign, I think since we are into pure services business, our business has not much impact of crude or gas prices. Because at the end of day, our services are indispensable kind of services. Whatever the price would be, our services would be required by every transport actually.

Surya Narayan — Sunidhi Securities — Analyst

Okay. And sir, any color on the goodwill amortization front going forward, so any timeline regarding there?

Paras Shantilal Savla — Chairman and Managing Director

With regards to goodwill since we follow Ind AS, we’ll have to do impairment testing on every year end. And if that impairment testing report suggests to impair the goodwill, we’ll have to impair. This year, the impairment testing is not suggesting any impairment on goodwill. So we would continue to have this goodwill on our books. So that testing will be done on every year end as required by Ind AS. So we cannot comment on that.

Surya Narayan — Sunidhi Securities — Analyst

But will you be appointing any external agencies to check whether the impairment is fair or not?

Paras Shantilal Savla — Chairman and Managing Director

Yes, yes, we’ll have to hire some registered value, the outside agency only who will give their report on impairment by testing various roots of impairment testing and on that — on their conclusion they will give their report. So it is of course outside agency.

Surya Narayan — Sunidhi Securities — Analyst

Okay. I’ll come in the queue, sir. Thank you.

Paras Shantilal Savla — Chairman and Managing Director

Thank you.

Operator

Thank you. The next question is from the line of Manan Shah from Moneybee Investment Advisors. Please go ahead.

Manan Shah — Moneybee Investment Advisors — Analyst

Yeah. Hi, thanks for the opportunity and congratulations for good set of numbers. Can you highlight what contracts are expected to commence in the upcoming quarters and whether this should be towards the gas dehydration, compression or drilling?

Paras Shantilal Savla — Chairman and Managing Director

Yeah. Hi, Manan bhai, thank you. So yes, in current quarter, we are executing some gas compression contract, which are under mobilization stage. So I believe there are three gas compression contracts which are getting added by this current quarter and will start coming into revenue.

Manan Shah — Moneybee Investment Advisors — Analyst

Okay. So — and any capex that we are projecting for the upcoming year?

Paras Shantilal Savla — Chairman and Managing Director

Yeah. So we are expecting to have immediate capex of 1,000 horsepower drilling rig, which we are anticipating to get an order probably in next one or two months. And based on that order, we may acquire one new 1,000 horsepower drilling rig.

Manan Shah — Moneybee Investment Advisors — Analyst

Can you quantify this capex?

Paras Shantilal Savla — Chairman and Managing Director

That would be in range of around INR45 crores.

Manan Shah — Moneybee Investment Advisors — Analyst

Okay. Understood. My next question was so I understand that we’ve written off a large part of operating liabilities of Dolphin. However, receivables still continue at almost upwards of INR140 crores in Dolphin. So I mean, how confident are we about recovering these receivables or from whom are these receivables or if you can just throw some sense on this?

Paras Shantilal Savla — Chairman and Managing Director

Sure. So based on NCLT order, we are not supposed to discharge any operating liabilities other than what we have agreed in resolution plan. So after paying off the liability as per resolution plan, we have written back all other liabilities in our books. With regards to receivables, we have written-off sizable receivables which were not recoverable at all. And the receivables which we believe we can recover that we have kept on our books as receivables. Out of INR140 crores almost INR40 crores are receivables of their overseas subsidiary where active arbitration is going on and award is in our fever as well. So we expect to have receipts out of that receivable. And with regards to Indian receivables, a majority of them are from ONGC and few of them are from other contracts as well, other clients where we are quite positive to recover them.

Manan Shah — Moneybee Investment Advisors — Analyst

Okay. Understood. And if you can also comment on the order that you had won against ONGC, any update when are we expecting this to come?

Paras Shantilal Savla — Chairman and Managing Director

Sorry, which order?

Manan Shah — Moneybee Investment Advisors — Analyst

We have won this case, right, at Deep Industries against ONGC where we were expecting around INR104 crores.

Paras Shantilal Savla — Chairman and Managing Director

Arbitration one, yeah.

Manan Shah — Moneybee Investment Advisors — Analyst

The arbitration one.

Paras Shantilal Savla — Chairman and Managing Director

Yeah. That arbitration award, we have received 75% of the award amount and we expect to receive balance on completion of the formalities because client has approached the higher forum, higher legal forum in High Court. So once that piece will be awarded in favor, balance amount will be received.

Manan Shah — Moneybee Investment Advisors — Analyst

So this 75% which you have received, we have parked this money in some liquid debt or something?

Paras Shantilal Savla — Chairman and Managing Director

Yes. We have parked as of now into bank FDs and liquid funds.

Manan Shah — Moneybee Investment Advisors — Analyst

Okay. My next question was on again on the Dolphin side. So I believe we would — we require to do some sort of refurbishment for the asset. So what is that number that you are projecting to spend in this year and how will the same will be funded?

Paras Shantilal Savla — Chairman and Managing Director

Yeah. So refurbishment process has already been started. And since it is a refurbishment of an equipment which was ideal for more than three years as of now, clear estimate is not with us. But yeah, it would not be that great amount and we expect to fund it either through our [Technical Issues] or we may go for loan as well.

Manan Shah — Moneybee Investment Advisors — Analyst

Okay. But we would start bidding for this, I mean, applying for which only post refurbishment or we’ve already started plan for the bids for this asset?

Paras Shantilal Savla — Chairman and Managing Director

No. So we have already started getting expirations from various clients and the response is excellent because the asset which we are having I think it is one of the rare asset and there are only six to seven such assets in entire world. So we are quite bullish on getting business on that asset.

Manan Shah — Moneybee Investment Advisors — Analyst

And the contracts over here are largely long-term in nature, I mean, two, three years or longer?

Paras Shantilal Savla — Chairman and Managing Director

Yeah, yeah, sometimes it be maybe longer than two, three years as well. But yeah, it depends on what price and what amount we are baking.

Manan Shah — Moneybee Investment Advisors — Analyst

Sure. Understood. Thanks. I’ll get back in the queue.

Paras Shantilal Savla — Chairman and Managing Director

Thank you.

Operator

[Operator Instructions] The next question is from the line of Karan Dubey from Anubhuti Advisors LLP. Please go ahead.

Karan Dubey — Anubhuti Advisors LLP — Analyst

Thank you so much for taking my question. Just wanted an update as to how much revenue are you expecting to get in from second half of ’24 from the Dolphin Offshore and also what will be the margins for the same?

Paras Shantilal Savla — Chairman and Managing Director

See that depends on how early we put that asset into operation. So as of now, it is difficult to comment on how much revenue we can book out of Dolphin, but we are quite bullish. Even if we get the revenue of say five, six months, then it would be more than INR30 crores, INR35 crores.

Karan Dubey — Anubhuti Advisors LLP — Analyst

Okay. And margins if we get — yeah.

Paras Shantilal Savla — Chairman and Managing Director

That would be almost same as our business margin. It can be some higher margins as well, but conservatively we are expecting the 40%, 45% EBITDA.

Karan Dubey — Anubhuti Advisors LLP — Analyst

Okay. And my next question is, is there — what are your thoughts on the natural gas dehydration? Can you throw some color on it and are we seeing any progress over there?

Paras Shantilal Savla — Chairman and Managing Director

So natural gas dehydration as we had already been saying that it has got a good prospect and there is a lot amount of pipeline already laid and there is lot of pipeline being laid. So we have got requirements from PNGRB that any new line whenever the gas is to be injected, it has to be the dehydrated. So on that front, I think that prospects are still there, but this process is on. So there is a lot of process to be done before that. There are some pipelines which are being under installation and all and there are certain in tendering process. This momentum can happen at any point in time which is business and highly perspective.

Karan Dubey — Anubhuti Advisors LLP — Analyst

As of now, how much it does contribute in your revenue?

Paras Shantilal Savla — Chairman and Managing Director

As of now, it is contributing around 5%.

Karan Dubey — Anubhuti Advisors LLP — Analyst

Okay. Thank you so much. That’s it from my side.

Paras Shantilal Savla — Chairman and Managing Director

Thanks.

Operator

[Operator Instructions] The next question is from the line of Yogesh from Arihant Capital Markets Limited. Please go ahead.

Yogesh — Arihant Capital Markets Limited — Analyst

Thank you, sir. Am I audible?

Paras Shantilal Savla — Chairman and Managing Director

Yeah.

Yogesh — Arihant Capital Markets Limited — Analyst

Sorry, sir, I actually joined a little late. So it might be repetitive question. So how do you see the growth of the IPM segment? And what would be your outlook for growth on an overall basis for revenue and profitability in FY ’25 for your whole company?

Paras Shantilal Savla — Chairman and Managing Director

So under IPM, we have successfully completed our first project with doing ONGC and currently, we are operating on integrated project management projects of Oil India and SELAN. And we have bidded few more projects on under IPM with ONGC as well with Vedanta as well. So we expect good amount of conversion going forward and we are quite bullish on this particular business.

Yogesh — Arihant Capital Markets Limited — Analyst

And sir, what would be your outlook for FY ’24 in terms of revenue growth and profitability?

Paras Shantilal Savla — Chairman and Managing Director

On revenue growth, conservatively, we are expecting 20% CAGR and profitability we would continue to maintain our existing percentage.

Yogesh — Arihant Capital Markets Limited — Analyst

Sure, sir. And finally, sir, on the debt profile, what would be the debt trajectory going forward? And is there any threshold on taking debt for the company?

Paras Shantilal Savla — Chairman and Managing Director

So currently, we are net debt free and we always believe to keep our debt at very minimal level. In our history, we have never crossed debt equity is one and our recent decision is to keep debt 0.5 of equity.

Yogesh — Arihant Capital Markets Limited — Analyst

Thank you sir. That’s very helpful. Thank you.

Operator

[Operator Instructions] The next question is from the line of Mayur Liman from Profitmart Securities. Please go ahead.

Mayur Liman — Profitmart Securities — Analyst

Thank you for the opportunity and congratulation on the great set of numbers. Sir, I just wanted to ask the capital utilization of gas compression has increased. Wanted to know the status of how many compressor we have as of now and how are we seeing this segment to grow going forward as we are already a leader in this segment?

Paras Shantilal Savla — Chairman and Managing Director

Thank you. Yes, with regards to gas compression division, our capacity utilization has improved. And with new projects of gas compressor coming in, we are doing capex also to acquire new compressor packages as well. So going forward, gas compression division we expect to grow quite a good way. And it should continue to contribute more than 40% in our overall revenue.

Mayur Liman — Profitmart Securities — Analyst

Okay. And my second question is what is the bidding pipeline? If you can let me know the some number for that? And also what do we expect our order book to be one year from now?

Paras Shantilal Savla — Chairman and Managing Director

See order book conversion is not in our control. It always depends on award of contract based on your bids, but yes, the way we have seen FY ’23 to grow, so demand in our industry is excellent for our type of services. And we expect to grow order book in this current financial year as well. So yes, we are quite bullish. Our order — our bidding pipeline is as good as around INR800 crores and of which we are expecting some good amount of conversion in current year as well.

Mayur Liman — Profitmart Securities — Analyst

Okay. Thank you so much, sir. That’s all from my side.

Paras Shantilal Savla — Chairman and Managing Director

Thank you.

Operator

[Operator Instructions] The next question is from the line of Parin Gala from SageOne. Please go ahead.

Parin Gala — SageOne — Analyst

Yes, sir. Good morning. Sir, I am relatively new to the company. So pardon if some of my questions sound silly. Sir, I understand that majority of your business comes from ONGC because of gas compression and all that and you’ve been doing this for a very, very long-time with them. In such a scenario, sir, why does any kind of a contractual dispute or something that arises with your primary client and then you have to go for arbitration and things like that. I mean, when it’s well defined in the contract, why do these disputes come up?

Paras Shantilal Savla — Chairman and Managing Director

See in the matters of contracts worldwide if you see, there are always disputes, which are on either side. And normally, these kind of disputes are largely based on the interpretations. This is not something that disputes can never happen. In every single contract, whenever the execution happens, there is certain amount of non-alignment of the client and service provider. So this is not something very new, which is happening to this business. This is very, very common and not in India. I believe it is across the globe. These arbitrations are definitely or the resolutions or the disputes resolution are something which are intently kept so that such disputes are being resolved.

Parin Gala — SageOne — Analyst

Okay. And generally when such disputes arise typically what is the timeline for them to get resolved?

Paras Shantilal Savla — Chairman and Managing Director

After the completion of the contract, it cannot normally happened during the ongoing operations of the contract. Normally once the contract is over and the disputes, if they are — if there are serious disputes, the same are been deferred for an arbitration. So I believe after the completion of the contract, normally hearing and all those stuff depending on the claim and all, it may take anywhere a period from a year to year and a half.

Parin Gala — SageOne — Analyst

Year to year and a half, okay. So sir, all these contracts, especially ONGC and when you’re dealing with government and things like that, when you are — how is the payment schedule? Whatever services you provide, you get immediately paid and if there’s somebody retainer money which is kept till the end of the contract or how does it work?

Paras Shantilal Savla — Chairman and Managing Director

No. There is nothing called a retainer money. Every invoices are paid in the due course of time. So normally, we have seen a trend of payments being in the range of about 90 days to 100 days as an average, all the monthly billing. So normally, it’s a long — it’s a process that the invoices go to the field, they get certified through various hierarchies and then they move to the different location. So that is in some of the clients who are paying early, some of them paying little late. But largely, we believe that the monthly billing cycle is in the range of 90 to 100 days.

Parin Gala — SageOne — Analyst

And these invoices are raised after the service is provided or during the period of the contract?

Paras Shantilal Savla — Chairman and Managing Director

It is within the period of the contract, but the end of the month in the few days from the next preceding month, we will make the invoice and send it to our clients.

Parin Gala — SageOne — Analyst

Got it. Thank you so much sir, I’ll come back if I any. Thank you.

Operator

Thank you. The next question is from the line of Kashvi Dedhia from Centra Advisors, Please go ahead.

Kashvi Dedhia — Centra Advisors — Analyst

Yeah. Thanks for the opportunity and congratulations on great set of numbers. Sir, I have two questions. Firstly, can you share the segment-wise breakup for order book that you received INR1,078 crores? And secondly, the order which you received from ONGC for mobile drilling of INR106 crores, is it recognized or by when will it get recognized?

Rohan Shah — Whole Time Director, Finance and Group Chief Financial Officer

Yeah. So I’ll answer your second question first. So INR106 crores order is for over a period of three years. So it is part of our rig division and it is for drilling rig with Ahmedabad assets. So you can say INR106 crores would be — revenue would be on in three years time.

Paras Shantilal Savla — Chairman and Managing Director

And with regards to breakup of our order book, out of INR1,078 crores of orders, almost gas compression consists of 52% of order book, rig consists of around 36% of order book. Gas dehydration consists around 5% of order book and rest is from integrated project management.

Kashvi Dedhia — Centra Advisors — Analyst

Yeah. Okay. Thanks. That’s it from my side.

Paras Shantilal Savla — Chairman and Managing Director

Thank you.

Operator

Thank you. The next question is from the line of Sanjay Shah from KSA Securities Private Limited. Please go ahead.

Sanjay Shah — KSA Securities Private Limited — Analyst

Yeah. Good morning, gentlemen. Thanks for the opportunity. Paras, sir, I have one question to understand from you about our acquisition that is Dolphin Offshore, which is maybe more than 40 years old company and having pioneer position in the business. So what went wrong and why are we so optimistic about it and acquired that being in a troubled company? Because our — they are into something different that is diving under water services and other services. So what expertise we see in an integration we can do to revive this and what confidence we have in the coming years?

Paras Shantilal Savla — Chairman and Managing Director

Coming to the first question you shared that what went wrong with Dolphin, I’m sure the things that went wrong was their financial management. They were doing things when they were not able to manage the company in the best financial basically that was required. That’s what we believe. They have been definitely in a very dominating position as far as the services as far as repairs of the well platform goes or diving services. So they have been leaders for all these years. Even before that, the acquisition remained met our clients and there is a lot of veterans [Phonetic] in this industry. Business has also always been very good in offshore segment and there has been a demand. So if you were to ask me today, we see a lot of demand in this segment and lot of vacuum to the kind of growth that is happening.

We believe the kind of experience that Dolphin has would definitely bring a lot of opportunity for the company going forward. So we believe if there is an amount of — a decent amount of financial discipline, utilization, recognition and getting the funds from the clients in a proper systematic way, then the company should not face any difficulty. As usual, we have been into the same sector, but the difference is Dolphin is offshore and what we were used to do is onshore. So we almost have a sense of what the requirements are and we are also operating companies for more than 30 years now. So we have a fair and decent idea of how to manage these kind of difficulties. So with this, this allows us a lot of opportunity to be in both the segments and that’s why we feel that we will be fairly successful.

Sanjay Shah — KSA Securities Private Limited — Analyst

That’s good. So can we take — understand that previously Dolphin used to do around INR300 crores, INR400 crores, INR500 crores top line? Is that market of that size still there available for…

Paras Shantilal Savla — Chairman and Managing Director

Honestly speaking, I believe it is much, much, much more than what even they were doing because they were doing this before four, five years now. And in these four, five years, the level of requirement, the level of services, see lot of equipments who used to lot of services, what they used to provide in the market, I think the demand has superseded towards the supply. So I’m just being opportunistic. I do not have a clarity on what the answers would be in terms of numbers, but the only thing that I’ll understand is that these numbers are very, very easily achievable in a span of time.

Sanjay Shah — KSA Securities Private Limited — Analyst

That’s great. So we are retaining the old staff of the Dolphin or we have our own expertise in that?

Paras Shantilal Savla — Chairman and Managing Director

We are trying to source the best possible talents from the market and we trying to see what best we can do. We are not very sure that what amount of stock that already Dolphin has we will be taking use of name or not. But going forward, I believe there is a lot of talent already available in the market. So we’ll try to see what best we can get and in the best interest of the company.

Sanjay Shah — KSA Securities Private Limited — Analyst

That’s great, sir. Good luck to you. Thank you for answering my questions.

Paras Shantilal Savla — Chairman and Managing Director

Thank you.

Operator

Thank you. The next question is from the line of Mayank Mamania from Mavira Investments. Please go ahead.

Mayank Mamania — Mavira Investments — Analyst

Yeah, sir, good morning. Sir, I wanted to understand what was the turnover of our subsidiary Raas in Q4? And what is the outlook for FY ’24 for Raas?

Paras Shantilal Savla — Chairman and Managing Director

So Raas has achieved INR17 crores over a year for FY ’23 and going forward, we expect to increase this at quite a good pace because currently the demand is a little low because the GA, a lot has been awarded the areas to install gas compressor packages and stations and pipeline. They are taking little long with some extensions with government and that is how the demand is not be picking up as per our expectation. So in current financial year, we expect to pick it up.

Mayank Mamania — Mavira Investments — Analyst

Okay. And sir, the refurbishment of Dolphin asset will be completed and put to use in H2. So what kind of revenue visibility will be there in H2 from Dolphin?

Paras Shantilal Savla — Chairman and Managing Director

So as I said before, it depends on how fast we can complete this refurbishment and put it into revenue. But yes, even if will be there in revenue for five months or so, we can expect around INR40 crores of revenue from there.

Mayank Mamania — Mavira Investments — Analyst

Okay, sir. Thank you. That’s all from my side.

Operator

Thank you. The next question is from the line of Sudhir Bheda from Right Time Private Limited. Please go ahead.

Sudhir Bheda — Right Time Private Limited — Analyst

Yeah. Congratulations, Paras bhai, Rupesh bhai, Rohan sir, for posting outstanding results and congratulations to entire team, particularly on cash flow side. It’s a good cash flow and very good control on better. So sir, my question Just kind of debtors control because now on a standalone basis 100 crore debtors are there. So these kind of debtors is — we will be able to maintain in future also?

Paras Shantilal Savla — Chairman and Managing Director

Yes, yes. In fact, we are working on reducing it even further. So yes, we are quite hopeful that debtors we would be in control.

Sudhir Bheda — Right Time Private Limited — Analyst

Yes. And my second question, is there any scope for margin improvement going forward as dollar rates, rupees has weakened a bit and rig rates and other rates have also gone up. So is there any scope for improvement in the margin?

Paras Shantilal Savla — Chairman and Managing Director

So I believe in the industry per se this is perhaps the best margin already in the sector. So if you compare any other players in the industry, you won’t find that kind of a margin. But having said that, the scope of margin improvement always exists. And just to answer you the first question, why these amount of debtors are aligning the book because whenever we start the first project, so normally that cycle of that project getting into a revenue stream takes normally four to five months and that is the typical way, because the first invoice is they have got a lot of compliances to go through. And even in this year, there were few projects which were installed.

So when you say these kind of an INR100 crores being outstanding, some of these amounts attribute towards the new commissioning of the projects as well. So even while you have to see year-on-year, this trend would be continuing to an extent because of the new projects getting commissioned. And then it’s about four, five months first revenue gets started. And once the first revenue starts coming in, then it becomes very regular. Then it is a normal process of monthly invoices getting paid. So that is the primary reason why this kind of amounts are visible in the balance sheet.

Sudhir Bheda — Right Time Private Limited — Analyst

But it is a fairly controlled debtors there I think.

Paras Shantilal Savla — Chairman and Managing Director

We are very much focused. And as I mentioned to — see our — the only thing that we believe is that we have to have a lot amount of financial discipline and that is the key to this business. So if we do not [Technical Issues] our dues back, this could be dangerous. And we know this having seen, having acquired these companies where they had gone wrong, so we’ll never make such mistakes. We are very, very vigilant on getting our dues.

Sudhir Bheda — Right Time Private Limited — Analyst

And rest of my questions are already answered. So thanks for the opportunity and all the best.

Paras Shantilal Savla — Chairman and Managing Director

Thank you.

Operator

Thank you. The next question is from the line of Dhruv from Jairam Stock Brokers. Please go ahead.

Dhruv — Jairam Stock Brokers — Analyst

Thank you for taking my question. My first question is on the order book front.

Operator

Sorry to interrupt, Dhruv. Sir, you’re sounding very soft and there’s a lot of disturbance from your line, sir.

Dhruv — Jairam Stock Brokers — Analyst

Is this better now?

Operator

Yeah, thank you.

Dhruv — Jairam Stock Brokers — Analyst

Yes. On the order book front, I have my first question. So in which segment or in which sector are we receiving the majority orders for say this year in FY ’22, ’23? And going forward, are you able to see — I mean, in which segment are you expecting the order books to flow?

Paras Shantilal Savla — Chairman and Managing Director

See order book for us is increasing on everything, right. So yes, there is a little increase in gas compression division in comparison with other. But having said so, the order flow is there in all those things.

Dhruv — Jairam Stock Brokers — Analyst

Okay.

Rohan Shah — Whole Time Director, Finance and Group Chief Financial Officer

And actually to quantify that what sector would get what kind of a thing is a little unpredictable. So there could be a possibility a year that one segment would be doing fantastically well. The other will be in the bidding pipeline. But as an average, what we have seen is that demand overall in this sector has been quite promising. So you can’t expect what segment could be turning out in a better way.

Dhruv — Jairam Stock Brokers — Analyst

Okay. Thank you. And my second question is out of our current order book of INR1,078 crores, so what is the expected execution timeline for this order book, the current order book?

Paras Shantilal Savla — Chairman and Managing Director

Two and half years.

Dhruv — Jairam Stock Brokers — Analyst

Two and a half years, okay. Thank you so much.

Operator

Thank you. The next question is from the line of Gaurav Sachdeva from Further Investments [Phonetic]. Please go ahead.

Gaurav Sachdeva — Further Investments — Analyst

Yeah, good morning, sir. Sir, the ONGC order of INR106 crores which you have got, is this a renewed contract or a new contract?

Paras Shantilal Savla — Chairman and Managing Director

It’s a new contract.

Gaurav Sachdeva — Further Investments — Analyst

Okay. And sir, could you please tell since we have three drilling rigs, what are the other prices of two drilling rigs, at which rate they are occupied currently?

Paras Shantilal Savla — Chairman and Managing Director

So yeah, currently, all these three rigs are working with ONGC Ahmedabad asset and all are [Technical Issues]

Gaurav Sachdeva — Further Investments — Analyst

Sir, could you tell me the price at which they are occupied, all three?

Paras Shantilal Savla — Chairman and Managing Director

You mean daily rate or you want…

Gaurav Sachdeva — Further Investments — Analyst

Yeah, daily rate, yeah.

Paras Shantilal Savla — Chairman and Managing Director

They are in range of $11,000 to $11,500 a day.

Gaurav Sachdeva — Further Investments — Analyst

Okay. And sir, in future are we looking for getting into offshore rigs also?

Paras Shantilal Savla — Chairman and Managing Director

Not as of now. So with acquisition of Dolphin, our thought process was to start with support services of — in offshore and then gas segment. And having some good amount of experience in those service segment we may look for, but not in next five years.

Gaurav Sachdeva — Further Investments — Analyst

Okay. Next five years you are not looking, okay. And sir, since I heard in the previous question that you are occupying a new drilling rig, what is the cost of a new drilling right, sir, right now of 1,000 HP?

Paras Shantilal Savla — Chairman and Managing Director

It would be in the range of around INR45 crores odd.

Gaurav Sachdeva — Further Investments — Analyst

INR45 crores odd. And sir, what is the cost of this workover rig?

Paras Shantilal Savla — Chairman and Managing Director

There are again different capacity of the rigs. They would be 50, 100 or 150 ton. But if I have to say typically for an 100 ton, it would be in the ranges of around INR11 crores to 15 crores.

Gaurav Sachdeva — Further Investments — Analyst

INR11 crores to INR15 crores. And sir, since you told that 36% order book is from the rigs. Could you also tell us the bifurcation between this drilling rigs and workover rigs?

Paras Shantilal Savla — Chairman and Managing Director

I think that may take us some time because we don’t bifurcate within the sector in itself. Rig is one thing. The drilling and workover it becomes the composite sector as a sector in itself. So we have not identified what workover does or what drilling does, but as a division or as a sector, we report these numbers.

Gaurav Sachdeva — Further Investments — Analyst

Thank you, sir. That’s all, sir. Thank you.

Operator

Thank you. The next question is from the line of Saket Kapoor from Kapoor Company. Please go ahead.

Saket Kapoor — Kapoor Company — Analyst

Yeah. Namaskar, sir, and thank you for the opportunity. Sir, firstly, we have our capital work in progress of INR20 crores as on 31 March, ’23. What does it contribute, sir? Where is the money spent and when it’s going to be capitalized?

Paras Shantilal Savla — Chairman and Managing Director

Yeah, hi Saket ji. Capital work in progress is for projects under mobilization for plant and machinery. So the gas compressor project which we are mobilizing, the cost which we have incurred in it goes into capital into capital work in progress unless and until it is put to use.

Saket Kapoor — Kapoor Company — Analyst

And also in the cash flow from investing activities, we find INR113.39 crores being spent. So if you could give the bifurcation of the same?

Paras Shantilal Savla — Chairman and Managing Director

Sorry, I’ll have to come back to you separately because that ready calculation is not available.

Saket Kapoor — Kapoor Company — Analyst

Right, sir. And for the exceptional item part, sir, I missed your opening remarks, sir. If you could explain once again what constitutes this INR45 crores exceptional item incurred?

Paras Shantilal Savla — Chairman and Managing Director

So it’s a net positive difference of writing back of liabilities and writing off of receivables of Dolphin Offshore to acquisition from IDC. See under IDC this company comes as a clean — under clean slate principle and you are not supposed to any have liabilities post the resolution amount has been paid. So we’ll have to write them back in your balance sheet. And since those liabilities are operational liabilities, then they come into profit and loss account. And so it’s a positive difference between liability and receivables.

Saket Kapoor — Kapoor Company — Analyst

But sir, this line item involves any taxes [Indecipherable] or is just block stream of the balance sheet and the P&L?

Paras Shantilal Savla — Chairman and Managing Director

Sorry, I didn’t get you.

Saket Kapoor — Kapoor Company — Analyst

Sir, does it occur for a tax incidence also for these exceptional item or is it a non-cash line item? This INR45 crores is only added to the book value in the balance sheet part or any tax treatment to be provided for the same?

Paras Shantilal Savla — Chairman and Managing Director

Yeah. It would be offered for tax. But since we have a carry forward loss in Dolphin, so there will be low tax outflow.

Saket Kapoor — Kapoor Company — Analyst

And sir, right — what is the current understanding of your for the oil and gas sector especially from the capex from ONGC and Oil India? Where are we, sir, in midst of this capex journey? Sir, if you could — from your experience, if you could throw some more light of what kind of capex can we envisage for the entire ecosystem going ahead, sir? What could happen there, sir?

Rohan Shah — Whole Time Director, Finance and Group Chief Financial Officer

If clients like ONGC, Oil India, if they are coming up with big plans of capex in this industry, it would definitely benefit to us. And of that overall capex, there is good amount of opportunity, which would come to our services segment as well. I’ll just give it to Paras bhai.

Paras Shantilal Savla — Chairman and Managing Director

Yeah. On the front of a capex, a lot of assets of oil business even subsidiary of ONGC, they have been — there are many fields and many group gathering stations they have been operating over 40 years and 50 years. So government — unless [Indecipherable] government, ONGC is constantly in a process of scrapping the old and trying to build the new facility. So while they start building a new facility, definitely the opportunity for these kind of services also would come in place. So we have seen lot of their equipments getting discarded or they are getting scrapped out from the system. So that is allowing a lot of requirement coming in for the — for our side kind of a business.

And also for the Fed, if you would have seen in last five to 10 years, there are private players who have been very, very active and they’re also trying to come out with a good amount of oil and gas production. So all that put together, putting a lot of demand in the system. Now to quantify that, what kind of demand that would be that is really a very difficult to answer to win. But what we feel and what we have been always saying for years together that we are seeing a lot of things getting converted. Now that has been reflected only with the fact that we crossed the order book of INR1,000 crores. And going forward, we are quite hopeful to keep adding these order books. So that could be probable answer what you maybe looking for.

Saket Kapoor — Kapoor Company — Analyst

Sir, color you can give on the order addition for the first quarter, sir? As on date, what should be the ballpark number for the order book?

Rohan Shah — Whole Time Director, Finance and Group Chief Financial Officer

Order book for first quarter…

Saket Kapoor — Kapoor Company — Analyst

As of now, sir, if any nearest event date if you can give? This was 31 March order book. We are already at the end of May. So if you could give us some understanding of how the business sentiment have been in terms of order intake for these two months?

Rohan Shah — Whole Time Director, Finance and Group Chief Financial Officer

No. So in coming month, we are expecting one order to come based on our bids. Other than that, some small re-awards have came in these two months, but as of now, the exact number is not available. But yeah, conversion is quite good based on our bidding pipeline.

Saket Kapoor — Kapoor Company — Analyst

Thank you, sir. Thank you and all the best.

Rohan Shah — Whole Time Director, Finance and Group Chief Financial Officer

Thank you.

Operator

Thank you. The next question is from the line of Raja Panda, an Individual Investor. Please go ahead.

Raja Panda — Individual Investor — Analyst

Am I audible?

Paras Shantilal Savla — Chairman and Managing Director

Yes.

Raja Panda — Individual Investor — Analyst

Yeah. Sir, my question is regarding the INR44.7 crores that exceptional item from writing back. Sir, my understanding is that this will be also added to the receivables, right? So we have not received the actual cash. It will stand in the books as we see. Is that correct?

Paras Shantilal Savla — Chairman and Managing Director

No. So it’s a writing back of operational liabilities. So we are discharging of our liabilities by writing them back. So that comes as an income to my profit and loss account. And that income would be reduced by writing off of receivables. The receivables which will not be received have been written off. So the difference between writing back of liabilities and writing off of receivables has been identified as gain in profit and loss account and that would be business gain.

Raja Panda — Individual Investor — Analyst

Okay, Sir, my second question is recently Adani Gas announced the opening up of the huge project in Dhamra, right, INR6,000 crores LNG import project. So my question is does this kind of LNG import also has need for the gas compression services like what we provide? Hello, am I audible?

Operator

The line for the management has got disconnected. Please stay connected while we reconnect the management. Ladies and gentlemen, thank you for patiently holding. We now have the line for the management reconnected. Over to you, sir.

Paras Shantilal Savla — Chairman and Managing Director

Yes. Hi, sorry. There was some line issue.

Raja Panda — Individual Investor — Analyst

Yeah, no problem, sir. Sir, my question is recently the Dhamra project was announced there, LNG import of roughly large from Adani Gas is going to happen. So my question was does the gas compression services that our company provides are required for such kind of import?

Paras Shantilal Savla — Chairman and Managing Director

Yeah, yeah. It is very much needed. So we have been in past already providing services to Petronet LNG, KLCL and we are already doing it for GSPC LNG right now. So this requirement of compressor is definitely going to be for any new LNG terminal that is going to come up.

Raja Panda — Individual Investor — Analyst

Yes, sir. Thank you.

Operator

Thank you. The next question is from the line of Surya Narayan from Sunidhi Securities. Please go ahead.

Surya Narayan — Sunidhi Securities — Analyst

Yeah. Sir my question is that regarding the Raas equipment, how much investment has gone into that?

Rohan Shah — Whole Time Director, Finance and Group Chief Financial Officer

We have invested around INR20 crores into it.

Surya Narayan — Sunidhi Securities — Analyst

So in which year?

Rohan Shah — Whole Time Director, Finance and Group Chief Financial Officer

In 2021. ’21 and — yes.

Surya Narayan — Sunidhi Securities — Analyst

What kind of opportunity here we can see for the booster station [Phonetic].

Rohan Shah — Whole Time Director, Finance and Group Chief Financial Officer

So with allotment of all these new GAs, booster compressors would definitely be required for [Indecipherable] station of city gas distribution network and CNG pumps as well. So we expect this demand to boost up at any point in time.

Surya Narayan — Sunidhi Securities — Analyst

So have you got any expression of interest from any of the CBD player?

Rohan Shah — Whole Time Director, Finance and Group Chief Financial Officer

We are already providing booster compressors to Adani, IOCL, Gujarat Gas, AGNP and all.

Surya Narayan — Sunidhi Securities — Analyst

What is the revenue currency we are deriving?

Rohan Shah — Whole Time Director, Finance and Group Chief Financial Officer

FY ’23, it was around INR17 crores.

Surya Narayan — Sunidhi Securities — Analyst

So any ballpark EBIT operating profit out of there?

Rohan Shah — Whole Time Director, Finance and Group Chief Financial Officer

We are reporting EBITDA of around 19%.

Surya Narayan — Sunidhi Securities — Analyst

19%. And sir, Rohan, sir one question is that over the years, no doubt, we are doing quite a lot of exploration, I mean, gas compression area and lead operations, but revenue is not growing that great pace. And secondly, if you take last six year perspective, our operating profit margin has dropped by around 14%. So going ahead what is that we can do to go back to the prior level of let’s say 2018 level of 52% currently down 38%? So at least — because there is a huge gap of 14%. So can we go back to the kind of level or will we satisfied, don’t have to contend with this kind of margin of close to 40%?

Rohan Shah — Whole Time Director, Finance and Group Chief Financial Officer

So yes, so currently our EBITDA is in range of 42%, not 38%. That is one. Second, 52% margin in FY ’18 was primarily because gas compression division was contributing more than 60% in overall revenue. So it also depends on the mix between overall revenue from various divisions. So from ’18 onwards, the revenue from integrated project management was also contributing at large and that first particular contract our EBITDA margins were less in comparison with other verticals. But since now we are qualified by our own for integrated project management, we are definitely eyeing on to improve operating margins.

Surya Narayan — Sunidhi Securities — Analyst

So sir, I mean, if you see the gas compression, you are also guiding that the gas compression division won’t go beyond 50%, though our order composition is around 52%, but it will below 50% so far as revenue is concerned. So in that case lesser the gap compression revenue, then the margins will be under the take. I mean, it don’t go beyond 45%, 42% — I mean, whatever you are saying 42%. It won’t go beyond. So is there any chance we can get higher operating margin?

Paras Shantilal Savla — Chairman and Managing Director

Yes. So as I said, our overall revenue mix gas compression is contributing around 42%, 43% and with other business verticals with improvement in margin, this margin can go up. I would like to mention here is in our industry, EBITDA of 42% is highest and probably no company other than us is reporting such type of margins. So we look to [Indecipherable] in our mind. And having said so, we are definitely working on improving our margins.

Surya Narayan — Sunidhi Securities — Analyst

So I mean, anything above 40%, 42%? I mean, the past operating margin is — we can say that now is quite of a anomaly rather than the norm. I mean, the norm is around 40% to 45% maximum, not beyond that.

Paras Shantilal Savla — Chairman and Managing Director

You ask me the norm, the norm is quite below the industry. If we see the industry, the norm is very, very low. So it’s not about the norm. It is about the projects that you execute. So there could be a project in a particular year that which could have commanded and higher margin. But having said that, we always eye on that and that is the reason to answer your first question that what kind of revenue visibility you have been seeing. See we have been — as a company, we have always focused on good profit margins rather than just seeing the top line.

I believe top line is definitely very important thing, but we have always focused to be improving on our bottom line. So we have never compromised on that and that is perhaps the reason that you might see a little low growth on the revenue side. But from last year onwards, that question is also now been taken care of with the visibility of new order book that we already have in place. And the new bidding pipeline is getting converted into the order. So this probably would be answered in the next financial year when we have completed say yes, that would give a good visibility of what the top line and the bottom line will be.

Surya Narayan — Sunidhi Securities — Analyst

Okay. And sir, I believe some of our competitors are also not in the good of the health like our. So are we intending to participate in any kind of ancillary process further beyond the Dolphin or we will wait for Dolphin to get consolidated and look for anything else?

Paras Shantilal Savla — Chairman and Managing Director

If you ask me very clearly [Technical Issues] do hush, bush. We have something on our table already, which is a very, very promising sector. So first, our intentions would definitely be consolidating and trying to get this company operated. Secondly, by saying that, it’s not that we are completely off on what is happening in the market. We have our eyes completely on what’s going on and given an opportunity, we’ll definitely be eyeing for acquisition as and when needed.

Surya Narayan — Sunidhi Securities — Analyst

Okay. Thank you, sir.

Operator

Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to the management for their closing comments.

Paras Shantilal Savla — Chairman and Managing Director

Thank you all for joining the call. At the end, I would like to say that healthy bidding pipeline, strong order book status, diversification to offshore segment, zero net debt and strong liquidity position along with the hard work and commitment of our team augurs well for the success of Deep industries. We hope that we are able to resolve all your queries. If you still have any follow-up questions, please feel free to reach out to us, our Investor relations Go India advisors. Thank you all once again.

Operator

[Operator Closing Remarks]