Tega Industries Ltd (TEGA) Q3 FY23 Earnings Concall Transcript

Tega Industries Ltd (NSE:TEGA) Q3 FY23 Earnings Concall dated Jan. 31, 2023.

Corporate Participants:

Manoj Kumar Agarwal — Director, Global Finance and Chief Financial Officer

Mehul Mohanka — Managing Director & Group Chief Executive Officer

Nachiket Kale — Investor Relations

Analysts:

Dhiral Shah — PhillipCapital India Pvt. Ltd. — Analyst

Sandeep Tulsiyan — JM Financial — Analyst

Rakesh Pal — Peace Wealth Capital — Analyst

Jasdeep Walia — Clockvine Capital — Analyst

Sagar Shah — PhillipCapital India Pvt. Ltd. — Analyst

Hiten Boricha — Joindre Capital Services — Analyst

Sushrut Gokhale — Caprize Investments — Analyst

Nikhil Jain — Galaxy International — Analyst

Bhavin Vithlani — SBI Mutual Fund — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to Tega Industries Limited Q3 and 9M FY ’23 Earnings Conference Call hosted by PhillipCapital Private Client Group. [Operator Instructions]

I now hand the conference over to Mr. Dhiral Shah of PhillipCapital. Thank you and over to you, sir.

Dhiral Shah — PhillipCapital India Pvt. Ltd. — Analyst

Thank you Viko. Good afternoon all. Thank you for joining us on the Q3 and Nine Months FY ’23 Post Earning Conference Call of Tega Industries Limited. We sincerely thank the management to allow us to host the call. In the panel today we have Mr. Mehul Mohanka, Managing Director and Group Chief Executive Officer, Mr. Syed Yaver Imam, Director, Global Product Management, and Mr. Manoj Kumar Agarwal, Director, Global Finance and CFO of the company.

Before we begin this call, I would like to state that some of the statements are made in today’s discussion may be forward-looking in nature and may involve risks and uncertainties.

I now invite Mr. Mehul Mohanka to begin the proceedings of the call. Thank you and over to you, sir. Thank you. Good afternoon, everyone. I welcome you to the Q3 earnings call. I’m joined by Mr. Imam, Director Global Product Management Group, and Mr. Agarwal, who is our CFO. As you can understand my — I have a sore throat, because of a onset of a viral prevalent in this part of the country as of today, so I’d like to excuse myself and hand over to Mr. Agarwal, who is our CFO to take this forward.

Manoj Kumar Agarwal — Director, Global Finance and Chief Financial Officer

Thank you, Mr. Mohanka. So on behalf of Mr. Mohanka, I just want to thank you all the investor to putting us — continued faith on the company. And we’re also pleased to announce that our business has been double-digit growth in key metrics in Q3, building on the strong momentum from H1. Sales have grown strongly across all regions.

Our growing scale has also led to improved operating leverage and significant margin improvement, both yearly and quarter-over-quarter. Significant improvement in global supply-chain normalized for logistic and transport cost also contributed to improved margins, which is visible in the Q3 numbers as well. Despite the easing pressure, the cost are still higher on a pre-COVID base and we are vigilant to managing our supply-chain accordingly.

Our expansion project in Chile, a requisite land acquisition has been completed, we are awaiting further approvals, shall keep you update on the progress of the same. We recently completed one-year of our listing, following our IPO in December 2021. We have had long journey of over three decades as India’s leading business in global niche. I look-forward to future with increasing optimism, we have many strategic initiatives in motion [Technical Issues] Tega Industries to this forefront of the industry globally and we aim to generate value over the long-term for all stakeholders.

Now I’m taking the Q3 numbers for the listeners. So for Y-o-Y Q3, the revenue has grown from INR2,578 million to INR2,969 million, a growth of 15% Y-o-Y. Material margin is around 55%, little subdued, mainly because of their geographical mix, not otherwise. We have been able to clawback the margin on account of logistic in this quarter, which we have not able to make-up until quarter two, which has help us to boost our EBITDA for the quarter three as well.

Other expenses also gone down with the fact that the logistic cost has come down from quarter one, quarter two and previous quarter as well. Operating EBITDA stand at 22.66% against 19.7% same-period last year. We have been able to manage our finance cost even in the increasing environment, with a better capital — working capital management.

If I go to the YTD Y-o-Y, the revenue growth has happened to the tune of 24%. We are at INR8,176 million versus INR6,617 million on Y-o-Y. Material margin on a yearly basis stood at 57% against 58% last year same period. We anticipate that this margin will improve in quarter four with a better geographical mix. The reason being lumpiness in the business, so quarter-on-quarter sometimes may not give a clear picture, hence we go into the yearly margin numbers.

Other expenses also gone down with the fact that packing and forwarding cost has gone down Y-o-Y. For nine months Y-o-Y, operating EBITDA stood at 20.5% against 17.21% same period last year. On the debt side, we are at a net-debt plus position of about INR22 crores. Working capital days stood at 154 days against target of 130 days. We expect it to normalize in quarter four.

That is all on the finance side number. I open the forum for the Q&A from the investors. Thank you.

Questions and Answers:

Operator

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions]

Our first question is from the line of Sandeep Tulsiyan with JM Financial. Please go-ahead, sir.

Sandeep Tulsiyan — JM Financial — Analyst

Yes, very good afternoon, gentlemen. My first question is pertaining to your full-year guidance that you had given for FY ’23 at 15% to 20% sales growth, given that we have been able to recoup volumes in newer geographies, as well as got some price increases, nine-month performance looks good. So would you want to revise this guidance or at least indicate that the company should comfortably be at the upper-end of this guidance?

Manoj Kumar Agarwal — Director, Global Finance and Chief Financial Officer

So we expect upper end of this guidance, so we intend to be within 15% to 20% for FY ’23, as of now.

Sandeep Tulsiyan — JM Financial — Analyst

Okay. Second question is on a further more color on these gross margins which have declined in the quarter are, you did highlight there is some geographical mix, which changed, which led to this decline. If you could also elaborate on that, what was this specifically?

Manoj Kumar Agarwal — Director, Global Finance and Chief Financial Officer

Yes, so in quarter, what happened that, our mix on South Africa entity and Chile entity has gone up, then India side and overall basis India margin is much better than these geographies. So because of that mix, there is some impact for this quarter in the margin. Further, the North America business for this quarter is down than expected, which is more or less kind of spillover to quarter four. So because of the margin, geographical mix from North America, lower mix, which is a better margin geography for us, and from South Africa and Chile, which is little higher cost centers for us as far as RMC cost is concerned, hence these margins showing lower for quarter three. And we are sure that in quarter four, we will be able to cover it up, both for the quarter four and year as a whole.

Sandeep Tulsiyan — JM Financial — Analyst

Got it, understood. And a bit more color on other expenses, you did highlight logistics cost has come down and packaging, forwarding costs have gone down, which led to this increase in margins. If you could quantify a bit, what was the logistics cost as a percentage of sales in first quarter and approximately how much has it fallen in third quarter? And also, is there further downside based on the new freight rates that you would have contracted for a couple of more quarters going ahead. Is it we are at the bottom-right now or is it further expected to decline?

Manoj Kumar Agarwal — Director, Global Finance and Chief Financial Officer

Yes, so let me give some numbers to you. So basically the logistic cost sits mostly on India side, because other than India, like Chile and South Africa we do all ex-works. India side, the cost was around 8.21% of our sales in December ’21 quarter, which has gone down to around 6.04% in September ’22, and it has gone down further in December quarter to 4.62%. So if I take the Group as a whole, where we were lagging about 1.5% in FY ’22, if you can recall, we have been able to recoup about 1.2% as of now. And we expect that this cost may further — it has not still to the level it was prior COVID, but we still expect that some cost reduction will happen and we will be able to recoup another 25 basis in quarter four, not beyond that.

Sandeep Tulsiyan — JM Financial — Analyst

Understood. Okay, and some bookkeeping questions, Mr. Agarwal, regarding the price and volume growth, and also the segmental numbers regarding DynaPrime, non-DynaPrime and non-Mill Liners that you typically provide every quarter.

Manoj Kumar Agarwal — Director, Global Finance and Chief Financial Officer

So we had the same range, if we talk about DynaPrime, we had a range of 25%, non-DynaPrime at about 9% to 10%, I talk about the volume side, so that we are still clogging as off the YTD December ’22.

Sandeep Tulsiyan — JM Financial — Analyst

Okay, no, if you could give like absolute rupees crore in third quarter and how much was that growth on a year-on-year basis in each of these segments?

Manoj Kumar Agarwal — Director, Global Finance and Chief Financial Officer

So let me give you nine months Y-o-Y, that we will give the picture, because Y-o-Y December ’22 we have done about INR165 crores in DynaPrime against INR135 crore for last year. For Mill we have done INR425 crores, against INR360 crores last year nine months. Non-Mill, we’ve done about INR192 crores against INR143 crores last year, [Indecipherable] services.

Sandeep Tulsiyan — JM Financial — Analyst

Got it. And what was the price and volume and forex breakup that you share?

Manoj Kumar Agarwal — Director, Global Finance and Chief Financial Officer

So volume, overall volume is 17.6% as of for the nine months and price mix together is about close to 6%.

Sandeep Tulsiyan — JM Financial — Analyst

Okay, this is for nine month again, right?

Manoj Kumar Agarwal — Director, Global Finance and Chief Financial Officer

Nine months, because lumpiness, so it’s better to take our YTD numbers.

Sandeep Tulsiyan — JM Financial — Analyst

Okay, and is there any forex gain element over here?

Manoj Kumar Agarwal — Director, Global Finance and Chief Financial Officer

Yes, forex is about 1%, around 1%, 1.25%.

Sandeep Tulsiyan — JM Financial — Analyst

Okay. No I meant in other income normally what we report at forex gains, is there a jump-in this quarter?

Manoj Kumar Agarwal — Director, Global Finance and Chief Financial Officer

There was — again, is there, I think, about INR8 crores forex gain is there for this quarter. Because the currency got, I think, appreciated in other geography, than what it was in the quarter two.

Sandeep Tulsiyan — JM Financial — Analyst

Got it. And one last question from my side. We definitely have a very comfortable balance sheet position right now. Any plans on inorganic acquisitions in related areas, any adjacencies that you have found out, which would be a close watch out for you in terms of acquisition? Also our promoters, they continue to remain at 79%, we have of course a good two years to bring it down to 75%, so will that be through a fund raise or will it be a stake sale, any thoughts on these two aspects if you can share please?

Manoj Kumar Agarwal — Director, Global Finance and Chief Financial Officer

So as our MD said, in last quarter also, that we are always in look for a better kind of a deal which makes sense for the stakeholders, right, by value appreciation. So we just try to time the market in terms of, if we get anything good to have in Tega’s fold which we give the value appreciation for the stakeholders, we may go for that also. And because we have to kind of value 4%, we have that advantage to kind of raise the fund in company also. So we’re just waiting for the right time, how to marry the — both the situations, once come into the fold. So we are in the look of opportunities, whenever it comes and makes sense for us, obviously, we’ll go for that.

Sandeep Tulsiyan — JM Financial — Analyst

Okay. Sir, just one related question. So when you said, you are seeing some good growth in all — across all geographies, is it possible to give some color as to which geographies are seeing faster growth other than of course, you’ve highlighted South Africa and Chile as subsidiaries, but within geographies, the major markets that you have, if you could give some more color in terms of where the growth was higher? What was the numbers? If U.S. was a decline, how much was the decline?

Manoj Kumar Agarwal — Director, Global Finance and Chief Financial Officer

Too many numbers we may not give, but I can tell you that, other than North America, maybe all — even North America also we talk about is on a slow pace, again because lumpiness. Something got spillover, which got covered in quarter four, rest all the geographies, giving a trajectory of the — on the higher trend as far as the revenue is concerned.

Operator

Thank you. [Operator Instructions] Our next question is from the line of Rakesh Pal with Peace Wealth Capital. Please go-ahead.

Rakesh Pal — Peace Wealth Capital — Analyst

Hello sir. Thank you for the opportunity. Sir, I have one question — two question, actually. My first question is, we are hearing that copper mines are being closed in South America, so what will be the impact on our company? And the second question is, if I can see your orders trajectory. It was peak during quarter two of this financial year and then it reduced. So how does the revenue — does the order book lags the revenue by one or two quarters? These two are my questions, sir. Thank you.

Manoj Kumar Agarwal — Director, Global Finance and Chief Financial Officer

As far as South America is concerned, there are some headwind in, especially in Codelco, but the number of projects which are coming on-stream over here or in copper over there, overall, copper production is not going to fall by too much in — as far as South America is concerned. Second issue is that, most of the mines which we are working in are operating mines and till — even if the production goes down by a couple of percentage points, the mills are running and we are being in the consumer business, our revenue does not get much affected by it.

Rakesh Pal — Peace Wealth Capital — Analyst

And sir, my second question is about the order book, how does your order book carries over the quarter. I guess I can see in quarter three your order book was highest, then it declined. So does it lag to the revenue by one or two quarters? That is my second question.

Manoj Kumar Agarwal — Director, Global Finance and Chief Financial Officer

See, again as we have always said, the revenue is lumpy because the order books are lumpy. So this year we started with good quarter one and overall, I think the pace of the revenue is what it has been kept because of the order booking. So our order booking is continue — continues to grow at that — between the 15, 20 range and in effect, the result of that is that the revenues are growing.

Rakesh Pal — Peace Wealth Capital — Analyst

Sir, with this, the order booking is for how many months? What is the execution period of this order book?

Manoj Kumar Agarwal — Director, Global Finance and Chief Financial Officer

Approximately three months.

Rakesh Pal — Peace Wealth Capital — Analyst

Okay, thank you. That’s all from my side.

Operator

Thank you. [Operator Instructions] Our next question is from the line of Jasdeep Walia with Clockvine Capital. Please go-ahead.

Jasdeep Walia — Clockvine Capital — Analyst

Hello sir, good afternoon, thanks for taking my question. Sir, out of top three copper and gold mining companies globally, how many are your clients, where you are supplying commercial quantities and not quantities meant for testing? Hello?

Manoj Kumar Agarwal — Director, Global Finance and Chief Financial Officer

Both in copper and in gold, the top 20 miners, we are there in all the top miners, okay. So both in copper and in gold.

Jasdeep Walia — Clockvine Capital — Analyst

You are there in all the top 20 miners globally?

Manoj Kumar Agarwal — Director, Global Finance and Chief Financial Officer

Yes.

Jasdeep Walia — Clockvine Capital — Analyst

And you’re supplying commercial scale quantities?

Manoj Kumar Agarwal — Director, Global Finance and Chief Financial Officer

Yes, please.

Jasdeep Walia — Clockvine Capital — Analyst

Got it, sir. Thank you. That’s all, sir.

Operator

Thank you. [Operator Instructions] Our next question is from the line of Sagar Shah with PhillipCapital. Please go-ahead.

Sagar Shah — PhillipCapital India Pvt. Ltd. — Analyst

Good evening, sir. Thank you so much for the opportunity. My first question was related to our capex plan. Can you throw some light that any update on our capex?

Manoj Kumar Agarwal — Director, Global Finance and Chief Financial Officer

A lot of background noise, we’re unable to hear you.

Sagar Shah — PhillipCapital India Pvt. Ltd. — Analyst

Okay, sure. So my question is related to our capex plan. Can you throw some light on our capex plan actually?

Manoj Kumar Agarwal — Director, Global Finance and Chief Financial Officer

So as we said last time, the capex plan for the Group is close to about $30 million, $32 million in next three years and major capex will be in Chile, close to about $22 million, right, followed by some addition in India and South Africa.

Mehul Mohanka — Managing Director & Group Chief Executive Officer

Correct.

Sagar Shah — PhillipCapital India Pvt. Ltd. — Analyst

Okay, got your point, sir. [Technical Issues]

Manoj Kumar Agarwal — Director, Global Finance and Chief Financial Officer

Can’t hear you, boss. Can’t hear you. Sorry, can’t hear you.

Sagar Shah — PhillipCapital India Pvt. Ltd. — Analyst

Okay, sure, one second.

Manoj Kumar Agarwal — Director, Global Finance and Chief Financial Officer

Your voice is breaking.

Sagar Shah — PhillipCapital India Pvt. Ltd. — Analyst

Sir, related to our hedging policy, sir.

Manoj Kumar Agarwal — Director, Global Finance and Chief Financial Officer

Yes, hello.

Sagar Shah — PhillipCapital India Pvt. Ltd. — Analyst

So we have recorded around INR8 crore of forex gain in this quarter. So can you throw some light that what exactly is our hedging policy? How do you — have you received or is it — can you throw some light or is this just a notional figure, this is just a one-off?

Manoj Kumar Agarwal — Director, Global Finance and Chief Financial Officer

No. So, in hedging policy we have hedging policy where we hedge net of import in India balance. In South Africa, again, net of hedging position, we have export. So there we have a gain which is realized. So in that realized gain, overall Group wise, about INR6 crores of realized gain we have. And unrealized gain is about INR1.25 crores as of December 2022.

Sagar Shah — PhillipCapital India Pvt. Ltd. — Analyst

Okay, okay. Got it. My last question, sir, is related to our order book. As on December ’22, and on absolute basis, what was our order books, sir?

Manoj Kumar Agarwal — Director, Global Finance and Chief Financial Officer

So, as of December 31st, I think the order book is about INR325 crores, on a Group level.

Sagar Shah — PhillipCapital India Pvt. Ltd. — Analyst

Okay. Got your point, sir. Thank you so much for your clarification. Thank you.

Operator

Thank you. [Operator Instructions] Our next question is from the line of Hiten Boricha with Joindre Capital. Please go-ahead.

Hiten Boricha — Joindre Capital Services — Analyst

Yes, thank you for the opportunity and congratulations for a very good set of numbers, sir. Sir, I have a couple of questions, the first question is on the order book side. Sir, you mentioned, we are looking to grow a 15%, 20% kind of order book growth in next year also. So can you throw some more light on where this order book inquiries comes in? From which particular sector or which [Technical Issues] export side? [Technical Issues]

Manoj Kumar Agarwal — Director, Global Finance and Chief Financial Officer

We can’t hear you, some problem in the line. Lot of cracking is happening. Can you repeat the question please.

Hiten Boricha — Joindre Capital Services — Analyst

Sure, sure. Am I audible now, sir? Is it okay?

Manoj Kumar Agarwal — Director, Global Finance and Chief Financial Officer

No, we’re struggling to hear you. Your voice is cracking in-between.

Hiten Boricha — Joindre Capital Services — Analyst

[Technical Issues]

Manoj Kumar Agarwal — Director, Global Finance and Chief Financial Officer

We can’t hear you boss.

Operator

Mr. Hiten, as there is disturbance, static from your line — are you using a handset?

Hiten Boricha — Joindre Capital Services — Analyst

Yes –.

Operator

We are unable to hear you due to the static and disturbance from your line. [Technical Issues] We would request you to join the queue again. And we can try again at that point of time.

Our next question is from the line of Jasdeep Walia with Clockvine Capital. Please go-ahead.

Jasdeep Walia — Clockvine Capital — Analyst

Hello. Sir, am I audible?

Manoj Kumar Agarwal — Director, Global Finance and Chief Financial Officer

Yes.

Jasdeep Walia — Clockvine Capital — Analyst

Sir, earlier I had asked the question to you that out of top three copper and gold mining companies globally, how many are your clients? I was asking specifically for DynaPrime range of products, sir, and not for your entire portfolio.

Mehul Mohanka — Managing Director & Group Chief Executive Officer

Hello. Let me answer that in a manner that, I’m not — most of the top gold and copper mines, even for DynaPrime, we are in different stages of development. But most of the top mines, they are our customer in the sense that we are either having business with them or we are trialing with them. So both copper — the largest miners, the top miner in copper and gold is our primary target for DynaPrime.

Jasdeep Walia — Clockvine Capital — Analyst

Got it, sir. Sir, like last time you gave me some numbers, in the sense, you said that top, all top 20 miners are our clients. What’s the — can you give me that sort of a data for DynaPrime? Where you’re supplying commercial quantities? Let’s say, amongst the top —

Mehul Mohanka — Managing Director & Group Chief Executive Officer

That’s what I’m saying. See, DynaPrime, if you look at DynaPrime as a business, it is focused on the top miners, big miners who are the top in listing. So all our focus on the top 20 miners for copper and gold are therefore DynaPrime and that is where our business are coming for DynaPrime. So, our — whatever business you are looking at and a growth is coming from the top miners, who are having the larger-size of mills.

Jasdeep Walia — Clockvine Capital — Analyst

Got it, sir. And sir, out of total sales of DynaPrime, what percentage of sales are contributed where you are supplying quantities for testing?

Mehul Mohanka — Managing Director & Group Chief Executive Officer

Again 8%, 10% is like that. We are not calling it. Testing is a part of supplying a couple of pieces here and there to see how they are fixing it there. So 8%, 10% of our business would be testing, which the balance is from the revenues.

Jasdeep Walia — Clockvine Capital — Analyst

Got it, sir. Thank you sir, that’s all from my side.

Operator

Thank you. Our next question is from the line of Sushrut Gokhale with Caprize Investments. Please go-ahead.

Sushrut Gokhale — Caprize Investments — Analyst

Hi, good afternoon, sir, congrats for the good set of numbers. So I just want guidance on our new products like DynaPrime. So what is the pipeline? Means, are we working on some new products like this?

Mehul Mohanka — Managing Director & Group Chief Executive Officer

You’re talking about new products or you’re talking about DynaPrime?

Sushrut Gokhale — Caprize Investments — Analyst

No, means like DynaPrime is our flagship product. So are we working on some new products like this?

Mehul Mohanka — Managing Director & Group Chief Executive Officer

Yes. We are working on a number of products on the R&D sections. But most of these products are in the process of patenting, in the process of patent, so detail of these products are not available in public domain now.

Sushrut Gokhale — Caprize Investments — Analyst

So just can you throw some light that three years down the line, what would be share from these new products?

Mehul Mohanka — Managing Director & Group Chief Executive Officer

See, one, we are — as of now, we are looking at the growth in the new few years from DynaPrime sector. Once this — the new products are fully tested, commercialized and put into operation, the way DynaPrime grows will be 10%, 15% growth will start coming from these kind of products also in the future.

Sushrut Gokhale — Caprize Investments — Analyst

And I just want this revenue number for [Indecipherable] for nine months and last nine months. Sorry, I was — I didn’t get that.

Manoj Kumar Agarwal — Director, Global Finance and Chief Financial Officer

So revenue numbers for December ’22 is INR8,059 million, revenue from sales, okay, against INR659 million previous period. Million, numbers are in million.

Sushrut Gokhale — Caprize Investments — Analyst

Yes. Thanks, that’s it from my side.

Manoj Kumar Agarwal — Director, Global Finance and Chief Financial Officer

Thank you.

Operator

Thank you. Our next question is from the line of Nikhil Jain with Galaxy International. Please go-ahead.

Nikhil Jain — Galaxy International — Analyst

Yes, thank you for the opportunity. Just two questions, actually a little more quantitative. So if I, let’s say, assume that the market is 100. So to how many customers would we have penetrated, both with DynaPrime and with our conventional products? So do we actually — so basically the point is that, do we foresee scope for expansion in our conventional product with the customers or is that kind of saturated? And the second question is for DynaPrime.

Mehul Mohanka — Managing Director & Group Chief Executive Officer

See, as far as DynaPrime is — I mean, overall, when we’re looking at the mill market and the DynaPrime product, we were close to 5%, 6% last year, right, so we have grown by 1%, but still the growth prospect is very large. So what we have been attacking with DynaPrime is close to a $1 billion market. And we have just started in the last three years. So there is a scope of growth is — as you can see from the revenue that we are clocking and the market potential which is there.

Nikhil Jain — Galaxy International — Analyst

Right. Okay, okay. Second question was with respect to the geographies, right? So we are there in India, we there in Chile, Australia, but are there some key geographies that we actually want to expand into and that would be our focus, let’s say, for FY ’24 and beyond?

Mehul Mohanka — Managing Director & Group Chief Executive Officer

So as of now, we are very evenly balanced in geographies with revenue, with Latin-America and Africa being around 24, 25 each and then the rest of the geographies. But Latin America because of being the largest copper producer in the world, will always be a focus in the next two, three years, because DynaPrime will focus on those large customers.

Nikhil Jain — Galaxy International — Analyst

All right, okay. Third question was with respect to, let’s say, right now our focus is actually on gold and copper, right? But let’s say, some of these metals, which are coming up or which would be required in higher quantities, let’s say, when we talk about lithium on nickel or some of these things, are our products suitable for those and is that a large enough market for you to actually address and kind of look for?

Mehul Mohanka — Managing Director & Group Chief Executive Officer

See, again, on the Mill Liner market, 75% of the liner market is in gold and copper. Now gold and copper are the bellwether for all the others, where — as far as the product usage is concerned, whether zinc, iron ore, other things. So the idea of focusing on this area and getting a market share in gold and copper is that once we have the product fully established over here, other material will always follow-on that, okay. So our basic focus is in gold and copper, because of these larger concentration of market there.

Nikhil Jain — Galaxy International — Analyst

But Nickel and, let’s say, lithium and all, so those are not — at this point of time, not a big enough market, basically that would be a small fraction or whatever, less than 5% or whatever?

Mehul Mohanka — Managing Director & Group Chief Executive Officer

Correct.

Nikhil Jain — Galaxy International — Analyst

Okay, okay and one last question. So we have a, let’s say, another company in similar area, let’s say, AIA Engineering, which is, let’s say, three to four times of your size. So, is it like we are having different product range than them or is it like we are competing with them in certain markets? I think they are also supplying some mill consumables. I think they are having a little different, but I just wanted to get your opinion on that?

Mehul Mohanka — Managing Director & Group Chief Executive Officer

See, AIA, 90% of their business is in grinding media. I think what they say is, 10% is coming from the Mill Liner and which includes cement mills and they are not folding into the mining. So in the mining sector, where they will be — the sector which we are trying to disrupt, there will be competition with — against them, but where we are competing is established steel liners changing to DynaPrime. And they will be looking at established steel ADRs to replace with their product, which will be steel, so that’s the difference.

Nikhil Jain — Galaxy International — Analyst

Okay, fair enough. Thank you. Thanks a lot.

Operator

Thank you. Our next question is from the line of Bhavin Vithlani with SBI Mutual Fund. Please go-ahead.

Bhavin Vithlani — SBI Mutual Fund — Analyst

Yes, thank you for the opportunity. First, if you — I mean, I’ve joined in late, pardon me. If you could help me nine month numbers for DynaPrime conventional Mill Liners and non-mill products?

Manoj Kumar Agarwal — Director, Global Finance and Chief Financial Officer

Yes, Bhavin, I’ll help you. So nine months DynaPrime number is INR1,652 million versus INR1,358 million. Non-Dyna mill is INR4,245 million versus INR3,593 million. And non-mill is INR1,926 million versus INR1,436 million.

Bhavin Vithlani — SBI Mutual Fund — Analyst

Okay, sorry, could you repeat the non-mill, please.

Manoj Kumar Agarwal — Director, Global Finance and Chief Financial Officer

INR1,926 million versus INR1,436 million.

Bhavin Vithlani — SBI Mutual Fund — Analyst

Sure. The other question is, we had renewed our focus on the non-mill by restructuring our distribution strategy. Could you help us understand the benefits that we are seeing on that path and how is the acceptance from the customer side?

Mehul Mohanka — Managing Director & Group Chief Executive Officer

So, you’ve already seen the numbers of the mill, non-mill increasing, right? So we are on a year-to-date non-mill close to 34% increase compared to what it was. So, what we had said right in the beginning, I think, in the last two-year, we are saying that non-mill follow-on once the DynaPrime and other establishments are doing, so non-mill is doing also pretty good now.

Bhavin Vithlani — SBI Mutual Fund — Analyst

Sure. The other part is, if you could help us with the utilization levels at the various key facilities and what is the update on the expansion that we were undertaking at Chile?

Mehul Mohanka — Managing Director & Group Chief Executive Officer

So on Chile, which I’ve said that, a land has been acquired by us, that’s in our name. We are making application — made application to the local authorities for clearances. We are awaiting the approval for the same and we expect to get it by March. And if so, then the field work will start from April onwards. So as of now, we are on the track, unless we have some delay on the approval side, which we not foresee as of now.

Bhavin Vithlani — SBI Mutual Fund — Analyst

Sure. And what is the utilization at the current facility, Chile, India, South Africa, it will help us understand how much far you can go?

Mehul Mohanka — Managing Director & Group Chief Executive Officer

So, in Chile, we are at about 72%. In South Africa about 68%. Kalyani is about 63%. India is altogether is about close to 55%. All three plant together.

Bhavin Vithlani — SBI Mutual Fund — Analyst

Okay, great. And the new expansion that we are undertaking, what is the timelines that we are expecting? And I believe there is a phase wise expansion that we are undertaking?

Mehul Mohanka — Managing Director & Group Chief Executive Officer

So we are kind of, as of now basis, taking approval as of March. We’re expecting the commercial production should come out in quarter one of FY ’25. Later quarter one.

Bhavin Vithlani — SBI Mutual Fund — Analyst

Okay. Sure. And with this expansion, if you could just help us, the current capacity of at Chile and what is the Phase I expansion. So the quantum increase in the capacity at Chile?

Mehul Mohanka — Managing Director & Group Chief Executive Officer

So currently the capacity is 5,000 ton, right, which will go up to close to about 10,000 tons by quarter one FY ’25.

Bhavin Vithlani — SBI Mutual Fund — Analyst

Okay. Okay, I understand. The last question is, if I look at your fourth quarter of previous years, there was a very significant seasonality that we absorb. Are we — is that something one can expect the similar level of seasonality in the current year? Because if I look at last year, quarter four profit was equal to the nine months profit last year.

Manoj Kumar Agarwal — Director, Global Finance and Chief Financial Officer

So I can’t talk about number, but the fact that quarter four all used to be better than first quarter three, historically. So we expect the same trend and wait to see that number how it converts.

Bhavin Vithlani — SBI Mutual Fund — Analyst

Great. And sorry, just one last. We were looking at converting our customers from CIF to FOB, because of the significant volatility in the freight that we have seen now that freight rates are coming down. If you could give us a perspective on that and what’s the kind of margin benefit that we could get once the — because the full impact of rate decline gets in?

Manoj Kumar Agarwal — Director, Global Finance and Chief Financial Officer

Okay, I’ll just repeat that as you joined later. So the freight side, if you can remember, last year full-year, we lost about 1.5% to 1.6% as a part of our EBITDA, right. And what we see now, we have recovered close to about 1.2% as of now. And we expect that the remaining portion will also get normalized by quarter four, because it is still going down, and not yet reached to the level what it was prior to COVID. So we are not pushing too hard for the FOB conversion. But we are softly kind of moving to that whatever customer — when customer is agree for FOB, we are just going to that aspect. So we are not forcing too much what was doing little earlier. So freight is — it is something coming into a very much expectable level to us where we’ve been able to kind of get back our margin what we’ve lost. Other than 25 basis point, which we expect to get it in quarter four also.

Bhavin Vithlani — SBI Mutual Fund — Analyst

Sure, sure. Yes, thank you so much for taking my questions.

Manoj Kumar Agarwal — Director, Global Finance and Chief Financial Officer

Thank you Bhavin.

Operator

Ladies and gentlemen, that was the last question for today’s conference. I would like to turn the floor back over to Mr. Nachiket Kale for closing comments. Over to you, sir.

Nachiket Kale — Investor Relations

Thanks everyone. I would like to thank the management for taking the time-out for this conference call today. And also thanks to all the participants. If you have any queries, please feel free-to contact us, we are Orient Capital, Investor Relations Advisor to Tega Industries. Thank you so much.

Mehul Mohanka — Managing Director & Group Chief Executive Officer

Thank you.

Operator

[Operator Closing Remarks]