Pitti Engineering Ltd:Annual Report 2023-24 Analysis

Pitti Engineering Ltd: A Comprehensive Overview #

About the Company #

Year of Establishment and Founding History #

Pitti Engineering Limited was established in 1983. The company was founded by Mr. Sharad B. Pitti and initially focused on manufacturing small electrical laminations.

Headquarters Location and Global Presence #

The company’s headquarters are located in Hyderabad, Telangana, India. Pitti Engineering has expanded its global presence with manufacturing facilities in India and a network of sales offices and partners worldwide.

Company Vision and Mission #

While the exact official vision and mission statements are not publicly available, based on their operations and public statements, Pitti Engineering likely aims to be a leading global provider of engineered electrical components and solutions, focusing on quality, innovation, and customer satisfaction. They strive to be a reliable partner for their customers, contributing to their success by delivering high-performance products and services.

Key Milestones in Their Growth Journey #

• Early Years (1983-1990s): Focus on electrical laminations and building a strong domestic presence.
• Expansion and Diversification (2000s): Expansion into machined components, sub-assemblies, and value-added services.
• Global Expansion (2010s): Establishing a stronger international footprint through exports and strategic partnerships.
• Capacity Augmentation: Continuously investing in expanding manufacturing capacity to meet growing demand.

Stock Exchange Listing Details and Market Capitalization #

Pitti Engineering Limited is listed on both the Bombay Stock Exchange (BSE: 533356) and the National Stock Exchange (NSE: PITTIENG). Market capitalization varies daily with stock prices. Current market capitalization data should be checked from financial news sources.

Recent Financial Performance Highlights #

Recent financial performance highlights should be checked from financial news sources, but generally, it is important to observe:

• Revenue Growth: Track year-over-year revenue growth.
• Profitability: Focus on key profitability metrics like EBITDA and net profit margins.
• Order Book: Monitor the size and composition of the order book, which is an indicator of future revenue.
• Debt Levels: Assess the company’s debt levels and financial leverage.

Management Team and Leadership Structure #

• Mr. Akshay S Pitti: Vice Chairman & Managing Director
• Mr. Sharad B Pitti: Chairman

The company has a board of directors with a mix of executive and independent directors.

Any Notable Awards or Recognitions #

Pitti Engineering has received awards and recognitions for export performance, quality, and innovation. Specific awards should be researched.

Their Products #

Complete Product Portfolio with Categories #

• Electrical Laminations: Stator and rotor laminations.
• Machined Components: Precision machined parts for various electrical applications.
• Castings: Aluminum and other metal castings.
• Sub-Assemblies: Integrated electrical sub-assemblies and components.
• Wound Cores: Cores for transformers and other electrical equipment.
• Die Cast Rotors

Flagship or Signature Product Lines #

Electrical laminations and machined components are considered to be the flagship product lines.

Key Technological Innovations or Patents #

Pitti Engineering focuses on continuous improvement in manufacturing processes and has developed in-house capabilities for tooling design and manufacturing. Exact patent numbers should be researched.

Manufacturing Facilities and Production Capacity #

The company has multiple manufacturing facilities in India. Production capacity has been expanded over time to meet the growing demand. Specific production capacity numbers are not readily available and should be obtained from company presentations or annual reports.

Quality Certifications and Standards #

Pitti Engineering has certifications like ISO 9001, ISO 14001, and IATF 16949, demonstrating its commitment to quality management and environmental sustainability.

Any Unique Selling Propositions or Technological Advantages #

• Integrated Capabilities: Pitti Engineering offers end-to-end solutions from design to manufacturing, providing a one-stop shop for its customers.
• Engineering Expertise: The company has a strong engineering team that can provide technical support and customization.
• Global Quality Standards: Pitti Engineering adheres to global quality standards and delivers high-performance products.

Recent Product Launches or R&D Initiatives #

Recent product launches and R&D initiatives should be checked from press releases or investor presentations.

Primary Customers #

Target Industries and Sectors #

• Power Generation: Power plants, turbines, generators.
• Electrical Equipment: Transformers, motors, switchgear.
• Industrial: General industrial applications.
• Transportation: Railway, electric vehicles.
• Renewable Energy: Wind turbines, solar inverters.

Geographic Markets (Domestic vs. International) #

Pitti Engineering serves both domestic and international markets. A significant portion of their revenue comes from exports.

Major Client Segments (agricultural, industrial, residential, etc.) #

• Industrial: The primary client segment.

Distribution Network and Sales Channels #

Pitti Engineering utilizes a direct sales force and a network of distributors to reach its customers.

Major Competitors #

Direct Competitors in India and Globally #

Identifying direct competitors requires in-depth industry analysis. However, competitors could include companies specializing in electrical laminations, machining, and related components, both Indian and international.

Competitive Advantages and Disadvantages #

Pitti Engineering’s competitive advantages include its integrated capabilities, engineering expertise, and global quality standards. Potential disadvantages could include competition from larger multinational corporations with greater financial resources.

How They Differentiate from Competitors #

Pitti Engineering differentiates itself through its focus on customer service, customization, and continuous improvement.

Industry Challenges and Opportunities #

Industry challenges include fluctuating raw material prices, global economic uncertainty, and increasing competition. Opportunities include growing demand for electrical equipment in emerging markets, increasing adoption of renewable energy, and the trend towards electric vehicles.

Market Positioning Strategy #

Pitti Engineering positions itself as a reliable partner for its customers, providing high-quality products and services at competitive prices.

Future Outlook #

Expansion Plans or Growth Strategy #

Pitti Engineering plans to expand its manufacturing capacity and geographical reach to meet growing demand.

Sustainability Initiatives or ESG Commitments #

Pitti Engineering has focused on sustainable manufacturing practices and environmental responsibility.

Industry Trends Affecting Their Business #

• Electrification: Increasing demand for electrical equipment across various industries.
• Renewable Energy: Growing adoption of renewable energy sources.
• Electric Vehicles: Rising demand for electric vehicles and related components.
• Automation and Digitization: Increasing adoption of automation and digitization in manufacturing processes.

Long-Term Vision and Strategic Goals #

Pitti Engineering’s long-term vision is to be a leading global provider of engineered electrical components and solutions. Their strategic goals include expanding manufacturing capacity, increasing global market share, and investing in innovation and technology.

Pitti Engineering Limited: FY 2023-24 Performance Analysis #

Financial Performance Trend Analysis (FY22-FY24 - Standalone) #

• Revenue Growth: Total Income demonstrated consistent growth, reaching ₹1,249.81 crore in FY24, up 11.79% YoY from ₹1,117.98 crore in FY23. This follows the positive trend from FY22, indicating sustained top-line expansion driven by increased sales volumes (up 16.55% YoY in FY24 to 42,305 MT) across domestic and export markets. The 5-year CAGR for Total Income stands at 23.99%.
• Profitability: EBITDA grew 17.39% YoY to ₹177.72 crore in FY24 (₹151.38 crore in FY23). Profit After Tax (PAT) saw a significant increase of 53.32% YoY, reaching ₹90.20 crore in FY24 (₹58.83 crore in FY23). The strong PAT growth highlights improved operational efficiency and potentially better product mix favouring higher-margin offerings. The 5-year PAT CAGR is 51.55%.
• Margins: EBITDA margin improved to 14.22% in FY24 from 13.54% in FY23 (using provided EBITDA & Total Income). PAT margin expanded significantly to 7.22% in FY24 from 5.26% in FY23. This margin expansion, particularly in PAT margin, reflects the success of focusing on margin-accretive, value-added products.
• Return Ratios: Return on Equity (ROE) improved markedly to 24.04% in FY24 from 19.04% in FY23 and 19.97% in FY22. Return on Capital Employed (ROCE) also increased to 19.58% in FY24 from 17.23% in FY23 and 17.44% in FY22, indicating enhanced efficiency in utilizing capital for profit generation.
• Earnings Per Share (EPS): Reflecting the strong PAT growth, EPS (Basic & Diluted) increased to ₹28.14 in FY24 from ₹18.36 in FY23. The 5-year EPS CAGR is 51.02%.
• Leverage & Liquidity: The Debt-Equity ratio increased to 1.29 in FY24 from 0.87 in FY23, primarily due to increased term loans for capex and higher working capital utilization. The Interest Coverage Ratio improved, suggesting better debt servicing capability despite higher debt levels. The Current Ratio remained stable. Net worth grew steadily over the three years. Asset Turnover Ratio indicates efficient asset utilization.

Business Segment Performance #

Pitti Engineering operates primarily across two verticals: Rotating Electrical Equipment and Machined Components.

Rotating Electrical Equipment #

This segment, the traditional core, includes electrical laminations (loose, pole, glued), sub-assemblies (stator cores, rotor packs, shafts), and value-added products like ready-for-winding (RFW) assemblies. The company is India’s largest manufacturer and exporter of electrical laminations. Performance is driven by demand from power generation (hydro, thermal, wind), railways, industrial motors, appliances, and emerging sectors like EVs and data centers (DG sets). The acquisition of Bagadia Chaitra (16,000 MT capacity) significantly boosts capacity in this segment, targeting growth particularly in South India. FY24 capacity utilization for components & assemblies was 72.95%.

Machined Components #

This newer, high-growth vertical leverages the company’s engineering and machining capabilities (including casting, fabrication, heat treatment, CNC machining). It produces complex, critical components like stator frames, gear cases, axle boxes, flywheel flanges, and parts for mining (OHV wheel hubs, support seals) and renewable energy (electrolyzer parts). This segment is margin-accretive and diversifies the end-user base (Railways, Metro, Mining, Renewables). Capacity utilization for Machined Components (based on hours) was high at 90.47% in FY24. The proposed merger with Pitti Castings Private Limited aims to further vertically integrate this segment, enhance control over casting quality, reduce related-party transactions, and bring in marquee clients.

Major Strategic Initiatives and Progress #

• Inorganic Growth (Acquisitions):
  • Bagadia Chaitra Industries: Acquired 100% in May 2024. Adds 16,000 MT capacity for electrical steel laminations & assemblies, strengthens presence in South India (Tumkur plants near Bengaluru, Chennai, Coimbatore hubs). Contributes to consolidated capacity expansion.
  • Pitti Castings Merger (Proposed): Scheme approved by Board, Shareholders, Creditors; NCLT approval pending. Aims for vertical integration (castings for machined components), synergy benefits (supply chain, cost reduction), reduced related-party transactions, access to new customers/industries.
• Organic Growth (Capacity Expansion & Reorganization):
  • Aurangabad Expansion: Commissioning underway, contributing to consolidated capacity reaching 90,000 TPA (from 56,000 TPA pre-acquisitions/expansion).
  • Hyderabad Reorganization: Lamination capacity to be decommissioned post-Aurangabad expansion; vacated space repurposed for increased machining capacity.
  • Consolidated Business Reorganization: Plans to derive material synergies and reduce logistics costs across all facilities.
• Value Addition & Product Development: Continued focus shift from laminations to value-added products (machined castings, fabricated parts, RFW assemblies, integrated stator frames). Developed critical components for Vande Bharat trains (18 projects), OHV mining clients, green hydrogen electrolyzers, marine electric propulsion, and data center generators. Enhanced supply of 6FRA products for Indian Railways traction motors.
• Market Focus: Deepening engagement with Indian Railways (‘Make in India’), Mining (complex, safety-critical parts), Renewable Energy (wind up to 5MW, hydro, green hydrogen), Data Centers (integrated stators/rotors for DG sets), and exploring opportunities in Marine applications.

Risk Landscape Changes & Mitigation #

• Commercial Risks:
  • Growth Risk: Mitigated by focusing on customer needs, talent, infrastructure, and pursuing opportunities in EVs and Europe.
  • Customer Concentration: Managed by increasing value proposition (integration) and diversifying geography/industry base.
  • Competition: Addressed through differentiation via forward/backward integration for client stickiness.
• Operational Risks:
  • Geopolitical: Constant assessment of impact on demand, costs, and supply chain.
  • HR/People: Addressed through upskilling/reskilling programs, securing talent pool, technical training, and succession planning.
  • Health & Safety: Managed via increased automation, focus on safety, training, and PPE usage.
• Information & Cybersecurity: Focus on staff training on IT protocols and implementing cybersecurity safeguards alongside digitization initiatives (cloud, automation, IoT, SAP).
• Sectoral Risks:
  • Technology Obsolescence: Mitigated by steady capacity addition with best-in-class technology and periodic modernization of legacy facilities.
  • Economic Cycles: Addressed through geographic/customer segment diversification, including non-capital goods areas.
• Financial Risks:
  • Commodity/Forex Volatility: Insulated via agreements/contracts and hedging strategies where possible.
  • Liquidity: Managed by maintaining credit lines, access to capital, strong balance sheet focus, and prudent working capital management.
• Sustainability & ESG Risks: Mindful of carbon footprint (energy/water rationalization, 4Rs, energy-efficient equipment). Monitoring Carbon Border Adjustment Mechanism (CBAM) for potential impact on EU exports from upstream emissions. Focus on ESG commitments for reputation and future business.
• Crisis Management: Utilizing experience from COVID-19, factoring high severity/velocity risks for Business Continuity Planning (BCP).

ESG Initiatives and Metrics #

• Environmental:
  • Energy: 1 MW solar plant at Aurangabad (reduced emissions by 1,162 MT CO2e in FY24). Planning expansion to 3 MW. Transitioning fleet to EVs (16 vehicles, reduced 42.75 tCO2e). Energy conservation capex: ₹313.73 lakhs.
  • Water: Zero Liquid Discharge mechanism via STPs (40 KLD Hyderabad, 50 KLD Aurangabad); treated water used for gardening, sludge used as fertilizer. Total water withdrawal: 17,975 KL (FY24) vs 16,060 KL (FY23).
  • Air Emissions: Monitoring NOx, SOx, PM levels within norms. GHG Scope 1+2 emissions intensity (per crore turnover): 71.28 tCO2e/₹ Cr (FY24). (Note: BRSR reports external assurance for GHG).
  • Waste Management: Adopts 3R principles. Segregates hazardous/non-hazardous waste. Recyclable waste handled by authorized vendors. Total waste generated: 31,322 MT (FY24) vs 31,273 MT (FY23), mostly recovered/reused (31,309 MT in FY24).
  • Afforestation: 8 acres dedicated (7 Aurangabad, 1 Hyderabad) for planting ~36,500 trees using Miyawaki method; 5,450 trees planted in Aurangabad, 6,107 in Hyderabad so far.
• Social:
  • Employees: Total 1502 employees (FY24) vs 1331 (FY23). Focus on well-being (health/accident insurance, parental benefits), training (55.07% coverage in FY24), career development reviews (100% coverage for permanent employees), grievance redressal. LTIFR: 0.00 (FY24 & FY23). No fatalities reported. Zero complaints under POSH Act.
  • CSR: Spent ₹131 lakhs (exceeding mandated ₹130.63 lakhs) in FY24 on healthcare, education, national heritage protection, animal welfare, sports.
  • Community Engagement: Mechanisms for grievance redressal; focus on inclusive growth (job creation).
• Governance: Strong Board structure (6 Independent Directors out of 8 as of Mar'24), multiple committees (Audit, NRC, SRC, RMC, CSR), adherence to codes/policies (Code of Conduct, Whistle Blower, Anti-Corruption - available internally), compliance with regulations and Secretarial Standards. Regular Board/Committee meetings, performance evaluation, director familiarization programs in place.

Management Outlook #

Management expresses optimism, anticipating continued growth driven by strong domestic demand (especially from government’s infrastructure focus like Railways) and resilient export markets. Key growth drivers identified are:

• Strategic Initiatives: Benefits expected from the Bagadia Chaitra acquisition (enhanced capacity, South India access) and the proposed Pitti Castings merger (vertical integration, margin enhancement in machined components). Capacity expansion in Aurangabad and facility reorganization are set to improve efficiency and reduce costs.
• Machined Components Vertical: Seen as a key growth engine due to higher margins and diversification potential.

Detailed Analysis #

Financial Position Analysis: Pitti Engineering Limited (FY2022-FY2024) #

Balance Sheet Analysis #

Comparative Analysis of Assets, Liabilities, and Equity (Standalone, 3-Year Trend) #

Source: Annual Report FY24, pp. 8-9 (Totals), p. 111 (FY24/FY23 Detail) Note: FY22 detailed breakdown derived from FY22 totals on p.8/9 and known FY23/FY24 splits. Capital Employed as per graph on p.8.

Analysis: The company demonstrates consistent growth across assets, equity, and liabilities over the three years. Asset growth is driven by increases in both current and non-current assets, indicating expansion in operations and capacity (evident from increased CWIP and PPE). Liabilities have grown faster than equity, particularly non-current liabilities in FY24, reflecting increased borrowings to fund expansion. Equity growth is supported by retained earnings.

Significant YoY Changes (>10% YoY Change, FY24 vs FY23 - Standalone) #

Source: Annual Report FY24, pp. 8-9, 41, 48, 111, 113, 120-126.

Analysis: FY24 saw significant capital expansion reflected in CWIP and increased debt (Non-Current & Current Borrowings), leading to a higher Debt-Equity ratio and lower DSCR. Profitability (PAT, EBITDA) showed strong growth despite increased finance costs, driven by higher revenue. Increases in Other Assets (Current & Non-Current) point towards higher advances and receivables related to operations and capex.

Pitti Engineering Limited: FY 2023-24 Financial Analysis - Income Statement #

Revenue Analysis #

• Overall Growth: Total Income (Standalone) for FY24 stood at ₹1,249.81 crore, an increase of 11.79% from ₹1,117.98 crore in FY23. Revenue from Operations (Standalone) grew by 9.22% YoY to ₹1,201.60 crore. Consolidated Revenue from Operations was ₹1,201.60 crore.
• Geographical Breakdown (Standalone - FY24):
  • India: ₹774.32 crore (64.44% of Revenue from Operations)
  • Outside India: ₹427.27 crore (35.56% of Revenue from Operations)
  • Export revenue contributed 36% to total turnover.
• Segment/Product Breakdown (Standalone - FY24 Turnover %):
  • Electrical Laminations and Stampings: 64.94%
  • Machining of Metal Components: 18.96%
  • Others (Metal scrap, traded goods, tools): 16.10%
• Growth Drivers: Growth was driven by increased sales volumes (up 16.55% YoY to 42,305 MT) supported by demand from domestic infrastructure projects (Railways - Vande Bharat, freight corridors) and resilient export markets (Mining, Renewable Energy, Data Centres). Focus on value-added products contributed positively.

Cost Structure Analysis (Standalone - FY24) #

• Cost of Materials Consumed: Remained the largest cost component at ₹804.30 crore, constituting approximately 64.35% of Total Income (FY23: ~69.94%). This slight decrease as a percentage of income suggests potential efficiency gains or product mix changes.
• Employee Benefit Expenses: Increased to ₹108.68 crore (8.70% of Total Income) from ₹89.62 crore (8.02% of Total Income) in FY23, reflecting workforce expansion (from 1331 to 1502 employees).
• Finance Costs: Stood at ₹47.99 crore (3.84% of Total Income), slightly higher than ₹44.66 crore (3.99% of Total Income) in FY23, likely due to increased borrowings to fund capex and working capital.
• Depreciation & Amortization: Increased to ₹54.02 crore (4.32% of Total Income) from ₹44.68 crore (3.99% of Total Income) in FY23, driven by significant capex incurred.
• Other Expenses: Increased to ₹104.12 crore (8.33% of Total Income) from ₹78.54 crore (7.02% of Total Income) in FY23. Major components include Power & Fuel (₹15.45 Cr), Stores & Spares consumption (₹21.20 Cr), and Packing Costs (₹15.08 Cr).

Margin Analysis (Standalone) #

• EBITDA: Increased by 17.39% YoY to ₹177.72 crore in FY24 from ₹151.41 crore in FY23 (calculated as PBT + Finance Costs + Depreciation).
• EBITDA Margin: Improved to 14.22% in FY24 from 13.54% in FY23 (Page 8 shows 14.79% vs 13.76%, likely including Other Income adjustments or slightly different calculation base). The trend shows margin improvement despite cost pressures. Blended EBITDA per metric tonne was ₹42,008.
• Profit Before Tax (PBT) Margin: Increased to 9.75% (₹121.91 Cr / ₹1249.81 Cr) in FY24 from 7.09% in FY23.
• Profit After Tax (PAT) Margin: Showed significant improvement, increasing to 7.22% (₹90.20 Cr / ₹1249.81 Cr) in FY24 from 5.26% in FY23.
• Trend: Margins have shown resilience and improvement, particularly PAT margin, reflecting operational efficiencies, focus on value-added products, and potentially favourable product mix/pricing adjustments offsetting input cost increases.

Operating Leverage #

• The significant increase in PAT (53.32% YoY) on an 11.79% YoY growth in Total Income indicates positive operating leverage.
• While Cost of Materials is largely variable, substantial fixed/semi-fixed costs (Employee Benefits, Depreciation, portions of Other Expenses) allow profitability to increase at a faster rate than revenue once fixed costs are covered.
• Investments in capacity expansion and automation (reflected in higher depreciation and capex) contribute to the fixed cost base but are expected to drive future efficiency and profitability as utilization increases.

Non-recurring / Exceptional Items #

• Other Income (Note 18): Includes State Industrial Promotion Subsidy of ₹408.19 lakhs (FY23: ₹130.03 lakhs) and Profit on Sale of Property, Plant & Equipment (Net) of ₹15.55 lakhs (FY23: ₹7.32 lakhs), which can be considered less recurring in nature compared to core operational revenue. Change in Fair Value of Investments (₹-5.37 lakhs) is also present.
• Exceptional Items: No items were classified as Exceptional in the P&L for FY24 or FY23.

GAAP vs Non-GAAP Reconciliation #

• The financial statements are prepared as per Indian Accounting Standards (Ind AS), which is the applicable GAAP in India.
• No specific non-GAAP measures requiring reconciliation were presented, apart from EBITDA, which is commonly used. EBITDA can be reconciled from the P&L: PBT (₹121.91 Cr) + Finance Costs (₹47.99 Cr) + Depreciation & Amortization (₹54.02 Cr) = ₹223.92 Cr. (Note: The reported EBITDA on page 8 is ₹177.72 Cr, calculated as PBT before Finance Costs and Depreciation/Amortization per page 48, which is ₹225.92 Cr - Finance Costs ₹47.99 Cr = ₹177.93 Cr, aligning closely. The difference might be minor definitional nuances).

EPS Analysis (Standalone) #

• Basic EPS: Increased significantly to ₹28.14 in FY24 from ₹18.36 in FY23.
• Diluted EPS: Increased significantly to ₹28.14 in FY24 from ₹18.36 in FY23.
• Trend: Reflects the strong PAT growth during the year. The 5-year CAGR for EPS is reported at 51.02%, indicating sustained high growth in earnings per share over the medium term.

Cash Management #

Cash Flow and Liquidity Analysis #

Operating Cash Flow (OCF) #

OCF before working capital changes improved to ₹21,590.86 lakhs in FY24 from ₹16,885.28 lakhs in FY23, driven by higher Profit Before Tax (PBT) (₹12,191.29 lakhs vs ₹7,988.49 lakhs). However, Net OCF decreased significantly to ₹7,008.11 lakhs in FY24 compared to ₹22,202.55 lakhs in FY23. This reduction was primarily due to substantial negative working capital changes of ₹(13,186.22) lakhs in FY24, compared to a positive contribution of ₹8,617.27 lakhs in FY23, mainly reflecting increased investments in inventories and receivables alongside faster payments to suppliers.

Investing Cash Flow (ICF) #

Net cash used in investing activities increased sharply to ₹(23,824.51) lakhs in FY24 from ₹(10,936.30) lakhs in FY23. The primary driver was higher capital expenditure on Property, Plant & Equipment (PPE) and intangibles, with cash outflow for purchases rising to ₹17,524.14 lakhs (FY23: ₹9,788.18 lakhs) and advances increasing to ₹4,045.64 lakhs (FY23: Nil). ROU asset additions also contributed ₹2,254.73 lakhs (FY23: ₹1,184.02 lakhs).

Financing Cash Flow (FCF) #

Net cash from financing activities was positive at ₹19,416.48 lakhs in FY24, compared to a

Pitti Engineering Limited - Financial Analysis (FY 2023-24) #

Overall Financial Performance (Standalone FY24 vs FY23) #

• Total Income: Increased by 11.79% to ₹1,249.81 crore from ₹1,117.99 crore (5-year CAGR: 23.99%).
• EBITDA: Grew by 17.39% to ₹177.72 crore from ₹151.39 crore (5-year CAGR: 22.97%).
• Profit After Tax (PAT): Increased by 53.32% to ₹90.20 crore from ₹58.83 crore (5-year CAGR: 51.55%).
• Net Worth: Increased to ₹416.28 crore from ₹331.65 crore.
• Total Assets: Expanded to ₹1,330.04 crore from ₹978.54 crore.
• Capital Employed: Reached ₹942.11 crore.
• Sales Volume: Increased by 16.55% to 42,305 metric tonnes.

Profitability Ratios (Standalone) #

Pitti Engineering Limited FY2023-24: Performance Analysis #

Revenue and Profitability #

• Total Income: ₹1,249.81 crore (11.79% Y-o-Y increase; 5-Year CAGR: 23.99%)
• EBITDA: ₹177.72 crore (17.39% Y-o-Y increase; 5-Year CAGR: 22.97%)
• Profit After Tax (PAT): ₹90.20 crore (53.32% Y-o-Y increase; 5-Year CAGR: 51.55%)
• Earnings Per Share (EPS): ₹28.14 (FY24) vs. ₹18.36 (FY23); 5-Year CAGR: 51.02%

Margins #

• EBITDA Margin: 14.22% (FY24) vs. 13.55% (FY23)
• PAT Margin: 7.22% (FY24) vs. 5.26% (FY23)

Return Ratios #

• Return on Equity (ROE): 24.04% (FY24) vs. 19.04% (FY23)
• Return on Capital Employed (ROCE): 19.58% (FY24) vs. 17.23% (FY23)

Market Position and Strategy #

• Largest manufacturer and exporter of electrical laminations in India.
• Leading supplier of complex sub-assemblies for motors and generators.
• Transitioning to a multi-product engineering company with integrated capabilities.

Product/Service Performance #

• Rotating Electrical Equipment: Primary revenue driver. FY24 sales volume: 42,305 MT (up 16.55% Y-o-Y). Includes loose laminations, assembled stator cores, rotors, stator frames, and ready-for-winding assemblies.
• Machined Components: Targeted for margin accretion and growth. Includes machined fabricated parts, forged shafts, castings, and specialized processing for industries like railways, mining, renewable energy.
• Value Addition: Focus on producing margin-accretive products like stator frames integrated with cores, components for OHV mining, electrolyser parts, and marine propulsion systems.

Geographic Distribution and Market Penetration #

• Exports: 36% of total turnover in FY24 (₹443.48 crore), up from ₹370.93 crore in FY23.
• Domestic: Strong in the railway sector. Enhanced presence in South India (Karnataka) through acquisition.
• Markets Served: National presence across 28 states and 8 Union Territories; International presence in 11 countries.
• Customers: 104 B2B customers (FY24) across diverse industries.

Capital Expenditure and ROIC #

• Total Capex (FY24): ₹209.37 crore (Standalone).
• Capex Focus: Expanding lamination capacity and increasing machining capacity. Specific capex on energy conservation equipment was ₹3.14 crore.
• Return on Capital Employed (ROCE): 19.58% (FY24) vs 17.23% (FY23).

Operational Efficiency #

• Capacity Utilisation (FY24 - Standalone):
  • Rotating Electrical Equipment Components & Assemblies: 72.95%
  • Machined Components: 90.47%
  • Bagadia Chaitra: 84.33%
• Asset Turnover Ratio: 1.11x (FY24) vs 1.28x (FY23)
• Inventory Turnover Ratio: 4.72x (FY24) vs 4.30x (FY23)
• Debtors Turnover Ratio: 6.13x (FY24) vs 5.70x (FY23)
• Trade Payables Turnover Ratio: 3.85x (FY24) vs 3.40x (FY23)

Growth Initiatives and Challenges #

• Inorganic Growth: Acquisition of Bagadia Chaitra Industries (BCIPL). Proposed merger with Pitti Castings Private Limited (PCPL).
• Organic Growth: Ongoing capacity expansion at Aurangabad facility.
• Capacity Target: Increase from 56,000 TPA to 90,000 TPA (including BCIPL).
• Challenges/Risks:
  • Commercial: Growth outpacing opportunities, customer concentration, competition.
  • Operational: Geopolitical instability, HR (talent acquisition/retention, upskilling), health & safety.
  • Information/Cybersecurity: Risks associated with increased digitization and automation.
  • Sectoral: Technological obsolescence, economic cyclicality.
  • Financial: Commodity price and Forex volatility, liquidity management.
  • Sustainability/ESG: Carbon footprint, potential CBAM tariffs.
  • Supply Chain: Dependence on imported raw materials.

Pitti Engineering Limited - Risk Analysis Report (FY 2023-24) #

Strategic Risks #

Operational Risks #

Financial Risks #

Quantitative Metrics (FY24 vs FY23): #

• Total Debt: ₹537.5 Cr vs ₹291.9 Cr (+84%)
• Net Debt: ₹428.1 Cr vs ₹224.9 Cr (+90%)
• Debt/Equity Ratio: 1.29x vs 0.87x (+48%)
• Interest Coverage Ratio: 3.52x vs 3.01x (+17%)
• Debt Service Coverage Ratio: 2.01x vs 2.90x (-31%)
• Finance Costs: ₹49.9 Cr vs ₹44.7 Cr (+11.6%)
• ROE: 24.04% vs 19.04%
• ROCE: 19.58% vs 17.23% (Standalone data used as per report)

Compliance/Regulatory Risks #

Emerging Risks #

Pitti Engineering Limited: Financial Analysis (FY 2023-24) #

Financial Performance Analysis #

Pitti Engineering Limited demonstrated significant financial growth in FY 2023-24.

Revenue & Profitability #

• Total income increased by 11.79% YoY to ₹1,249.81 crore. EBITDA grew by 17.39% to ₹177.72 crore, and Profit After Tax (PAT) surged by 53.32% to ₹90.20 crore. Sales volumes increased by 16.55% to 42,305 metric tonnes.

Margins #

• EBITDA margin improved to 14.22% from 13.76% in FY23. PAT margin increased significantly to 7.22% from 5.26% in FY23, indicating enhanced operational efficiency and potentially favourable product mix. Blended EBITDA per metric tonne stood at ₹42,008.

Return Ratios #

• Return on Equity (ROE) improved to 24.04% (FY23: 19.04%), and Return on Capital Employed (ROCE) increased to 19.58% (FY23: 17.23%), reflecting better utilization of capital and improved profitability.

Leverage #

• The Debt-Equity ratio increased to 1.29 (standalone basis, as per Directors’ Report; MD&A notes a 48.28% YoY increase), attributed to term loans for capex and increased working capital utilization. The Debt Service Coverage Ratio (DSCR) decreased by 30.69% YoY due to increased term loans. Net debt stood at ₹428.08 crore (standalone).

Long-Term Trend #

• The company reported strong 5-year CAGRs: Total Income (23.99%), EBITDA (22.97%), and PAT (51.55%), indicating sustained growth over the medium term.

Capital Expenditure #

• Capex incurred during FY24 was ₹209.37 crore.

Business & Strategy Analysis #

Business Model #

• The company has transitioned from primarily an electrical lamination manufacturer to an integrated engineering solutions provider, offering machined castings, fabricated components, shaft manufacturing, and complex assemblies. This addresses rotating electrical equipment and machined component verticals.

Strategic Initiatives #

• Acquisition: Acquired 100% of Bagadia Chaitra Industries Private Limited (BCIPL) post-FY24 (May 6, 2024). This adds 16,000 MTPA capacity for components & assemblies for rotating electrical equipment and provides a strategic manufacturing base in South India (Tumkur, Karnataka). The enterprise value was ₹124.92 crore (subject to adjustments).
• Merger: A scheme of amalgamation is underway (pending NCLT approval) to merge promoter-owned Pitti Castings Private Limited (PCPL) and wholly-owned subsidiary Pitti Rail and Engineering Components Limited (PRECL) with Pitti Engineering. Rationale includes vertical integration (castings), supply chain optimization, margin enhancement, reduced related-party transactions, and corporate structure simplification. The appointed date is April 1, 2023.
• Capacity Expansion: Ongoing expansion at the Aurangabad facility, combined with the BCIPL acquisition, will increase consolidated capacity from 56,000 TPA to 90,000 TPA.
• Operational Reorganization: Plans include decommissioning lamination capacity in Hyderabad to increase machining capacity and reorganizing the consolidated business for synergies and logistics cost reduction.

Product Focus #

• Emphasis on margin-accretive, value-added products like ready-to-wind assemblies, fully finished stator frames with cores, and complex machined components for diverse industries.

Market Environment & Opportunities #

Macro Environment #

• India’s strong economic growth (8.2% GDP in FY24) provides a favourable backdrop. Global resilience noted despite geopolitical uncertainties.

Key Sector Opportunities #

• Railways: Significant government focus on infrastructure (Vande Bharat, Amrit Bharat, freight modal share). Pitti supplies critical components for traction motors and locomotives, aligning with ‘Make in India’. Developed products for 18 Vande Bharat projects.
• Renewable Energy: Growing demand for wind (supporting projects up to 5MW), hydro (supplying RFW stator cores for mini-hydro), and green hydrogen (developed critical electrolyser parts).
• Mining: Supplying complex, safety-critical components (wheel hubs, support seals) for overseas OHV mining customers, leveraging integrated capabilities.
• Data Centers: Increased demand for reliable power (DG sets) drives need for components like assembled stators and rotors with shafts, which Pitti supplies.
• Other: Power generation (thermal, steam turbines), industrial automation, marine applications (electric propulsion), construction, steel, cement, sugar industries.

Competitive Positioning #

• Largest manufacturer and exporter of electrical laminations in India; preeminent manufacturer of machined castings and fabricated components; leading supplier of complex sub-assemblies.

Risk Assessment #

The company identifies several material risks:

Commercial #

• Dependence on niche segments, potential mismatch in investment vs. revenue growth, customer concentration, competitive pressures.

Operational #

• Geopolitical instability impacting demand/costs, HR challenges (skilled labor retention, succession planning), health & safety hazards.

Technology & Sectoral #

• Risk of technological obsolescence due to customization needs, linkage to economic/infrastructure cycles.

Financial #

• Commodity price and Forex volatility, liquidity management in a capital-intensive sector.

Information Security #

• Risks associated with increasing digitization and automation.

Sustainability/ESG #

• Managing carbon footprint (especially upstream emissions), potential impacts of regulations like CBAM for EU exports.

Mitigation strategies include vertical integration, diversification (geography, industry), continuous investment in technology/capacity, talent development, safety protocols, hedging (where applicable), and prudent financial management.

Corporate Governance Highlights #

Board Structure #

• As of March 31, 2024, the Board comprised 8 Directors (2 Promoter Executive, 6 Independent). Post-year-end changes include the appointment of 3 new Independent Directors (N Vinod Kumar, Kemisha Soni, Priti Paras Savla) effective Aug 14, 2024, and re-designation of Shri Sharad B Pitti (Founder & Chairman) and Shri Akshay S Pitti (MD & CEO). The composition aligns with SEBI regulations.

Committees #

• Functional committees (Audit, NRC, SRC, RMC, CSR) are in place with compositions adhering to regulations. The Audit Committee comprises entirely Independent Directors.

Policies #

• Established codes and policies cover conduct, ethics, RPT, risk management, whistleblowing, etc.

Compliance #

• The company reported compliance with mandatory SEBI LODR requirements and Secretarial Standards. Statutory and Secretarial Audit reports for FY24 contain no qualifications, reservations, or adverse remarks.

Outlook #

Management expresses optimism, anticipating continued demand growth. Key growth drivers include:

• Full integration and operationalization of acquired (BCIPL) and expanded (Aurangabad) capacities, targeting 90,000 TPA.
• Synergies and vertical integration benefits from the proposed Pitti Castings merger, particularly boosting the machined components vertical.
• Strategic reorganization to enhance efficiency and reduce costs.
• Continued focus on value-added products across key growth sectors (Railways, Renewables, Mining, Data Centers).
• Commitment

ESG Analysis: Pitti Engineering Limited (FY 2023-24) #

Environmental Metrics and Targets #

Energy Consumption & Efficiency #

• Invested ₹313.73 lakhs in energy conservation equipment in FY24.
• Utilized energy-efficient machinery, LED lighting, HVAC, and advanced monitoring systems.
• Total energy consumed: 66,341.49 GJ (FY24) vs 50,414.69 GJ (FY23).
• Energy intensity per rupee of turnover: 530.82 GJ/₹ Crore (FY24) vs 457.50 GJ/₹ Crore (FY23).

Renewable Energy #

• Operates a 1 MW solar plant at the Aurangabad facility, generating 1,629.55 MWh in FY24, reducing CO2e emissions by 1,162 MT (cumulative 2,382 MT CO2e over FY23-FY24).
• Total energy from renewable sources: 5,297.29 GJ (FY24) vs 5,335.82 GJ (FY23).
• Plans to enhance renewable power capacity to 3 MW.

Fleet Transition #

• Operates 16 Electric Vehicles (EVs) for daily use, reducing potential Scope 1 GHG emissions by 42.754 t CO2e over the last two years.

Afforestation #

• Project underway on 8 acres (7 Aurangabad, 1 Hyderabad) targeting ~36,500 trees using Miyawaki and traditional methods.
• Planted: ~5,450 trees (Aurangabad), ~6,107 trees (Hyderabad). Expected self-sustainability within 2 years.

Water Management #

• Total water withdrawal: 17,914 KL (FY24) vs 16,097 KL (FY23), primarily groundwater and third-party sources.
• Total water consumption: 17,914 KL (FY24) vs 16,097 KL (FY23).
• Water intensity per rupee of turnover: 14.33 KL/₹ Crore (FY24) vs 14.63 KL/₹ Crore (FY23).
• Zero Liquid Discharge (ZLD) mechanism implemented with STPs (40 KLD Hyderabad, 50 KLD Aurangabad); treated water used for gardening, dried sludge used as fertilizer.

Emissions #

• Scope 1 emissions: 1,491.42 tCO2e (FY24) vs 958.13 tCO2e (FY23).
• Scope 2 emissions: 8,759.36 tCO2e (FY24) vs 7,093.95 tCO2e (FY23).
• Total Scope 1 & 2 intensity: 8.20 tCO2e/₹ Crore turnover (FY24) vs 7.33 tCO2e/₹ Crore turnover (FY23).
• Air emissions (NOx, SOx, PM) monitored; values provided in BRSR.

Waste Management #

• Adopts 3R (Reduce, Reuse, Recycle) principles.
• Total waste generated: 31,322.24 MT (FY24) vs 31,272.76 MT (FY23), primarily non-hazardous (31,252.22 MT).
• Waste recovered through reuse: 31,252.22 MT (FY24) vs 31,185.49 MT (FY23).
• Hazardous waste managed through state-authorized vendors; e-waste via authorized recyclers; batteries returned to suppliers.

Certifications #

• ISO 14001:2015 (Environmental Management).

Compliance #

• Compliant with Water Act, Air Act, Environment Protection Act and Rules; no non-compliances reported in FY24. No operations in ecologically sensitive areas requiring special clearance.

Social Responsibility Programs #

Corporate Social Responsibility (CSR) #

• Spent ₹131 lakhs on CSR activities in FY24, exceeding the mandated ₹130.63 lakhs.
• Focus areas included: Healthcare, Education, Protection of National Heritage, Art & Culture, Animal Welfare, Promotion of Sports.
• CSR Committee comprises 2 Executive Directors and 1 Independent Director.

Employee Well-being #

• Total permanent employees: 1502 (FY24) vs 1331 (FY23).
• Measures include health insurance (100% permanent employees), accident insurance (100% permanent employees), maternity benefits (100% female permanent employees). Paternity benefits and Day Care facilities reported as Nil coverage for permanent employees.
• Workers (permanent & other) covered by health (ESIC/other) and accident insurance.
• Cost incurred on well-being measures: 0.20% of total revenue (FY24).
• Retirement benefits (PF, Gratuity, ESI) provided and deposited as applicable.

Human Rights & Labour Practices #

• Equal Opportunity Policy in place; premises accessible to differently-abled persons.
• No child labour or forced labour reported.
• Policy for Prevention of Sexual Harassment (POSH) in place with Internal Complaints Committee; zero complaints reported in FY24.
• Grievance Redressal mechanism available for all employee categories.
• No recognized employee unions reported.
• Minimum wage compliance reported; median wages detailed in BRSR.

Health & Safety #

• Implemented Occupational Health and Safety management system.
• Processes for hazard identification (HIRA, FMEA), risk assessment, and worker reporting exist.
• Safety measures include safety sensors, fencing, fire safety systems, air monitoring, PPE provision, safety showers, periodic medical check-ups, and training.
• Zero fatalities and Lost Time Injuries reported for FY24 (LTIFR = 0).
• 100% of plants/offices assessed for H&S and working conditions.

Stakeholder Engagement #

• Identified key stakeholders: Employees/Workers, Investors/Shareholders, Communities, Customers/Value Chain Partners, Government/Regulatory Bodies.
• Engages through various channels (email, meetings, website, calls, training, publications, AGM) with frequencies ranging from regular to event-based.

Training #

• 55.07% of employees/workers covered by training programs in FY24 on topics including policy, safety, environment, governance, health, skills, risk management, compliance. 100% Board/KMP coverage.
• Performance and career development reviews conducted for employees.

Governance Structure and Effectiveness #

Board Composition & Independence #

• As of March 31, 2024, Board comprised 8 Directors: 2 Promoter Executive Directors (Founder & Chairman, MD & CEO) and 6 Independent Non-Executive Directors (including one woman Director). Post year-end, 3 new Independent Directors were appointed (Aug 2024).
• Composition meets Regulation 17 requirements.
• Independent Directors meet criteria of independence (Sec 149(6) Act, Reg 16(1)(b) SEBI Regs); declarations submitted and confirmed by the Board. All IDs registered with IICA databank.

Pitti Engineering Limited - FY23-24 Financial Analysis #

Financial Performance Analysis (FY24 vs FY23 - Standalone) #

Revenue Growth #

Total Income increased by 11.79% to ₹1,249.81 crore in FY24 from ₹1,117.99 crore in FY23. Revenue from operations grew 9.22% to ₹1,201.60 crore. This growth was driven by a 16.55% increase in sales volume to 42,305 MT, supported by strong domestic demand and resilient export markets.

Profitability #

Profit After Tax (PAT) saw a significant increase of 53.32%, reaching ₹90.20 crore compared to ₹58.83 crore in FY23. Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) grew by 17.39% to ₹177.72 crore from ₹151.40 crore (calculated). The growth in profitability outpaced revenue growth, indicating improved operational efficiency and margin expansion, attributed to the strategic focus on margin-accretive, value-added products.

Margins #

EBITDA margin improved to 14.79% in FY24 from 13.76% in FY23. PAT margin expanded significantly to 7.22% from 5.26% in the previous year. Blended EBITDA per metric tonne stood at ₹42,008.

Return Ratios #

Return on Equity (ROE) improved markedly to 24.04% from 19.04% in FY23. Return on Capital Employed (ROCE) also increased to 19.58% from 17.23%. These improvements reflect enhanced profitability and efficient utilization of equity and capital. Asset Turnover Ratio slightly decreased to 1.03x from 1.15x.

Balance Sheet and Leverage #

Total Assets grew to ₹1,330.04 crore. Net worth increased to ₹416.28 crore. Total debt stood at ₹537.48 crore (Long-term: ₹262.94 Cr, Short-term: ₹274.54 Cr). Net Debt was ₹428.08 crore. The Debt-to-Equity ratio increased significantly by 48.28% YoY to 1.29, primarily due to increased term loans supporting capital expenditure and working capital requirements. Consequently, the Debt Service Coverage Ratio (DSCR) decreased by 30.69% YoY.

Cash Flow #

Cash accruals improved by 39.38% to ₹144.22 crore.

Dividend #

The Board recommended a final dividend of ₹1.50 per share (30% payout), subject to shareholder approval. This represents a lower payout percentage compared to 54% in FY23.

Strategic Developments and Operational Highlights #

Product Portfolio Evolution #

The company is transitioning from an electrical lamination-focused business to a multi-product engineering company, emphasizing value-added machined components, assemblies, and ready-to-wind assemblies for rotating electrical equipment and diverse industries (Railways, Mining, Renewables, Data Centers). This shift targets higher margins.

Capacity Expansion & Capex #

FY24 capex amounted to ₹209.37 crore. Planned initiatives aim to increase consolidated capacity from 56,000 TPA to 90,000 TPA. This includes expansion at the Aurangabad facility and the integration of the acquired BCIPL capacity. Lamination capacity in Hyderabad is planned for decommissioning, with the space repurposed for increased machining capacity.

Mergers & Acquisitions #

Bagadia Chaitra Industries Private Limited (BCIPL) #

Acquired 100% equity on May 6, 2024 (post FY24 end). BCIPL adds 16,000 MT capacity and provides a strategic manufacturing base in South India (Tumkur, Karnataka).

Pitti Castings Private Limited (PCPL) Merger #

A scheme of amalgamation for merging promoter-owned PCPL and wholly-owned subsidiary Pitti Rail and Engineering Components Limited (PRECL) into Pitti Engineering is underway (appointed date April 1, 2024).

Pitti Engineering Limited - Financial Analysis Report (FY 2023-24) #

Auditor’s Opinion and Qualifications #

• Standalone Financial Statements: Talati & Talati LLP issued an unmodified opinion, stating the statements give a true and fair view in conformity with Indian Accounting Standards (Ind AS) and the Companies Act, 2013. No qualifications, reservations, adverse remarks, or disclaimers were noted.
• Consolidated Financial Statements: Talati & Talati LLP issued an unmodified opinion, affirming the statements present a true and fair view in accordance with Ind AS and the Companies Act, 2013. No qualifications, reservations, adverse remarks, or disclaimers were noted.
• Secretarial Audit Report: Shri Ajay Kishen reported that the company complied with applicable statutory provisions (including the Companies Act, SEBI Regulations, SCRA, Depositories Act, FEMA) and adheres to good corporate practices. No qualifications, reservations, adverse remarks, or disclaimers were noted.

Key Accounting Policies and Changes #

• Basis of Preparation: Financial statements are prepared on an accrual basis under the historical cost convention (except for certain financial instruments at fair value) in accordance with Ind AS notified under the Companies Act, 2013.
• Revenue Recognition (Ind AS 115): Revenue from contracts with customers is recognized when control of goods/services transfers to the customer, measured at the transaction price net of variable considerations.
• Property, Plant & Equipment (PPE) (Ind AS 16): Stated at cost less accumulated depreciation and impairment. Depreciation is provided on the straight-line method based on useful lives specified in Schedule II of the Companies Act, 2013, or as estimated by management.
• Leases (Ind AS 116): The Company recognizes Right-of-Use (ROU) assets and corresponding lease liabilities for most leases (except short-term and low-value leases). ROU assets are depreciated over the shorter of the lease term or useful life.
• Financial Instruments (Ind AS 109): Financial assets are initially recognized at fair value. Subsequent measurement depends on classification. Impairment is assessed using the Expected Credit Loss (ECL) model.
• Inventories (Ind AS 2): Valued at the lower of cost (weighted average basis) or net realizable value (NRV).
• Taxation: Current tax is measured based on enacted tax rates. Deferred tax is recognized on temporary differences between carrying amounts and tax bases. The Company adopted the reduced corporate tax rate under section 115BAA of the Income Tax Act, 1961.
• Changes in Policies: No significant changes in accounting policies during FY 2023-24. The policies appear consistent with the prior year.

Internal Control Effectiveness #

• Auditor’s Opinion (Standalone & Consolidated): The Independent Auditors reported that the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such controls were operating effectively as at March 31, 2024.
• Management’s Assessment: The Directors’ Responsibility Statement confirms that proper internal financial controls were laid down and followed, and such controls are adequate and operating effectively.

Regulatory Compliance Status #

• Companies Act, 2013 & SEBI LODR: The Directors’ Report, Corporate Governance Report, and CEO/CFO certification affirm compliance with applicable provisions of the Companies Act and SEBI Listing Regulations.
• Secretarial Audit: The Secretarial Audit Report confirms compliance with the Companies Act, 2013, SCRA 1956, Depositories Act 1996, FEMA 1999, specific SEBI regulations, applicable labor laws, environmental laws, and Secretarial Standards during FY 2023-24. No non-compliances were reported.
• Auditor’s Report (CARO): Confirms regularity in depositing undisputed statutory dues and provides details of disputed dues (Income Tax, Service Tax, GST). No defaults in loan repayments were reported.
• Statutory Auditor’s Main Report: Confirms compliance with Ind AS, maintenance of proper books of account, and director disqualification status check.
• Director Disqualification: The Certificate of Non-Disqualification of Directors confirms none of the directors were debarred or disqualified as of March 31, 2024.

Legal Proceedings and Potential Impact #

• Contingent Liabilities: The Company reports contingent liabilities primarily related to disputed tax matters: Service Tax, GST, and Income Tax.
• Management Assessment: The Company states no provision is considered necessary as it expects favorable decisions. However, a certain amount has been deposited under protest towards Income Tax liabilities.
• Other Disclosures: No significant/material orders from regulators/courts impacting going concern status or future operations, no IBC proceedings, and no one-time settlements.
• Potential Impact: The disputed tax liabilities, particularly Income Tax, represent a potential financial risk if the decisions are unfavorable.

Related Party Transactions #

• Policy and Approach: The Company has a policy on Related Party Transactions (RPTs). All reported transactions during the year were stated to be on an arm’s length basis and in the ordinary course of business.
• Approvals: Material RPTs require members’ approval. All RPTs are placed before the Audit Committee, with omnibus approval obtained for repetitive transactions.
• Key Transactions: Major transactions involve: Remuneration to KMP, lease rentals paid to related parties, purchase/sale of goods & services with related companies, interest paid on unsecured loans from KMP/relatives, and investment in subsidiary/associate.
• Materiality: Specific material RPTs needing shareholder approval are mentioned in financial statement notes. Purchases from related parties constituted a certain percentage of total purchases.
• Transparency: Details are disclosed in the financial statements, Directors’ Report, and Corporate Governance Report. The proposed amalgamation with Pitti Castings Pvt Ltd is a significant related party event.

Subsequent Events #

• Acquisition: The Company completed the acquisition of 100% equity share capital of Bagadia Chaitra Industries Private Limited (BCIPL), which became a wholly owned subsidiary.
• Scheme of Amalgamation: The scheme involving the amalgamation of Pitti Castings Private Limited (PCPL) and Pitti Rail and Engineering Components Limited (PRECL) with Pitti Engineering Limited received shareholder and creditor approval and is pending NCLT approval.
• Director Appointments/Re-designations: Various director appointments and re-designations have occurred.
• AGM: The 40th AGM is scheduled.

Accounting Quality Analysis #

The Company prepares its financial statements under Ind AS. The accounting policies appear consistently applied, and major policies are clearly disclosed. The auditors issued clean opinions on both standalone and consolidated statements. The detailed disclosures enhance transparency. Overall, the accounting quality appears reasonable and compliant with required standards.

Regulatory Risk Assessment #

Pitti Engineering operates in a regulated environment.

• Compliance: The Secretarial Audit Report and Directors’ affirmations suggest a strong compliance record for FY24.
• Tax Disputes: The pending tax litigations represent a key regulatory risk.
• Environmental Regulations: As a manufacturing entity, environmental compliance is crucial.