Tega Industries held a conference call on 09 February 2023 to discuss the results for the quarter ended December 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

• Q3 performance has been impacted due to supply chain challenges arising from the red sea crisis and few instances wherein the conversion orders have taken longer than expected timelines. There was shipment delays and higher freight costs in the second fortnight of December, emanating from the raging red sea crisis and the ongoing geopolitical tensions in West Asia. The situation has improved now.

• The freight levels for the major part of 9MFY24 were lower than last year. It was only at the fag end of December, the second fortnight of December, where the freight rates went up. It does not impact the company too much because all the increase in freight rates is a pass-through which it passes on to the customers.

• Inventory as at December end went up due to such supply chain issues in Q3FY24. There has been an incremental increase in the stock of about Rs 20 crore over March '23 levels, which has impacted the Q3 revenues by about Rs 45-50 crore. With this, revenue for consumer segment for Q3 would have been close to Rs 335 crore, resulting in an EBITDA to the tune of 22%.

• However, the company has been able to accelerate the sales in Q4FY24 till date and is confident of achieving the projected organic revenue growth of 15% on a year-on-year basis as per its earlier estimates.

• The integration of Tega McNally with Tega is progressing as per expectations so far. For 9MFY24, Tega McNally has recorded a revenue of Rs 145 crore with an EBITDA of Rs 15 crore. Tega McNally had recorded a revenue of Rs 183 crore with an adjusted EBITDA of Rs 10 crore in FY23.

• 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.

• The company has completed all groundwork including finalization of designs, etc., for the Chile project and has received most of the regulatory approvals. While few approvals are expected to be received anytime, it expect start the project latest by April 2024.

• The company has also opened a new subsidiary in Peru, which has significant mineral reserves and presents substantial business opportunities in mining.

• The company has a strong order book at a Group level of Rs 673 crore as at December end vis-a-vis an order book of Rs 480 crore as on 1st April, '23.

• The company expects an EBITDA margin of 20-22% for the full-year basis.

• Current capacity utilization is about 60-65%.