Tega Industries held a conference call on 23 May 2024 to discuss the results for the quarter ended March 2024 and way forward. Mr. Mehul Mohanka - MD & Group CEO, Mr. Syed Yaver Imam - Director – Global Product Group and Mr. Sharad Kumar Khaitan – CFO of the company addressed the call.

Highlights of the Concall

• Supply chain challenges eased in Q4 of FY24 but were not completely eliminated and resulted in transportation delays due to events ranging from the Red Sea crisis and the geopolitical tensions in West Asia.

• Such transportation delays resulted in higher finished goods inventory of approximately Rs 30 crore in the consumables business segment which that had not been the case would have resulted in higher revenues of approximately Rs 70 crore and in turn put revenues at Rs 1360 crore achieving a 15% growth in consumable business segment. The company expects to crystallize the same in Q1 of FY24.

• The company has a strong order book at a group level of Rs 630 crore as at March 24 against an order book of Rs 480 crore as the beginning of the year which is an increase of Rs 150 crore that is 30% during FY24.

• The integration of Tega McNally with Tega Industries has been progressing as per expectations. For FY24 Tega McNally has recorded revenue of Rs 206 crore with an Ebitda of Rs 20 crore. For FY23 Tega McNally on a full year basis had recorded revenue of Rs 183 crore with an adjusted Ebitda of Rs 10 crore.

• The group synergies and focused approach has helped it to increase the Ebitda margins from 5% last year to 10% in FY 24.

• The company has completed all ground work including finalization of designs for Chile project and shall start the construction of the project very soon and expect the construction to be complete by June 2025. Revenue potential from the project will be around US $100 million

• The company had earlier made an announcement of a wholly-owned subsidiary company entering into an agreement with the largest copper mine in Europe to completely manage the rare product assets of the mines covering all mills and non-mills for a period of five years extendable by another year with minimum revenues over the contract period estimated to be at Rs 685 crore. Tega Industries has started the maintenance operations with effect from 1st January, 2024. It has now been nearly five months of operations of this contract and it has been progressing extremely well.

• Capacity utilization was around 65% in FY24

• Depreciation cost has increased on FY 24 by about Rs 22 crore i.e. from Rs 41 crore last year to Rs 63 crore in FY24. Increase is mainly attributable to the net addition of fixed assets as part of the regular capex plan, depreciation of assets and the addition of the asset base of Tega McNally.

• Copper and gold business is around 75%. Last year copper overall grew by 2.2. %. There was a little bit of headwind on copper during last quarter because of uh closure of Panama mines and a few other project getting delayed which will be there also in the first half of 2024 but as a number of projects in Russia as well as in Congo that are coming on stream, the copper projection is expected to be pretty good 2025.

• Consumable business on a sustainable basis gives Ebitda margin of 20-22% while for equipment business is around 10-11%

• The company expect 15% revenue growth in both consumable and equipment business