Press Release

Tecnimont S.p.A. India Project Office

January 27, 2023

Facilities Amount (₹ crore) Rating1 Rating Action

Long-term bank facilities 15.00 CARE AA-; Stable Assigned

Short-term bank facilities 280.00 CARE A1+ Assigned

Details of facilities in Annexure-1.

Rationale and key rating drivers

The ratings assigned to the bank facilities of Tecnimont S.p.A. India Project Office (TIPO) takes into account established
presence of the Maire Tecnimont group in India through Tecnimont Private Limited (TPL) and other project offices, strong
operational and financial linkages with its parent, Maire Tecnimont S.p.A., and the groups’ vast scale of operations spread
across the globe with established position in engineering, procurement and construction (EPC) of polymerbased plants and
fertilizer segment. The rating also derives strength from track record of TIPO in Indian petrochemical industry, satisfactory
execution of two projects from Indian Oil Corporation Limited (IOCL), nil debt in the books of TIPO with strong liquidity position
and stable industry outlook.
The rating strengths are partially offset by modest size and scale of operation limited to two projects and execution risk
associated with the projects.

Rating sensitivities: Factors likely to lead to rating actions

Positive factors
• Scaling-up of business operation through additional projects with satisfactory profit margins
Negative factors
• Raising of term debt for project under execution impacting the liquidity profile
• Non-adherence to sanction terms regarding repatriation of funds from Tecnimont S.p.A. India Project Office (TIPO) to
Tecnimont SpA

Analytical approach: Standalone financials of Tecnimont S.p.A. India Project Office (TIPO) has been considered along with
group linkages with Tecnimont Private Limited (TPL) as there exist group linkages with the entities belonging to the Maire
Tecnimont group which has presence in India through TPL and other project offices.
The group provides operational, financial and management support to the entity. The financial support is demonstrated by way
of co-borrowing of partial facilities by TPL for the project-specific debt availed by TIPO. As per the co-borrowing agreement,
both the entities are jointly and severally liable for the partial debt availed by TIPO.
The debt raised by TIPO satisfies the conditions stipulated by Reserve Bank of India for project office set up in India by foreign
entities-
1. Assets being financed are located in India
2. Debt is secured in nature
3. Income from the project office is ring fenced (i.e. the revenue generated from the project is escrowed to the account
maintained with the lender and no repatriation of funds is permitted without prior permission of the lender)

Key strengths
Part of the larger Maire Tecnimont group having operations spread across the globe: TIPO is a project office set-up
in India by Tecnimont SpA for execution of contracts on EPC basis in oil & gas sector. Tecnimont SpA is a wholly owned
subsidiary of Maire Technimont SpA, an Italian listed company (Milan Stock Exchange) with market cap of around Euro 1.03
billion (₹9,044 crore as on December 23, 2022). The Maire Tecnimont group operates in around 45 countries through its

Complete definitions of the ratings assigned are available at www.careedge.in and in other CARE Ratings Ltd.’s publications.
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various group companies spread across the four continents. The group had an order book of 8 billion Euro as on September 30,
2022, out of which orders worth 6.85 billion Euro pertain to hydrocarbon business and the balance is from green energy
segment.
The Maire group is present in petrochemical segment since 1970 and has around five decades of existence. The group has
completed construction of more than 200 polyethylene and polypropylene plants, 172 ammonia and urea plants and more than
250 hydrogen and sulphur recovery unit projects. The group has more than 1,850 patents registered on its name.
The Maire Tecnimont group is a global market leader for installed capacity with 30% market share in polyolefin plants and 50%
market share in low-density polyethylene (LDPE) plants. In the fertilizer segment, the group has 52% market share in licensing
urea plants technology (first worldwide) and 34% market share in licensing urea granulation technology (second worldwide).

Strong business linkages with the group: The Maire Tecnimont group operates in around 45 countries through its various
group companies spread across the four continents. In India, the group has presence through Tecnimont Private Limited,
Tecnimont SpA and KT Kinetics Technology SpA. The group extends support to its Indian counterpart in the execution of
projects by providing access to its technologies and know-how as well as deployment of skilled personnel wherever necessary.
The strong credentials of the Maire Tecnimont group have enabled TPL & Tecnimont SpA to bid for the IOCL projects.
Furthermore, the group also enables TPL to bid for large and complex projects. TPL & Tecnimont SpA in turn support the
international operations of the group by providing engineering consultation and execution services (both onshore and offshore)
such as engineering and detailed engineering services, field engineering services, project management services, procurement
services, etc.
TPL has a master agreement with Tecnimont SpA (parent entity of TPL) for supply of 2.2 million man-hours annually which
provides stable source of revenue to TPL (almost 50% of the revenue). This apart, TIPO receives management support from
the group with common management personnel for the group operations. Furthermore, financing support is demonstrated by
virtue of co-borrowing of partial facilities by TPL for the project-specific limits availed by TIPO.

Proven track record of TIPO in petrochemical industry: TIPO has a track record of successfully executing four projects
since FY12. TIPO in association with TPL has executed large and complex projects which includes EPC of polyethylene (PE) and
polypropylene (PP) plants for well-known clients such as ONGC Petro Additions Limited (OPAL) and HPCL-Mittal Energy Limited
(HMEL).
TIPO has outstanding order book of ₹1,469 crore as on July 31, 2022. The entire work order is from IOCL for Paradip and
Barauni projects. The IOCL Paradip and IOCL Barauni Project are 41.30% and 33.45% completed as on September 30, 2022
and are scheduled to be completed by June 30, 2024 and March 31, 2024 respectively.

No term debt availed for execution of projects: TIPO has not availed any term debt for execution of IOCL projects and
the same is being funded through fund received from Tecnimont SpA and project cashflows. There was no outstanding debt in
books of TIPO as on March 31, 2022.
However, TIPO has availed overdraft limit (for exigencies) and non-fund-based limits (Letter of Credit) for purchase/import of
raw materials.

Liquidity: Strong
The liquidity position of TIPO is strong as it does not have any term debt and has majorly availed project specific non-fund-
based limits for project execution. TIPO also has sanctioned working capital limits of ₹15 crore which remains unutilized as on
December 31, 2022. Furthermore, out of the total sanctioned non-fund-based limits to TIPO; partial sanctioned limits are
supported by Tecnimont Private Limited as co-borrower. TIPO had cash and cash equivalents of ₹59.51 crore as November 30,
2022 (₹70.87 crore as on March 31, 2022).

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Key weaknesses
Size and scale of operation limited to two projects: Project office restricts the size and scale of operation with TIPO
having only two projects in hand from IOCL. During FY22, TIPO has booked revenue of ₹209.99 crore (against ₹120.42 crore in
FY21) which was majorly contributed by revenue from HMEL project.
There is risk associated with non-performance of the project and levy of any penalty for the same. As on November 30, 2022,
TIPO has receivable of about ₹111 crore which majorly pertains to IOCL Paradip project. Strong credit profile of the
counterparty minimizes the receivable risk. Any cashflow support is expected to be met from existing liquid funds and/or
sponsor support.

Applicable criteria
Rating Outlook and Credit Watch
Policy on default recognition
Policy on Withdrawal of Ratings
Construction
Infrastructure Sector Ratings
Factoring Linkages Parent Sub JV Group
Short Term Instruments
Financial Ratios – Non financial Sector
Liquidity Analysis of Non-financial sector entities

About the company

Tecnimont S.p.A. India Project Office (TIPO):
TIPO is a project office set-up in India by Tecnimont SpA for execution of contracts on EPC basis in oil & gas sector. In FY22,
TIPO received two projects from IOCL at Paradip, Odisha & Barauni, Bihar which are currently being executed by TIPO in
association with TPL. The share of TIPO in IOCL Paradip and IOCL Barauni Project is ₹1,297 crore and ₹372 crore respectively.
The projects are expected to be completed in FY24-25.
Brief Financials- TIPO (₹ crore) 31-03-2021 (A) 31-03-2022 (A) 9MFY23 (Prov.)
Total operating income 120.42 209.99
PBILDT 10.10 0.56
PAT 6.62 4.46 Not Available
Overall gearing (times) NA NA
Interest coverage (times) - -
A: Audited, Prov.: Provisional, NA: Not Applicable as project office

Tecnimont SpA:
Tecnimont SpA is an international process engineering contractor with high expertise in hydrocarbon processing industry.
Tecnimont SpA is a wholly owned subsidiary of Maire Tecnimont SpA, Italy (Maire Tecnimont group) which operates as a
provider of proprietary technologies and as an EPC contractor in the chemical and Oil and Gas complexes.
Tecnimont SpA, Italy has in terms of a general permission granted by Reserve Bank of India (RBI) to open project offices to
execute engineering EPC contracts awarded by Indian Oil Corporation Limited (IOCL). Tecnimont SpA is registered with
registrar of companies as foreign company for establishment of place of business in India and has accordingly set-up project
office named as Tecnimont S.p.A. India Project Office (TIPO).
Brief Financials (Mn Euro) 31-12-2020 (A) 31-12-2021 (A) 31-12-2022 (A)
Total operating income 836.08 1262.23
PBILDT (3.58) 48.54
PAT (2.82) 44.99 Not Available
Overall gearing (times) 1.11 0.88
Interest coverage (times) NM 1.88
A: Audited, NM: Not meaningful

Status of non-cooperation with previous CRA: Not Applicable

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Any other information: Not Applicable

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

Covenants of rated instrument/facilities: Detailed explanation of covenants of the rated instruments/facilities is given in
Annexure-3
Complexity level of various instruments rated: Annexure-4

Lender details: Annexure-5

Annexure-1: Details of instruments/facilities

Coupon Size of the
Name of the Date of Maturity Rating Assigned along
ISIN Rate Issue
Instrument Issuance Date with Rating Outlook
(%) (₹ crore)
Fund-based - LT-Bank
- - - - 15.00 CARE AA-; Stable
Overdraft
Non-fund-based - ST-
- - - - 280.00 CARE A1+
Letter of credit

Annexure-2: Rating history for the last three years

Current Ratings Rating History
Date(s)
Date(s) Date(s) Date(s)
Name of the and
Sr. Amount and and and
Instrument/Bank Rating(s)
No. Type Outstanding Rating Rating(s) Rating(s) Rating(s)
Facilities assigned
(₹ crore) assigned in assigned in assigned in
in 2019-
2022-2023 2021-2022 2020-2021
2020
Non-fund-based - ST- CARE
1 ST 280.00 - - - -
Letter of credit A1+
CARE
Fund-based - LT-
2 LT 15.00 AA-; - - - -
Bank Overdraft
Stable

Annexure-3: Detailed explanation of the covenants of the rated instruments/facilities: Not Applicable
Annexure-4: Complexity level of the various instruments rated
Sr. No. Name of the Instrument Complexity Level
1 Fund-based - LT-Bank Overdraft Simple
2 Non-fund-based - ST-Letter of credit Simple
Annexure-5: Lender details
To view the lender wise details of bank facilities please click here

Note on the 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: Puja Jalan
Phone: +91- 91600 01511
E-mail: puja.jalan@careedge.in

Relationship Contact
Name: Saikat Roy
Phone: +91-22-6754 3404
E-mail: saikat.roy@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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please visit www.careedge.in

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