Akshay Pitti, said, “We had received an order worth of Rs500cr from GE India (now Wabtec), to supply traction motor-related products to be used in locomotives for catering to the requirements of Indian Railways, subsequently, the scope of supplies increased and we estimate the value of the order to be Rs750cr.”
How has been your journey in building India’s finest Engineering solutions company serving leaders in Electrical Equipment manufacturers like GE, Siemens and Cummins etc.?
Pitti Engineering Limited (Formerly Pitti Laminations Limited), is a leading Engineering company in the country with three decades of excellence in manufacturing of Sheet Metal Components including Motor Cores, Sub-Assemblies, Die-Cast Rotors and Machining of Metal Components & also the largest exporter of Electrical Laminations from India. The company has evolved into a complete engineering solution provider to its customers assisting in optimizing their supply chain by integrating various horizontal processes.
The company supplies a range of Engineering products to vastly diversified segments like Hydro & Thermal Generation, Windmill, Mining, Cement, Steel, Sugar, Construction, Lift Irrigation, Freight Rail, Passenger Rail, Mass Urban Transport, Appliances, Medical Equipment, Oil & Gas and various several other industrial applications. Broadly speaking, the Company’s products find a suitable application in almost every equipment that rotates or generates electricity.
Company has state of the art manufacturing facilities in Hyderabad and Aurangabad. Lately, the company has successfully commissioned mega project at Aurangabad in Maharashtra and one new unit in Hyderabad deploying advanced manufacturing techniques and automation in both the facilities.
What is your current order book and execution road map and expected orders?
The residual long-term order book with the company as on Dec 2019 stands at Rs600cr, comprises of engineering products catering to user industries like Diesel and electric locomotives, data farms, consumer durables, renewable energy.
The other prestigious products include Power Systems for Data Firms (from Cummins Generators), Propulsion Systems for Electric Vehicles, Various Sub-assemblies for Intercity Passenger and Freight Movement Components for Mass Urban Transit Systems (from Siemens and Alstom), Renewable Energy (from ABB).
Tell us about the work you do for Indian Railways? What are the growth drivers?
We had received an order worth of Rs500cr from GE India (now Wabtec), to supply traction motor-related products to be used in locomotives for catering to the requirements of Indian Railways, subsequently, the scope of supplies increased and we estimate the value of the order to be Rs750cr. Against which, we have supplied components worth Rs150cr to GE and the remaining unexecuted order stands at Rs600cr.
Indian Railways is now focusing on achieving 100% indigenization of its manufacturing therefore Pitti Engineering expects pouring in of more such orders. Working in this segment with companies, who are world leaders in supplying these machines to Indian Railways. The Indian Railways is planning to increase domestic content in procurement under ‘Make in India’ campaign, giving a boost to Indian companies for producing world class manufactured goods. Indian Railways capital expenditure has been growing steadily and touched an all-time high of Rs. 1.58 lakh crore this fiscal from Rs. 1.33 lakh crore logged last fiscal as per government data.
The company expects increased business for precision engineered products that find their use in locomotives as well as urban mass transit systems in the coming years as modernization and localization of sourcing of such parts increases.
Tell us about your new facility in Aurangabad.
Over the last three years, we have scaled down our Hyderabad operations and started a more automated unit in Aurangabad, at a cost of Rs 129 crore capex, to make more assembled and value-added products. The manufacturing unit at Aurangabad is also awarded the status of Mega Project by the Government of Maharashtra. The new facility, which deploys some of the latest manufacturing techniques including Robotics, IOT and Artificial Intelligence, is fully capable of integrating all the process under one roof.
What are you expansion plans?
The company would enhance its current installed capacity from the existing 36,000 MT to 46,000 MT for sheet metal components and from 2,47,600 hours to 405,600 hours for machining. The capital expenditure for the same would be Rs. 190 crore and will be funded by combination of internal accruals and debt. The company is currently operating at around 70% capacity utilization.
How was the company's performance in Q3, what is your outlook for FY20?
We have seen some fall in our revenues this year mainly on account of falling steel prices and consumption of pipeline stocks by certain customers and deferment in replenishing the same, reducing the off-take during the period under review. However, due to better product mix, the profitability is showing improvement. We are hopeful the recovery in infrastructure and capital goods sector will be seen soon.
FY21 is where we see good growth rates from the sector and our company too on account of increased order flow, seamless execution of orders with modernized manufacturing facilities and moving in the value chain by adding more and more value through high margin products. Pitti Engineering Ltd’s products find application in almost every equipment that rotates when generating or consuming electricity and thus maintains a positive growth outlook for FY21.
What will be the impact of budget announcements on the company?
Government’s thrust on increasing spend on overall development of infrastructure to boost the economy is a great positive step towards encouraging private investment, which would further fuel the growth of the economy. 18% increase in budget allocation for urban development, which would have smart transport systems and investments on bettering public transport etc. is a positive move for us. Government’s thrust on developing large irrigation project would really increase the demand for electric equipments like specialized traction motors which will be a big positive for engineering companies like us.
The Indian engineering sector, which has witnessed some moderation in its activities in the last few months, is expected to gain strength in coming months led by recovery in capex cycle. The overall sector is undergoing the transitional phase and the latest measures of Government of India to make India a manufacturing hub will transcend into a major opportunity for the sector as a whole and Pitti Engineering in specific due to the nature of product and multiplicity of the application and industries it caters to.
Large players in our user industries/current clientele have been operating on Just in time inventory for the last couple of months on account of slowdown in the economy. Now that they have exhausted their stocks and there is good growth expected on public transport systems like railways, Mass Urban Transport and Freight Rail, the order flow should increase substantially during the FY21 and engineering companies like us can expect huge order flow during the next year from these large clients where in the company is the sole supplier for certain products both in India and overseas and major supplier for other products.