Deep Industries Completes Merger with Kandla Energy

Deep Industries Limited (DIL) has received final approval from the National Company Law Tribunal (NCLT) to merge with its wholly-owned subsidiary, Kandla Energy and Chemicals Limited (KECL). The NCLT's order was issued on March 23, 2026, finalizing the company's plan to integrate KECL's operations. This strategic move follows a strong financial year for DIL, which reported FY25 operational revenue of ₹576.1 Cr, a 35% year-over-year increase. Net profit attributable to owners reached ₹161 Cr, up 31.6%, while EBITDA stood at ₹263.8 Cr, a 35.3% increase.

NCLT Approves Merger

The Ahmedabad bench of the NCLT issued its sanction order on March 23, 2026, marking the successful conclusion of the legal procedures to merge KECL fully into DIL.

Benefits of the Merger

This merger is expected to simplify Deep Industries' corporate structure and operations significantly. By bringing KECL's chemical and hydrocarbon fluid manufacturing capabilities in-house, DIL aims to gain greater control over its supply chain. This integration is anticipated to lower costs, ensure a more reliable supply of essential inputs, and potentially boost operating profit margins.

Background on the Acquisition

Deep Industries originally acquired KECL for ₹1 lakh on March 31, 2025, taking over the subsidiary during its insolvency resolution process under NCLT. DIL's board greenlit the merger plan on June 30, 2025. KECL, founded in 2005, produces chemicals and hydrocarbon fluids critical for DIL's service offerings. In fiscal year 2025, KECL reported assets of approximately ₹215 Cr and income of ₹38.5 lakh. DIL's financials for the same period showed assets of around ₹1,820 Cr and income of ₹515 Cr.

Operational Streamlining

The merger eliminates the separate legal entity of KECL, consolidating all operations under Deep Industries. This structural change is expected to cut overlapping administrative tasks and reduce associated paperwork costs. By fully integrating KECL, DIL strengthens its direct control over essential supply chains.

Potential Risks and Challenges

Investors are monitoring several potential risks. Deep Industries is facing a provisional suspension issued by Oil and Natural Gas Corp (ONGC) on February 13, 2026, which the company intends to contest. Additionally, SEBI has been investigating allegations of insider trading related to DIL shares from mid-2015. A gas leak incident at Well Mori #5 in January 2026 was reportedly contained without major incident.

Industry Peers

Deep Industries operates in the Oil & Gas Equipment & Services sector, a competitive field. Its peers include companies like DHP India Ltd., Alphageo (India) Ltd., and Dolphin Offshore Enterprises (India) Ltd., which also provide specialized services to the energy industry.

Key Factors for Investors

Looking ahead, investors will closely watch how Deep Industries resolves the ONGC suspension. The successful integration of KECL's operations and DIL's capacity to secure new orders and maintain healthy profit margins amidst ongoing operational and regulatory matters will be critical indicators.