Lloyds Metals acquiring 79.82% stake inMDO business of TEMPL

 

 

 

Lloyds Metals and Energy Limited (LMEL), which has 10 million tonnes per annum (MTPA) capacity iron ore mine at Surjagarh in Gadchiroli district of Vidarbha, is acquiring a 79.82 per cent stake in the mining development and operation (MDO) business of Thriveni Earthmovers Private Limited (TEMPL). The Board of Directors of LMEL, at a meeting held on December 18, approved a set of ‘strategic measures’ aimed at enhancing operational efficiency and reinforcing leadership position in the industry. The key initiatives include acquisition of MDO business of TEMPL, ensuring raw material security through access to coking coal mines, and investment in renewable energy. An investor presentation submitted to the Bombay Stock Exchange Limited as well as the National Stock Exchange of India Limited, stated that the said strategic initiatives were aimed at enhancing operational efficiency, optimising costs, and solidifying LMEL’s position as one of the ‘lowest cost producers’ in the iron and steel industry. As per the presentation, which ‘The Hitavada’ got access to, LMEL is acquiring 79.82 per cent stake in the MDO business of TEMPL through an investment of Rs 70 crore in Thriveni Earthmovers and Infra Private Limited (TEIL).

 

On completion of the said investment, TEIL shall become a subsidiary of LMEL. Currently, the MDO business of TEMPL is in the process of demerger to TEIL. This is currently awaiting approval from the National Company Law Tribunal, Chennai. Following the demerger, TEIL shall receive the MDO business of TEMPL and shall issue Redeemable Preference Shares (RPS) worth Rs 2,157 crore to the erstwhile shareholders of TEMPL as a consideration for the receipt of the MDO business.

 

These RPS are expected to be redeemed from LMEL’s internal accruals over the next few years. Interestingly, as per the presentation, the LMEL expects to receive several benefits including swift execution at optimised costs for ramping up its mining output from 10 MTPA to 55 MTPA from Surjagarh mine in the next few years. Besides, LMEL stated, ‘the acquisition comes in with a strategic vision to execute an MDO order-book exceeding Rs 70,000 crore over the next 15-18 years’. The MDO business, it projected, will have cumulative revenues of Rs 27,000 crore from the financial year 2026-28, which shall be consolidated to LMEL profitability. LMEL is partnering with Lekcon-NCC Consortium to manage MDO at Brahmadiha coal block in Giridih (Jharkhand), which is leased to Andhra Pradesh Mineral Development Corporation. Another ‘strategic measure’ of LMEL is that the TEIL shall execute the actual MDO work in this case.

 

The company expects to ensure a steady and cost-effective supply of critical raw material to coking coal for the upcoming 1.2 MTPA steel plant of Lloyds Metals at Ghugus in Chandrapur district of Vidarbha. The third ‘strategic measure’ is Lloyds Metals’ plans to invest up to Rs 52 crore in renewable energy projects to secure 100 MW of green power for captive consumption for its ‘upcoming grinding unit, slurry pipeline and pellet plant operations’. These power plants are being developed in partnership with Amplus Energy Solutions Pvt Ltd and Hinduja Renewables Energy Private Limited.