Interview with South West Pinnacle Exploration Ltd

Interview with South West Pinnacle Exploration Ltd

Indian Market
by 5paisa Research Team Last Updated: 2022-11-17T10:31:33+05:30

In conversation with Piyush Jain, Joint Managing Director, South West Pinnacle Exploration Ltd.

Can you tell us about the business activities of South West Pinnacle Exploration? What are the company's mission and vision?

South West Pinnacle Exploration Limited (SWPE) is a 360-degree integrated service provider, providing end-to-end exploration, drilling, and allied services. The services include Exploration of Coal & minerals, Unconventional Oil & Gas (CBM, Shale, and Geothermal) exploration & Production, Aquifer Mapping, 2D & 3D Seismic Data Acquisition, Mining & Processing, Passive Seismic Tomography, and providing all kinds of Geological & Geophysical services, Geo-Thermal project, Underground core Drilling for Copper and Gold Exploration, etc. The company has a joint venture in Oman through which it is currently providing long-term mining services in Oman. Besides, SWPE has recently been allocated a coal block in the state of Jharkhand. 

Since its inception, the company has completed more than 110 projects. In addition, the company has served prominent Government and private organizations like Reliance Industries Limited, Tata Steels Ltd., ONGC Energy Centre Trust, Oil India Ltd, HINDALCO Industries Ltd., Hindustan Zinc Ltd., Arcelor Mittal Group, Ultratech Cement Ltd., JSW Steels Ltd., Hindustan Copper Ltd, Geological Survey of India, CMPDI (a 100% subsidiary of Coal India), Atomic Mineral Directorate for Exploration and Research(AMD), Central Ground Water Board (CGWB), Vedanta Ltd. NMDC Ltd. and MECL etc. to name a few. Being One of India's fastest-growing private exploration services firms in the field of mineral & unconventional energy resources, the company is listed on NSE, and has a market capitalisation of Rs. 37,849 lac.

The company’s Vision statement reads as: “MINING OUR DREAM & EXPLORATION AN OPPORTUNITY, WE ARE MAKING BOTH OF THEM A REALITY”.

SWPE started as an exploration company with one or two domains initially and gradually added on more and domains including 2D/ 3D seismic Data Acquisition and has now become a full-fledged exploration company coving around ten domains which is a rare phenomenon in India.

Having completed the journey in drilling and exploration, SWPE recently entered into commercial coal mining by winning a coal block in the state of Jharkhand by participating in a forward auction conducted by the Ministry of Coal, Government of India.

After successfully competing for 110 projects in drilling and exploration, imparting Copper Mining services in Oman and owning a Coal Block for commercial mining we now are a full-fledged natural resources exploration and mining company in line with its vision and mission.

What is your outlook on the Indian energy and mining industry? What are the opportunities you are focusing on? 

The demand for drilling services plays a crucial role in the mining industry. An increase in the demand for mining activities across various regions could positively impact the market. The years of pandemic proved to be a remarkable year for the mining & drilling industry. Despite disrupting other businesses, the Mining industry continued to flourish due to a rapid increase in the iron-steel demand in the post-cooperative shutdown period, which propelled the need for mining drilling services. The new expansions and projects took place in the industry leading to the increased market share of the overall mining & drilling industry.

The global mining market is being driven by various factors. Significant growth is expected to be witnessed by the industry across the globe, along with an increase in off-shore and on-shore oil exploration activities, which has been boosting the market. Factors such as the implementation of favourable government policies are anticipated to drive the market toward growth. Additionally, numerous investments to explore & produce more metals and minerals to satisfy the growing needs of metals are projected as one of the leading factors, in propelling the growth of the market size of the Mining industry. Not just that, but also the continuous Launch of new products for sustainable mining process, have proved to be the driving force for the growth.

The outlook for the sector has also shifted due to a significant upheaval in the Indian electricity sector. According to India Ratings and Research (Ind-Ra), the overall plant load factor (PLF) of thermal power plants would continue to rise and go closer to 60% in FY23, maintaining its neutral view for the power industry for that year. This is due to the ongoing rise in power consumption and persistent reliance on coal-based generation, as well as the lack of a significant expansion of capacity in any other sector besides renewable energy.

The Government has taken various initiatives to enhance the energy resources domestically to give a boost to ‘Atmanirbhar Bharat’ and also to save precious FX outgo. Open Acreage Licensing Policy (OALP) under the National Seismic Programme announced by the Government of India is primarily aimed at reducing the dependence on Oil and Gas imports by 10% over some time. 

Currently, what are your top three strategic objectives?

As one of the fastest-growing private exploration services companies, we will continue focusing on exploration and services and adding new domains of exploration clients. Currently, our focus is on our new projects in Oman and Saudi Arabia to tap the unexplored mineral resources in mineral-rich regions. The development of existing coal block in Jharkhand as quickly as possible and also to participate in other non-coal mineral auctions of the Government of India.

Jharkhand is one of India’s richest mineral zones, superabundant with mineral resources such as coal. Once operational, the coal block will aid the economic development of the region and will create multiple employment opportunities in Jharkhand.

What is your earnings outlook for the next few quarters?

The company has been expanding steadily and has been recording annual top and bottom line growth of about 15%. The company recorded revenue of Rs 120.65 crore and PAT of Rs 12.16 crore for FY 2021–22 on a standalone basis. The Q1 results for 2022–23 showed an 8% increase in sales and a 10% increase in PAT, which was in line with our projections.

We expect growth and expansion in our core exploration service business at 20% P.A. over the near to medium term. Our revenues are expected to be Rs 700 – Rs 800 crore from FY25-FY27 with the coal block acquisition. Our growth in Exploration, Infrastructure & Allied Services along with the coal block acquisition and recent operations will add to the overall growth of the company year on year.

The company's order book currently stands at Rs 245 crore, which is sufficient to provide the top line of 2022–23 with the needed boost. We anticipate a 20% increase in our top line and a comparable increase in the bottom line. It should be noted that we recently took part in a substantial number of bids and anticipate winning a few of them, which will boost our order and book and improve our year-end financial forecast.


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