Sadbhav seeking to become coal mine developer

Ahmedabad-based Sadbhav Engineering plans to expand its portfolio of development projects by bidding for long-term mining contracts.

The company has submitted a bid to develop and operate Steel Authority of India’s Tasra coal block at Dhanbad, Jharkhand, executive director Nitin Patel said on Thursday.

The mine is estimated to have coking coal reserves of 100 million tonne.

“It’s a 16 year contract and we have bid with Godawari Power & Ispat,” Patel said in an earnings conference call.

Sadbhav will hold 74% and Godawari the rest in the venture. “We tied-up with them because they have the expertise for coal washeries,” he noted.

Patel added that the mine developer-cum operator (MDO) is expected to produce 12 million tonnes of coal per annum.
Other bidders in the fray include state-owned Hindustan Steelworks Construction, AMR Infrastructure, Sainik Mining and Allied Services and Adani Enterprises.

The investment in mining and building the coal washery is reported to be Rs2,000 crore.

When asked about other upcoming bids, Patel said there are three Coal India blocks up for grabs. Though he did not disclose the value of the contracts, he said the annual production requirement is 15-40 million tonnes.

Sadbhav has nine BOT projects, of which eight are roads and one is development of 22 check posts on the Maharashtra border.
The company develops these projects through its subsidiary, Sadbhav Infrastructure Project, in which it sold a 22.22% stake for Rs400 crore to private equity firms Norwest Venture Partners (NVP) and Xander Group.

Sadbhav’s order backlog stands at Rs6,965 crore, of which Rs5,123 crore is in roads and the rest in irrigation and mining.

For the year ended March 31, Sadbhav’s sales rose 75% from a year ago to Rs2,336 crore and net profit surged 157% to Rs93.30 crore.

The scrip rose 20% to hit the upper circuit limit in intraday trading on Wednesday before closing 13% higher at Rs138.60. On Thursday, the stock closed at Rs142.75.