Lloyds Metals and Energy Limited (512455) Earnings Call Transcript & Summary

Ladies and gentlemen, good morning, and welcome to the update call for Lloyds Metals and Energy Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Siddharth Gadekar from Equirus Securities Private Limited. Thank you, and over to you, sir.

Good morning, everyone, and thank you for joining us today. We, at Equirus, are pleased to host Lloyd's Metals and Energy's business update call to discuss the acquisition of Thriveni's mining business and the other initiatives taken up by the company. We have with us today Mr. Rajesh Gupta, Managing Director; Mr. Riyaz Shaikh, CFO. Now I would like to invite Mr. Rajesh Gupta to initiate the proceedings for the call. Over to you, sir.

Good morning, everyone. It is a pleasure to welcome all of you to today's call. I would like to begin by thanking Siddharth and the team at Equirus for organizing and hosting this session. A warm welcome to all our investors. We greatly value your time and interest in our company Lloyds Metals. The purpose of today's call is to share some key updates on the strategic initiatives that we have been undertaken recently and decided on our board meeting yesterday. These steps are part of our larger vision. We established Lloyd Metal as a strong, low-cost and high efficient player in the steel and mining sector. And emphasis is on is now going to be on managing the growth that we have started for the next 5 years. Being in the steel and mining business, our focus is crystal clear, keeping costs at the minimum which enables us to stay resilient during challenging times like the current steel cycle. Keeping this in mind, we have acquired a majority stake in Thriveni Earthmovers Infrastructure Limited with -- Private Limited, which holds the mining development and operations segment of Thriveni Earthmovers Private Limited. This move strengthens -- significantly strengthens the bond between our 2 co-promoters and creating a very formidable and collaborative partnership. It allows us to ramp up our mining output at the Surjagarh mining iron ore mine from the current 10 million tonnes to ultimately 25 million tonnes of output at a very effective cost. Beyond volume growth, this initiative will reduce mining costs substantially, reinforcing our operational competitiveness. The acquisition brings an impressive order book of INR 70,000 crores over the next 15 to 18 years, and we're expected to add robust revenue and profit to the company, with cumulative revenues of approximately INR 27,000 crores and EBITDA of INR 9,000 crores between the next 3 years FY '26 to '28. These initiatives make our company stronger than ever, positioning us with a robust foundation and immense potential to deliver consistent performance and shareholder value. Of course, in the longer run, the Lloyds Metals' strength in the balance sheet will grow international avenues for Thriveni as well. We have also partnered with Lekcon-NCC and ultimately with APMDC, Andhra Pradesh Mineral Development Corporation, to ensure supply of key raw materials like coking coal where we will be having an MDO contract at the [ Brahmani-B ] coal block in Jharkhand. This partnership is a critical step towards securing the supply of coking coal for our upcoming steel plant in Chandrapur with a capacity of 1.2 million tonnes of steel. Ensuring a steady and cost-effective supply of this raw material, enhances our operational efficiency, and strengthens our resilience is a vital step in aligning with our low growth, long-term -- sorry, long-term growth plans and diversifying our raw material resources and we stabilize our net coal costs at the new steel plant. Regarding our green efforts, in line with our commitments, we have been investing continuously in green energy and green usage. We are now investing in a renewable energy project -- 2 renewable energy projects to secure 100 megawatts of green power for captive consumption. These projects executed in collaboration with Hinduja and with Amplus, a part of the PETRONAS Group, will serve our grinding unit slurry pipeline and pellet plant operations. This shift to renewable energy will not only deliver annual cost saving of approximately INR 100 crore, but also significantly reduce our carbon footprint, underscoring our commitment to environmental responsibility. Along with this, we have also in the past signed the contract with GAIL for using LNG. This is in addition to our already ongoing efforts to run the mine itself on electrified -- electrification instead of fossil fuels, which will make the mine near zero carbon in the very near future. Our ultimate aim is to transform this business into a rare non-metals -- rare metals business, which is noncyclical one, ensuring sustainable growth and consistent value creation. Revenue is vanity and profit is sanity will be the mantra going forward. Thank you for all your attention, everybody. The floor is now open to your questions.

[Operator Instructions] The first question is from the line of Parthiv Shah from TSBPL.

Congratulations for this deal. Sir, I would really appreciate if you could explain in detail how exactly this deal is structured. No doubt it is there on your PowerPoint, but would like to hear it from you. Also, sir, I would appreciate to understand that the projections that have been given for the Thriveni MDO business, which goes right up to FY '29, so taking those numbers, by then, even Lloyd's mining capacity would have been announced to 55 million tonnes. So what sort of contribution does Lloyd bring in that particular business? And what other businesses you are targeting?

Regarding [indiscernible], I request Hemankur, our Deputy CFO, to respond.

Good morning, everyone. I think we had outlined the slides. So primarily how it is structured is that Thriveni Earthmovers, which is housing the MDO business and some other family investments of the other co-promoters of Lloyd Metals, Mr. Prabhakaran and his family. That is currently the process of a demerger. So that demerger is currently being heard at NCLT Chennai, and it is expected to complete in 6 to 8 months. So the process of demerger will ultimately result in the MDO business being transferred to a new entity, which was formed earlier this year, and the entity is called Thriveni Earthmovers and Infra Limited. The process of demerger is that MDO business is received by this company and redeemable preference shares are issued by them as a consideration to the shareholders of the original entity which is including Mr. Prabhakaran and family and some other investors. Now going forward, basically, Lloyd will be investing into this entity. So by investing an amount of INR 70 crores, they will be acquiring near about 79.82% or 80% of the shareholding of this new entity and that it will become a majority shareholder of the MDO business. As a part of the deal, basically, the -- as the majority shareholder is changing, so Lloyd when coming in as a major shareholder, they are guaranteeing the redemption of redeemable preference shares, the amount of which is INR 2,157 crores, and that will be redeemed over a period of 3 years -- near about 3 years, 3 months. So last tranche is to be paid out by 31st March 2028. So it's near about 3-year installment, equal installments of INR 700 crores to INR 750 crores each. So that's how the structure is consummated. We'll wait for the NCLT approval for MDO business to come in and RPS to be sure.

So does this bring also the equipment fleet and everything? And also, sir, like I just wanted to understand that instead of this, what else remains in Thriveni Earthmovers Private Limited? And instead of this, why not we would have entirely merged that company into Lloyd Metal?

So very good question. I think what remains in Thriveni Earthmovers are family investments. We are not [indiscernible] to what all other investments they have. but this includes the entire business, which is the MDO business, including all assets, liabilities, manpower equipment, workshops, fixed assets, the rebuild business, everything all put together. So only what is remaining is primarily family investment. A major part, of course, we all know that they are holding near about 32% of Lloyds Metals share. So it would have been nonprudent to acquire a parent company and merge it. I mean that would have been very complicated and very difficult. So definitely, this demerger was required for the business to be transferred into a new entity.

Sir, does this require any non-complete clause to be signed? So going ahead in future can Thriveni Earthmovers Private Limited bid for other MDO rights in other locations?

Can you repeat that, please?

Does this come with a non-compete clause? Can in future, Thriveni Earthmovers Private Limited bid separately for other MDO contracts or in future, all the MDO contracts will be housed under Lloyds only after this deal?

All the contracts will be housed under these new entities. And basically -- yes, but the main idea for this acquisition or bringing the business together is primarily to align the interest so that both the co-promoters increase their alignment of business and they share a major part of their family wealth in the same business. So that's how it is going to continue. So all the MDO businesses will be under this new entity. That is an undertaking given by the Thriveni promoters.

And as mentioned in the Slide #8, so this deal, if I have to understand the valuation, it is happening at an enterprise valuation of INR 4,952 crores, is that correct?

Yes, that's right.

So the debt which is brought on to Lloyds' book from Thriveni's book is, I think, debt related to all the equipment that have been purchased. So that's how the equipments are also coming into Lloyds' book, right?

Yes, yes, correct. So it includes working capital -- it includes working capital. It includes equipment finance loan. It includes term loans, which are taken for the business of MDO.

Okay. And the last question, in the mining business...

To simplify, all the operating assets of the Thriveni Earthmovers Private Limited will be moving to Thriveni Earthmovers and Infra Limited -- Private Limited.

Okay. And sir, going ahead, what happens to the 20% stake, which is in private capacity? Will Lloyd be also acquiring that and making it a 100% subsidiary?

So the promoters -- both the promoters will be controlling part of this and part would be with some other shareholders of Thriveni Earthmovers Private Limited, the erstwhile company.

Okay. And sir, last question. You mentioned there will be around 10% to 15% addition in the mining margins of Lloyds' existing mining operations. So on a per tonne basis, what does that percolate into?

So see, basically, for our mining business, there will be a 10% to 15% addition because of the combination of the MDO business margins. Primarily, as has been outlined, I think earlier by Mr. Rajesh, roughly 50% of the MDO cost is primarily margin for the MDO. That as a percentage of our revenues for mining, which is, let's say, near about INR 4,500-odds. So that INR 500 on that is primarily the 10% to 15% margin increase, which is happening.

Okay. So around INR 500 per tonne is savings for Lloyd with having this MDO operations [indiscernible].

Yes. On consolidated basis.

The next question comes from the line of Parthiv from Anand Rathi.

Congratulations on the new structure, sir. I just have a couple of questions. If you can just walk me through one of the slides, you have mentioned that the total guarantee is up to INR 2,500 crores. So what exactly -- am I reading it wrong? Or is it INR 2,157 crores, and -- I am not able to get that. I think Slide #5, you have mentioned somewhere.

Basically, the RPS being issued is INR 2,157 crores, but of course, if we see the RPS terms because they will be redeemed over a period of time. So there is a 9.5% interest coupon, which is payable on them. So to account for that, we have kept that buffer. But the redemption amount is primarily going to the principal amount. And this coupon will be payable in case the dividend is paid by the company. So that's why that amount has been built in to keep a cushion for that buffer.

All right. So my second question is remaining to that on the 3.08%, which is with the erstwhile shareholders, does Lloyds or the original promoters have any ROFO on that, that in the future, they will be acquiring at a certain valuation if it comes up? Anything on that front?

Yes. So the 3.08% is actually with one of the clients, which is there for the MDO business, and they have been 6.5% shareholders in the original Thriveni holding company. So as a part of the negotiations and as a part of the agreement with them, this has been negotiated to have them the 3.08%, and that is one of the conditions that they have agreed to this transaction. And they will we continue with us to be in the longer run.

This particular shareholder has been a partner with Thriveni since the right [indiscernible] in the beginning of the journey of Thriveni.

Okay. And sir, my last question is what is the saving you mentioned when this business becomes a subsidiary, it's INR 500 per tonne for Lloyds?

Again, on a consolidated basis, that's approximately the margin, INR 350 to INR 500, depending on the month, the year, the type of iron ore coming out, et cetera. But the approximate margin on the total contract that is correctly with Thriveni. So that will get consolidated into the books of Lloyds Metals consolidated. That's the figure that we are talking about.

The next question comes from the line of Siddharth Gadekar from Equirus Securities Private Limited.

Sir, when we look at the Slide #6, the kind of EBITDA that Thriveni MDO operations would be doing, can you just outline what all projects are there in the MDO business besides the Lloyd Metals mining operations?

So the -- okay. The kind of -- the projects that are there is [ Pakri Barwadih ] is one project, which is with NMBC -- with NTPC, where we are mining around 16 million, 18 million tonnes of coal there. We are mining around 35 million tonnes of iron ore in Odisha in around 5 or 7 mines. We are mining baryte for APMDC, around 3 million tonnes. And we are mining around 5 million tons of coal in Indonesia in Satui Coal Project for approximately 71 million tonnes, including Lloyd Metal [indiscernible], is the EC or the total limit of the contracts today. And I'd also like to refer all the participants to our website where we have uploaded a more detailed presentation, which will gave details of all these contracts, et cetera on that site, including a geographical map, et cetera, showing the total business of Thriveni in a more detailed way.

Okay. Got it. And secondly, in terms of the new coking coal project in Andhra Pradesh, even there we will be participating as a MDO through this entity itself, right?

No. That project for some reasons of stronger balance sheet, et cetera, APMDC required Lloyd Metals to participate directly. But the subcontract will be given to this entity, yes.

Okay. Sir, lastly, when we look at our growth projects now, given that we would be going -- moving towards 55 million tonnes EC in the next -- by FY '26, incrementally in the EBITDA assumptions, how should we think about Lloyds' contribution in that?

So just to clarify one thing, the 55 million tonnes is the raw material, the output would be constrained at 25 million tonne of finished iron ore after the BHQ is beneficiated. I could not understand the other part of the question?

So basically, I wanted to understand that out of the INR 3,000 crores EBITDA that Thriveni is forecasting for the next 2, 3 years, say per annum, what would be the contribution coming from Lloyd Metals in that?

Yes. So I think basically, the contribution will change as the production ramps up, but I think your question is more related to when we are mining the full capacity of 55 million tonnes because that will be a significant part of Thriveni's numbers. So roughly 1/3 or 33% to 35% is the range that is there in those numbers coming from the Lloyds contracts of 55 million tonnes.

The next question comes from the line of [ Nikunj Lahuti ], an investor.

My question is, you have manufactured 2 slurry pipelines, you would be manufacturing one 10 million tonnes and one 5 million tonnes slurry pipeline. So how would you transport the last 10 million tonnes?

So part of the materials or whatever pelletization we do, will be through slurry pipeline. The 10 million tonnes that we're talking about would be transported as we are currently transporting by truck to the railway sliding and to our customers as the case may be.

Okay. So you would transport the last 10 million tonnes by a railway sliding and 15 million tonnes through slurry pipeline?

Yes. And as we expand, actually, a significant portion of that will be done by Thriveni's MDO business also, so part of that contract, which was earlier under the transport contract would also get consolidated into Lloyds' profitability.

The next question comes from the line of Divya Agrawal from Ficom Family Office.

So I have 2 questions. First on this merger. I mean Thriveni Earthmovers, I believe, have mines as well the ore mines. So are we getting the mines as well as the MDO business or just the MDO business apart from those mines?

See, Earthmovers control no mines by itself.

Okay. Sir, Thriveni Earthmovers don't own any mine?

It's a pure-play MDO service business.

Okay. Sure, sir. And secondly, regarding the guarantees given by Lloyd's metal to Thriveni Earthmovers, so Thriveni Earthmovers redeem those guarantees in these funds, so will Thriveni Infra repay the amount to Lloyd's Metal or how will be the transition then?

So see, basically, as a part of the demerger, so there are 2 parts to the overall transaction, right? One is that demerger happens and Thriveni Infra would have redeemed this RPS as per the shareholders, which is the same shareholders for Thriveni Earthmovers and Thriveni Infra is Mr. Prabhakaran and family. Now because that is changing and Lloyds Metals is coming in as a majority shareholder. So there are 2 shareholders on the issuer and the [ receipt ] or holders of the RPS is different. So that's why this guarantee is being given that Thriveni Infra will timely redeem this as per the agreed schedule and the guarantee is primarily given for that. Ideally, what we have seen from the cash flow, it should be able to sell service from the existing business as we ramp up and scale up only in an event of eventuality that is not achieved for whatever purpose. In that case, the guarantee of Lloyd Metals will come in, wherein they will have to either bridge the gap or take over on some of those obligations and that can be done either way, it can be either through purchase of RPS or it can be through equity infusion in Thriveni Infra, which will then redeem. So yes, ultimately, it will be paid by the business. Only thing that can happen is that Thriveni Infra -- I mean only thing that can happen is that if it is not in 3 years, Lloyds Metals will get back the money in 4 years. So that's the only eventuality that can happen in a worst-case scenario. But yes, that will effectively be paid out of the profits of the MDO business, which has been acquired.

Okay, sure, sir. And last question. So this INR 70 crores valuation for Thriveni Infra, how did we arrive at that INR 70 crores?

Yes. So INR 70 crores is just face value. So actually it's been acquired at nominal face value. And so that INR 70 crore effectively will remain in the company. So there is no -- because the company is a shell company without the MDO business. So it's a INR 70 crore infusion and INR 70 crores sitting on the cash. So cash is the value for that.

Okay. So basically, if we see -- so Lloyd Metal has paid INR 70 crores, and we are getting the MDO business plus the guarantees. And if the guarantees are not traded, so Lloyds Metal eventually will pay just INR 70 crores getting the business?

No, INR 70 crores is actually infused in this company and INR 70 crores will be used by the company for developing the business of MDO. So INR 70 crores is not paid out to any of the promoters. It will remain with the company. So effectively 80% of that -- actually, total infusion is INR 87.7 crores, which is INR 70 crores is Lloyds Metals and INR 17 crores is roughly by other investors and all put together. So effectively, Lloyds Metal owns 80% of that INR 87.7 crores. So effectively, it owns 70% -- INR 70 crores of cash as a part of 80% shareholding. So that's the -- it's done at nominal value, face value only.

The next question comes from the line of Vikash Singh from PhillipCapital.

Am I audible?

Yes, yes.

Congratulations, sir, on the successful completion of this. Sir, my -- I have 2 clarifications basically. Firstly, you said that you would be saving after this merger, roughly about INR 500 per tonne, while we expect in our previous con call in Lloyd Metals, we said we are paying INR 800 to -- we are paying roughly about INR 1,000-plus per tonne, and this would expected to come INR 800 per tonne. So why the net savings is less than what we are paying actually right now?

Thank you, Vikash, for your question. We had said around INR 300 crores, INR 350 of savings once the total quantity comes up including slurry pipeline. So that's number one, that we are mixing up 2 different issues of slurry pipeline; saving and quantity of mining savings. Now the third, three is the consolidation of balance sheet, what we're saying is the INR 500, the profitability of the contract of Lloyds Metals with Thriveni is that profitability that will get consolidated into Lloyd Metals' balance sheet. The other figures remain the same.

Understood, sir. Sir, my second question pertains to our guarantees of this up to INR 2,500 crores, is this guarantee based on achieving the projected EBITDA milestone or is it irrespective of the EBITDA, and this is at the current today junction, we are ready to pay this at [indiscernible].

There's no EBITDA milestone. It is to be paid by -- in 3 years or...

Okay. So basically, there are no milestone for these things.

Yes.

Once again, congratulations.

The next question comes from the line of Ashutosh Somani from JM Financial.

My question relates to the Karnataka mining business. And I just wanted to hear your thoughts on, if Maharashtra can go the Karnataka way, given how strategically important we have become as a resource miner in the country and with the increased EC more so. And the fact that we are the lowest cost producer in the country. So how do you see this developing situation?

Number one, the Karnataka mining tax doesn't affect LME directly. And as such, we have no direct comments. Number two, other states have not levied other such taxes and such extent of taxes like Karnataka has, including Chhattisgarh, Odisha, et cetera. They are still taking a call on what to do, what not to do. So maybe Karnataka is the outlier and not the -- not be a norm or would not become the norm. Number three, does Maharashtra -- can they levy such taxes? As per the Supreme Court order, yes, they can levy such taxes. Currently, as we know, there is other movements happening in the Maharashtra [indiscernible] and there's no such move to levy any such taxes in Maharashtra at the moment.

The next question comes from the line of Prateek Singh from DAM Capital.

First of all, congrats for this development to participate in the growing mining story of India. I just had -- most of my questions are answered, but just had a query on top of Ashutosh's question, I understand that other states are still not following this but this is a major development where center can put their foot down. By your experience, are our contracts in the MDO business structured? Are they like 3, 4 years or long term? Or is the pricing decided on a yearly basis? The basis for my question is, in case, let's say, some miners get a duty hike and their margins are kind of affected on the lower side, have you seen a history where they come and say that we will be paying you a bit lower on a per tonne basis because our margins are getting squeezed? Or that's not something which usually happens?

Firstly, let me congratulate DAM on their IPO and best of luck for the same. Regarding this, the nature of the contracts, it's a mixed bag. For example, with NTPC, it's a long-term contract of 28 years -- 27 years, which is still balanced with Lloyd Metal, it's till the life of the mine, which is 2057. Our APMDC is a 5-year contract, the other mines are for 5 years or some of them are 10 years, some of them are till the life of the mine. So it's a very mixed bag. Most of the times, once you get an MDO, you can take it that the contract is there for the life of the mine because it's difficult for both the contractor and the mine owner to change. When we say MDO is not only mining contract, but also the outside boundaries, including the CSR, the transport, the permissions required, et cetera. So we are definitely long-term contracts. One of the reasons that we like Thriveni investment is that it gives us a foreseeable revenue of INR 70,000 crores on the existing contracts that are there. The second part of your question is what happens if somebody wants to back out. Most commercial contracts have such clauses. And always at the end of the day, any contractor, any client relationship was on a win-win basis, and we have to take the hit, which is required to be taken. Thriveni had again such hits in a much larger way in Thriveni when -- in Odisha when the Shah Commission had come in or when COVID had happened. And that's part of the business of any such business. In Lloyds Group also, we have businesses like Lloyds Engineering where these are longer-term contracts or where we deal with such ifs and buts on a continuous basis.

And on the other side, does it also open up opportunities for us because some PSUs or some subsidiaries of Coal India who are not very efficient in case their costs go up because of royalty, that opens opportunities for us because we would be more efficient on a content basis to mine. So it opens up new areas for us also in terms of business. So is that...

So all these projections that we have given are basis current contracts that are existing. Like I mentioned in my opening remarks, we believe that the experience of Thriveni along with the strength of the balance sheet will open up many more avenues for Thriveni and therefore, ultimately for Lloyds Metals in the consolidated balance sheet, including international contracts around the world, whether it is coal, whether it's iron ore, whether it is baryte, whether it is chromite, copper, gold and anything. We are in that business now, and definitely, we'll be able to compete, we hope with the best of the world in a very competitive way. In our detailed slide on the website, you will see that one of the very important parts of Thriveni's business is that rebuilding of equipment. Over the last 10 years, they have saved around INR 3,000 crores in equipment cost. In some ways, the mining business is like a revenue generator based on -- it's a lease business also. So if you save around 70%, 80% of the cost of the equipment, that's a very big revenue over the life of the contract. So with all those features in the company, and we hope that the partnership will become not only -- will make not Thriveni stronger, but the group stronger.

So I mean just to add, on the contract, Thriveni has lost very few contracts in the past. Most of the contracts have run till the mine owner has been running. And I mean, for example, Indrani [indiscernible] Patnaik, in fact, are the 3.08% shareholders that we talked about. So a few mines are owned by them. And similarly, other large miners also whosoever has been partnering with Thriveni, they have run till those miners continue to hold the contracts. So that's one of the key uniqueness of the business that we have generally not lost contracts, very few of them. That's one. And second is that they have not participated in contracts, which are too competitive just for the purpose of order book. So as I think Rajeshji mentioned in his opening remarks that profit is sanity, and that's what Thriveni has been following. That's one of the key things, which is aligning the business of Lloyds and Thriveni's MDO business. So I think if the contracts are very competitive because there's a lot of MDO contract, as you mentioned, regarding Coal India and other companies. But if it requires a very large amount of investment with long paybacks, that's not something Thriveni has been doing, they have been doing and taking opportunistic contracts wherein they can add value and wherein other people are not able to probably compete with their technical capability and scale.

Also to add one more point, Thriveni at one point was mining around 65% of the iron ore in Odisha. When -- years back in 2002, when the China demand picked up, the mine capacity was around 35, 40 million tonnes. And today, Odisha is mining around 120 million tonnes. And I think, Mr. Prabhakaran and Thriveni have been very large instrument in picking up the mining capacity of that state and therefore, of the country.

And all the best, and I hope that -- you're already very big, and I hope that you become an even bigger enabler of mining in India.

[Operator Instructions] The next question comes from the line of Siddharth Gadekar from Equirus Securities.

Sir, we have also mentioned in the presentation that these forecasts do not include any future projects. Can you give us some sense on the future projects that we would be targeting in terms of mining in India and overseas. Secondly, when we had visited the mine, the kind of infrastructure that we had created, we could also leverage that for mining in Maharashtra as well, so any sense on how do we see this business scaling up beyond the existing projects?

Sir, we would not like to give any forward-looking statements like you know. We would definitely be working very strongly in Maharashtra, Odisha like has become more and more competitive with the advent of the 120% regime in Odisha. So it's a very competitive market. We are mining there in OMC. I forgot to mention that in our earlier statements. We're mining in the Guali Mine in the OMC company. So we will be bidding, again, I repeat, for mineral assets in India and abroad as a mining contractor based on cost effectiveness, profitability, geographical sense. For example, the Jharkhand mine that we're doing with APMDC, very close to Pakri Barwadih, sorry, I'm a little bad in the pronunciation of that company. So it's very close to that. And that's one big advantage that we have there. So all those kind of things we will take not purely for revenue, but for the bottom line more.

The next question comes from the line of Aman from Seven Rivers.

So if you could help me understand, is there any difference in per tonne cost for BHQ mining versus the ore that we are mining right now. Are we saying that we'll save 50% of the respective amounts?

No. The cost comes down because of the volumes getting added more than the grade of the ore. For example, the overburden in the coal mining is being built, including the overburden cost is being built to the [indiscernible] coal to the miner. So here, if it is coming down, it's not -- it is coming down because of the sheer quantity going up, and therefore, the fixed cost going down per tonne basis.

Okay. So -- and my second question is, are we looking at any change in active management of the mining operations? Or will it be status quo in terms of management at, let's say, mid or let's say long [indiscernible].

Sorry, I couldn't understand the question.

Management [indiscernible]?

No, the MDO management is very well run, and there will be no change in that account.

The next question comes from the line of Namit Arora from IndGrowth Capital.

Congratulations to the teams on the deal and all the best for the integration. Also, my question was in terms of investments to further enhance value from your acquired assets, both in terms of capital and talent, any thoughts on that, which could help it take it to the next level post your acquisition?

Sorry, I don't understand the question, my friend?

The question is that post the acquisition, what are the kind of investments that you may need to do, both in terms of capital and talent to further realize the potential of this acquisition.

In the new Thriveni company?

Yes, sir. Yes, sir.

I think the capital allotment of that business would grow as it acquires new businesses. And we'll be looking at growth in capital as the opportunities come up over the next 2, 3, 4 years. And in terms of talent with the confidence of the company with the -- in the Lloyd Metal, like you know, many of the -- not many, all the white collar workers have ESOP. So we hope to introduce that process in Thriveni MDO also. So that will get more talent to us as well. So these type of things will -- is an ongoing process and Thriveni, the INR 8,000 crores, INR 9,000 crores top line company larger than Lloyds Metals at the moment or nearly as large as Lloyds Metals at the moment. So we are very well in the ball game to get the best talent in the country. And one thing that we have learned from them as an MDO and client relationship is how to manage the people. And I hope they can teach us more on that -- teach me more than more going forward on that.

The next question comes from the line of Nikunj Lahuti, an Investor.

Sir, what is the current freight costs for -- if you're mining 10 million tonnes? And what would be freight cost in future if you're mining 25 million tonnes and after starting off both the slurry pipeline?

Nikunj, the freight costs are to various places around INR 4.5 to INR 5 per kilometer, So we take some of the materials up to the stockyard, we take up some of the materials up to the siding. We transferred some of the materials to the end consumer directly by truck. We have a few companies in India, which -- I would say a few companies in the world, which take the mineral right up to the customer's doorstep in many, many ways. In fact, right now, we have done a contract for fitting the material up to Kandla from the mine. So to give a very direct answer, freight cost per tonne is not a straightforward answer, unfortunately. The costs going forward, for the 10 million tonnes that is balanced, not going by pipeline would remain in the same mix. Both of this would be to outside customers, but would remain in the same mix of INR 4.5, INR 5. The pipeline transport cost is in the range of INR 150, INR 100 per tonne. Does that address your concern?

Yes.

The next question comes from the line of Parthiv Shah from TSBPL.

Sir, I just wanted to understand, you just mentioned that Thriveni Earthmovers Private Limited as an MDO does a top line of INR 8,000 crores to INR 9,000 crores. But sir, why is it not getting reflected in the PPT projections? For FY '25, the revenue shows INR 5,500 crores. And then subsequently in FY '26, it shows INR 8,000 crores and then it stays kind of flattish between '27 to '29.

I meant to say INR 8,000 crore going forward with the 55 million tonne of evacuation that they'll do in Surjagarh, INR 5,550 crores in the current top line.

Okay. And sir, in Surjagarh, I think there were other players who had won some composite mining licenses. So will like now you being an MDO as well, will you be aggressively bidding for those projects also? And by when can we expect that revenue kick in? How many years it might take?

So those contracts for those mines are all on, including exploration, et cetera. Those mines are now -- we understand some of them have started some exploration activities. As and when people approach us, we'd be glad to interact with them and work with them closely to get the mineral out and make Surjagarh and Maharashtra into the Prime Minister vision of the next Jamshedpur.

So you have not projected all that till your FY '29?

All the projections that have happened in that Slide #7 are of existing contracts that are there. including the 55 million tonnes of Surjagarh mining of our own mine.

And sir, by when we are expected to get the EC for the 55 million tonne mining capacity?

That's a very nice question. The state has been under -- because of the elections, that cycle has slowed down a little bit than what we anticipated. We hope to have the public hearing of that mine in the next month. And then going forward, it will take 45 days, hopefully to get the MDO done -- get the EC done.

Sir, pardon my ignorance, I was under the impression because we are -- sorry.

The process is fully on except for a pause due to the election where such decisions are not legally allowed to take place.

Sir, pardon my ignorance, but I was under the impression that we being a 5-star rated mine, we don't need a public hearing.

Public hearing is not required, which we increased by 20% -- here we are increasing by 250%.

The next question comes from the line of Aman from Seven Rivers.

Sir, can you tell us about the promoter pledge by Thriveni? Will that -- anything outside of that will be released as an outcome of this?

Again, that would have to be discussed with Thriveni promoters at that point of time. But we understand that part of this fund will be able to dilute those pledges and once the RPS goes and that happens. So over a period, that pledges would be removed, we hope.

As there are no further questions, I would now hand the conference over to the management for their closing comments.

Gentlemen, thank you very much for all the interesting questions. We are in a very different growth phase right now compared to what we started around, say, 3 years back, I call myself a 50-year-old startup. And I think some of these moves that we have done in the last few weeks are a testament to that, and we hope to live up to all the target that we have set to ourselves.

On behalf of Lloyds Metals and Energy Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.

Thank you.