Face to face series with the management of South West Pinnacle Exploration Ltd

Summary

In this episode of Face to Face series, Avinash Gorakshekar interviews Vikas Jain, founder of Southwest Pinnacle Exploration Limited, discussing the company's journey, business model, and growth prospects. They cover the company's ventures in exploration services, mining, and the potential impact of global events on the coal sector. Jain emphasizes the strategic importance of mining for energy security and the company's focus on sustainable growth, highlighting the opportunities in the exploration and mining sectors in India.

Takeaways

• 😀 Avinash Gorakshekar hosts the Face to Face series, interviewing emerging corporates and promising companies to understand their business models and growth prospects.
• 👋 Mr. Vikas Jain, Founder Chairman and Managing Director of Southwest Pinnacle Exploration Limited, shares his company's journey and insights on the business in the interview.
• 📈 Southwest Pinnacle Exploration Limited started in 2006 with a drilling contract for Rio Tinto and has since diversified into various domains including CBM exploration, 2D/3D seismic, and mining services.
• 💼 The company's business model is divided into three main segments: exploration and allied services, the Middle East Oman business, and coal mining, with a focus on quality services and repeat orders from clients.
• 🌟 Government initiatives in India are driving growth in the exploration and mining sector, with an emphasis on import substitution and increasing domestic production of minerals.
• 🔍 Southwest Pinnacle Exploration Limited has a strong presence in the exploration industry, providing services to major Indian mining and oil and gas companies, and has received repeat orders from its clients.
• 📊 The company has an order book of around 200 crores, with a mix of contracts from the mineral exploration sector and oil and gas sector, indicating a robust pipeline of business opportunities.
• 🚧 The company is capital intensive, requiring significant investment in equipment and rigs, but this also serves as a barrier to entry for new competitors.
• 🌐 The impact of COVID-19 was managed by securing permissions for operations as an essential service and adapting business practices, leading to cost savings and maintaining operations.
• 💪 Employee motivation at Southwest Pinnacle Exploration Limited is achieved through a family-like culture, providing financial benefits, love, and respect, ensuring a strong and united team.
• 🔑 The company's future strategy includes consolidating existing operations and then expanding, with an emphasis on becoming a significant player in the mining sector over the next 10 years.

Q & A

What is the primary focus of Southwest Pinnacle Exploration Limited?

Southwest Pinnacle Exploration Limited primarily focuses on exploration and allied services, including drilling, CBM exploration, 2D and 3D seismic for oil and gas, coal, and geothermal, as well as mining services.

How did the company start its business journey?

The company started its journey in 2006 with a contract for drilling in kimberlite for Rio Tinto, a global mining giant, in the Panna region near Damu in Madhya Pradesh.

What is the business model of Southwest Pinnacle Exploration Limited?

The business model is divided into three parts: exploration and allied services, Middle East Oman business, and coal business. They provide services to major mining and oil and gas companies in India and have a long-term mining service contract in Oman.

How does the company view the future of the exploration and mining sector in India?

The company sees a huge upside in the exploration and mining sector due to the government's focus on import substitution, increasing GDP, and providing employment, which will drive the demand for exploration and mining services.

What is the current status of Southwest Pinnacle Exploration Limited's coal mining business?

The company has been allotted a coal block and is in the process of development and obtaining clearances from the local government. They expect to start production in the financial year 2024-25.

How does the company manage the seasonality aspect of its business?

The company experiences seasonality, particularly during the rainy season which affects operations in the eastern part of India. They manage this by planning the deployment of rigs accordingly and participating in tenders that align with their availability.

What is the company's strategy for capital investments in new equipment?

The company takes a calculated risk based on the mobilization time given by clients and the construction time of the equipment. They may invest before getting the L1 status in tenders if the equipment is also deployable in other contracts.

How does Southwest Pinnacle Exploration Limited ensure the motivation and retention of its employees?

The company focuses on providing good financial benefits and treating employees like family, ensuring a supportive work environment where everyone works as a team towards the company's success.

What are the future growth prospects for Southwest Pinnacle Exploration Limited?

The company expects growth to come from mining, with the coal mining business expected to contribute significantly to revenue in the next 3 to 5 years. They also aim to expand into new mining blocks beyond coal.

How does the company address the challenges posed by the COVID-19 pandemic?

Southwest Pinnacle Exploration Limited managed to resume operations by mid-May 2020 by obtaining permissions from local authorities. They also reduced costs by minimizing travel and conducting business online.

What message does the company have for its shareholders regarding long-term prospects?

The company encourages shareholders to have faith in its growth strategy, assuring them that their investments are safe and that the company has a strong future across all three segments of its business.