Tega Industries held a conference call on 31 January 2023 to discuss the results for the quarter ended December 2022 and way forward. Mr. Mehul Mohanka - MD & Group CEO, Mr. Syed Yaver Imam - Director – Global Product Group and Mr. Manoj Kumar Agarwal - Director – Global Finance and CFO of the company addressed the call.

Highlights of the Concall

• Sales of the company have grown strongly across all regions. Significant improvement in global supply chain, normalization of the transport and logistics cost contributed to improved margins. However, despite easing pressure, the costs are still higher on pre covid base and the company is vigilant to managing its supply chain accordingly.

• Land acquisition has been completed for its expansion project in Chile and is awaiting for further approvals. The company expects commercial production to start by Q1FY25.

• Gross margin was subdued mainly due to geographical mix - product mix for South Africa and Chile has gone up compared to India. Overall India margin is much better than these geographies. Further, the North America business for this quarter is down than expected which is more of spillover to Q4. The company expects to recoup these margins in Q4.

• Other expense has come down mainly due to lower logistics, packaging and forwarding cost which has come down from Q1 to Q2 to Q3.

• Logistics cost at India site was around 8.21% of sales in December 21 quarter, which has gone down to around two 6.04% in September 22, and it has gone down further in December 22 to 4.62%. This is still higher than pre covid and the company expects it come down further

• The company has a net debt plus positive position of Rs 22 crore. Working capital stood at 154 days against target of 130 days. It expect it to normalize in Q4.

• The company did about Rs 165 crore in Dyna prime in 9MFY23 against Rs 135 crore in 9MFY22 with a growth of 32% and going forward it expects growth of more than 25%.

• Mill revenue was Rs 425 crore in 9MFY23 compared to Rs 360 crore in 9MFY22. Non mill revenues was Rs 192 crore in 9MFY23 compared to Rs 143 crore in 9MFY22

• Volume growth in 9MFY23 was 17.6% while price action was around 6%.

• The company has planned capex of about US$ 30-32 million for next three years and major capex will be in Chile of about US$ 22 million followed by India and South Africa

• Order book as on 31st December is Rs 325 crore.

• Capacity utilization at Chile plant is about 72%, South Africa 68% and India is about 55%.