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Power Mech Projects hosted a conference call on Aug 10, 2021. In the conference call the company was represented by S Kodandaramaiah, Director Business Development and J Satish, CFO.
Key takeaways of the conference call
During Q1FY22, the company was awarded a Mine Development & Operation (MDO) project from Central Coalfields Limited (CCL), a subsidiary of Coal India Limited, aggregating to Rs. 9,294 Crores over the contract period. Consortium of Power Mech Projects Limited and AMR India Limited wherein Power Mech is the consortium leader with 74% stake and AMR India will hold 26% stake. An SPV - M/s. KBP Mining Private Limited has been formed to undertake the project. Duration of the contract is 25 years which includes two years of development period and marks the entry of a new strategic business unit. The project will add more than Rs. 400 crores annually to top line.
Order inflow in Q1FY21 excluding MDO order of Rs 9294 crore was Rs 343 crore. The company is confident of attaining the OI target of Rs 4000-4500 crore for FY22. The company is L1 for order which will come in first week of next month.
Order backlog including MDO as end of Jun 2021 is Rs 16348 crore. Of the order book (including MDO) non power orders were 70.5% and power sector orders were 29.5%.
Order book excluding MDO order is about Rs 7054 crore. Of the order book (excluding MDO) non power orders were 31.6% and power sector orders were 68.4%. Of the order book erection was 31.6%, O&M 19%, electrical 2.6%, civil & other works 46.8%.
Of the order book is domestic 87% and 12.3% is international.
Execution in Q1FY22 is all time high in the history of Power Mech. This gives the confidence for the company to see strong execution in balance period of current fiscal. Confident of ramping up more than 700 core/quarter in second half.
The company continue to ram-up manpower capacity, it has doubled up the manpower at sites now compared to last year. No shutdown during second wave in sites unlike last year. Labour shortage in H1FY21 was about 50% and the labour strength has more or less back to normal.
The company is looking at two EPC contracts from NMDC with an contract size of Rs 500-1000 crore each.
Net debt as of Jun 2021 end was Rs 330 crore. Receivables is RS 495 crore and retention money is Rs 280-85 crore. Retention money is coming down and will be about Rs RS265-270 crore as end of current fiscal. Monthly collections 220-230 crore it is healthy and improving.
MDO project will be executed under SPV and the capex (in CHP, township) will be happen at SPV level. The capex will be about Rs 280 core. Equity contribution of the company will be about 80-85% in SPV. Revenue contribution will start from 3rd year. Internal estimate is 18% EBITDA margin from MDO project.
Current situation is challenging. Margin to improve gradually. Expect to come back to normal margin of 12-13% gradually.
Expects a revenue of Rs 2800-3000 crore for FY23
The company is partners with Thyseenkrup and FL Smith.
The company is working on mineral processing plant contract for HZL in partnership with FL Smith.
The company has bagged an coal handling plant for NTPC projects in partnership with ThyssenGroup for a contract of RS 250 crore in value. The company has taken part of single point site execution. Thyssen group it is technological partner.
The partnership with FL Smith where the company is responsible for supply of non processing part equipment.
The company has submitted bids for 4-5 railway orders. Further the company has submitted for Railway electrification orders worth Rs 2000 crore.
All project in backlog has started. Execution of Road project is also started. The Water project will start in July 2021.
Has to incur covid related expenses. The quantum is coming down and it may continue for next 1-2 quarters.
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