| Benefits derived from the parent group
GSPL is the parent company of TMPL, in which the promoters are resourceful and have also supported the group companies by infusing unsecured loans as and when required to support the business operations. The resourcefulness of the group can be witnessed from the extended unsecured loans in the company to the extent of Rs. 111.07 Cr. in FY 26. Acuite believes that the company will continue to benefit from its group on need based funding support, if and when required over the medium term.
Moderate Financial Risk Profile
The company’s moderate financial risk profile is marked by increase in net worth, gearing below unity, and moderate debt protection metrics. The tangible net worth of the company has increased to Rs. 83.71 Cr. as on March 31, 2025, from Rs. 76.57 Cr. as on March 31, 2024, due to accretion to reserves and portion of the unsecured loans treated as quasi equity. Gearing of the company remained comfortable at 0.65 times as on March 31, 2025, as against 0.85 times as on March 31, 2024. The Total Outside Liabilities/Tangible Net Worth (TOL/TNW) stood at 1.10 times as on March 31, 2025, compared to 1.23 times as on March 31, 2024. The moderate debt protection metrics of the company was marked by an Interest Coverage Ratio of 1.31 times and a Debt Service Coverage Ratio (DSCR) of 1.23 times as on March 31, 2025 as against 2.10 times and 1.81 times as on March 31, 2024, respectively. Acuite believes that TMPL’s financial profile is likely to sustain going forward in the absence of any debt-funded capex plans.
Stable scale of operations
TMPL’s scale of operations remained stable in FY2025, with revenue from operations of Rs. 142.11 Cr. as against Rs. 141.53 Cr. in FY2024. Further, the company reported revenue of Rs. 136.79 Cr. in FY2026 (Estd.). The marginal moderation in revenue was primarily on account of lower offtake demand from Durgapur Projects Limited (DPL), which impacted billed volumes during the year. Consequently, billed quantity declined to 6.29 lakh tonnes in FY2026 from 7.40 lakh tonnes in FY2025. Further, dispatch volumes stood at 2.75 lakh tonnes till 2MFY2027. Acuite believes that the company’s scale of operations is likely to improve over the medium term, supported by expected recovery in offtake volumes.
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| Decline in profitability margins
The operating margin declined to 16.16 per cent in FY2025 from 24.21 per cent in FY2024, primarily due to the recognition of Rs.15.03 crore towards stripping activity as an expense during the year. Mining expenses are being recognised based on coal dispatch rather than production, thereby aligning cost recognition with revenue booking. These expenses were initially recorded as non-current assets and were subsequently adjusted at the time of dispatch. The operating margin remains susceptible to fluctuations in the stripping ratio. In FY2026, the stripping ratio increased to 6.09 (over and above the contractual benchmark of 5.50), which exerted further pressure on margins.
Further, the PAT margin declined to 2.83 per cent in FY2025 from 9.54 per cent in FY2024 on account of increase in interest costs on unsecured loans. In FY2026 (Estd.), the EBITDA and PAT margins remained subdued at 13.63 per cent and 2.50 per cent respectively. Acuite believes that profitability margins are expected to increase over the medium term supported by normalisation of the stripping ratio.
Intensive working capital cycle
TMPL’s working capital cycle remained intensive, as reflected in Gross Current Assets (GCA) of 401 days in FY2025 as against 354 days in FY2024. The high GCA days were primarily on account of stretched receivables. Although debtor days improved, they remained high at 311 days in FY2025 as compared to 344 days in FY2024. The company’s receivables are entirely concentrated on Durgapur Projects Limited (DPL), a state government entity, with payment realisations within 7–9 months. Further, other current assets include service work-in-progress of Rs. 21.58 Cr, advances to suppliers of Rs. 6.39 Cr, and other current assets. Acuite believes that the working capital cycle is likely to remain at similar levels over the medium term, given the inherently elongated receivables cycle and the company’s exposure to counterparty credit risk associated with DPL, considering its weak financial risk profile. Nevertheless, some comfort is derived from the power purchase agreement (PPA) between West Bengal State Electricity Distribution Company Limited (WBSEDCL) and DPL.
Customer concentration risk
TMPL act as designated mine developer and operator (MDO) for The Durgapur Projects Limited’s mines. Consequently, revenue profile depends on a single customer, exposing them to customer concentration risk. However, this risk is partly mitigated by the long-term contract with DPL, under which realizations are typically received within a period of nine months.
Susceptibility to risks related to heightened regulations in the mining industry
In India, the mining industry is governed by several key regulations, with recent amendments aimed at promoting sustainable and responsible mining practices. The Mines and Minerals (Development and Regulation) Amendment Bill, 2023 is one of the latest significant changes. This bill introduces several reforms, including allowing the private sector to mine certain atomic minerals like lithium and beryllium, which were previously restricted to state agencies. It also facilitates the auction of mining leases and composite licenses for critical minerals such as gold, silver, and copper. Additionally, the bill aims to streamline the process for granting exploration licenses through competitive bidding and sets guidelines for the maximum area allowed for exploration activities. These changes are designed to increase transparency, boost investment, and enhance the efficiency of the mining sector. However, as TMPL operates as an MDO for DPL, the risk is moderated to some extent.
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