Tega Industries held a conference call on 30 May 2023 to discuss the results for the quarter ended March 2023 and way forward. Mr. Mehul Mohanka - MD & Group CEO, Mr. Syed Yaver Imam - Director – Global Product Group and Mr Kaushal Sureka - DGM Finance and Accounts of the company addressed the call.

Highlights of the Concall

• Tega Industries acquire McNally Sayaji Engineering Limited via NCLT (National Company Law Tribunal) during Q4FY23. This marks take its first acquisition in India and fourth globally. McNally Sayaji Engineering Limited (MSEL) offers pioneering solutions in the field of manufacturing and marketing of crushing, screening, grinding, material handling, and mineral processing equipment coupled with integrated customer support and after sales service.

• McNally Sayaji Engineering acquisition represents a significant step towards expanding Tega Industries product portfolio, both in terms of products as well as services. The broader range of offerings is expected to enhance a company's sustainable sustainability and drive future growth.

• McNally Sayaji Engineering is an operational company and it is kind of a backward integration for Tega Industries because McNally are into an equipment space and Tega provide spares which are getting installed into those equipments as well.

• McNally Sayaji engineering Limited is an operational company that is not losing cash, and Tega Industries anticipate strong growth in the coming years.

• McNally Sayaji Engineering gross margin will be lower compared to current business gross margin. So as a merged entity gross margins will be lower.

• The company expansion project in Chile is progressing well. It has successfully completed the land acquisition process and is currently awaiting further statutory approvals so as to commence construction.

• Order book as on 1st April 2023 stands at Rs 340 crore

• Volume growth was 16-17% in FY23 while price increase was around 5-6%. The comany expects same volume growth in Q1FY24 as well

• The company typically takes around two quarters to pass on the benefits of decrease in raw materials or even the increase in the prices of its products to its customer. As a result the company expect margin improvement in the coming quarters as well.

• Gross block has increased from Rs 170 crore in FY22 to Rs 308 crore in FY23 mostly due to McNally Sayaji Engineering acquisition which has gross block of around Rs 170 crore at a fair value level.

• Mill business grew around 20-22% in FY23 which formed around 70% of total business. Non mill business grew about 25-26% in FY23

• The company expects CAGR growth of around 15% for McNally Sayaji Engineering for next 3-4 years

• The company has plans for consolidating its operation and expanding capacity in Latin America which is a Greenfield project and it is also planning an expansion project to add some capacities in Africa and in India. It has plans to invest around Rs 15 crore to McNally Sayaji Engineering to put into this business to meet up the product gap wherever Tega Industries find that the market is ready to take its products and can build up the capabilities faster.

• Overall project capex for Latin America is around US$ 20 million. Land acquisition has already been done and the company is waiting for environmental clearance from regulators

• Capex for Africa and India would be around US$ 10 million and for McNally Sayaji Engineering would be US$ 2 million. Overall capex would be US$ 32 million for next few years.

• The company is aspires to grow at around 15% every year.