tega industries ltd share price Management discussions

Global economic overview

The global economy grew an estimated 5.9% in 2021 compared to a de-growth of 3.3% in 2020. This recovery is attributed to accelerated vaccine rollout across 4.4 Billion people. However, the global economy was affected by prohibitive shipping freight rates, and a shortage of shipping containers amongst others. Inflation was at its highest since 2011, especially in the advanced economies. The commodities that reported a sharp increase in prices comprised steel, coal, oil, copper, food grains, fertilisers and gold. The global economy is projected to grow at a modest 2.6% in 2022 following the Russia-Ukraine crisis.

Regional growth (%) 2021 2020
World output 5.9 (3.3)
Advanced economies 5.0 (4.9)
Emerging and developing economies 6.3 (2.4)
(Source: IMF, World Bank, UNCTAD)

Indian economic overview

Indias GDP rebounded from a de-growth of 7.3% in FY 2020-21 to a growth of 8.7% in FY 2021-22, the fastest among major economies.

Y-o-Y growth of the Indian economy

Regional growth (%) FY19 FY20 FY21 FY22
Real GDP growth (%) 6.1 4.2 (7.3) 8.7

There were positive features of the Indian economy during the year under review. Foreign direct investments increased 15% to USD74.01 Billion in 2021. The government approved 100% FDI for insurance intermediaries and increased the FDI limit in the insurance sector from 49% to 74% in Union Budget 2021-22. India raised over H97,000 crore through asset monetization, which was higher than the target.

India was the largest recipient of global remittances. Indias foreign exchange reserves stood at an all-time high of USD 642.45 Billion as of September 3, 2021. Indias bank loan growth was 11.20% during the year under review, partly reflecting the low base effect of the previous year. India reported improving Goods and Services Tax (GST) collections month-on-month in the second half of 2021-22, peaking at H1.42 lakh crore in March 2022.

India ranked 62 in the 2020 World Banks Ease of Doing Business ranking. The country received positive FPIs worth H51,000 crore in 2021 as the country ranked fifth among the worlds top leading stock markets with a market capitalization of USD 3.21 Trillion in March 2022.

Indias per capita income was estimated to have increased 16.28% from H1.29 lakh in 2020-21 to H1.50 lakh in 2021-22.

Indias tax collections increased to a record H27.07 lakh crore in FY 2021-22, higher

than the budgeted H22.17 lakh crore. Indias tax-to-GDP ratio jumped from 10.3% in FY 2020-21 to 11.7% in FY 2021-22, the highest since 1999.

However, retail inflation in March 2022 at 6.95% was above the RBIs tolerance level of 6% and at a 17-month high. The fiscal deficit was estimated at ~H15.91 Trillion for the year ending March 31, 2022, on account of a higher government expenditure during the year under review. (Source: Economic Times, IMF, World Bank, EIU, Business Standard, McKinsey, SANDRP, Times of India, Livemint, InvestIndia.org, Indian Express, NDTV, Asian Development Bank)

Indian economic reforms and Budget 2022-23 provisions

The Budget 2022-23 seeks to lay the foundation of the Indian economy over the next 25 years. The government is emphasizing the role of PM GatiShakti, Inclusive Development, Productivity Enhancement & Investment, Sunrise Opportunities, Energy Transition and Climate Action, as well as Financing of Investments.

The capital expenditure target of the Indian government expanded by 35.4% from H5.54 lakh crore to H7.50 lakh crore. An announcement of nearly H20,000 crore was made for the PM Gati Shakti National

Master Plan to catalyse the infrastructure sector. An expansion of 25,000 km was initiated for the national highways network in FY 2022-23. An allocation of H2.37 lakh crore was made towards the procurement of wheat and paddy under MSP operations. An outlay of H1.97 lakh crore was announced for the Production Linked Incentive (PLI) schemes across 13 sectors.


Across the next three years, capital expenditure in core sectors - cement, metal, oil refining and power - should be about H5 Trillion. Besides, the governments production linked incentives (PLI)–led capital expenditure should generate an incremental H1.4 Trillion in sectors like consumer durables, pharmaceuticals and automobiles. A multi-year revival in capital investments comprises USD 500 Billion investments projected for the wind and solar infrastructure, energy storage and grid expansion segments. The Indian economy is projected to grow by a little more than 8% in FY 2022-23 (World Bank estimate).

Global mining industry overview

The global mining sector was estimated at USD 2.06 Trillion in 2022 compared to USD 1.84 Trillion in 2021. As the global economy gradually recovered from the pandemic, the metals and mining sector benefited from recovering realizations. Demand for most minerals is driven by a release of pent-up consumer spending, government stimulus efforts and a global energy transition. The mining sector market is expected to reach USD 3.36 Trillion by 2026, growing at a CAGR of 12.9% during the forecasted period. The mining sector is segmented into mining support activities, general minerals, stones, copper, nickel, lead, and zinc, metal ore, coal, lignite and anthracite As of 2021, the coal, lignite and anthracite market was considered the largest within the mining sector by type - 62.4% of the total market. Moreover, the general minerals market is forecast to be the fastest-growing (segmented by type), growing at a CAGR of 20.7% during the 2021-2026 period.

The Asia-Pacific was the largest in the global mining market, accounting for 70.5% of the market in 2021, followed by North America, Western Europe and the other regions. Going forward, South

. America and the Middle East are expected to emerge as the fastest-growing mining geographies, growing at a CAGR of 23.7% and 22.4% respectively from 2021 to 2026.

The increasing use of renewable energy is helping mining companies reduce power costs and control mine emissions. Besides, solar or wind projects proximate to mine sites are reducing the cost of connecting to power grids. (Source: prnewswire.com)

Indian mining industry overview

The Indian mining industry is core to Indias progress, providing basic raw materials to prominent downstream industries. India produces over 85 minerals including coal, lignite, bauxite, chromite, copper ore and concentrates, iron ore, manganese ore, silver, diamond, limestone, phosphorite and others. The major mining states of India comprise Andhra Pradesh, Jharkhand, Odisha, Rajasthan, Karnataka, Madhya Pradesh and Maharashtra. India is also the second-largest coal producer and importer in the world. Indias coal consumption is anticipated to rise 3.9% annually to 1.18 Billion Tonnes in 2024 based on 7.4% GDP growth estimates between 2022 and 2024, this growth is partly catalysed by the timely availability of coal mined from within the country.

As of 2021, the number of reporting mines in India was estimated at 1,229, out of which mines for metallic minerals were estimated at 545 and non-metallic minerals at 684. The rise in infrastructure development, automotive production, power and cement sector will be major growth drivers. Besides, the growing demand for iron and steel is likely to sustain given strong growth expectations for the residential and commercial building industry. Indias consumption outlook for various mineral resources is expected to remain optimistic well into the long term.

(Source: IBEF, makeinindia.com, Invest India)

Indian steel and power industry

The Indian steel sector contributes about 1.5% to its GDP and is one of the leading sectors forming the cornerstone of the economy. India is the second largest producer of steel in the world. In FY 2021-22, the production of crude steel was estimated at 112-114 MT, an increase of 8-9% year on year. Crude steel production is anticipated to grow by 18%, to reach 120 Million Tonnes by the end of 2022, driven by abundant availability of raw materials and cost-effective labour. Indias finished steel exports (globally) were at 12.2 Million Tonnes in 2021-22, against 10.78 Million Tonnes in 2020-21.

Indias per capita steel consumption was 70 Kg in FY 2020-21, compared with the global average of 227.5 Kg, indicating room for growth. This represent the optimism of why Indias steel industry is expected to produce 300 MTPA by FY 2030-31, catalysed by demand from the construction, infrastructure, automotive, oil and gas and consumer durable sectors. The Indian governments Jal Jeevan Mission, Pradhan Mantri Awas Yojana (PMAY), Bharatmala and Sagarmala policies are expected to catalyse public investment; projects like the dedicated freight corridor, metro railways, UJALA, port modernization, new airports, renewable energy and irrigation projects could result in consumption growth. Under the Union Budget 2022-23, the government allocated H47 crore (USD 6.2 Million) to the Ministry of Steel. The government seeks to increase domestic per capita steel consumption to 160 Kg by 2030, creating a larger market for the mining sector.

(Source: IBEF, Economic Times, worldsteel. org, CNBC TV 18, Financial Express) Indias power generation ranges from conventional sources like coal, lignite, natural gas, oil, hydro and nuclear power to non-conventional sources like wind, solar, agricultural and domestic waste. India is the third-largest producer and second-largest consumer of electricity. The countrys installed power generation capacity was 399.49 GW as on March 31, 2022.

The countrys installed renewable energy capacity stood at 152.36 GW, representing 38.56% of the overall installed power capacity. Electricity consumption per capita was around 2,280 Billion kilowatt hours in India in 2021-22 and is expected to reach 4,500 Billion kilowatt hours by 3031-32. Indias power industry is forecast to grow at 6.5% a year between 2022 and 2024, catalysed by growing consumption from residential and industrial segments as well as general economic growth. The Indian governments ‘Power for all focus also accelerated capacity addition; it allocated H19,500 crore (USD 2.57 Billion) for the PLI scheme to accelerate manufacture of high-efficiency solar modules. By 2026-27 Indias power generation could be around 620 GW, of which 38% would be from coal and 44% from renewable energy sources, catalysed by schemes like Deen Dayal Upadhyay

Gram Jyoti Yojana (DDUGJY), Ujwal DISCOM Assurance Yojana (UDAY) and Integrated Power Development Scheme (IPDS). (Source – IBEF, ETimes, CEA, Statista, The Hindu Business Online, Invest India)

Key growth drivers

Improved infrastructure development and automobile manufacture The growth of the power and cement sector Inclusion of the private sector in the mining industry, estimated at 67.33% of the total value Policy reforms, comprising relaxation of mineral exploration norms Large headroom with 80% of Indias mineral reserves not explored Strong downstream demand, marked by a growth in the real estate sector, driving the demand for metals and in turn for the mining of resources Permission to captive mines to market their coal in the open market, catalysing additional investments Announcement of the production-linked incentive (PLI) in the speciality steel sector A unified single-window clearance platform, facilitating mine clearances and approvals (Source: IBEF, makeinindia.com, Invest India)

Global mineral processing industry overview

The global mineral processing industry was estimated at USD 83,150 Million in 2021 compared to USD 77,220 Million in 2020. Increasing industrialization, urbanization and expansion in the mining industry are catalysing the need for natural minerals and processing. The mineral processing market is segmented into types: crushing, screening, grinding and classification. It is also classified into applications: metal ore mining and non-metallic ore mining. The mineral processing industry is expected to reach USD 168,130 Million in 2028, growing at a CAGR of 10.6% during the forecasted period. The demand for iron ore, copper, and other metals & minerals is expected to drive the mineral processing industry while electric vehicle manufacture could catalyse the demand for copper, aluminium and other metals. The traction for environmental-friendly mining tools is driving mining equipment safe for the environment. (Source: marketwatch.com, prnewswire.com)

Global copper mining industry overview

Copper is the third most consumed metal in the world. The global copper mining industry was estimated at USD 76.76 Billion in 2022, catalysed by increasing construction projects in rapidly developing countries like China and India owing to population and infrastructure growth. The copper market is segmented by end-users like automotive and heavy equipment, construction, electrical and electronics, industrial, and others. The global copper mine production was estimated at 21 Million Tonnes (MT) in 2021 and is expected to reach 25 Million Tonnes (MT) in 2025. This industry is expected to grow at a CAGR of 5.33% from 2021 to 2027. With ~5,600 kTonnes of copper mined in 2021, Chile was the leading global copper producer, followed by Peru (2,200 Tonnes) and China (1,800 kTonnes). (Source: marketwatch.com, mordorintelligence.com, Statista, kitco. com)

Indian copper mining industry overview

Copper is one of the most important non-ferrous metals in India, addressing diverse needs. The size of the Indian copper industry is estimated at around 6.6 lakh Tonnes per annum, merely 3% of the global copper market in 2021.

The factors influencing the growth of copper off-take in India are regulations and performance of the London Metal Exchange, currency exchange rates, infrastructure developments, electric sector, telecom growth, renewable energy, electric vehicle off-take and consumer durables, among others.

Indias per capita consumption of copper was 0.5 Kg against a global average of 3.1 Kg. In terms of exploration, only 20,000 sq. km. area has been explored out of a potential 60,000 sq. km in India. The country is a net exporter of refined copper as it has a higher refining capacity than that of its domestic demand. Further, the refined copper sector is expected to grow at a CAGR of 7% until 2030. To boost copper recycling in India, the Indian government announced a reduction in import duty on copper scrap from 5% to 2.5%. (Source: mines.gov.in, IBEF)

Global gold mining industry overview

Gold continues to be the most popular metal commodity, used as a long-term the store of value and inflation hedge. The global gold mining market was pegged at 130 USD 214.1 Billion in 2021. Increasing gold key reserves by central banks and government vaults, cultural affinity and wealth creation the are driving the gold mining market. Global gold production is recovering following the COVID-19 pandemic that affected output in 2020 and is expected to surpass 130 Million ounces (Moz) by 2024. The key regions in the global gold mining market comprise Asia-Pacific, Europe, the former Soviet Union, the Middle East, Africa, North America, Oceania, and

South & Central America. The industry is expected to reach USD 249.6 Billion by 2026, growing at 3.1% from 2021 to 2026. (Source: researchandmarkets.com, store. globaldata.com, mining-technology.com, gold.org)

Indian gold mining industry overview

India enjoys a rich heritage of gold mining and is one of the largest consumers in the world. The countrys gold consumption was estimated at 850 Tonnes in 2022 compared to 797.3 Tonnes in 2021, the highest in six years. Pent-up demand for gold jewellery and an improvement in consumer confidence is strengthening retail gold sales. As of February 2021, Indias gold and trade contributed ~7.5% to Indias Gross Domestic Product (GDP) and 14% to Indias merchandise exports.

The largest reserves of gold ore are located in Bihar (44%), Rajasthan (25%), Karnataka (21%), West Bengal (3%), Andhra Pradesh (3%) and Jharkhand (2%). (Source: Mint, IBEF, Down to Earth)

The global mill liner industry

The global mill liner segment was estimated at USD 2.03 Billion in 2021. Mill liners are used to improve a mills longevity, protecting the mill from wear while increasing efficiency. The quality of the material used to make a mill liner has a significant impact on the mills efficiency and lifespan. The metal mill liner section accounted for the largest share of the global grinding mill liner market. The five major mill liner consuming regions include North America, Europe, Asia-Pacific (APAC), Middle East and Africa (MEA) and South America. Rapid growth in the mining industry (metal mill liner and rubber mill liner) is the key growth driver of this industry. The global grinding mill liner is expected to grow at a CAGR of 5.5% from 2021 to 2028. Metallic mill liners are expected to dominate the market by 2030. (Source: The Insight Partners, maximizemarketresearch.com, dataintelo. com)

Global hydrocyclones industry

Hydro cyclones are primarily used in mineral slurry separation. The global market size for hydro cyclones was estimated at USD 617 Million in 2020 and projected at USD 1.2 Billion by 2030, growing at a CAGR of 3.2% over the forecasted period 2020-2027. Gold, copper, and iron ore segments account for 60% of the demand for hydro cyclones. Demand for hydro cyclones experienced a rebound following Covid-19 relaxation, especially in the automotive, construction, consumer durables and other segments. Europe is the largest manufacturer of hydro cyclones with a market share of more than 50%, followed by North

America and China. The demand for solid-liquid hydro cyclones leads the segment as it is used in metals, construction and liquid-liquid hydro cyclones (in the crude oil industry) to separate oil from water by the cyclonic effect. (Source: Valuates Report)

Global trommel screen industry

Trommel screen is a mechanical screening machine used to separate materials, mainly in the mineral and solid-waste processing industries. The global trommel screen market was estimated at USD 940 Million in 2020. The demand for global trommel screen is primarily driven by copper and iron mines in Latin American countries, accounting for 35% of the global trommel screen revenue. China accounts for 10% of the global demand for trommel screens. Continuous demand from various mineral companies, water resource management industries, solid-waste processing industries and rising industrialization and mining are catalysing the growth of this kind of filtration screen. (Source: futuremarketinsights.com)

Government initiatives

The National Steel Policy aims to boost per capita steel consumption to 160 Kg by 2030-31. Moreover, the government has a fixed objective of increasing rural consumption of steel from the current 19.6 Kg per capita to 38 Kg per capita by 2030-31.

As part of unlocking Indias vast mineral potential by exploration, the Ministry of Mines handed 152 mineral block reports to different state governments in 2021. Also, 52 potential G-4 mineral blocks approved by the Geological Survey of India (GSI) were handed to 15 state governments.

The National Mineral Exploration Trust (NMET) approved 187 exploration projects for H895.72 crore (USD116.4 Million), of which 69 projects were finished and 118 in the lower ranks.

The Indian government approved the production-linked incentive (PLI) scheme for speciality steel in 2021. The scheme is expected to attract investment worth

~H400 Billion (USD 5.37 Billion) and expand speciality steel capacity by 25 Million Tonnes (MT), to 42 MT in FY 2026-27 from 18 MT in FY 2020-21.

To boost copper recycling in India, the government announced a reduction in the import duty on copper scrap from 5% to 2.5% in 2021.

Under the Union Budget 2022-23, the government allocated H47 crore (USD 6.2 Million) to the Ministry of Steel. The budgets focus is on creating infrastructure and manufacturing to propel the economy.

(Source: IBEF)

Company overview

Tega Industries Limited (Tega) is the flagship company of the Tega Group of Companies, promoted by the Mohanka family. Established in 1976, Tega Industries Limited is one of the leading manufacturers of specialized ‘critical to operate and recurring consumable products for the global mineral beneficiation, mining and bulk solids handling industry. Headquartered in Kolkata (India), Tega offers a range of specialized abrasion and wear-resistant rubber, polyurethane, steel and ceramic based lining components required for mining and mineral processing, screening, and grinding and material handling. Presently, Tega is considered the second-largest producer of polymer-based mill liners. It has manufacturing facilities in India, South Africa, Australia and Chile, with exports to 70+ countries.

Financial overview

Analysis of the Profit and Loss Statement Revenue: Revenues from operations reported a 18.15 % increase from H8,055.22 Million in FY 2020-21 to reach H9,517.56 Million in FY 2021-22. Other income of the Company accounted for a 2.54 % share of the Companys revenues, validating the Companys reliability in its core business operations.

Expenses: Total expenses of the Company increased from H6,755.00 Million in FY 2020-21 to H8,237.98 Million. Raw material costs, accounting for 42.30 % share of the Companys revenues, increased from 40.20 % in FY 2020-21. Employee expenses, accounting for a 15.07 % share of the Companys revenues, increased from H1,226.70 Million in FY 2020-21 to H1,434.21 Million in FY 2021-22.

Analysis of the Balance Sheet

The capital employed by the Company increased by 18.65 % from H8,015.24 Million as of March 31, 2021, to H9,509.78 Million as of March 31, 2022.

The net worth of the Company increased by 19.93 % from H6,137.22 Million as of March 31, 2021, to H7,360.35 Million as of March 31, 2022, due to our growth in reserves and surplus. The Companys equity share capital stood at 6,62,93,149 equity shares of H10 each as of March 31, 2022.

Long-term debt of the Company reduced by 17.32 % to H890.69 Million as on March 31, 2022. Net debt-equity ratio of the Company stood at NIL in FY 2021-22 compared to (0.06) in FY 2020-21.

Finance costs of the Company decreased by 6.22% % from H172.78 Million in FY 2020-21 to H162.04 Million in FY 2021-22 following the repayment of liabilities.

Key ratios

Particulars Formula FY22 FY21
Debt-equity ratio Total Borrowings/Total Equity 0.29 0.31
Debtors Turnover (days) Trade Receivable/(Sales of Products & Services/365) 108.00 102.00
Inventory Turnover (days) Inventories/((Cost of Materials Consumed+Change in 228.00 179.00
inventories of finished goods and work-in-progress)/365)
Debtors Turnover (x) Sales of Products & Services/Trade Receivables 3.37 3.56
Inventory Turnover(x) (Cost of Materials Consumed+Change in inventories of 1.60 2.04
finished goods and work-in-progress)/Inventories
Interest Coverage Ratio (x) EBITDA/Interest Expenses 12.78 13.81
Current Ratio (x) Current Assets/Current Liabilities 2.32 2.25
Operating EBITDA margin (%) (EBITDA minus Non Operating Income)/Revenue from 19.21 23.27
Net Profit margin (%) Profit after Tax/Revenue from operations 12.28 16.93


Competition risk Mitigation: Your Company commenced its operations in 1976 and has a strong brand
The emergence of new competitors call with exports across 70+ countries. Your Company is currently the second-largest
could affect profitability. producer of polymer-based mill liners in the world. Moreover, the Company dedicates
significant time, manpower, financial and other resources for product customization as
per consumer needs to maintain a competitive position.
Global slowdown risk Any further slowdown across the globe might hamper the demand, thereby impacting the financial performance of your Company. Mitigation: Covid-19 had a limited impact on the mining industry, as it was declared an essential service in all countries globally. Mines were running continuously since temporary shutdowns of mines are expensive and therefore there was resilient demand for critical mining consumables for regular operations.
Obsolescence risk Technological obsolescence might hamper your Companys manufacturing potential and impact the Companys performance. Mitigation: Your Company is constantly engaged in R&D and has a special team which is engaged in the development of new products and services with a key objective to deliver premium products and solutions. Therefore, our extensive research activities, advanced R&D centres and innovation keep us at the forefront of the industry.
Employee risk Mitigation: Your Companys employee strength stood at 1,779 on March 31, 2022, while
Incompetence to maintain a robust talent retention stood 82% for FY 2021-22 for employees on the role of the Company.
working environment could reduce
people retention.
Geographic risk Dependency on specific geography can hurt the financial health of your Company. Mitigation: Your Company services its clients across India, Asia Pacific, South America, North America, Europe, the Middle East and Africa. Moreover, your Company has 18 global and 14 domestic sales offices located close to the key customers and mining sites.
Compliance risk Inability to comply with regulatory norms could result in penalties being levied. Mitigation: Your Companys operations are in line with the statutory and regulatory permits and the approvals are timely renewed. Moreover, your Company always keeps itself updated with the latest regulatory norms and compliance whenever proposed.

Internal control systems and their adequacy

The internal control and risk management system are structured and applied by the principles and criteria established in the corporate governance code of the organization. It is an integral part of the general organizational structure of the Company and the Group and involves a range of personnel who act in a coordinated manner while executing their respective responsibilities. The Board of Directors offers its guidance and strategic supervision to the Executive

Directors and management, monitoring and support committees. The control and risk committee and the head of the audit department work under the supervision of the Board appointed Statutory Auditors.

Human resources

Your Company believes that its dedicated and motivated employees are its greatest asset. Your Company now has offered competitive compensation, healthy work environment and the employee performances are recognized through a planned reward and recognition programme. Your Company intends to develop a workplace where every employee can recognize and attain his or her true power. Your Company motivates individuals to undertake voluntary projects apart from their scope of work that helps them to learn and nurture creative thinking. Your Companys employee strength stood at 1,779 as of March 31, 2022.

Cautionary statement

This statement made in this section describes the Companys objectives, projections, expectations and estimations which may be ‘forward-looking statements within the meaning of applicable securities laws and regulations. Forward-looking statements are based on certain assumptions and expectations of future events. Your Company cannot guarantee that these assumptions and expectations are accurate or will be realized by the Company. The actual result could differ materially from those expressed in the statement or implied due to the influence of external factors which are beyond the control of the Company. Your Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements based on any subsequent development.