Power Mech Projects Secures ₹109 Crore Deal for Hindustan Zinc Power Plant Operations

Power Mech Projects Limited (PMPL) has announced a new contract win worth ₹109.22 crore (excluding GST) from Hindustan Zinc Limited.

The agreement covers the comprehensive operations and maintenance for a 91.5 MW captive power plant and its associated transmission line over a 48-month period. This award is set to expand PMPL's base of recurring revenue from power infrastructure operations and maintenance.

New Contract Details

Power Mech Projects Limited disclosed the contract award from Hindustan Zinc Limited, valued at ₹109.22 crore before Goods and Services Tax (GST).

The scope of work involves managing the operations and maintenance of a 91.5 MW captive power plant (CPP) and its transmission lines.

The contract duration is set at 48 months, beginning April 1, 2026.

PMPL will operate as an independent contractor, overseeing these power assets for Hindustan Zinc.

Why This Matters

This contract highlights PMPL's expertise in operating and maintaining power generation facilities. It also strengthens the company's relationship with Hindustan Zinc, a client that has previously engaged PMPL for similar services.

Operations and maintenance contracts typically provide a more stable and predictable revenue stream compared to project-based EPC (Engineering, Procurement, and Construction) work, thus contributing to PMPL's business diversification.

Securing such contracts improves visibility into the company's future workload and demonstrates its capability to manage large-scale power infrastructure reliably.

Company Background and Partnership

Power Mech Projects, established in 1999, is a significant player in India's infrastructure and power sectors, offering services including EPC, civil works, and operations and maintenance (O&M). The O&M division is a substantial part of its business, accounting for about 33% of its revenue in FY25.

Hindustan Zinc, a leading zinc and lead producer, relies on its captive power plants to ensure continuous operations and manage costs effectively. In September 2023, Power Mech Projects secured a ₹229.20 crore O&M contract from Hindustan Zinc for a 2x91.2 MW CPP in Dariba, Rajasthan, lasting six years. This new contract for a 91.5 MW plant builds upon that existing partnership.

PMPL's broader strategy includes expanding into areas like Mining Development and Operation (MDO) and enhancing its EPC capabilities across various infrastructure projects to build a strong order book.

Key Impacts

• Expanded O&M Portfolio: The new contract adds to PMPL's existing operations and maintenance services, reinforcing its market position.
• Client Relationship: It deepens the business ties with Hindustan Zinc, opening possibilities for future collaborations.
• Revenue Predictability: The 48-month term ensures a steady income for the medium term.
• Operational Focus: The company will concentrate on the efficient management of the 91.5 MW CPP and its transmission infrastructure.

Potential Risks

In July 2022, the Income Tax Department conducted searches at PMPL's premises over allegations of inflated deductions and suppressed expenses. Separately, in February 2025, the company faced GST penalty orders totaling over ₹4.7 crore related to input tax credit disputes. While these are historical issues, investors continue to monitor the company's compliance and governance standards.

Competitive Landscape

Power Mech Projects operates in a competitive environment alongside major companies such as Larsen & Toubro, BHEL, and Engineers India Ltd. While Larsen & Toubro has a larger market capitalization and more diverse operations, PMPL maintains a niche with its strong focus on power plant EPC and O&M. BHEL, primarily an equipment manufacturer, also offers EPC and O&M services, while Engineers India provides extensive engineering consultancy.

PMPL's specialization in O&M, especially with repeat clients like Hindustan Zinc, serves as a key differentiator. Hindustan Zinc aims for cost optimization and operational excellence through its captive power plants, balancing thermal power generation with increasing renewable energy integration.

Performance Metrics

• Power Mech Projects reported a revenue of ₹5,279.3 crore for FY25, marking a 24.7% increase year-on-year.
• The company's operations and maintenance segment contributed approximately 33% to its total revenue in FY25.

Looking Ahead

• Confirmation of order acknowledgment and commencement of operations by PMPL.
• Monitoring the performance and successful execution of the 48-month O&M contract.
• Tracking future order wins in the operations and maintenance segment, particularly from large industrial clients.
• PMPL's overall order book expansion and revenue growth in the coming quarters.
• Analysis of the company's financial performance and margin trends within the O&M sector.