Tega Industries Limited (TEGA) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Maiden Earnings Conference Call of Tega Industries Limited, organized by Orient Capital. As a reminder, all participant lines will be in the listen-only mode. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Mehul Mohanka, Managing Director and Group CEO. Thank you, and over to you, sir.

Thank you. Good afternoon, and a warm welcome to all the participants. I'm joined today on this call by my colleagues, Mr. Manoj Agarwal the CFO of the company; and Mr. Yaver Imam, the Director of Global Product Group as well as Orient Capital, our Investor Relations partner. It is our maiden earnings call today after the initial public offering. As you all know, the company listed on the Indian Horses on the 13th of December 2021. I hope by now, all of you have had the opportunity to go through our financial results and investor presentations which have been uploaded on the stock exchanges as well as our company website. Before we get to the Q3 performance, I would like to thank everyone for supporting the IPO of the company. Without your support and trust the IPO -- with your support and trust, the IPO was oversubscribed by almost 219x. Since this is the first call, there are some of you with whom we will be interacting for the first time. And hence, I would like to take this opportunity to quickly give you a short, brief description about the company. So take our commenced operations in 1978 in India with a foreign collaboration with Skega of Sweden with an objective of providing unique products and services for handling complex problems in material handling and mineral processing. We are the leading manufacturer and [distributor] of specialized critical to operate and recurring consumable products, catering to global mineral beneficiation, mining and bulk solids handling industries. We are the second largest producer of polymer-based mill linings as well as one of the largest players providing hybrid liners across [indiscernible] and ball mills. We have close to 55 products in our portfolio spread across multiple geographies globally. Today, we operate six manufacturing plants across the world with three in India and three in overseas locations. And we have approximately 513 installations at different mine sites across the world. And as on financial year March '21, in about 17 countries with 18 global and 14 domestic sales offices across the world, and almost 85% of our revenues is generated outside of the country. From a macro industry data, mineral processing industry is set to grow at a CAGR of 6.3% between 2020 to 2030. Infrastructure growth shift to EVs electronics, volatility hedge, et cetera, are key demand drivers for relevant metals. Declining ore grade, enhancing demand for beneficiation products, decreasing ore grades requires a higher throughput, which has led to greater demand for larger-sized equipment as well as higher consumption of consumables. This is supported by the fact that our business is immune from CapEx cycles, and it caters to aftermarket spend for customers which has recurring revenue in nature. So all our products tend to be an operational expense for our clients. We drive continuous design innovation in all our products. As you all know, we launched the DynaPrime range of our products in 2018. It's a composite line out. First of its kind in the entire world. And this has helped us unlock new addressable markets for our company which includes larger-sized mills, which offers greater productivity gains and cost savings for our customers, as well as almost a 50% increase in life compared to traditional steel linings. We have also embarked on inorganic strategy in the past. We have successfully integrated more than three acquisitions across the world. Some of the key growth drivers for us would be the demand for iron ore, copper and other metals and minerals, which will drive the growth for mineral processing equipment industry in time to come. We all know about the electric vehicle manufacturing, which will be top demand drivers for copper, aluminum and other metals. ED, as we know, is now something just synonymous with not only automobiles, but it is the future of our country. Global gold and copper concentrate production industry is likely to grow at a CAGR of 4.3% and 3.7%, respectively, between 2020 and '30. And gold and copper mill sites require superior quality of consumables and have higher beneficiation requirements. Owing to ore-grade depletion, miners are required to process more ore to get the desired throughput, which will boost the demand for mineral processing equipment. Strong market position and entry barriers have helped us maintain high margins over time with revenues from operations growing at about 12.74% CAGR during FY '19, '21. Reported operating EBITDA margin at 23.7% in FY '21 have been successfully maintained this operational -- operating efficiency levels while completing and integrating acquisitions, JVs and strategic alliances including our acquisitions in South Africa, Australia and Chile. In several cases, our relationships with key customers pan for more than a decade, and it's a testimony to our business excellence. Our order book stands at about INR 278.1 crores as of December 31, 2021. Our strategies going forward is to increase our penetration and market share in North and South America, Australia and South Africa to grow our market share and share of customers' wallet with improving market penetration and cross-selling opportunities in high-quality products and solutions, which have recurring demand and will lead to higher repeating revenues. We will continue to leverage our in-house R&D capabilities to grow our product offerings and capitalize on future trends. Our in-house R&D team focuses on upgrading our existing products and developing product variance on a continuous basis. We're going to continue to expand our manufacturing capabilities with planned expansions in our facilities in Dahej and in Calcutta plant. We also are going to be setting up a new manufacturing facility in Chile for which, as you know, the Board has already given us an in-principle approval. We would also continue to enhance our operational efficiencies and increased economies of scale to strengthen our competitive position globally. With that, I would now like to hand over to Mr. Manoj Agarwal, our CFO, to take you through the financial performance of the company for Q3 and 9 months under review.

Thank you, Mr. Mohanka, and a very good evening to all the participants. I hope all of you and your families are in good health. I'll share the highlights of our performance for the quarter ending 31st December 2021. And following which, we will be happy to respond to your queries. Quarter-to-quarter net revenue from operation is INR 257 crores for the quarter ending December 31, 2021, against INR 214 crores previous year same period, delivering a growth of 20%. Operating EBITDA stood at INR 61 crores in quarter 3 FY '22 as against INR 47 crores in quarter 3 FY '21, a jump of 8%. Operating EBITDA margin stood at 20% as it is 22% same period last year. The major impact on EBITDA for the quarter ending 31 December, 2021 is due to higher input cost which we need to transfer to the customer, which will take another quarter to pass it on. This is also impacted because of abnormal increase logistic cost, which will again take some quarters to pass it on. Profit after tax increased to INR 33.5 crores for quarter 3 FY '22 as against INR 31.5 crores in quarter 3 FY '21. This is to be noted that nonoperating income has gone down from INR 14 crores in December '20 quarter to INR 4 crores in December '21 quarters. Now we may open the floor for Q&A.

Thank you very much, sir. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] First question is from Sandeep Tulsiyan from JM Financial.

Yes, very good evening. The first question is pertaining to term growth. If you can provide some more color as to how the liner business has grown versus the non-mill lining business -- and within mill lining, how will the DynaPrime product range progress in terms of growth? And also broadly, with this 20% growth, if you can briefly break it up into how much would be our realization increase driven or rather how much realization increase you would require to pass through the cost increases that you just mentioned and what has already been taken?

Thank you, Sandeep. This is Manoj. So if I just try to break up the revenue on a 20% growth, what we see about 10% is coming from the price and 10% coming from the volume. On the mill liners side, the overall growth is about wherein the DynaPrime has grown at a rate of about 16%, and the mill without DynaPrime goes about close to 30%. On the non-mill liner, as of now, the growth is virtually flat. It's about 1%. And overall growth is about 20% for the quarter December '21.

Okay. So DynaPrime, the growth rate has come up to 16%. Is it -- if you could highlight what will be the major reason for that?

So the growth has come mainly from the India side where we have got some new orders from North America diesel. And we're also able to expand ourselves in Africa, Western Africa region. So those two areas giving the kind of upswing in the DynaPrime segment. And that is coming with the fact that we have been doing the trial in many of the sites and those trials is getting converted into commercial orders.

Okay. And on the non mill lining side, you mentioned it is flat. So overall, if you could help us understand the math because you mentioned mill-lining has grown 20% overall [indiscernible] 20% -- so non-mill lining revenues should not be ideally so low, right, on the average to be 20%.

Yes. So what I said basically in the non-mill liner, DynaPrime has gone about 16%. Your non-mill liner without DynaPrime has given about 25%, which gives about 25% overall growth. And then the non-mill is coming about 1%. And if I take the project in the non-mill liner because as you know that we also have the project under the non-mill business, which are not recurring in nature, unless the project got commissioned. So if I add the non-mill liner, including project, the degrowth will be about close to minus 6%, minus 7%. And if I remove the project business from the non-mill liner, it is about flat. And mill-liner has gone substantially about 25-plus percent taking DynaPrime and mill both together. Maybe I can share the breakup separately.

And second part of the question was on what kind of cost pass-throughs are you expecting over the next two quarters for both raw material and logistics so that we are able to maintain the earlier level of margin from 20% to [indiscernible]?

So we are looking at two parts here. One is raw material. So we are confident that our raw material gap, which is about 2.5% we will be able to pass it on. As far as logistic is concerned, which we know that is absorbably high. So it's more of that we will be able to pass through some bit of it in coming quarters, but may not all [indiscernible] it, all logistic costs. So maybe one part, then we can pass it to the customers and how much the costs are normalized in the coming quarters. But this is the current situation, what we see that logistic cost will take another two to three quarters to kind of come to a lower trajectory. So there is a challenge to pass an entire gap of logistic cost to the customer. And it -- logistic cost doesn't kind of come to downtrend -- that gap may be there for that period.

Understood. And last question on DynaPrime per se. Currently, if you can give some trajectory as to how many sites the trials are on currently and based on whatever your expectations on the conversion rate, what is the average revenue per site can you grow to? And what should be the total growth in DynaPrime over the next 2 to 3 years?

So Sandeep, actually, is it difficult to give some kind of forecasting in this call, basically, so we can't talk about that forecasting per se. But what we can say that trial is running on in various sites globally and that will take up the growth trajectory as far as DynaPrime is concerned.

The next question is from the line of Abhishek Podar from HDFC Asset Management.

Sir, is it possible to give the revenue split for DynaPrime -- percentage of revenues coming from Dyna Prime? Or any absolute number if you can throw.

So it is about 19% of the total revenue. 1-9.

Okay. And you would expect that this 19% should grow faster, so that percentage will increase in going forward in the next 2, 3 years?

So as I said that we are expecting our growth [objective] from DynaPrime, obviously, going forward. So DynaPrime will take the growth forward for the company.

Understood. And this raw material gap of 2.5%. This is the commodity price inflation that you have not been able to pass on to customers is what you're referring to?

Yes. So Gary, we tend to target about 60% raw material margin in our business, right? And what we're finding that there is still a gap of about 2.5% to 3%. And we believe that it will take another 2 quarters to pass it on. As I said in my earlier query. And so revenue cost will be able to pass it on if we take 1 or 2 more quarters, but there's challenging logistic cost as of now.

And in the other expenses, is there any ForEx loss in this quarter?

Not as such.

Okay. So trying to understand that how the ForEx has impacted your last quarter, last year's margin and the sales margin?

So this year, more or less, the ForEx impact is not there, which was there last year. So on the plus pillar side, it is more of getting nullified in terms of impact on the P&L account. So hardly, if I talk about the number, the P&L account is coming about close to about [indiscernible] net-net, INR 13 lakhs.

For this quarter?

For 9 months for this quarter is about INR 78 lakhs.

Okay. Understood, sir. And just last question. Any comments on the demand outlook in the overseas market from the mining industry.

Yes, I'll just request Mr. Yaver Imam to come.

As far as mining industry is concerned, in the last 10 months copper production had increased somewhere around by 4.1%. And similarly, gold had -- I mean gold latest figures are up to expand of last year. So there also the growth has been 9%. So as far as copper and gold is concerned, as far as the production is concerned, there has been -- it is more or less following the projections that were given earlier as far as the growth is concerned. So the demand of both from gold as well as copper is on the rise.

[Operator Instructions] Next question is from the line of Bharti Sawant from [indiscernible] .

A couple of questions. Story mentioned that the overall priming growth, so you would 10% ...

Sorry to interrupt your question, but your voice is very low. Can you speak louder please?

Yes, is it better? So, I wanted to understand what kind of an argument have you seen? And are we seeing a trend of moderation in the RM prices? Because despite a 10% pricing growth, we've still seen our gross margin... [Technical Difficulty] Hello?

We can't hear you Bharti. Can you repeat the question?

Hello. Is this better?

Yes, yes.

Yes. So what I wanted to understand is you mentioned that the overall growth in revenues of the 20%, 10% is driven by pricing. So what kind of RM inflation are we seeing? And is there a trend that the RM prices are kind of moderating and we should see an improvement in margins going forward just on account of RM?

So on the RM side, what we are seeing from last 2, 3 months that it is [indiscernible] flatting down. So we're not seeing any upswing, which was there in the first -- last 3 quarters -- in the quarter 3. So, this is a good news for us in terms of not going to [indiscernible] every time to the customers. Now from here if it goes on a [indiscernible] trajectory, then obviously, it may have some impact. But as we said that it's about passthrough. Passthrough was both the sites. We can't talk about passthroughs on the upward trend and not the downward trend. And if prices goes down again, no, [drastically] again, we need to pass it on to customers also. So ultimate objective of [ours] to stay at least at 60% RM margin and plus minus 1% 2%.

So the key increase in the raw material cost couldn't have been more like 14%, 15% because despite of taking a 10% price hike, we are not able to pass on the RM cost. So would it be that state?

Yes, it is that sharp. It is more than that also.

And also in terms of the 10% pricing, so can you just explain us what would be the role of product change, which will drive the realization?

So what is the price when the product mix. So basically, product mix got normalized in quarter 3, quarter 4, may not be quarter 1 or quarter 2. And again, price depends on the local landscape of the competition, customer kind of acceptance. So there are a lot of levers to decide on the price part, [indiscernible]. But again, it is being based on the geography -- geographic customer to customers.

Okay. Also just coming 20 more on the expense front. So we have seen significant increase in the first 9 months. We've seen a significant increase in the employee cost as well as your other expenses. Unlike the past 3 years, where in these -- these costs were quite benign. So would you like to throw some light as to where should this number stabilize and given that we are targeting growth of closer to 14%, 15% CAGR. So can we expect a similar growth in the employee cost? Or should it remain benign?

No, it will remain benign now because as we told earlier also that in our business, we have to build up our team year-end to in advance. So what we believe -- because last year also because of COVID period, the intent was to preserve cash and not to spend money. So we have not done per se hiring last year. So most of the hiring is happening this year itself. So that we can take the growth from the next couple of years. So what we believe that whatever trajectory is going in today's employee cost that will not be in the same proportion going forward. So it will be kind of benign going forward as our employee [indiscernible] is concerned.

Okay. And also in terms of other expenses?

Other expenses, as I said, because there are 3, 4 main items there, like I said, logistic costs, right, which are about INR 20 crores or no, most to 9 months which is something very abnormal. And then we have some repair and maintenance, which we had stopped last year, again, because of COVID and cost [redivision]. We talk about INR 5 crores and about logistic INR 20 crores, and we have about close to traveling also been started, which was absolutely not there previous year. So that impact also is coming. So taking 4, 5 bigger items, it's coming now to that difference basically. And then the other volume and price growth are there in other expenses.

Okay. And just last question from my side. On the non-mill products, non-mill lining products. So given that earlier we have highlighted that our strategy is to increase the wallet share by increasing the products that we are supplying it to the consumers to our mining customers. So -- but given the way non-mill lining products have been performing like flattish number for the current quarter. I don't know what that number is for the 9 months. So what strategy are we adopting to push more sales or to increase the contribution from the mill lining products? If you can just highlight that.

I think the issue which we had discussed earlier also was on the increase of wallet share on acquired customers. So what we are looking at in the short-term strategy, which will be effective for the next 2 years -- 2 to 3 years, is that DynaPrime, the large customers that we are acquiring now once we stabilize the customer from going through the trial and making them on board with regular supplies. Thereafter, we are looking at expanding their product press portfolio with the non-mill products. And this is already in operation in Chile, where if you will look at the non-mill growth, we will find good growth over there. And going forward, once we acquire the larger customers in the rest of the world, this will happen. So it's a question of 1 or 2 years lag with the acquisition of customers for DynaPrime where the following would be the rest of the product to gain market share and wallet share at there.

And also while acquiring customers for DynaPrime, so what strategy to be adopt, is it more led by pricing? Or do we still earn margins on -- or during the trial period?

[Foreign Language] I think even in the trial period orders with the DynaPrime, we are close to somewhere around gross margin of close to around 55% to 58%, okay, which is not too far off. The basic idea is that we are changing from steel liner -- we go in with the value proposition and look at it. So the changes which will come in once we go into a full application at site will bring us back to around 60% gross margin. So that is the range in which we are playing with DynaPrime as far as the product lines are concerned.

Okay, and ...

I'm sorry to interrupt, but we request you to return to the queue. We have several parties [indiscernible]. Our next question is from the line of [indiscernible]

Congratulations on getting listed and thanks for the opportunity. I went for your presentation, which helps me get an idea of your business model. And I appreciate the company's rich legacy. So I have two questions. First, what is the expected timeline on Suspence and the claim. And my second question is what services do we provide in [life-cycle] management?

So the timeline for the plant to be set up in Chile is within 24 months. The internal estimate is to try and aim for 18. But the attempt is to do it within 24 months. When we talk about life cycle management, it's to do with providing services to customers, which includes monitoring the performance of the product using laser scanning technology, providing constant performance reports to customers aiding in installation of our product and also providing customers with opportunities to save on downtime of the equipment by improving the speed with which the products are installed. So those are part of our life cycle management services.

Participant Chavelas the line for the current question. We'll move to our next question, which is from the line of [indiscernible] from [indiscernible] Capital.

First thing, sir, DynaPrime thing, if you can explain in detail how big can be the opportunity is there right now? And what is our product differentiation? Second, as the earlier participant has discussed, you have said what can be the margins we should take it for next 2, 3 years down the line on the stable state margin? And third, if you could throw light on the Chile business right now. And after the new capacity, what kind of revenue we are looking out?

So -- as far as the DynaPrime opportunity is concerned, it is close to around 900 million, okay? And globally when we are looking at this, the growth in the DynaPrime will come from this 900 million [indiscernible]. What was your second question, please? The margin effort is there is, as I've said before also, -- it is more or less the same gross margin we are looking at. And our aim is to be at 50% gross margin as far as the DynaPrime is concerned. Also Chile, the project that is being set up, as of now, we are running close to capacity in Chile for the next year. So the idea is that the growth opportunity that have been put in and the trials that are in working in Chile now, which will get into the operational and commercial business. By that time, we should get the plant up and ready. The plant that we are looking at we presented -- presently have -- we will be doubling our capacity in Chile, and that is what we plan to see to get the growth from there.

How much is our current capacity in Chile right now, sir?

[indiscernible]

Can you repeat? Your voice is breaking.

What is our current capacity in right now? How much revenue we are doing in Chile at this point of time, sir?

So current capacity as break in two parts. On DynaPrime side, we are close to about $30 million, 30 million and this product is about go to $10 million. So as of today, we can talk to $40 million at a full scale.

Okay. And after this expansion, we'll be reaching around $80 million.

Yes, close to that.

Next question is from the line of Nitin Arora from Axis Mutual [indiscernible].

First question, is it possible to share the 9-month growth number of DynaPrime?

I think what I shared earlier, it's a 9 months it was only about 16%. 1-6.

Sir,what is then in this quarter, the DynaPrime growth in this? What's the growth in Q3?

Q3 -- I'll come back to you about Q3 growth number is. I don't have it. I'll come back to separately on it.

The question, sir, it's a very quantitative statement from two angles. One, you see the demand is very good. And at the time of the IPO also, you said DynaPrime is going to grow much ahead of the company's growth. So the question I want to understand is -- if the 9-month figure is 15%, and I'm assuming the inflation should be about 10%, 12%. It's a really low single-digit growth, which has come up in the 9 months, assuming you don't have the numbers for Q3. What would like to this low growth, number one, and the demand is so strong and you're trying to penetrate into clients. Is it -- Hello?

I think I didn't think right on tick even in the road show when we are there, we have been saying that look at our figures on a year-on-year basis, okay? Because what -- and if you remember, I told you that most of the large mining corporations have their year-on-year on the calendar year. So for us, the -- especially for DynaPrime and all would be big months in the next quarter when we [indiscernible] . So overall, when you look at it, -- we have to look at the -- what is the growth in the order booking and then at the same time, the pending order as well as what will happen in the next quarter. So relevance of year-to-year growth would be more appropriate than to look at quarter-to-quarter or 3 quarters and look at that. Because Dyna Prime mainly and the other mills with [indiscernible] for 6 months and 12 months are in that period, where it will be on the fourth quarter for us or first quarter of the [indiscernible]. So when we look at that, I think that is the period we should look at it on the year-to-years growth. So what will happen at the end of the quarter, I think the figures would be more relevant to see.

Sir, first of all, I asked the number which you only gave you, which is a 15% growth. So I never compare quarter-on-quarter. That's a good thing. [indiscernible] more of a heavy quarter. So in Q4 and you have a strong order backlog, let's say, for the DynaPrime, is it safe to assume a 40% growth? What you stated at the time of the IPO, 35%, 40% growth for the DynaPrime this year?

So at the time of the IPO also, we were looking at 25% to 28% growth as far as DynaPrime is concerned. And from whatever the situation is today, we are on track on that.

All right. That is helpful. Sir, second question, with respect to the cost arbitrage. So you're already saying that 10% kind of a cost increase and we have passed on to the customer. Now this question is, one is the [indiscernible] live business. if you can throw some light with respect of pressure, is there some pressure on the market share because if you go beyond the [ total ] price point, the local player gets little edge, if someone -- less or not an end, let's say, cost is improving for everyone, but if someone wants to get higher market share, they can actually do it because of the supply chain, how you're tackling that? And second, in the DynaPrime, does the cost arbitrage when the steel liner and the DynaPrime has widened a lot in this commodity scenario -- those are the two questions.

No. Steel prices have been going up also, okay? So it is not that the prices of DynaPrime is [going up]. So there are two parts of this when you're looking at it. When we look at passing on to the pricing, we are talking about 75% of our spare business where we are passing on the price business. The new business is a combination of what the customer is spending, what the competitive situation is, how we are getting the thing. Those are the various question of [indiscernible]. So when we look at most of the DynaPrime where we have the growth coming at 25%, 30% on that, when we look at the balance 75% where the price increases are being passed on to the customer. So where the steel -- is steel prices have gone up and the margins, we will look at the -- growing according to what the steel prices are going up and our [indiscernible] mine. The problem which you have rightly pointed out is the question in the non-Dyna Prime mills, where the logistic cost becomes so high, it becomes -- the local supplier would become more [indiscernible]. Now for us, this is a challenge only in two territories because we have already covered Latin America, in Africa and Australia and India through this thing. So the main geography, which we are getting would be getting challenges, it would be U.S.A and Canada. U.S.A and Canada, the margins on the existing business are such that we have to make a call on where to pass on what portion of the -- this thing to pass on to the customer. So we are taking a call that the logistic cost somewhere in the future would normalize. So in some of the cases, we take a call to hold the customer and the logistics cost then gets passed on to a certain percentage, maybe not fully. So those are costs which we take and which we do it overall to see that our margins on the gross level does not get affected. And as of today, the major challenge would be only in these two territories because the local manufacturer in other places mitigated that project.

Ladies and gentlemen, in order to ensure that the management is able to address queries from all participants in the call [indiscernible], you may return to the queue for a follow-up question. Next question is from the line of [Sagar from Bonaparte].

Can you hear me?

Yes, please.

Yes. I just wanted to know, since the company is newly listed and we do not have a lot of history of numbers. Is there some seasonality in business? You mentioned that Q4 would be big for DynaPrime, but for the rest of the business?

See, for us, the second half usually becomes -- I think we have to look at the global mining companies and their scheduled shutdown schedules. Most of them are on a calendar year. So the second half of the calendar year, they are on a full production run. Would normally not try to have any shutdown figures over there, okay? So for us, the third quarter and fourth quarter where we get the order and start shipping to meet the schedules in the last quarter of ours and the first quarter. So this is where the schedule -- so for us, the third and fourth quarter becomes a heavy distinct and not only in DynaPrime, in most of the mill liner business. Because the customers are timing their shutdowns to half where they are not ramping up production.

Next question is from the line of Anurag Patil from Roha Asset marketers.

How much CapEx we are doing for expanding DynaPrime [indiscernible] .

Can you repeat the question, Raf?

Sir, for the agent for Samali plant expansion, how much will be steady?

So Samali plant is a very old plant per se, but Dahej is the latest one, and we have spent about close INR 240 crores for Dahej plant.

Okay. So that expansion is complete as of now, right?

Yes, that initial project cost -- project was in 2013, and that is the initial cost and expansion will be doing from next year onwards. So that expansion will be close to about to $9 million to $10 million, taking Dahej and Samali, a little better.

And sir, out of our total revenue, what percentage of constitutes the long-term contract related revenue and the spot remain?

Generally, 25% to 30% is long-term revenue, long-term contract generally.

Okay. And the rest is on the spot business.

Yes. So we used to get a recurring orders from the customers.

Next question is from the line of Mitul Ashwath from Kiva Advisors.

Just wanted to understand the terms of your order book, how is the order book grown when you mentioned that visibility is reasonably good. I just wanted to get a sense of how that has moved up?

Order book in this figure has grown around 24%.

Right. And typically how many months of business or would you have the order book? Or is it a short cycle sort of a ...

Usually, if you look at the pending order that we have, always it is a 3-month order booking for the next 3 months. So we usually are looking at order booking, which is because with our shipment and as a schedule, this is the cycle that we have. So a quarter, when we look at the order bookings for a quarter.

And so every quarter you are able to reprice your products typically?

Yes. Most of what we -- it's not a quarter-wise, it's an ongoing process. What happens is throughout the year when -- as and when the orders are getting negotiation and this thing, we look at what the prices have been and what is passed on. So when we talk about pass-through usually 1 or 2 quarter, it takes to pass on everything. So whatever is coming up in negotiation during one quarter, we continue to pass it on.

Now I just wanted to get a sense because I think from your presentation, there's about INR 270 crores or INR 280 crores of order spending. So -- and I'll say our margins have fluctuated through this year. So -- and there's been some improvement quarter-on-quarter. Do you see the trend of improvement on the margins on a quarter-on-quarter basis sustainable? Or this would again depend on, like you mentioned, the -- how your raw material fluctuation would go?

Yes, you are right. It depends on the raw material fluctuations. As I said that if is not flattened, if we find that there's no upward movement going forward, then we can reach 60% margin in the quarter or 2 quarters going forward.

Thank you. Ladies and gentlemen, that was our last question for today. I now hand the conference over to the management for closing remarks. Over to you.

Yes. So I'd like to thank everyone for joining this call, and I hope we've been able to respond to your queries adequately. For those that we are to come back with additional information, we will do so shortly. For any further information, I would request you all to get in touch with Orient Capital, our Investor Relations advisers. So once again, thank you for participating in this call, and we hope to see you again in the next quarter earnings call. Thank you.

Thank you members of management. Mr. [Cali], would you like to add any closing comments from the audience, sir?

Thanks, everybody, for participating in the Maiden quarter call of Tega Industries, we look forward to continuous engagement with the markets and [indiscernible] and we will be more than happy to clarify because there letdown queries which you would have a contact the numbers and [indiscernible] present on the company's presentation on the [indiscernible] Thank you once again. Have a nice day.

Thank very much members of management. On behalf of Tega Industries United and Orient Capital, that concludes today's conference call. Thank you all for joining us, and you may now disconnect your lines.