Power Mech Projects Ltd Management Discussions

Economic Overview

Global Economy 1

Overview

The Global economy grew at 3.3% in CY 2024 which was driven by moderating inflation, technological advancements and structural economic shifts across regions. The growth was achieved in a turbulent macroeconomic environment with geopolitical unrest and supply chain disruptions. The major cause has been the ongoing conflict for 3 years between Russia and Ukraine and the flash points in Middle East, as the situation has deteriorated owing to open conflicts with intervention from outside powers. Emerging Market and Developing Economies (EMDEs) delivered a better performance by growing at 4.3% which outperformed the 1.8% growth recorded by advanced economies. This economic stability got captured due to proactive monetary policies by Central Banks across the world. Monetary policy interventions played an important role in checking inflation, which declined from 6.7% in CY 2023 to 5.7% in CY 2024. 2 The easing inflation led to moderation in price levels helped stabilise consumer confidence and accelerate economic activity.

Outlook

The Global economy is expected to maintain a modest growth, with a growth forecast of 2.8% for CY 2025 and 3.0% for CY 2026. This foreseen growth will be supported by further accommodative monetary policy aimed at ensuring price stability, stimulating economic activity and augmenting employment. The new US administration has been reviewing the trade policies related to tariffs with most of the countries and a new tariff regime being pushed with leading trade partners. To stabilise the impact of the tariffs, leaders around the world are undertaking diplomatic and economic steps through dialogue, trade alliances and strategic negotiations to ease rising tariff tensions and stabilise global trade.

Inflationary pressures are expected to settle down gradually, with global headline inflation projected decline to 4.3% in CY 2025 and further to 3.6% in CY 2026. The outlook of the Emerging Market and Developing Economies (EMDEs) is positive where it is projected that they will sustain their momentum with a 3.7% growth in CY 2025 and 3.9% in CY 2026 and Advanced economies will clock in a growth of 1.4% in CY 2025 and 1.5% in CY 2026.

Indian Economy 3

Overview

The economy of India achieved a GDP growth rate of 6.5% in FY 2025, as the fastest growing economy under emerging markets. The growth was achieved amidst a disrupted global economic landscape and geopolitical tensions in Europe and the Middle

East. One of the major factors that facilitated this growth was the targeted government initiatives aimed at stimulating economic activity through infrastructure development as part of National Infrastructure Pipeline ( NIP) initiative in bringing up huge spending from the Government side and paving the way for the Private sector to bring in more investments in sustaining growth with continued capital investment from the Central Government which has gone up from C4.1 lakh crore in 2020-21 to C11.21 lakh crore for 2025-26 in last 5 years. Allocation of C11.21 lakh crore 4 in the Union Budget and has heightened its focus on rural connectivity and continued focus on infrastructure development in all the segments that should sustain the growth. The clean-up of the financial sector balance of banks will be in a better position to provide credit. Heightened capital infusion helped the economy to keep its fiscal deficit at 4.4% of GDP 5 , providing the government with more room to increased spending and stimulate demand. The export trade in merchandise and services exceeded USD 824 billion, a growth of 5.5% and total imports during the period is estimated at USD 915 billion with a growth of 6.8%.

Additionally, the growth was further propelled by declining inflation from 5.4% in FY 2024 6 to 4.7% in FY 2025 and there are signs that the same would come down further in the current year. The enhanced consumer confidence augmented both urban and rural consumption. The easing of inflation measured by consumer price index (CPI) which has come down to 4.63% in 2024-25 compared to 5.35% in 2023-24. Also, RBI has further pushed to infuse C1.5 trillion into the banking system to support the demand for liquidity and propel economic activity.

Outlook

The Indian economy is better placed to handle many global head winds with its robust internal economy with exports contributing to about 21% of GDP unlike other export driven economies like Vietnam and Thailand, Indias internal economy has built in strengths with huge domestic demand. The economy is driven more by private consumption when compared to China. expected to maintain its growth momentum as the worlds 5 th largest economy with investments both in physical infra and also Digital infra where the current year growth rate is projected to be at 6.2 to 6.5% in FY 2026 based on projections from various institutions. This was also followed by earlier growth of 9.2% in 2024 and 6.5% in 2025. The focussed growth in the next two years should enable the country to reach USD 5 trillion and become the third largest economy. This growth will be backed by the Governments tax reform, in personal income tax and expected rationalisation in GST. The Government along with, the Reserve Bank of India (RBI) is also aiming to augment economic activity by implementing expansionary monetary strategies. The key Government initiative on make in India and production linked incentive has played a key role in sustaining economy RBI has reduced the repo rate by 50 basis points through consecutive cuts 7 to further boost consumption and inject liquidity. Also Indias favourable demographics with a young aspirational population to synergize with the growth initiatives.

Barring tariff issues with USA the inflation is expected to fall further to 4% in FY 2026, which will strengthen the economic growth momentum by enhancing purchasing power. With strong foreign reserves, smart government stable policies, the Indian economy is positioned for a continued growth, making it an even bigger player on the global stage.

Industry Overview

Indian Power Sector 9

Indias Total Power Generation Capacity in the last 6 years

Total Generation (Including Renewable Sources) (BU)

With a total installed capacity of 475 GW as of March 2025, Indias power sector is experiencing a steady and sustained expansion in all segments with huge impetus to Renewable Power and the resurgence of Thermal Power. As on March 25, 48% of installed capacity is derived from renewable energy sources and including non-Fossil fuel base of Hydro and Nuclear power, the installed base of the same as on March 25 is 2,28GW with about 1,72 GW of renewable power of Wind, Solar, Bio Power, and this is expected to grow substantially with

247GW of Coal and Gas based plants in operation, with lower utilization of Gas based capacity. This highlights a gradual shift towards cleaner power. The countrys power generation for FY 2025 has achieved 1900 Billion Units (BU) which is 9.3% rise over the previous fiscal year. Renewable energy generation is witnessing a strong push owing to increasing environmental concerns and the Governments heightened emphasis on achieving the Net Zero carbon emission targets by 2070. Power shortages have become minimal, reflecting better supply management, but there is need to improve the quality of power supply and reduce losses. Going forward, India is focused on expanding its renewable energy capabilities and creating an eco-conscious and reliable energy system. The planned capacity addition can go up to 819 GW by 2030-32, from 475 GW as on March 25 with non-Fossil based plants having total capacity of 544 GW including Battery Energy Storage of 42GW. It has to be seen how realistically the additional capacity addition of 344 GW can be added of Coal, Nuclear, Hydro and Renewable power in the next 5 to 7 years with emphasis also on Pumped Storage and also Battery storage for augmentation of power generation during the non-solar hours. The non-Fossil power capacity can go up from 228 GW to 544 GW. The power generation going up from 1900 BU in 2025 to 2440BU by 2030 with Non thermal power generation reaching 1076 BU. The non-Fossil generation going up from 25 % to 44% by 2030.

Indias per capita electricity consumption has grown significantly over the past decade, rising from 957 kwh in FY 2013-14 to 1,538 kwh in FY 2024-25, reflecting a 60.7% increase. This growth is driven by improved access to electricity, with the government achieving universal electrification, with clear emphasis on village level electrification nearly reaching the households in villages. Rural areas now get about 21.9 hours of electricity daily and urban areas enjoy up to 23.4 hours. In FY 2024-25, India met a record peak power demand of 241 GW, showing the countrys progress in ensuring reliable energy supply. As investments in renewable energy and power infrastructure continue, per capita electricity consumption is expected to rise, supporting economic growth and a better quality of life. 10

Middle East Power Sector 11

Decarbonization is the main driver of the growth in thermal generation - yet aspiration differs by country Capacity Mix in selected ME countries, GW, for the years 2022 and 2050; Further Acceleration scenario

2050# More focus in future on Renewables of Solar , Wind, Hydro, Battery storage of share varying from 11% to 50% in different countries with planned capacity expansions.

The Middle East power sector is heavily dependent on oil and gas for electricity generation. As of recent years, around 97% of the regions electricity comes from these fossil fuels. Natural gas is the dominant source, covering about 60% of the installed capacity, while oil also plays a significant role. The installed capacity which was 243 GW in 2022 is expected to reach a capacity of 1197GW(excluding Iraq and Iran) and including Iran and Iraq it is 441GW in 2022 and 1793GW by 2050. This reliance on oil and gas makes the power sector susceptible to fluctuations in global fuel prices and results in high operational and maintenance costs. The future emphasis is more on Renewables like Solar, Wind, Hydro and Battery power.

Over the past few years, there has been a noticeable shift from oil-based to gas-based power generation. This transition is primarily driven by the economic and environmental advantages of natural gas over oil. Gas power plants are generally more efficient, produce lower emissions and have comparatively lower operational costs. Countries like Saudi Arabia, UAE, Kuwait and Iran are significantly investing in expanding their gas power generation capabilities. By 2035, natural gas is expected to maintain its position as the largest source of power in the region, even as renewable energy slowly gains ground.

One of the major opportunities in the Middle East power sector is the conversion of existing oil power plants to gas power plants.

In addition to converting existing oil plants to gas, the region has opportunities to invest in new gas infrastructure, such as pipelines and gas storage facilities. This would ensure a stable and reliable energy supply as more gas-based power plants come online. Investing in efficient gas turbines and combined-cycle power plants (CCPP) would also enhance power generation efficiency and support the gradual transition from oil to gas.

Looking ahead to 2030, the shift from oil to gas represents a strategic opportunity for the Middle East to modernize its power sector. Reducing reliance on oil not only lowers operational costs but also aligns with global trends toward cleaner energy. The transition to gas-based power generation will help the region maintain energy security while also meeting the growing electricity demands driven by economic and population growth. By prioritizing the conversion of oil plants and expanding gas infrastructure, the Middle East can secure a more efficient and sustainable power future.

Infrastructure Sector 14

In FY 2025, rapid growth was noted in Indias infrastructure sector. This growth has been facilitated with more focus of investment in infrastructure segment and with record investment allocation of H11.21 lakh crore 15 which is 3.1% of the GDP by the government in the current year. Heightened capital allocation expedited the development of roadways, airports, railways and ports. The growth in capital expenditure has gone up from 2.1% of GDP in 2021 to 3.1% in 2025-25. This shows the commitment of the Government to improve the overall infrastructure of the country.

The Government is implementing large-scale infrastructure development initiatives such as the PM Gati Shakti, which aims to link different transport systems. In addition, the Bharatmala initiative focuses on building highways to enhance the roadway infrastructure. By early 2025 approximately 20,000 km of roadway was developed under the Bharatmala project, which marked the achievement of a huge milestone. Further, the Sagarmala initiative is aimed at upgrading ports to augment trade. Additionally, urban services are being improved through the Smart Cities Mission. Further, the National Industrial Corridor Development Programme is aiding industries grow by developing new industrial areas. There is a strong focus on modernising Railways with 98.83 % achievement of Railway electrification, modernisaiton of Railway stations, expanding Metro networks for better urban mobility, continued emphasis on 100% drinking water network completion to all the Villages in the country. All these government projects together form a jointforcetoacceleratethepaceofinfrastructuredevelopment.

India to reach $ 5 trillion economy in the next 2 years and the long term goal is to become a $10 trillion economy before 2035 and has plans to invest C143 lakh crore in infrastructure in the coming years, that is by 2030 and out of which C36.6 lakh crore is going toward green projects. 17 All these massive investments clearly highlights the massive growth opportunity that is available in the Indian Infrastructure sector, which is the fundamental pillar of Indias journey towards becoming a developed nation.

Company Overview

Power Mech Projects Limited, established in 1999 by Sajja Kishore Babu and headquartered in Hyderabad, is a leading construction, engineering, O&M services and infrastructure company with global operations. Initially, the company provided maintenance services for coal and gas-based plants. It leveraged the expansion in Indias power sector by adding 41,000 MW between 2007 and 2012 and 91,700 MW from 2012 to 2017, to diversify into civil works, main plant installations, O&M services and exports, especially to the Middle East. This was a great push in providing end to end solution as service provider in the Power sector in all segments of construction till commissioning and a post commissioning phase establishing as a leading service provider in Operation and Maintenance(0&M) on long term basis leading to sustianbale revenue and growth.

After the 2015 COP climate mandate, coal-based capacity additions fell significantly: only 30,448 MW were added in the five years from 2017 to 2022 (averaging 6,129 MW/year, down from 18,346 MW/year previously) and in the last three years, additions dropped further to about 3,798 MW/year (totalling 11,394 MW) (source CEA). The company responded by focusing on the growing trend of O&M outsourcing in the private power sector, securing long-term contracts and improving margins. This approach was later adopted by state sector GENCOs as well.

Power Mech now manages an installed base of 71,537 MW for O&M services and has established 9,262 MW of export capacity across the Middle East, West Africa and Bangladesh. Over its 26-year history, the company has delivered more than 208 projects for over 80 clients, employs 40,000+ people and continues to expand in non-power sectors since 2015 such as petrochemicals, steel, technology parks, roads, railways, rural electrification, irrigation, drinking water, pipelines, metro work and mining. Known for its commitment to quality, safety and timely delivery, Power Mech drives growth by adopting new technologies and broadening its services for evolving infrastructure demands.

Business Segments

A. Power sector

(Inputs from Ministry of Power, CEA, Adani Power, NTPC, BHEL etc)

The power sector has been the foundation of the companys strength, with significant growth and market penetration across Public and private entities. Investment patterns shifted following the COP 15 guidelines, which directed focus away from coal-based plants. As of March 2025, the installed capacity includes approximately 222 GW of coal-based and 25 GW of gas-based plants, out of a total base of 475 GW. Meanwhile, investment emphasis has moved towards solar, wind, hydro, nuclear, battery storage and pumped storage plants, resulting in a current non-fossil capacity of 228 GW, including hydro and nuclear segments. The target is to increase this capacity to about 500 GW by 2030-32.

However, challenges such as grid imbalance arise with increased solar and wind power, leading to forecasted power shortages during night hours (6 PM-6 AM), threatening the grid stability. To address this, based on studies conducted by NTPC, the Central Electricity Authority (CEA) recommend increasing coal-based capacity to around 285-300 GW by 2030-32 to stabilize night-time power supply. This necessitates adding about 80,000 MW of capacity in the coming years.

Accordingly, the government has announced an investment requirement of C6.67 lakh crore covering both public and private sectors. Over the past two-plus years, thermal power orders totalling about 38,000 MW have been placed by leading utilities like NTPC, Adani Power and DVC. BHEL has received orders worth C1,75,182 crore for approximately 34,220 MW, while L&T re-entered the market with a 4,000 MW order worth C27,523 crore; these include EPC, main plant and turbine contracts.

This surge in investment offers the company an opportunity size of around C30,000 crore over 2-3 years in civil, structural, erection, coal handling and associated works, alongside a Balance of Plant (BoP) opportunity size of about C15,000 crore. With the projected 80,000

MW capacity addition by 2030-32, the companys O&M profile may also expand, presenting annual opportunities around C1,200-1,500 crore per year in the coming years.

BHELs increased orders and new outsourcing policies for BoP packages enhance opportunities for the company, which has strengthened its engineering, procurement and construction capabilities. Additionally, the company is exploring opportunities in nuclear power, having secured its first major civil works contract for the Kaiga Nuclear project. Nuclear capacity expansion, expected to reach about 22,480 MW by 2032 with 10 more sanctioned projects, is critical as a coal-based alternative.

1. Operation & Maintenance (O&M)

The O&M segment is a crucial part of Power Mech Projects Limiteds business and is a significant revenue contributor and also bottom line. The companys expertise and services in O&M are diversified across both power and non-power sectors and well recognised in the industry, ensuring a robust and stable income stream. This segment has been predominantly driven through the Coal based plant capacities and efforts being made to work in non-power sector areas also.

_ Power Sector O&M:

Thermal Power: The Company has a strong presence in providing complete services for thermal power plants, on long term O&M contracts, including the overhauling and maintenance of boilers, turbines and auxiliaries.

Renewable Energy: Expanding its scope, the company now handles the O&M of solar and wind power projects, as well as energy storage solutions like Battery Energy Storage Systems (BESS) and Hydrogen power systems.

Gas-Powered Plants: With gas becoming a cleaner alternative, Power Mech also operates and maintains gas-powered power stations.

?€? Non-Power Sector O&M:

Metro Systems: The Company is planning to provide O&M services for metro rail infrastructure, covering mechanical and electrical maintenance.

Steel Plants: In the industrial domain, Power Mech manages maintenance and overhauling of equipment in steel manufacturing units.

Material Handling Systems: The Company supports operations for systems related to material transport and processing in industries.

Refinery, Mineral processing & process plants:

Services related to O&M, maintenance, shutdown, renovations with focus on Captive power plants

Drinking water schemes: This is part of the O&M part of work to be undertaken after completing of the ongoing Drinking water schemes under Jal Jeevan Mission.

Power Mechs strength in the O&M segment comes from its skilled and expanding workforce, currently about 18,000 employees which is a 27% rise from 13,400 a year ago, reflecting growing opportunities. Coal-based power plant O&M is a core part of the business, driven by private sector leadership in long-term outsourcing contracts. O&M revenue has surged to around C1,746 crore, contributing 34% of the companys top line, with a 25% growth in order backlog. Customers include private utilities and states like SCCL, KPCL, GMDC , SJVN , NLC and NTPC adopting outsourcing models. Revenue and margins have improved due to strong plant performance under stringent KPIs.

In captive power, the company serves major clients such as HZL, Dangote Oil Refinery (Nigeria) and Vedantas Lanjigarh Aluminium plant. Power Mech has also entered long-term (about 10 years) O&M contracts in the water sector under the Jal Jeevan Mission for rural drinking water schemes in UP districts like Etah, Pratapgarh Bulandshahr and Fatehpur, with around 65% completion, adding to future revenues.

With early market entry, Power Mech has built strong organizational capabilities and skill-focused HR policies to manage complex plant operations and control room functions, meeting rigorous operational standards. Internationally, O&M activities in the Middle East and West Africa including shutdowns, maintenance and long-term contracts, have grown, with the order book rising from C145 crore in 2022-23 to C253 crore in 2024-25, about 11% of total O&M orders.

Emerging opportunities include the metro rail sector, where O&M outsourcing covers 22 cities with 961 km of operating tracks, a network expected to double in five years. Captive power O&M is also expanding notably in the metal and mineral sectors, underscoring Power Mechs growing presence in both utility and captive power markets.

2. Installation /Erection Testing and Commissioning (ETC) & Civil works in Thermal plants

This is one of the key segments of Power Mechs Business since inception and for the last two decades has been the backbone of the companys strength with huge market penetration, customer and geographical reach across the country. Company has established niche business profile with about 70,626MW in various segments of Indias present installed base of 2,22,000 MW of Coal based capacity, and with new push for coal-based plants, this trend would continue in the next few years.

Company has established huge resource base, with a huge base of supply chain in manpower resource base, construction management organisation, set up which can undertake of 5000mw to 6000mw in a year of new construction works in the main plant Boiler, Turbine, structural and other auxiliary works. The market dynamics of investments in the coal-based power sector has been brought out above over the last 15 years and the factors which had prompted the need for more capacity addition in this sector to reach between 285GW to 300GW by 2032. About 38000mw of new ordering has been done on BHEL and L&T for the main plant and also about 10 EPC contracts on BHEL, which can bring in huge opportunities for revival of the business in this segment for the next 5 years. Leading Developer like Adani is planning to double their installed capacity from 17550mw to about 34000mw and they have placed orders on main plant equipment for 15720mw mainly on BHEL, NTPC has ordered on BHEL and recently with L&T for about 11580mw. Many other utilities like NLC, DVC, SCCL, GSECL, CSGPCL, HPGCL, MAHAGENCO,

SJVN have taken the initiative in undertaking new Power Projects. Other private players like JSW, JSPL, Vedanta, Torrent Power are also planning major investment in this segment to augment the Generation capacity as part of the 80000mw addition. The ETC segment and Civil scope of business opportunity in these new orders placed is more than 30,000 crore. Already orders have been received from Adani power and BHEL for works related ETC /Civil works at Raipur, Mahan Stage II, Mirzapur, DVC Koderma. There are also many coal based projects planned for development exceeding more than 40000mw apart from the ongoing projects. There is more scope to book orders in this segment with the opportunity available in the next 2 to 3 years.

As more Utilities are taking the initiative for establishing Coal-based plants the opportunity size in the next 2 to 3 years can be substantial when the full complement of ordering is done to reach about 80000mw planned capacity addition.

As the company also had established its synergy in undertaking both Civil and ETC works in various power plants with Civil works getting added to the portfolio since 2012, there is an equal level of opportunity in doing both civil and ETC works in the new power plants being installed . Out of the total 30000 crore combined Civil and ETC opportunity the balance opportunity in the Civil segment is about 12000 crore for 38000mw ordering done and more orders to follow in the next 18 to 24 months.

B. Infrastructure Segment

Power Mech has diversified its portfolio to include infrastructure development, reflecting its strategic move to balance power-centric operations with broader infrastructure projects to broad base the business and also to overcome the market volatility in the key coal-based segment which is subject to environmental policy issues and in the long term needs of pruning down its size to meet net zero emission targets.

?€? Industrial Parks: The Company undertakes construction projects for setting up industrial parks, aiming to support manufacturing and logistical hubs.

?€? Roads and Highways: Engaged in the construction and development of road networks, which are integral to national infrastructure initiatives.

?€? Railways & Metro Rail Projects: Apart from O&M, the company is also involved in the construction of metro rail infrastructure, including civil works and laying tracks.

?€? Drinking water schemes, Irrigation, water linked projects: Mainly related to the Village drinking water schemes, Urban Renewal and Irrigation related projects

?€? Townships: Developing residential and commercial townships as part of urban development initiatives.

?€? Other Related Infrastructure: This includes building supporting facilities and amenities linked to industrial and urban projects.

As stated above, the major thrust in the GDP growth and its sustenance for the last 6 years since 2019 is also due to the impetus given to investments in infrastructure segment as part of NIP program launched in 2019 with about C111 lakh crore investment. Major part of NIP investments has been channelised towards infra related works towards Roads, Railways, Metro networks, Drinking water connectivity etc. The continued emphasis on infra investments has been focus in the coming years in various sectors in order to enhance the overall infra.

1. Railway and Metro works:

(With inputs from Railway Ministry, NIP, NRP (National Rail Plan) and Omniscience Capital)

Since 2016, railway and metro projects have been a key growth area for the company, leveraging its civil works expertise. Since 2019, Government investments surged, with ongoing projects worth about C2,500 crore across eight states, including new railway lines, maintenance depots and workshops. A notable project is the C427 crore

Bangalore Metro Maintenance Depot. The company has completed 37 km of railway lines so far. 150kms of new Railway lines are in progress in Chhattisgarh and Maharashtra.

The expanding metro and railway infrastructure offers ample opportunities, including electrification, track laying and maintenance depots, supporting improved connectivity, faster freight, better urban mobility and reduced pollution. The National Rail Plan targets increasing freight share from 27% to 45% and cutting logistics costs from 14% to 7-8% of GDP. Railway capex rose from C65,637 crore (2019-20) to C2.52 lakh crore

(2024-25), with C2.65 lakh crore planned for 2025-26. Total five-year capex is C15 lakh crore, with C5.6 lakh crore for EPC contracts.

India is aiming to achieve 100% railway electrification. Dedicated Freight Corridors (e.g., Dadri-JNPT, Ludhiana-Dankuni) and high-speed rail projects like Vande Bharat trains are progressing. Since 2019-20, railway investments total about C8.81 lakh crore. Track expansions cover

17,340 km; dedicated freight corridors will expand to 3,893 km by 2031.

Metro networks serve 22 cities with 946 km of routes, helping reduce pollution and congestion. Plans aim to double coverage to 45 cities and add 1,000 km routes over five years with C3 lakh crore investment. The companys nine years of experience and government contracts with steady cash flows position it well for growth.

Further investments include rapid rail in Delhi NCR, suburban rail in Bangalore and proposed metro-lite networks across 220 cities (794 km over 10 years). These require maintenance facilities, with two depots typically needed per metro, offering additional business opportunities.

2. Road & Highways

(With inputs from NHAI, Ministry of Roads and Transport, Niti Ayog, Market reports)

The Roads and Highway sector has experienced significant investment growth over the past decade, especially following the launch of the National Infrastructure Pipeline (NIP) program, which aims to accelerate infrastructure development and increase government capital investment. Emphasis spans National Highways, State Highways, rural roads and expressways for high-speed travel.

Since 2014, the highway network has expanded by about 60%, growing from 91,287 km to 146,195 km. High-speed corridors have increased dramatically from 93 km to 2,474 lane-km and four-lane and above highways have grown from 18,278 km to 45,947 km. Annual capital expenditure on roads has risen from C1.04 lakh crore (five years ago) to a planned C2.87 lakh crore for 2025-26.

The National Highways Authority of India (NHAI) is expanding the road network using various delivery modes: Build-Operate-Transfer (BOT), Engineering-Procurement-Construction (EPC) and Hybrid Annuity Model (HAM). BOT concession periods range from 15 to 20 years, while HAM is typically 15 years; these include road maintenance, with EPC contracts covering fixed maintenance for up to 5 years.

Recent major projects include contracts totalling 112 km across Telangana, Mizoram and Karnataka for the Adani Group and NHAI, valued at C1,648 crore. The latest order is the Deogarh Bypass in Jharkhand (49 km) under HAM mode, valued at C972 crore. Other completed or ongoing projects include the 32 km Khammam-Kodar Road (C645 crore) for Adani group now operational; a 41 km Mizoram project planned for completion in 2025; and the Hasan Bypass in Karnataka, expected by 2026.

Given its extensive road project experience and the continuingsurgeincentralandstatefunding,thecompany sees strong potential in undertaking more EPC and HAM road projects. The trend of increasing investment in the road sector is expected to continue, ensuring sustained growth opportunities in the coming years.

3. Drinking water, Irrigation & Sewage Treatment etc.

The companys diversification into the drinking water infrastructure segment was driven by opportunities identified under the National Infrastructure Pipeline (NIP) plans of 2019. At that time, only about 3.29 crore rural households out of 19.46 crore (17%) had access to drinking water connections. Since the launch of the Jal Jeevan Mission (JJM) in 2021, rural household water connectivity has increased significantly to 80.97%, despite local challenges and infrastructure gaps requiring robust project execution at the village level.

JJM aims to provide Functional Household Tap Connections (FHTC) to every rural household, improving quality of life and generating skill-based rural employment. The work includes constructing water tanks, sourcing water, developing distribution networks to homes, installing solar power for electricity and building pumping and piping systems, thus supporting rural livelihoods alongside drinking water access.

Partnering with BRCCPL, the company secured a major contract in Uttar Pradesh to connect about 1,971 villages, initially valued at C2,729 crore. Work completed so far amounts to C1,863 crore, with major remaining works scheduled for completion by 2026. Additionally, a 10-year O&M contract worth C699 crore is planned for sustained revenue post-completion.

Under the AMRUT scheme for urban rejuvenation, investments target 4,800 cities with populations over 1 lakh for household water connectivity and sewage treatment. The company is executing three Sewage Treatment Plants (STPs) in Gudivada, Karnal and Palwal, including O&M services, valued at C181 crore, with around

90% of the work completed.

JJMs timeline has been extended to 2028 to ensure 100% rural drinking water coverage, with continued government investments sustaining ample opportunities for the company in this sector. The present focus of the company is in getting the ongoing works in UP to be completed for the remaining 35% of work to be done.

C. Mining Minerals of, Coal, Iron ore, Bauxite etc.

Mining operations and mine-side facilities present significant business opportunities, especially as privatization increases across major minerals like iron ore, bauxite and notably coal. These works are crucial for expanding capacity to meet rising demands in steel, aluminium, zinc and coal-based power generation, including captive power units. Mechanization at mine sites ensures efficient production, minimizes losses from transportation and supports reliable delivery.

Indias reserves include about 326 billion tonnes (BT) of coal, 35 BT of iron ore and 2,500 million tonnes (MT) of bauxite. Coal mining capacity is projected to rise from 1,048 MT to 1,500 MT by 2030, with iron ore increasing from 289 MT to 437 MT over the same period. The Governments Mine Developer and Operator (MDO) initiative is central to developing resources, as it opens the sector to private investment, technology and greater efficiency which is key to meeting future growth in energy, steel and aluminium.

Coal remains essential for power and steel production, which heavily relies on coking coal. India has 343 BT of thermal and 46 BT of coking coal, but production is insufficient, especially for coking coal. In FY 2024-25, domestic coking coal production was 66.49 MT against imports of 57.58 MT, showing substantial import dependence. With steel production targeted at 300 MT by 2030, coking coal demand may reach around 161 MT, making increased domestic output critical. The MDO model is vital for unlocking new reserves and speeding up timely, cost-effective delivery to industry.

Power Mechs mining work emphasizes mechanized material handling, EPC contracts for coal and iron ore crushing and screening and partnerships with technology providers. Coal India Limited (CIL) is investing about C53,250 crore in mine-side mechanization, coal bed methane, coking coal beneficiation and First Mile Connectivity (FMC), further expanding sector opportunities.

1. Mine Developer and Operator Role of Power Mech

Power Mech forayed into the Mine Developer and Operator (MDO) segment in 2020 as part of a strategic diversification beyond its core Erection, Testing and Commissioning (ETC) activities in the power sector. This move aligned with national resource development and energy security goals by positioning the company within the evolving mining and energy value chain. Power Mech secured two major MDO contracts. The first is the Kotre Basantpur coal block in Jharkhand, awarded in 2021, with a capacity of 5 million tonnes per annum (MTPA), a total contract value of C9,294 crore and a duration of 25 years. This project involves the extraction of approximately 105 million metric tonnes (MMT) of coal and includes a planned investment of C366 crore toward infrastructure development, mining operations and associated facilities. The mined coal will be supplied to Central Coalfields Limited (CCL), a subsidiary of Coal India Limited (CIL), for washery operations. The second contract, awarded in 2023 by Steel Authority of India Ltd (SAIL), is focused on coal mine development for coking coal production with an annual capacity of 4 MTPA and extractable coal reserves of about 97 MMT. This contract, valued at C30,438 crore and lasting 28 years under the

MDO model, features an integrated coal washery with a capacity of 3.5 MTPA to add significant value and increase revenue through processed coking coal supply. A planned investment of C2,393 crore will fund mine development, coal handling infrastructure, washery facilities and related equipment. Together, Power Mech is developing and operating two coal mines with a combined peak production capacity of 9 MTPA, supplying coal to CCL and SAIL, thereby positioning itself as a significant player in Indias coking and coal value chain. The company is progressing actively on both projects, finalizing technical and financial plans and engaging with major equipment suppliers for procurement and development activities. These initiatives mark a transformative phase for Power Mech, strengthening its long-term revenue base and enhancing its role in the nations energy and infrastructure development landscape. Mining operations are already started by open cast mining operations from 2024 onwards. The output for the year 24-25 was 4.08 lakh tons (revenue 72.31 crores). With 95% land acquisition the development works are in progress including the engineering, ordering of key packages for the mine side material handling. The completion of the mine side facilities, Coal washery is planned by March 2027. The high value addition to Coking coal production can significantly add to the overall revenue and also bottom lines of the company.

2. Steel and Iron ore

India, the worlds second-largest steel producer after China, is witnessing major capacity expansions and investments by leading players like SAIL, JSW, JSPL and Arcelor Mittal, who plans a greenfield plant in Andhra Pradesh. The sector has planned investments worth about C10 lakh crore. New steel projects in Andhra

Pradesh, Maharashtra (Gadchiroli), IISCO Burnpur and Rourkela aim to raise steel capacity to 300 million tonnes by 2030. The current installed capacity is 205 mtpa, with production at around 152 mtpa in 2024-25.

Significant opportunities exist in steel plant works such as sinter and pellet plants, blast furnaces, steel melt shops, raw material handling and construction (ETC, structures, civil). Power Mech has entered this sector at JSW and JSPL plants, leveraging its power sector construction experience for similar EPC contracts with technology partners.

Iron ore capacity which is crucial for steelmaking, is also expanding. NMDC plans to nearly double output from 69 mtpa to 116 mtpa by 2030, investing C70,000 crore in crushing, screening, beneficiation and slurry pipelines over five years. Other players like Vedanta are investing in Goa, Karnataka and Lanjigarh. Orissa is slated for C1 lakh crore investments in aluminium plants and expansions at Lanjigarh and Jharsuguda. Private firms such as the Aditya Birla group are expanding bauxite mining and refineries in Odisha and Madhya Pradesh. This should throw up many opportunities to work with NMDC in the areas of iron ore crushing, screening, Iron ore beneficiation, Material handling and also slurry pipe line works based on tie ups with technology players and also undertake major plant based civil and structural works.

This massive investment wave in steel, iron ore and aluminium sectors opens wide opportunities for construction, installation and EPC contracts amid rapid capacity growth and modernization.

D. Renewable Power and Green Hydrogen

The Government has pushed renewable power capacity expansion steadily over the last decade, intensifying in the past five years after the COP 15 mandate aimed at reducing fossil fuel emissions. By March 2025, Indias renewable energy capacity reached about 172 GW, including 105.6 GW solar, 50 GW wind, 5.1 GW small hydro and waste-to-energy projects. Adding large hydro (48 GW) and nuclear power (8 GW), the total non-fossil electricity generation capacity stood at 228 GW, alongside 247 GW coal and gas capacity.

Key initiatives include the National Green Hydrogen Mission, targeting 5 million metric tonnes (MMT) of green hydrogen capacity by 2030, supported by 60-100 GW of electrolyser capacity and about 125 GW of renewable energy input. These are expected to reduce carbon emissions by ~50 MMT. Energy storage projects such as battery energy storage systems (BESS) aimed at 50,000 MW and pumped storage projects totalling 27,000 MW are planned by 2031-32, creating opportunities in plant construction for pumped storage, green hydrogen, hydro, nuclear and renewables.

Power Mech is actively exploring opportunities in BESS and solar, with several projects under evaluation. The company established a Green Energy subsidiary focused on development, execution and operation of solar and battery storage projects, offering turnkey solutions. It has also entered the sector by acquiring three grid-connected solar plants in Bihar (4.2 MW, 4.3 MW and 5.1 MW) with 25-year power purchase agreements at tariffs of C3.15/kWh, C3.15/kWh and C3.30/kWh respectively.

The total gross investment is about C66.5 crore, while the net investment after adjusting for central and state grant assistance is about C46 crore with expected revenue over 25 years of approximately C159 crore. Additional solar and green hydrogen projects are also under evaluation as part of Power Mechs green energy expansion. With lot of focus on Battery storage systems along with Pumped storage as back up supply during the nights during non-solar hours, and taking into account the funding support from Government for faster development of this sector, Powermech is planning to enter the development of Energy storage system with the opportunities being made available

E. Electrical

Power Mechs diversification into Transmission and Distribution aligns with the expanding power sector, especially thermal and renewable growth over the past 20 years. Renewable capacity has reached 172 GW, with total power capacity at 475 GW and peak demand at 256 GW (March 2025). The government is focused on strengthening transmission networks and reducing losses.

As of March 2025, Indias T&D network spans 4.95 lakh km (up from 4.56 lakh km in 2022) with transformation capacity of 13.51 lakh MVA (up from 10.7 lakh MVA). By 2031-32, these are projected to grow to 5.71 lakh km and 18.47 lakh MVA, supported by ongoing C4.25 lakh crore investments and planned C4.91 lakh crore spend. Peak generation is expected to rise to 366 GW and capacity to nearly 800 GW by 2030, necessitating T&D expansion, especially for renewables.

In the last nine years, Power Mech completed key projects including 750 km railway electrification (C332 crore , Rajasthan), 91 km for RITES (C69 crore), 777 km 11 kV distribution lines (Bihar) and 95 km 132/220 kV HT lines (Assam), totalling about C511 crore. Railway works worth about C700 crore, including 95 km of electrification, track laying, OHE, and civil works, are in progress at Dadhapara and Rajnandgaon in SECR, Chhattisgarh.

With this experience, the company is positioned to deliver comprehensive electrical EPC works. Considering competition and margins, Power Mech is reviewing growth strategies to improve execution and profitability, with ample market opportunity through 2032 from expanding investments.

Overseas Business

Power Mech Projects Limited has significantly expanded its overseas Operations & Maintenance (O&M) business, establishing a strong presence across the Middle East, West Africa and South Asia. Since entering the international market in 2000 and setting up its first overseas branch in Dubai in 2013, the Company has executed projects totalling nearly 9262MW of power generation capacity. Notable achievements include the 2,640 MW Shuqaiq Steam Power Plant in Saudi Arabia, the 1,519 MW IBRI Independent Power Plant in Oman and the 250 MW Sabiya Combined Cycle Power Plant in Kuwait, 1320 mw Maitree Coal fired plant in Bangladesh., the 400mw combined cycle plant of Dangote Oil Refinery in Nigeria. Powermech also diversified into Desalination installation & O&M works in Saudi Arabia(2.5lakh m3/day) and Oman (1.14lakh m3/day). Also it has undertaken providing O&M services for the Desalination and RO plants as a diversification of business in this segment.

In Middle East Powermech has made its presence in the installation works in UAE, Oman, Bahrein, Saudi Arabia, Kuwait making geographical spread across the region having established a strong project execution organisation set up..

Power Mech operates through wholly owned branches in the UAE providing services to public utilities such as Dubai Electricity and Water Authority (DEWA), Sharjah Electricity and Water Authority (SEWA) and the Shuweihat Power Complex. The company has also established subsidiaries and joint ventures, including Powermech Arabia Contracting Company, Power Mech Projects Limited LLC in Oman and GTA Power Mech Nigeria Ltd. in Nigeria, to cater to regional project requirements.

With a dedicated workforce of over 1,200 engineers , specialists, skilled and unskilled labour, Power Mech offers comprehensive O&M services, including manpower supply, capital overhauls, repairs and shutdown maintenance. The company has secured long-term contracts in various sectors, such as a 400 MW captive power plant in Nigeria, the 2x660 MW Maitree coal fired project in Bangladesh and maintenance services for RO plants in Abu Dhabi.

The O&M cost for oil and gas plants in the region is approximately USD 3,500 per megawatt (MW) per year. Considering the substantial installed capacity, it gives a huge scope to the O&M players to make big income stream.One of the major opportunities in the Middle East power sector is the conversion of existing oil power plants to gas power plants. The estimated cost for this conversion is around USD 6 million per 100 MW. While the initial investment might seem high, the long-term economic benefits are substantial. Gas plants not only have lower maintenance costs but also provide higher fuel efficiency. For instance, converting a 500 MW oil-based plant to a gas-based plant would cost around USD 30 million.

Over the past few years, there has been a noticeable shift from oil-based to gas-based power generation. This transition is primarily driven by the economic and environmental advantages of natural gas over oil. Gas power plants are generally more efficient, produce lower emissions and have comparatively lower operational costs. Countries like Saudi Arabia, UAE, Kuwait and Iran are significantly investing in expanding their gas power generation capabilities. By 2035, natural gas is expected to maintain its position as the largest source of power in the region, even as renewable energy gains ground.

Looking ahead, Power Mech expects steady growth in its O&M business, driven by a strategic focus on long-term contracts and diversified operations. The company is well-positioned to strengthen its presence in the international market, ensuring sustainable business expansion. In the present context , there is more focus in these countries to go for the Renewable segment in the next 10 years. With the opening up of new investments in gas based and Desalination projects, and with the experience gained over the last 12 years the company can certainly work in new projects expected to come up.

Strategic Focus and Outlook

Power Mech Projects Limited has strategically positioned itself to cater to both traditional power sector and emerging and fast expanding renewable energy domains. By balancing O&M activities for sustainable revenue along with infrastructure projects and also undertaking diversifying into long term mining MDO contracts the Company is mitigating risks associated with sectoral downturns. The diversification into non-power O&M and infrastructure construction strengthens its revenue base, making it resilient to fluctuations in any single market. The policy of the company is on multi project, pan Indian reach, with diversified customer base matching diversified revenue base in various sectors under Power and Non Power sectors and also looking at new investments in overseas market.

Key Focus Areas

Strategic Focus Area	Description
Backward and Forward	Augmenting core business strength through consolidation across the value chain.
Integration
Feasible and Rewarding	Identifying EPC contracts in sectors like railways, roads, water and energy, Mine side
Opportunities	facilities.
Tie-ups	Collaborating with EPC and tech partners in various segments.
Enhancing Execution Capabilities	Improving the HR base, asset utilisation and ensuring timely project completion, and
	enhancing customer satisfaction.
Expanding O&M Profile	Continued focus on utility/captive thermal plants and entering non-power O&M markets,
	Metro O&M market etc.
Value-added Services	Offering complete engineering and project-based solutions.
Digital Initiatives	Using technology for better risk management and productivity.
Geographical Expansion	Growing overseas operations and export-based projects.
MDO Capabilities	Expanding mine development operations with long-term capacity growth (15 MTPA).
Revenue Diversification	Targeting visible, sustainable revenue across sectors like roads, railways, water, renewable
	energy.
Leverage Government Investment	Tapping into continued large-scale investments under the National Infrastructure Pipeline
	in various segments
Private sector investment	Tapping into the new opportunities in private sector investment planned in infra, metals,
	minerals etc. by leading players like Adani, Vedanta

Strengths Opportunities and Threats

Strengths

Wide Service Coverage

Power Mech caters to both power and non-power sectors. This adds to the versatility of the Company.

O&M Expertise

It is a leading player in operations and maintenance services. The Company is backed by strong system & organisation base which support both past and future projects.

Strong Order Book

The Company has a steady pipeline of projects, supported by contractsundertheMineDeveloperandOperator(MDO)model.

Large Equipment Base

The Company owns a wide range of construction equipment including a fleet of over 300 cranes. This greatly augments its project execution capacities.

Global Project Experience

Power Mech has the ability and is well-equipped to manage international projects efficiently.

Trusted Clients

The Company maintains long-term partnerships with major equipment makers, project contractors and utility firms.

Strong Execution Team

It has skilled management teams that ensure projects are completed effectively.

Financial Stability

The Company has strong financials with steady profits.

Skilled Workforce

It employs a large number of professionals with experience in the industry and versatile skill-sets, and a strong supply chain support for skilled manpower sourcing.

Opportunities

China Plus One

As many global companies are reducing their dependence on China and looking for alternative manufacturing and project locations, India is becoming a preferred choice. Power Mech can leverage this shift by taking on more projects from multinational clients.

Expansion in Non-Power Sectors

With its growing presence beyond the power sector, Power Mech is well positioned to explore more projects in infrastructure, railways & metro works, oil and gas and industrial construction.

Rising Demand for O&M Services

With aging plants and infrastructure assets becoming more common, there is an increasing demand for operations and maintenance services. The Company is strategically positioned to capitalise on this demand.

Growing Focus on Renewable Energy

The Governments push for clean energy presents opportunities in solar, wind and hybrid energy projects, where Power Mech can offer EPC and O&M solutions.

International Market Penetration

With proven expertise in handling international projects, Power Mech can expand further into emerging markets in Africa, Southeast Asia and the Middle East.

Urbanisation and Infrastructure Development in India

Heightened urban development, increasing smart cities and large-scale infrastructure projects are creating new scopes for civil construction and allied services.

Mining and MDO Contracts

The Companys increasing involvement in Mine Developer and Operator (MDO) projects presents a long-term growth opportunity in mining services.

Technological Upgradation

Adoption of advanced construction technology and digital tools (like drones, IoT-based maintenance, etc.) can augment project efficiency and reduce costs.

Public-Private Partnership (PPP) Models

Government support for PPP in infrastructure projects could allow Power Mech to participate in more large-scale, capital-intensive ventures.

Threats

Economic Slowdown

Any slowdown in the economy can reduce the number of new infrastructure projects, affecting the companys growth and also Tariff issues which needs a fair settlement with USA

High Competition

The construction and maintenance sector have many players, both big and small, which can lead to tough competition and lower profit margins.

Dependence on Government Projects

A large portion of the companys work comes from government contracts. Any delays or policy changes can affect project timelines and payments.

Fluctuating Raw Material Costs

The cost of construction materials like steel and cement can change suddenly, increasing project expenses.

Regulatory Challenges

Strict government regulations, especially in environmental and safety areas, can slow down project execution or lead to additional costs.

International Risks

Since the company works globally, issues like political instability, currency changes, or new regulations in foreign countries can impact overseas projects.

Manpower Challenges

The company relies on a large workforce and any shortage of skilled workers or labour disputes can slow down projects.

Safety and Compliance Issues

Working with heavy machinery and complex projects involves safety risks. Any accidents or non-compliance can lead to legal issues and damage the companys reputation.

Financial Review Key Financial Ratios

Particulars	FY 2025	FY 2024	Change
Debtors turnover (days)	102	90	13.35%
Inventory turnover (days)	14	11	25.56%
Interest coverage ratio	5.98	5.11	16.97%
Current ratio	1.80	2.04	(11.61%)
EBITDA / Turnover (%)	12.29%	12.37%	(0.62%)
Debt equity ratio	0.33	0.21	57.11%
Return on equity (%)	16.26%	14.22%	14.33%
Return on capital employed (%)	23.10%	23.93%	(3.48%)
Book value per share (C)	683.17	581.5	17.48%
Earnings per share (C)	103.26	81.07	27.37%

Risks and Concerns

Human Resource

Power Mech Projects Limited is resolute on building a positive, fair and growth-oriented workplace through its HR initiatives. The Company aims to recruit individuals that are aligned with the Companys vision and values. Further, the Company ensures smooth on-boarding along with continuous learning and development opportunities. It encourages high performance, quality work and customer satisfaction while offering competitive salaries and employee benefits to support overall well-being. A strong emphasis is placed on open communication, team activities and workplace diversity with a notable presence of women workforce. The initiatives are designed in such a way that these make the employees remain engaged through training sessions. The Companys performance management system is very efficient and provides regular feedback and clear goals, helping employees grow and feel valued in their roles.

Company also has initiated extensive training programs at all levels and number of such programs have been imparted at various levels and the most important of this capability and leadership enhancement is targeted leadership training being imparted to the middle and senior management levels to update the needs of capacity building and leadership building to meet the demanding needs of new tasks and increased business challenges in undertaking more diversified opportunities in various segments of Business.

In the year 24-25 major training programs were undertaken in about 15 project sites in imparting Team work and Work culture involving about 600 participants. These programs can further advance the work culture and team working approach which is very important for project execution.

10,445

Total Employees

Internal Control System

Power Mech Projects Limited has a strong system of internal controls in place to ensure the safety and proper use of its assets. This system also ensures that all financial transactions are approved, recorded and reported correctly. A key focus is on accurate financial reporting and reducing the risk of fraud.

The Internal Controls and Criteria Team sets clear procedures and approval rules, with checks in place from the beginning of any task and throughout the process to track important changes. They also review whether key processes have enough controls built into their design.

Additionally, independent internal auditors regularly review the Companys operations and procedures, as per SEBI guidelines. The statutory auditors have also reviewed the financial statements, including internal controls over financial reporting, in line with Section 143 of the Companies Act, 2013. Their findings are included in the audit report attached to the financial statements.

Cautionary Statement

In accordance with relevant securities laws and regulations, comments in the Management Discussion and Analysis that describe the Companys goals, plans, estimates, or expectations may be deemed to be forward-looking statements. Actual outcomes could significantly vary from those that were stated or indicated.

Economic conditions affecting supply and demand, price conditions in domestic and international markets where the Company operates, competitive pressures in these markets, changes in governmental regulations, tax laws and other statutes, as well as incidental factors, are significant variables that could have an impact on results.