Tega Industries held a conference call on 8 August 2022 to discuss the results for the quarter ended June 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

• The quarter was marked by a bleak global macro environment affected by the geopolitical issues in Europe. The recessionary outlook in leading economies, the volatility in currencies and inflationary pressures on raw materials.

• The company mentioned that its revenue builds up through throughout the financial year starting from a moderate q1 and finishing higher in q4. Hence, the performance analysis of quarter on quarter versus year on year for its business will be more relevant.

• The disruption in supply chain coupled with rising fuel and commodity costs, affected the margins for the past few quarters. In Q1, there was some respite in logistic costs, which has reduced since the last quarter. However, the costs are still higher than the normal prices, or pre covid era and commodity inflation still persists, as well as raw material prices remain elevated.

• The company is able to pass through any cost escalations to its customers, with a lag of a few quarters.

• The company has a strong pipeline with a robust order book of Rs 300.4 crore as of June 30 2022, compared to Rs 235.9 crore as of March 3120 22.

• Ebitda margin improved from 14% to 19% due to higher volume resulting in better adoption of fixed cost also

• Out of 41% revenue growth around 13-14% was towards price increase and 30% towards volume growth while the company lost arbout 3% in exchange.

• Dyna prime revenue in Q1FY23 was Rs 45.3 crore while Non Dyna prime mill revenue was Rs 138.9 crore and non mill revenue was Rs 46.6 crore.

• The company saw a growth of 157% in Dynaprime mill segment which consists of 150% volume and 10% price. High growth in trajectory was due to supply chain issues in Chile last year which will get normalized in coming quarters.

• On the mill segment non dyna prime the company grew about 32% which consists of 18% business growth and 17% is about price growth.

• Non mill side the company grew about 15% which consists of 8% business growth and 7% is about price growth.

• Logistics costs have fallen by around 20% from its peak in Q3FY22 but it is still very high from normailzation rates what it had at pre covid levels.

• The company has capex plans for about Rs 250-270 crore over a three year period.