Tega Industries held a conference call on 12 August 2023 to discuss the results for the quarter ended June 2023 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

• The company mentioned that the recent acquisition of McNally Sayaji Engineering has not only enriched Tega Industries, but also opened up new avenues for them. The integration of McNally capabilities has bolstered its global market reach and positioned it to manage larger projects with increased capacity.

• The expansion project in Chile is progressing smoothly and it has now completed the land acquisition phase and is eagerly awaiting the necessary regulatory approvals to start construction.

• Mill business was impacted during the quarter due to congestion in the port which had an impact of about Rs 20 crore in Q1FY24.

• A wholly owned foreign subsidiary of Tega Industries, has entered into an Agreement with the largest copper mine in Europe, to supply, install and manage the company mill and non-mill products for the mineral processing plant of the mine. The agreement covers supply, maintenance, and other services for a period of five (5) plus one (1) years, w.e.f. January 1, 2024. The agreement is linked to production and the minimum amount the customer is expected to spend during the six (6) year term of the agreement is estimated to be Rs 685.2 crore.

• Order book has increased from Rs 480 crore at the end of FY2023 to Rs 520 crore at the end of Q1FY2024.

• The company had certain lower sales account logistics and shipment issue, which created the uncertainty and non availability of shipping containers in the month of June 2023. Apart from that it had a one time legal and professional expenses of about Rs 4 crore towards the McNally acquisition and integration into the mainstream. These two items together have the impacted profitability in the current quarter by about Rs 24 crore. It was one off during the quarter and will not impact the rest of the quarters.

• McNally is is like a backward integration for Tega because McNally is in the equipment space, and Tega provide spares which are getting installed in those equipments as well. So this opens up a new market domain for Tega as well as it is not into the equipment space and the size of the market in the equipment space is pretty big as compared to the spare business. The company has started working towards the integration of the entities and creating value from the synergies which will have a positive impact in the future.

• Copper production has been growing to about between 3.5-4% while gold production also is growing up by 1.5%. The company mentioned that any impact on the global economic situation is not going to have impact on this two commodity because the electrical vehicle introduction globally is going on at a very large pace and each vehicle require a large amount of copper.

• Volume de growth during the quarter was 10%

• Current capacity utilization is around 65%

• The company expects sustainable Ebitda margins at around 20-22% in the consumable business while for McNally it would be 12-13%.

• The company aims to grow at about 15% CAGR for next 3-4 years.