27-05-2025
From roads to mining: How an engineering company has quietly built a coal empire
Dilip Buildcon Ltd, India's eighth-largest engineering, procurement and construction (EPC) company, now gets more than a fourth of its total business and about a third of its profits from coal mining. The development has helped the company offset a slowdown in the roadway construction business.
At the end of financial year 2025, the Bhopal-based company recorded ₹3,626 crore from mining projects in its ₹14,923-crore order book. This marks a significant jump from its 5% share in the FY24 order book. Of the ₹840-crore net profit in FY25, ₹265 crore came from coal mining projects.
The proceeds from mining became crucial as three other segments of the company witnessed a slowdown in the previous financial year, which includes roads and highways, irrigation and water supply projects.
To be sure, its total order book has declined from ₹25,395 crore in FY23. In the current financial year as well, it anticipates a decline in revenue at a standalone level as execution of new orders in core sectors will take some time, said Rohan Suryavanshi, head of strategy and planning at Dilip Buildcon during the May 9 earnings call post Q4 results.
At the same time, analysts expect mining's share in its overall business to increase amid a slowdown in its key segments like road, highways and irrigation.
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The company declined to comment on the matter when contacted by Mint.
'The Siarmal Coal Mine's ramp-up is leading to increasing the performance of the coal business of the company," Parikshit Kandpal, vice president of institutional research at HDFC Securities, said. 'The segment has also worked in boosting profitability."
A planned increase of capacity to produce more than 50 million metric tonnes of coal annually at the Siarmal mine will make it one of the world's largest by 2029.
In the coal mining segment, the company executes mining developer-cum operator (MDO) projects. Such projects allow a company to control all aspects of developing and operating a mine. Adani Enterprises is the largest player in the coal MDO market of the country, with a capacity of 63 MMTA as of 31 March 2025.
But in the listed EPC space, there are very few who pick up such projects. Dilip Buildcon and Hyderabad-based NCC Ltd are among the few players who have diversified into the space.
Dilip Buildcon was founded in 1987 by Dilip Suryavanshi, the current chairman and managing director of the company. The promoters hold about 70% of its shares. The company's market capitalization at the end of 23 May stood at ₹7,000 crore.
How Dilip Buildcon got into mining
The firm won its first mining contract in 2018 when a consortium led by it bagged the ₹32,156-crore Pachhwara Central Coal Block project in Jharkhand for 55 years. The peak capacity of the plant was 7 million tonnes per annum.
But its bigger win came in the form of the Siarmal coal mine in Odisha in 2021, which was awarded by Mahanadi Coalfield Ltd. a subsidiary of Coal India Ltd, for 25 years. The peak capacity of the coal mine is 50 million metric tonnes annually (MMTA).
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Currently, the firm is in the process of ramping up the capacity of the plant to reach the peak capacity of 50 MMTA, with the capacity at 18.53 MMTA at the end of 31 March 2025. Dilip Buildcon's target is to achieve peak capacity by FY29, and then operate it until FY48 when the contract expires.
When the mine reaches its peak capacity, it will be the fourth largest coal mine in the world in terms of annual production capacity, putting it ahead of Shaanxi Mine located in China.
'Once the mine reaches its peak capacity, its revenue will stabilize till the end of the contract," Kandpal added.
This increase in capacity will be key as the company is coming to terms with the slowdown in the infrastructure sector, leading to less order inflow in roads and highways segment.
At the company's Q4 earnings call, Rohan Suryavanshi said the slowdown in road development had surprised both the company as well as the industry, which had expected stronger demand after an election year. 'However, for reasons unknown to us, it hasn't panned out in the way that the industry had expected," he said.
The company is looking to offset the slowdown in its core EPC businesses with a ramp up in the coal segment.
'So, even in the face of a lot of headwinds on the EPC front, the steps that we have taken in the past along the coal and the road asset business, both of them will keep us in good stead going forward and provide company with predictable cash flows," Suryavanshi said.
But as Kandpal indicated, the revenue from the current coal projects will stabilize when the mines reach their peak capacity, limiting the prospects for growth.
With an eye on the future, Dilip Buildcon has entered the market to pick up more coal mining opportunities in its bid to build on the success of the Siarmal and Pachhwara coal mines.
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'Now that we are on track with both these mines with one being at peak capacity, another one ramping up very swiftly, we are looking at other opportunities," Suryavanshi told analysts.
In 2025, Dilip Buildcon's share price has increased by 5% compared to a 6.42% rise in Nifty Infra index.
