Power Mech's Reward For Investors: Bonus Shares On Sept 28 | NDTV Profit
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00:00Well, one stock that celebrates its 25th anniversary and does a bonus issue and investors of this
00:05company are probably very excited and excited about the future of PowerMECH.
00:10S. Kodanda Ramaiya, Director of Business Development at PowerMECH Projects joins in.
00:14Sir, good morning.
00:15Thank you very much for joining us and thank you for waiting by patiently while we were
00:19coming to you.
00:20First up, congratulations, you have completed 25 years and rewarded your shareholders with
00:24a bonus issue.
00:26This comes as a very pleasant surprise and also reiterates the faith that you have in
00:32the company going ahead.
00:34Yeah, thank you, madam.
00:36Thank you for wishes.
00:38We are on a 25th celebration, I think we are doing pretty well over the last nine years
00:47since its IPO has come in 2015 and the growth story remains.
00:53I think we are bullish about our market and also our service to the customers and our
00:59stakeholders and the company has got quite a bright future in terms of order booking,
01:07in terms of opportunities, in terms of diversified business approach.
01:12That is what I would like to say based on the revenue growth.
01:15As you know, we have seen about 17% growth from 22 to 23 to 23, 24 and another 23% growth
01:25expected in the current year from 4,234 to 5,200 crores and we have got five sets of
01:32businesses.
01:33One is the installation business on the mechanical and equipment services and we are basically
01:40a service provider and we provide services in the civil segment also, both in the power
01:45sector and the non-power sector and we cover a wide customer base and a very important
01:51segment of our business, which sustains the business and also contributes to the top 10
01:56is the operation maintenance.
01:57We are a leading player in the operation maintenance in the country for the power sector and also
02:02in some of the non-power sector business also.
02:05And there is an electrical group which we have established a couple of years back and
02:08we are looking at the business there also, but what is more important, exciting is the
02:12mine development operation we have taken up in the last two, three years and two mines
02:17with a total capacity of 9 million tons are under development in Jharkhand and that should
02:22give a lot of headway in the future, both for the top 10 and the bottom line.
02:27And as far as the order backlog is concerned, there has been a steady growth in order backlog.
02:32From the 2022 end, we had 8,855 crores and in 2023, it went up to 13,733 crores and the
02:43last year, end of April, it is 17,362 crores with a growth of 26% and earlier 55%.
02:51I think this is mainly due to the continued focus on the customer base, then market penetration
02:58and diversification and also looking at the opportunities available.
03:03Right.
03:04Sir, I want to talk about very specific verticals because I know a lot of brokerages are very
03:08constructive on the mining development and operation piece of your business.
03:12Please share with me what is the top line that you are guiding from here, what are the
03:18margins and in the next two to three years, where do you see this vertical contribute
03:23to your top line and also peak capacity, what margins will look like and where they are
03:28and where do you see them go over the next two to three years?
03:31Yeah, the two mining projects at Kotrabasanpur and at Tasra in Jharkhand, their development
03:41is in full progress and one is a thermal coal to be supplied for the central coal fields
03:49that is about 5 million tons and that is Kotrabasanpur.
03:53Another is the cooking coal to be supplied to Steel Authority of India Limited for the
03:58Bokaro Steel Plant, that is about 4 million tons.
04:01Now, there are value additions in both these projects, of course, better value addition
04:05is there in the Tasra project because of the cooking coal we have to supply with a coal
04:10wash day also to be installed in that and that we have taken, the development work is
04:16there in various clearances, statutory clearances and the project clearances are in progress.
04:22We expect it should come on and also already some mining activities have started because
04:27of OCP mine, open cast project mine in these projects and last year we had a modest turnover
04:33of 41 crores with about 350,000 tons of mining operation and this year we expect to increase
04:43it to nearly 1 million tons and that is parallelly going the development work as well as the
04:48mining work and our aim is to see that the potential for this, both the mining is for
04:55the Tasra project, the potential is around nearly 1,300 crores when the peak capacity
05:03is reached for about 4 million tons, in that about 3.5 million tons will be the cooking
05:07coal and the other Kotrabasanpur, the thermal coal is about 5 million tons, that will also
05:13reach a peak capacity, it's about 400 plus crores and these things are benchmarked with
05:19the coal index to be provided and therefore the margins are much better and then you know
05:25the long term view is that you know both these projects will run for 25 to 20 years, in that
05:31way it will give sustained growth to the company, both to the top layer and the bottom layer
05:36and we expect it will contribute more than 25% of our business in the coming years.
05:41Sir, any risk on these two projects, I know they are long tenure, 20 to 25 years and if
05:45they are contributing 20% to your book, there is also some risk it then carries, right?
05:51Anything that you may be watching out for closely because if these two deals go wrong
05:56it could mean significant damage to your top line, sir?
06:00I don't think so because let us understand cooking coal, how cooking coal is linked is
06:06with the demand for the steel and the steel capacity has to be enhanced to double from
06:11present 161 million tons to almost 300 million tons and a lot of steel plants are going for
06:16expansion and we have got a binding agreement with the Steel Authority of India Limited
06:21with an uptake price of 3,555, mostly cooking coal system also comes into the line and the other
06:28thermal coal is about 871 rupees for the central coal fields, therefore they are all binding
06:33agreements and then the demand is there, thermal coal is also required for the meeting the
06:38requirements of the coal generation which continues to be there and then cooking coal also, in fact
06:44India is importing a lot of cooking coal, therefore I don't think there are any risks in these
06:49projects and more than that we have got in-house project capability experience and many of the
06:55aspects we are taking care of, the project deliverables are going on in terms of various
06:59project clearances, environmental clearance is in the process, we expect by September we will
07:04get the full environmental clearance, afterwards we can take the full action for the development,
07:09placing of the orders and then undertaking the construction works. Now in third quarter,
07:13I think all eyes will be on the MDO piece of the business turning revenue accretive,
07:18third quarter of FY25, is that the fair timeline for MDO business to pick up?
07:23No, we already as I told you know, 41 crores is the revenue we have generated in the previous year,
07:29this year we expect to generate about 200 crores and next to next year…
07:35Did you say 400 or did you say 200?
07:38200, 200 crores and coming year next year you know perhaps it will go up to nearly 400 crores,
07:45once the project is fully operational, maybe two to three years, it depends on the
07:50clearances and the way it is executed, then there is a full potential of reaching
07:56in both these projects something like 1600 to 1700 crores, that is the full potential
08:02and off take is also required, therefore you know that is a very, we are bullish on that,
08:08lot of focus is on that and we have tied up the investments required and we are quite
08:15hopeful this project will take shape as per the schedule.
08:17Right, congratulations on your 25th year again and good luck,
08:20hopefully these plans play out as expected by you.