Power Mech Eyes Rs 200-Crore Revenue From Mining Business In This Fiscal

Power Mech Projects Ltd. is eyeing an increase of 23% in the company’s revenue in the current financial year, with focus on its mining development operations business. The segment is expected to more than double its growth in fiscal 2025.

The Hyderabad-based company is in process of developing two coal mine projects in Basantpur and Tasra, with a total output capacity of around 9 million tonnes. 

The mining projects are expected to give significant headway to Power Mech’s topline and bottomline growth, S Kodandaramaiah, director of business development at Power Mech Projects, told NDTV Profit. “We have been doing well since the last nine years, when Power Mech’s IPO was done and the growth story remains. We are bullish about our market and our service to the customers and stakeholders as well. The company has quite a bright future in terms of order booking, opportunities, and a diversified business approach. We have seen about 17% revenue growth from FY23 to FY24,” Kodandaramaiah said.

Another 23% growth is expected in the current year from Rs 4,234 crore to Rs 5,200 crore, he said. The mine development operation business the company has developed in the last two to three years is interesting. There are two mine projects with a total capacity of 9 million tonnes that are under development in Jharkhand. This should give a lot of headway in the future, both in terms of topline and bottomline, Kodandaramaiah said.

The two mining projects with Power Mech, located in Basantpur and Tasra in Jharkhand, involve the extraction of thermal and coking coal, respectively. While the thermal coal project has been awarded by the Central CoalFields, the Tasra project for coking coal is being developed for the Steel Authority of India Ltd. The company will supply 5 million tonne thermal coal, and will give 4 million tonne coking coal to SAIL.

This year, Power Mech plans to more-than-double its revenues from the mining development business. “This year, we expect to generate Rs 200 crore revenue from mining development operations." In the coming year, it will reach Rs 400 crore. And in two-three years, when the projects are under full swing, it will come to around Rs 1,600 crore to Rs 1,700 crore, he said.

This year, Power Mech plans to more-than-double its revenues from the mining development business.

The Tasra project for SAIL is expected to bring more value addition to Power Mech, according to Kodandaramaiah. “There are value additions in both these projects, with the better one being in the Tasra project because of the coking coal we have to supply. The various clearances in the project are in progress."

Some mining activities have already started because the project is on an opencast mine. Last year, the company had a modest turnover of Rs 41 crore with about 3,50,000 tonnes of mining operation. This year, it expects to increase it to nearly 1 million tonnes, he explained.

According to Kodandaramaiah, the company aims at a revenue potential of Rs 1,300 crore from the Tasra project.

“In peak capacity we will reach around 4 million tonnes. In that case, we will reach the revenue potential. The other project in Basantpur is about 5 million tonnes and it can also reach a revenue capacity of Rs 400-plus crores."

These things are benchmarked with the coal index to be provided and therefore the margins will be much better. The long term view is that these projects will go on for 20-25 years and it will sustain the topline and the bottomline, he said.

"We expect it will contribute to more than 25% of our business in the coming years."