Detailed Rationale

Crisil Ratings has continued its ratings on the bank facilities of Tega Industries Ltd (TIL; part of the Tega group) on ‘Rating Watch with Developing Implications’. 

 

The ratings were placed on developing watch in September 2025 on account of the proposed acquisition of AIP MC Holdings LLC (Molycop) by TIL in partnership with Apollo Funds. On November 28, 2025, TIL entered into a definitive agreement with Apollo Funds to acquire Molycop at enterprise value of $1.455 billion. As per the revised terms, TIL has increased its holding in Molycop from 76.7% to 84.12%, which is valued at $395 million or ~Rs 3,617 crore, up from $359 million.

 

Apollo Funds will hold 15.82% stake valued at $75 million. Also, Apollo Funds will infuse ~$270 million in perpetual preference shares, which will be utilised to reduce the existing debt in Molycop, thereby optimising the company's capital structure.

 

TIL has raised equity of Rs 1,713 crore and the balance is expected to be funded through proposed term debt of Rs 1,500 crore and internal accrual. TIL has completed antitrust filings in all 12 jurisdictions The transaction is expected to be completed by May 2026.

 

The acquisition will propel TIL among the world’s leading designers and manufacturers of critical-to-operate consumables for production in the mining, mineral processing and material handling industries with an innovative and differentiated product portfolio. The complementary product profile and clientele of TIL and Molycop should lead to significant synergies and economies of scale, which will drive revenue growth and improvement in the operating profitability over the medium term. The revenue of the combined entity was $1.7 billion (~Rs 15,207 crore) in fiscal 2025 and earnings before interest, tax, depreciation and amortisation (Ebitda) was $217 million (~Rs 1,906 core) before adjustment of minority interest.

 

The financial risk profile will moderate in the interim owing to incremental debt for funding the acquisition and existing debt at Molycop. However, the financial risk profile will improve over time, driven by refinancing of the existing debt at Molycop at lower cost and enhanced cash flow resulting from operational synergies. That said, debt at the consolidated level for TIL, along with terms and conditions of the perpetual preference shares to be infused by Apollo Funds, will be monitorable.

 

Crisil Ratings will continue to monitor the transaction and will resolve the watch on receipt of regulatory approvals and successful completion of the transaction. Also, Crisil Ratings will engage with the TIL management to better understand the terms of the funding for the transaction as well as the synergy benefits that may emerge post completion of the transaction.

 

The ratings continue to reflect the Tega group's established market position in the wear-resistant products (WRP) and wear-resistant components (WRC) segments, geographically diversified revenue profile, healthy capital structure and improved operating performance. The ratings also factor in the acquisition, which is likely to strengthen TIL’s market position through complementary product profile and other cost synergies. These strengths are partially offset by large working capital requirement and exposure to risks related to aggressive growth through acquisitions and capital expenditure (capex). Ability of TIL to integrate operations post-acquisition of Molycop and meaningfully realise operational synergies, resulting in enhanced scale and profitability, will be monitorable.

Analytical Approach

Crisil Ratings has combined the business and financial risk profiles of TIL and its subsidiaries− Losugen Pty Ltd, Tega Industries Chile SpA, Tega McNally Minerals Ltd (TMML), Tega Industries Inc, Tega Industries Canada Inc, Tega Do Brasil Servicos Tecnicos Ltd, Tega Holdings Pty Ltd, Tega Industries Australia Pty Ltd, Edoctum SA, Tega Industries Peru SAC, Tega Investment South Africa Proprietary Ltd, Tega Industries Africa Proprietary Ltd, Tega Industries Ghana Ltd, Tega MC Investment Pte Ltd and Tega MC JV Holdings Pte Ltd. This is because all these entities, collectively referred to as the Tega group, have strong operational linkages and cash flow fungibility.

 

Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation.

Key Rating Drivers - Strengths

Established market position in the mining consumables segment

The Tega group is one of the world’s leading and experienced players in the WRP and WRC segments. It has a wide product profile, which includes both mill and non-mill products such as grinding mills, wear components, screens, trommels, conveyors, chute liners, pump liners and hydro cyclones. The equipment business has enabled TIL to become an integrated player offering equipment as well as consumables to its customers. However, steady ramp-up of the equipment business remains monitorable.

 

In the first nine months of fiscal 2026, revenue increased by 6% on-year to Rs 1,165 crore, compared with Rs 1,102 crore in the corresponding period of fiscal 2025. The Ebitda margin declined to 14.67% from 17.22% on account of exceptional cost related to acquisition of Molycop and provision for new labour laws. The company had orders worth Rs 1,140 crore as on December 31, 2025, of which Rs 810 crore will be executed within a year.

 

Molycop is a leading global player of grinding media in core gold and copper mining regions. Post acquisition of Molycop, TIL will become the leading provider in comminution circuit, leveraging the global relationships of the former, thereby strengthening the business risk profile of the Tega group.

 

Geographically diversified revenue with strong clientele

TIL has a strong clientele with stable demand. Around 75% of its orders are repeat orders. Income is geographically diversified with foreign exchange-denominated revenue accounting for 80-85% of sales. Its latest product, Dynaprime, in the mill liner segment has been a success globally, including in geographies such as South America, Asia Pacific, EMEA (Europe, the Middle East and Africa).

 

Post the acquisition, TIL will benefit from the complementary sales of its consumables to Molycop’s customers. TIL will also benefit from Molycop’s strong presence in geographies such as the US and Australia. At a combined level, the Tega group will have 23 global manufacturing sites close to its clientele.

Key Rating Drivers - Weaknesses

Large working capital requirement

Gross current assets (GCAs; net off cash) were at 219 days as on March 31, 2025, and are expected at similar levels owing to the export-oriented business. Exports account for around 85% of sales and involve a transit period of 60-90 days and an additional 30-60 days of credit is provided to customers. Hence, overall receivables amount to 3-4 months from the time of dispatch. Post the Molycop acquisition, the working capital cycle of the combined entity will be monitorable.

 

Exposure to risks related to aggressive growth through acquisitions and capex

The Tega group has grown inorganically through acquisitions outside India. Overseas subsidiaries play a significant part in the group’s performance and contribute 35-40% of sales.

 

The acquisition of Molycop will lead to increase in the leverage of the group with the debt to Ebitda ratio expected over 4 times. Ability of TIL to integrate operations and realise operational synergies, thereby improving cash flow and reducing leverage, will be monitorable. That said, TIL has demonstrated its ability to turn around acquired companies in the past, though they were much smaller.

Liquidity Strong

Liquidity remains strong backed by cash and equivalent and marketable securities of ~Rs 218.88 crore as on December 31, 2025. Net cash accrual was Rs 284 crore in fiscal 2025 and is projected over Rs 280 crore over the medium term against yearly debt obligation of Rs 50-60 crore. Bank limit of Rs 201 crore was utilised 31% on average over the six months through November 2025.

 

Post completion of the Molycop acquisition, TIL is expected to maintain liquidity of ~$50 million (~Rs 450 crore) at the consolidated level.

ESG Profile

The environment, social and governance (ESG) profile of the Tega group supports its credit risk profile. The sector has a moderate environmental and social impact, driven by its raw material sourcing strategies and energy-intensive processes. The social impact is indicated by labour-intensive operations and safety issues on account of manufacturing activities. The group’s increasing focus on addressing ESG risks supports its ESG profile.

 

ESG highlights:

• TIL aims to improve emission management by switching to liquefied petroleum gas instead of solid and liquid fuel for boilers and furnaces. In fiscal 2024, TIL achieved 7.5% reduction in carbon dioxide emissions.
• The company has invested in solar and wind power in its drive towards clean and renewable energy sources. It has undertaken several community engagement initiatives focusing on health, education, rural transformation and environment parameters.
• TIL has expanded contractor safety through a formal contractor safety management system.
• The governance structure is characterised by more than 50% independent directors on the boards of key committees, the presence of investor grievance redressal mechanism and extensive financial disclosures.
• TIL rolled out an ESG/compliance dashboard and roadmap to address global frameworks, such as Corporate Sustainability Reporting Directive (CSRD), Corporate Sustainability Due Diligence Directive (CSDDD) and Carbon Border Adjustment Mechanism (CBAM) in fiscal 2024.

 

ESG is gaining importance among investors and lenders. The commitment of the Tega group to ESG will play a key role in enhancing stakeholder confidence given the shareholding by foreign portfolio investors and the group’s access to both domestic and overseas capital markets.

Rating sensitivity factors

Upward factors

• Significant increase in revenue with sustained healthy profitability, resulting in operating Ebitda of over Rs 450 crore at the consolidated level
• Improvement in the working capital cycle, resulting in better financial risk profile

 

Downward factors

• Weakening of business risk profile with decline in sales or consolidated Ebitda margin lower than 16%
• Stretched working capital cycle
• Larger-than-expected debt-funded capex or acquisition

About the Tega group
Set up in 1976 by Madan Mohan Mohanka and his family members, the Tega group manufactures rubber WRP and WRC for mineral-processing applications and polyurethane lining. Its facilities are at Kalyani and Samali in West Bengal, and at Dahej in Gujarat.

In 2001 and 2002, the group set up two wholly owned subsidiaries in the US and Australia for increasing export to these countries.

In 2006, it established a wholly owned subsidiary in the Bahamas as a holding company that owns Tega Industries South Africa Pty Ltd, a manufacturing unit in South Africa.

In March 2008, it established wholly owned subsidiaries in Canada and Brazil for enhancing its presence in these regions.

In February 2011, the group acquired Australia-based Losugen Pty Ltd and Chile-based Tega Industries Chile SPA (formerly, Tega Acotec SA). Losugen Pty Ltd manufactures and distributes wear-resistant mining equipment products. Tega Industries Chile SPA manufactures fluid transportation products (pipe-lining products) and has an established position in Chile, Peru, Argentina and Bolivia.

Tega Industries (SEZ) Ltd, a wholly owned subsidiary of TIL, was merged with the latter with effect from October 1, 2016, to improve financial strength and flexibility, management control and operational efficiency.

TMML was taken over by TIL under the resolution plan approved by the National Company Law Tribunal through an order dated February 24, 2023. The entity was engaged in manufacturing crushing, screening, grinding, material handling and mineral processing equipment, serving industries such as iron ore, coal, steel, zinc and copper, and other minerals.

Key Financial Indicators

As on / for the period ended March 31		2025	2024
Operating income	Rs crore	1,639	1,493
Profit after tax (PAT)	Rs crore	200	194
PAT margin	%	12.2	12.9
Adjusted debt/adjusted networth	Times	0.18	0.22
Interest coverage	Times	14.23	11.42

Crisil Ratings-adjusted numbers

Any other information: Not applicable