Welcome to the Tega Industries Limited Q1 FY 2025 earnings conference call hosted by Orient Capital. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please email an operator by pressing star and zero on your touch-tone phone. Please note that this conference is being recorded. Welcome, and the conference over to Mr. Hitesh Agrawal. Thank you, and over to you, sir. Thank you, Shlok. Good evening, everybody, and welcome to the Q1 FY 2025 earnings conference call of Tega Industries Limited. Today on this call, we have with us Mr. Mehul Mohanka, Managing Director and Group CEO, Mr. Pratik Basu Roy, Product Management, Global Sales and Marketing, and Mr. Sharad Kumar Khaitan, who is the CFO. Before we proceed with this call, I would like to give a small disclaimer that this conference call may contain certain public information which are based on the view, opinion, and expectation of a company as of today. A detailed statement has also been given on the company representation, which has been uploaded on the public screen. I hope everybody has had a chance to go through the video. Now, I would like to hand over the call to Mr. Mehul Mohanka, for his opening remark. Over to you, sir. Thank you. Good evening and a warm welcome to all the participants in the call. I am joined this evening by Mr. Imam, who is a Director on the Board, Mr. Pratik Basu Roy, President, Product Group and Sales, and Mr. Sharad Kumar Khaitan, our CFO. The total group revenues for Q1 of FY 2025 stood at INR 352 crores, with an EBITDA of INR 76 crores. That is an EBITDA margin of 21%. Revenues have been higher by about INR 75 crores in the same period last year, mainly due to the spillover of the carry forward of the last quarter, that is Q4 of FY 2024, current quarter, and higher service income. The total revenues of the consumables business segment grew by INR 84 crores over the same period last year, whereas the equipment business segment operated to INR 37 crores from INR 45 crores during the same period last year. The increase of group revenues by 27% should be adjusted for the one-off impact, which will sequentially bring it in line with the earlier estimates of 15% average growth rate. It should be noted that we have acquired Tega McNally Minerals Limited in February of 2023, and hence the comparative figures for the same period last year are fully comparable, as both the consumable and the consumables business segments have been fully operative in the 12-month period between 31st March 2024. It is very important for me to thank and express my heartfelt gratitude to the entire team for the performance in such dynamic operating environments. I believe that high employee engagement leads to improved customer satisfaction, which in turn leads to better business results. Our employees across the globe feel engaged and committed, which helps us in customer satisfaction and creating value for all our customers. The integration of Tega McNally with Tega has been progressing as per our expectations, as per the yielding results. As informed earlier, Tega McNally has formed a consortium for designing and commissioning of a new 7 million ton per annum iron ore screening and beneficiation plant at Donimalai for NMDC Limited. The total contract value, including taxes, is INR 872 crores, with Tega McNally's share being INR 120 crores. This should be executed over a period of 26 months. From a logistics point of view, the shipping route continues to be a challenge, with shipping lines hitting into conflicts at sea. Congestion at major ports along these alternative routes has escalated, delaying ship and tender turnaround times. The time to deliver products to customers has also gone up substantially. The COVID crisis has left us with experiences on how to manage such logistic challenges proactively, and we have already executed such measures in anticipation of such disruptions. The impact of heightened shipping costs will be passed on to the customers in most of the cases. Our supply chain is more resilient, better planning for both raw material as well as customer deliveries. We have built up the industry and are in constant communication with all our customers and business partners to mitigate these crises. We also have a strong order book at a group level of INR 560 crores as of June 2024 ends, vis-à-vis an order book of INR 520 crores as of June 2023, without considering the long-term orders like NMDC in Tega McNally. We have received all regulatory approvals for the construction for the Chile project and have started the construction activities. We intend to start the commercial production for the new facility by June of 2025. The Chile project will assist us in consolidating existing facilities and adding new capacity, which shall help gain efficiency and strengthen our presence in Latin America. Apart from the existing project, we have also secured additional land, measuring 51,000 sq m alongside the project site for INR 21 crores, which will be used for future expansion. Sustainability is not only important for us but also for the customers we serve, and Tega recognizes the significance of environmental, social, and governance. We are committed to being a sustainable business, as we believe it is not only a commercial and moral imperative but also a tremendous opportunity. As we work towards our net-zero goals, our technologies and products are helping our customers on their own sustainability journey by enabling significant reductions in power consumption and in reduction of carbon emissions. I would like to express our sincere gratitude to all our investors for their unwavering faith in our company. Thank you for your continued support, and now I would like to hand over to Sharad to take us through the financial performance of the company for the period under review. Thank you, Mehul. A very warm welcome to everyone, and thank you for joining the earnings call for Q1 of FY 2025. In our business, generally, H2 has always been in H1 in terms of performance, revenue, and profitability margins, and hence, comparison with the immediately preceding quarter, this Q4 of FY 2024 has not been commented upon. The total group revenues for Q1 of FY 2025 stood at INR 352 crores and INR 76 crores, that is at an EBITDA margin of 21%. Revenues have been higher by about INR 75 crores than the same period last year, mainly due to the spillover of the carry forward from the last quarter and higher service incomes, as informed earlier. The revenue from operations has grown by approximately 72%, that is from INR 268 crores in the same period last year to INR 340 crores, with the consumables business segment growing by approximately 26%, that is from INR 224 crores in the same period last year to about INR 305 crores in the period under review. The equipment business segment had a revenue from operations of INR 36 crores versus INR 44 crores in the same period last year. The equipment business performance was lower in the current quarter due to delay in receipt of payments, inspection reports, and such as dispatch clearance certificates from a few customers, which is expected to be regularized in Q2 of the current financial year. The order book for both the business segments remains strong. The overall operating EBITDA at the group level for Q1 of FY 2025 has grown from INR 39 crores in the same period last year to INR 64 crores in the reporting quarter. We achieved an operating EBITDA of 19% at the group level versus 15% last year. The consumables business segment achieved an EBITDA margin of 21% in Q1 of FY 2025 versus 16% in the same period last year. The EBITDA margins for the equipment business would show recovery once we are able to record the revenue, as mentioned earlier. With respect to integration of Tega McNally Minerals Limited with Tega Industries Limited, please note that the integration milestones and the synergy challenges are progressing as per the integration plans, and we are satisfied with the progress made till date. We are on the path to capture the full potential of the equipment business, not only to increase economies of scale but also to position ourselves in the market and accelerate our overall strategy. One small step in this regard is getting the order from NMDC Limited, the largest iron ore mining company of India, for designing and commissioning of the 7 metric tons per annum iron ore screening and beneficiation plant at Donimalai as part of a consortium being mentioned by Mehul earlier. Tega McNally's share, including taxes in the said contract, is approximately INR 120 crores, and the scope includes design and supply of specific equipment from the proposed plant, like feeders, screens, hydrocyclones, spiral classifier, milling, etc. Thank you very much for your time, and the forum is now open to any questions you may have. Over to you, Hitesh. Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their desktop phone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use a handset while asking a question. We will wait for a moment while the question queue assembles. The first question is from the line of Aman Soni from Nvest Analytics Advisory. Please go ahead. Hello. You're audible. You may go ahead with your question. Congratulations for good setup number. The first question is on future outlooks. Could you share your perspective on future outlooks of the copper industry and how the company plans to navigate the anticipated market trends and challenges in the upcoming period? The revenue estimates what we give is about an average of 15% over the last five years and a blended EBITDA margin of 21 odd percent. So as we have said, we are also copper and gold. Our business is around 75% of our business comes from this two gold. Last year, copper overall grew by 2.2%, but in the last quarter, there was a problem with Panama Mines, which closed down, and a few other projects which had also got delayed because commissioning was there. But from this first half, we see good headwinds over there. Projects are now coming on online and g oing forward, both for the current financial year and the next year, we think copper's outlook is pretty good. My next question is on margin guidance and the growth guidance for the financial year 2025. Could you please provide the guidance? We have already given the guidance that the revenue growth should be around 15% on an average, within blended EBITDA margin of about 20% to 21%. Thank you. A reminder to all the participants that you may press star and one to ask your questions. The next question is from the line of Saloni Shah from SK Investments. Please go ahead. Hello, sir. Thank you for the opportunity. I have two questions. The first one is regarding the competition. Considering long-standing players like Metso and the others in the market, they currently offer a superior product. So can these competitors replicate it, or is your product continuously upgraded? So if you look at the product compared to Metso, globally, we are competing against products of Metso only. Metso is our major competitor globally, and our product, both from quality and other aspects of delivery of value to the customer, is in no way second to anyone. Okay? And on some of the fronts, including DynaPrime, we are the leaders in that segment. We do invest into R&D, and a lot of proposals and products are under evaluation, and we will let you know once the commercial launches are done. So we always try to remain ahead of the curve and ahead of the competition as well. Okay, sir. Thank you. Sir, my second question is, could you provide more details on the potential infrastructure improvements planned for the next three years? Specifically, what kind of CapEx are we anticipating for the same? There are two business segments what we are talking about, ma'am. First is we have a CapEx plan of about $30 million overall in the consumable business segment, of which a significant portion will be towards the Chile CapEx plant, which we just mentioned that we are starting the construction. We have started the construction, and it is expected that commercial production to be there from June 2025. Apart from that, in the equipment business space, as and when the CapEx is required, we shall have those fundings done to revive the equipment business and take it forward. Anything in the range of INR 15 crores to INR 2 0 crores is the immediate requirement for that particular business. Okay. All right. Thank you so much. Thank you. The next question is from the line of Manish Ostwal from Nirmal Bang Securities. Please go ahead. The current participant seems to have disconnected. The next question is from the line of Chirag Muchhala. Please go ahead. Yeah. Hi. Thank you for the opportunity. So firstly, on the consumable segment, in last quarter, we had mentioned about some supply chain issues and West Asia-related Red Sea supply constraints, which had also led to some deferment of revenue. So just wanted to have a look at that. Are all those completely o r did those impact everything in Q1 also? Chirag, like we mentioned in our opening remarks, the revenues have been higher by INR 75 crores current year versus Q1 last year, and we have clearly mentioned that one of the main reasons is the spillover on the tariff order last quarter. That is why you have such a high revenue in Q1, which normally we do not have. As far as the logistics is concerned, the shipping routes continue to be a challenge because there are so many issues along the Red Sea, and there is congestion of the ports, and there's a lot of delay in the container times, but like we mentioned earlier, we have taken proactive steps in anticipation of such disruptions, and we are doing a pre-planning advancement to ensure that we meet our estimates and our customers are also not disturbed. As far as the backlog situation is concerned, a significant major portion of that has been recovered, and disruptions keep happening. So as and when they come, we will let you know about that. Sure. Sir, on the Europe order, so this would have been the second quarter of the execution of that Europe order. So just qualitatively speaking, how is our experience and the normal quarterly run? It can vary from month to month, but in Q1 also, if you can qualitatively speak about the Euro pe order's normal, I mean, execution has been progressing well as per our expectation, and roughly speaking, around INR 30 crores or so has been generated from Q1? Chirag, as far as this European order is concerned, we are very happy to inform that it's been more than six months, and we are doing pretty well. The customer is very happy and satisfied with our progress we have done so far, and it's a matter of pride that we have been able to successfully maneuver these six months and prove that yes, we can operate in those conditions as well. This order, particularly on an average, generates about INR 10 crores of cash flow per month, which is on a steady state basis and keeps continuing accruing us over the period of 5 plus one, that is six years. Okay. Sir, one quick question I wanted to check on how the global mining industry, especially the three ores that we cater to, gold, copper, and iron ore. So, considering that there are certain economic challenges globally in certain countries because of various economic situations, etc., are we seeing a trend where the shift from, let's say, metallic liners to DynaPrime etc., continues as we have seen in two, three years prior, or is there some softness in decision-making by customers? Because generally, when economic situations are a bit unfavorable, generally, this product upgradation, etc., takes a backseat with some countries and some customers. Just wanted to have your colleagues to comment on the same. Yes. So, Chirag, Pratik here, so you see, you're right. There are disruptions in the three ores. However, fortunately, while some of the countries, like Australia, Canada, Peru, and US, have gone down, some others, like Kazakhstan, South Africa, Indonesia, they have come up. So overall, the market remains moderately with the growth, so flattish. So, there's no immediate challenge out there. Similarly, for copper, while one segment in construction is going up, the other on energy conservation is going up. So those are balancing each other out. So, the larger trend is that we see similar trends as we have seen last year. However, significant growth is projected beyond 2025. So that's the situation currently. To summarize, Chirag, we are bullish on the prospects of the overall industry. The metals that we primarily focus upon for the consumables are copper and gold, which continue to be of significant interest globally due to their various end-use applications, and we don't think any impact on the global economic situation is going to have on the use of these two commodities. The EV focus on renewables, all of that, the consumption and the focus on these two ores shall remain as it is and should be on a growth trajectory as itself. Sure. So that's happening too now. And last question on the equipment business. So, our commentary thus far has been that we want to take a conservative approach in terms of equipment business for new contracts because obviously the initial focus is to upgrade the products and processes and integrate the same. So, in that context, it was heartening to see our first major and large order of INR 120 crores from NMDC. So, I mean, where are we in that journey, and should one expect that going forward, we should expect continuation of such large orders, and we are ready with at least a few of these so that we will now start being effective in the domestic market? On the domestic market, see, the Indian market, as well as mineral processing equipment, is very bullish now. Okay? And our basic idea with this NMDC, such large projects come in sequences of growth. And basically, we are going to look at both in the coal and the iron ore sector, how this growth is going to take place through Brownfield and Greenfield projects. We have been over the period of the last 15 months that we have taken over McNally, been looking into a lot of upgradation of these others. Some of the upgradation has already been progressed. And overall, we are pretty bullish on this thing. As you know, apart from this NMDC, our order booking is pretty strong now, in good. And going forward, I think even next year also, we think that the strong growth will continue to happen with the capital equipment business. Having said that, capital equipment business, this equipment takes five months, six months to get ready, v arious components are there. So, in some months, we will have larger revenue. Some of them will have below the average revenue. But overall, looking forward for the full year, we appreciate the confidence of reaching our growth targets. That's heartening. That's it from my side. Thank you. As a reminder, participants who wish to ask questions may please press star and one. The next question is from the line of Saurabh Patwa from Quest Investment Advisors. Please go ahead. Mr. Saurabh? Hello. You may go ahead with your question. What is your view on the acquired company McNally Sayaji? H ow is the progress has been? Is it in line with what you originally expected, or is it better? How do you see, from a three-year view, the acquisition helping us in our growth targets? So even in last year, we grew. Okay? So in 12 months, compared to the previous year, from 183, we grew up to 206. I mean, both we were looking at the business. There were a lot of issues over there for us to understand. Cultural integration is a process. And right in the first stage, when we had taken over the company, we had said this will take around 18 to 24 months for us to fully integrate. Okay? Then we'll start looking at. So, whatever is happening with it, we are pretty happy with the milestones which we are reaching. As I said in the question before, we have invested quite heavily on product upgradation and people and resources. We have hired people from different industries to bolster the whole team. And happily, our product booking is pretty strong now. Overall, as I said, we're pretty bullish on that. So sir, concerning integration, this is a question from the previous question. With the entire integration taking 24 months, is it higher than your expectation, and you're getting much more confident now versus what you would have 12 months back or maybe six months ago? Like we mentioned earlier, the integration milestones and the synergy targets, what we have expected, we are as per our integration plans, and like Mr. Imam mentioned, we are pretty confident of the turnaround of the McNally story as well, with the growth we made in FY 2024 and the current stage in FY 2025. Great. Great. Congratulations on all the results for the coming quarter. Thank you. Goodbye. Thank you. Next question is from the line of Mayank Bhandari from Asian Markets Securities. Please go ahead. Thanks for the opportunity. So, I have a few questions from the annual report that you have presented recently. Firstly, what is your proportion of revenue from the mill liners, like 75% of the total revenue? Yes. Around that same level, Mayank. So which gives me a number of almost INR 1,100 crores of the total revenue from the mill liners. You are talking about the FY 2024 numbers, right? Yes. In the last almost two years, the growth has been particularly in the mill liners, okay, in some rate of almost more than 20% CAGR. I think, I mean, if you were to estimate your market share now at this moment globally, what would be significantly outstanding competition? Is it like a double-digit kind of market share now? So market share figure as of now, but let me just tell you, because the market sector, if you look at copper and gold, they are growing at 2% or 3%. The liner business itself is growing around 5%. And we are growing another 15%. Okay? So all the growth that is taking place is a market share gain. Okay? So we have not reached the double-digit figure as our growth was expected, but we have come on the path to that. Just reconfirming one thing, because in the annual report, it's written 25% from the non-mill liner up, which includes Tega McNally, right? In the consol numbers, if you see, consol numbers, it would be 25% of my domestic sales, which includes McNally revenues as well. So total consol number, 75% is mill liners and 25% is? No. No. 75% is my exports on this thing, and 25% is domestic sales. In that domestic sales, McNally is contributing. The entire McNally, 100% of it is a part of the domestic sales. Okay. And secondly, sir, you also mentioned that there are some acquisition plans going on in the McNally business, which is written in the annual report. If you could help elaborate on that. We have not mentioned any acquisition plan. We have mentioned, if I recall correctly, we have mentioned that we will do sufficient CapEx in that business. Okay. Okay. INR 15 crore-INR 20 crores the number is. Yeah. INR 15 crore-INR 20 crores is the CapEx what we intend to do in the equipment business category. Okay. I've noted it. And additionally, sir, as part of our solar power initiatives, we have, I think, three plants under the initiation where we are working on developing the solar plants. What kind of cost saving will we realize once all of them are materially contributing? It will help us reduce our power cost. And other than that, we believe strongly in that ESG and other initiatives. So it will help us generate green energy, and that is how we intend to use the solar power. So, any number, cost saving in terms of how much you can? Not any specific number at this juncture, Mayank. Okay. And. We have solar plants which are coming up, solar installations in Samali, Kalyani, as well as the Dahej plant. Yeah. That is. So totally, we see it's about 1,600 KWh-1,700 KWh of solar power, what we intend to harness. Okay. And this is the last question on the global trends. So we have seen that the experts indicating that the inquiry pipeline for the copper, particularly, is very strong, although the results indicate that there is a weakness. So what kind of traction you are seeing, particularly in the mines? The inquiries have increased recently, or how is it? And we would not like to comment on Metso's result, this thing. But as far as our revenue estimates are concerned, we are confident that we will be able to meet our revenue estimates and guidance for both the revenue as well as the EBITDA margins. Okay. Okay. Thank you, sir. That's it from my side, and I'll supplement on the annual report. It's very exhaustive and informative. Thank you, Mayank. Thank you. The next question is from the line of Manish Ostwal from Nirmal Bang Securities. Please go ahead. Yes, sir. Thank you for the opportunity. And I have most of the questions already answered. I have only two questions. First is our logistics cost compared to our normal logistics cost, how much it is higher currently? The logistics cost is basically we do not have too much of an increase in the logistics cost because we pass the logistics cost to our customers because of a small time lag. Okay. Okay. And secondly, sir, in terms of inorganic growth strategy of the company and overall capital allocation decision processes, can you elaborate on that, sir? That will be my final question. No. Can you be little specific? I couldn't understand your question. The question is basically in terms of growth investment in the business. One is we are making investment like we are making investment for Chile project, right? And for equipment business, we have an earmarked INR 15 crore-INR 20 crores. Apart from that, any inorganic growth strategy company is following in FY 2025, FY26? Hello? Yeah. I got the question. Last year only, in February 2023, we acquired McNally as part of our growth expansion strategy. And we are open for any acquisition which comes, but then it has to be at the right value for us. If it's the right value fit, then we are definitely open and we will explore that if it's a strategic fit for us. So it is a combination of geography or it's a combination of capability standpoint? We are a global player, and in geography, it can be a capability enhancement. It can be technology enhancement. It can be a geographical expansion. It has to be a strategically right fit for us, and then we can evaluate if anything comes. Sure, sir. Thank you very much. Thank you. Thank you. The next question is from the line of Anupam Gupta from IIFL Securities. Please go ahead. Yeah. Thanks for the opportunity, sir. First question is on McNally. So is there an output number which you can share into? Anupam, can you speak a little louder? Mr. Anupam, please get closer to your microphone. Yeah. Is this better? Yes. It's a little better now. Yeah. So, the question. Just give me one second. Give me one second. Yeah. Not bad. Yeah. So, the question is basically for McNally. Is there a sort of an order book number which you can share, including the NMDC order which is there? See, the NMDC order is about INR 120 crores, which is to be executed in a span of 24-26 months. We see the order book at an overall group level because the industry we are servicing is the same. And when we talk about an order book, we don't consider long-term contracts in our order book numbers. Okay. So basically, McNally, what is the growth number which you said you are targeting for the equipment business? We are targeting a 15% revenue growth in the McNally business. Should it not be higher, given that you are basically now turning it around and you are expanding the targeted market? And can it potentially be higher is the question. The overall equipment business is anything in the range of $28 billion-$30 billion. So that is the scope for us, as well as the domestic industry also, like Mr. Imam mentioned, there's a lot of scope there. We will definitely try, but on a conservative basis, we would like to remain at a 15% guidance at this stage. On consumables, is there a metric? Let's say, so there are a lot of factors which you keep asking for your new product development, and you have said that you focus on that. But is there, let's say FY 2024? What sort of revenues did you do from new products in the consumable side, or what is your target for that, let's say, a few years down the line? Is there something which you track internally? You see, basically, what we have mentioned in all our guidance estimates is a 15% revenue growth. This comes from a mix of a few things, actually. Number one is high-quality solutions, what we give to our customers. Second is we provide all the solution value addition, what we give to the consumers. This value addition comes from not only the product quality, the service quality, as well as the other intangibles, what is a part of that. Until you don't modify and keep upgrading, consumers will not find any attraction and value in the product. That is how we look for our growth trajectory. Okay. Okay. Understood. And just one last question on the consumables business. What would be the proportion of volumes? What would be proportion of volumes would be from the CapEx side of it and what is let's say the OpEx side of it? I couldn't understand your question. What is for your customers when you are supplying it as an operational expense versus when you are supplying it as when we are doing a CapEx? Our CapEx-related consumables are very low, 5% and below. Most of our consumer business are OpEx-related. It comes in the form of our own shares as well as growth in the market share through converting from different type of lineups to our design and from property. So growth from the market itself is growing by 4%-5%. So all the new business from OEM levels, which you are going to do, will be limited to that. And our figures are also tracking that figure separately. Understood. That's all from my side. Thank you. This was the last question for today. I would now like to hand the conference over to management for closing comments. Thank you very much, everybody, for participating. We look forward to your constant feedback. Thank you so much. Thank you.