Power Mech zooms 20% on securing mega mine development contract from SAIL

The company has bagged a Mine Development and Operation (MD) project for an estimated value of Rs 30,438 crore from SAIL, and the duration of the contract is 28 years.

Shares of Power Mech Projects hit a new high of Rs 5,062.25, as they zoomed 20 per cent on the BSE in Monday’s intra-day trade in an otherwise subdued market after the company said it bagged a Mine Development and Operation (MD) project for an estimated value of Rs 30,438 crore from Steel Authority of India Limited (SAIL).

The company has won Tasra Open Cast Project (OCP) located in Jharia Coal Fields, Ohanbad, Jharkhand. The duration of the contract is 28 years (including 2 years of development period), the company said.

At 09:29 AM; Power Mech Projects was quoting 10 per cent higher at Rs 4,644, as compared to 0.08 per cent rise in the S&P BSE Sensex. Thus far in the current calendar year 2023, the stock has zoomed 155 per cent, as compared to 8 per cent rise in the benchmark index.

Power Mech Projects in an exchange filing today said, the scope of the MDO contract mainly comprises of mine infrastructure development including extraction of coking coal, crushing, transportation, setting up of washery and supply of steel grade coking coal to SAIL. The contract would be executed through a Special Purpose Vehicle (SPV), to be incorporated for the said purpose with Power Mech Projects Limited holding 74 per cent stake and PC Patel Infra Private Limited holding 26 per cent stake.

The project has total coal extraction reserves of 96.78 MT with an annual capacity of 4 MTPA and over burden removal during the project period is over 535.29 MBCM. The concession period of the mine is 28 years including two years of development period.

The management said, this mine has all statutory approvals in place and it is a ready to mine project. The revenue booking can be started from FY24 onwards. The project can add peak turnover of around Rs 1,200 crore plus escalation annually. With the revenue coming in from both the MOO Projects along with the existing operation & maintenance (O&M) business, the management expect to witness sustainable growth both in top and bottom lines in the future for a longer period.