Incorporated in 1976, Tega Industries (Tega) manufactures components of mining equipment. These components are used across different stages of mineral ore processing.
Tega has six manufacturing sites: three in India and the other three strategically located in Chile, South Africa, and Australia.
- Tega Industries manufactures specialized mining equipment components such as grinding mill-liners, chutes, pump parts, conveyors belts, etc, which are used in mineral processing.
- Its product portfolio comprises more than 55 such mineral processing and material handling products.
- These components are critical to Tega’s clients as they not only help to improve operational efficiency of the mineral processing but also reduce the production downtime.
- Further, as these products wear and tear over time, they help to generate recurring revenue.
- Globally, Tega is the second-largest producer of polymer-based mill liners. In 2020, it had a 5% market share in the overall global mill-liner market, up from 3% in 2018.
- In Fiscal 2021, it derived around 86% of its revenue from outside India. Its order book, as on June 2021, stood at ₹316 crore, about 40% of its FY21 revenues.
- Meanwhile, the large international revenue base exposes Tega to geo-political risks and currency fluctuations.
- Tega has a strong outreach with 18 global and 14 domestic sales offices. It had presence in 513 installation sites in over 70 countries at the end of fiscal 2021.
- The mill-liner market is expected to grow at about 6% CAGR between 2020 and2030 to around $3 billion (or ₹22,500 crore). In comparison to its global peers, Tega is the most efficient player in terms of EBITDA margins as well as returns on capital employed.
- The company started its operations in 1978 in India in collaboration with Skega AB, Sweden.
Here’s a look at the company’s financial status:
|Revenue from Operations
|Profit after Tax
- High repeat revenue of about 75% due to replacement demand.
- 60% of revenue comes from gold and copper ore processing sites.
- These metals have different demand cycles and hence provide stability to the revenue.
- High client diversification with top 10 customers accounting for less than 30% of total revenue.
- Tega is one of the most efficient players globally with operating margins of around 28% and return on capital employed of about 24% in FY21.
- Business presence in over 70 countries exposes it to currency fluctuations and geo-political risks.
- Failure to manage its vast production and distribution network could hamper business growth.
- Loss of a long-term marquee customer(s) may result in loss of business in an industry, which has high entry barriers.
- Gold and copper ore processing is expected to grow at 6% CAGR to $3 billion over the next 10 years.
- Strategically located manufacturing sites are positioned in key mining belts to leverage the growth of its clients.
- Interestingly, declining grades of copper ore require more processing material. This is expected to boost demand for Tega’s products.