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Boost for JP Associates as company gets clearance for coal mine

Wednesday, 5 December 2012 - 5:39am IST | Place: Mumbai | Agency: DNA
Jaiprakash Associates (JPA) has received final-stage forest clearance for its Amelia (north) coal block in Madhya Pradesh, paving the way for production from the block to commence from mid 2013.

Jaiprakash Associates (JPA) has received final-stage forest clearance for its Amelia (north) coal block in Madhya Pradesh, paving the way for production from the block to commence from mid 2013.

The block to be mined by JPA would feed the 660x2 megawatt power plant being developed by group company JP Power in Singrauli district in Madhya Pradesh. The plant is scheduled to be fully operational by March 2014.

The block was awarded to Madhya Pradesh State Mining Corporation (MPSMC) in 2006.

An analyst with a domestic brokerage said the development is a big booster for JP Power as it gives revenue visibility from fiscal 2014.

JP Power has signed a power purchase agreement with Madhya Pradesh State Electricity Board under which 42.5% power will be sold on cost-plus basis, 7.5% on variable cost and rest 50% on merchant basis. JP Power was reverse-merged with JP Hydro Power, a listed entity, in fiscal 2011.

A senior JPA official told DNA that the company has got an approval for a mining plan of 2.8 million tonne per annum from the block.

The block would service 50% of upcoming power plant, while balance coal may be sourced from Dongri Tal Coal block that, too, was awarded to MPSMC in 2007.

MPSMC has a joint venture with JPA for development of the block, said the official.

Describing the development as positive, another analyst said Amelia is a first mine project of JPA and will test its capabilities as a mine developer.

It will also add to the construction segment revenues of the company from fiscal 2014, he said. Construction contributed 44.2% to JPA's standalone revenue of Rs12,853 crore in the last fiscal.

There have been significant sequential fluctuations in the EBIT margin of the construction segment, depending on the kind of work undertaken, said a First Global report on November 27 on JP Associates. The EBIT margin of the construction segment contracted 207 basis points year on year, but expanded 442 bps sequentially to 34.1%.

The segment has been witnessing an EBIT margin of over 30% for the last two quarters on account of completion of major projects, the report said.
 


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