Press Release

Thriveni Earthmovers Private Limited

January 09, 2023

Ratings
Facilities/Instruments Amount (₹ crore) Rating1 Rating Action
CARE A-; Stable Revised from CARE BBB+;
649.11
Long-term bank facilities (Single A Minus; Positive (Triple B Plus;
(Enhanced from 602.56)
Outlook: Stable) Outlook: Positive)
504.50 CARE A2+ Revised from CARE A2
Short-term bank facilities
(Reduced from 630.00) (A Two Plus) (A Two)
1,153.61
(₹One thousand one hundred
Total bank facilities
fifty-three crore and sixty-
one lakhs only)
CARE A-; Stable
Non-convertible debentures 230.00 (Single A Minus; Assigned
Outlook: Stable)
CARE A-; Stable Revised from CARE BBB+;
240.00
Non-convertible debentures (Single A Minus; Positive (Triple B Plus;
(Reduced from 300.00)
Outlook: Stable) Outlook: Positive)
470.00
Total long-term
(₹Four hundred seventy crore
instruments
only)
Details of instruments/facilities in Annexure-1.

Detailed rationale and key rating drivers

The revision in the ratings assigned to the bank facilities/instruments of Thriveni Earthmovers Private Limited (TEPL)
factors in the increasing consolidated scale of operations with diversified revenue streams and healthy revenue visibility
going forward. The ratings also factor in the improvement in consolidated operating profitability in FY22 (refers to the
period April 1 to March 31) which is expected to improve further in the medium term with higher profitability expected
from its mine developer and operator (MDO) contracts, increasing contribution of higher margin equipment rental
income in total operating income (TOI) and healthy returns expected from its investments in associate entities,
especially from Lloyds Metals and Energy Ltd (LMEL). The ratings also take note of the improvement in profitability of
subsidiary Thriveni Sainik Mining Private Limited (TSMPL) in the current financial year after incurring losses in FY21 and
FY22 in its coal mining contract.
The ratings take note of the moderation in consolidated profitability from the iron-ore pellets business in FY23 of
subsidiary Brahmani River Pellets Limited (BRPL) on account of the imposition of export duty on pellets in May 2022
which impacted the viability of pellet export sales. However, the removal of duty in November 2022 is expected to result
in improvement in profitability in the medium term, though the global demand outlook remains subdued in the near
term. Nevertheless, the generation of healthy profitability from the other business segments is expected to negate the
impact of the decline in pellets profitability.
The ratings also factor in the moderate capital structure of TEPL on a consolidated basis despite high capital intensity
of operations. While the debt level is expected to increase in FY23 to fund the investment in associates/purchase of
equipment and funding the increased working capital requirement, the overall gearing is expected to remain stable.
The debt coverage indicators remain adequate and are expected to improve further.
Furthermore, the ratings continue to derive strength from TEPL’s long track record of operations and established position
as a MDO and differentiated acquisition and rebuild model of large fleet of owned heavy equipment that reduces capital
intensity of mining services business significantly.
The ratings remain constrained by the capital-intensive nature of business, perceived regulatory risk in the mining
industry, emerging competition in mining services industry and dependence on the cyclical iron and steel sector.

1
Complete definition of the ratings assigned are available at www.careedge.in and other CARE Ratings Ltd.’s publications

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Rating sensitivities
Positive Factors - Factors that could lead to positive rating action/upgrade:
• Healthy growth in consolidated TOI and profitability as envisaged from the various revenue streams with ROCE
improving to above 18% on a sustained basis
• Improvement in consolidated overall gearing at less than 0.50x and improvement in debt coverage indicators (Total
Debt/PBILDT < 1.5x and interest coverage > 5x) on a sustained basis

Negative Factors- Factors that could lead to negative rating action/downgrade:

• Significant decline in consolidated TOI or profitability (PBILDT margin < 8%) on a sustained basis
• Deterioration in consolidated capital structure (overall gearing > unity) and debt coverage indicators (Total
Debt/PBILDT > 3x and interest coverage < 2.5x) on a sustained basis
• Any significant debt laden capex/acquisition which is likely to result in significant deterioration of debt protection
metrics.

Detailed description of the key rating drivers

Key rating strengths
Long and established track record of operations as MDO: The promoters of TEPL, Mr. P. Balasubramaniam (Ex-
chairman), Mr. B. Prabhakaran (MD) and Mr. B. Karthikeyan (ED), started as MDO for limestone in 1991 and over the
years TEPL has grown to be one of the dominant players in iron ore mining in the country. It has also built presence in
open cast coal mining through its subsidiary viz. TSMPL.

Diversified revenue streams: Apart from the MDO business under TEPL and TSMPL, TEPL derives rental income from
leasing out of mining and construction equipment in Indonesia. It also holds 49% stake in BRPL through its subsidiary
Thriveni Pellets Private Limited (TPPL) and has management control of the entity. BRPL operates a 4.7 Million ton per
annum (TPA) iron-ore beneficiation plant in Barbil, Odisha, 4 Million TPA pellet plant in Jajpur, Kalinganagar and has a
230 km underground slurry pipeline connecting the beneficiation plant to the pellet plant resulting in substantial savings
in transportation cost. It has significant share in the export of pellets from India. Since February 2020, BRPL books a
fixed margin of ₹350 per MT over cost of production for sale to pellets to its shareholders. TPPL which holds 49% in
BRPL books a fixed margin of ₹100 per MT before selling it to TEPL which ultimately sells it in the market.
TEPL also holds 22.49% stake in LMEL directly and 14.83% stake through Sky United LLP in which it has 76% stake.
TEPL has made a total investment of about ₹420 crore for acquisition of the above stake in LMEL. LMEL produces sponge
iron and has captive iron ore mines with environmental clearance (EC) for production of 3 million MTPA with total
deposits of more than 91 million ton in the Maharashtra belt for which TEPL has the MDO contract. The EC for the mine
is in advanced stages of being increased to 10 million MTPA and TEPL expects to achieve healthy PBILDT from LMEL
MDO operations and its investment in LMEL.
TEPL also owns commercial lease of aggregate quarry situated at Hosur, Tamil Nadu which is used for manufacturing
sand (as opposed to river sand) which is environment friendly. This apart, TEPL has controlling interest in a coal mine
in Indonesia through its step-down subsidiary, PT Minemax Indonesia (PTM). TEPL has also entered into strategic
partnership in 2019 with some of the largest coal mine owners in Indonesia to grow its business significantly in the
future.

Healthy order-book position and strong revenue visibility through cash flows from key subsidiaries and
associates: As on September 30, 2022, TEPL has several operational MDO contracts with environmental clearance of
around 36.57 million MTPA which provides revenue visibility for the medium-term. Apart from this, the company has
bid for a new contract with EC of 24.4 million MTPA which is in advanced stage of allocation while the LMEL mine EC is
expected to increase to 10 million MTPA from the current 3 million MTPA. TEPL also has revenue visibility through rental
income from its Indonesian operations, cash flows expected from pellet sales pertaining to BRPL and other MDO
contracts (barytes, coal etc). Furthermore, the company has an order in Laserda Pacheri which is located in Bonai-
Kendujhar Belt of Kendujhar district in Odisha. The company found manganese ore having 2.3 million tonnes of reserve,
iron ore having 1.2 million tonnes of reserve and dolomite having 14.58 million tonnes of reserve during its prospecting
activities in the mine. The mining activities are expected to provide healthy revenues from FY24 onwards.

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Thriveni Group has also formed a strategic alliance with Darm Henwa (DH) Group of Indonesia, one of the largest
mining contractors in Indonesia, in December 2019 wherein TEPL will manage the operations for DH and will also deploy
its mining equipment through a step-down subsidiary in Indonesia, PT Mandiangin Batubara (PT MBB) and in return
will earn lease rentals. TEPL has dispatched the mining equipment at the respective sites. The rental flow has already
started, and the company expects to book long-term high margin income from the same.

Improvement in operating performance in FY22 with further improvement expected going forward: The
consolidated TOI of TEPL improved by 13% y-o-y in FY22 to ₹7,571 crore vis-à-vis ₹6,715 crore in FY21. The
improvement in the revenue was on back of increase in revenue from mining activities along with rental income from
Indonesia and TSMPL. The increase in revenue was also contributed by increase in pellet sales during FY22.
The profitability also improved in FY22 on the back of increase in income from mining activities and rental business
which are high margin businesses. The pellet sales continued to contribute significantly to consolidated sales. However,
the gross margin from pellet sales was lower in FY22 due to the market volatility.
In H1FY23, TEPL’s standalone sales stood at around ₹1420 crore with marginal moderation witnessed due to lower
volume of pellet sales. Going forward in FY23, the TOI and the profitability are expected to improve further backed
strong revenue visibility over next couple of years from mining activities, rental income, pellet sales, etc.

Stable capital structure despite increase in debt, expected to improve in the medium term: Although the
total debt of TEPL continued to increase y-o-y in FY22 and 8MFY23, the capital structure of the company remains
moderate and stable with overall gearing at 0.60x as on March 31, 2022 (0.63x as on March 31, 2021). The company
during March 2022, converted unsecured loans of ₹331 crore to equity which strengthened its networth hereby keeping
the overall gearing stable despite the increase in the total debt.
The coverage ratios also remained stable with total debt/PBILDT of 2.78x (FY21: 3.16x) and interest coverage of 2.91x
in FY22 (2.82x in FY21).,
Debt level including unsecured loans, has increased significantly in the current year for purchasing equipment,
investment in LMEL and for meeting working capital requirement. However, debt coverage indicators are expected to
remain adequate with healthy generation of cash accruals from the various investments and no major debt planned to
be availed in the near term.

Differentiated heavy mining equipment acquisition and rebuild model: The company possesses more than
1600 heavy equipment, including some of the largest class of equipment available globally such as 240-280 Ton dumpers,
35-42 CuM Excavators/Loaders, and other supporting equipment etc. TEPL purchases many of these second-hand
equipment at the end of their life in their respective markets at a fraction of the original cost and rebuilds/refurbishes
them in its state of the art rebuild centre at Jamshedpur for which it has developed an extensive local and international
supply chain. This approach to equipment acquisition and rebuild/life extension has enabled the company to reduce
capital intensity in the MDO business. Through this approach the company is able to meet majority of its heavy equipment
requirement in-house with significant spare capacity and the remaining (mostly smaller sized equipment) is hired on
contractual basis.

Reputed Clientele: TEPL has bagged iron ore MDO contracts from the new lessees in the mining auctions concluded
in Odisha, from some of the most established names in the iron and steel sector. It also has established public sector
undertakings in its client base. In its iron ore pellet business, the company has presence both in the export and domestic
market.

Key rating weaknesses

Capital intensive nature of business: TEPL’s MDO operation is capital intensive in nature as it has to continuously
incur capex for procuring heavy earthmoving and other mining equipment. Further, the company’s MDO operation is
working capital intensive in nature due to requirement of maintenance of adequate stock of critical stores & spares for
its heavy equipment, many of which have a long lead procurement cycle and provide credit period of around two months
to its customers.

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However, TEPL reduces its capex requirement, to large extent, through its strategy of procuring large mining equipment
from around the world at the end of their life in their respective markets and rebuilding them at its facility at Jamshedpur.
TEPL has also built an extensive local and international supply chain away from OEMs which has enabled to reduce cost
of maintenance and inventory holding.

Regulatory risk in the mining industry: TEPL generates significant revenue from its mining service operations. The
Indian mining industry is highly regulated by the Government of India; therefore, TEPL’s MDO business is indirectly
exposed to the risk attached to changes in government policy affecting the rights of lessees. However, this risk
associated with the mining industry has been mitigated to a large extent after amendment in the Mines and Minerals
(Development and Regulation) Act, 1957 in 2015 which has mandated that all the mining leases shall be granted
through auction by competitive bidding, including e-auction as opposed to first come first serve principles which existed
prior to the said amendment.

Emerging competition in mining services industry: The profitability margins from the new MDO contracts, bagged
by TEPL from the new lessees post conclusion of mining auction in Odisha, is reduced on account of lower mining rates
in comparison to the earlier contracts. Decline in mining rates is largely on account of competitive bidding invited by
the new lessees for award of contracts owing to the amended revenue sharing arrangement with the government.
Nevertheless, lower profitability margin is expected to be compensated, to some extent, through higher mining volumes
and optimal utilization of overhead resulting in stable profitability in the long run.

Dependence on iron and steel sector: Majority of the company’s revenue currently is derived from iron ore mining
and pellet business and the prospects of the company are dependent upon the iron and steel industry which is cyclical
in nature. However, this risk is somewhat mitigated as it has diversified into other minerals such as coal, barytes etc.
Further, as the company’s iron ore mining is largely concentrated in Odisha (and nearby Jharkhand) which are home
to majority of high-grade iron ore deposit in the country, any down-turn in steel industry leading to low demand is less
likely to impact iron ore producers in Odisha/Jharkhand. The company remains exposed to cyclicality of the steel industry
in its pellet business as well.

Liquidity: Adequate
TEPL’s cash accruals are expected to be adequate to meet its term debt and unsecured debt repayment obligations in
FY23. Average utilisation of its fund-based limits over the past 12 months ended November 2022 stood at around 90%.
The company does not have any major capex plans over the medium term. Its current ratio stood moderate at 1.10
times as on March 31, 2022, which is expected to improve going forward.

Analytical approach: Consolidated approach considering the significant exposure of TEPL in its group entities
along with presence of synergies in the operations between the group entities. Further, TEPL has provided corporate
guarantee for debt availed by TSMPL. The list of entities consolidated with TEPL are placed at Annexure-6.

Applicable criteria
Policy on default recognition
Consolidation
Financial Ratios – Non financial Sector
Liquidity Analysis of Non-financial sector entities
Rating Outlook and Credit Watch
Short Term Instruments
Manufacturing Companies
Service Sector Companies
Wholesale Trading

About the company

TEPL was initially promoted by Sri P. Balasubramaniam as a partnership firm in 1991 which was later converted into
private limited company in 1999. It is engaged in MDO contract services of various minerals (i.e. iron ore, copper, coal,

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bauxite, barite ore, etc) for private mine lease owners. TEPL is one of the largest MDO of iron-ore in India and has
diversified business interests.
Consolidated Brief Financials (₹ crore) FY21 (A) FY22 (A) Q1FY23 (UA)*
Total operating income 6,715 7,571 890
PBILDT 553 721 114
PAT -16 200 8
Overall gearing (times) 0.63 0.60 0.87
Interest coverage (times) 2.82 2.91 2.71
A: Audited; UA: Unaudited; Financials are reclassified as per CARE Ratings’ standards
*standalone of TEPL

Status of non-cooperation with previous CRA: Not Applicable

Any other information: Not Applicable

Rating history for the last three years: Please refer Annexure-2

Covenants of the rated instruments/facilities: Detailed explanation of covenants of the rated instruments/facilities
is given in Annexure-3

Complexity level of various instruments rated for this company: Annexure-4

Bank lender details of the company: Annexure-5

Annexure-1: Details of instruments/facilities

Date of
Maturity Size of Rating Assigned
Name of the Issuance Coupon
ISIN Date (DD- the Issue along with
Instrument (DD-MM- Rate (%)
MM-YYYY) (₹ crore) Rating Outlook
YYYY)
Fund-based - LT-
- - - 395.50 CARE A-; Stable
Cash Credit
Non-fund-based -
- - - 504.50 CARE A2+
ST-BG/LC
Term Loan-Long
- - 31/10/2027 253.61 CARE A-; Stable
Term
Debentures-Non
Convertible INE380L07020 07/10/2021 07/10/2023 60.00 CARE A-; Stable
Debentures
Debentures-Non
Convertible INE380L07038 07/10/2021 Zero coupon 07/10/2024 75.00 CARE A-; Stable
Debentures with
Debentures-Non redemption
Convertible INE380L07046 07/10/2021 premium 07/01/2026 52.50 CARE A-; Stable
Debentures
Debentures-Non
Convertible INE380L07053 07/10/2021 07/04/2027 52.50 CARE A-; Stable
Debentures
Debentures-Non
Convertible INE380L07061 19/05/2022 21/05/2023 57.50 CARE A-; Stable
Debentures
Debentures-Non
Convertible INE380L07079 19/05/2022 16% 19/05/2024 57.50 CARE A-; Stable
Debentures
Debentures-Non
Convertible INE380L07087 19/05/2022 19/05/2025 57.50 CARE A-; Stable
Debentures

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Date of
Maturity Size of Rating Assigned
Name of the Issuance Coupon
ISIN Date (DD- the Issue along with
Instrument (DD-MM- Rate (%)
MM-YYYY) (₹ crore) Rating Outlook
YYYY)
Debentures-Non
Convertible INE380L07095 19/05/2022 19/05/2026 57.50 CARE A-; Stable
Debentures

Annexure-2: Rating history for the last three years

Current Ratings Rating History
Date(s)
Name of the Date(s) and Date(s) and Date(s) and
Sr. Amount and
Instrument/Bank Rating(s) Rating(s) Rating(s)
No. Type Outstanding Rating Rating(s)
Facilities assigned in assigned in assigned in
(₹ crore) assigned in
2022-2023 2020-2021 2019-2020
2021-2022
1)CARE
BBB+;
Positive 1)CARE BBB+
CARE 1)CARE BBB+; (06-Dec-21) (CW with
Fund-based - LT-
1 LT 395.50 A-; Positive - Developing
Cash Credit
Stable (06-Apr-22) 2)CARE Implications)
BBB+; (11-Feb-20)
Positive
(07-Apr-21)
1)CARE A2 1)CARE A2
(06-Dec-21) (CW with
Non-fund-based - CARE 1)CARE A2
2 ST 504.50 - Developing
ST-BG/LC A2+ (06-Apr-22)
2)CARE A2 Implications)
(07-Apr-21) (11-Feb-20)
1)CARE
BBB+;
Positive 1)CARE BBB+
CARE 1)CARE BBB+; (06-Dec-21) (CW with
Term Loan-Long
3 LT 253.61 A-; Positive - Developing
Term
Stable (06-Apr-22) 2)CARE Implications)
BBB+; (11-Feb-20)
Positive
(07-Apr-21)
Debentures-Non CARE 1)CARE BBB+;
4 Convertible LT 240.00 A-; Positive - - -
Debentures Stable (06-Apr-22)
Debentures-Non CARE
5 Convertible LT 230.00 A-;
Debentures Stable
*Long term/Short term.

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Annexure-3: Detailed explanation of the covenants of the rated instruments

Name of the Instrument Detailed explanation
NCD-1 issue of ₹ 240.00 crore (zero coupon)
A. Key financial covenants
I. Debt service coverage ratio DSCR >= 1.30x
II. Long term debt/ PBILDT (standalone & Long term debt/PBILDT <= 3.50x
consolidated)
B. Key non-financial covenants
I. Standard reporting and negative Customary information and reporting covenants
covenants Restrictions on dividend payment beyond 25% of its net profit for the
year without prior consent. The right to pay dividend shall be
automatically suspended in case of EOD (Event of Default).
II. Credit Rating of Issuer Should not be below investment grade
III. Subordination of unsecured loans from All unsecured loans/promoter group loans in TEPL should be
promoters subordinated to the investor facility
IV. Agreements with BRPL Prior consent of investor required for amendment/ termination of
pellet sale agreement, pellet offtake agreement or shareholder’s
agreement
NCD-2 issue of ₹ 230.00 crore (16% coupon)
A. Key financial covenants
I. Debt service coverage ratio DSCR >= 1.30x
II. Long term debt/ PBILDT (standalone & Long term debt/PBILDT (Standalone and consolidated) <= 3.50x
consolidated)
B. Key non-financial covenants
I. Standard reporting and negative Customary information and reporting covenants
covenants Restrictions on dividend payment beyond 25% of its net profit for the
year without prior consent. The right to pay dividend shall be
automatically suspended in case of EOD (Event of Default).
II. Credit Rating of Issuer Should not be below investment grade
III. Subordination of unsecured loans from All unsecured loans/promoter group loans in TEPL should be
promoters subordinated to the investor facility
IV. Agreements with BRPL Prior consent of investor required for amendment/ termination of
pellet sale agreement, pellet offtake agreement or shareholder’s
agreement
V. Agreement with Sky United LLP Prior consent of investor required for amendment/modification in
shareholding agreement with Sky United LLP

Annexure-4: Complexity level of various instruments rated for this company

Sr. No. Name of Instrument Complexity Level
1 Debentures-Non Convertible Debentures Simple
2 Fund-based - LT-Cash Credit Simple
3 Non-fund-based - ST-BG/LC Simple
4 Term Loan-Long Term Simple

Annexure-5: Bank lender details for this company

To view the lender wise details of bank facilities please click here

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Annexure 6: List of entities consolidated as on March 31, 2022

Name of Entity Relationship % Holding
Sumrit Metaliks Private Limited Subsidiary 99.81%
Geovale Services Private Limited Subsidiary 60.00%
Thriveni Sands & Aggregates LLP Subsidiary 90.00%
Thriveni Logistics Services LLP Subsidiary 60.00%
Maa Tarani Logistics Limited Subsidiary 58.31%
Thriveni Apparels & Textiles Private Limited Subsidiary 100.00%
TSMPL Subsidiary 51.00%
Stem Minerals & Resources LLP Subsidiary 70.00%
Thriveni Resomin Pte Ltd (Consolidated) Subsidiary 100.00%
Thriveni International Limited (Consolidated) Subsidiary 100.00%
Thriveni Ramka Mining Private Limited Subsidiary 51.00%
TPPL (Consolidated) Subsidiary 51.00%
KJS Pellets & Power Private Limited Subsidiary 51.00%
STK Energies Private Limited Subsidiary 51.00%
Thriveni Sainik PBNW Private Limited Subsidiary 60.00%
Thriveni Llyods Mining Private Limited Subsidiary 60.00%
Thriveni Minerals Mozambique Limited* Subsidiary 100.00%
Mangampet Barytes Project Subsidiary 65.00%
Geomysore Services India Private Limited Associate 45.84%
LMEL Associate 24.41%
* Thriveni Minerals Mozambique Ltd is under voluntary liquidation

Note on complexity levels of the rated instruments: CARE Ratings has classified instruments rated by it on the
basis of complexity. Investors/market intermediaries/regulators or others are welcome to write to care@careedge.in for
any clarifications.

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Contact us
Media contact
Name: Mradul Mishra
Phone: +91-22-6754 3596
E-mail: mradul.mishra@careedge.in

Analyst contact
Name: Mamta Muklania
Phone: + 91-33-4018 1651
E-mail: mamta.khemka@careedge.in

Relationship contact
Name: Lalit Sikaria
Phone: + 91-033- 40181600
E-mail: lalit.sikaria@careedge.in

About us:
Established in 1993, CARE Ratings is one of the leading credit rating agencies in India. Registered under the Securities
and Exchange Board of India, it has been acknowledged as an External Credit Assessment Institution by the RBI. With
an equitable position in the Indian capital market, CARE Ratings provides a wide array of credit rating services that help
corporates raise capital and enable investors to make informed decisions. With an established track record of rating
companies over almost three decades, CARE Ratings follows a robust and transparent rating process that leverages its
domain and analytical expertise, backed by the methodologies congruent with the international best practices. CARE
Ratings has played a pivotal role in developing bank debt and capital market instruments, including commercial papers,
corporate bonds and debentures, and structured credit.

Disclaimer:
The ratings issued by CARE Ratings are opinions on the likelihood of timely payment of the obligations under the rated instrument and are not
recommendations to sanction, renew, disburse, or recall the concerned bank facilities or to buy, sell, or hold any security. These ratings do not convey
suitability or price for the investor. The agency does not constitute an audit on the rated entity. CARE Ratings has based its ratings/outlook based on
information obtained from reliable and credible sources. CARE Ratings does not, however, guarantee the accuracy, adequacy, or completeness of any
information and is not responsible for any errors or omissions and the results obtained from the use of such information. Most entities whose bank
facilities/instruments are rated by CARE Ratings have paid a credit rating fee, based on the amount and type of bank facilities/instruments. CARE Ratings
or its subsidiaries/associates may also be involved with other commercial transactions with the entity. In case of partnership/proprietary concerns, the
rating/outlook assigned by CARE Ratings is, inter-alia, based on the capital deployed by the partners/proprietors and the current financial strength of the
firm. The ratings/outlook may change in case of withdrawal of capital, or the unsecured loans brought in by the partners/proprietors in addition to the
financial performance and other relevant factors. CARE Ratings is not responsible for any errors and states that it has no financial liability whatsoever to
the users of the ratings of CARE Ratings. The ratings of CARE Ratings do not factor in any rating-related trigger clauses as per the terms of the
facilities/instruments, which may involve acceleration of payments in case of rating downgrades. However, if any such clauses are introduced and
triggered, the ratings may see volatility and sharp downgrades.

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